Document:

ex101CommitmentLetter

Exhibit 10.1
Execution Version

	
	
	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED 
BANK OF AMERICA, N.A. 
One Bryant Park 
New York, NY 10036

July 30, 2015
Sensata Technologies B.V.
529 Pleasant St.
Attleboro, MA 02703
Attention:  Paul Vasington
Project Silence
Commitment Letter
Ladies and Gentlemen:
Sensata Technologies B.V., a besloten vennootschap organized under the laws of the Netherlands (the “BV Borrower” or “you”) and Sensata Technologies Finance Company, LLC, a Delaware limited liability company (the “US Borrower” and together with the BV Borrower, the “Borrowers”), each wholly owned subsidiaries of Sensata Technologies Intermediate Holdings B.V., a besloten vennootschap organized under the laws of the Netherlands (the “Parent”), have advised Bank of America, N.A. (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch” and acting through such of its affiliates as it deems appropriate, Bank of America and Merrill Lynch, collectively, the “Senior Agents”, “we” or “us” and together with any Additional Agents appointed pursuant to Section 2, the “Agents”) that you intend to consummate the Transaction (such term and each other capitalized term used but not defined herein having the meaning assigned to such term in the Transaction Description attached hereto as Exhibit A or in the Term Sheets referred to below).
1.    Commitments.
In connection with the foregoing, Bank of America (the “Initial Lender” and together with any Initial Lenders committing to the Senior Bridge Facility pursuant to Section 2, the “Initial Lenders”) is pleased to advise you of its commitment to provide 100% of the principal amount of the Senior Bridge Facility, upon the terms set forth or referred to in this commitment letter (together with the exhibits attached hereto, this “Commitment Letter”) and in the Summary of Principal Terms and Conditions attached hereto as Exhibit B (the “Senior Bridge Facility Term Sheet” and, together with Exhibit C attached hereto, the “Term Sheets”), in each case subject to the conditions set forth in Section 5 and Exhibit C hereto.
2.    Titles and Roles.
You hereby appoint (i) Merrill Lynch to act, and Merrill Lynch hereby agrees to act, as sole bookrunner and lead arranger (or as a joint bookrunner and lead arranger if you 

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appoint an Additional Lead Arranger pursuant to the immediately succeeding paragraph) for the Senior Bridge Facility (in such capacity, the “Senior Lead Arranger” and together with any Additional Lead Arrangers, the “Lead Arrangers”) on an exclusive basis in connection with the proposed arrangement and subsequent syndication of the Senior Bridge Facility and (ii) Merrill Lynch to act, and Merrill Lynch hereby agrees to act, as sole administrative agent for the Senior Bridge Facility, in each case upon the terms and subject to the conditions set forth or referred to in this Commitment Letter. 
At any time on or prior to the 10th business day following the date of this Commitment Letter, you may (in consultation with the Senior Lead Arranger) appoint up to 3 additional joint lead arrangers and joint bookrunners (the “Additional Lead Arrangers”) and up to 3 additional agents or co-agents or confer other titles (the “Other Agents”) in a manner and with economics determined by you and reasonably acceptable to the Senior Lead Arranger (collectively, the Additional Lead Arrangers and the Other Agents, the “Additional Agents”); provided that the aggregate economics payable to Merrill Lynch for the Senior Bridge Facility shall not be less than 30% of the total economics which would otherwise be payable to the Agents pursuant to the fee letter dated the date hereof and delivered herewith with respect to the Senior Bridge Facility (the “Fee Letter”) (exclusive of any fees payable to an administrative agent in its capacity as such) (it being understood that (i) the commitment of the Initial Lender hereunder will be reduced by the amount of the commitments of each such Additional Agent (or its relevant affiliate) under the Senior Bridge Facility on a pro rata basis upon the execution of customary joinder documentation satisfactory to the Senior Lead Arranger, and upon such execution such financial institution shall constitute an “Initial Lender,” “Agent” and, in the case of an Additional Lead Arranger, a “Lead Arranger”  hereunder and under the Fee Letter, (ii) the commitments assumed by such Additional Agent for the Senior Bridge Facility will be in proportion to the economics allocated to such Additional Agent, (iii) no Additional Agent (nor any affiliate thereof) shall receive greater economics in respect of the Senior Bridge Facility than that received by Merrill Lynch and (iv) Merrill Lynch will have “left side” designation and shall appear on the top left of the cover page of any marketing materials for the Senior Bridge Facility).  The parties hereto agree that Merrill Lynch shall hold the leading roles and responsibilities conventionally associated with such “left” placement with respect to the Senior Bridge Facility and each of the Lead Arrangers shall be entitled to receive league table credit for its role as “lead arranger” and “bookrunner” for the Senior Bridge Facility.
3.    Syndication.
We reserve the right, prior to and/or after the execution of definitive documentation for the Senior Bridge Facility (the “Credit Documentation”), to syndicate all or a portion of our commitments with respect to the Senior Bridge Facility to a group of banks, financial institutions and other lenders (together with the Initial Lenders, the “Lenders”) identified by us in consultation with you pursuant to a syndication to be managed exclusively by the Lead Arrangers; provided that we will not syndicate the Senior Bridge Facility to certain banks, financial institutions and other institutional lenders and competitors of you and your subsidiaries or the Acquired Business and its subsidiaries that, in each case, have been specified to us by you in writing prior to the date hereof (such persons, collectively, the “Disqualified Institutions”).  Subject to the foregoing rights, the Lead Arrangers will manage all aspects of the 

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syndication of the Senior Bridge Facility in consultation with you, including, without limitation, timing, potential syndicate members to be approached, titles and allocations and division of fees.
We intend to commence our syndication efforts with respect to the Senior Bridge Facility promptly upon your execution and delivery to us of this Commitment Letter, and, until the earlier to occur of (i) a Successful Syndication (as defined in the Fee Letter) and (ii) 60 days after the Closing Date, you agree to use commercially reasonable efforts to assist us in completing a syndication that is reasonably satisfactory to you and us.  Such assistance shall include (i) your using commercially reasonable efforts to ensure that any syndication and marketing efforts benefit from your existing lending and investment banking relationships, (ii) direct contact between appropriate members of senior management, certain representatives and certain non‐legal advisors of you (and, subject always to the extent expressly provided in the Acquisition Agreement, your using commercially reasonable efforts to cause direct contact between appropriate members of senior management, certain representatives and certain non‐legal advisors of the Target), on the one hand, and the proposed Lenders and rating agencies identified by the Senior Lead Arranger, on the other hand, at times and places mutually agreed, (iii) assistance by you (and your using commercially reasonable efforts to cause the assistance by the Target) in the prompt preparation of a customary Confidential Information Memorandum for the Senior Bridge Facility and other customary marketing materials and information reasonably deemed necessary by the Senior Lead Arranger to complete a successful syndication (collectively, the “Information Materials”) for delivery to potential syndicate members and participants, including, without limitation, estimates, forecasts, projections and other forward‐looking financial information regarding the future performance of the Parent, the Target and Parent’s and its respective subsidiaries (collectively, the “Projections”), (iv) the hosting, with the Lead Arrangers, of a reasonable number of meetings with prospective Lenders at reasonable times and locations to be mutually agreed and (v) your using commercially reasonable efforts to obtain (or maintain, to the extent already in effect as of the date hereof), prior to the launch of the syndication of the Senior Bridge Facility and the marketing of the Senior Notes, public ratings (but no specific ratings) for the Senior Bridge Facility and the Senior Notes from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) and a public corporate credit rating (but no specific rating) of the BV Borrower from S&P and a public corporate family rating (but no specific rating) of the BV Borrower from Moody’s.  For the avoidance of doubt, you will not be required to provide any information to the extent that provisions thereof would violate any attorney client privilege, law, rule or regulation or any obligation of confidentiality on you, the Target or any of your or its affiliates; provided that you shall use commercially reasonable efforts to obtain consents to use your and your affiliates’ information or communicate such applicable information in a way that would not violate the applicable obligation or risk waiver of such privilege.  Notwithstanding anything to the contrary contained in this Commitment Letter or the Fee Letter and without limiting your obligations to assist with syndication efforts as set forth herein, (i) none of the foregoing shall constitute a condition to the commitments hereunder or the funding of the Senior Bridge Facility on the Closing Date (except to the extent also set forth on Exhibit C) and (ii) neither the commencement nor the completion of the syndication of the Senior Bridge Facility shall constitute a condition to the commitments hereunder or the funding of the Senior Bridge Facility on the Closing Date.  For the avoidance of doubt, the only financial statements and other financial information that 

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shall be required to be provided to the Lead Arrangers in connection with the syndication of the Senior Bridge Facility shall be the financial statements and other financial information to be delivered pursuant to paragraph 4 of Exhibit C.
You hereby acknowledge that (i) the Agents will make available Information (as defined below) and Projections, and the documentation relating to the Senior Bridge Facility referred to in the paragraph below, to the proposed syndicate of Lenders by transmitting such Information, Projections and documentation through Intralinks, SyndTrak Online, the internet, email or similar electronic transmission systems and (ii) certain of the Lenders may be “public side” Lenders (i.e., Lenders that do not wish to receive material non‐public information with respect to the Parent, the Target and their respective subsidiaries or securities) (“Public Lenders”).  You agree, at the request of the Lead Arrangers, to assist in the prompt preparation of a version of the Confidential Information Memorandum and other marketing materials and presentations to be used in connection with the syndication of the Senior Bridge Facility, consisting exclusively of information and documentation that is either (a) publicly available, (b) not material with respect to the Parent or its subsidiaries or any of their respective securities for purposes of United States federal securities laws or (c) information that the Target or its subsidiaries would publicly disclose if they were a public reporting company (all such information and documentation being “Public Lender Information” and with any information and documentation that is not Public Lender Information being referred to herein as “Private Lender Information”).
It is understood that in connection with your assistance described above, customary authorization letters signed by you will be included in any such Confidential Information Memorandum that authorize the distribution thereof to prospective Lenders, represent that the additional version of the Confidential Information Memorandum does not include any Private Lender Information and such Confidential Information Memorandum will exculpate us with respect to any liability related to the use of the contents of such Confidential Information Memorandum or any related offering and marketing materials by the recipients thereof and exculpate you and the Acquired Business with respect to any liability related to the misuse of the contents of such Confidential Information Memorandum or any related offering and marketing materials by the recipients thereof.  You agree that such Confidential Information Memorandum or related offering and marketing materials to be disseminated by the Lead Arrangers to any prospective Lender in connection with the Senior Bridge Facility will be identified by you as either (A) containing Private Lender Information or (B) containing solely Public Lender Information.
You acknowledge that the following documents may be distributed to Public Lenders, unless you notify the Lead Arrangers in writing (including by email) within a reasonable period of time prior to the intended distribution that any such document contains Private Lender Information (provided that such materials have been provided to you for review a reasonable period of time prior thereto):  (x) drafts and final versions of the Credit Documentation; (y) administrative materials prepared by the Lead Arrangers for prospective Lenders (such as a lender meeting invitation, allocation, if any, customary marketing term sheets and funding and closing memoranda); and (z) notification of changes in the terms and conditions of the Senior Bridge Facility. 

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You hereby agree that, prior to the later of (x) the Closing Date and (y) the earlier of (A) Successful Syndication and (B) the 60th day following the Closing Date, there shall be no competing issues, offerings or placements of debt securities or commercial bank or other credit facilities by or on behalf of you or the Borrowers, and you will use commercially reasonable efforts, to ensure that there are no competing issues, offerings or placements of debt securities or commercial bank or other credit facilities by or on behalf of the Target or its subsidiaries, being offered, placed or arranged (other than the Senior Bridge Facility, the Senior Notes, any increase in the revolving commitments under the Existing Credit Agreement of up to $70.0 million or incurrence of additional term loans under the Existing Credit Agreement of up to $100.0 million (which amount shall increase by $25.0 million on the three-month anniversary of the date hereof and by $25.0 million for each subsequent three-month period thereafter; provided that such amount shall not exceed $200.0 million) or any indebtedness of the Target and its subsidiaries permitted to be incurred or outstanding pursuant to the Acquisition Agreement), without the consent of the Lead Arrangers (such consent not to be unreasonably withheld or delayed), if such issuance, offering, placement or arrangement would reasonably be expected to materially impair the primary syndication of the Senior Bridge Facility or the offering of the Senior Notes.
4.    Information.
You represent and warrant (with respect to Information relating to the Acquired Business, to the best of your knowledge) that (a) all written information which has been or is hereafter furnished to the Agents by you or on your behalf in connection with the transactions contemplated hereby (other than the Projections, other forward looking information and information of a general economic or industry specific nature) (such information being referred to herein collectively as the “Information”), when taken as a whole, as of the time it was (or, in the case of Information furnished after the date hereof, hereafter is) furnished, does not (or will not) contain any untrue statement of a material fact or omit as of such time to state any material fact necessary to make the statements therein taken as a whole not materially misleading, in light of the circumstances under which they were (or hereafter are) made, and (b) the Projections and other forward looking information that have been or will be made available to the Agents by you or any of your representatives have been or will be prepared in good faith based upon assumptions that you believe to be reasonable at the time made and at the time such Projections or other forward looking information are made available to the Agents, it being recognized by the Agents that such Projections and other forward looking information are as to future events and are not to be viewed as facts, such Projections and other forward looking information are subject to significant uncertainties and contingencies and that actual results during the period or periods covered by any such Projections or other forward looking information may differ significantly from the projected results, and that no assurance can be given that the projected results will be realized.  You agree that if at any time prior to the earlier of (x) 60 days after the Closing Date and (y) the Successful Syndication of the Senior Bridge Facility (or, to the extent a Successful Syndication is attained prior to the Closing Date, the Closing Date), you become aware that any of the representations in the preceding sentence would be incorrect (to the best of your knowledge as to Information and Projections and any forward looking information relating to the Acquired Business) in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will promptly advise the Agents and supplement (or use commercially reasonable efforts to supplement, in the 

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case of Information relating to the Acquired Business) the Information and the Projections so that such representations will be (to the best of your knowledge as to Information and Projections and any forward looking information relating to the Acquired Business) correct in all material respects under those circumstances.  The accuracy of the foregoing representations shall not be a condition to our obligations hereunder or the funding of the Senior Bridge Facility on the Closing Date.  You understand that, in arranging and syndicating the Senior Bridge Facility, we will be entitled to use and rely on the Information and the Projections without responsibility for independent verification thereof and do not assume responsibility for the accuracy or completeness of the Information or the Projections.
5.    Conditions Precedent.
Each Initial Lender’s commitment hereunder, and the agreement of each Agent to perform the services described herein, are subject solely to the satisfaction of the following conditions:  (a) since the date of the Acquisition Agreement, no Target Material Adverse Effect (as defined below) shall have occurred and be continuing and (b) the conditions set forth in Exhibit C attached hereto (clauses (a) and (b), collectively, the “Funding Conditions”); it being understood that there are no conditions (implied or otherwise) to the commitments hereunder (including compliance with the terms of the Commitment Letter, the Fee Letter and the Credit Documentation) other than the Funding Conditions (and upon satisfaction or waiver of the Funding Conditions, the initial funding under the Senior Bridge Facility shall occur).
For purposes hereof, “Target Material Adverse Effect” means an event, circumstance, development, change or effect that, individually or in the aggregate with other events, circumstances, developments, changes or effects, has been or would reasonably be expected to be materially adverse to (i) the business, assets, financial condition or results of operations of the Companies (as defined in the Acquisition Agreement) and the Transferred Subsidiaries (as defined in the Acquisition Agreement) or the Business (as defined in the Acquisition Agreement), taken as a whole, or (ii) the ability of any Seller to timely perform its obligations under the Acquisition Agreement or to consummate the transactions contemplated by the Acquisition Agreement, provided that any such change or effect resulting from any of the following, individually or in the aggregate, shall not be considered when determining whether a Target Material Adverse Effect has occurred for purposes of clause (i) above: (A) any change in economic conditions generally or capital and financial markets generally, including changes in interest or exchange rates, (B) any change in the industry in which the Business (as defined in the Acquisition Agreement) operates or in which products of the Business (as defined in the Acquisition Agreement) are used or distributed, including increases in energy, electricity, raw material or other operating costs, (C) any change in Laws (as defined in the Acquisition Agreement) or accounting standards, or the enforcement or interpretation thereof, applicable to the Companies (as defined in the Acquisition Agreement) and the Transferred Subsidiaries (as defined in the Acquisition Agreement), (D) social, political or military conditions in jurisdictions in which the Business (as defined in the Acquisition Agreement) operates, including hostilities, acts of war, sabotage, terrorism or military actions, or any escalation or worsening of any of the foregoing, (E) any change resulting from the announcement of the execution of the Acquisition Agreement or the pendency or consummation of the transactions contemplated by the Acquisition Agreement or the Ancillary Agreements (as defined in the Acquisition Agreement), including any such change relating to the identity of, or facts and circumstances relating to, 

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Buyer (as defined in the Acquisition Agreement), (F) any action taken by Buyer (as defined in the Acquisition Agreement) or its Affiliates (as defined in the Acquisition Agreement), (G) any hurricane, flood, tornado, earthquake or other natural disaster, (H) any actions required to be taken or omitted pursuant to the express terms of the Acquisition Agreement or the Ancillary Agreements (as defined in the Acquisition Agreement) or taken with Buyer’s (as defined in the Acquisition Agreement) consent or not taken because Buyer (as defined in the Acquisition Agreement) withheld consent, except that this clause (H) shall not apply to any actions normally taken or omitted in the ordinary course of business consistent with past practice, or (I) the failure in and of itself of the Business (as defined in the Acquisition Agreement) to achieve any financial projections or forecasts (but not the underlying cause of such failure); provided that any adverse effects resulting from matters described in any of the foregoing clauses (A), (B), (C), (D) or (G) may be taken into account in determining whether there is or has been a Target Material Adverse Effect to the extent, and only to the extent, that they have a disproportionate effect on the Companies (as defined in the Acquisition Agreement) and the Transferred Subsidiaries (as defined in the Acquisition Agreement) or the Business (as defined in the Acquisition Agreement) relative to other participants in the industries or geographies in which the Companies (as defined in the Acquisition Agreement) and the Transferred Subsidiaries (as defined in the Acquisition Agreement) or the Business (as defined in the Acquisition Agreement) operate.
Notwithstanding anything set forth in this Commitment Letter, the Term Sheets, the Fee Letter or the Credit Documentation, or any other letter agreement or other undertaking concerning the financing of the Acquisition to the contrary, (i) the only representations and warranties the accuracy of which shall be a condition to availability of the Senior Bridge Facility on the Closing Date shall be (x) such of the representations and warranties made by the Sellers with respect to the Acquired Business in the Acquisition Agreement as are material to the interests of the Lenders (in their capacities as such), but only to the extent you have (or an affiliate of yours has) the right to terminate your (or its) obligations (or to refuse to consummate the Acquisition) under the Acquisition Agreement (subject to cure rights thereunder) as a result of a breach of such representations (the “Acquisition Agreement Target Representations”) and (y) the Specified Representations (as defined below) made by the Borrowers and Guarantors in the Credit Documentation and (ii) the terms of the Credit Documentation shall be in a form such that they do not impair the availability of the Senior Bridge Facility on the Closing Date if the conditions set forth in this Section 5 and Exhibit C attached hereto are satisfied (it being understood that (I) to the extent any guaranty by the Target or any subsidiary of the Target may not be accomplished prior to the Closing Date, then such guaranty shall not constitute a condition precedent to the availability of the Senior Bridge Facility on the Closing Date but, instead, may be accomplished within the time periods set forth in the Existing Credit Agreement, (II) to the extent any guaranty by any subsidiary of Parent not organized in the United States may not be accomplished prior to the Closing Date after your use of commercially reasonable efforts to do so and without undue burden and expense, then such guaranty shall not constitute a condition precedent to the availability of the Senior Bridge Facility on the Closing Date but, instead, may be accomplished within the time periods set forth in the Existing Credit Agreement as if such subsidiary were acquired on the Closing Date and (III) nothing in preceding clause (ii) shall be construed to limit the applicability of the individual conditions expressly set forth in this Section 5 or in Exhibit C attached hereto).  For purposes hereof, “Specified Representations” 

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means the representations and warranties of the Borrowers and Guarantors (as of the Closing Date) set forth (or referred to) in the Term Sheets relating to legal existence, corporate power and authority relating to the entering into and performance of the Credit Documentation, the due authorization, execution, delivery, validity and enforceability of the Credit Documentation, no conflicts with or violations of the Borrowers’ or such Guarantors’ organizational documents, margin regulations, the Investment Company Act of 1940, as amended, solvency of Parent and its subsidiaries on a consolidated basis as of the Closing Date (after giving effect to the Transaction), USA PATRIOT Act and use of proceeds not in violation of OFAC/Sanctions, etc. and Foreign Corrupt Practices Act.  The provisions of this paragraph are referred to as the “Funds Certain Provisions”.
6.    Fees.
As consideration for each Initial Lender’s commitment hereunder, and the agreement of each Agent to perform the services described herein, you agree to pay (or cause to be paid) to each Agent the fees to which such Agent is entitled set forth in this Commitment Letter and in the Fee Letter.
7.    Expenses; Indemnification.
You hereby agree to reimburse the Agents upon the initial funding of the Senior Bridge Facility for all reasonable and documented out‐of‐pocket fees and expenses (in the case of legal fees limited to the reasonable fees and expenses of (x) the primary counsel acting for the Lead Arrangers, which shall be Shearman & Sterling LLP and (y) one special and local counsel for each relevant jurisdiction as may be necessary or advisable in the sole judgment of the Lead Arrangers) of the Agents and their affiliates arising in connection with the Senior Bridge Facility and the preparation, negotiation, execution, delivery and enforcement of this Commitment Letter, the Fee Letter and the Credit Documentation (including in connection with our due diligence and syndication efforts; provided that you shall not be required to reimburse such parties in the event the Closing Date does not occur. You acknowledge that we may receive a benefit, including without limitation, a discount, credit or other accommodation, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.
You further agree to indemnify and hold harmless each Agent and each other agent or co‐agent (if any) designated by the Lead Arrangers with respect to the Senior Bridge Facility (each, a “Co‐Agent”), each Initial Lender, each Lender which is a Co‐Agent or an affiliate thereof (each, a “Co‐Agent Lender”) and all of their respective affiliates, successors and permitted assigns and each director, officer, employee, representative, advisors, attorneys, controlling persons, and agent thereof (in each case, excluding any such Agent, Co-Agent or affiliate to the extent acting in the capacity as a Financial Advisor to the Sellers and any director, officer or employee of such Financial Advisor acting in their capacity as such) (each, an “Indemnified Person”) from and against any and all actions, suits, proceedings (including any investigations or inquiries), claims, losses, damages, liabilities or expenses of any kind or nature whatsoever which may be incurred by or asserted against or involve any Agent, any Co‐Agent, any Initial Lender, any Co‐Agent Lender or any other such Indemnified Person as a result of or arising out of or in any way related to or resulting from the Transaction, this Commitment Letter or the Fee Letter and any related transactions contemplated hereby or thereby or any use or 

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intended use of the proceeds of the Senior Bridge Facility and, upon demand, to pay and reimburse each Agent, each Co‐Agent, each Initial Lender, each Co‐Agent Lender and each other Indemnified Person for any reasonable legal expenses of one firm of counsel for all such Indemnified Persons, taken as a whole (and, in the case of an actual or perceived conflict of interest, where the Indemnified Person affected by such conflict informs you of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected Indemnified Person) and, if necessary, of a single local counsel in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnified Persons, taken as a whole, and, solely in the case of an actual or potential conflict of interest in any jurisdiction, one additional local counsel to all affected indemnified persons, taken as a whole, in such relevant jurisdiction or other reasonable and documented out‐of‐pocket expenses paid or incurred in connection with investigating, defending or preparing to defend any such action, suit, proceeding (including any inquiry or investigation) or claim (whether or not any Agent, any Co‐Agent, any Initial Lender, any Co‐Agent Lender or any other such Indemnified Person is a party to any action or proceeding out of which any such expenses arise or such matter is initiated by a third party or by you or any of your affiliates); provided, however, that you shall not have to indemnify any Indemnified Person against any loss, claim, damage, expense or liability to the extent same resulted from (x) the bad faith, gross negligence or willful misconduct of such Indemnified Person or any Related Indemnified Person (as defined below) of such Indemnified Person (as determined by a court of competent jurisdiction in a final and non‐appealable judgment), (y) a material breach by the relevant Indemnified Person (or any Related Indemnified Person of such Indemnified Person) (as determined by a court of competent jurisdiction in a final and non‐appealable judgment) of the express contractual obligations of such Indemnified Person under this Commitment Letter pursuant to a claim made by you or (z) any disputes among the Indemnified Persons (other than disputes involving claims against any Lead Arranger or Agent in their capacities as such) and not arising from any act or omission by the Parent or any of its affiliates. 
For purposes hereof, a “Related Indemnified Person” of an Indemnified Person means (a) any controlling person or controlled affiliate of such Indemnified Person, (b) the respective directors, officers, or employees of such Indemnified Person or any of its controlling persons or controlled affiliates and (c) the respective agents or representatives of such Indemnified Person, in the case of this clause (c), acting on behalf of or at the instructions of such Indemnified Person; provided that each reference to a controlled affiliate in this sentence pertains to a controlled affiliate involved in the negotiation or syndication of this Commitment Letter and the Senior Bridge Facility.
No Agent nor any other Indemnified Person shall be responsible or liable to you or any other person or entity for (i) any damages arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems (including IntraLinks, Syndtrak Online or email) or (ii) any indirect, special, exemplary, incidental, punitive or consequential damages (including, without limitation, any loss of profits, business or anticipated savings) which may be alleged as a result of this Commitment Letter, the Fee Letter or the Transaction even if advised of the possibility thereof other than as a result of such person’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non‐appealable decision.

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Notwithstanding any other provision of this Commitment Letter, without limiting the indemnification obligations set forth above, none of us, you or any Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) arising out of, related to or in connection with any aspect of this Commitment Letter or the Fee Letter and any related transactions contemplated hereby or thereby or any use or intended use of the proceeds of the Senior Bridge Facility, except to the extent of direct, as opposed to special, indirect, consequential or punitive damages (other than arising from any third party claims for such damages).  You shall not be liable for any settlement of any action, suit, proceeding (including any inquiry or investigation) or claim effected without your written consent (which consent shall not be unreasonably withheld or delayed), but if settled with your written consent, you agree to indemnify and hold harmless each Indemnified Person from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement in accordance with the other provisions of this Section 7.
You agree that, without such relevant Indemnified Person’s prior written consent (such consent not to be unreasonably withheld or delayed), neither you nor any of your subsidiaries will settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification could be sought under the indemnification provision of this Commitment Letter (whether or not any Agent or any other Indemnified Person is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Indemnified Person from all liability arising out of such claim, action or proceeding and does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any Indemnified Person.
In addition, you agree to indemnify the Indemnified Persons against any loss incurred by any Indemnified Person as a result of any judgment or order being given or made for any amount due hereunder and such judgment or order being expressed and paid in a currency (the “Judgment Currency”) other than United States dollars and as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the Judgment Currency for the purpose of such judgment or order, and (ii) the rate of exchange at which such Indemnified Person is able to purchase United States dollars with the amount of the Judgment Currency actually received by such Indemnified Person.  The foregoing indemnity shall constitute a separate and independent obligation of the BV Borrower and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.  The term “rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.
Certain of the Agents and/or their respective affiliates have been retained as a sell-side financial advisor to the Sellers (as hereinafter defined) (in such capacity, a “Financial Advisor”) in connection with the Transaction.  You agree to any such retention, and further agree not to assert any claim you might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from, on the one hand, the engagement of a Financial Advisor or such Agents and/or their respective affiliates’ arranging or providing or contemplating arranging or providing financing for a competing bidder and, on the other hand, our relationship with you as described and referred to herein.

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The indemnification and contribution provisions contained in this Commitment Letter are in addition to any liability which you may otherwise have to an Indemnified Person.  Solely for purposes of enforcing the provisions of this Section 7, you hereby consent to personal jurisdiction, service of process and venue in any court in which any claim or proceeding that is subject to this Section 7 is brought against any Agent. 
8.    Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities.
You acknowledge that the Agents and their respective affiliates are full service securities firms and as such may from time to time effect transactions, for their own account or the account of customers, and may hold positions in securities or indebtedness, or options thereon, of BV Borrower and other companies that may be the subject of the Transaction and may act with respect to any such entities in such other capacities to which it is appointed.  The Agents and their respective affiliates will have economic interests that are different from or conflict with those of BV Borrower regarding the transactions contemplated hereby, and you acknowledge and agree that none of the Agents has any obligation to disclose such interests to you.  In particular, you acknowledge that you have been advised of the role of certain of the Agents and/or their respective affiliates as a Financial Advisor and that, in such capacity, (i) a Financial Advisor may recommend to the Sellers that the Sellers not pursue or accept your offer or proposal for the acquisition of the Acquired Business, (ii) a Financial Advisor may advise the Sellers and the Target in other manners adverse to your interests, including, without limitation, by providing advice on pricing, leverage levels, and timing and conditions of closing with respect to your bid, taking other actions with respect to your bid and taking action under any definitive agreement between you, the Sellers and/or the Target, and (iii) a Financial Advisor may possess information about the Sellers, the Acquired Business, the acquisition of the Acquired Business, and other potential purchasers and their respective strategies and proposals, but such Financial Advisor shall have no obligation to disclose to you the substance of such information or the fact that it is in possession thereof.  

You further acknowledge and agree that nothing in this Commitment Letter, the Fee Letter or the nature of our services or in any prior relationship will be deemed to create an advisory, fiduciary or agency relationship between us, on the one hand, and you, your equity holders or your affiliates, on the other hand, and you waive, to the fullest extent permitted by law, any claims you may have against the Agents for breach of fiduciary duty or alleged breach of fiduciary duty and agree that the Agents will have no liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on your behalf, including your equity holders, employees or creditors.  You acknowledge that the Transaction (including the exercise of rights and remedies hereunder and under the Fee Letter) is an arms’ length commercial transaction and that we are acting as principal and in our own best interests.  You are relying on your own experts and advisors to determine whether the Transaction is in your best interests and are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated hereby.  In addition, you acknowledge that we may employ the services of our affiliates in providing certain services hereunder and may exchange with such affiliates information concerning you 

11

and other companies that may be the subject of the Transaction and such affiliates will be entitled to the benefits afforded to us hereunder. 
Please note that the Agents and their respective affiliates do not provide tax, accounting or legal advice.
9.    Confidentiality.
This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter nor the Fee Letter nor any of their terms or substance shall be disclosed, directly or indirectly, by you to any other person or entity except (a) to your officers, directors, affiliates, employees, attorneys, accountants and advisors who are directly involved in the consideration of this matter and on a confidential and need‐to‐know basis, (b) as required by applicable law or compulsory legal process or in connection with any pending legal proceeding (in which case you agree, to the extent permitted by applicable law, to inform us promptly thereof) or regulatory review or (c) if the Agents consent in writing to such proposed disclosure (such consent not to be unreasonably withheld); provided that (i) you may disclose this Commitment Letter and the contents hereof (but you may not disclose the Fee Letter or the contents thereof) to the Acquired Business, its affiliates and their respective officers, directors, employees, attorneys, accountants and advisors, in each case who are directly involved in the consideration of this matter and on a confidential and need‐to‐know basis (provided that you also may disclose the Fee Letter (including any “market flex” provisions thereof, if applicable) subject to redactions reasonably satisfactory to the Agents) to such persons), (ii) you may disclose this Commitment Letter and the contents hereof (but you may not disclose the Fee Letter or the contents thereof) in any prospectus or other offering memorandum relating to the Senior Notes or in any filing with the SEC in connection with the Transaction, (iii) you may disclose the Term Sheets and the other exhibits and annexes to the Commitment Letter, and the contents thereof, to any rating agencies in connection with obtaining ratings for the BV Borrower and the Senior Bridge Facility, (iv) you may disclose the aggregate fee amounts contained in the Fee Letter as part of a generic disclosure of aggregate sources and uses related to fee amounts applicable to the Transaction to the extent customary or required in offering and marketing materials for the Senior Bridge Facility and/or the Senior Notes or in any public release or filing relating to the Transaction and (v) in consultation with the Senior Lead Arranger, you may disclose the Fee Letter and the contents thereof to any prospective Additional Agent and to such Additional Agent’s respective officers, directors, employees, attorneys, accountants and advisors, in each case on a confidential basis. 
The Agents and their respective affiliates will use all confidential information provided to them or such affiliates by or on behalf of you hereunder solely for the purpose of providing the services which are the subject of this Commitment Letter and shall treat confidentially all such information; provided that nothing herein shall prevent the Agents from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case the Agents, to the extent permitted by law, agree to inform you promptly thereof), (b) upon the request or demand of any regulatory authority or self‐regulatory body having jurisdiction or oversight over the Agents or any of their respective affiliates, their business or operations, (c) to the extent that such information becomes publicly 

12

available other than by reason of improper disclosure by the Agents or any of their affiliates, (d) to the extent that such information is received by the Agents from a third party that is not to their knowledge subject to confidentiality obligations to you or the Acquired Business, (e) to the extent that such information is independently developed by the Agents, (f) to the Agents’ respective affiliates and their respective employees, legal counsel, independent auditors and other experts or agents (other than any employees of a Financial Advisor, acting in their capacity as such; provided, however, the foregoing shall not prohibit disclosure of such information to a limited number of senior employees who are required, in accordance with industry regulations or an Agent’s internal policies and procedures to act in a supervisory capacity and an Agent’s internal legal, compliance, risk management, credit or investment committee members) who need to know such information in connection with the Transaction and are informed of the confidential nature of such information, (g) to potential Lenders, participants or assignees or any potential counterparty (or its advisors) to any swap or derivative transaction relating to the Borrowers, the Parent, the Acquired Business or any of their respective affiliates or any of their respective obligations (in each case, other than Disqualified Institutions), in each case who agree that they shall be bound by the terms of this paragraph (or language substantially similar to this paragraph), including in any confidential information memorandum or other marketing materials, in accordance with our standard syndication processes or customary market standards for dissemination of such type of information, (h) for purposes of establishing a “due diligence” defense or (i) to enforce their respective rights hereunder or under the Fee Letter.  The Agents’ obligations under this paragraph shall automatically expire on the date occurring 18 months after the date hereof.
10.    Assignments; Etc.
This Commitment Letter and the Fee Letter (and your rights and obligations hereunder and thereunder) shall not be assignable by you without the prior written consent of each Agent (and any attempted assignment without such consent shall be null and void), are intended to be solely for the benefit of the parties hereto and thereto (and Indemnified Persons), are not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and thereto (and Indemnified Persons) and may not be relied upon by any person or entity other than you.  Each Agent may assign its commitment hereunder to one or more prospective Lenders; provided that, except with respect to assignments to Additional Agents as separately agreed, (a) no Initial Lender shall be relieved or novated from its obligations hereunder (including its obligation to fund the Senior Bridge Facility on the Closing Date) in connection with any syndication, assignment or participation of the Senior Bridge Facility (including its commitments in respect thereof) until after the initial funding of the Senior Bridge Facility and (if applicable) the issuance of the Senior Notes on the Closing Date, (b) no assignment or novation shall become effective with respect to all or any portion of each Initial Lender’s commitment in respect of the Senior Bridge Facility until the initial funding of the Senior Bridge Facility and (if applicable) the issuance of the Senior Notes on the Closing Date, and (c) unless you agree in writing, each Initial Lender shall retain exclusive control over all rights and obligations with respect to their respective commitments in respect of the Senior Bridge Facility, including all rights with respect to consents, modifications, supplements and amendments, until the initial funding of the Senior Bridge Facility on the Closing Date has occurred.  Any and all obligations of, and services to be provided by an Agent hereunder 

13

(including, without limitation, the commitment of such Agent) may be performed and any and all rights of the Agents hereunder may be exercised by or through any of their respective affiliates or branches; provided that with respect to the commitments, any assignments thereof to an affiliate will not relieve the Agents from any of their obligations hereunder unless and until such affiliate shall have funded the portion of the commitment so assigned. 
11.    Amendments; Governing Law; Etc.
This Commitment Letter and the Fee Letter may not be amended or modified, or any provision hereof or thereof waived, except by an instrument in writing signed by you and each Agent.  Each of this Commitment Letter and the Fee Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement.  Delivery of an executed signature page of this Commitment Letter or the Fee Letter by facsimile (or other electronic, i.e. a “pdf” or “tif”) transmission shall be effective as delivery of a manually executed counterpart hereof or thereof, as the case may be.  Section headings used herein and in the Fee Letter are for convenience of reference only, are not part of this Commitment Letter or the Fee Letter, as the case may be, and are not to affect the construction of, or to be taken into consideration in interpreting, this Commitment Letter or the Fee Letter, as the case may be.  Notwithstanding anything to the contrary set forth herein, each Agent may, in consultation with you, place customary advertisements in financial and other newspapers and periodicals or on a home page or similar place for dissemination of customary information on the Internet or worldwide web as it may choose, and circulate similar promotional materials, after the Closing Date in the form of a “tombstone” or otherwise describing the names of the Borrowers, the Parent, the Acquired Business and their respective affiliates (or any of them), and the amount, type and closing date of the transactions contemplated hereby, all at the expense of such Agent.  This Commitment Letter and the Fee Letter set forth the entire agreement between the parties hereto as to the matters set forth herein and therein and supersede all prior understandings, whether written or oral, between us with respect to the matters herein and therein.  THIS COMMITMENT LETTER AND THE FEE LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.    Jurisdiction.
Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in the County of New York, Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Commitment Letter, the Fee Letter or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding shall be heard and determined only in such courts located within New York County, (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Commitment Letter, the Fee Letter or the transactions contemplated hereby or thereby in any such New York State or federal court, as the case may be, (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and (d) agrees that a final judgment in any such action or 

14

proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Service of any process, summons, notice or document by registered mail or overnight courier addressed to you at the address above shall be effective service of process against you for any suit, action or proceeding brought in any such court.  The BV Borrower hereby irrevocably and unconditionally appoints the US Borrower, with an office on the date hereof at 529 Pleasant St., Attleboro, MA 02703, and its successors hereunder as its agent to receive on behalf of the BV Borrower and its property all writs, claims, process and summonses in any action or proceeding brought against it in the State of New York.
13.    Waiver of Jury Trial.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, SUIT, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER, THE FEE LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.
14.    Surviving Provisions.
The provisions of Sections 3, 6, 7, 8, 9, 11, 12 and 13 and this Section 14 of this Commitment Letter and the provisions of the Fee Letter shall remain in full force and effect regardless of whether definitive Credit Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the commitments of the Agents hereunder and our agreements to perform the services described herein; provided that your obligations under this Commitment Letter and the Fee Letter, other than those provisions relating to confidentiality, the syndication of the Senior Bridge Facility and the payment of annual agency fees to any Agent and with respect to your obligations under Section 7, only to the extent covered under the definitive Credit Documentation relating to the Senior Bridge Facility, shall automatically terminate and be superseded by the definitive Credit Documentation relating to the Senior Bridge Facility upon the initial funding thereunder and the payment of all amounts owing at such time hereunder and under the Fee Letter.  You may terminate the Initial Lenders’ commitments with respect to the Senior Bridge Facility hereunder at any time in their entirety (but not in part), subject to the provisions of the preceding sentence, by written notice to such Initial Lender.
15.    PATRIOT Act Notification.
Each Agent hereby notifies you that each Agent and each Lender subject to the USA PATRIOT ACT (Title III of Pub. Law 107‐56 (signed into law October 26, 2001)) (as amended from time to time, the “PATRIOT Act”) is required to obtain, verify and record information that identifies the Parent, the Borrowers and any other obligor under the Senior Bridge Facility and any related Credit Documentation and other information that will allow such Lender to identify the Parent, the Borrowers and any other obligor in accordance with the PATRIOT Act.  This notice is given in accordance with the requirements of the PATRIOT Act and is effective as to each Agent and each Lender.  You hereby acknowledge and agree that the Agents shall be permitted to share any or all such information with the Lenders.

15

16.    Termination and Acceptance.
The commitments of the Initial Lenders hereunder, and the Agents’ agreements to perform the services described herein, shall automatically terminate  (without further action or notice and without further obligation to you) on the first to occur of (i) August 2, 2016, (ii) any time after the execution of the Acquisition Agreement and prior to the consummation of the Transaction, the date of the termination of the Acquisition Agreement in accordance with its terms (other than with respect to terms that survive such termination), and (iii) the consummation of the Acquisition occurs without the use of the Senior Bridge Facility.
Each of the parties hereto agrees that (i) this Commitment Letter, if accepted by you as provided above, is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law)) with respect to the subject matter contained herein, including an agreement to negotiate in good faith the Credit Documentation by the parties hereto in a manner consistent with this Commitment Letter, it being acknowledged and agreed that the funding of the Senior Bridge Facility is subject to the Funding Conditions and (ii) the Fee Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law)).
If the foregoing correctly sets forth our agreement with you, please indicate your acceptance of the terms of this Commitment Letter and of the Fee Letter by returning to us executed counterparts hereof and of the Fee Letter. 
[Remainder of this page intentionally left blank]

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We are pleased to have been given the opportunity to assist you in connection with this important financing.
                    	
						
	 
	 
	Very truly yours,
	 

	 
	 
	 
	 

	 
	 
	 
	BANK OF AMERICA, N.A.

	 
	 
	 
	By:
	/s/ Vikas Singh
	 

	 
	 
	 
	Name:
	Vikas Singh
	 

	 
	 
	 
	Title:
	Director
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	
						
	 
	 
	 
	MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

	 
	 
	 
	By:
	/s/ Vikas Singh
	 

	 
	 
	 
	Name:
	Vikas Singh
	 

	 
	 
	 
	Title:
	Director
	 

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

Signature Page to Project Silence Commitment Letter (2015)

	
			
	Accepted and agreed to as of  
the date first above written:
	 

	 

	SENSATA TECHNOLOGIES, B.V.

	 
	 
	 

	By:
	/s/ Martha Sullivan
	 

	Name:
	Martha Sullivan
	 

	Title:
	President and CEO
	 

	 
	 
	 

Signature Page to Project Silence Commitment Letter (2015)

EXHIBIT A
Project Silence
Transaction Description
Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in the commitment letter to which this Exhibit A is attached (the “Commitment Letter”) and in the other Exhibits to the Commitment Letter. 
You and/or certain of your affiliates intend to acquire certain stock and assets of certain companies identified to us and code‐named “Silence” (collectively, the “Target” and, together with their subsidiaries (if any), the “Acquired Business”) from Custom Sensors & Technologies Ltd., a private limited company organized under the laws of England and Wales, Crouzet Automatismes S.A.S., a Société par Actions Simplifiée organized under the laws of France, Custom Sensors & Technologies (Huizhou) Limited, a corporation organized under the laws of China (together with their applicable affiliates, collectively, the “Sellers”) in accordance with the Acquisition Agreement (the “Acquisition”).
The sources of cash funds needed to effect the Acquisition, the Refinancing and to pay all fees and expenses incurred in connection with the Transaction (as defined below) (the “Transaction Costs”) shall be provided through financing consisting of the following:
(A)    the issuance and sale by the BV Borrower of up to $1,000.0 million in aggregate principal amount of unsecured senior notes (the “Senior Notes”) in a Rule 144A or other private placement; and
(B)    if and to the extent that the Senior Notes are not issued in an aggregate principal amount of up to $1,000.0 million on or prior to the Closing Date, the incurrence by the Borrowers (as defined in Exhibit B) of loans in an aggregate principal amount equal to the remainder of $1,000.0 million less the aggregate principal amount of Senior Notes issued pursuant to the immediately preceding clause (A) under a new unsecured senior bridge facility as described in Exhibit B (the “Senior Bridge Facility”).
All indebtedness for borrowed money owed by Target or any of its subsidiaries, including, without limitation, all indebtedness of Target or any of its subsidiaries outstanding under that certain Credit Agreement, dated as of September 30, 2014, made by and among Custom Sensors & Technologies S.à R.L (formerly known as Carros Finance Luxembourg S.à R.L.), Custom Sensors & Technologies US LLC (formerly known as Carros US LLC), Custom Sensors & Technologies Finance UK Ltd. (formerly known as Carros UK Holdco Limited), the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, collateral agent and L/C Issuer thereunder, and the other persons party thereto, shall have been (or substantially concurrently with the Acquisition, shall be) paid in full (or otherwise satisfied with respect to Target and its subsidiaries), and all security interests and guaranties of Target and its subsidiaries in connection therewith shall have been (or substantially concurrently with the Acquisition, shall be) terminated and released, and all letters of credit of Target or any of its subsidiaries have been replaced or backstopped in accordance with the Acquisition Agreement, in each case, except for indebtedness for borrowed money not so repaid (or so 

A-1

otherwise satisfied) and which is permitted to remain outstanding under the terms of the Acquisition Agreement (the “Refinancing”).
The date on which the Acquisition is consummated and the initial borrowings are made under the Senior Bridge Facility (to the extent utilized) and the Refinancing is consummated is referred to herein as the “Closing Date”.  The transactions described in this Exhibit A, including the Acquisition and the arrangement, funding and subsequent syndication of the Senior Bridge Facility are collectively referred to herein as the “Transaction”.

A-2

EXHIBIT B
Project Silence
$1,000.0 million Senior Bridge Facility
Summary of Principal Terms and Conditions 1 
	
		
	Borrowers:
	Sensata Technologies B.V., a besloten vennootschap organized under the laws of the Netherlands and a direct wholly‐owned subsidiary of the Parent (the “BV Borrower”), and Sensata Technologies Finance Company, LLC, a Delaware limited liability company and a direct wholly‐owned subsidiary of the BV Borrower (the “U.S. Borrower”), on a joint and several basis (the “Borrowers”).

	Agent:
	Bank of America, N.A. (“Bank of America”) will act as sole and exclusive administrative agent for the Bridge Lenders (the “Bridge Facility Administrative Agent”).

	Lead Bridge Arranger and Bookrunning Manager:
	Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of its affiliates) (“Merrill Lynch”) will act as a lead arranger and bookrunning manager for the Bridge Loans, together with any Additional Lead Arrangers pursuant to (and as defined in) Section 2 of the Commitment Letter (collectively, in such capacity, the “Lead Bridge Arrangers”).

	Bridge Lenders:
	Bank of America or an affiliate thereof (the “Initial Bridge Lender”) and other financial institutions and institutional lenders arranged by the Lead Bridge Arrangers in consultation with the Borrowers and otherwise in accordance with Section 2 of the Commitment Letter (the “Bridge Lenders”).

	Senior Bridge Facility:
	Senior unsecured bridge loans in an aggregate principal amount of up to $1,000.0 million (less the aggregate gross cash proceeds from any Senior Notes issued on or prior to the Closing Date) (the “Senior Bridge Loans”).

	Purpose:
	The proceeds of the Senior Bridge Loans will be used on the Closing Date solely to finance, in part, the Acquisition , the Refinancing and to pay the Transaction Costs.

	Availability:
	The Bridge Lenders will make the Senior Bridge Loans on the Closing Date in a single drawing.  Amounts borrowed under the Senior Bridge Facility that are repaid or prepaid may not be reborrowed.

	1 All capitalized terms used but not defined herein have the meanings given to them in the Commitment Letter to which this term sheet is attached, including the other Exhibits thereto.

B-1

	
		
	Guarantees:
	Subject to the Funds Certain Provisions, each existing and subsequently acquired or organized subsidiary that is a guarantor of the Borrowers’ obligations under Credit Agreement, dated as of May 12, 2011, among the Parent, the Borrowers, the lenders party thereto and the term loan administrative agent (as amended to the date hereof, the “Existing Credit Agreement”), including the Target and its subsidiaries to the extent required to guarantee the Existing Credit Agreement upon consummation of the Acquisition (each, a “Guarantor” and, collectively, the “Guarantors”), will guarantee (the “Guarantees”) the Senior Bridge Loans on a senior unsecured basis, subject to the same exceptions and limitations applicable to such Guarantors’ guarantees of the Borrowers’ obligations under the Existing Credit Agreement.  The Guarantees will be automatically released upon release of the corresponding guarantees of such obligations under the Existing Credit Agreement or the other indebtedness that triggered the obligation to give a Guarantee; provided that such released Guarantees shall be reinstated if such released Guarantors are required to subsequently guarantee obligations under the Existing Credit Agreement or such other indebtedness.

	Security:
	None.

	Interest Rates:
	The Senior Bridge Loans shall bear interest, reset quarterly, at the rate of the Adjusted LIBOR plus 5.00% per annum (the “Interest Rate”) and such spread over Adjusted LIBOR shall automatically increase by 0.50% per annum for each period of three months (or portion thereof) after the Closing Date that Senior Bridge Loans are outstanding; provided, however, that the interest rate determined in accordance with the foregoing shall not exceed the Total Bridge Loan Cap (as defined in the Fee Letter) (excluding interest at the default rate as described below). 
“Adjusted LIBOR” on any date, means the greater of (i) 0.75% per annum and (ii) the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a three‐month period appearing on the LIBOR 01 page published by Reuters two business days prior to such date. 
Upon the occurrence of a Demand Failure Event (as defined in the Fee Letter), the outstanding Senior Bridge Loans shall automatically begin to accrue interest at the Total Bridge Loan Cap.

	Interest Payments:
	Interest on the Senior Bridge Loans will be payable in cash, quarterly in arrears.

	Default Rate:
	Overdue principal, interest and other overdue amounts shall bear interest, after as well as before judgment, at a rate per annum equal to 2.00% plus the Interest Rate applicable to such overdue amounts.

B-2

	
		
	Conversion and Maturity:
	Any outstanding amount under the Senior Bridge Loans will have an initial maturity date on the one year anniversary of the initial funding date of the Senior Bridge Loans (the “Bridge Loan Maturity Date”), which shall be extended as provided below. If any Senior Bridge Loans have not been previously repaid in full on or prior to the Bridge Loan Maturity Date, then such Senior Bridge Loans shall be converted, subject to the conditions outlined under “Conditions to Conversion” on Annex B‐I hereto, to a senior unsecured term loan facility (the “Senior Extended Term Loans”) with a maturity of six years after the Conversion Date (as defined in Annex B‐I hereto).  At any time or from time to time on or after the Conversion Date, upon reasonable prior written notice from the Bridge Lenders and in a minimum principal amount of at least $100.0 million (or such lesser principal amount as represents all outstanding Senior Extended Term Loans), the Senior Extended Term Loans may be exchanged in whole or in part for senior unsecured exchange notes (the “Senior Exchange Notes”) having an equal principal amount and having the terms set forth in Annex B‐II hereto.
The Senior Extended Term Loans will be governed by the provisions of the Senior Bridge Documentation (as defined below) and will have the same terms as the Senior Bridge Loans except as expressly set forth in Annex B‐I hereto.  The Senior Exchange Notes will be issued pursuant to an indenture that will have the terms set forth on Annex B‐II hereto.

	Mandatory Prepayments:
	The Borrowers will prepay the Senior Bridge Loans at par (without premium or penalty), together with accrued interest to the prepayment date, with any of the following:  (i) the net proceeds from the issuance of the Securities (as defined in the Fee Letter); (ii) subject to prepayment requirements under the Existing Credit Agreement and certain customary and other exceptions, the net proceeds from any other indebtedness for borrowed money (including subordinated indebtedness) incurred by Parent and its restricted subsidiaries; (iii) subject to certain customary exceptions, the net cash proceeds from the public issuance of equity interests by, or equity contributions of such net cash proceeds to, Parent (other than equity contributed pursuant to employee stock plans); and (iv) subject to certain customary and other exceptions, thresholds and reinvestment rights to be agreed upon and prepayment requirements under the Existing Credit Agreement, the net proceeds from non‐ordinary course asset sales by, and casualty events related to the property of, Parent or any of its restricted subsidiaries (including sales of equity interests of any restricted subsidiary of the Parent but excluding issuances by such restricted subsidiary of its own equity interests).

	Voluntary Prepayments:
	The Senior Bridge Loans may be prepaid at par prior to the Bridge Loan Maturity Date, in whole or in part (without premium or penalty), upon written notice, at the option of the Borrowers, at any time, together with accrued interest to the prepayment date and break funding payments, if applicable.

B-3

	
		
	Change of Control:
	In the event of a Change of Control (to be defined in a manner consistent with the Existing Credit Agreement), each Bridge Lender will have the right to require the Borrowers, and the Borrowers must offer, to prepay at par the outstanding principal amount of the Senior Bridge Loans plus accrued and unpaid interest thereon to the date of prepayment.

	Assignments and Participations:
	The Bridge Lenders shall have the right to assign their interest in the Senior Bridge Loans in whole or in part without the consent of the Borrowers (other than to Disqualified Institutions); provided, however, that (i) prior to the date that is one year after the Closing Date and unless a Demand Failure Event has occurred or a payment or bankruptcy event of default shall have occurred and be continuing, the consent of the Borrowers shall be required with respect to any assignment (such consent not to be unreasonably withheld, delayed or conditioned) if, subsequent thereto, the Initial Lenders (as defined in the Commitment Letter) (together with their respective affiliates) would hold, in the aggregate, less than 50.1% of the outstanding Senior Bridge Loans and (ii) the Borrowers shall be notified of such assignment.  For any assignments for which the Borrowers’ consent is required, such consent shall be deemed to have been given if the Borrowers have not responded within ten business days of a request for such consent.
The Bridge Lenders shall have the right to participate their interest in the Senior Bridge Loans without restriction, other than customary voting limitations and, to the extent the list of Disqualified Institutions is made available to all Bridge Lenders to Disqualified Institutions.  Participants will have the same benefits as the selling Bridge Lenders would have (and will be limited to the amount of such benefits) with regard to cost and yield protection, subject to customary limitations and restrictions.

	Documentation:
	The definitive credit documentation for the Senior Bridge Facility (the “Senior Bridge Documentation”) will be based on senior bridge facilities documentation for similarly‐situated credits, as modified to (i) reflect the terms and conditions set forth herein and in the Commitment Letter, (ii) take account of differences related to the operational requirements of the BV Borrower, the Parent, the Acquired Business and their respective subsidiaries in light of their size, industries, businesses, business practices (after giving effect to the Transaction) and then prevailing market conditions at the time of syndication of the Senior Bridge Facility and (iii) operational and administrative changes reasonably required by the Bridge Facility Administrative Agent, the definitive terms of which will be negotiated in good faith (the “Bridge Documentation Principles”). Notwithstanding the foregoing, the Senior Bridge Documentation will contain only those conditions to borrowing, mandatory repayments, representations, warranties, covenants and events of default expressly set forth (or referred to) in this Term Sheet, Section 5 of the Commitment Letter (subject to the Funds Certain Provisions) and in Exhibit C to the Commitment Letter.

B-4

	
		
	Conditions Precedent to Borrowing:
	The conditions precedent in Section 5 of the Commitment Letter and on Exhibit C to the Commitment Letter, subject in each case to the Funds Certain Provisions.

	Representations and  
Warranties:
	The Senior Bridge Documentation will contain representations and warranties relating to the Parent and its subsidiaries substantially similar to those contained in the Existing Credit Agreement, with such changes as are appropriate to reflect the bridge loan nature of the Senior Bridge Loans (and in any event such representations and warranties shall be no more restrictive to the Parent and its subsidiaries than those set forth in the Existing Credit Agreement).

	Covenants:
	The Senior Bridge Documentation will contain affirmative and incurrence‐based negative covenants relating to the Parent, the Borrowers and BV Borrower’s restricted subsidiaries consistent, to the extent applicable, with those contained in the Existing Credit Agreement and, in addition, a securities demand covenant consistent with the provision contained in the Fee Letter.  In no event will the covenants be more restrictive to the Parent, the Borrowers and BV Borrower’s restricted subsidiaries than those set forth in the Existing Credit Agreement; provided that the negative covenants governing debt incurrence and restricted payments shall be more restrictive than that applicable to the Existing Credit Agreement prior to the Conversion Date.  The Senior Bridge Documentation shall not contain any financial maintenance covenants.

	Events of Default:
	Customary for transactions of this type and in no event less favorable to the Parent, the Borrowers and BV Borrower’s restricted subsidiaries than those set forth in the Existing Credit Agreement, including, without limitation, payment defaults, covenant defaults, bankruptcy and insolvency, monetary judgments in an amount in excess of $50.0 million, cross acceleration of and failure to pay at final maturity other indebtedness aggregating an amount in excess of $50.0 million, subject to, in certain cases, customary thresholds, notice and grace periods.

	Voting:
	Amendments and waivers of the Senior Bridge Documentation will require the approval of Bridge Lenders holding at least a majority of the outstanding Senior Bridge Loans, except that the consent of each affected Bridge Lender will be required for: (i) reductions of principal, interest rates or fees, (ii) extensions of the Bridge Loan Maturity Date, (iii) additional restrictions on the right to exchange Senior Extended Term Loans for Senior Exchange Notes or any amendment of the rate of such exchange or (iv) any amendment to the Senior Exchange Notes that requires (or would, if any Senior Exchange Notes were outstanding, require) the approval of all holders of Senior Exchange Notes.

	Cost and Yield Protection:
	Substantially consistent with the Existing Credit Agreement.

	Expenses and Indemnification:
	Substantially consistent with the Existing Credit Agreement.

B-5

	
		
	Governing Law and Forum; Submission to Exclusive Jurisdiction:
	All Senior Bridge Documentation shall be governed by the internal laws of the State of New York (except guarantees that the Bridge Facility Administrative Agent determines should be governed by local or foreign law).  The Borrowers and the Guarantors will submit to the exclusive jurisdiction and venue of any New York State court or federal court sitting in the County of New York, Borough of Manhattan, and appellate courts thereof (except to the extent the Bridge Facility Administrative Agent requires submission to any other jurisdiction in connection with the enforcement of any judgment).

	Counsel to the Bridge Facility Administrative Agent and the Lead Bridge Arranger:
	Shearman & Sterling LLP.

B-6

ANNEX B‐I
Senior Extended Term Loans
	
		
	Borrowers:
	Same as Senior Bridge Loans.

	Guaranties:
	Same as Senior Bridge Loans.

	Security:
	None.

	Facility:
	Subject to “Conditions to Conversion” below (i) the Senior Bridge Loans will convert into senior unsecured extended loans (the “Senior Extended Term Loans”) in an initial principal amount equal to 100% of the outstanding principal amount of the Senior Bridge Loans on the one year anniversary of the Closing Date (the “Conversion Date”) and (ii) the Senior Extended Term Loans will be available to the Borrowers to refinance the Senior Bridge Loans on the Conversion Date.  The Senior Extended Term Loans will be governed by the Senior Bridge Documentation and, except as set forth below, shall have the same terms as the Senior Bridge Loans.

	Maturity:
	Six years from the Conversion Date (the “Final Maturity Date”).

	Interest Rate:
	The Senior Extended Term Loans shall bear interest, payable in cash semi‐annually, in arrears at a fixed rate per annum equal to the Total Bridge Loan Cap. 

	Covenants, Events of 
Default and Prepayments:
	From and after the Conversion Date, the covenants, events of default and mandatory prepayment provisions applicable to the Senior Extended Term Loans will conform to those applicable to the Senior Exchange Notes (described on Annex B‐II), except with respect to the right to exchange Senior Extended Term Loans for Senior Exchange Notes and others to be agreed; provided that the optional prepayment provisions applicable to the Senior Bridge Loans shall remain applicable to the Senior Extended Term Loans.

	Conditions to Conversion:
	One year after the Closing Date, unless (A) the Parent, a Borrower or any significant subsidiary thereof is subject to a bankruptcy or other insolvency proceeding or (B) there exists a payment default (whether or not matured) with respect to the Senior Bridge Loans or any fees payable thereunder, the Senior Bridge Loans shall convert into the Senior Extended Term Loans; provided, however, that if an event described in clause (B) is continuing at the scheduled Conversion Date but the applicable grace period, if any, set forth in the events of default provision of the Senior Bridge Documentation has not expired, the Conversion Date shall be deferred until the earlier to occur of (i) the cure of such event or (ii) the expiration of any applicable grace period.

B-I-1

ANNEX B‐2
Senior Exchange Notes
	
		
	Issuers:
	Same as Borrowers under Senior Extended Term Loans.

	Guarantees:
	Same as Senior Extended Term Loans.

	Maturity:
	Six years from the Conversion Date.

	Security:
	None.

	Interest Rate; Redemption:
	Each Senior Exchange Note will bear interest, payable in cash semi‐annually in arrears, at a fixed rate per annum equal to the Total Bridge Loan Cap.  The Senior Exchange Notes will provide for mandatory repurchase offers customary for publicly traded high yield debt securities.
Except as set forth below, the Senior Exchange Notes will be non‐callable until the third anniversary of the Closing Date and will be callable thereafter at par plus accrued interest plus a premium equal to three-fourths of the coupon of the Senior Exchange Notes, declining ratably to par on the date that is two years prior to maturity of the Senior Exchange Notes.
Prior to the third anniversary of the Closing Date, the Borrowers may redeem up to 40% of such Senior Exchange Notes with the proceeds from an equity offering at a redemption price equal to par plus accrued interest plus a premium equal to 100% of the coupon in effect on such Senior Exchange Notes.
Prior to the third anniversary of the Closing Date, the Borrowers may redeem such Senior Exchange Notes at a make‐whole price based on U.S. Treasury notes with a maturity closest to the third anniversary of the Closing Date plus 50 basis points, plus accrued interest.
Prior to a Demand Failure Event, any Senior Exchange Notes held by the Initial Lenders (as defined in the Commitment Letter) or their respective affiliates (other than (x) asset management affiliates purchasing Senior Exchange Notes in the ordinary course of their business as part of a regular distribution of the Senior Exchange Notes (“Asset Management Affiliates”) and (y) Senior Exchange Notes acquired pursuant to bona fide open market purchases from third parties or market making activities), shall be prepayable and/or subject to redemption in whole or in part at par plus accrued interest on a non‐ratable basis so long as such Senior Exchange Notes are held by them.

B-II-1

	
		
	Offer to Repurchase Upon a Change of Control:
	The Issuers will be required to make an offer to repurchase the Senior Exchange Notes following the occurrence of a “change of control” (to be defined in a manner consistent with the BV Borrower’s 5.00% Senior Notes due 2025 (the “2025 Notes”)) at a price in cash equal to 101% of the outstanding principal amount thereof, plus accrued and unpaid interest to the date of repurchase; provided that Senior Exchange Notes held by the Initial Lenders (as defined in the Commitment Letter) or their respective affiliates (other than Asset Management Affiliates or Senior Exchange Notes acquired pursuant to bona fide open market purchases from third parties or market making activities) shall be subject to prepayment at par, plus accrued and unpaid interest to the date of repurchase. 

	Defeasance and Discharge Provisions:
	Substantially consistent with the 2025 Notes.

	Modification:
	Substantially consistent with the 2025 Notes.

	Right to Transfer Exchange Notes:
	Substantially consistent with the 2025 Notes.

	Covenants and  
Events of Default:
	The indenture governing the Senior Exchange Notes will include provisions customary for an indenture governing publicly traded investment grade debt securities issued by issuers of comparable creditworthiness and taking into account then prevailing market conditions (including in respects of baskets and carveouts to such covenants), and shall be no more restrictive than those contained in the 2025 Notes.

B-II-2

EXHIBIT C
Project Silence
Additional Conditions Precedent
Capitalized terms used in this Exhibit C but not defined herein shall have the meanings set forth in the Commitment Letter to which this Exhibit C is attached and in the other Exhibits to the Commitment Letter. 
The initial borrowing under the Senior Bridge Facility shall be subject to the following additional conditions precedent:
1.    Subject to the Funds Certain Provisions, the execution and delivery of definitive Credit Documentation by the Borrowers and Guarantors consistent with the terms of the Commitment Letter and the Term Sheets.
2.    Substantially concurrently with the initial funding under the Senior Bridge Facility, the Acquisition shall be consummated in accordance with the terms and conditions of the Stock and Asset Purchase Agreement among the Sellers and Sensata Technologies Holding N.V., dated as July 30, 2015 (including, but not limited to, all schedules and exhibits thereto and after giving effect to any alteration, amendment, modification, supplement or waiver permitted below, the “Acquisition Agreement”) and the Acquisition Agreement shall not have been altered, amended or otherwise changed or supplemented or any provision or condition therein waived, nor any consent granted, by you, if such alteration, amendment, change, supplement, waiver or consent would be adverse to the interests of the Lenders (in their capacities as such) in any material respect, without the prior written consent of the Agents (such consent not to be unreasonably withheld, delayed or conditioned) (it being understood and agreed that any alteration, amendment, change, supplement, waiver or consent that (a) increases the purchase price in respect of the Acquisition shall not be deemed to be adverse to the interests of the Lenders in any material respects, so long as such increase (other than the purchase price adjustment pursuant to the express terms of the Acquisition Agreement) is funded solely by the issuance of common equity or funded by cash on hand and (b) decreases the purchase price (which, for the avoidance of doubt, is inclusive of the amount of the Refinancing) in respect of the Acquisition so long as any reduction reduces the Senior Bridge Facility on a dollar for dollar basis shall be deemed to not be adverse to the interest of the Lenders in a material respect).  The Refinancing shall have been consummated, or, substantially concurrently with the initial funding under the Senior Bridge Facility, shall be consummated.
3.    The Lenders shall have received (1) customary legal opinions from counsel in form, scope and substance reasonably acceptable to the Agents, (2) a solvency certificate from a director of the BV Borrower substantially in the form of Exhibit Q to the Existing Credit Agreement and (3) customary closing and, to the extent relevant, good standing (of the jurisdiction of organization) certificates and a customary notice of borrowing, in each case subject to the Funds Certain Provisions.
4.    The Borrowers shall have engaged one or more investment banks reasonably satisfactory to the Lead Arrangers (collectively, the “Investment Bank”) (it being understood and agreed that Merrill Lynch is acceptable to the Lead Arrangers) to sell or place the Senior Notes 

C-1

on a private placement basis (including pursuant to a Rule 144A offering) and shall ensure that (a) the Investment Bank and the Lead Arrangers each shall have received prior to the start of the Marketing Period, a draft preliminary offering memorandum or preliminary private placement memorandum (collectively, the “Offering Documents”) suitable for use in a customary “high‐yield road show” relating to the Senior Notes and substantially similar to the applicable offering documents for the 2025 Notes, in each case, which contains all financial statements that the Securities and Exchange Commission would require to be included in a registered offering of the Senior Notes by the BV Borrower to finance the Acquisition (including all audited financial statements, all unaudited financial statements (which shall have been reviewed by the independent accountants as provided in Statement on Auditing Standards No. 100) and all appropriate pro forma financial statements or financial information prepared in accordance with, or reconciled to, generally accepted accounting principles in the United States and prepared in accordance with Regulation S‐X under the Securities Act of 1933, as amended), unless otherwise agreed (it being understood that no such financial statements of the Target or pro forma statements giving effect to the Acquisition shall be required if the conditions set forth in Rule 3-05(b)(4)(i) of Regulation S-X are satisfied), and, except as otherwise agreed by the Investment Bank, all other data (including selected financial data) that the Securities and Exchange Commission would require in a registered offering of the Senior Notes by the BV Borrower to finance the Acquisition (in each case other than Rule 3‐09, Rule 3‐10 or Rule 3‐16 of Regulation S‐X, Item 402 of Regulation S‐K and subject to exceptions customary for a Rule 144A offering), or that would be necessary for the Investment Bank to receive customary (for high yield debt securities) “comfort” (including “negative assurance” comfort) from Parent’s independent accountants and, if the financial statements of the Target are required to be included in an Offering Document, the independent accountants for the Target in connection with the offering of the Senior Notes (and the Borrowers shall have made commercially reasonable efforts to arrange for the delivery of a draft of the comfort letter that each such independent accountant is prepared to deliver upon pricing to the extent required hereunder) (“Required Notes Information”)) and (b) the Investment Bank shall have been afforded a period (the “Marketing Period”) of at least 15 consecutive calendar days following receipt of an Offering Document (or such shorter time as may be agreed by the Lead Arrangers and the Investment Bank) including the information described in clause (a) above, to seek to place the Senior Notes with qualified purchasers thereof; provided that (i) the Marketing Period shall either end on or prior to August 14, 2015 or, if the Marketing Period has not ended on or prior to August 14, 2015, then the Marketing Period shall commence no earlier than September 8, 2015, (ii) each of November 26, 2015, November 27, 2015, July 1, 2016, July 4, 2016 and July 5, 2016 shall not be considered a calendar day for the purposes of the Marketing Period and (iii) the Marketing Period shall either end on or prior to December 11, 2015 or, if the Marketing Period has not ended on or prior to December 11, 2015, then the Marketing Period shall commence no earlier than January 4, 2016.
If you shall in good faith reasonably believe that you have delivered the Required Notes Information, you may deliver to the Lead Bridge Arrangers written notice to that effect (stating when you believe you completed any such delivery), in which case you shall be deemed to have delivered such Required Notes Information on the date such notice is received, unless the Lead Bridge Arrangers in good faith reasonably believe that you have not completed delivery of such Required Notes Information and, within three business days after its receipt of such notice from 

C-2

you, the Lead Arrangers deliver a written notice to you to that effect (stating with specificity what Required Notes Information you have not delivered). 
5.    To the extent invoiced at least two business days prior to the Closing Date, all costs, fees, expenses (including, without limitation, legal fees and expenses) and other compensation contemplated by the Commitment Letter and the Fee Letter, payable to each Agent (and counsel thereof) and the Lenders shall have been paid to the extent due. 
6.    The Agents shall have received, at least 3 business days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti‐money laundering rules and regulations, including without limitation the PATRIOT Act, to the extent requested in writing at least 10 days prior to the Closing Date. 
7.    The Specified Representations shall be true and correct in all material respects (unless already qualified by materiality, in which case such representation and warranty shall be true and correct in all respects) and the Acquisition Agreement Target Representations shall be true and correct (provided that pursuant to the Funds Certain Provisions, this condition shall be satisfied unless you have (or an affiliate of yours has) the right to terminate your (or its) obligations (or to refuse to consummate the Acquisition) under the Acquisition Agreement (subject to cure rights thereunder) as a result of a breach of such representation and warranty).

C-3Exhibit 4.2

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of May 4, 2015 (the “Effective Date”), by and between FATE THERAPEUTICS, INC., a Delaware corporation  (the “Company”), having its principal place of business at 3535 General Atomics Court, Suite 200, San Diego, CA 92121, and JUNO THERAPEUTICS, INC., a Delaware corporation (the “Purchaser”), having its principal place of business at 307 Westlake Ave N, 300, Seattle, WA 98109.

 

WHEREAS, the Company and the Purchaser have entered into that certain Collaboration and License Agreement of even date herewith (the “License Agreement”); and

 

WHEREAS, in connection with the License Agreement, the Company wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the Company, shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), on the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Purchaser hereby agree as follows:

 

1.                                      DEFINITIONS

 

Capitalized terms used but not defined herein shall have the meanings provided in the License Agreement.  In addition, the following terms shall have the respective meanings set forth below:

 

1.1                               “Affiliate” shall mean any corporation or other entity, whether de jure or de facto, which is directly or indirectly controlling, controlled by or under common control of a party hereto for so long as such control exists.  For the purposes of this Section, “control” shall mean the direct or indirect ownership of at least 50% of the outstanding shares or other voting rights of the subject entity having the power to vote on or direct the affairs of the entity, or if not meeting the preceding, the maximum voting right that may be held by the particular Party under the laws of the country where such entity exists.

 

1.2                               “Aggregate Purchase Price” shall mean, (a) with respect to the Initial Closing, the product of the Initial Closing Share Price multiplied by the number of Initial Closing Shares, and (b) with respect to the Extension Closing, the product of the Extension Closing Share Price multiplied by the number of Extension Closing Shares, in each case rounded up to the nearest whole penny.

 

1.3                               “Acquisition Transaction” shall mean any transaction involving:  (i) any sale, license, lease, exchange, transfer or other disposition of the assets of the Company or any subsidiary of the Company constituting more than 50% of the consolidated assets of the Company or accounting for more than 50% of the consolidated revenues of the Company in

 

 

any one transaction or in a series of related transactions; (ii) any offer to purchase, tender offer, exchange offer or any similar transaction or series of related transactions made by any Person involving more than 50% of the outstanding shares of capital stock of the Company; or (iii) any merger, consolidation, business combination, share exchange, reorganization or similar transaction or series of related transactions involving the Company or any subsidiary of the Company whereby the holders of voting capital stock of the Company immediately prior to any such transaction hold less than 50% of the voting capital stock of the Company or the surviving corporation (or its parent company) immediately after the consummation of any such transaction.

 

1.4                               “Closing” shall mean each of the Initial Closing and the Extension Closing, if any.

 

1.5                               “Closing Date” shall mean each of the Initial Closing Date and the Extension Closing Date, if any.

 

1.6                               “Company Securities” shall have the meaning set forth in Section 7.1.

 

1.7                               “Election Notice” and “Election Notice Date” shall have the meaning set forth in Section 2.3(b).

 

1.8                               “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.9                               “Extension Closing,” “Extension Closing Date” and “Extension Closing Shares” shall have the meanings set forth in Section 2.3(b).

 

1.10                        “Extension Closing Share Price” shall mean 120% of the volume weighted average trading price per share of Common Stock for the 30 trading days ending on and including the Extension Notice Date, as reported on the Nasdaq Stock Market.

 

1.11                        “Extension Notice” shall mean the written notice by Purchaser of the exercise of the Extension Option (as defined in Section 2.5 of the License Agreement).

 

1.12                        “Extension Notice Date” shall mean the date of receipt by the Company of the Extension Notice, or if such date is not a trading day, the last trading day immediately prior to such date.

 

1.13                        “Initial Closing,” “Initial Closing Date” and “Initial Closing Shares” shall have the meanings set forth in Section 2.3(a).

 

1.14                        “Initial Closing Share Price” shall mean $8.00 per share of Common Stock.

 

1.15                        “Nasdaq” shall mean The Nasdaq Stock Market LLC.

 

1.16                        “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust, estate or other entity or organization.

 

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1.17                        “Restricted Transaction” shall have the meaning set forth in Section 7.1.

 

1.18                        “Rule 144” shall have the meaning set forth in Section 4.8(a).

 

1.19                        “SEC” shall mean the U.S. Securities and Exchange Commission.

 

1.20                        “SEC Filings” shall mean all reports, schedules, forms, statements and other documents filed or required to be filed by the Company with the SEC pursuant to the requirements of the Securities Act or the Exchange Act, including material filed pursuant to Section 13(a) or 15(c) of the Exchange Act, in each case, together with all exhibits, supplements, amendments and schedules thereto, and all documents incorporated by reference therein.

 

1.21                        “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.22                        “Shares” shall mean the shares of Common Stock purchased under this Agreement.

 

1.23                        “Share Price” shall mean the Initial Closing Share Price or the Extension Closing Share Price, as applicable.

 

2.                                      AGREEMENT TO SELL AND PURCHASE

 

2.1                               Authorization of Shares.  The Company has authorized the sale and issuance to the Purchaser of the Shares under the terms and conditions of this Agreement.

 

2.2                               Sale and Issuance of Shares.  On the basis of the representations and warranties herein, and upon the terms and subject to the conditions hereof, the Purchaser agrees to purchase from the Company, and the Company agrees to issue and sell to the Purchaser, the Shares at a price per share equal to the applicable Share Price.

 

2.3                               Closings.

 

(a)                                 Initial Closing. Subject to the satisfaction or waiver of the conditions set forth herein, the initial Closing (the “Initial Closing”) shall take place on the 3rd calendar day following the Effective Date (or, if such 3rd calendar day is not a business day, the next business day subsequent to such 3rd calendar day) at the offices of the Company or at such earlier time and such other place as the Company and the Purchaser may agree in writing (the date of the Initial Closing, the “Initial Closing Date”).  At the Initial Closing, (i) the Company shall deposit 1,000,000 Shares (the “Initial Closing Shares”) with its transfer agent to be held in book entry form for the benefit of, and in the name of, the Purchaser and (ii) the Purchaser shall pay the Aggregate Purchase Price for the Initial Closing Shares in U.S. dollars by bank wire transfer in immediately available funds to a bank account designated by the Company.

 

(b)                                 Extension Closing. Subject to the satisfaction or waiver of the conditions set forth herein, an additional Closing (the “Extension Closing”) shall take place 

 

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on the 3rd calendar day (or, if such 3rd calendar day is not a business day, the next business day subsequent to such 3rd calendar day) following the receipt by the Purchaser of the Company’s written election provided pursuant to Section 5.2(b) of the License Agreement (the “Election Notice” and the date of such Election Notice, the “Election Notice Date”) at the offices of the Company or at such earlier time and such other place as the Company and the Purchaser may agree in writing (the date of the Extension Closing, the “Extension Closing Date”).  At the Extension Closing, (i) the Company shall deposit the Extension Closing Shares (defined below) with its transfer agent to be held in book entry form for the benefit of, and in the name of, the Purchaser and (ii) the Purchaser shall pay the Aggregate Purchase Price for the Extension Closing Shares in U.S. dollars by bank wire transfer in immediately available funds to a bank account designated by the Company.  “Extension Closing Shares” shall mean that number of Shares as is equal to the lesser of (A) 0.0999 multiplied by the number of shares of the Company’s Common Stock outstanding as of the Election Notice Date, rounded down to the nearest whole share, minus the number of Initial Closing Shares purchased pursuant to Section 2.3(a) of this Agreement and (B) $10,000,000 divided by the Extension Closing Share Price, rounded down to the nearest whole share; provided, however, that to the extent that the purchase of such Extension Closing Shares in addition to the Initial Closing Shares would result in Purchaser beneficially owning in excess of 19.99% of the outstanding shares of Common Stock or the voting power of the Company as of immediately prior to the Effective Date (the “Ownership Maximum”), then the number of Extension Closing Shares purchased by Purchaser pursuant to this Agreement shall be reduced to the extent necessary such that such beneficial ownership does not exceed the Ownership Maximum. For the avoidance of doubt, if the Company does not deliver the Election Notice pursuant to Section 5.2(b) of the License Agreement within the time period specified therein, there will not be an Extension Closing and the Purchaser shall have no rights or obligations to acquire Shares under this Section 2.3(b).

 

(c)                                  The parties agree that the aggregate number of shares to be issued at all Closings shall not exceed such number of shares that is equal to 19.99% of the outstanding shares of Common Stock or the voting power of the Company as of immediately prior to the Effective Date.

 

2.4                               Purchase Price Allocation.  The parties agree that for income tax purposes, the amount of the premium of each of the Initial Closing Share Price and the Extension Closing Share Price, as applicable, over the fair market value of the applicable Shares as of the applicable Closing Date shall be deemed additional consideration to the Company pursuant to the License Agreement, and the fair market value of the applicable Shares shall be deemed consideration to the Company for the issuance of such Shares.  The Company, in its sole discretion shall make all decisions relating to the determination of the value of shares for purposes of this section. The parties shall file all income tax returns in a manner consistent with this section, and shall not take any income tax position inconsistent with this section in any tax proceeding or context, unless required by a final determination, within the meaning of section 1313 of the Internal Revenue Code of 1986, as amended (or any similar provision or non-federal income tax law).

 

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3.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to the Purchaser as of each Closing Date as follows:

 

3.1                               Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business.  The Company is duly qualified to transact business as a corporation and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect upon the Company’s ability to perform its obligations under this Agreement.

 

3.2                               Authorization; Due Execution.  The Company has the requisite corporate power and authority to enter into this Agreement and to perform its obligations under the terms of this Agreement.  All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement has been taken.  This Agreement has been duly authorized, executed and delivered by the Company and, upon due execution and delivery by the Purchaser, this Agreement will be a valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

 

3.3                               Valid Issuance of Stock.  The Shares, when issued, sold and delivered in accordance with the terms of Section 2 hereof for the consideration and on the terms and conditions set forth herein, will be duly and validly authorized and issued, fully paid and nonassessable and, based in part upon the representations of the Purchaser in this Agreement, will be issued in compliance with all applicable federal and state securities laws.

 

3.4                               No Violations or Defaults.  There exists no violation or default by the Company or any of its subsidiaries under (i) the Company’s  Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, each as amended to date (copies of which have been filed with the SEC), or such subsidiaries’ charters, bylaws or other organizational documents, or (ii) the provisions of any instrument or agreement evidencing, governing or otherwise relating to any material indebtedness of the Company or any of its subsidiaries.  There exists no default under any other agreement to which the Company or any of its subsidiaries is party, which default could have a material adverse effect upon the Company’s ability to perform its obligations under this Agreement.

 

3.5                               SEC Filings.  The Company has timely filed with the SEC all SEC Filings.  The SEC Filings were prepared in accordance with and, as of the date on which each such SEC Filing was filed with the SEC, complied in all material respects with the applicable requirements of the Securities Act and Exchange Act.  None of such SEC Filings, including, without limitation, any financial statements, exhibits and schedules included therein and documents incorporated therein by reference, at the time filed, declared effective or mailed, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

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3.6                               Material Changes.   Since December 31, 2014, except as specifically disclosed in SEC Filings dated prior to the Effective Date (in the case of the Initial Closing) or dated prior to the Extension Notice Date (in the case of the Extension Closing): (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have, either individually or in the aggregate, a material adverse effect on the business, operations or financial condition of the Company and its subsidiaries, taken as a whole, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”) or disclosed in filings made with the SEC, (iii) the Company has not altered materially its method of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend or distribution of cash, shares of capital stock or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), and (v) the Company has not issued any equity securities, except Common Stock issued pursuant to existing Company equity incentive, stock option or stock purchase plans or agreements or executive and director compensation arrangements disclosed in the SEC Filings dated prior to the Effective Date (in the case of the Initial Closing) or dated prior to the Extension Notice Date (in the case of the Extension Closing).

 

3.7                               Investment Company.   The Company is not, and immediately after receipt of payment for the Shares, will not be an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

 

3.8                               Registration Rights.   Other than as disclosed in the Company’s SEC Filings, no Person has any right to cause the Company to effect the registration under the Securities Act of the transfer of any securities of the Company.

 

3.9                               Listing and Maintenance Requirements.   The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the previous twelve (12) months, received (i) written notice from Nasdaq that the Company is not in compliance with the listing or maintenance requirements of Nasdaq that would result in immediate delisting or (ii) any notification, Staff Delisting Determination, or Public Reprimand Letter (as such terms are defined in applicable Nasdaq listing rules) that requires a public announcement by the Company of any noncompliance or deficiency with respect to such listing or maintenance requirements (other than any public announcement relating to noncompliance or deficiency under Rules 5605(b)(1), 5605(c)(2), 5605(d)(2), 5450(a)(1), or 5250(c)(1) of the Nasdaq listing rules). The Company is in compliance with all listing and maintenance requirements of Nasdaq on the date hereof, except for any noncompliance or deficiency which may exist under Rules 5605(b)(1), 5605(c)(2), 5605(d)(2), 5450(a)(1), or 5250(c)(1) of the Nasdaq listing rules and 

 

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in each such case where the Company fully expects to, and has a plan to, regain compliance in accordance with applicable Nasdaq procedures and cure periods such as to avoid any suspension of trading of the Company’s stock on Nasdaq or delisting actions by Nasdaq.

 

3.10                        No Integrated Offering.   Assuming the accuracy of Purchaser’s representations and warranties set forth in Sections 4.4 — 4.7 hereof, none of the Company nor, to the Company’s knowledge, any of its Affiliates or any Person acting on its behalf has, directly or indirectly, at any time within the past six (6) months, made any offers or sales of any Company security or solicited any offers to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Shares or (ii) cause the offering of the Shares to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of Nasdaq.

 

3.11                        OFAC.   Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee, Affiliate or Person acting on behalf of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person or entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

 

3.12                        FCPA.   Neither the Company nor, to the Company’ knowledge, any agent or other Person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

3.13                        Internal Accounting Controls.   The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.

 

3.14                        Sarbanes-Oxley; Disclosure Controls.   As of the date of the Initial Closing, the Company is an “emerging growth company,” as defined in Section 2(a) of the

 

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Securities Act. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 that are applicable to the Company. The Company has established disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there has been no change in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

3.15                        Governmental Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental or regulatory authority or securities exchange on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for such notices or additional listing applications required or permitted to be filed with certain state and federal securities commissions or securities exchanges after the Closing Date, which notices and applications will be filed on a timely basis.

 

3.16                        No Required Additional Issuances.   The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person and will not result in a right of any holder of securities of the Company to adjust the exercise, conversion, exchange or reset price under any of such securities.

 

3.17                        Application of Takeover Protections; Rights Agreements.   The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of the State of Delaware that is or would reasonably be expected to become applicable to the Purchaser as a result of Purchaser and the Company fulfilling their obligations or exercising their rights under this Agreement or the License Agreement, including, without limitation, the Company’s issuance of the Shares and Purchaser’s ownership of the Shares.

 

3.18                        No Conflict.  The Company’s execution, delivery and performance of this Agreement does not violate (i) any provision of the Company’s Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, each as amended to date (copies of which have been filed with the SEC), (ii) any provision of any material contract or agreement (copies of which have been filed with the SEC), or order, writ, judgment, 

 

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injunction, decree, determination or award to which the Company is a party or by which it is bound, or (iii) to the Company’s knowledge, any law, rule or regulation currently in effect having applicability to the Company.

 

4.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER

 

The Purchaser hereby represents and warrants to the Company as of each Closing Date as follows:

 

4.1                               Organization and Good Standing.  The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to carry on its business.

 

4.2                               Authorization; Due Execution.  The Purchaser has the requisite corporate power and authority to enter into this Agreement and to perform its obligations under the terms of this Agreement.  All corporate action on the part of the Purchaser, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement have been taken.  This Agreement has been duly authorized, executed and delivered by the Purchaser, and, upon due execution and delivery by the Company, this Agreement will be a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

 

4.3                               No Current Ownership in the Company.  Other than the Shares acquired under this Agreement, neither the Purchaser nor any of its Affiliates own any shares of Common Stock or have any rights to acquire Common Stock.

 

4.4                               Purchase Entirely for Own Account.  This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which the Purchaser hereby confirms by executing this Agreement, that the Shares purchased by the Purchaser will be acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same.  Purchaser does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participation to such Person or to any third party, with respect to the Shares, if issued.

 

4.5                               Disclosure of Information.  The Purchaser has received all the information that it has requested and that it considers necessary or appropriate for deciding whether to enter into this Agreement and to acquire the Shares, and  the Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares; provided, however, that neither such inquiries nor any other investigation conducted by or on behalf of the Purchaser or its representatives or counsel shall modify, amend or affect Purchaser’s right to rely on the truth, accuracy and completeness of the Company’s representations and warranties contained in this Agreement or the License Agreement.

 

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4.6                               Investment Experience.  The Purchaser acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.  The Purchaser has not been organized solely for the purpose of acquiring the Shares.

 

4.7                               Accredited Investor.  The Purchaser is an “accredited investor” as such term is defined in Rule 501 of the General Rules and Regulations promulgated by the SEC pursuant to the Securities Act.

 

4.8                               Restricted Securities.  The Purchaser understands that:

 

(a)                                 the Shares will not be registered under the Securities Act by reason of a specific exemption therefrom, and that the Purchaser must, therefore, bear the economic risk of such investment, unless and until a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, such as under Rule 144 of the Securities Act (“Rule 144”);

 

(b)                                 each book-entry entitlement representing the Shares will be noted with the following legends:

 

(i)                                     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED; and

 

(ii)                                  Any legend required to be placed thereon under applicable state securities laws.

 

(c)                                  The Company will instruct its transfer agent not to register the transfer of the Shares (or any portion thereof) unless the conditions specified in the foregoing legends are satisfied, until such time as a transfer is made, pursuant to the terms of this Agreement, and in compliance with Rule 144 or pursuant to a registration statement or, if the opinion of counsel referred to above is to the further effect that such legend is not required in order to establish compliance with any provisions of the Securities Act or this Agreement.

 

4.9                               No Short Sales.  The Purchaser has not engaged, and will not engage, in any short sales of the Company’s Common Stock within the three month period prior to the applicable Closing Date.

 

4.10                        No Legal, Tax or Investment Advice.  The Purchaser understands that nothing in the SEC Filings, this Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice and that independent legal counsel has reviewed these documents and materials on the Purchaser’s behalf.  The Purchaser has consulted such legal, tax and investment advisors as

 

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it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

 

5.                                      CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING

 

5.1                               Closing.  The Company’s obligation to sell, issue and deliver the Shares to the Purchaser at each Closing shall be subject to the following conditions to the extent not waived by the Company:

 

(a)                                 Receipt of Payment.  The Company shall have received payment in full, by wire transfer of immediately available funds, for the Shares at the applicable Share Price.

 

(b)                                 License Agreement.  The License Agreement shall have been executed and delivered by the Company and the Purchaser and shall remain in full force and effect.

 

(c)                                  Representations and Warranties; Obligations. The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct on the applicable Closing Date.  The Purchaser shall have performed and complied with all obligations and conditions required to be performed and complied with by the Purchaser under this Agreement on, as of or prior to the applicable Closing Date.

 

(d)                                 Provision of Election Notice. With respect to the Extension Closing, the Company shall have delivered the Election Notice to the Purchaser in accordance with Section 5.2(b) of the License Agreement.

 

6.                                      CONDITIONS TO THE PURCHASER’S OBLIGATIONS AT CLOSING

 

6.1                               Closing.  The Purchaser’s obligation to accept delivery of and pay for the Shares at each Closing shall be subject to the following conditions to the extent not waived by the Purchaser:

 

(a)                                 License Agreement.  The License Agreement shall have been executed and delivered by the Company and the Purchaser and shall remain in full force and effect.

 

(b)                                 Representations and Warranties; Obligations.  The representations and warranties made by the Company in Section 3 hereof shall be true and correct on the applicable Closing Date.  The Company shall have performed and complied with all obligations and conditions to be performed and complied with by the Company under this Agreement on, as of or prior to the applicable Closing Date.

 

(c)                                  Compliance Certificate.         The Purchaser shall have received a certificate, dated such Closing Date, of an executive officer of the Company in which such officer, in his or her capacity as an officer of the Company, shall state that: the representations and warranties of the Company in this Agreement are true and correct; and 

 

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the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date.

 

(d)                                 Secretary’s Certificate.  The Purchaser shall have received a certificate, dated such Closing Date, of the secretary of the Company in which such secretary, in his or her capacity as secretary of the Company, shall certify and attach the resolutions of the Board of Directors of the company approving the Agreement, the License Agreement and the transactions contemplated hereunder, and shall certify that such resolutions have not been amended or modified and remain in full force and effect.

 

(e)                                  Good Standing Certificate.   The Purchaser shall have received a certificate from the Secretary of State of the State of Delaware dated within three (3) business days of such Closing Date evidencing the good standing and legal corporate existence of the Company.

 

(f)                                   Opinion of Counsel to the Company.   The Purchaser shall have received an opinion, dated such Closing Date, of Goodwin Procter LLP, counsel for the Company, in the form attached hereto as Exhibit A.

 

(g)                                  Registration Rights. With respect to the Extension Closing, the Company shall have caused Purchaser to become a party to that certain Amended and Restated Investor Rights Agreement, dated as of August 8, 2013 (the “IRA”), among the Company and the securityholders listed on Exhibits A and B thereto, and to have the rights and obligations of, and be treated as, an Initiating Holder (as defined in the IRA), an S-3 Initiating Holder (as defined in the IRA), and a Holder (as defined in the IRA) thereunder beginning two (2) years after the Effective Date of the License Agreement and which will not include any registration rights that have been waived by existing securityholders under the IRA with respect to offerings of securities by the Company that may be conducted pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-199107), and shall have amended the IRA to provide that Purchaser’s registration rights thereunder shall survive until the earlier of (i) one year following the end of the Research Term or (ii) such time as Rule 144 under the Securities Act is available for the sale of all of Purchaser’s Shares during a three-month period without registration and without breach of the restrictions set forth in this Agreement (and assuming for the purposes of Rule 144 that Purchaser is subject to the volume limitations thereof as if Purchaser were an “affiliate” within the meaning of Rule 144).

 

(h)                                 Exercise of Extension Option. With respect to the Extension Closing, the Purchaser shall have exercised the Extension Option in accordance with Section 2.5 of the License Agreement.

 

7.                                      ADDITIONAL COVENANTS OF THE COMPANY AND THE PURCHASER.

 

7.1                               Restricted Transactions.  For the Research Term (as defined in the License Agreement), the Purchaser shall not, and shall not authorize, instruct, facilitate or permit any of its Affiliates or any other Person or entity to, engage in any of the following (a “Restricted Transaction”):  (a) offer, sell or contract to sell securities of the Company or any of its 

 

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Affiliates or successors or any instruments convertible into or exchangeable or exercisable for securities of the Company or any of its Affiliates or successors (the “Company Securities”) in a private placement or similar transaction; (b) sell any option or contract to purchase, purchase any option or contract to sell, or grant any option, right or warrant for the sale of the Company Securities; or (c) enter into any swap or any other agreement or any transaction that transfers, in whole or in part directly or indirectly, the economic consequence of ownership of the Company Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise.

 

7.2                               Standstill.

 

(a)                                 The Purchaser agrees that during the Research Term (as defined in the License Agreement), except with the prior written consent of the Company, the Purchaser shall not, and shall not permit any of its officers, directors, investment advisors, agents, representatives or Affiliates to:

 

(i)                                     except pursuant to Section 2.3(b) hereof, acquire, offer to acquire, agree to acquire or cause or effect the acquisition of, directly or indirectly, by purchase or otherwise, beneficial ownership of any securities or instruments convertible into any of the Company Securities such that the aggregate beneficial ownership of the Purchaser, its officers, directors (but excluding for these purposes beneficial ownership of Robert Nelsen through ARCH Venture Fund VI, L.P.) and Affiliates (on a combined basis), if (A) subsequent to the Extension Closing Date, is 20% or more of the Company’s outstanding Common Stock, and (B) prior to the Extension Closing Date, is [***]% or more of the Company’s outstanding Common Stock calculated as of immediately prior to the Effective Date;

 

(ii)                                  solicit or encourage any other entity to solicit proxies (as such terms are defined in Regulation 14A under the Exchange Act) with respect to any matter involving the Company, its nominees for directors or otherwise initiate, propose or solicit, or induce any other Person to initiate, propose or solicit any stockholder of the Company, any stockholder proposal or director nominations, any tender offer for Company Securities, any change of control of the Company, or for the purpose of convening a stockholders’ meeting of the Company;

 

(iii)                               except with respect to proxies executed in connection with stockholder meetings, deposit any Company Securities in any voting trust or subject them to any voting agreement or other agreement of similar effect;

 

(iv)                              join or form any partnership, limited partnership, syndicate, or other group within the meaning of Section 13(d)(3) of the Exchange Act for the purpose of acquiring, holding or disposing of beneficial ownership of any Company Securities or encourage, advise or, for the purpose of circumventing or avoiding any of the provisions of this Agreement, assist any Person to do any of the foregoing or otherwise take any action individually or jointly with any partnership, limited partnership, syndicate, or other group or assist any other Person or group of Persons in taking any action it could not individually take under this Agreement;

 

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(v)                                 make, effect, cause, initiate or participate in any Acquisition Transaction with respect to the Company (for the avoidance of doubt, Purchaser may directly engage Company’s management and/or its Board of Directors in private discussions with respect to an Acquisition Transaction by and between Purchaser and Company); or

 

(vi)                              make any public proposals to the Company or any of its Affiliates, directors, officers, employees, agents, representatives, successors or security holders concerning, or otherwise announce any intention to effect or participate in any Acquisition Transaction relating to the Company or any Affiliate or successor of the Company or take any action that would require the Company to make a public announcement regarding the possibility of an Acquisition Transaction with the Purchaser or any of its Affiliates.

 

(b)                                 Termination of Standstill.  The obligations of the Purchaser under Section 7.2(a) shall terminate in the event of (i) any bona fide third party tender or exchange offer for at least 50% of the outstanding voting capital stock of the Company, which third party tender or exchange offer was not solicited or otherwise encouraged by the Purchaser, or (ii) the Company enters into any agreement for an Acquisition Transaction with any entity not affiliated with the Purchaser pursuant to a proposal by such third party, which third party proposal was not solicited or otherwise encouraged by the Purchaser.  All of the provisions of Section 7.2(a) shall be reinstated and shall apply in full force according to their terms in the event that any event set forth in this Section 7.2(b) is not completed or if the announced transaction is abandoned and no similar transaction has been announced and not abandoned within ninety (90) days thereafter.  Upon reinstatement of the provisions of Section 7.2(a), the provisions of this Section 7.2(b) shall continue to govern in the event that any of the events described in this Section 7.2(b) shall occur.

 

7.3                               Market Stand-Off.  If requested by the representative of the underwriters of Common Stock (or other securities) of the Company, provided that Purchaser is then a beneficial owner of 5% or greater of the Company’s outstanding Common Stock, the Purchaser shall enter into a customary lock-up agreement with the representative of the underwriters not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by the Purchaser for a period specified by the representative of the underwriters, in any case not to exceed 90 days following any registered offering of the Common Stock of the Company, provided that all officers, all directors and their affiliates, and all stockholders which then beneficially own 5% or greater of the Company’s outstanding Common Stock (excluding investment companies or institutional investors that are not venture capital firms, which, for purposes of illustration only, based on the beneficial ownership table included in the Company’s proxy statement filed on Schedule 14A with the SEC on April 2, 2015, would exclude only FMR LLC, Wellington Management Group LLC, and Kingdon Capital Management, L.L.C.) are bound by substantially the same lock-up agreement. Any discretionary waiver or termination of the restrictions of any or all of such lock-up agreements by the underwriters shall apply pro rata to all parties subject to such lock-up agreements, based on the number of shares subject to such lock-up agreements. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said periods.

 

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7.4                               Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, in either case solely by virtue of purchasing the Shares under this Agreement.

 

7.5                               Nasdaq Listing.  In the time and manner required by Nasdaq, the Company shall prepare and file with Nasdaq an additional shares listing application covering all of the Shares and shall use its commercially reasonable efforts to take all steps necessary to cause all of the Shares to be approved for listing on Nasdaq. The Company shall maintain compliance with all listing and maintenance requirements of Nasdaq on the date hereof, except for any noncompliance or deficiencies that may occur under Rules 5605(b)(1), 5605(c)(2), 5605(d)(2), 5450(a)(1), or 5250(c)(1) of the Nasdaq listing rules and in the event of any noncompliance or deficiency pursuant to such rules the Company shall use its best efforts to regain compliance in accordance with applicable Nasdaq procedures and cure periods such as to avoid any suspension of trading of the Company’s stock on Nasdaq or delisting actions by Nasdaq.

 

7.6                               Legend Removal.   The legends set forth in Section 4.8(b) above shall be removed and the Company shall instruct its transfer agent for the Common Stock (the “Transfer Agent”) to register the Shares in book-entry form free and clear of such legends or any other legends by electronic delivery at the applicable balance account at the Depository Trust Company, if (i) such Shares have been resold under an effective registration statement under the Securities Act, (ii) such Shares are sold or transferred in connection with a resale transaction in compliance with Rule 144 (if the transferor is not an Affiliate of the Company), or (iii) such Shares are eligible for resale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions. The Company further agrees that it shall cause its counsel (i) after the effective date of a registration statement registering the resale of the Shares, to issue to the Transfer Agent, if required by the Transfer Agent, a “blanket” legal opinion or other letter to allow sales without restriction pursuant to the effective registration statement and (ii) provide all other opinions of counsel as may reasonably be required by the Transfer Agent in connection with the removal of legends pursuant to this Section 7.6. Following Rule 144 becoming available for the resale of the Shares, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to the Shares and without volume or manner-of-sale restrictions, the Company, upon the request of the Purchaser, shall cause Company counsel or other counsel satisfactory to the Transfer Agent to issue to the Transfer Agent a legal opinion stating that the Shares are eligible for sale under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such securities and without volume or manner-of-sale restrictions. Any fees (with respect to the Transfer Agent, Company counsel or otherwise) associated with the issuance of such opinion or the removal of such legends shall be borne by the Company. The Company may not make any notation on its records or give 

 

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instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in Section 4.8(b), other than with respect to any lock-up restrictions in connection with Section 7.3.

 

7.7                               Registration Rights.   The Company shall promptly and, in any event, within thirty (30) calendar days after the Effective Date, take all action necessary to cause Purchaser to become a party to the IRA and to have the rights and obligations of, and be treated as, an Initiating Holder (as defined in the IRA), an S-3 Initiating Holder (as defined in the IRA), and a Holder (as defined in the IRA) thereunder beginning [***] after the Effective Date of the License Agreement and which will not include any registration rights that have been waived by existing securityholders under the IRA with respect to offerings of securities by the Company that may be conducted pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-199107), and shall have amended the IRA to provide that Purchaser’s registration rights thereunder shall survive until the earlier of (i) two (2) years or (ii) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of Purchaser’s Shares during a three-month period without registration and without breach of the restrictions set forth in this Agreement (and assuming for the purposes of Rule 144 that Purchaser is subject to the volume limitations thereof as if Purchaser were an “affiliate” within the meaning of Rule 144).

 

8.                                      MISCELLANEOUS.

 

8.1                               Waivers and Amendments.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of both the Company and the Purchaser.

 

8.2                               Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

 

8.3                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles.

 

8.4                               Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original document, and all of which, together with this writing, shall be deemed one instrument.  Facsimile and electronic (PDF) signatures shall be as effective as original signatures.

 

8.5                               Successors and Assigns.  Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either party without the prior written consent of the other party; provided, however, that either party may assign this Agreement and its rights and obligations hereunder without the other party’s consent:

 

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(a)                                 in connection with the transfer or sale of all or substantially all of the business of such party to which the License Agreement relates to a third party, whether by merger, sale of stock, sale of assets or otherwise; or

 

(b)                                 to an Affiliate, provided that the assigning party shall remain liable and responsible to the non-assigning party hereto for the performance and observance of all such duties and obligations by such Affiliate.

 

The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with this Agreement shall be void.

 

8.6                               Entire Agreement.  This Agreement and the other documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

8.7                               Payment of Fees and Expenses.  Except as set forth in Section 7.6 of this Agreement, each of the Company and the Purchaser shall bear its own expenses and legal fees incurred on its behalf with respect to this Agreement and the transactions contemplated hereby.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

8.8                               Broker’s Fee.  Each of the Company and the Purchaser hereby represents that there are no brokers or finders entitled to compensation in connection with the sale of the Shares, and each party shall indemnify the other party for any such fees for which such party is responsible.

 

8.9                               Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) seven (7) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iii) two (2) business days after deposit with a nationally recognized overnight courier with written verification of receipt.  All communications shall be sent to the other party hereto at the mailing address set forth below, or at such other mailing address as such party may designate by ten (10) days’ advance written notice to the other party hereto.

 

(a)                                 If to the Company, notices shall be addressed to:

 

Fate Therapeutics, Inc.

3535 General Atomics Court, Suite 200

San Diego, California, 92121, USA

Attention: Chief Operating Officer

 

(b)                                 If to the Purchaser, notices shall be addressed to:

 

Juno Therapeutics, Inc.

 

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307 Westlake Avenue North, Suite 300

Seattle, Washington, 98109, USA

Attention:  General Counsel

 

With respect to the Election Notice and Extension Notice, such notices shall also be sent by e-mail on the date of such notices. In the case of the Election Notice, the Company shall send such notice by e-mail to the Purchaser’s then current Chief Financial Officer and then current General Counsel. In the case of the Extension Notice, the Purchaser shall send such notices by e-mail to the Company’s then current Chief Operating Officer. Such notices shall be deemed received by the Purchaser or the Company, as applicable, upon receipt of such e-mails (whether or not such e-mail is checked or read by the recipient) by such persons for purposes of determining the date of delivery of such notices hereunder. Concurrently with the execution of this Agreement, the Purchaser has provided the Company with the e-mail addresses of its current Chief Financial Officer and its current General Counsel, and the Company has provided the Purchaser with the e-mail address of its current Chief Operating Officer. Each party covenants to promptly update the other of changes in these positions and e-mail addresses.

 

8.10                        Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

 

8.11                        Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE LICENSE AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY NATURE, EXPRESS OR IMPLIED.

 

8.12                        Limitation of Liability.  NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

 

	
 
    	
FATE THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JUNO THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}]]