On October 5, 2019, the Carbonite Board held a meeting, which included Mr. Semel, Mr. Folger,
and representatives of Skadden. The directors again discussed the bids received and the strategic opportunities for Carbonite, including the possibility of remaining a standalone company. The Carbonite Board considered the range of prices at which a
transaction could be compelling. Following discussion, the Carbonite Board approved five (5) parties to proceed to the second bidding round: Party C, Party D, Party E, Party G and OpenText (the Second Round Bidders) and
instructed J.P. Morgan to communicate this to the parties.
On October 6-7, 2019, J.P. Morgan instructed the
Second Round Bidders that they would be given access to a virtual data room and an opportunity to schedule management presentations and that final bids would be due at the end of October or early November, 2019.
On October 7, 2019, Carbonite provided access to a virtual data room to the Second Round Bidders.
Between October 7 and November 2, 2019, the Second Round Bidders conducted extensive due diligence on Carbonite, including diligence calls with
Carbonite, representatives of Skadden, J.P. Morgan, and, on certain financial diligence matters, representatives of Carbonites independent auditor and of Institution A.
On October 8, 2019, J.P. Morgan provided a second-round process letter to the Second Round Bidders requesting that interested parties submit a markup of
the merger agreement and copies of any financing commitment letters on October 27, 2019 and submit final written proposals no later than November 1, 2019.
During the week of October 13, 2019, Carbonite held management presentations with each of the Second Round Bidders, including OpenText on
October 18, 2019.
On October 19, 2019, the Carbonite Board held a meeting, which included Mr. Semel, Mr. Folger, and representatives
of Skadden and J.P. Morgan. The Carbonite Board approved two separate auction draft merger agreements prepared by Skadden to be circulated to financial and strategic bidders, respectively.
On October 21, 2019, J.P. Morgan made copies of the respective draft merger agreements available to bidders in the virtual data room, which contemplated,
among other things, (w) the potential transaction being structured as a one-step merger preceded by a proxy statement and a shareholder meeting, (x) a
no-shop provision with exceptions allowing the Carbonite Board to respond to any unsolicited offer that the Carbonite Board determined in good faith could reasonably be expected to lead to a
proposal for 50% or more of the shares or assets of Carbonite, (y) a termination fee of 2.5% of the purchase price upon the occurrence of certain events, including termination of the Merger Agreement by Carbonite to enter into a definitive
agreement for an alternative, superior acquisition proposal and (z) an obligation of the counterparty to take all actions necessary to obtain antitrust approval, including any divestitures required to close the proposed merger.
On October 22, 2019, Skadden and Cleary, Gottlieb, Steen & Hamilton LLP (CGSH), OpenTexts outside legal counsel,
discussed certain structuring considerations related to Carbonites October 21, 2019 draft of the Merger Agreement.
On October 23, 2019,
representatives of J.P. Morgan spoke to representatives of Lazard to inform them that the Carbonite Board anticipated extending the deadline for the submission of final bids from November 1 to November 6, 2019. The following day, representatives of
J.P. Morgan confirmed the extended deadline by email to representatives of Lazard. Between October 23, 2019 and October 25, 2019, representatives of J.P. Morgan communicated the extension to each of the Second Round Bidders.
During the weeks of October 21 and October 28, 2019, Carbonite responded to extensive due diligence requests from the Second Round Bidders and held
numerous diligence calls with Party C, Party D, Party E, Party G and OpenText on topics including legal, finance, technology, marketing, human resources, operations and tax.
Starting the week of October 21, 2019, each of Party C and Party E reached out to J.P. Morgan on multiple occasions to request permission to contact
additional debt financing sources, stating that this was because each party was having difficulty raising financing on terms necessary to submit final proposals, in part due to tightening in the debt markets, at prices consistent with the initial
bids they had submitted on October 1, 2019.
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