HNSN Hansen Medical, Inc. (MM)

PROPOSAL 3: AUTHORITY TO ADJOURN THE ANNUAL MEETING

Hansen stockholders may be asked to adjourn the annual meeting to a later date or time if necessary or appropriate, as determined by the Company, to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the annual meeting, or any adjournment or postponement thereof, to adopt the merger agreement.

The Board unanimously recommends that stockholders vote “ FOR ” Proposal 3.

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Hansen common stock represented by such proxy card will be voted “ FOR ” Proposal 3.

The approval of Proposal 3 requires the affirmative vote of a majority of the shares present in person or represented by proxy at the annual meeting.

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THE MERGER

Overview

Hansen is seeking the adoption by Hansen stockholders of the merger agreement Hansen entered into on April 19, 2016 with Auris and Sub. Under the terms of the merger agreement, subject to the satisfaction or waiver of specified conditions, Sub will merge with and into Hansen. Hansen will survive the merger as a wholly owned subsidiary of Auris. The Board has approved the merger agreement and unanimously recommends that Hansen stockholders vote “ FOR ” the proposal to adopt the merger agreement.

Upon completion of the merger, each share of Hansen common stock that is issued and outstanding immediately prior to the effective time of the merger (other than (i) shares held in treasury of Hansen or owned of record by Hansen, Auris or any wholly owned subsidiary of Hansen or Auris and (ii) shares held by stockholders who have not voted in favor of the adoption of the merger agreement and who have perfected their statutory rights of appraisal in respect of such shares in accordance with Section 262 of the DGCL) will be cancelled and cease to exist and will automatically be converted into the right to receive $4.00 per share, in cash, without interest, subject to any applicable withholding taxes.

Following the completion of the merger, Hansen will cease to be a publicly traded company and will become a wholly owned subsidiary of Auris.

As contemplated by the merger agreement, concurrently with entering into the merger agreement, the Rollover Stockholders owning approximately 64.6% of the outstanding shares of Hansen common stock as of April 18, 2016, including Larry Feinberg and certain affiliated entities, Jack Schuler and certain affiliated entities, an affiliated entity of Lawrence T. Kennedy, Jr., and certain other Hansen stockholders, executed and delivered the investment agreement with Auris, pursuant to which the Rollover Stockholders have agreed to acquire, in a private placement exempt from registration under the Securities Act of 1933, as amended, shares of preferred stock of Auris at the effective time of the merger on the terms set forth therein for an aggregate purchase price of approximately $49 million, which approximately represents the aggregate amount of consideration payable to the Rollover Stockholders in the merger. The execution and delivery of the investment agreement was a condition to the transaction imposed by Auris, which was unwilling to pay on a net basis the approximately $49 million that the Rollover Stockholders would have been entitled to receive and retain absent the investment agreement. Although the Special Committee and our Board approved the merger agreement (which was conditioned on the Rollover Stockholders entering into the investment agreement), neither the Special Committee nor our Board participated in the negotiation of the terms of the investment agreement.

In addition, concurrently with entering into the merger agreement, and as an inducement to Auris and Sub entering into the merger agreement, Auris, Sub and Hansen obtained voting agreements and irrevocable proxies from each of the Rollover Stockholders and directors and executive officers of Hansen to vote all shares beneficially owned by each such person in favor of the adoption of the merger agreement and to otherwise support the merger. The voting agreements cover in the aggregate approximately 65.4% of the outstanding shares of Hansen common stock as of April 18, 2016 (excluding shares issuable upon the exercise of options, restricted stock units and warrants exercisable within 60 days of such date).

Reasons for Recommendation, and Background of the Merger

The Company ultimately entered into the merger agreement with Auris as a consequence of financial performance of the Company’s business, the financial constraints under which the Company has been operating, and increasing risk of the likelihood of the foreclosure of the White Oak indebtedness. Over a period of time, these factors, together with other market factors relevant to the Company’s business, made it very difficult for the Company to continue as an independent public company.

Since the Company’s formation, it has never achieved profitability, generated net income or been cash flow positive. We have financed our operations principally through equity and debt financings, as well as through the limited sale of our products and through partnering and licensing of our intellectual property. As of December 31, 2015, we had incurred cumulative net losses of approximately $453.9 million and negative working capital of $6.9 million, and our cash, cash equivalents, short-term investments and restricted cash balances were $28.0 million.

The terms of the debt that we incurred to finance our operations impose financial conditions and requirements on us. In particular, our White Oak agreement requires us to obtain an audit opinion from our independent certified public accountants on the annual financial statements that does not include a going concern qualification. If the audited financial statements include this qualification, it is an event of default under the White Oak credit agreement and gives White Oak the ability to

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exercise its remedies, including accelerating all amounts outstanding under the credit agreement and allowing it to foreclose on substantially all of our assets, other than intellectual property. Except for the limited forbearance agreement that White Oak ultimately entered into with us contemporaneously with our entering into the merger agreement with Auris, White Oak has consistently refused to grant us relief from the covenants and default provisions of the White Oak credit agreement.

As we described in our quarterly report on Form 10-Q for the period ended June 30, 2015, based on our operating projections at that time, we did not have sufficient liquidity to meet our anticipated cash requirements for the next twelve months. As a result, we stated in that quarterly report that there was substantial doubt about the Company’s ability to continue as a going concern. We explained that in order to continue our operations, we would need to obtain sufficient additional funding to satisfy our longer term liquidity requirements and that if such funding did not meet our longer term needs, we might be required to take various measures, including extending our existing cash and liquidity by adopting additional cost-cutting measures, any of which could harm our financial condition, and which might not be sufficient to extend our cash and liquidity.

During 2015, the Company evaluated a number of measures designed to decrease operating costs and also sought additional funding, some of which are described in more detail below. However, none of these measures was viewed as being sufficient to avoid a going concern audit qualification to the Company’s financial statements for the year ended December 31, 2015. As a result, in the second half of 2015, the Company became increasingly concerned that upon the filing of the Company’s annual report on Form 10-K for that period, there would be a going concern qualification on the financial statements and thus an event of default that would allow White Oak to accelerate the loan and potentially foreclose on substantially all of our assets, other than intellectual property.

As of December 31, 2015, we owed $35.1 million under our debt arrangement with White Oak, which exceeded our cash, cash equivalents, short-term investments and restricted cash balances as of such date by more than $7 million, even before taking into account our other liabilities and the amounts needed to fund our future operations. In short, we faced an acceleration of debt in an amount that we would be unable to pay. This acceleration of our debt upon the filing of our annual report on Form 10-K would have given White Oak the ability to foreclose on many of our significant assets, including our cash accounts. In the absence of a merger transaction or significant financing event before the filing of our annual report on Form 10-K that would give us the ability to repay the White Oak debt such that White Oak would agree to forbearance, the Company would have been unable to continue as a going concern. Our stockholders would have faced significant uncertainty as to whether they would receive anything for their Company shares once White Oak had foreclosed on our assets, our other creditors were paid and the significant costs associated with a foreclosure or bankruptcy proceeding were paid. Moreover, the ability to consummate any merger or financing transaction that would potentially forestall or prevent an event of default and acceleration of our debt was heavily dependent on factors outside our control, including market conditions generally, the ability to generate competition for the opportunity to invest in, or acquire, the Company and, to the extent any of these alternatives required a stockholder vote, the support of our stockholders for such alternatives.

The trading price of our shares reflected the difficulties faced by the Company. To maintain our listing on The NASDAQ Global Market, we are required to comply with NASDAQ Marketplace Rules, which include a minimum bid price of $1.00 per share. On December 1, 2014, we were notified by the NASDAQ Listing Qualifications Department that we did not comply with the $1.00 minimum bid threshold as our Common Stock had traded below the $1.00 minimum bid price (pre-reverse stock split as described below) for 30 consecutive business days. We were automatically provided with a 180-calendar day period, which ended June 1, 2015, within which to regain compliance. On February 20, 2015, the Company regained compliance with NASDAQ’s minimum bid price rule. However, in the third quarter of 2015, our shares traded at prices as low as $0.40 per share (pre-reverse stock split as described below). In order to help assure our ability to maintain our NASDAQ listing, the Board approved and implemented a 1-for-10 reverse stock split on September 23, 2015. Although this temporarily restored the trading value of our shares to prices in excess of $3 per share, soon our stock price continued its downward trend, and in early January 2016 our shares traded as low as $1.28 per share immediately following our public announcement that we were exploring strategic alternatives. Shortly thereafter, our shares recovered to trade at prices in excess of $2 per share over most of the period from then until the date we entered into the merger agreement with Auris.

Factors Impacting the Board and Special Committee’s Determination

During the course of the events described in more detail below, and as the Special Committee and the Board evaluated the merger agreement and the transactions contemplated thereby, including the merger, they consulted with the Company’s management team, the Company’s and the Special Committee’s respective outside legal counsel and the Special Committee’s financial advisor, and considered and evaluated a variety of factors. Such consideration and evaluation included the following factors, which the Special Committee and the Board believed supported their respective unanimous determination to approve the terms of the merger and the Board’s unanimous recommendation that holders of the Company’s common stock vote in favor of the adoption of the merger agreement:

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White Oak Debt and Looming Event of Default . The Board and Special Committee considered the fact that there was an imminent event of default under the arrangement with White Oak that would give White Oak the ability to foreclose on certain of our assets, as described in greater detail above. They considered the fact that White Oak would not agree to grant forbearance on the event of default unless we were to enter into a transaction that would provide for the repayment in full of the White Oak debt and that the Company had been unable to find a source to refinance the White Oak debt. The Board and Special Committee viewed as very favorable to the Company the forbearance agreement ultimately agreed to by White Oak by which White Oak agreed that if we were to enter into the merger agreement with Auris, they would grant forbearance until August 17, 2016 of the event of default caused by the going concern audit qualification as well as the event of default expected to occur as a result of our failure to maintain a minimum level of liquidity.

Financial Condition and Prospects of the Company . Over the entire period in which the Board and Special Committee considered an acquisition by Auris and other strategic alternatives, the Board and Special Committee considered the Company’s financial condition and prospects and the risks associated with the Company’s business, financial condition and results of operation. In addition to the imminent default under the White Oak debt described above, among the risks identified by the Board and Special Committee were the inadequacy of the Company’s capital resources in light of its anticipated cash requirements, the challenges and risks associated with the Company’s inability to meet the current- and long-term liquidity requirements, the need to raise substantial capital to meet the Company’s continuing cash needs and the uncertainties and adverse impact on the stockholders, and other risks and uncertainties described in the Company’s SEC filings. The Board and Special Committee also considered that the continuing deterioration of the Company’s financial condition and its stock price was having a negative impact on the Company’s ability to retain and recruit employees.

Potential Strategic Alternatives .  The Board and Special Committee considered and pursued various other potential strategic alternatives over an extended period of time, including an acquisition of the Company by third parties other than Auris, a refinancing or replacement of the White Oak debt, alternative standalone operating strategies, including a divestiture of the Sensei product line, reducing headcount and restructuring its facilities lease, and potential strategic partnerships, including a licensing of its intellectual property. The Company was not able to obtain a refinancing or replacement of the White Oak debt, and determined that cost-cutting and restructuring alone would not be sufficient to avoid an event of default under the White Oak debt. Relative to the alternative of licensing of the Company’s intellectual property, the Board and Special Committee considered the potential stockholder value that might result from such an alternative, as well as the feasibility of such an alternative and the risks and uncertainties associated with pursuing such an alternative, including risks associated with its business, financial condition and results of operations, as discussed above, but ultimately determined that the merger agreement with Auris was superior to any such alternative and to any other alternatives that the Company could feasibly pursue.

Other Potentially Interested Parties .  The Board and Special Committee considered the fact that the Company had, working with Perella Weinberg Partners LP (“ Perella Weinberg ”), engaged in a comprehensive process over an extended period of time to solicit and pursue strategic transactions with other potentially interested parties. In January 2016, three months prior to entering into the merger agreement with Auris, the Company publicly announced that it had “entered a process to explore strategic alternatives for the company focused on enhancing stockholder value, including, but not limited to, a licensing transaction, a refinancing transaction, a strategic business combination, partnership, a possible sale or disposition of one or more corporate assets or the company itself” and formed a special committee and engaged Perella Weinberg as part of that process. Other than Auris and one other company (Company B) described below, neither the outreach process nor this public announcement had resulted in any other potential buyers or strategic partners. The Board and Special Committee also considered that if there were some other potentially interested party, under the terms of the merger agreement it would be able to submit an unsolicited competing proposal during the period between the announcement of the execution of the merger agreement with Auris and the stockholder vote to approve the merger, and subject to compliance with the terms of the merger agreement (including payment to Auris of a termination fee equal to $3,325,000, representing approximately 3.5% of Hansen’s enterprise value as of March 31, 2016 based on the $4.00 per share purchase price), the Company could potentially enter into an alternative acquisition transaction with such party.

Course of Negotiations . The Board and Special Committee considered the fact that the merger consideration to be paid pursuant to the merger agreement was the result of arms’-length negotiations with Auris over an extensive period of time, during which market volatility in general and pressure on the Company’s financial viability in particular continued to increase, while the other alternatives identified and pursued by the Company failed to develop into viable alternatives. The result of all of the foregoing, as described with greater particularity below, was significant downward pressure on the price Auris was willing to pay. The Board and Special Committee ultimately determined that the merger consideration represented

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the most that Auris was willing to pay, notwithstanding that it had submitted non-binding proposals earlier in the process that at the time reflected possible consideration greater than $4.00 per share. The Board and Special Committee also considered the fact that through most of the negotiating process, Auris had taken the position that it was unwilling to pay a price involving an aggregate expenditure of cash that would be sufficient to enable the Rollover Stockholders to receive and retain their shares of the merger consideration on the same basis as other stockholders, and accordingly demanded that the Rollover Stockholders invest in preferred stock of Auris cash in an amount approximately equal to their respective proceeds from the merger, which ultimately had the effect of reducing Auris’s net cash outlay in connection with the merger by approximately $49 million.

Merger Consideration .  The Board and Special Committee considered that the merger consideration of $4.00 per share represented:

Cash Consideration; Certainty of Value . The Board and Special Committee considered the fact that the merger consideration is a fixed cash amount providing the Company’s stockholders (other than the Rollover Stockholders) with certainty of value and liquidity immediately upon the closing of the merger, in comparison to the risks and uncertainty that would be inherent in remaining a standalone company.

No Financing Condition .  The Board and Special Committee considered that the merger is not subject to a financing condition and Auris had represented that it has and, at the closing, will have sufficient available funds to consummate the transactions contemplated by the merger agreement, including repaying the White Oak indebtedness.

Opinion of the Special Committee ’ s Financial Advisor . The Board and Special Committee considered the oral opinion of Perella Weinberg rendered on April 19, 2016, subsequently confirmed in writing, to the Special Committee and the Board to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth therein, the merger consideration to be received by the holders of Hansen common stock (other than the holders of cancelled shares and dissenting shares and the Rollover Stockholders) was fair, from a financial point of view, to such holders, which opinion is more fully described in the section entitled “—Opinion of Our Financial Advisor.”

The Merger Agreement .  The Board and Special Committee considered the general terms and conditions of the merger agreement, including:

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Conditions to the Consummation of the Merger .  The Board and Special Committee considered the conditions to the consummation of the merger and the likelihood of closing and noted the fact that no third-party consents are required to consummate the merger, other than the need to comply with the HSR Act, if required.

Timing of Completion . The Board and Special Committee considered the anticipated timing of the consummation of the transactions contemplated by the merger agreement and the structure of the transaction as a merger and concluded that the merger could be completed in a reasonable timeframe, within the forbearance period under the forbearance agreement with White Oak, and in an orderly manner. The Board also considered that the potential for closing the merger in a reasonable timeframe could reduce the period during which the Company’s business would be subject to the potential uncertainty of closing and related disruption.

Availability of Appraisal Rights . The Board and Special Committee considered the availability of appraisal rights under Delaware law to the Company’s stockholders who do not vote in favor of the adoption of the merger agreement and who otherwise comply with all of the required procedures under Delaware law, which provides those eligible stockholders with an opportunity to have the Court of Chancery of the State of Delaware determine the fair value of their shares of the Company common stock, which may be more than, less than or the same as the $4.00 per share that such stockholders would have received under the merger agreement.

In the course of its deliberations, the Board and Special Committee also considered certain risks and other potentially negative factors concerning the transactions contemplated by the merger agreement, including:

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The foregoing discussion of the information and factors considered by the Board and Special Committee is not intended to be exhaustive, but includes the material factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Board and Special Committee did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board and Special Committee did not undertake to make any specific determination as to whether, or to what extent, any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board and Special Committee based their recommendations on the totality of the information presented, including the factors described above.

Timeline of the Transaction

Our Board and management periodically review our long-term strategy and objectives in light of developments in the markets in which we operate. Over the past several years, we have considered a range of strategic alternatives with a view to increasing stockholder value, including accessing the public markets through public offerings, potential commercial and strategic business partnerships, and other potential strategic transactions, such as mergers and acquisitions and dispositions of assets. We have, at various times, had discussions with Auris and others (including a company we refer to as Company B) about potential partnerships and other strategic transactions.

During the first half of 2015, we also explored ways to obtain sufficient additional funding to satisfy our longer term liquidity requirements and/or take cost-cutting measures. Among other things, we explored both debt and equity as a source of capital and sought to obtain a financial instrument which would retire the White Oak note and provide the Company additional capital of up to $15 million. The Company’s management met with a total of seven potential sources of financing. Only one source engaged in any meaningful discussions with the Company but withdrew from the discussions after learning that the Company had sold no systems in the second quarter of 2015.

Shortly before the filing of our quarterly report for the period ending June 30, 2015, in which we announced that we did not have sufficient liquidity to meet our anticipated cash requirements for the next twelve months, our Board, at a meeting held on July 27 and 28, 2015, discussed the Company’s financial condition and path to reduce the Company’s cash burn rate and achieve a sustainable business. The meeting was also attended by a representative of Sidley Austin LLP, our outside counsel (“ Sidley ”), and, for a portion of the meeting, members of the Company’s management team. The Board evaluated the possibility of raising additional capital at a reasonable valuation and one that our stockholders would support. The Board assessed this path to be unlikely in light of recent performance of the business, specifically the fact that the Company had sold no systems in the most recent quarter. Our Board asked the Company’s management to explore divesting the Sensei product line, reducing headcount, and restructuring its facilities lease, in addition to pursuing financing alternatives.

Between that meeting and the end of August, we approached 10 companies, including Auris and some of the other companies mentioned below, regarding a potential divestiture of the Sensei product line and sought to engage them in discussions. Ultimately, none of the companies contacted wished to engage in pursuing such a transaction.

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On September 24, a call was held between Frederic Moll, M.D., the chief executive officer of Auris, and Cary Vance, our chief executive officer, during which they discussed potential collaboration arrangements and other strategic activities between the two companies.

The chief executive officer of Company B called Mr. Vance on September 25 to explore a potential acquisition of the Company or acquisition or licensing of certain of our intellectual property assets. The chief executive officer sent a confirmatory email expressing Company B’s interest in exploring a potential relationship after the call.

Mr. Vance updated the members of our Board on September 27 regarding the prospect of a potential strategic transaction involving the Company, which would be further discussed at an upcoming Board meeting on October 2.

The Company entered into a mutual confidentiality agreement with Company B on September 28.

On September 30, Dr. Moll emailed an expression of interest letter from Auris to Mr. Vance and requested that the Company agree to a 60 day exclusivity period. The letter contemplated a potential acquisition of the Company or all or substantially all of its assets by Auris at a price to be agreed following due diligence. The letter specified that there would be no financing condition to the transaction.

The next day, Dr. Moll and Mr. Vance met in person to discuss further exploration of a potential transaction between the two companies. Dr. Moll requested the ability to communicate with each of the following of our stockholders: Jack Schuler, who was then also a member of our Board, Larry Feinberg and Lawrence Kennedy, to inquire as to the willingness of each of them to potentially invest in Auris and/or their willingness to support a potential transaction between Auris and the Company.

(Please note that in this section of the proxy statement, we will refer to each of Mr. Schuler, Mr. Feinberg and Mr. Kennedy in their individual capacities as a “Key Stockholder” and collectively as the “Key Stockholders.” The term “Rollover Stockholders” is used elsewhere to refer to the Key Stockholders, their respective affiliates and certain persons and entities with whom they have family connections who Auris ultimately required to enter into investment and other agreements with Auris. However, all discussions and negotiations occurred only with these three individuals, which is why we refer to Key Stockholders rather than Rollover Stockholders in this section.)

Our Board held a meeting on October 2, 2015 that was also attended by representatives of Sidley and members of the Company’s management team, during which Mr. Vance updated our Board on the status of the discussions with Auris and Company B and discussed potential financial advisors. Management also discussed the status of discussions to restructure the facility lease and potential reductions in headcount. Chris Lowe, the Company’s interim chief financial officer and a member of the Board, provided a status update on ongoing financing discussions and discussed the Company’s financial prospects in light of the Company’s inability to divest the Sensei product line. Mr. Lowe noted that without a sale or discontinuation of the Sensei product line, the Company would face a possible failure of the going concern covenant associated with the White Oak debt in the first quarter of 2016, and the potential that White Oak might then foreclose on significant assets of the Company.

In light of the potential interest expressed by Auris and Company B in a transaction, including the possibility of the sale of the Company as a whole, the Board decided to defer a decision on the future of the Sensei product line, restructuring of the lease or reductions in headcount until the Company had more information about a potential sale. Our Board also created a Transaction Committee to assist management with the process of pursuing potential strategic alternatives for the Company and interviewing potential financial advisors to assist with such a transaction and asked management to further the discussions. The Board appointed Marjorie L. Bowen, Michael L. Eagle, Stephen L. Newman and Jack Schuler to serve as members of the Transaction Committee.

Also on October 2, the Transaction Committee held a meeting that was also attended by representatives of Sidley, members of the Company’s management team, and other members of the Board, during which Mr. Vance provided an update on his conversations with Company B. The committee discussed other potential parties that might be contacted regarding a transaction, the White Oak going concern covenant and the timing of a potential transaction or financing, potential deal structures with Auris and Company B, the potential value of the Company’s net operating losses to a potential acquirer and timing regarding the engagement of a financial advisor.

From October 2 through the time the Transaction Committee involved a financial advisor in the transaction on October 20, Mr. Vance and other members of the Company’s management regularly had discussions with potential counterparties to discuss a potential strategic transaction.

Mr. Vance met with the chief executive officer of Company B on October 8. Company B’s chief executive officer proposed that Company B purchase all of our intellectual property in exchange for $40 million in cash and subject to a license back of certain intellectual property to the Company (the “ Company B Initial Proposal ”), which he confirmed in writing on October 9. Neither this offer from Company B nor any later offer included any assumption, or payment, of the White Oak debt. From this date forward, Company B never expressed an interest in any transaction that, like the merger agreement with Auris, would involve a sale of the entire Company and the payment of consideration directly to the Company’s stockholders. Of all of the parties contacted by the Company, only Auris was willing to entertain such a transaction.

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Later on October 8, the Transaction Committee held a meeting that was also attended by representatives of Sidley, members of the Company’s management team, and other members of the Board, during which Mr. Vance provided an update on his further conversations with Auris and Company B. The Company’s management also provided the committee with information regarding the Company’s intellectual property portfolio, net operating losses and potential value of those net operating losses to third parties. The committee discussed those matters as well as potential structures for a transaction with Auris, including the fact that Auris had informed the Company that any proposal by Auris to acquire the Company might be conditioned on the Key Stockholders being required to invest in Auris an amount equal to all or a significant portion of their proceeds from such a transaction.

On October 12, Auris provided the Company with a draft nondisclosure agreement among Auris, the Company and each of the Key Stockholders. The nondisclosure agreement explicitly permitted Auris to discuss the possible transaction with the Company’s stockholders (including the Key Stockholders), including the terms of the requirement by Auris that the Key Stockholders invest in Auris an amount equal to all or a significant portion of their proceeds from any transaction.

The Transaction Committee met later on October 12. Also attending were a representative of Sidley, members of the Company’s management team, and other members of the Board. The committee reviewed and discussed the Company B Initial Proposal, the nondisclosure agreement presented by Auris that included the three Key Stockholders, whether the Key Stockholders should be included in discussions regarding a potential strategic transaction involving the Company in light of Auris’s request to involve them, the engagement of financial advisors, and the lack of any significant interest in a strategic transaction by any third parties other than Auris and Company B. The committee decided that until the Company received a formal proposal from Auris, the committee would defer a response to the Company B Initial Proposal and selection of financial advisors, but that members of the Transaction Committee and management should continue reaching out to prospective financial advisor candidates, which they did over the course of the following week. Because Auris had informed the Company that any proposal by Auris to acquire the Company might be conditioned on the Key Stockholders being required to invest in Auris an amount equal to all or a significant portion of their proceeds from such a transaction, the committee determined that it would be in the best interests of the Company and the Company’s other stockholders if the Key Stockholders were permitted to participate in, and have, discussions with Auris regarding a potential strategic transaction. The committee recognized that the views of the Key Stockholders would not necessarily be aligned either among themselves or with those of the Board or the Transaction Committee, whether as to an acceptable price per share or structure of any proposed transaction, and recognized that the interest of any Key Stockholder in any such transaction might be different from other stockholders. The committee further determined that each of Mr. Kennedy and Mr. Feinberg sign nondisclosure agreements with the Company (it being noted that Mr. Schuler, as a director of the Company, already had fiduciary obligations to the Company and thus the Company did not require a nondisclosure agreement from him).

Between October 12 and November 9, the Company, the Key Stockholders and Auris and their respective counsel engaged in discussions and negotiations regarding the proposed nondisclosure and confidentiality agreements.

We entered into a mutual confidentiality agreement with Kennedy Advisers LLC on October 14 and with Mr. Feinberg and his related entities on October 15.

The Transaction Committee held a meeting on October 15 that was also attended by representatives of Sidley, members of the Company’s management team, and other members of the Board, during which they discussed the status of the various discussions, including the possibility that Auris might require the Key Stockholders to reinvest all or a significant portion of their proceeds from a sale of the Company into Auris, to reduce Auris’s net cash outlay in connection with any acquisition transaction. The Transaction Committee and Mr. Schuler determined that Mr. Schuler should not continue as a member of the Transaction Committee in light of the possibility that he might be required to invest in Auris, and he resigned from the committee.

Mr. Vance received an expression of interest on behalf of Auris from Dr. Moll on October 18 outlining potential deal structures between the parties but lacking any valuation terms other than to propose that any acquisition of the Company would be for a mix of cash and Auris stock. Mr. Vance and Dr. Moll discussed the parties entering into a nondisclosure agreement to continue discussions and enable Auris to make a proposal on price.

On October 19-20, the Board held its regularly scheduled two-day Board meeting that was also attended by representatives of Sidley and members of the Company’s management team. Representatives of Sidley made a presentation to the Board regarding its fiduciary duties in the context of a potential strategic transaction involving the Company and how potential conflicts of interest might be addressed if they arose.

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The Board further discussed the Company B Initial Proposal and the possibility of a transaction with Auris. In light of the recent interest that had been expressed by Auris and Company B, the Board also determined to proceed with contacting other companies regarding a potential sale of the Company, concurrently with the alternatives already being explored.

At the Board’s invitation, two potential financial advisory firms, including Perella Weinberg, participated in a portion of the meeting and presented their capabilities to, and discussed potential acquirers with, the Board. During and following these presentations and discussions, and with input from management and the members of the Board, the Board identified and discussed a number of third parties that could be contacted regarding a potential acquisition of the Company. The Board, based in part on input from such financial advisory firms, determined that in light of the Company’s financial and business profile, the Company should focus on strategic acquirers rather than financial sponsors. These companies were selected based on a variety of factors, including: each company’s potential interest in entering into a strategic transaction with the Company given such company’s industry position and perceived strategic priorities; such company’s financial strength and resources to pursue a strategic transaction in a timely manner; such company’s intellectual property portfolio and the proposed and perceived value of our intellectual property portfolio to such company; the risk of potential leaks in engaging with such company; and such company’s experience in efficiently evaluating, pursuing and consummating the acquisition of a public company of the size and nature of the Company.

Following the conclusion of the Board meeting on October 20, the Transaction Committee held a meeting that was also attended by a representative of Sidley, members of the Company’s management team, and other members of the Board, in which it approved, subject to the satisfactory negotiation of an engagement letter with Perella Weinberg, engaging Perella Weinberg as the Company’s financial advisor and instructed Perella Weinberg to work with management to proceed to contact potential counterparties, including Auris, Company B and others and begin discussions with Auris and Company B regarding their respective interests in a transaction.

Starting October 20 and continuing until the time we entered into the merger agreement with Auris, a discussed with and at the direction of the Transaction Committee, representatives of Perella Weinberg contacted a total of eight potential counterparties, including Auris and Company B, to discuss their potential interest in engaging in discussions regarding an acquisition of the Company. During this time, in addition to Auris and Company B, two other companies entered into nondisclosure agreements with the Company. Only Auris, Company B and these two other companies agreed to meet with representatives of the Company to discuss a potential transaction and only Auris made any proposal to acquire the Company and pay off the White Oak debt. Representatives of Perella Weinberg, together with representatives of the Company’s management and, from time to time, members of the Transaction Committee, engaged in discussions and negotiations with Auris, Company B and the two others through the time the Company entered into the merger agreement with Auris.

From October 23 through October 29, the Transaction Committee held three separate meetings that were also attended by representatives of Sidley, representatives of Perella Weinberg, members of the Company’s management team, and other members of the Board. At each meeting, a representative of Perella Weinberg updated the Transaction Committee on the outreach to potential acquirers and the status of those discussions. The Transaction Committee discussed those matters, providing management and representatives of Perella Weinberg with their views and guidance. At one of these meetings, Mr. Schuler informed the Transaction Committee that Auris had been reaching out directly to himself, Mr. Feinberg and Mr. Kennedy to discuss a transaction (including the possible terms of a required reinvestment in Auris), and recommended that representatives of Perella Weinberg seek to manage conversations with all parties. The Transaction Committee agreed to this approach. Thereafter, representatives of Perella Weinberg engaged in discussions from time to time, as directed by the Transaction Committee and which the Transaction Committee deemed appropriate, with Mr. Feinberg and Mr. Kennedy. Mr. Feinberg and Mr. Kennedy also maintained their past lines of contact with various members of the Company’s management and the Board. The Transaction Committee also discussed certain aspects of the proposed nondisclosure agreement with Auris.

On November 3, at the Transaction Committee’s direction, the Company sent Company B a counter-offer to the Company B Initial Proposal (the “ Hansen Company B Initial Counter ”) that contemplated a licensing arrangement, rather than a sale of intellectual property, for an upfront payment and additional yearly payments that would, in the aggregate, equal $100 million.

During the period from November 4 through November 20, the Transaction Committee held three separate meetings that were also attended by representatives of Sidley, representatives of Perella Weinberg, members of the Company’s management team, and other members of the Board. At each meeting, the Transaction Committee was given an update on, and discussed, the status of the outreach and discussion process, providing management and representatives of Perella Weinberg with views and guidance. In addition, Mr. Lowe conveyed to the Transaction Committee that the Company had not been successful in finding any funding to retire the White Oak debt and that the response from potential sources of financing was no more productive than the responses that the Company received when it unsuccessfully sought similar financing in the first half of 2015.

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At the direction of the Transaction Committee and, later, at the direction of the Special Committee, at various points in November and December Mr. Lowe contacted representatives of Oracle Management (an affiliate of Mr. Feinberg) to seek their assistance in retiring the White Oak note through, among other things, a potential financing of the Company or guarantee of debt issued by another source. Following these discussions, Oracle Management expressed that it did not wish to further pursue such discussions.

We entered into a mutual non-disclosure agreement with Auris on November 9, and began sharing documents and other information with them in a due diligence process, which continued through the execution of the merger agreement.

The Board held a special meeting on November 18 that was also attended by representatives of Sidley, representatives of Perella Weinberg, and members of the Company’s management team. The Board was given an update on the upcoming diligence meeting, scheduled with Auris for November 19, and a summary of more recent conversations with Company B.

On November 20, 2015, representatives of Sidley and outside legal counsel representing Auris participated on a call where Auris’s counsel informed Sidley that the forthcoming proposal for the Company would be an all-cash proposal but that Auris would require the Key Stockholders to reinvest their proceeds in Auris, with the terms of the reinvestment to be negotiated directly between Auris and the Key Stockholders.

On November 23, at the direction of the Transaction Committee, Mr. Lowe and another member of the Company’s management team contacted Company B to outline the terms of a sale of all of our intellectual property to Company B instead of a license.

On November 24, the Transaction Committee held a meeting that was also attended by representatives of Sidley, representatives of Perella Weinberg, members of the Company’s management team, and other members of the Board. The Transaction Committee was given an update on, and discussed, the status of the outreach and discussion process, providing management and representatives of Perella Weinberg with views and guidance. The representatives of Perella Weinberg noted that only Auris and Company B remained interested in continuing discussions (and that only Auris remained interested in an acquisition of the entire Company) but, if so directed by the Transaction Committee, it would continue its outreach efforts. Representatives of Sidley discussed recent conversations with Auris and its counsel in which Auris indicated that it might make an all-cash proposal for the Company, but that the proposal would be conditioned on a reinvestment of their proceeds by the Key Stockholders in Auris. The Transaction Committee engaged in a discussion of that possibility during an executive session later in the meeting following Mr. Schuler leaving the meeting.

On November 25, representatives of Sidley and Perella Weinberg and representatives of the legal and financial advisors for Auris had a call regarding the potential structure of a proposal from Auris to acquire the Company, and communications with the Key Stockholders regarding their willingness to support a transaction that was expressly conditioned by Auris on an investment by the Key Stockholders in Auris. Auris’s financial advisor indicated a formal proposal would be submitted on December 4.

On December 2, a representative of Perella Weinberg, Mr. Lowe and a member of our management team had a telephonic meeting with members of the legal and business development teams at Company B to review the Hansen Company B Initial Counter. The parties negotiated the terms of a deal structure whereby we would sell all of our patents to Company B. The Company proposed that the consideration for such a transaction would include an upfront payment and additional yearly payments that would, in the aggregate, exceed $100 million and would be subject to a license back to the Company of the patents that enabled our vascular business. Later that day, the Company sent Company B a summary of terms for this proposed structure.

The next day, on December 3, the Transaction Committee held a meeting that was also attended by a representative of Sidley, a representative of Perella Weinberg, members of the Company’s management team, and other members of the Board. The committee was given an update on, and discussed, the status of the outreach and discussion process, including additional parties contacted by Perella Weinberg, providing management and Perella Weinberg with views and guidance.

The Company received an expression of interest from Auris on December 4 to acquire the Company for $4.50 per share, representing a 35.5% premium over the closing stock price of our common stock on December 4 (the “ Auris Initial Proposal ”). The proposal stated that Auris intended to further explore the requirement that the Key Stockholders acquire preferred stock in Auris contemporaneously with the closing of a merger transaction with the Company. It also noted that Auris had held initial discussions with the Key Stockholders, who indicated their willingness to entertain a requirement that they make such an investment. The proposal stated that the reinvestment of Key Stockholders into Auris, and the support of the Key Stockholders (in the form of an agreement to tender or vote their shares in the transaction), was a condition to Auris’s willingness to enter into an agreement to acquire the Company. With regard to the White Oak debt, Auris stated that the parties would discuss exploring alternatives to either have the White Oak debt continue to be outstanding following a transaction between the parties or refinance or replace the White Oak debt. However, Auris stated that the transaction between Auris and the Company would not be subject to a financing condition.

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Also on December 4, we received an updated proposal from Company B (the “ Company B Initial Response to Counter ”). The Company B Initial Response to Counter contemplated a sale of our intellectual property to Company B to $50 million payable over three years. Company B continued to express no interest in an acquisition of the entire Company that would involve the payment of consideration directly to the Company’s stockholders or the payment by Company B of the White Oak debt.

On December 6, at the Transaction Committee’s direction, representatives from Perella Weinberg engaged in separate discussions with Mr. Schuler and Mr. Feinberg. Both communicated their views that the Auris Initial Proposal and the Company B Initial Response to Counter implied valuations of the Company that were not high enough for those stockholders to support the Company entering into either such transaction.

On December 7 and 8, our Board held our regularly scheduled Board meeting that was also attended by representatives of Sidley, representatives of Perella Weinberg, and members of the Company’s management team. A representative of Perella Weinberg provided a status update as to all contacted parties as of that date and expected future outreach. He reviewed the proposals from Auris and Company B, noted that both were seeking exclusivity, and presented some initial feedback and analysis on market dynamics based on the bids received. Our Board instructed the representatives of Perella Weinberg to respond to Auris and Company B that we did not have sufficient support from our stockholders to engage in exclusive discussions with either party based on their current proposals but would continue conversations.

On December 8, the Board reconstituted the Transaction Committee as a special committee of the Board with independent directors in accordance with Section 141(c) of the Delaware General Corporation Law. The Special Committee was comprised of Ms. Bowen as chairperson and Mr. Rohn and Dr. Newman. Among other things, the Board resolved not to approve any transaction without a favorable recommendation from the Special Committee. Later on December 8, the Special Committee held a meeting that was also attended by representatives of Sidley, who reviewed the committee’s charter with them, including the Special Committee’s ability to engage its own counsel and financial advisors and its authority to consider alternatives currently being considered by the Company and alternatives available to the Company beyond the particular proposals that were under consideration at the time.

The Company entered into an engagement letter with Perella Weinberg on December 9, formally documenting the engagement of Perella Weinberg approved by the Transaction Committee on October 20.

The Special Committee held a meeting on December 16 that was also attended by representatives of Sidley, a representative of Perella Weinberg, members of the Company’s management team, and other members of the Board (excluding Mr. Schuler). At this meeting, a representative of Perella Weinberg updated the Special Committee on a conversation held with Auris in which Perella Weinberg had informed Auris that it needed to increase the proposed price for the Company. In addition, a representative of Perella Weinberg provided an update on information he had obtained from Mr. Feinberg and Mr. Kennedy regarding discussions between such stockholders and Auris, and that they had agreed to meet with Dr. Moll, Auris’s chief executive officer, to further discuss a possible transaction and the terms that Auris would require for a reinvestment in Auris. Perella Weinberg also noted that they had encouraged Auris to submit a revised proposal reflecting a higher price. The committee also discussed outreach to additional potential acquirers.

Mr. Lowe and another member of our management team met with Mr. Feinberg and one of his associates telephonically on December 18 in advance of a scheduled meeting with Auris and the Key Stockholders to review the Company’s financial model and intellectual property landscape. Auris’s chief executive officer and a member of Auris’ board of directors met with Mr. Feinberg and Mr. Kennedy on December 21, to discuss the parameters of a reinvestment by the Key Stockholders in Auris pursuant to the reinvestment condition imposed by Auris on any deal with the Company.

On December 22, the Company communicated to Company B its response to the Company B Initial Response to Counter (the “ Hansen Updated Response to Company B ”). The Hansen Updated Response to Company B called for upfront consideration greater than $50 million and three annual payments of $15 million each in exchange for a sale of all of our intellectual property to Company B and included a limited buy-back right for the Company to certain intellectual property assets. None of the proceeds payable by Company B to Hansen would be distributed by the Company to its stockholders.

Also on December 22, we received an updated proposal from Auris (the “ Second Auris Proposal ”). The proposal included a price range from $5.50 to $6.00 per share, stating that Auris’s willingness to transact in the upper half of that range was dependent on the extent to which the Key Stockholders confirm their agreement to the material terms of the Auris Initial Proposal, which included a requirement that the Key Stockholders reinvest 100% of the consideration they would receive in a deal back into Auris, and the results of final confirmatory due diligence. The Second Auris Proposal also stated that the other terms of the Auris Initial Proposal still applied to the Second Auris Proposal.

On December 23, the Special Committee held a meeting that was also attended by representatives of Sidley, a representative of Perella Weinberg, members of the Company’s management team, and other members of the Board (excluding Mr. Schuler). The committee reviewed the Hansen Updated Response to Company B and the Second Auris Proposal and discussed whether the Key Stockholders might support a transaction with Auris in the price range indicated in

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the Second Auris Proposal. The committee reviewed the impact the Hansen Updated Response to Company B would have on the Company’s capital and its ability to achieve an operating plan. The committee also selected Morris, Nichols, Arsht & Tunnell LLP (“ Morris, Nichols ”) as independent counsel to the Special Committee.

The Special Committee held a meeting on December 29 that was also attended by representatives of Sidley, a representative of Morris, Nichols, a representative of Perella Weinberg, members of the Company’s management team, and other members of the Board. The committee discussed the timeline for an anticipated response from Company B to the Hansen Updated Response to Company B, and the Key Stockholders’ reaction to the Second Auris Proposal. A representative of Perella Weinberg informed the Special Committee that in discussing the potential transactions with the Key Stockholders, each of them indicated that they did not support the Second Auris Proposal at the indicated price range or the reinvestment terms proposed by Auris, but encouraged the Company, the Special Committee and the Company’s financial advisers to continue conversations with Auris as well as with any other potential acquirers. The committee also discussed the timing of a potential transaction in light of the expected failure in the first quarter of 2016 of the Company to comply with the going concern covenant under the White Oak debt, and the likelihood that White Oak would as a consequence foreclose on significant assets of the Company. The committee discussed the terms of a proposal to be made to the Key Stockholders requesting them to personally refinance the White Oak debt. The committee and management determined to work on the terms of such a proposal.

On January 1, 2016, after developing the proposal with members of the Special Committee, Mr. Lowe sent a financing proposal to the Key Stockholders in which the Key Stockholders would provide financing on substantially similar terms as the White Oak debt, the proceeds of which would be used to retire the existing White Oak debt.

Mr. Feinberg and Mr. Kennedy informed Mr. Lowe on January 2 that they were not interested in engaging in a financing transaction to replace the White Oak debt.

At a Special Committee meeting held on January 5 that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board, the Special Committee received an update on the discussions with Auris, Company B, other potential counterparties and the Key Stockholders. At this point, Mr. Schuler left the meeting. The representative of Perella Weinberg then discussed how the Committee might analyze and compare the two alternative transactions proposed by Auris and by Company B. The Committee discussed how to proceed with negotiations with both counterparties and the Key Stockholders and the rejection of the financing proposal by Mr. Feinberg and Mr. Kennedy. Based on conversations with the Key Stockholders, the committee discussed the Key Stockholders’ indications that they would only support a transaction with Auris if (a) the Key Stockholders were not required to use the proceeds of a sale of the Company to make an investment in Auris, and (b) Auris were to increase its offer price from the previously indicated range. It was noted that the Key Stockholders still had not identified a price that they would be prepared to accept but that there remained a significant price disparity. The committee also discussed what options the Company might have to engage in a strategic transaction without the support of the Key Stockholders.

At the meeting, Mr. Lowe also updated the Special Committee on other parties contacted regarding a potential replacement of the White Oak debt. The committee discussed that it appeared unlikely that the Company would be able to obtain financing from either traditional or non-traditional financing sources, and thus remained at risk of an impending White Oak default and foreclosure. Finally, during an executive session attended only by the Special Committee and representatives of Morris, Nichols and Sidley, the representative from Morris, Nichols reviewed the Special Committee’s fiduciary duties in connection with a potential transaction and led a discussion with the committee regarding whether to engage its own financial advisor in addition to Perella Weinberg (which was retained by the Company acting through the previously-constituted Transaction Committee), as it was empowered to do under its charter. After discussion with Morris, Nichols of various relevant factors, the committee determined to retain Perella Weinberg as its financial advisor and directed Morris, Nichols to negotiate an amendment to Perella Weinberg’s December 9 engagement letter with the Company reflecting that Perella Weinberg would report directly to the committee. The amended letter with Perella Weinberg was entered into on January 26, effective as of January 5. The committee also discussed whether it should make a counterproposal to Auris and determined that it was too soon to do so given that Auris was requiring each of the Key Stockholders to reinvest their proceeds from the merger into Auris and the committee did not have sufficient input from the Key Stockholders as to a valuation they would support.

On January 7, Mr. Schuler had separate conversations with a representative of Sidley and with Michael Eagle, one of our directors. In those conversations, Mr. Schuler conveyed that he would like to discuss resigning from the Board because he was considering proposing a transaction with the Company, either alone or in combination with other stockholders or financing partners. Both the representative of Sidley and Mr. Eagle asked Mr. Schuler to convey any and all potential proposals to Perella Weinberg or to the Special Committee.

The next day, on January 8, the Special Committee held a meeting that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, and other members of the Board (excluding

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Mr. Schuler). A representative of Sidley and Mr. Eagle conveyed their conversations with Mr. Schuler from the prior day. The Special Committee discussed Mr. Schuler’s potential resignation, various potential consequences of that, the possibility that Mr. Schuler might decide to make a proposal, and other facts. The committee received an update that Company B preliminarily indicated that it might be willing to acquire all of the Company’s intellectual property, subject to certain carveouts, for a $60 million upfront payment and a $20 million loan. The committee asked that the Company’s management and Perella Weinberg prepare a term sheet memorializing this proposal (the “ Second Updated Hansen Response to Company B ”). The committee also determined to recommend to the Board that Mr. Eagle be added to the Special Committee. The Board added Mr. Eagle to the committee by written consent later that day.

Following the Special Committee meeting, Mr. Eagle spoke with Mr. Schuler, who informed Mr. Eagle that he was resigning from the Board. He also told Mr. Eagle that he did not believe that Auris would be able to make an acceptable proposal and thought that the proposed transaction with Company B undervalued the Company’s intellectual property. Mr. Schuler stated that he was working with his legal counsel on proposed deal structures and hoped to have something to present to the Special Committee the following week. Mr. Eagle conveyed this information to the other directors, Sidley, Morris, Nichols and Perella Weinberg.

Later on January 8, Perella Weinberg sent Company B the Second Updated Hansen Response to Company B.

During a Special Committee call on January 11, that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board, the Special Committee received an update on the respective discussions with Auris and Company B. Given the Key Stockholders’ unwillingness to agree to Auris’s requirement that they invest in Auris, representatives of Perella Weinberg were instructed to contact Auris to counter that any required investment by the Key Stockholders should be removed as a condition for a deal between the two companies.

During a Special Committee call on January 12, that was also attended by a representative of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, and other members of the Board, the Special Committee received an update on the respective discussions with Auris and Company B. A representative of Perella Weinberg informed the Special Committee that Company B expressed concerns about the initial amount of cash to be paid under the Second Updated Hansen Response to Company B. A representative of Perella Weinberg also informed the Special Committee that Perella Weinberg had not yet been able to communicate with Auris. The Special Committee discussed the proposed press release announcing Mr. Schuler’s resignation and the fact that the Company was seeking strategic alternatives.

On January 14, the Company issued a press release and filed a Current Report on Form 8-K announcing the resignation of Mr. Schuler as a member of our Board and the fact that the Company was seeking strategic alternatives and had hired Perella Weinberg and formed a Special Committee as part of that process. Later that day, we received an updated proposal from Auris (the “ Third Auris Proposal ”) amending its prior proposal by removing the language that had required reinvestment by the Key Stockholders and maintaining the previously proposed price range.

The Special Committee held a meeting on January 15 that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. The committee discussed the Third Auris Proposal, the potential of a proposal from Mr. Schuler, and the timing for a response from Company B on the Second Updated Hansen Response to Company B. Mr. Lowe relayed a conversation with Mr. Feinberg and Mr. Kennedy where they expressed their lack of interest in joining Mr. Schuler in proposing any transaction with the Company. The Special Committee discussed the expected timing of a proposal by Mr. Schuler and requested that Sidley and Morris, Nichols work with Mr. Schuler to enter into a mutual non-disclosure agreement with the Company and to instruct Mr. Schuler to sign the non-disclosure agreement prior to taking any action.

On January 18, we entered into a mutual non-disclosure agreement with Mr. Schuler and his affiliated entities. Also on that day, Mr. Lowe spoke with Mr. Kennedy, who conveyed that he would support the Auris deal, believed a stockholder vote was required for the deal expressed in the Second Updated Hansen Response to Company B and that he would vote against a deal with Company B in its current form.

The Special Committee held a meeting on January 22 that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, and members of the Company’s management team. A representative of Perella Weinberg discussed financial analysis materials he had prepared for the committee. He also updated the committee on communications with the Key Stockholders and their lack of support for the Auris proposal at the proposed price and the seeming disengagement by Company B from the process, noting that the Company had still not received feedback on its Second Updated Hansen Response to Company B that was sent on January 8, 2016. Mr. Eagle also shared that Mr. Feinberg and Mr. Kennedy had indicated to him in recent discussions that they would oppose a sale of the Company’s intellectual property at such a price but, assuming an acceptable offer price, would support an acquisition of the Company. The Special Committee noted that communications with Mr. Schuler seeking his support of, or otherwise regarding, the Third Auris Proposal should be deferred until Mr. Schuler stated his intentions with respect to a potential proposal.

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Later in the day on January 22, Mr. Feinberg sent a letter to our Board chair and our Special Committee chair asking the Board and the Special Committee to seek to create a bidding war for the Company by making the Third Auris Proposal public, subject to consideration of the legal and contractual consequences of doing so. At the Special Committee’s direction, representatives of Perella Weinberg called Mr. Feinberg to explain that to get a deal announced with Auris, the Key Stockholders would need to agree on a price for the Auris deal and be willing to sign voting agreements with Auris to support the deal. At that time, Auris had not yet reinstituted its requirement that the Key Stockholders reinvest in Auris their proceeds from a transaction.

The Special Committee held a meeting on January 24 that was also attended by a representative of Sidley, a representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg informed the Special Committee that, as instructed by the Special Committee, Perella Weinberg had conveyed to Auris that the price range of $5.50 to $6.00 was encouraging but not yet acceptable. The representative of Perella Weinberg advised the Special Committee that Auris responded that it would not increase its offer price without further information regarding what price the Key Stockholders would consider acceptable. A representative of Perella Weinberg then conveyed the results of communications with Mr. Feinberg and Mr. Kennedy earlier in the day in which they indicated that they would likely support a transaction at approximately $8 per share, but they would confirm that the following day. The Special Committee authorized Perella Weinberg to make a counter proposal to Auris of $8 per share if Mr. Feinberg and Mr. Kennedy confirmed that they would support that price.

On January 26, the Special Committee held a meeting that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg informed the Special Committee that Mr. Feinberg and Mr. Kennedy confirmed that they would support an $8 price and that he had conveyed this to Auris and was awaiting a response. Company B still had not conveyed a response to the Company’s last proposal.

The Special Committee held a meeting on January 29 that was also attended by representatives of Sidley, a representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg informed the Special Committee that Auris had communicated to Perella Weinberg that it held a board meeting the previous evening and had not authorized any counterproposal to the Company’s latest proposal of $8 cash per share, and that any possible transaction at that price would need to include a financing contingency. Perella Weinberg indicated also that it was further informed by Auris that the treatment of the White Oak debt had become an important issue for Auris, and had also asked whether the Key Stockholders would be willing to reinvest all or a significant portion of their proceeds from the transaction into Auris, notwithstanding the removal of that condition two weeks earlier. His assessment of the conversation with Auris’s representatives was that the proposed transaction had become more uncertain, even at a price of $6 per share, as a result of recent market volatility and Auris’s continuing concern about the status of the White Oak debt. The representative of Perella Weinberg noted that there had still been no communications from Company B.

The committee then discussed various potential structures to facilitate a transaction at $6 per share without causing Auris to expend additional cash, whether through the acquisition being in a combination of cash and stock, including a contingent value right, a refinancing or rolling of the White Oak debt or other method. The committee asked Perella Weinberg to explore with Auris the possibility of Auris increasing its proposed price per share if there were a way to structure a deal that reduced the aggregate amount of cash Auris would pay at closing. The committee also instructed management to contact White Oak to assess its willingness to allow any portion of its outstanding debt to remain outstanding following a sale to Auris.

On February 1 and 2, the Board held its regularly scheduled quarterly meeting, which was also attended by representatives of Sidley, representatives of Perella Weinberg, a representative of Morris, Nichols, and members of the Company’s management team. A representative of Perella Weinberg updated the Board on his recent conversations with Auris, including outstanding issues regarding the White Oak debt and a return of the condition that the Key Stockholders invest the consideration they receive in a deal into Auris. A representative of Perella Weinberg also provided an update on his conversations with Mr. Feinberg, who stated he wanted an all cash deal of at least $6 per share and with Mr. Schuler who continued to express an interest in making a proposal to the Company. Mr. Lowe provided an update on his conversations with White Oak and the fact that they were expecting the debt to be paid in full upon the closing of an acquisition of the Company and would only grant forbearance in connection with the announcement of such an acquisition. The Special Committee asked Perella Weinberg to continue to seek a counterproposal from Auris and to ask Mr. Schuler if he intended to make a proposal.

The chair of the Special Committee and a representative of Sidley had a telephonic meeting with Mr. Schuler and his outside counsel on February 4 to discuss Mr. Schuler’s ideas for strategies to elicit potential acquirers to make their highest bids and the Special Committee’s view that unless Mr. Schuler was willing to make a bid for the Company, he should work with the Company’s financial advisor and the Special Committee on getting a revised proposal from Auris. Mr. Schuler stated his intention not to make a proposal to the Company and that he would support the Company’s financial advisor in working with Auris on a revised proposal.

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The Special Committee held a meeting on February 5 that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg informed the committee that Auris had not responded to the Company’s last counterproposal, but that representatives of Auris had conveyed that though Auris’s management’s continued to support a transaction, the interest of Auris’s board in such a transaction was waning. The representative of Perella Weinberg further informed the Special Committee that David Styka, Auris’s chief financial officer, had contacted Perella Weinberg and informed it that Auris was insisting on a condition that the Key Stockholders reinvest their transaction proceeds in Auris, that $6 per share was at the high end of a fair valuation of the Company and that Auris was open to further discussing deal structure issues to see if the gap between the parties could be bridged. The Special Committee instructed Perella Weinberg, Sidley and Morris, Nichols to analyze and pursue deal structures and strategies with Auris to achieve this result. The Special Committee asked Perella Weinberg to try to convince Auris to abandon its requirement that each of the Key Stockholders invest in Auris, but understood that ultimately any transaction that would be in the best interests of the other stockholders would have to be approved by at least Mr. Schuler or Mr. Feinberg, given the significance of their respective ownership stakes, which collectively (with their respective affiliates) constitute a majority of Hansen’s outstanding shares. If both of them opposed a transaction, the Company would not be able to obtain the necessary stockholder approval for a change of control transaction. The Special Committee also discussed the call with Mr. Schuler the previous day in which he stated that he would not make a proposal to the Company. The committee instructed Perella Weinberg to discuss with Mr. Schuler the Company’s financial needs and constraints, Auris’ most recent proposal, and the Company’s limited leverage in its negotiations with Auris, now that Mr. Schuler stated that he did not intend to make an offer to acquire the Company.

On February 6, Mr. Lowe, another member of the Company’s management team and Mr. Schuler had a telephonic meeting to discuss the Company’s cash needs in order to obtain an auditor opinion without a going concern qualification in connection with its upcoming Form 10-K filing, in an attempt to avoid an event of default on the White Oak debt. Mr. Schuler asked Mr. Lowe if an infusion of $15 million to the Company would suffice. Mr. Lowe informed Mr. Schuler that the cash requirements would be significantly higher than $15 million.

Also on February 6, a representative of Perella Weinberg spoke to Dr. Moll, who confirmed the earlier statement by Mr. Styka that Auris would require the Key Stockholders to invest their proceeds from the transaction into Auris. Later on February 6, Mr. Lowe spoke with Mr. Kennedy and presented the Company’s financial position given the potential event of default with White Oak. Mr. Kennedy expressed that he understood the potential for a Company bankruptcy and that he would support a deal with Auris that required a reinvestment of the proceeds he received from the deal.

The Special Committee held a meeting on February 9 that was also attended by representatives of Sidley, a representative of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg updated the Special Committee on ongoing discussions with Auris regarding structuring options and price, as well as with the Key Stockholders regarding their support for a transaction and the significant issues facing the Company, including the potential of a default under the White Oak indebtedness. He noted that the latest Auris proposal was that Auris would not entertain a transaction that involved it investing in a transaction on a net basis more than $30 million in cash after taking into account the reinvestment by the Key Stockholders of their deal proceeds in Auris, though Mr. Styka had indicated that Auris would give further consideration to increasing the total merger consideration, with a condition to closing that White Oak roll over approximately $15 to $20 million of its debt. The committee discussed that Mr. Feinberg continued to request at least $6 per share in cash for his shares without any requirement to reinvest those proceeds in Auris. The Special Committee discussed the proposal and alternative structuring mechanisms and directed Perella Weinberg to continue negotiations with Auris. The committee also discussed with Sidley and Morris, Nichols the various legal aspects that would be involved in potentially permitting Company stockholders who satisfy the requirements of being an “accredited” investor under the securities laws to elect whether to receive cash or shares of Auris in connection with the merger (other than the Key Stockholders, who would be required to receive shares of Auris).

The following day, on February 10, the Special Committee held a meeting that was also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. A representative of Perella Weinberg updated the Special Committee on ongoing discussions with Auris regarding structuring options and price, with the current proposal from Auris being that it would proceed with an acquisition of the Company only if the net cash invested by Auris in a transaction (after taking into account the reinvestment by the Key Stockholders of their deal proceeds in Auris) was less than $35 million in cash, the Key Stockholders reinvested in Auris all of their proceeds received in a transaction in Auris, the Company’s working capital would be greater than zero at the close of a transaction, and there were some ability to address the White Oak debt through a partial or complete rollover with White Oak or another lender (the “ Revised Auris Proposal ”). The Special Committee continued its discussion from the prior meeting regarding the possibility of allowing Company stockholders who satisfy the

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requirements of being an “accredited” investor under the securities laws to elect to receive cash or shares in Auris. The Special Committee also discussed the possibility of re-engaging with Company B after the extended silence, and determined to wait until discussions with Auris were more advanced.

At the direction of the Special Committee, the Company sent an updated term sheet to Auris on February 11 proposing a transaction in which accredited Company stockholders would be given the ability to elect to receive Auris stock (subject to a cap of 70%), reinvestment of merger proceeds of Company stockholders holding at least 60% but not more than 70% of the Company’s outstanding shares, a price per share equal to the quotient determined by dividing a figure between $35 and $40 million by the number of outstanding Company shares held by persons other than those receiving, or reinvesting their proceeds in, Auris stock and a requirement that the Company would assist Auris in seeking to refinance $15 million of the White Oak debt (but no condition that such refinancing be obtained).

On February 12, 2016, Mr. Lowe had a call with White Oak at their request. They reiterated to Mr. Lowe that a deal with Auris could not require any rollover of the White Oak debt and that a new debt facility with the combined entity would require a complete diligence process with White Oak. Mr. Lowe asked White Oak if it would waive the going concern covenant and White Oak responded that any waiver would be conditioned upon the certainty of a deal and its potential to close, and would come with a cost to the Company.

On each of February 12 and 16, the Special Committee held meetings that were also attended by representatives of Sidley, representatives of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board. Representatives of Perella Weinberg and Sidley updated the Special Committee on their ongoing discussions with Auris regarding structuring options and price, with the committee providing input and guidance. During the February 16 ^th meeting, representatives of Sidley informed the committee that Auris had rejected the proposal that accredited Company stockholders other than the Key Stockholders be given the opportunity to elect to receive either cash or Auris shares in the merger. Auris stated that it rejected this proposal because of, among other things, the requirement to publicly disclose Auris’s confidential financial information such a proposal would entail, Auris’s desire to maintain its status as a private company, and its unwillingness to entertain a complex process whereby accredited investors in the Company could potentially be identified as eligible for such a potential reinvestment. Auris stated that it would only agree to allow accredited stockholders to accept non-cash consideration if arranged directly with those stockholders before the signing of the merger agreement. Also during this meeting, Mr. Lowe updated the committee on the efforts to seek alternative lenders to replace White Oak, noting the Company had not found willing alternative lenders, but would continue its efforts in this regard.

We received a revised proposal from Auris on February 17 for $4.80 per share (which approximated the $35 million aggregate cash proceeds Auris previously indicated it was willing to spend in the acquisition), requiring that all of the Key Stockholders reinvest all of the consideration received by them in the transaction into Auris and that all of the White Oak debt remain outstanding following the transaction. This proposal was shared with the Key Stockholders.

At the Special Committee’s instruction, also on February 17, 2016, Mr. Vance exchanged messages and talked to Company B’s chief executive officer about a desire to refresh the companies’ discussions surrounding a sale of all of the Company’s intellectual property in exchange for a license back to the Company and cash consideration. Company B’s chief executive officer confirmed the cash consideration for a proposed sale of the Company’s intellectual property would be a $60 million upfront payment and $10 million loan. As with earlier proposals from Company B, none of the proceeds from such a transaction would be available for distribution to stockholders of the Company and the Company would be required to pay the White Oak debt from the proceeds received from Company B.

On February 18, Sidley sent a proposed draft of a merger agreement to Auris’s counsel, Morrison & Foerster LLP.

Also on February 18, the Company sent a revised term sheet (the “ Company B Term Sheet ”) to Company B with the revised financial terms.

The Special Committee held a meeting on February 19 that was also attended by a representative of Sidley, a representative of Perella Weinberg, representatives of Morris, Nichols, members of the Company’s management team, and other members of the Board, to review the state of negotiations with Auris and the Company B Term Sheet. Given the uncertainty surrounding the requirement of the Auris deal that the White Oak debt remain outstanding following the acquisition, the Special Committee instructed the Company’s financial advisor and management to pursue additional clarification and details from Company B. The Special Committee discussed the fact that the aggregate proceeds proposed by Company B would be insufficient to meet the Company’s operating needs under its current five-year operating plan, particularly given the need to utilize approximately $36 million of such proceeds to pay off the White Oak indebtedness. The Special Committee also instructed management and the legal and financial advisors to continue pursuing both transactions and to try to increase value from both. From February 19 through March 6, the Company, working with its legal and financial advisors, pursued both potential transactions. At points during this period of time, Company B requested, but was not granted, exclusivity. At one point in this process, Auris suspended negotiations regarding an acquisition based on the Key

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Stockholders’ lack of support for a deal at the price Auris was proposing, and, for a period of about a week, engaged in discussions regarding a commercial deal whereby Auris would purchase certain intellectual property of the Company with a license back to the Company, before returning to pursuing an acquisition of the Company. During this period of time there were no material proposed changes in purchase price.

Between February 21 and March 4, the Special Committee held seven meetings, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, to review the status of discussions with Auris, the status of discussions with Company B, the degree to which a Company B transaction would allow the Company to operate going forward, the Key Stockholders’ views as to both potential transactions, discussions with White Oak and other relevant matters.

Auris submitted a revised proposal to the Company on March 6 (the “ Revised Proposal ”) contemplating a price of $5 a share, and requiring the Key Stockholders to invest all of their proceeds from the transaction into Auris. Although unclear, the proposal seemed to indicate that it would be a condition that the White Oak debt remain outstanding following the closing. This revised proposal was communicated to the Key Stockholders.

Later on March 6, a representative of Perella Weinberg, together with Mr. Feinberg had a call with Dr. Moll and Mr. Styka where he stated that the Key Stockholders would support a transaction with Auris at $6 per share no financing contingency for the White Oak debt.

On March 7, Auris submitted a counterproposal for $5.50 per share without a White Oak financing contingency but continuing to include a requirement that the Key Stockholders invest their entire consideration received in the deal into Auris. Later that evening, the Special Committee met and instructed Perella Weinberg to communicate the details of the counterproposal from Auris to the Key Stockholders and to move the deal with Auris forward. The committee also received an update on the negotiations with Company B, including that the parties had not been able to agree upon terms that would be acceptable to the Company and the Key Stockholders. In particular, Company B would not agree that the Company would retain, or retain rights to, intellectual property that would be key to advancing its vascular business, which would be the Company’s remaining focus following any such transaction with Company B. The committee also discussed the White Oak debt, and instructed Mr. Lowe to contact White Oak to request forbearance for the looming going concern covenant and to negotiate a forbearance agreement with White Oak that would permit the Auris transaction to be signed and closed within a reasonable period. The committee instructed management and its legal and financial advisors that if the Key Stockholders agreed to the terms of the transaction with Auris, to proceed with negotiations with Auris and, in light of the fact that the final proposal from Company B provided neither sufficient financing, nor the operating ability, for the Company to continue its business going forward, to disengage from negotiations with Company B.

Later on March 7, representatives of Perella Weinberg communicated to the Key Stockholders the counterproposal from Auris. The Key Stockholders indicated their approval of the deal pending their completion of the negotiation of the terms of their required reinvestment into Auris.

On March 8, the terms of such reinvestment proposed by Auris were sent to the Key Stockholders and they communicated to representatives of Perella Weinberg their acceptance of the general terms. From March 8 through the execution of the merger agreement, the Key Stockholders and Auris negotiated the documentation regarding the reinvestment of their respective shares of the merger proceeds into Auris, as required by Auris.

Beginning on March 9, the parties and their respective advisors began negotiating documentation regarding the transaction. These negotiations continued through the execution of the merger agreement.

On March 10, Mr. Vance called Company B’s executive officer to inform him that we would not be pursuing the Company B deal and were moving in a different direction.

Between March 11 and March 25, the Special Committee held six separate meetings, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, during which they discussed the progress that had been made in negotiations, how more progress could be made more quickly, how the White Oak debt was being addressed in these negotiations, the open issues between the parties, and the status of discussions with White Oak regarding the debt and the impact of the Company potentially being put into bankruptcy as a result of an imminent White Oak event of default arising from the going concern covenant.

Members of management for Auris visited our headquarters in Mountain View, California on March 15 and met with members of our management team. During those meetings, Mr. Styka indicated that the White Oak debt would still need to be addressed in a manner satisfactory to Auris for a transaction to be signed or closed.

On March 18, Mr. Lowe and Mr. Styka held a telephonic meeting where Auris’s Mr. Styka stated that Auris would require a debt refinancing condition to close as part of the merger agreement.

As part of the Special Committee’s discussion of the status of the transaction at its meeting on March 25, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, the

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committee determined that Ms. Bowen and Mr. Eagle should point out to Auris that any financing source that might replace the White Oak debt following closing would want to engage in those discussions with Auris, not the Company, making it impossible for the Company on its own to find such financing or to take the risk of the transaction not closing if it could not be obtained. Ms. Bowen and Mr. Eagle had that discussion on March 27.

On March 27, the Company received a revised proposal from Auris reducing its proposal to $3.50 per share but removing any financing condition to close. The requirement that the Key Stockholders reinvest all of the merger proceeds into Auris remained.

The Special Committee held a meeting on March 28, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, to discuss the revised proposal. The committee explored potential structures to keep the transaction price at $5.50, including a $3.50 payment at closing followed by a later additional payment based on the refinancing of the White Oak debt.

Later on March 28, we responded to Auris that their proposal undervalued the Company and countered with a proposal of $3.50 per share at closing plus additional consideration of between $2.00 and $2.33 payable if the White Oak debt refinancing is obtained at closing or within the 24 months post-closing. This proposal assumed full assumption of the White Oak debt at closing.

On March 29, Auris increased its proposal to a $4.00 offer price with no contingent payments and the assumption of the White Oak debt and no financing condition. The requirement that the Key Stockholders reinvest all of the merger proceeds into Auris remained.

The Special Committee met on March 30, with members of the Board, management and representatives of Perella Weinberg, Sidley and Morris Nichols present, to discuss this proposal and potential alternatives, as well as the status of discussions with White Oak.

We responded to Auris on March 31 that the proposal still undervalued the Company and countered with a proposal of $4.25 per share.

Negotiations between the parties continued. During this period of negotiations, Auris required that affiliates and individuals and entities with family connections to the Key Stockholders (i.e., the Rollover Stockholders) also reinvest the proceeds of the merger into Auris. The Special Committee held three meetings from April 1 through April 10, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, during which the committee discussed the status of negotiations with Auris and with White Oak and gave its management team and legal and financial advisors guidance and direction.

On April 12, Auris responded that their board had approved a transaction price at $4.00 per share with the requirement that the Company get forbearance from White Oak through the close of the deal. The requirement that the Rollover Stockholders reinvest all of the merger proceeds into Auris remained. The price of $4.00 per share represented an equity value of the Company of approximately $80 million.

The Special Committee met on April 13 and April 18, with members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols present, to review and discuss the terms of the proposed transaction with Auris and the proposed forbearance agreement with White Oak, with input and review of relevant materials from management, Sidley, Perella Weinberg and Morris, Nichols.

On April 19, the forbearance agreement with White Oak was executed and shortly thereafter the Special Committee held a meeting, at which members of the Board, management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, during which Perella Weinberg rendered its oral opinion, subsequently confirmed in writing, to the Board and Special Committee that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth therein, the merger consideration to be received by the holders of Hansen common stock (other than the holders of cancelled shares and dissenting shares and the Rollover Stockholders) pursuant to the merger agreement was fair, from a financial point of view, to such holders. A representative of Sidley reviewed the terms of the merger agreement with the Special Committee. After discussion, the Special Committee unanimously approved recommending to the Board that the Board approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, recommend to the Company stockholders that they approve the merger agreement and the merger and approve the forbearance agreement with White Oak.

Immediately following such Special Committee meeting, the Board held a meeting, at which members of management and representatives of Perella Weinberg, Sidley and Morris, Nichols were present, in which the Board unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, determined to recommend to the Company stockholders that they approve the merger agreement and the merger and approved the forbearance agreement with White Oak.

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Later in the day on April 19, the merger agreement with Auris was executed, and all signatories to the voting agreements executed such agreements and related proxies, the Rollover Stockholders executed the documentation regarding the reinvestment of their merger proceeds into Auris and general releases, and the Company and Auris jointly announced the execution of the merger agreement the morning of April 20, 2016.