EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and among BUGATTI PARENT, INC., BUGATTI MERGER SUB, INC. and BRAVO BRIO RESTAURANT GROUP, INC. Dated as of March 7, 2018
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and among
BUGATTI PARENT, INC.,
BUGATTI MERGER SUB, INC.
and
BRAVO BRIO RESTAURANT GROUP, INC.
Dated as of March 7, 2018
i
Table of Contents
Page
ARTICLE I THE MERGER ......................................................................................................................... 1
Section 1.1. The Merger ............................................................................................................ 1
Section 1.2. Closing ................................................................................................................... 2
Section 1.3. Effective Time ....................................................................................................... 2
Section 1.4. Surviving Corporation Articles of Incorporation ................................................... 2
Section 1.5. Surviving Corporation Code of Regulations .......................................................... 2
Section 1.6. Directors ................................................................................................................ 2
Section 1.7. Officers .................................................................................................................. 2
ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES ...................................... 3
Section 2.1. Effect on Share Capital .......................................................................................... 3
Section 2.2. Exchange of Certificates ........................................................................................ 5
Section 2.3. Treatment of Company Options and Company Restricted Shares. ....................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................................. 8
Section 3.1. Organization and Qualification; Subsidiaries. ....................................................... 8
Section 3.2. Capital Stock. ......................................................................................................... 9
Section 3.3. Corporate Authority and Approval ...................................................................... 10
Section 3.4. No Conflict; Consents and Approvals ................................................................. 11
Section 3.5. Reports and Financial Statements ........................................................................ 11
Section 3.6. Internal Controls and Procedures ......................................................................... 12
Section 3.7. No Undisclosed Liabilities ................................................................................... 13
Section 3.8. Internal Controls; Financial Reporting. ............................................................... 13
Section 3.9. Absence of Certain Changes or Events ................................................................ 13
Section 3.10. Compliance with Law; Permits ............................................................................ 13
Section 3.11. Environmental Matters ........................................................................................ 14
Section 3.12. Employee Benefit Plans ....................................................................................... 15
Section 3.13. Investigations; Litigation ..................................................................................... 16
Section 3.14. Information Supplied ........................................................................................... 16
Section 3.15. Tax Matters .......................................................................................................... 17
Section 3.16. Labor Matters ....................................................................................................... 17
Section 3.17. Intellectual Property ............................................................................................. 18
Section 3.18. Real Property ....................................................................................................... 19
Section 3.19. Company Material Contracts ............................................................................... 20
Section 3.20. Opinion of Financial Advisor .............................................................................. 22
Section 3.21. Finders or Brokers; Fees ...................................................................................... 23
Section 3.22. Vote Required ...................................................................................................... 23
Section 3.23. Takeover Laws ..................................................................................................... 23
Section 3.24. Insurance .............................................................................................................. 23
Section 3.25. Affiliate Transactions .......................................................................................... 23
Section 3.26. Certain Business Practices ................................................................................... 24
Section 3.27. Quality and Safety of Food & Beverage Products. .............................................. 24
Section 3.28. No Other Representations or Warranties ............................................................. 24
ii
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ......... 24
Section 4.1. Organization and Qualification ............................................................................ 25
Section 4.2. Corporate Authority and Approval ...................................................................... 25
Section 4.3. No Conflict; Required Filings and Consents ....................................................... 25
Section 4.4. Investigations; Litigation ..................................................................................... 26
Section 4.5. Information Supplied ........................................................................................... 26
Section 4.6. Equity Commitment Letter .................................................................................. 26
Section 4.7. Financing ............................................................................................................. 27
Section 4.8. Capitalization of Merger Sub ............................................................................... 27
Section 4.9. Certain Arrangements .......................................................................................... 27
Section 4.10. Ownership of Common Shares ............................................................................ 27
Section 4.11. No Vote of Parent Stockholders .......................................................................... 27
Section 4.12. Finders or Brokers ............................................................................................... 27
Section 4.13. No Other Representations or Warranties ............................................................. 28
Section 4.14. Investigation; No Other Representations and Warranties .................................... 28
ARTICLE V COVENANTS AND AGREEMENTS ................................................................................. 28
Section 5.1. Conduct of Business by the Company and Parent ............................................... 28
Section 5.2. Proxy Statement and Other Required SEC Filings .............................................. 31
Section 5.3. Company Shareholders Meeting .......................................................................... 33
Section 5.4. Access; Confidentiality ........................................................................................ 33
Section 5.5. Acquisition Proposals .......................................................................................... 34
Section 5.6. Employee Matters ................................................................................................ 37
Section 5.7. Efforts; Consents and Approvals ......................................................................... 39
Section 5.8. Takeover Statute .................................................................................................. 40
Section 5.9. Notification of Certain Matters ............................................................................ 40
Section 5.10. Public Announcements ........................................................................................ 40
Section 5.11. Indemnification and Insurance ............................................................................. 41
Section 5.12. Financing Cooperation ......................................................................................... 42
Section 5.13. Transaction Litigation .......................................................................................... 45
Section 5.14. Stock Exchange Delisting; Deregistration ........................................................... 45
Section 5.15. Merger Sub .......................................................................................................... 45
Section 5.16. Section 16(b) ........................................................................................................ 45
Section 5.17. Control of Operations .......................................................................................... 45
ARTICLE VI CONDITIONS TO THE MERGER .................................................................................... 45
Section 6.1. Conditions to Each Party’s Obligation to Effect the Merger ............................... 45
Section 6.2. Conditions to Obligations of Parent and Merger Sub .......................................... 46
Section 6.3. Conditions to Obligations of the Company ......................................................... 46
Section 6.4. Frustration of Closing Conditions ........................................................................ 47
ARTICLE VII TERMINATION ................................................................................................................ 47
Section 7.1. Termination by Mutual Consent .......................................................................... 47
Section 7.2. Termination by Either Parent or the Company .................................................... 47
Section 7.3. Termination by Parent ......................................................................................... 48
Section 7.4. Termination by the Company .............................................................................. 48
Section 7.5. Manner and Effect of Termination ...................................................................... 48
iii
Section 7.6. Termination Payment ........................................................................................... 48
ARTICLE VIII MISCELLANEOUS.......................................................................................................... 50
Section 8.1. No Survival of Representations and Warranties .................................................. 50
Section 8.2. Expenses .............................................................................................................. 50
Section 8.3. Counterparts; Effectiveness ................................................................................. 50
Section 8.4. Governing Law; Jurisdiction ............................................................................... 50
Section 8.5. Remedies; Specific Enforcement ......................................................................... 51
Section 8.6. Non-Recourse ...................................................................................................... 52
Section 8.7. No Limitation. ...................................................................................................... 52
Section 8.8. WAIVER OF JURY TRIAL ................................................................................ 52
Section 8.9. Notices ................................................................................................................. 53
Section 8.10. Assignment; Binding Effect ................................................................................. 54
Section 8.11. Severability .......................................................................................................... 54
Section 8.12. Entire Agreement; Third-Party Beneficiaries ...................................................... 54
Section 8.13. Amendments; Waivers ......................................................................................... 55
Section 8.14. Headings .............................................................................................................. 55
Section 8.15. Interpretation ........................................................................................................ 55
Section 8.16. Obligations of Merger Sub .................................................................................. 56
Section 8.17. Definitions ........................................................................................................... 56
EXHIBITS
Exhibit A Articles of Incorporation of Surviving Corporation
Exhibit B Code of Regulations of Surviving Corporation
DISCLOSURE LETTERS
Company Disclosure Letter
Parent Disclosure Letter
1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 7, 2018 (the “Agreement”), by and
among Bugatti Parent, Inc., a Delaware corporation (“Parent”), Bugatti Merger Sub, Inc., an Ohio
corporation and a direct wholly-owned subsidiary of Parent (“Merger Sub”), and Bravo Brio Restaurant
Group, Inc., an Ohio corporation (the “Company”). Capitalized terms used but not defined elsewhere in
this Agreement shall have the meanings set forth in Section 8.17.
RECITALS
WHEREAS, it is proposed that Merger Sub will be merged with and into the Company (the
“Merger”), with the Company surviving the Merger (the “Surviving Corporation”), upon the terms and
subject to the conditions and limitations of the Ohio General Corporation Law (the “OGCL”) and this
Agreement;
WHEREAS, the board of directors of each of Parent and Merger Sub has unanimously (a)
determined that the Merger is advisable and fair to, and in the best interests of, Parent and Merger Sub, as
the case may be; and (b) approved and adopted this Agreement and the Transactions, including the
Merger, in accordance with the OGCL;
WHEREAS, the board of directors of the Company (the “Company Board”) has (a) determined
that the Transactions, including the Merger, are fair to and in the best interests of the Company and its
shareholders, (b) approved and declared advisable this Agreement and the Transactions, and (c) on the
terms and subject to the conditions set forth herein, resolved to recommend that the Company
Shareholders adopt this Agreement and approve the Transactions in accordance with the OGCL;
WHEREAS, Parent, as sole shareholder of Merger Sub, has approved this Agreement and the
Transactions, including the Merger;
WHEREAS, Parent, Merger Sub and the Company desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe various conditions to the
Merger; and
WHEREAS, concurrently with the execution of this Agreement, and as a condition and
inducement to the Company’s willingness to enter into this Agreement, Parent and Merger Sub have
delivered an equity financing commitment (the “Equity Commitment Letter”) from Spice Private Equity
(Bermuda) Ltd. (the “Equity Investor”), pursuant to which, subject to the terms and conditions contained
in the Equity Commitment Letter, the Equity Investor is agreeing to consummate the Equity Financing.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements contained herein, and intending to be legally bound hereby, the Company,
Parent and Merger Sub agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. On the terms and subject to the conditions set forth in this
Agreement and the applicable terms of the OGCL, at the Effective Time, Merger Sub shall be merged
with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease.
The Company shall be the Surviving Corporation in the Merger, and the separate corporate existence of
the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected
2
by the Merger, except as set forth in this Article I. The Merger shall have the effects specified in the
OGCL including Section 1701.82 thereof.
Section 1.2. Closing. Subject to the terms and conditions of this Agreement, the closing of
the Merger (the “Closing”) will take place at the offices of Dechert LLP, ▇▇▇▇ Centre, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City time, on the date (the “Closing Date”)
that is the third (3rd) Business Day after the day on which the last of those conditions (other than any
conditions in Article VI that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions) is satisfied or waived in accordance with this Agreement or at
such other place and time or on such other date as Parent and the Company may agree in writing.
Section 1.3. Effective Time. Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, the Company and Parent will cause a certificate of merger with respect
to the Merger (the “Certificate of Merger”) to be executed and filed with the Secretary of State of the
State of Ohio, as provided in the OGCL. The Merger shall become effective at the time when the
Certificate of Merger has been duly filed with the Secretary of State of the State of Ohio, or at such later
time and date as may be agreed by the parties hereto in writing and set forth in the Certificate of Merger
in accordance with the OGCL (the “Effective Time”).
Section 1.4. Surviving Corporation Articles of Incorporation. At the Effective Time, the
articles of incorporation of Merger Sub in effect immediately prior to the Effective Time, which are
attached hereto as Exhibit A, shall be the articles of incorporation (the “Articles of Incorporation”) of the
Surviving Corporation, until thereafter amended or modified as provided therein or by applicable Law,
except that references to the name of Merger Sub shall be replaced by the name of the Company.
Section 1.5. Surviving Corporation Code of Regulations. At the Effective Time, the code of
regulations of Merger Sub in effect immediately prior to the Effective Time, which is attached hereto as
Exhibit B, shall be the code of regulations (the “Code of Regulations”) of the Surviving Corporation, until
thereafter amended or modified as provided therein or by applicable Law, except that references to the
name of Merger Sub shall be replaced by the name of the Company.
Section 1.6. Directors. The directors of Merger Sub immediately prior to the Effective Time
shall be, from and after the Effective Time, the initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and the Code of Regulations until their respective
successors are duly elected and qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and the Code of Regulations, and each of the parties to this Agreement
shall take all requisite action, if any, required so that the directors of Merger Sub immediately prior to the
Effective Time shall be, from and after the Effective Time, the directors of the Surviving Corporation.
Section 1.7. Officers. The officers of the Company immediately prior to the Effective Time
shall be, from and after the Effective Time, the initial officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and the Code of Regulations until their respective
successors are duly elected or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Articles of Incorporation and the Code of Regulations, and each of the parties to
this Agreement shall take all requisite action, if any, required so that the officers of the Company
immediately prior to the Effective Time shall be, from and after the Effective Time, the initial officers of
the Surviving Corporation.
3
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Share Capital. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Parent, Merger Sub or the holders of any securities of the Company or Merger Sub, the
following will occur:
(a) Conversion of Common Shares. Except as otherwise provided in Section 2.1(b),
each common share of the Company, no par value (each, a “Company Common Share”), issued
and outstanding immediately prior to the Effective Time (other than Excluded Shares and
Dissenting Shares) shall be converted into the right to receive $4.05 in cash, without interest
thereon and subject to any applicable taxes withheld pursuant to Section 2.2(b)(ii) (the “Merger
Consideration”). Each Company Common Share to be converted into the right to receive the
Merger Consideration as provided in this Section 2.1(a) shall be automatically canceled and shall
cease to exist, and the holders of share certificates representing Company Common Shares (the
“Certificates”) or book-entry shares (“Book-Entry Shares”) which immediately prior to the
Effective Time represented such Company Common Shares shall cease to have any rights with
respect to such Company Common Shares other than, (i) in the case of the Company Common
Shares (other than Dissenting Shares and Excluded Shares), the right to receive, upon surrender
of such Certificates or Book-Entry Shares in accordance with Section 2.2, the Merger
Consideration and (ii) in the case of the Dissenting Shares, the rights set forth in Section 2.1(e).
(b) Treasury Shares; Parent and Merger Sub-Owned Shares. Notwithstanding
anything in this Agreement to the contrary, each Company Common Share held by the Company
as a treasury share or owned by any of the Company’s direct or indirect wholly owned
Subsidiaries or owned by Parent, Merger Sub or any other direct or indirect wholly owned
Subsidiary of Parent immediately prior to the Effective Time (collectively, the “Excluded
Shares”) shall be canceled automatically and shall cease to exist, and no consideration shall be
delivered in respect of the Excluded Shares.
(c) Conversion of Merger Sub Share Capital. Each common share, no par value, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted
into and become one validly issued, fully paid and nonassessable common share, no par value per
share, of the Surviving Corporation.
(d) Adjustments. Without limiting the other provisions of this Agreement, if at any
time during the period between the date of this Agreement and the Effective Time, any change in
the number of outstanding Company Common Shares shall occur as a result of a reclassification,
recapitalization, reorganization, share split (including a reverse share split), or combination,
exchange or readjustment of shares, or any share dividend or share distribution (including any
dividend or distribution of securities convertible into Company Common Shares) or other similar
change with respect to the Company Common Shares with a record date during such period, the
Merger Consideration shall be equitably adjusted to reflect such change and such adjustment shall
provide the Company’s shareholders the same economic effect as contemplated by this
Agreement prior to such action; provided, that nothing in this Section 2.1(d) shall be construed to
permit the Company, any Subsidiary of the Company or any other Person to take any action that
is otherwise prohibited by the terms of this Agreement (including, for the avoidance of doubt,
Section 5.1).
4
(e) Dissenters’ Rights. Notwithstanding any provision of this Agreement to the
contrary and to the extent required by the OGCL, any Company Common Shares that are issued
and outstanding immediately prior to the Effective Time that are held by any shareholder who
was a record holder of Company Common Shares as to which such shareholder seeks relief as of
the date fixed for determination of shareholders entitled to notice of the Company Shareholders
Meeting, and who delivers to the Company, in accordance with Section 1701.85 of the OGCL, a
written demand for payment of the fair cash value for such Company Common Shares prior to the
Company Shareholders Meeting and for such Company Common Shares that have not been voted
in favor of the proposal to adopt this Agreement at the Company Shareholders Meeting (the
“Dissenting Shares”), will not be converted into the right to receive the Merger Consideration,
unless and until such Dissenting Holder fails to perfect or otherwise waives, withdraws or loses
any such rights as a Dissenting Holder under the OGCL, and such Dissenting Holder will be
entitled to only such rights as are granted to holders of Dissenting Shares by the OGCL. If a
Dissenting Holder fails to perfect or otherwise waives, withdraws or loses any such rights as a
Dissenting Holder under the OGCL, then as of the Effective Time or the occurrence of such
event, whichever later occurs, and upon surrender of such Certificates or Book-Entry Shares
representing the Company Common Shares in accordance with Section 2.2, such holder’s
Company Common Shares will automatically be converted into and represent only the right to
receive the Merger Consideration, without interest, and will no longer be Dissenting Shares. No
Dissenting Holder shall be entitled to receive the Merger Consideration unless and until such
Dissenting Holder shall have effectively withdrawn or lost such holder’s rights under Section
1701.85 of the OGCL (through failure to perfect or otherwise), and any Dissenting Holder shall
be entitled to only such rights as are provided by Section 1701.85 of the OGCL with respect to
Dissenting Shares owned by such Dissenting Holder. If any Person who otherwise would be
deemed a Dissenting Holder shall have effectively withdrawn or lost such holder’s rights under
Section 1701.85 of the OGCL (through failure to perfect or otherwise) or if a court of competent
jurisdiction shall finally determine that the Dissenting Holder is not entitled to the relief provided
by Section 1701.85 of the OGCL with respect to any Dissenting Shares, such Dissenting Shares
shall thereupon be treated as though such Dissenting Shares had been converted, as of the
Effective Time or as of the time of such withdrawal or loss of such holders’ rights under 1701.85
of the OGCL (through failure to perfect or otherwise), whichever later occurs, into the right to
receive the Merger Consideration. The Company will give Parent prompt written notice (and in
any event within two (2) Business Days) of, and copies of all correspondence from, each
shareholder who asserts rights as a Dissenting Holder following receipt of such shareholder’s
written demand delivered as provided in Section 1701.85 of the OGCL, or withdrawals or
attempted withdrawals of such demands and any other instruments served pursuant to the OGCL
and received by the Company in respect of Dissenting Shares. In no event shall the exercise by
one or more Dissenting Holders of demands for appraisal pursuant to the OGCL give rise to a
right to terminate this Agreement. Parent shall have the right to direct and control all negotiations
and proceedings with respect to any such demands, withdrawals or attempted withdrawals of such
demands and any other actions in respect of any Company shareholder’s rights in respect of
Dissenting Shares; provided, that prior to the Effective Time, Parent shall consult with the
Company and consider in good faith the Company’s advice with respect to such negotiations and
proceedings and the Company shall have the right to participate in any such negotiations and
proceedings. The Company may not, except with the prior written consent of Parent (which
consent will not be unreasonably withheld, conditioned or delayed), and prior to the Effective
Time, Parent may not, except with the prior written consent of the Company (which consent will
not be unreasonably withheld, conditioned or delayed), voluntarily make any payment with
respect to any demands for appraisal or settle or offer to settle any such demands for payment in
respect of Dissenting Shares.
5
Section 2.2. Exchange of Certificates.
(a) Exchange Fund. At least one (1) Business Day prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a U.S. bank or trust company that shall
be appointed by Parent (and reasonably satisfactory to the Company) to act as a paying agent
hereunder (the “Paying Agent”), in trust for the benefit of holders of Company Common Shares,
cash in U.S. dollars that is sufficient in the aggregate for the Paying Agent to make the payments
of the aggregate Merger Consideration in exchange for all of the Company Common Shares
issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares
and Excluded shares), payable upon due surrender of Certificates or Book-Entry Shares pursuant
to the provisions of this Article II (such cash in the aggregate and any proceeds thereon being
hereinafter referred to as the “Exchange Fund”). In the event any Dissenting Shares cease to be
Dissenting Shares, prior to the termination of the Exchange Fund pursuant to Section 2.2(d),
Parent shall deposit, or cause to be deposited, with the Paying Agent in the Exchange Fund, an
amount equal to the product of (i) the Merger Consideration multiplied by (ii) the number of such
formerly Dissenting Shares. In the event the Exchange Fund shall be insufficient to make the
payments contemplated by this Agreement, Parent shall, or shall cause Merger Sub or the
Surviving Corporation to, promptly deposit additional funds with the Paying Agent in an amount
sufficient to make such payments. The Exchange Fund shall not be used for any purpose that is
not expressly provided for in this Agreement. The Exchange Fund shall be invested by the
Paying Agent as reasonably directed by Parent; provided, however, that (i) any investment of
such cash shall in all events be limited to (A) direct short-term obligations of, or short-term
obligations fully guaranteed as to principal and interest by, the U.S. government or any agency or
instrumentality thereof, (B) in commercial paper rated A-1 or P-1 or better by ▇▇▇▇▇’▇ Investors
Service, Inc. or Standard & Poor’s Corporation, respectively, (C) in deposit accounts, certificates
of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital
exceeding $10 billion (based on the most recent financial statements of such bank that are then
publicly available), or (D) money market funds investing solely in a combination of the foregoing
and, in any such case, no instrument shall have a maturity exceeding three months and (ii) no
such investment or loss thereon shall affect the amounts payable to the former holders of
Company Common Shares pursuant to this Article II.
(b) Payment Procedures.
(i) As promptly as practicable following the Effective Time and in any
event not later than the third (3rd) Business Day thereafter, the Surviving Corporation
shall cause the Paying Agent to mail (and to make available for collection by hand) to
each holder of record (as of immediately prior to the Effective Time) of a Certificate or
Book-Entry Share that immediately prior to the Effective Time represented outstanding
Company Common Shares (other than Dissenting Shares and Excluded Shares) whose
Company Common Shares were converted into the right to receive the consideration
payable in respect thereof pursuant to Section 2.1 (i) a letter of transmittal, which shall
specify that delivery shall be effected, and risk of loss and title to the Certificates or
Book-Entry Shares, as applicable, shall pass, only upon proper delivery of the
Certificates (or affidavits of loss together with any required bond or indemnity in lieu
thereof) or Book-Entry Shares to the Paying Agent and which shall be in the form and
have such other provisions as Parent and the Company may reasonably specify and (ii)
instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in
exchange for the Merger Consideration into which the number of Company Common
Shares previously represented by such Certificate or Book-Entry Shares shall have been
converted pursuant to this Agreement. Parent shall require the paying agent agreement to
6
provide that the Paying Agent deliver such letter of transmittal and instructions not later
than three (3) Business Days after the Effective Time. Upon surrender of Certificates (or
effective affidavits of loss together with any required bond or indemnity in lieu thereof)
or Book-Entry Shares to the Paying Agent, including by the entry through a book-entry
transfer agent of the surrender of any Company Common Shares held in book entry on a
book-entry statement, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other documents as may
customarily and reasonably be required by the Paying Agent, the holder of such
Certificates (or effective affidavits of loss together with any required bond or indemnity
in lieu thereof) or Book-Entry Shares shall be entitled to receive from the Exchange Fund
in exchange therefor an amount in cash equal to the product of (A) the number of
Company Common Shares represented by such holder’s properly surrendered Certificates
(or effective affidavits of loss in lieu thereof) or Book-Entry Shares multiplied by (B) the
Merger Consideration. The Certificate so surrendered will be cancelled. No interest will
be paid or accrued on any amount payable upon due surrender of Certificates (or effective
affidavits of loss together with any required bond or indemnity in lieu thereof) or Book-
Entry Shares. In the event of a transfer of ownership of Company Common Shares that is
not registered in the transfer records of the Company, or if the consideration payable is to
be paid in a name other than that in which the Certificates surrendered or transferred in
exchange therefor are registered in the stock transfer books or ledger of the Company,
payment upon due surrender of the Certificate may be paid to such a transferee if the
Certificate formerly representing such Company Common Shares is presented to the
Paying Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable share transfer and other applicable Taxes
have been paid or are not applicable. Any holder of Book-Entry Shares shall not be
required to deliver a Certificate to the Paying Agent to receive the Merger Consideration
that such holder is entitled to receive pursuant to this Article II. In lieu thereof, each
registered holder of one or more Book-Entry Shares shall automatically, upon compliance
with this Section 2.2(b)(i), be entitled to receive, and the Surviving Corporation shall
cause the Paying Agent to pay and deliver as soon as reasonably practicable after the
Effective Time (but in no event more than three (3) Business Days thereafter), from the
Exchange Fund an amount in cash equal to the product of (A) the number of such
holder’s Book-Entry Shares multiplied by (B) the Merger Consideration. The Merger
Consideration, paid in full with respect to any Company Common Share in accordance
with the terms hereof, shall be deemed to have been paid in full satisfaction of all rights
pertaining to such Company Common Share.
(ii) The Paying Agent, the Company and its Subsidiaries, Parent and Merger
Sub, as applicable, shall be entitled to deduct and withhold from any amounts otherwise
payable under this Agreement Taxes that are required to be withheld or deducted with
respect to the making of such payment. To the extent that amounts are so deducted or
withheld, such deducted or withheld amounts (A) shall be remitted by the applicable
entity to the appropriate Governmental Entity and (B) shall be treated for all purposes of
this Agreement as having been paid to the Person in respect of which such deduction or
withholding was made. The parties hereto agree to cooperate in good faith in requesting
and providing any information or documentation allowing for the reduction or
elimination of any such deduction and withholding.
(c) Closing of Transfer Books. At the Effective Time, the share transfer books of the
Company shall be closed, and there shall be no further registration of transfers on the share
transfer books of the Surviving Corporation of the Company Common Shares that were
7
outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or
Book-Entry Shares are presented to the Surviving Corporation or Parent for transfer, the holder of
any such Certificates or Book-Entry Shares shall be given a copy of the letter of transmittal
referred to in Section 2.2(b) and instructed to comply with the instructions in that letter of
transmittal in order to receive the Merger Consideration to which such holder is entitled pursuant
to this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund (including
the proceeds of any investments thereof) that remains undistributed to the holders of Company
Common Shares that were issued and outstanding immediately prior to the Merger on the first
(1st) anniversary of the Closing Date shall be delivered to the Surviving Corporation upon its
demand, and any holders of Company Common Shares (other than Dissenting Shares) that were
issued and outstanding immediately prior to the Merger who have not surrendered their
Certificates (or effective affidavits of loss together with any required bond or indemnity in lieu
thereof) or Book-Entry Shares in accordance with this Section 2.2 shall thereafter look only to the
Surviving Corporation for payment of their claim for the Merger Consideration upon due
surrender of their Certificates (or effective affidavits of loss together with any required bond or
indemnity in lieu thereof) or Book-Entry Shares, in each case subject to applicable abandoned
property, escheat or similar Law.
(e) No Liability. Anything herein to the contrary notwithstanding, none of the
Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent or any other Person
shall be liable to any holder of Company Common Shares for any amount properly delivered to a
public official pursuant to any applicable abandoned property, escheat or similar Law, and any
such amounts will be treated for all purposes under this Agreement as having been paid to the
holder of such Company Common Shares. If any Certificates or Book-Entry Shares have not been
surrendered immediately prior to the date on which any cash in respect of such Certificate or
Book-Entry Share would otherwise escheat to or become the property of any Governmental
Entity, then any such cash in respect of such Certificate or Book-Entry Share will, to the extent
permitted by applicable Law, become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
(f) Lost, Stolen or Destroyed Certificates. In the case of any Certificate that has
been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the Paying Agent or the
Surviving Corporation, the posting by such Person of a bond in reasonable and customary amount
as indemnity against any claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate a check in the
amount of the product of the number of Company Common Shares formerly represented by such
lost, stolen or destroyed Certificate multiplied by the Merger Consideration (without interest).
Section 2.3. Treatment of Company Options and Company Restricted Shares.
(a) Effective as of the Effective Time, each Company Option, whether vested or
unvested, that is outstanding immediately prior to the Effective Time shall be canceled without
any action on the part of the holder thereof in consideration for the right of such holder to receive,
without interest, a cash payment (less required withholding Taxes and deductions pursuant to
Section 2.2(b)(ii)) with respect thereto equal to the product of (i) the number of Company
Common Shares subject to such Company Option as of immediately prior to the Effective Time
multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price per share
of Company Common Shares subject to such Company Option (the “Option Cash Payments”);
8
provided, that each Company Option with an exercise price per share that is equal to or greater
than the Merger Consideration shall be canceled with no payment due to the holder thereof. As
of the Effective Time, all Company Options shall no longer be outstanding and shall
automatically terminate and cease to exist, and each holder of a Company Option shall cease to
have any rights with respect thereto, except the right to receive the Option Cash Payment, if any,
in respect thereof. The Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, pay to the holders of Company Options the Option Cash Payments as promptly as
practicable, and in all events within three (3) Business Days, following the Effective Time.
(b) Effective as of the Effective Time, each Company Restricted Share, shall be
canceled without any action on the part of the holder thereof in consideration for the right of such
holder to receive, without interest, a cash payment (less required withholding Taxes and
deductions pursuant to Section 2.2(b)(ii)) equal to the Merger Consideration (the “Restricted
Share Cash Payments”). The Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, pay to the holders of Company Restricted Shares the Restricted Share Cash
Payments as promptly as practicable, and in all events within three (3) Business Days, following
the Effective Time.
(c) Prior to the Effective Time, the Company shall adopt such resolutions and take
such other actions as may reasonably be necessary to effectuate the foregoing provisions of this
Section 2.3.
(d) Notwithstanding anything in this Agreement to the contrary, the Option Cash
Payments and the Restricted Share Cash Payments shall be processed through the regular payroll
account of the Company following receipt of such amounts from Parent, and the Company or the
Surviving Corporation, as applicable, shall pay to the applicable recipient of such payment such
amount (less required withholding Taxes and deductions pursuant to Section 2.2(b)(ii)) in full
payment thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as set forth in this Article III;
provided that such representations and warranties by the Company are qualified in their entirety by
reference to the disclosure (i) in the Filed Company SEC Documents (excluding any disclosures (other
than statements of historical fact) contained under the heading “Risk Factors”, “Forward-Looking
Statements” and “Quantitative and Qualitative Disclosures About Market Risk” and other disclosures that
are predictive or forward-looking in nature) it being understood that any matter disclosed in such filings
shall not be deemed disclosed for purposes of Section 3.2 or Section 3.3 or (ii) set forth in the disclosure
letter delivered by the Company to Parent immediately prior to the execution of this Agreement (the
“Company Disclosure Letter”). Each disclosure set forth in the Company Disclosure Letter or such
Company SEC Documents shall qualify or modify each of the representations and warranties set forth in
this Article III to the extent the applicability of the disclosure to such representation and warranty is
reasonably apparent from the text of the disclosure made and, notwithstanding anything in this Agreement
to the contrary, the inclusion of an item in the Company Disclosure Letter as an exception to a
representation or warranty will not be deemed an admission that such item represents a material exception
or material fact, event or circumstance (or that such item has had, or could have, a Company Material
Adverse Effect).
Section 3.1. Organization and Qualification; Subsidiaries.
9
(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Ohio. The Company has all requisite corporate or similar
power and authority to own, lease and operate its properties and assets and to carry on its business
as presently conducted and is qualified to do business and is in good standing (where applicable
as a legal concept) as a foreign corporation or other relevant legal entity in each jurisdiction
where the ownership, leasing or operation of its assets or properties or conduct of its business
requires such qualification, except where any such failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect. Each of the Company’s Subsidiaries is a legal entity duly organized,
validly existing and in good standing (where applicable as a legal concept) under the Laws of the
jurisdiction of its organization and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing (where applicable as a legal
concept) as a foreign corporation or other relevant legal entity in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its business requires such
qualification, except where any failure to be in good standing or qualified would not reasonably
be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries,
taken as a whole.
(b) Section 3.1(b) of the Company Disclosure Letter sets forth a true and complete
list of each Subsidiary of the Company as of the date hereof, each such Subsidiary’s jurisdiction
of incorporation, organization or formation and its authorized, issued and outstanding shares or
units of equity interests (including limited liability company interests).
Section 3.2. Capital Stock.
(a) The authorized share capital of the Company consists of 100,000,000 Company
Common Shares and 5,000,000 preferred shares, no par value per share (the “Company Preferred
Shares”). As of March 6, 2018 (the “Capitalization Date”), there were (i) 15,259,015 Company
Common Shares issued and outstanding (which number of Company Common Shares excludes
the Company Restricted Shares described in clause (iv) below), (ii) no shares of Company
Preferred Shares issued and outstanding, (iii) Company Options to acquire 15,545 Company
Common Shares, (iv) 319,875 Company Restricted Shares issued and outstanding, (v) 5,977,860
Company Common Shares held by the Company as treasury shares and (vi) 1,900,000 Company
Common Shares reserved for issuance under the Company Share Plans (excluding Company
Common Shares that are subject to the Company Options described in the foregoing clause (iii)
and Company Restricted Shares in clause (iv)). All outstanding Company Common Shares and
shares or equity securities of each Subsidiary of the Company are duly authorized, validly issued,
fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-
emptive or similar right, purchase option, call or right of first refusal or similar right. No
Subsidiary of the Company owns any shares of Capital Stock of the Company. There are no
accrued and unpaid dividends or dividend equivalent rights with respect to any of the Capital
Stock issued or outstanding of the Company or any of its Subsidiaries.
(b) Except as set forth in subsection (a) above, the Company does not have any
shares of its Capital Stock issued or outstanding.
(c) Except as set forth in subsection (a) above and as set forth on Section 3.1(b) of
the Company Disclosure Letter, there are no outstanding (A) shares of Capital Stock of the
Company or securities of the Company convertible into or exchangeable or exercisable for shares
of Capital Stock of the Company or any of its Subsidiaries or (B) subscriptions, options, warrants,
10
calls, rights, profits interests, stock appreciation rights, phantom stock, performance shares,
contingent value rights (or similar securities or rights that are derivative of, or provide economic
benefits based, directly or indirectly, on the value or price of, any Capital Stock of, or other
securities or ownership interests), convertible securities or other similar rights to which the
Company or any of the Company’s Subsidiaries is a party or by which any of them is bound
obligating the Company or any of the Company’s Subsidiaries to (i) issue, transfer or sell any
shares of Capital Stock of the Company or any Subsidiary of the Company or securities
convertible into or exchangeable for such shares or equity interests, (ii) grant, extend or enter into
any such subscriptions, options, warrants, calls, rights, profits interests, stock appreciation rights,
phantom stock, convertible securities or other similar rights, (iii) redeem, repurchase or otherwise
acquire any such shares of Capital Stock or (iv) provide funds to, or make any investment (in the
form of a loan, capital contribution, guarantee, credit enhancement or otherwise) in or assume any
liability or obligation of, any other Person.
(d) Except with respect to outstanding Company Options and Company Restricted
Shares issued pursuant to the Company Share Plans, neither the Company nor any of its
Subsidiaries has outstanding bonds, debentures, notes or similar obligations, the holders of which
have the right to vote (or which are convertible into or exercisable for securities having the right
to vote) with the Company Shareholders on any matter.
(e) Except with respect to outstanding Company Options and Company Restricted
Shares issued pursuant to the Company Share Plans, there are no voting agreements, voting trusts,
shareholders agreements, proxies or other agreements or understandings to which the Company is
a party with respect to the voting of the Capital Stock of, restricting the transfer of, or providing
for registration rights with respect to, the Company.
(f) Section 3.2(f) of the Company Disclosure Letter sets forth all Indebtedness for
borrowed money of the Company as of the date hereof.
Section 3.3. Corporate Authority and Approval.
(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and subject to obtaining the Requisite Company Vote to consummate the
Merger. The execution and delivery of this Agreement by the Company and the consummation
by the Company of the Merger have been duly and validly authorized by all necessary corporate
action, subject to the adoption of the Agreement by the Company Shareholders by the Requisite
Company Vote. The Company Board, at a meeting duly called and held prior to the date of this
Agreement at which a quorum of directors of the Company was present, adopted resolutions by
majority vote of the directors present (i) approving and declaring advisable the execution and
delivery of this Agreement by the Company, (ii) declaring that it is in the best interests of the
Company Shareholders that the Company enter into this Agreement and consummate the Merger
in accordance with the OGCL on the terms and subject to the conditions set forth in this
Agreement, (iii) directing that the adoption of this Agreement be submitted as promptly as
practicable to a vote at a meeting of the Company Shareholders and (iv) recommending that the
Company Shareholders adopt this Agreement, which resolutions have not been amended,
rescinded, modified or withdrawn in any way. Except as provided in this Section 3.3(a), no other
corporate proceedings or actions on the part of the Company are necessary under the OGCL to
authorize the execution and delivery of this Agreement or to consummate the Merger (other than
the adoption of the Agreement by the Company Shareholders by the Requisite Company Vote
and the filing of the Certificate of Merger with the Secretary of State of the State of Ohio).
11
(b) This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub,
this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms and conditions (except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditor’s rights, and, as to
enforceability, to general equitable principles).
Section 3.4. No Conflict; Consents and Approvals.
(a) The execution, delivery and performance by the Company of this Agreement and
the consummation by the Company of the Transactions (including the Merger) do not and will
not require any consent, registration, declaration, approval, authorization or permit of, action by,
filing with or notification to any Governmental Entity with respect to the Company or any of its
Subsidiaries, other than (i) the filing with the Secretary of State of the State of Ohio of the
Certificate of Merger as required by the OGCL, (ii) the filing with the SEC of any filings and
reports that may be required in connection with this Agreement and the Merger under the
Exchange Act and the rules and regulations thereunder, including the Proxy Statement (iii)
compliance with the rules and regulations of NASDAQ, (iv) compliance with any applicable
foreign or state securities or blue sky laws and (v) the other consents and/or notices set forth on
Section 3.4(a) of the Company Disclosure Letter (collectively, clauses (i) through (v), the
“Company Approvals”), and other than any consent, registration, declaration, approval,
authorization, permit, action, filing or notification the failure of which to make or obtain would
not individually or in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect.
(b) Subject to obtaining the Company Approvals, none of the execution and delivery
of this Agreement by the Company, the consummation by the Company of the Transactions, or
the compliance by the Company or any of its Subsidiaries with any of the provisions of this
Agreement will (i) conflict with, or result in any breach, violation or default (with or without
notice or lapse of time, or both) of any provision of, the organizational or governing documents of
the Company or any of its Subsidiaries, (ii) violate any Law binding upon or applicable to the
Company or any of its Subsidiaries or any of their respective properties or assets, (iii) result in
any breach, violation of, or default (with or without notice, lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a
benefit under any Company Material Contract, Real Property Lease or any Company Permit, (iv)
result in the creation of any Lien (other than a Permitted Lien) on any of the properties or assets
of the Company or any of its Subsidiaries, or (v) give rise to any obligation to make an offer to
purchase or redeem any Indebtedness or Capital Stock (other than pursuant to the Credit
Agreement), other than, in the case of clauses (ii) and (iii), any such violation, default,
termination, cancellation, acceleration, right or loss that would not individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse Effect.
Section 3.5. Reports and Financial Statements.
(a) The Company has filed or furnished all forms, documents and reports required to
be filed or furnished prior to the date hereof by it with the SEC on a timely basis since January 1,
2015 (together with any documents so filed or furnished during such period on a voluntary basis,
in each case as may have been amended or supplemented since their filing, the “Company SEC
Documents”). As of the date filed with or furnished to the SEC (or if amended or superseded by
a filing or amendment prior to the date of this Agreement, then at the time of such filing or
12
amendment), each of the Company SEC Documents complied in all material respects with the
applicable requirements of SOX, the Securities Act and the Exchange Act, as the case may be,
and the applicable rules and regulations promulgated thereunder, each as in effect on the date of
any such filing. As of the date filed with or furnished to the SEC (or if amended or superseded by
a filing or amendment prior to the date of this Agreement, then at the time of such filing or
amendment), none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements of the Company included in the
Company SEC Documents fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries, as at such date, and the consolidated
statements of operations, income and comprehensive income, cash flows and stockholders’ equity
for such period (subject, in the case of unaudited statements, to normal immaterial year-end audit
adjustments as permitted by GAAP) and were prepared in conformity with GAAP applied on a
consistent basis during the periods referred to therein (except for the absence of footnote
discussions and normal immaterial year-end adjustments as permitted by GAAP). Except as set
forth in Section 3.5(b) of the Company Disclosure Letter, there are no outstanding or unresolved
comments in comment letters received from the SEC or its staff and, to the Knowledge of the
Company, none of the Company SEC Documents is the subject of ongoing SEC review. There
has been no material correspondence between the SEC and the Company since January 1, 2016
that is not set forth in the Company SEC Documents or that has not otherwise been disclosed to
Parent prior to the date hereof. Since January 1, 2016, neither the Company nor any of its
Subsidiaries has received any material unresolved complaint, allegation, assertion or claim in
writing regarding deficiencies in the accounting or auditing practices, procedures, methodologies
or methods of the Company or its Subsidiaries or their respective internal accounting controls.
Since January 1, 2016, the Company has been in compliance in all material respects with the
applicable listing and corporate governance rules and regulations of NASDAQ.
(c) Since January 1, 2016, (a) the Company is and has been in compliance in all
material respects with the applicable provisions of SOX, and (b) each of the chief executive
officer of the Company and the chief financial officer of the Company (or each former chief
executive officer of the Company and each former chief financial officer of the Company, as
applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act
and Section 302 and Section 906 of SOX with respect to the Company SEC Documents, and the
statements contained in such certifications are true, correct and complete in all material respects.
Since January 1, 2016, neither the Company nor any of its Subsidiaries has outstanding, or has
arranged any outstanding, “extensions of credit” to directors or executive officers within the
meaning of Section 402 of SOX.
(d) No Subsidiary of the Company is, or has been at any time since January 1, 2016,
subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.
Section 3.6. Internal Controls and Procedures. The Company has designed and maintained
“disclosure controls and procedures” and “internal controls over financial reporting” (as such terms are
defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by
Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are designed
and effective to provide reasonable assurance that all material information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC, and that all
such material information is accumulated and communicated to the Company’s principal executive officer
13
and principal financial officer by others in the Company or its Subsidiaries to allow timely decisions
regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of
the SOX. The Company’s internal control over financial reporting are sufficient to provide reasonable
assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP, consistently applied; (ii) that transactions are executed only in accordance with
the authorization of management; and (iii) regarding prevention or timely detection of the unauthorized
acquisition, use or disposition of the Company’s properties or assets.
Section 3.7. No Undisclosed Liabilities. Except (a) as disclosed, reflected or reserved against
in the audited consolidated balance sheet of the Company and its Subsidiaries as of December 25, 2016
(or the notes thereto) (the “Audited Company Balance Sheet”), (b) for liabilities and obligations incurred
under or in accordance with this Agreement or in connection with the Transactions, (c) for liabilities and
obligations incurred in the ordinary course of business since the date of the Audited Company Balance
Sheet, and (d) for liabilities or obligations that have been discharged or paid in full, neither the Company
nor any Subsidiary of the Company has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet (or the notes thereto) of the Company and its Subsidiaries, other than those which would not
reasonably be expected to result in, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.8. Internal Controls; Financial Reporting. Since January 1, 2016, none of the
Company, the Company Board or the audit committee of the Company Board, or to the Knowledge of the
Company, the Company’s independent accountants, has identified or received any written notification of
any (i) “significant deficiency” in the internal controls over financial reporting of the Company which is
reasonably likely to adversely affect the Company’s ability to record, process, summarize and report
financial information; (ii) “material weakness” or significant deficiency in the design or operation of the
internal controls over financial reporting of the Company which is reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial information; or (iii) fraud or
allegation of fraud, whether or not material, that involves management or other employees of the
Company who have a significant role in the internal controls over financial reporting of the Company.
Section 3.9. Absence of Certain Changes or Events. Since January 1, 2017 through the date
hereof (i) the Company and each of its Subsidiaries has conducted its business in all material respects in
the ordinary course of business consistent with past practice, except in connection with this Agreement
and the Transactions, (ii) there has not occurred any Company Material Adverse Effect and (iii) except as
set forth on Section 3.9 of the Company Disclosure Letter, none of the Company or any of its Subsidiaries
has taken or agreed to take any action that, if taken after the date hereof, would require the consent of
Parent pursuant to Section 5.1(b).
Section 3.10. Compliance with Law; Permits.
(a) Except as provided in Section 3.10(a) of the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries is in violation of, or since January 1, 2016 has been in
violation of, any Law, Company Permit, rule, regulation or Order applicable to the Company or
any of its Subsidiaries or by which the Company’s or any of its Subsidiaries’ respective assets or
properties are bound, except for any such violation or non-compliance as would not reasonably be
expected to be, individually or in the aggregate, material to the Company and its Subsidiaries,
taken as a whole. To the Knowledge of the Company, except for matters that would not
reasonably be expected to be, individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole, no Action or demand by or before any Governmental Authority is
pending or threatened alleging that the Company or any of its Subsidiaries is not in compliance
with any applicable Law or Company Permit.
14
(b) The Company and its Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents, certificates,
registrations, approvals and orders of any Governmental Entity (the “Company Permits”)
necessary for the Company and its Subsidiaries to own, lease and operate their properties and
assets and to carry on their businesses as they are now being conducted, except where the failure
to have any of the Company Permits would not reasonably be expected to be, individually or in
the aggregate, material to the Company and its Subsidiaries, taken as a whole. All Company
Permits are in full force and effect, no default (with or without notice, lapse of time, or both) has
occurred under any such Company Permit, and none of the Company or its Subsidiaries has
received any written notice from any Governmental Entity threatening to suspend, revoke,
withdraw or modify any such Company Permit, in each case, except as would not reasonably be
expected to be, individually or in the aggregate, material to the Company and its Subsidiaries,
taken as a whole.
(c) Without limiting the generality of the foregoing, the Company is in possession of
all liquor licenses held or used by the Company and its Subsidiaries (collectively, the “Liquor
Licenses”), except where the failure to have any of the Liquor Licenses would not reasonably be
expected to be, individually or in the aggregate, material to the Company and its Subsidiaries,
taken as a whole. Section 3.10(c) of the Company Disclosure Letter sets forth a list, as of the date
hereof, of all the Liquor Licenses, along with the street address, license number and expiration
date of each such Liquor License. As of the date hereof, the Company represents that:
(i) To the extent required by applicable Law, each of the restaurants listed in
Section 3.10(c)(i) of the Company Disclosure Letter and operated by the Company or any
of its Subsidiaries possesses a Liquor License in good standing;
(ii) Each Liquor License is in full force and effect and is adequate for the
current operation at the restaurant for which it is issued;
(iii) Neither the Company nor any of its Subsidiaries have received any
written notice of any pending or threatened modification, suspension, revocation or
cancellation of a Liquor License or any proceeding related thereto;
(iv) Since January 1, 2016, there have been no proceedings before any
Governmental Entity related to any of the Liquor Licenses; and
(v) Except as provided in Section 3.10(c)(v) of the Company Disclosure
Letter, to the Knowledge of the Company, there are no pending disciplinary actions,
unresolved citations, unsatisfied penalties or past disciplinary actions related to the
Liquor Licenses that would reasonably be expected to have any impact on any restaurant
locations or the ability to maintain or renew any Liquor License.
Section 3.11. Environmental Matters.
(a) Except as would not reasonably be expected to be, individually or in the
aggregate, material to the Company and its Subsidiaries, taken as a whole, (i) the Company and
its Subsidiaries are, and since January 1, 2016 have been, in compliance with all applicable
Environmental Laws, (ii) since January 1, 2016, neither the Company nor any of its Subsidiaries
has received any written notices or demand letters from any federal, state, local or foreign
Governmental Entity alleging that the Company or any of its Subsidiaries is in violation of any
Environmental Law, (iii) there are no actions, suits or proceedings pending or, to the Knowledge
15
of the Company, threatened against the Company or any of its Subsidiaries arising under
Environmental Law, (iv) to the Knowledge of the Company, there has been no release of any
Hazardous Substance in violation of or giving rise to liability of the Company or any of its
Subsidiaries under any applicable Environmental Law on or from any properties owned or leased
by the Company or any of its Subsidiaries, (v) neither the Company nor any of its Subsidiaries
has handled, stored, released, transported, or disposed of, or arranged for the transport or disposal
of, any Hazardous Substance except as would not require investigation or remediation pursuant to
Environmental Law and (vi) neither the Company nor any of its Subsidiaries have assumed by
Contract any liability or obligation arising pursuant to Environmental Law.
(b) The Company has provided to the Parent all material environmental reports,
assessments, studies, audits, and tests and material correspondence relating to the environmental
compliance of the Company or its Subsidiaries, or any real property owned, leased or operated by
the Company or its Subsidiaries which are in the possession or reasonable control of the
Company or its Subsidiaries.
(c) As used herein, “Environmental Law” means any Law regulating (i) the
protection of the environment or worker health and safety, or (ii) the use, storage, treatment,
generation, transportation, handling, release or disposal of, or exposure to Hazardous Substances.
(d) As used herein, “Hazardous Substance” means any substance listed, defined,
designated or classified as of the date hereof as “hazardous” or “toxic”, a “pollutant”, a
“contaminant” or words of similar meaning under any Environmental Law, including petroleum
or any derivative or byproduct thereof, asbestos, and polychlorinated biphenyls.
Section 3.12. Employee Benefit Plans.
(a) Section 3.12(a) of the Company Disclosure Letter lists all material Company
Benefit Plans as of the date of this Agreement.” Company Benefit Plan” means each benefit plan,
program, agreement or arrangement, including any employee welfare plan within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”), any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is
subject to ERISA), and any employment agreement, bonus, incentive, equity or equity related,
deferred compensation, vacation, stock purchase, stock option, severance, change of control or
fringe benefit plan, program or agreement (other than any “multiemployer plan” within the
meaning of Section 4001(a)(3) of ERISA (a “Multiemployer Plan”)), in each case, that is
sponsored, maintained or contributed to by the Company or any of its Subsidiaries for the benefit
of any current or former employee, officer, director or individual consultant of the Company or
its Subsidiaries or to which the Company or any of its Subsidiaries has any liability, contingent or
otherwise.
(b) The Company has provided to Parent true and complete copies of each material
Company Benefit Plan and, as applicable to each material Company Benefit Plan, the most recent
Form 5500, financial statement, determination, opinion or advisory letter and actuarial report.
(c) Except as provided in Section 3.12(c) of the Company Disclosure Letter, (i) Each
Company Benefit Plan has been maintained and administered in material compliance with its
terms and with applicable Law, including ERISA and the Code to the extent applicable thereto;
(ii) each of the Company Benefit Plans intended to be “qualified” within the meaning of Section
401(a) of the Code has received a favorable determination letter from the IRS or is entitled to rely
upon a favorable opinion or advisory letter issued by the IRS and to the Knowledge of the
16
Company, no event has occurred nor do any facts exist that would reasonably be expected to
result in the loss of qualified status of such Company Benefit Plan; (iii) no Company Benefit Plan
is subject to Title IV of ERISA or Sections 412 or 430 of the Code; (iv) no Company Benefit Plan
provides medical, dental, vision or prescription drug benefits with respect to any current or
former employee of the Company or its Subsidiaries, or any spouse or dependent of any such
person, beyond their retirement or other termination of service, other than coverage mandated by
applicable Law; and (v) neither the Company nor any Subsidiary thereof contributes to, has in the
past three years been required to contribute to, or has any liability with respect to, a
Multiemployer Plan. Except as would not reasonably be expected to result in material liability to
the Company or any of its Subsidiaries (i) there are no pending or, to the Knowledge of the
Company, threatened claims (other than claims for benefits in the ordinary course of business) by,
on behalf of or against any of the Company Benefit Plans and (ii) there are no audits or
proceedings pending or, to the Knowledge of the Company, threatened, by the IRS, the United
States Department of Labor or other Governmental Entity with respect to any Company Benefit
Plan.
(d) Except as provided in Section 3.12(d) of the Company Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation of the Transactions, either
alone or in combination with any other event, will (i) entitle any current or former employee,
officer or director of the Company or any of its Subsidiaries to any compensation, benefits or
severance pay or materially increase any such amounts due, (ii) accelerate the time of payment or
vesting of any amount due to, or materially increase the base salary, hourly wage, target bonus
opportunity, directors fee or other compensation or benefits (as applicable) of, any current or
former employee, officer or director of the Company or any of its Subsidiaries, (iii) increase any
benefits otherwise payable under any Company Benefit Plan, or (iv) result in “excess parachute
payments” within the meaning of Section 280G(b)(1) of the Code. Neither the Company nor any
of its Subsidiaries is a party to, or is otherwise obligated under, any plan, policy, agreement or
arrangement to provide for the gross-up or reimbursement of Taxes imposed under Section 409A
or 4999 of the Code (or any corresponding provisions of foreign, state or local Law).
Section 3.13. Investigations; Litigation. Except as provided in Section 3.13 of the Company
Disclosure Letter, there are no (a) investigations or reviews pending or, to the Knowledge of the
Company, threatened by any Governmental Entity with respect to the Company or any of the Company’s
Subsidiaries that, if determined adversely to the Company or any of its Subsidiaries or any of their
respective properties or assets, would reasonably be expected to be materially adverse to the Company
and its Subsidiaries, taken as a whole and (b) Actions pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of the Company’s Subsidiaries, or any of their
respective properties or assets at law or in equity before, and there are no Orders of, or before, any
Governmental Entity, in each case (i) that would reasonably be expected to be materially adverse to the
Company and its Subsidiaries, taken as a whole or (ii) that seeks to delay or prevent the consummation of
the Transactions.
Section 3.14. Information Supplied. Subject to the accuracy of the representations and
warranties of Parent and Merger Sub set forth in Section 4.5, none of the information supplied or to be
supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in the
proxy statement (the “Proxy Statement”) relating to the special meeting of the Company Shareholders to
be held to consider and vote upon the approval and adoption of this Agreement and the Merger (the
“Company Shareholders Meeting”), on the date the Proxy Statement is first sent or mailed to Company
Shareholders or at the time of the Company Shareholders Meeting, will contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or will omit to state any material fact with
17
respect to the Company or any of its Subsidiaries that is necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company Shareholders Meeting which
has become false or misleading.
Section 3.15. Tax Matters.
(a) Except as would not reasonably be expected to be, individually or in the
aggregate, material to the Company and its Subsidiaries, taken as a whole, (i) the Company and
each of its Subsidiaries have prepared and timely filed (taking into account any extension of time
within which to file) all Tax Returns required to be filed by any of them and all such filed Tax
Returns are true, complete and correct; (ii) the Company and each of its Subsidiaries have paid all
Taxes shown to be due on such Tax Returns or otherwise payable by the Company or any of its
Subsidiaries, except with respect to matters contested in good faith and for which adequate
reserves have been established in accordance with GAAP; (iii) as of the date of this Agreement,
there are no ongoing audits, examinations, investigations or other proceedings in respect of Taxes
of the Company or any of its Subsidiaries; (iv) there are no Liens for Taxes upon any property of
the Company or any of its Subsidiaries, except for Permitted Liens; (v) neither the Company nor
any of its Subsidiaries has participated in any reportable transaction within the meaning of
Treasury Regulations Section 1.6011-4(b) (or any similar provision of state, local or non-U.S.
Tax law); (vi) neither the Company nor any of its Subsidiaries has constituted a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of shares qualifying for tax-free treatment under Section 355 of the Code
(x) in the two years prior to the date of this Agreement or (y) in a distribution that could
otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of
Section 355(e) of the Code) in conjunction with this acquisition; (vii) since October 20, 2010,
neither the Company nor any of its Subsidiaries (x) has been a member of an Affiliated Group
filing a combined, consolidated, or unitary Tax Return other than Affiliated Groups comprised of
the Company and any of its Subsidiaries or (y) has any liability for the Taxes of any Person (other
than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local, or foreign Tax law), as a transferee or successor, by contract
(other than contracts entered into in the ordinary course of business the primary subject matter of
which is not Taxes), or otherwise; and (viii) to the Knowledge of the Company, neither the
Company nor any of its Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code and (ix) neither the Company nor any of its Subsidiaries is a
party to any currently effective waiver or other agreement extending the statute of limitation or
period of assessment or collection of Taxes.
(b) As used in this Agreement, (i) “Taxes” means any and all federal, state, local or
foreign taxes of any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental Entity, including
income, franchise, windfall or other profits, gross receipts, property, sales, use, Capital Stock,
payroll, employment, unemployment, social security, workers’ compensation, net worth, excise,
withholding, ad valorem and value added taxes, and (ii) “Tax Return” means any return, report or
similar filing (including the attached schedules) required to be filed with respect to Taxes.
Section 3.16. Labor Matters.
(a) Except as provided in Section 3.16 of the Company Disclosure Letter and for
such matters that would not reasonably be expected to result in, individually or in the aggregate, a
Company Material Adverse Effect, (i) there are and in the last three years there have been no
18
strikes or lockouts by any employees of the Company or any of its Subsidiaries against the
Company or any of its Subsidiaries, (ii) to the Knowledge of the Company there is no union
organizing effort pending or in the last three years has been commenced against the Company or
any of its Subsidiaries, (iii) there is no unfair labor practice charge or labor arbitration proceeding
pending against the Company or any of its Subsidiaries by any employees of the Company or any
of its Subsidiaries, (iv) there is no, nor has there been in the last three years, any slowdown or
work stoppage in effect by employees of the Company or any of its Subsidiaries against the
Company or any of its Subsidiaries, (v) none of the Company or any of its Subsidiaries is a party
to any collective bargaining agreement with any labor union and, no labor organization (whether
certified or not) represents or to the Knowledge of the Company, purports to represent any
employees of the Company or its Subsidiaries for purposes of collective bargaining with respect
to their employment by the Company or its Subsidiaries.
(b) Except as set forth on Section 3.16(b) of the Company Disclosure Letter, the
Company and its Subsidiaries are, and since January 1, 2016 have been, in compliance with all
Labor Laws, except for any non-compliance as would not reasonably be expected to result in,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.17. Intellectual Property.
(a) Section 3.17(a) of the Company Disclosure Letter lists, as of the date of this
Agreement, a true, complete and correct list of all (i) issuances, registrations and applications to
register by the Company or any of its Subsidiaries of any of the following with or by any
Governmental Entity in any jurisdiction in the world, (A) patents, (B) trademarks, trade names
and service marks and (C) copyrights, and (ii) material domain name registrations and social
media account identifiers owned by the Company or any of its Subsidiaries. Each material
issuance, registration and application listed in Section 3.17(a) of the Company Disclosure Letter
is, to the Knowledge of the Company, subsisting, valid and enforceable. As of the date of this
Agreement, all maintenance filings and fee payments for such material issuance, registration and
application have been duly made.
(b) Except as set forth on Section 3.17(b) of the Company Disclosure Letter, and
except as would not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect, the Company or one of its Subsidiaries either exclusively
owns (free and clear of all Liens, other than Permitted Liens), or has a valid right to use all of the
material Company Intellectual Property.
(c) Except as would not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is
currently or has infringed, misappropriated or violated in any material respect any Intellectual
Property of any third party in the two (2) years prior to the date of this Agreement. As of the date
of this Agreement, none of the Company or its Subsidiaries has any pending action, suit, written
claim, administrative proceeding, or investigation against any third party on the basis that such
third party is infringing, misappropriating or violating any Company Intellectual Property and, to
the Knowledge of the Company, no third party is infringing, misappropriating or otherwise
violating any rights of the Company or any of its Subsidiaries in the Company Intellectual
Property in any material respect.
(d) Except as would not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect, there are no actions, suits, written claims,
administrative proceedings or investigations pending or, to the Knowledge of the Company,
19
threatened against the Company or any of its Subsidiaries, that (i) challenge or question the
validity of, or the Company’s ownership or right to use, any Company Intellectual Property, or
(ii) assert infringement, misappropriation or violation by the Company or any of its Subsidiaries
of any Intellectual Property owned by a third party. To the Knowledge of the Company, there is
no existing fact or circumstances that would reasonably be expected to give rise to any such
claim.
(e) The Company and its Subsidiaries have taken commercially reasonable steps to
maintain and protect each item of material Company Intellectual Property owned by the
Company or any of its Subsidiaries and the confidentiality of their trade secrets. To the
Knowledge of the Company, except as would not reasonably be expected to be, individually or in
the aggregate, material to the Company and its Subsidiaries, taken as a whole, no trade secrets or
other confidential information included in the Company Intellectual Property owned by the
Company have been disclosed to any Person, except pursuant to written confidentiality
obligations that reasonably protect the Company’s or applicable Subsidiary’s rights in such trade
secrets and confidential information.
(f) Each of the Company and its Subsidiaries has taken commercially reasonable
actions necessary to maintain and protect the security of the IT Assets and data (including
personal information) stored therein or transmitted thereby from loss, unauthorized access or
other misuse. Except as would not reasonably be expected to be, individually or in the aggregate,
material to the Company and its Subsidiaries, taken as a whole, (i) there has been no loss,
unauthorized access to or misuse of any such IT Assets or data in the possession and control of
the Company and its Subsidiaries since January 1, 2016 nor, to the Knowledge of the Company,
prior to January 1, 2016; and (ii) the IT Assets are sufficient for the current operations and
currently contemplated operations of the Company and its Subsidiaries and operate in
conformance with their documentation and, to the Knowledge of the Company, without any
material virus, malware, defect or error.
(g) Each of the Company and its Subsidiaries has a privacy policy regarding the
collection, use, storage and transfer of personal information in its business, true and correct
copies of which have been made available to the Parent prior to the date of this Agreement.
Except as would not reasonably be expected to be, individually or in the aggregate, material to the
Company and its Subsidiaries, taken as a whole, each of the Company and its Subsidiaries is and
has at all times been in compliance with its privacy policy and all applicable Laws, Orders,
payment card industry data security standards and contractual requirements concerning the
collection, use, storage and transfer of personal information in its business. Except as would not
reasonably be expected to be, individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole, the execution and delivery of this Agreement by the Company,
and the consummation by the Company of the Transactions, and the compliance by the Company
and its Subsidiaries with this Agreement will not (i) violate such privacy policies as they
currently exist or as they existed at any time during which personal information was collected or
obtained by the Company or any of its Subsidiaries, (ii) require notice to or consent from any data
subjects or (iii) result in the forfeiture or loss of any personal information in the possession or
control of the Company or any of its Subsidiaries. There are no actions, suits, claims,
administrative proceedings or investigations pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries relating to the collection, use, storage
or transfer of personal information.
Section 3.18. Real Property.
20
(a) Section 3.18(a) of the Company Disclosure Letter sets forth the address of each
parcel of real property owned by the Company or its Subsidiaries (the “Owned Real Property”).
With respect to each parcel of Owned Real Property: (i) the Company or one of its Subsidiaries
has good, valid and marketable fee simple title, free and clear of all Liens, except Permitted
Liens; (ii) except for Permitted Liens or as set forth on Section 3.18(a) of the Company
Disclosure Letter, neither the Company nor any of the Subsidiaries has leased or otherwise
granted to any Person the right to use or occupy such Owned Real Property; and (iii) there are no
outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real
Property or any portion thereof or interest therein.
(b) Section 3.18(b) of the Company Disclosure Letter sets forth (whether as lessee or
lessor) a list of all leases, including all amendments, modifications, extensions and guaranties
relating thereto, of real property (the “Leased Real Property”, together with the Owned Real
Property, the “Real Property”) to which the Company or any Subsidiary is a party or by which it
is bound, in each case as of the date hereof (each a “Real Property Lease,” and collectively the
“Real Property Leases”) and the address of each Leased Real Property. The Company or one of
its Subsidiaries has good and valid leasehold title in the Leased Real Property, free and clear of
all Liens, except for Permitted Liens. The Company has made available to Parent complete and
correct copies of all real Property Leases. Except as set forth on Section 3.18(b), each Real
Property Lease is valid and binding on the Company or a Subsidiary and, to the Knowledge of the
Company, on the other parties thereto and is in full force and effect. Except as set forth on
Section 3.18(b) of the Company Disclosure Letter, the Company or a Subsidiary and, to the
Knowledge of the Company, each of the other parties thereto has performed in all material
respects all material obligations required to be performed by it under each Real Property Lease.
Since January 1, 2016, neither the Company nor any Subsidiary has received written notice of
any default under any Real Property Lease. Neither the Company nor any of its Subsidiaries, nor,
to the Knowledge of the Company, any other party to any Real Property Lease, is in violation or
breach of, or default under, any Real Property Lease in any material respect.
(c) To the Knowledge of the Company, all material buildings, facilities, structures
and fixtures included in the Real Property (giving due account to the age and length of use of
same, ordinary wear and tear excepted) are in good operating condition and repair (except for
ordinary routine maintenance and repairs that are not material in nature or cost).
(d) There is no pending or, to the Knowledge of the Company, threatened
appropriation, condemnation or like action, or sale or other disposition in lieu of condemnation,
affecting the Real Property or any part thereof.
(e) The Real Property constitutes all of the real property used or occupied by the
Company and its Subsidiaries.
Section 3.19. Company Material Contracts.
(a) As used herein, “Company Filed Contracts” shall mean all “material contracts”
described in Item 601(b)(10) of Regulation S-K (other than this Agreement and any Company
Benefit Plan) to which the Company or its Subsidiaries is a party or may be bound as of the date
hereof and that are required to be filed with the SEC. As of the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to any Filed Company Contract that has not been
filed.
21
(b) Section 3.19(b) of the Company Disclosure Letter sets forth, as of the date of this
Agreement, a correct and complete list, and the Company has made available to Parent correct
and complete copies, of the following Contracts in effect as of the date of this Agreement, in each
case, other than the Company Benefit Plans (each Contract of the type described in this Section
3.19(b) and each Company Filed Contract, a “Company Material Contract”):
(i) each Contract that materially restricts the ability of the Company or its
Subsidiaries to compete in any business or with any Person in any geographical area or
materially restricts the ability of the Company or any of its Subsidiaries to solicit or hire
any employee or consultant;
(ii) other than any such agreement solely between or among the Company
and its wholly owned Subsidiaries, each loan and credit Contract, note, debenture, bond,
indenture, mortgage, security agreement, pledge, capital and financing method lease or
other similar agreement pursuant to which any Indebtedness of the Company or any of its
Subsidiaries is outstanding or may be incurred having an outstanding amount in excess of
$100,000;
(iii) each Contract that requires the Company or any of its Subsidiaries,
directly or indirectly, to make any advance, loan, extension of credit or capital
contribution to, or other investment in, any Person (other than the Company or any of its
wholly-owned Subsidiaries) in any such case which is in excess of $100,000;
(iv) each Contract to which the Company or any of its Subsidiaries is a party
relating to (A) the formation, creation, operation, management or control of any
partnership or joint venture; or (B) the ownership of any equity interest in any entity or
business enterprise other than the Subsidiaries of the Company;
(v) other than the Company Benefit Plans, each indemnification,
employment, consulting or other material Contract with (A) any member of the Company
Board or (B) any executive officer of the Company, in each case, other than those
Contracts (or forms of) (1) filed as exhibits (including exhibits incorporated by reference)
to any Filed Company SEC Documents or (2) terminable by the Company or any of its
Subsidiaries on no more than 30 days’ notice without liability or financial obligation to
the Company or any of its Subsidiaries;
(vi) each Contract (A) pursuant to which the Company or any of its
Subsidiaries is granting any license to any third party under any material Company
Intellectual Property owned by the Company or any of its Subsidiaries (other than non-
exclusive licenses granted in the ordinary course of business to customers or suppliers in
connection with products and services sold or offered for sale by the Company or any of
its Subsidiaries); or (B) that purports to materially limit, curtail or restrain the ability of
the Company or any of its Subsidiaries to exploit any material Company Intellectual
Property owned by the Company or any of its Subsidiaries;
(vii) each Contract pursuant to which the Company or any of its Subsidiaries
is being granted any material license to Intellectual Property owned by any third party
(other than off-the-shelf licenses for generally commercially available Software);
(viii) each settlement, conciliation or similar Contract with any Governmental
Authority;
22
(ix) each Contract that (A) contains “most favored nation” pricing provisions
with any third party or (B) grants exclusive rights, rights of first refusal, rights of first
negotiation or offer or similar rights to any Person;
(x) each Contract that (A) by its terms calls for aggregate payments or
receipts (including termination fees) by the Company and its Subsidiaries under such
Contract(s) of more than $1,000,000 over the remaining term of such Contract(s) or of
more than $500,000 in any calendar year or (B) pursuant to which the Company and its
Subsidiaries have had, or could reasonably be expected to have, aggregate payments or
receipts of more than $500,000 in any calendar year;
(xi) each Contract that is between the Company or any of its Subsidiaries, on
the one hand, and any director or officer of the Company or any person beneficially
owning five percent (5%) or more of the outstanding Company Common Shares, on the
other hand, except for any Company Benefit Plan or other compensation arrangement;
(xii) each Contract with respect to any acquisition and divestiture pursuant to
which the Company or any of its Subsidiaries has continuing indemnification, guarantee,
“earn-out” or other contingent payment obligations;
(xiii) each Contract involving the acquisition or disposition of assets, directly
or indirectly (by merger or otherwise) outside the ordinary course of business, consistent
with past practice; and
(xiv) each Contract with each of the 20 largest vendors (in the aggregate) of
the Company, based on consolidated accounts payable as of December 31, 2017.
(c) Each Company Material Contract is valid and binding on the Company or one of
its Subsidiaries party thereto, and, to the Knowledge of the Company, each other party thereto,
and is in full force and effect, except to the extent such Company Material Contract has
previously expired in accordance with its terms or as would not individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. Neither the Company
nor any of its Subsidiaries, or, to the Knowledge of the Company, the other parties thereto, is
(with or without notice or lapse of time, or both) in violation or breach of, or default under, any
provision of any Company Material Contract, and to the Knowledge of the Company, no party to
any Company Material Contract has committed or failed to perform any act under and no event
has occurred which, with or without notice, lapse of time or both, would reasonably be expected
to result in a default under provisions of such Company Material Contract, except in each case for
such violations, breaches, defaults, acts, events or failures as would not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse Effect. Since
January 1, 2016, neither the Company nor any of its Subsidiaries has received written notice (a)
of any breach or default of any Material Contract, or (b) from any other party to a Material
Contract that such other party intends to terminate, not renew, or renegotiate the terms of any
such Material Contract
Section 3.20. Opinion of Financial Advisor. The Company Board has received the opinion of
its financial advisor, ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. (“▇▇▇▇▇ ▇▇▇▇▇▇▇”), to the effect that, as of the date of such opinion
and subject to the assumptions and limitations set forth therein, from a financial point of view, the Merger
Consideration to be offered to the Company Shareholders pursuant to this Agreement (other than holders
of Excluded Shares) is fair to such shareholders. The Company has furnished to Parent a true, correct and
complete copy of such opinion.
23
Section 3.21. Finders or Brokers; Fees. No broker, finder or investment banker, financial
advisor or other Person other than ▇▇▇▇▇ ▇▇▇▇▇▇▇ is entitled to any brokerage, finder’s, financial advisor’s
or other fee or commission in connection with the Merger based upon arrangements made by or on behalf
of the Company or its Subsidiaries. The fees and expenses payable by the Company to ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall
be calculated in accordance with the engagement letter between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇, a copy of
which has been made available to Parent.
Section 3.22. Vote Required. In respect of the Company, the Requisite Company Vote is the
only vote of the holders of any class or series of the share capital of the Company or any of its
Subsidiaries necessary (under the organizational documents of the Company, the OGCL, other applicable
Laws or otherwise) to approve and adopt this Agreement and the Merger and no other vote of holders of
securities of the Company or any of its Subsidiaries is required to order for the Merger to be
consummated or otherwise in connection with the Transactions.
Section 3.23. Takeover Laws. Assuming the accuracy of Parent’s and Merger Sub’s
representations and warranties set forth in Section 4.10, no “fair price,” “moratorium,” “control share
acquisition,” “interested shareholder” or other anti-takeover statute or regulation, including Chapters
1701.831, 1701.832 and 1704 of the OGCL (collectively, “Takeover Statutes”) applies to the Company
with respect to this Agreement or the Merger in connection with this Agreement or the performance by
the Company of its obligations hereunder and thereunder and consummating the Merger. Prior to the
execution and delivery of this Agreement, the Company’s board of directors has authorized the Merger,
and approved this Agreement and any related agreements for purposes of Chapter 1704 of the OGCL.
Section 3.24. Insurance. The Company and its Subsidiaries maintain all insurance policies
(issued in favor of the Company and its Subsidiaries and businesses of the Company and its Subsidiaries)
in such amounts, with such deductibles and against such risks and losses as are commercially reasonable
for the assets of the Company and its Subsidiaries and the conduct of their businesses. Section 3.24 of the
Company Disclosure Letter contains a true, correct and complete list of all insurance policies in effect as
of the date of this Agreement that are material to the business of the Company and its Subsidiaries.
Except as would not reasonably be expected to be, individually or in the aggregate, material to the
Company and its Subsidiaries, taken as a whole, (i) such insurance policies are in full force and effect, all
premiums due and payable thereon have been paid in accordance with the respective terms thereof, (ii)
neither the Company nor any of its Subsidiaries has received, as of the date hereof, written notice of any
pending or threatened cancellation with respect thereto (iii) the Company and each of its Subsidiaries is in
material compliance with all conditions contained in such insurance policies and (iv) there is no material
claim by the Company or any of its Subsidiaries pending under any such policies that has been denied or
disputed by the insurer other than denials and disputes in the ordinary course of business consistent with
past practice. This Section 3.24 shall not apply to insurance maintained in connection with any Company
Benefit Plan. There is no material claim by the Company or any of its Subsidiaries pending under any
such policies that (i) has been denied or disputed by the insurer other than denials and disputes in the
ordinary course of business consistent with past practice; or (i) if not paid would be materially adverse to
the Company and its Subsidiaries, taken as a whole.
Section 3.25. Affiliate Transactions. Except for (a) employment-related Contracts filed or
incorporated by reference as an exhibit to the Filed Company SEC Documents or (b) Company Benefit
Plans or compensation arrangements with Company employees or directors in the ordinary course of
business, Section 3.25 of the Company Disclosure Letter sets forth a true, correct and complete list of the
Contracts that are in existence as of the date of this Agreement between the Company or any of its
Subsidiaries and any (i) present executive officer or director of either the Company or any of its
Subsidiaries or any person that has served as such an executive officer or director within the last five
years or any of such officer’s or director’s immediate family members; (ii) record or beneficial owner of
24
more than 5% of the shares of Company Common Shares as of the date of this Agreement; or (iii) to the
Knowledge of the Company, any affiliate of any such officer, director or owner (other than the Company
or any of its Subsidiaries) (each of (i), (ii), and (iii) above, a “Company Affiliate Transaction”). Any
Company Affiliate Transaction as of the time it was entered into and as of the time of any amendment or
renewal thereof contained such terms, provisions and conditions as were at least as favorable to the
Company or any of its Subsidiaries as would have been obtainable by the Company or its Subsidiaries in
a similar transaction with an unaffiliated third party. To the Knowledge of the Company, no Company
Specified Person owns, directly or indirectly, on an individual or joint basis, any interest in, or, except as
set forth in Section 3.25 of the Company Disclosure Letter, serves as an officer or director or in another
similar capacity of, any vendor or other Independent Contractor, or any person which has a Contract with
the Company or any of its Subsidiaries.
Section 3.26. Certain Business Practices.
(a) Neither the Company nor any of its Subsidiaries, nor any of its or their directors,
officers or employees, nor, to the Company’s Knowledge, any agents, independent contractors
and other parties acting on behalf of the Company or any of its Subsidiaries or Affiliates, has
violated any material provision of the Foreign Corrupt Practices Act of 1977, as amended, the
U.K. Bribery Act of 2010 or any other similar Law in any jurisdiction applicable to the Company
or any of its Subsidiaries (collectively, the “Anti-Corruption Laws”).
(b) To the Knowledge of the Company, there is no investigation of, allegation by, or
request for information from the Company or any of its Subsidiaries by any Governmental Entity
regarding the Anti-Corruption Laws that would reasonably be expected to result in any material
fine, penalty or enforcement action by such Governmental Entity.
(c) To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries, nor any current or former directors, officers, employees, agents, independent
contractors or other parties acting on behalf of the Company or any of its Subsidiaries or
Affiliates, has materially violated or operated in material noncompliance with any export
restrictions, anti-boycott regulations, embargo regulations or other similar applicable Laws of any
Governmental Entity.
Section 3.27. Quality and Safety of Food & Beverage Products. Since January 1, 2016,
(a) there have been no recalls of any food or beverage product of the Company or any Subsidiary,
whether ordered by a Governmental Entity or undertaken voluntarily by the Company or a Subsidiary;
and (b) to the Knowledge of the Company, none of the food or beverage products of the Company or any
Subsidiary has been adulterated, misbranded, mispackaged, or mislabeled in violation of applicable Law,
or posed an inappropriate threat to the health or safety of a consumer when consumed in the intended
manner, except as (a) and (b), either individually or in the aggregate, would not reasonably be expected to
be material to the Company and its Subsidiaries, taken as a whole.
Section 3.28. No Other Representations or Warranties. Except for the representations and
warranties contained in this Article III, neither the Company nor any other Person makes any other
express or implied representation or warranty on behalf of the Company or any of its Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, jointly and severally, as set forth
in this Article IV; provided that such representations and warranties by Parent and Merger Sub are
25
qualified in their entirety by reference to the disclosure set forth in the disclosure letter delivered by
Parent and Merger Sub to the Company immediately prior to the execution of this Agreement (the “Parent
Disclosure Letter”). Each disclosure set forth in the Parent Disclosure Letter shall qualify or modify each
of the representations and warranties set forth in this Article IV to the extent the applicability of the
disclosure to such representation and warranty is reasonably apparent from the text of the disclosure
made.
Section 4.1. Organization and Qualification. Each of Parent and Merger Sub is a legal entity
duly organized, validly existing and in good standing (where applicable as a legal concept) under the
Laws of its respective jurisdiction of incorporation and has all requisite corporate or similar power and
authority to own, lease and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing (where applicable as a legal concept) as
a foreign company in each jurisdiction where the ownership, leasing or operation of its assets or
properties or conduct of its business requires such qualification, except where any such failure to be so
qualified or in good standing, or to have such power or authority, would not reasonably be expected to,
individually or in the aggregate, prevent, materially impair or materially delay the ability of each of
Parent and Merger Sub to perform its obligations under this Agreement. Parent has made available to the
Company prior to the date of this Agreement a true, complete and correct copy of the certificate of
incorporation and bylaws or other equivalent organizational documents of each of Parent and Merger Sub,
each as amended through the date hereof.
Section 4.2. Corporate Authority and Approval. Each of Parent and Merger Sub has all
necessary corporate or similar power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the Merger have been
duly and validly authorized by all necessary corporate or similar action of Parent and Merger Sub (other
than the adoption of this Agreement by Parent as sole shareholder of Merger Sub (which shall occur
immediately after the execution and delivery of this Agreement)), and no other corporate proceedings on
the part of Parent or Merger Sub are necessary to authorize the execution and delivery of this Agreement
or to consummate the Transactions (other than, with respect to the Merger, the adoption of this
Agreement by Parent as sole shareholder of Merger Sub (which shall occur immediately after the
execution and delivery of this Agreement), and the filing of the Certificate of Merger with the Secretary
of State of the State of Ohio). This Agreement has been duly and validly executed and delivered by Parent
and Merger Sub and, assuming the due authorization, execution and delivery by the Company, this
Agreement constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditor’s rights, and, as to enforceability, to general equitable
principles).
Section 4.3. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance by Parent and Merger Sub of this
Agreement and the consummation by Parent and Merger Sub of the Transactions (including the
consummation of the Merger) will not require any consent, approval, registration, declaration,
approval, authorization or permit of, action by, filing with or notification to any Governmental
Entity with respect to Parent or Merger Sub, other than (i) the filing with the Secretary of State of
Ohio of the Certificate of Merger as required by the OGCL, (ii) compliance with the applicable
requirements of the Exchange Act, (iii) compliance with any applicable foreign or state securities
or blue sky laws, and (iv) the other consents and/or notices set forth on Section 4.3(a) of the
Parent Disclosure Letter (collectively, clauses (i) through (iv), the “Parent Approvals”), and other
26
than any consent, approval, authorization, permit, action, filing or notification the failure of which
to make or obtain would not reasonably be expected to, individually or in the aggregate, prevent,
materially impair or materially delay the ability of each of Parent and Merger Sub to perform its
obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Merger Sub, the
consummation by Parent and Merger Sub of the Transactions or compliance by Parent or Merger
Sub with any of the provisions of this Agreement will not (i) conflict with, or result in any breach,
violation or default (with or without notice or lapse of time, or both) of any provision of, the
organizational or governing documents of Parent or any of its Subsidiaries, (ii) violate any Law
binding upon or applicable to Parent or any of its Subsidiaries or any of their respective properties
or assets, or (iii) result in any breach, violation of, or default (with or without notice, lapse of
time, or both) under, or give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a benefit under any Contract to which Parent or Merger Sub is a party
or by which any of their respective properties or assets is bound, other than any such violation,
default, termination, cancellation, acceleration, right, loss or Lien that would not reasonably be
expected to, individually or in the aggregate, prevent, materially impair or materially delay the
ability of each of Parent and Merger Sub to perform its obligations under this Agreement.
Section 4.4. Investigations; Litigation. There are no (a) investigations or reviews pending or,
to the Knowledge of Parent, threatened by any Governmental Entity with respect to Parent or Merger Sub
that, if determined adversely to Parent or Merger Sub or any of their respective properties or assets, would
or would be expected to, individually or in the aggregate, prevent, materially impair or materially delay
the ability of each of Parent and Merger Sub to perform its obligations under this Agreement and (b)
Actions pending or, to the Knowledge of Parent, threatened against or affecting Parent or Merger Sub, or
any of their respective properties or assets at law or in equity before, and there are no Orders of, or before,
any Governmental Entity, in each case that would or would reasonably be expected to, individually or in
the aggregate, prevent, materially impair or materially delay the ability of each of Parent and Merger Sub
to perform its obligations under this Agreement.
Section 4.5. Information Supplied. Subject to the accuracy of the representations and
warranties of the Company set forth in Section 3.14, none of the information supplied or to be supplied by
or on behalf of Parent and Merger Sub specifically for inclusion or incorporation by reference in the
Proxy Statement shall, on the date the Proxy Statement is first sent or mailed to the Company
Shareholders or at the time of the Company Shareholders Meeting, will contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or will omit to state any material fact with
respect to Parent or any of its Affiliates that is necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company Shareholders Meeting which
has become false or misleading.
Section 4.6. Equity Commitment Letter. Concurrently with the execution of this Agreement,
the Equity Investor has delivered to the Company the duly executed Equity Commitment Letter. The
Equity Commitment Letter is in full force and effect and constitutes a legal, valid and binding obligation
of the Equity Investor, enforceable against it in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws
of general applicability relating to or affecting creditor’s rights, and, as to enforceability, to general
equitable principles and, as of the date of this Agreement, (i) no amendment is contemplated to the Equity
Commitment Letter and (ii) no commitment contained in the Equity Commitment Letter has been
withdrawn or rescinded.
27
Section 4.7. Financing.
(a) As of the date of this Agreement, Parent has sufficient cash, available lines of
credit or other sources of immediately available funds and/or committed equity or debt financing
(including pursuant to the Equity Commitment Letter and the Debt Commitment Letters) to
enable Merger Sub to pay the aggregate Merger Consideration and to perform its obligations with
respect to the Transactions (such amount, the “Required Amount”).
(b) Parent will have and will cause Merger Sub to have at the Closing, the available
cash on hand and/or financing in an aggregate amount sufficient to enable Merger Sub to
consummate the Merger, including payment in cash of the aggregate Merger Consideration on the
Closing Date and for Parent and Merger Sub to satisfy all of their obligations under this
Agreement, including to pay all related Expenses. Parent and Merger Sub acknowledge and agree
that their obligations under this Agreement are not contingent or conditioned in any manner on
obtaining any financing.
Section 4.8. Capitalization of Merger Sub. As of the date hereof, the authorized Capital Stock
of Merger Sub consists of 100 shares of common stock. All of the issued and outstanding Capital Stock
of Merger Sub is, and at the Effective Time will be, owned directly by Parent. Merger Sub has
outstanding no option, warrant, right, or any other agreement pursuant to which any Person other than
Parent may, directly or indirectly, acquire any equity security of Merger Sub. Merger Sub has been
formed solely for the purpose of the Merger Agreement and has not conducted any business prior to the
date hereof and has, and prior to the Effective Time will have, no assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this Agreement and the Transactions.
Section 4.9. Certain Arrangements. Except as contemplated by this Agreement, neither
Parent nor any of its Affiliates has entered into any contract, arrangement or understanding (in each case,
whether oral or written), or authorized, committed or agreed to enter into any contract, arrangement or
understanding (in each case, whether oral or written), pursuant to which any shareholder of the Company
would be entitled to receive consideration of a different amount or nature than the Merger Consideration
or pursuant to which any shareholder of the Company (a) agrees to vote to adopt this Agreement or the
Merger or (b) agrees to vote against any Superior Proposal.
Section 4.10. Ownership of Common Shares. None of Parent, Merger Sub or any of their
respective Subsidiaries or Affiliates beneficially owns (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly (including pursuant to a derivatives Contract), any Company
Common Shares or other securities convertible into, exchangeable for or exercisable for Company
Common Shares or any securities of any Subsidiary of the Company and none of Parent, its Subsidiaries
or Affiliates has any rights to acquire, directly or indirectly, any Company Common Shares except
pursuant to this Agreement or agreements to which the Company is a party. Assuming the accuracy of
the Company’s representations and warranties set forth in the second sentence of Section 3.23, neither
Parent nor any of its “affiliates” or “associates ” ( including Merger Sub) is, and at no time during the last
three years has Parent or any of its “affiliates” or “associates” (including Merger Sub) been, an “interested
shareholder” of the Company, as such terms are defined in Section 1704.01 of the OGCL.
Section 4.11. No Vote of Parent Stockholders. No vote of the stockholders of Parent that has
not been obtained on or prior to the date hereof is required by any applicable Law or the organizational
documents of Parent in connection with the consummation of the Merger.
Section 4.12. Finders or Brokers. No broker, finder, investment banker, financial advisor or
other Person is entitled to any brokerage, finder’s, financial advisor’s or other fee or commission in
28
connection with the Merger and any of the other Transactions based upon arrangements made by or on
behalf of Parent or Merger Sub.
Section 4.13. No Other Representations or Warranties. Except for the representations and
warranties contained in this Article IV, neither Parent nor Merger Sub nor any other Person makes any
other express or implied representation or warranty on behalf of Parent, Merger Sub or any of their
respective Affiliates.
Section 4.14. Investigation; No Other Representations and Warranties. Parent and Merger Sub
each acknowledge and agree that, except for the representations and warranties expressly set forth in
Article III (subject to the qualifications set forth therein and the expiration thereof at the Effective Time)
(i) the Company does not make, and has not made, any representations or warranties relating to itself or
its Subsidiaries or their respective businesses or otherwise in connection with the Transactions and Parent
and Merger Sub are not relying on any representation or warranty except for those expressly set forth in
this Agreement, (ii) no Person has been authorized by the Company to make any representation or
warranty relating to itself or its business or otherwise in connection with the Transactions, and if made,
such representation or warranty will not be relied upon by Parent or Merger Sub as having been
authorized by such party and (iii) any estimates, projections, predictions, data, financial information,
memoranda, presentations or any other materials or information provided or addressed to Parent, Merger
Sub or any of their representatives, oral or written, are not and shall not be deemed to be or include
representations or warranties unless any such materials or information is the subject of any express
representation or warranty set forth in Article III of this Agreement (subject to the qualifications set forth
therein and the expiration thereof at the Effective Time).
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company and Parent.
(a) From and after the date hereof and prior to the earlier of the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to Article VII and except (i)
as may be required by applicable Law, (ii) as may be consented to in writing by Parent (such
consent not to be unreasonably withheld, conditioned or delayed), (iii) as expressly required by
this Agreement, or (iv) as set forth in Section 5.1(a) of the Company Disclosure Letter, the
Company shall, and shall cause each of its Subsidiaries to (A) conduct its business and operations
in the ordinary course of business consistent with past practice and (B) use commercially
reasonable efforts to (1) maintain and preserve intact its business organization and business
relationships, including its relations and goodwill with Governmental Entities, customers,
suppliers, distributors, licensors, contractors, creditors and lessors and (2) keep available the
services of its officers and key employees.
(b) Except as set forth on Section 5.1(b) of the Company Disclosure Letter and
subject to the exceptions contained in clauses (i) through (iv) of Section 5.1(a) at all times during
the period between the date hereof and the earlier of the Effective Time and the Termination
Date, the Company shall not, and shall not permit any of its Subsidiaries to (it being understood
and hereby agreed that if any action is expressly permitted by any of the following subsections,
such action shall be expressly permitted under Section 5.1(a)):
(i) amend, adopt any amendment or otherwise change its Articles of
Incorporation, Code of Regulations or any similar organizational document;
29
(ii) (A) adjust, split, reverse split, combine, consolidate, subdivide or
reclassify any shares of Capital Stock or other ownership interests of the Company or any
of its Subsidiaries (including any warrants, options or other rights to acquire the
foregoing) or (B) modify the terms of any shares of its Capital Stock;
(iii) issue, sell, authorize, deliver, pledge, grant, transfer, encumber or
otherwise dispose of any shares of Capital Stock of the Company or any of its
Subsidiaries, or securities convertible into or exchangeable for, or options, warrants,
calls, subscriptions, commitments or rights of any kind to acquire, any shares of Capital
Stock of the Company or any of its Subsidiaries (other than (A) the issuance of Company
Common Shares upon the exercise of Company Options outstanding as of the
Capitalization Date, (B) in satisfaction of obligations pursuant to Company Benefit Plans
existing as of the date hereof in accordance with their terms as of the date hereof, (C) by
a wholly-owned Subsidiary of the Company to the Company or another wholly-owned
Subsidiary of the Company, or (D) pursuant to net settlements or exercises of outstanding
Company Options or Company Restricted Shares in satisfaction of the exercise price
and/or tax withholding relating to such award solely to the extent required or permitted
by any Company Benefit Plan as in effect on the date hereof);
(iv) directly or indirectly acquire, repurchase or redeem any securities, except
for transactions between the Company and any of its direct or indirect wholly owned
Subsidiaries and except pursuant to net settlements or exercises of outstanding Company
Options or Company Restricted Shares in satisfaction of the exercise price and/or tax
withholding relating to such award solely to the extent required or permitted by any
Company Benefit Plan as in effect on the date hereof);
(v) declare, set aside, establish a record date for, authorize or pay any
dividend or other distribution payable in cash, stock or property (or any combination
thereof) with respect to the Capital Stock of the Company or any of its Subsidiaries, or
make any other actual, constructive deemed distribution in respect of such Capital Stock
(except cash dividends or other distributions paid by any direct or indirect wholly-owned
Subsidiary of the Company to the Company or to any other direct or indirect wholly-
owned Subsidiary of the Company);
(vi) make any acquisition (whether by merger, consolidation, or acquisition
of stock or assets or otherwise) of any interest in any Person or any division or assets
thereof (other than inventory in the ordinary course of business or capital expenditures
pursuant to the budget set forth in Section 5.1(b)(vi) of the Company Disclosure Letter);
(vii) acquire, or agree to acquire, fee ownership (or its jurisdictional
equivalent) of any real property, or amend, modify, waive, or terminate any Real
Property Lease, or enter into any Real Property Lease;
(viii) enter into any understanding, arrangement or Contract with respect to the
voting or registration of the shares of the Company’s or its Subsidiaries’ Capital Stock;
(ix) enter any new line of business outside of its existing business as of the
date hereof;
(x) sell, transfer, lease, license or otherwise dispose of (whether by merger,
consolidation or acquisition of stock or assets or otherwise), any corporation, partnership
30
or other business organization or division thereof or any property or assets (including any
Company Intellectual Property) of the Company or its Subsidiaries outside the ordinary
course of business, consistent with past practice;
(xi) other than the Company Shareholders Meeting, convene any special
meeting (or any adjournment thereof) of the Company Shareholders;
(xii) make any loans, advances or capital contributions to or investments in
any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of
the Company) other than loans, advances, capital contributions or investments pursuant
to Contracts in effect as of the date of this Agreement in accordance with their terms as of
the date hereof as disclosed on Section 5.1(b)(xii) of the Company Disclosure Letter.
(xiii) (A) incur, assume, suffer or modify the terms of any Indebtedness or
issue any debt securities, other than (1) trade payables incurred in the ordinary course of
business consistent with past practice, and (2) Indebtedness under the Company’s
existing credit facilities in an amount that does not exceed $1,000,000, (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except with respect to
obligations of wholly owned Subsidiaries of the Company or (C) mortgage, pledge or
otherwise encumber any assets, tangible or intangible, or create or suffer to exist any Lien
thereon (other than Permitted Liens) in an amount that does not exceed $500,000
individually or in the aggregate;
(xiv) settle, release, assign, waive or compromise any pending or threatened
Action against the Company or any of its Subsidiaries other than settlements or
compromises for any Action that is reflected or reserved against in the Audited Company
Balance Sheet;
(xv) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any of its material assets, other than (A) sale of inventory in the ordinary course of
business, consistent with past practice, (B) dispositions of assets no longer used in the
operation of the business, (C) sales that are not material to the Company or (D) factoring
of accounts receivable;
(xvi) enter into or adopt any “poison pill” or similar stockholder rights plan;
(xvii) except as required by any existing agreements, any Company Benefit
Plan, or applicable Law, (A) increase the compensation or other benefits payable or
provided to the Company’s directors or executive officers or any other employee of the
Company and its Subsidiaries whose base salary is greater than $50,000 per annum; (B)
except in the ordinary course of business consistent with past practice, increase the
compensation or other benefits payable or provided to employees of the Company and its
Subsidiaries that are not described in clause (A); (C) except in the ordinary course of
business, establish, adopt, enter into or materially amend any Company Benefit Plan or
plan, agreement or arrangement that would have been a Company Benefit Plan had it
been in effect on the date hereof, other than adopting any amendments required by Law
or to maintain the Tax qualified or registered status of any Company Benefit Plan;
provided, that, in any case, the Company shall not establish or adopt any change in
control, transaction bonus, equity or equity-based, retirement or severance plan, program
or arrangement and severance arrangements for new hires consistent with those of
31
Company employees holding a similar position); or (D) terminate the employment of any
employee whose base salary is greater than $100,000, other than for cause or hire any
employee whose base salary is greater than $100,000;
(xviii) (A) incur, authorize or commit to incur any capital expenditures other
than consistent with the capital expenditure budget set forth in Section 5.1(b)(xviii) of the
Company Disclosure Letter; (B) enter into, modify, amend, extend, fail to perform the
terms of or terminate any (1) Contract which if entered into prior to the date hereof would
be a Material Contract if it had been in effect as of the date hereof; or (2) Material
Contract; (C) engage in any transaction with, or enter into any agreement, arrangement or
understanding with, any Affiliate of the Company or other Person covered by Item 404 of
Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant
to Item 404; (D) effectuate a “plant closing” or “mass layoff” (each as defined in
WARN); or (E) waive, release, grant or transfer any right of material value;
(xix) adopt or enter into a plan or agreement of complete or partial liquidation,
dissolution, merger, amalgamation, consolidation or other reorganization of the Company
or any of its Subsidiaries (other than the Merger).
(xx) except as may be required by a change in GAAP, make any change in its
financial accounting principles, policies, or practices;
(xxi) make or change any material Tax election, change any material annual
Tax accounting period, adopt or change any material method of Tax accounting, amend
any Tax Returns or settle any material Tax claim; or
(xxii) agree, resolve, authorize or commit, in writing or otherwise, to do or take
any of the actions prohibited by this Section 5.1(b).
Section 5.2. Proxy Statement and Other Required SEC Filings.
(a) Promptly after the execution of this Agreement (and in any event within twenty
(20) Business Days after the date of this Agreement), the Company will prepare (with Parent’s
reasonable cooperation) and file with the SEC the Proxy Statement to be sent to the Company
Shareholders in connection with the Company Shareholders Meeting. The Company will not file
the Proxy Statement with the SEC without first providing Parent and its counsel a reasonable
opportunity to review and comment thereon, and the Company will give due consideration to, and
consider in good faith, all reasonable additions, deletions or changes suggested by Parent or its
counsel. Subject to Section 5.5 and unless there has been a Change of Recommendation, the
Company will (A) include the Company Recommendation in the Proxy Statement, (B) use its
reasonable best efforts to solicit proxies to obtain the Requisite Company Vote and (C) take all
other action reasonably necessary or advisable to secure the Requisite Company Vote. The
Company will use its reasonable best efforts to resolve all SEC comments, if any, with respect to
the Proxy Statement as promptly as practicable after the receipt thereof. Promptly (but in any
event no more than ten (10) Business Days) following the (1) confirmation by the SEC that it has
no further comments or (2) if applicable, expiration of the 10-day waiting period contemplated by
Rule 14a-6(a) promulgated under the Exchange Act, the Company will cause the Proxy Statement
in definitive form to be mailed to the Company Shareholders as of the record date established for
the Company Shareholders Meeting.
32
(b) Each of the Company, Parent and Merger Sub will furnish all information
concerning such Person and its Affiliates to the other, and provide such other assistance, as may
be reasonably requested by such other party hereto to be included therein and will otherwise
reasonably assist and cooperate with the other in the preparation, filing and distribution of the
Proxy Statement and the resolution of any comments received from the SEC.
(c) The Company will notify Parent promptly (and in any event within 24 hours) of
the receipt of any comments, whether written or oral, from the SEC and of any request by the
SEC for amendments or supplements to the Proxy Statement, any Other Required Company
Filing or any Other Required Parent Filing, or for additional information, and will supply Parent
with copies of all correspondence between it or any of its Representatives, on the one hand, and
the SEC, on the other hand, with respect to such filings.
(d) Except in connection with a Change of Recommendation or thereafter, no
amendment or supplement to the Proxy Statement will be made by the Company without the
approval of Parent, which approval will not be unreasonably withheld, conditioned or delayed.
(e) If the Company determines that it is required to file any document other than the
Proxy Statement with the SEC in connection with the Merger pursuant to applicable Law (such
document, as amended or supplemented, an “Other Required Company Filing”), then the
Company will use its reasonable best efforts to promptly prepare and file such Other Required
Company Filing with the SEC; provided, for the avoidance of doubt, none of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2017 nor any Quarterly
Reports on Form 10-Q for quarterly periods ending in 2018 shall be deemed an “Other Required
Company Filing” for purposes of this Agreement and shall not be subject to Parent’s prior review
and comment. The Company will use its reasonable best efforts to cause the Proxy Statement and
any Other Required Company Filing to comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules of the SEC and NASDAQ. Except in
connection with a Change of Recommendation or thereafter, the Company may not file any Other
Required Company Filing with the SEC without first providing Parent and its counsel a
reasonable opportunity to review and comment thereon, and the Company will give due
consideration to, and will consider in good faith, all reasonable additions, deletions or changes
suggested by Parent or its counsel.
(f) On the date of filing, the date of mailing to the Company Shareholders (if
applicable) and at the time of the Company Shareholders Meeting, neither the Proxy Statement
nor any Other Required Company Filing will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no covenant is made by the Company with respect to any
information supplied by Parent, Merger Sub or any of their Affiliates for inclusion or
incorporation by reference in the Proxy Statement or any Other Required Company Filing. The
information supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement or any Other Required Company Filings will not, at the time that such Proxy Statement
or Other Required Company Filing is filed with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they are made, not
misleading. The information supplied by Parent, Merger Sub and their respective Affiliates for
inclusion or incorporation by reference in the Proxy Statement or any Other Required Company
Filing will not, at the time that the Proxy Statement or such Other Required Company Filing is
filed with the SEC, contain any untrue statement of a material fact or omit to state any material
33
fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. For the avoidance of doubt, no
covenant is made by Parent or Merger Sub with respect to any information supplied by the
Company for inclusion or incorporation by reference in any document that Parent or Merger Sub
determines that it is required to file with the SEC as a result of the Merger or the Company
Shareholders Meeting pursuant to applicable law (an “Other Required Parent Filing”).
Section 5.3. Company Shareholders Meeting. Subject to Section 5.5, the Company shall take
all necessary actions in accordance with applicable Law, the organizational documents of the Company
and the applicable rules of the NASDAQ to establish a record date for, duly call, give notice of, convene
and hold the Company Shareholders Meeting as promptly as reasonably practicable after confirmation by
the SEC that the SEC has no further comments on the Proxy Statement, for the purpose of (i) voting on
the approval and adoption of this Agreement and the Merger, which such Company Shareholders Meeting
shall be held on a date selected by the Company in consultation with Parent and (ii) in accordance with
Section 14A of the Exchange Act, seeking advisory approval of a proposal in connection with a non-
binding, advisory vote to approve certain compensation that may become payable to the Company’s
named executive officers in connection with the consummation of the Merger. The Company shall cause
the Proxy Statement to be mailed to the Company Shareholders entitled to vote at the Company
Shareholders Meeting, and comply with all legal requirements applicable to the Proxy Statement and the
Company Shareholders Meeting. Subject to Section 5.5, the Company shall use its reasonable best efforts
to submit this Agreement for adoption by the Company Shareholders at the Company Shareholders
Meeting and obtain the Requisite Company Vote. Notwithstanding anything to the contrary contained in
this Agreement, the Company may adjourn, recess, reconvene or postpone the Company Shareholders
Meeting if (x) after consultation with Parent, the Company Board (or a committee thereof) has determined
in good faith (after consultation with outside legal counsel) that it is required by applicable Law to
postpone or adjourn the Company Shareholders Meeting to ensure that any required supplement or
amendment to the Proxy Statement is provided to the Company Shareholders within a reasonable amount
of time in advance of the Company Shareholders Meeting or (y) after consultation with Parent, if as of the
time for which the Company Shareholders Meeting is originally scheduled (as set forth in the Proxy
Statement) there are insufficient Company Common Shares present (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Company Shareholders Meeting.
Notwithstanding the foregoing, without the prior written consent of Parent, the Company Shareholders
Meeting will not be postponed or adjourned with respect to clause (y) of this Section 5.3, by more than 30
calendar days after the date on which the Company Shareholders Meeting was (or was required to be)
originally scheduled.
Section 5.4. Access; Confidentiality.
(a) Subject to compliance with applicable Laws, the Company shall, and shall cause
its Subsidiaries, and its and its Subsidiaries’ respective officers, directors, employees and
representatives to, afford to Parent and Merger Sub and their respective Affiliates, officers,
employees, accountants, consultants, legal counsel, financial advisors and agents and other
representatives (collectively, “Parent Representatives”), upon written request, reasonable access
during normal business hours, during the period prior to the earlier of the Effective Time and the
Termination Date, to the Company’s and its Subsidiaries’ officers and employees, properties,
Contracts, facilities, tax records, books and records. The foregoing notwithstanding, the
Company shall not be required to afford such access if it (i) would unreasonably disrupt the
operations of the Company or any of its Subsidiaries, (ii) would violate any of the Company’s or
its Subsidiaries’ obligations under any Contract with respect to confidentiality that was entered
into prior to the date of this Agreement so long as the Company shall have used reasonable efforts
to obtain the consent of the counterparty in such Contract to such access or disclosure, (iii) is
34
subject to any attorney-client privilege to the Company or any of its Subsidiaries (so long as the
Company uses its reasonable best efforts to allow for such access or disclosure to the maximum
extent that does not result in a loss of such privilege, or (iv) reasonably be expected to result in a
violation of any applicable Law.
(b) Parent hereby agrees that all information provided to it, Merger Sub or any
Parent Representatives in connection with this Agreement and the consummation of the
Transactions shall be deemed to be Evaluation Material, as such term is used in, and shall be
treated in accordance with the non-disclosure agreement, dated as of November 6, 2017, between
the Company and GP Investments, Ltd. (the “Confidentiality Agreement”).
Section 5.5. Acquisition Proposals.
(a) Except as expressly permitted by this Section 5.5, promptly following the date of
this Agreement (i) the Company shall immediately cease and cause to be terminated any
activities, discussions or negotiations with, and terminate any data room access (or other access to
diligence) of, any Person and its directors, officers, Affiliates, employees, investment bankers,
attorneys, accountants and other advisors, agents or representatives (collectively,
“Representatives”) relating to an Acquisition Transaction and (ii) the Company will request that
each Person (other than Parent and its Representatives) that has, prior to the date of this
Agreement, executed a confidentiality agreement in connection with its consideration of
acquiring the Company to, in accordance with the terms of such confidentiality agreement,
promptly return or destroy all non-public information furnished to such Person by or on behalf of
the Company or its Subsidiaries prior to the date of this Agreement. Except as expressly
permitted by this Section 5.5, from the date of this Agreement until the Effective Time or, if
earlier, the termination of this Agreement in accordance with Article VII, the Company and its
Subsidiaries shall not, and the Company shall direct and cause its Representatives not to, directly
or indirectly, (i) initiate, solicit, propose, or knowingly encourage, facilitate or assist, any inquiry
or the making of any proposal or offer that constitutes, or is reasonably expected to lead to, an
Acquisition Proposal, (ii) engage in, enter into, continue or otherwise participate in any
discussions or negotiations with any Person with respect to, or provide any non-public
information or data concerning the Company or its Subsidiaries or afford access to the business,
properties, assets, books, records or any personnel of the Company or any of its Subsidiaries
(other than Parent, Merger Sub or any of their respective designees) relating to, an Acquisition
Proposal, (iii) approve, endorse or recommend any proposal that constitutes, or is reasonably
expected to lead to, an Acquisition Proposal or (iv) enter into any acquisition agreement, merger
agreement or similar definitive agreement, or any letter of intent, memorandum of understanding
or agreement in principle, or any other agreement relating to an Acquisition Proposal (an
“Alternative Acquisition Agreement”).
(b) Notwithstanding anything to the contrary contained herein, from the date of this
Agreement until the Company’s receipt of the Requisite Company Vote, if the Company receives
a bona fide unsolicited Acquisition Proposal from any Person that was not received as a result of
a breach of Section 5.5(a), the Company and its Representatives may contact such Person to
clarify the terms and conditions thereof and (i) the Company and its Representatives may provide
information (including any non-public information) regarding, and afford access to the business,
properties, assets, books, records and personnel of, the Company and its Subsidiaries to such
Person pursuant to an executed confidentiality agreement containing terms as to confidentiality
that are no less favorable to the Company in the aggregate than those contained in the
Confidentiality Agreement (an “Acceptable Confidentiality Agreement”); provided that the
Company shall (x) promptly (but in any event within 24 hours) notify Parent of the receipt of any
35
Acquisition Proposal, the identity of the Person making such Acquisition Proposal and the
material terms of such Acquisition Proposal, and deliver to Parent unredacted copies of any
documents received in connection with such Acquisition Proposal, (y) promptly (but in any event
within 24 hours) notify Parent of any material developments with respect to such Acquisition
Proposal, and (z) contemporaneously make available to Parent and Merger Sub any confidential
information concerning the Company or its Subsidiaries that is provided to any Person given such
access that was not previously made available to Parent or Merger Sub and (ii) following the
execution of an Acceptable Confidentiality Agreement, the Company and its Representatives may
engage in, enter into, continue or otherwise participate in any discussions or negotiations with
such Person with respect to such Acquisition Proposal, if and only to the extent that prior to
taking any action described in clauses (i) or (ii) above, the Company Board determines in good
faith (after consultation with its financial advisor and outside legal counsel) that such Acquisition
Proposal either constitutes a Superior Proposal or would reasonably be expected to result in a
Superior Proposal and that the failure to take the actions contemplated by this Section 5.5(b)
would be inconsistent with its fiduciary duties pursuant to applicable Law.
(c) Except as set forth in this Section 5.5(c), following the date of this Agreement the
Company Board shall not (i) change, withhold, withdraw, qualify, amend or modify (or publicly
propose or resolve to change, withhold, withdraw, qualify, amend or modify), in a manner
adverse to Parent or Merger Sub, the Company Recommendation, (ii) fail to include the Company
Recommendation in the Proxy Statement, (iii) approve or recommend, or publicly propose to
approve or recommend to the Company Shareholders, an Acquisition Proposal, (iv) fail to
publicly reaffirm the Company Recommendation within 10 Business Days of the occurrence of a
material event or development and after Parent so requests in writing (or, if the Company
Shareholders Meeting is scheduled to be held within 10 Business Days, then within one Business
Day after Parent so requests in writing), or (v) if a tender offer or exchange offer for shares of
Capital Stock of the Company that constitutes an Acquisition Proposal is commenced, fail to
recommend against acceptance of such tender offer or exchange offer by the Company
Shareholders (including, for these purposes, by disclosing that it is taking no position with respect
to the acceptance of such tender offer or exchange offer by its shareholders, which shall constitute
a failure to recommend against acceptance of such tender offer or exchange offer, provided that a
customary “stop, look and listen” communication by the Company Board pursuant to
Rule 14d-9(f) promulgated under the Exchange Act shall not be prohibited), within ten (10)
Business Days after commencement thereof (any of the foregoing, a “Change of
Recommendation”), or authorize, adopt, approve or propose to authorize, adopt or approve, an
Acquisition Proposal, or cause or permit the Company to enter into any Alternative Acquisition
Agreement. Notwithstanding anything to the contrary set forth in this Agreement, the Company
Board may (A) effect a Change of Recommendation if the Company Board determines in good
faith (after consultation with its outside legal counsel) that, (x) as a result of a development or
Effect that occurs or arises after the execution and delivery of this Agreement (other than a
Superior Proposal or Effect that otherwise relates to an Acquisition Proposal) that was not known
to, or reasonably foreseeable by, the Company Board prior to the execution and delivery of this
Agreement (an “Intervening Event”), and (y) failure to take such action would be inconsistent
with the directors’ fiduciary duties under applicable Law or (B) if the Company receives a bona
fide Acquisition Proposal that the Company Board determines in good faith (after consultation
with its financial advisor and outside legal counsel) constitutes a Superior Proposal and that the
failure to do so would reasonably be expected to be inconsistent with its fiduciary duties pursuant
to applicable Law, terminate this Agreement pursuant to Section 7.4(a) and enter into, the
Alternative Acquisition Agreement associated with such Superior Proposal; provided, however,
that:
36
(i) the Company Board may only take the actions described in the foregoing
clause (A) if:
(1) the Company shall have provided prior written notice to Parent of the
Company Board’s intention to take such actions at least three (3) Business Days in
advance of taking such action, which notice shall describe the Intervening Event in
reasonable detail;
(2) after providing such notice and prior to taking such actions, the Company
shall have, and shall have caused its Representatives to, negotiate with Parent in good
faith (to the extent Parent desires to negotiate) during such three (3) Business Day period,
to make such adjustments in the terms and conditions of this Agreement that would cause
the Company Board to no longer believe that it would be inconsistent with the directors’
fiduciary duties under applicable Law not to effect the Change of Recommendation, and
by 5:00 PM Eastern Time on the last Business Day of such three (3) Business Day and
the Company Board shall have determined in good faith after consultation with outside
counsel, that it would continue to reasonably be expected to be inconsistent with the
directors’ fiduciary duties under applicable Law not to effect the Change of
Recommendation, if such changes offered in writing by Parent were given effect; and
(ii) the Company Board may only take the actions described in the foregoing
clause (B) if:
(1) the Company shall have provided prior written notice to Parent of the
Company Board’s intention to take such actions at least three (3) Business Days in
advance of taking such action (or two (2) Business Days in the case of any material
modification of a Superior Proposal that is the subject of a prior notification under this
clause), which notice shall specify, as applicable, the material terms of the Acquisition
Proposal received by the Company that could reasonably result in a Superior Proposal,
including a copy of the most current version of the relevant proposed transaction
agreements with, and the identity of, the party making the Acquisition Proposal and other
material documents (including any financing commitments with respect to such
Acquisition Proposal);
(2) after providing such notice and prior to taking such actions, the Company
shall have, and shall have caused its Representatives to, negotiate with Parent in good
faith (to the extent Parent desires to negotiate) during such three (3) Business Day or two
(2) Business Day period, as the case may be, to make such adjustments in the terms and
conditions of this Agreement as would cause the Company Board to no longer believe
that it would reasonably be expected to be inconsistent with the directors’ fiduciary duties
under applicable Law not to effect the Change of Recommendation;
(3) the Company Board shall have considered in good faith any changes to
this Agreement or other arrangements that may be offered in writing by Parent by 5:00
PM Eastern Time on the last Business Day of such three (3) Business Day or two (2)
Business Day period, as the case may be, and shall have determined in good faith, after
consultation with outside counsel and its financial advisors, that (i) Parent has not made
an offer that is at least as favorable, taken as a whole, to the Company Shareholders as
such Acquisition Proposal and (ii) the bona fide Acquisition Proposal received by the
Company would continue to constitute a Superior Proposal, in each case, if such changes
offered in writing by Parent were given effect; and
37
(4) the Company pays the Company Termination Fee in accordance with
procedures set forth in Section 7.6.
(d) Nothing contained in this Section 5.5 shall be deemed to prohibit the Company,
the Company Board or any committee of the Company Board from (i) complying with its
disclosure obligations under U.S. federal or state Law with regard to an Acquisition Proposal,
including taking and disclosing to its shareholders a position contemplated by Rule 14d-9 or Rule
14e-2(a) under the Exchange Act (or any similar communication to shareholders), or (ii) making
any “stop-look-and-listen” communication to the Company Shareholders under the Exchange Act
(or any similar communications to the Company Shareholders) within ten (10) Business Days
after commencement of any tender offer; provided, however, that any such disclosure or
communication that constitutes or contains a Change of Recommendation shall be subject to the
provisions of Section 5.5(c).
(e) The Company agrees that any action taken by a Representative of the Company
at the direction of the Company (other than an employee or consultant of the Company who is not
an executive or other officer of the Company and was not otherwise directed to take such action
by the Company) that, if taken by the Company, would constitute a material breach of this
Section 5.5 will be deemed to constitute a breach by the Company of this Section 5.5.
(f) As used in this Agreement, “Acquisition Proposal” shall mean any inquiry,
proposal or offer made by any Person (other than the Parent or Merger Sub) for (i) a merger,
share exchange, consolidation, business combination, recapitalization or similar transaction
involving the Company (other than the Merger), (ii) the direct or indirect acquisition by any
Person of twenty percent (20%) or more of the assets of the Company and its Subsidiaries, on a
consolidated basis, or (iii) the direct or indirect acquisition by any Person of twenty percent
(20%) or more of the voting power of the outstanding Company Common Shares, including any
tender offer or exchange offer that if consummated would result in any Person beneficially
owning twenty percent (20%) or more of the voting power of the outstanding Company Common
Shares.
(g) As used in this Agreement, “Superior Proposal” means any bona fide written
Acquisition Proposal (with the percentages set forth in the definition of such term, to the extent
applicable, changed from 20% to 50%) that did not result from a breach of this Section 5.5 and
that the Company Board has determined in its good faith judgment (after consultation with
outside legal counsel and its financial advisor) would, if consummated, be more favorable, from a
financial point of view, to the Company Shareholders (in their capacity as such) than the Merger,
taking into account among other things all of the terms and conditions of such Acquisition
Proposal (including the financing, likelihood and timing of consummation of the transaction
contemplated by such Acquisition Proposal) and this Agreement (including any changes to the
terms of this Agreement committed to by Parent to the Company in writing in response to such
Acquisition Proposal under the provisions of Section 5.5(c)).
Section 5.6. Employee Matters.
(a) For a period of one year following the Effective Time (but not beyond the
termination of the applicable individual’s employment with the Company and its Subsidiaries),
Parent shall provide, or shall cause to be provided, to each individual that is an employee of the
Company or its Subsidiaries immediately prior to the Effective Time (each, a “Continuing
Employee”), (i) a base salary or hourly wage and bonus opportunities (excluding for such
purposes any equity-based compensation, change in control payments, or retention or similar
38
payments) that are at least equal to those that were provided to such Continuing Employee
immediately prior to the Effective Time and (ii) employee benefits (excluding for such purposes
any equity-based compensation, change in control payments, or retention or similar payments)
that are at least as favorable in the aggregate, to either (A) the compensation and benefits that
were provided to such employee immediately prior to the Effective Time and (B) the
compensation and benefits that are provided to an employee of Parent or an affiliate thereof
(other than the Surviving Corporation and its Subsidiaries) in a similar position. Without limiting
the generality of the foregoing, in the event that the employment of any Continuing Employee is
terminated during the one-year period following the Effective Time, Parent shall provide, or shall
cause the Surviving Corporation and its Subsidiaries to provide, to such Continuing Employee
severance benefits that are no less favorable than the severance benefits to which such Continuing
Employee would have been entitled under the applicable Company Benefit Plan disclosed on
Section 5.6 of the Company Disclosure Letter as in effect immediately prior to the Effective
Time.
(b) Without limiting the generality of Section 5.6(a), for all purposes (including
purposes of vesting, eligibility to participate, and level of benefits) under the employee benefit
plans of Parent and its Affiliates providing benefits to any Continuing Employee after the
Effective Time (the “New Plans”), each Continuing Employee shall be credited with his or her
years of service with the Company and its Subsidiaries and their respective predecessors,
provided that the foregoing shall not apply to the extent that its application would result in a
duplication of benefits. In addition, and without limiting the generality of the foregoing, (i) each
Continuing Employee shall be immediately eligible to participate, without any waiting time, in
any and all New Plans to the extent coverage under such New Plan replaces coverage under a
similar Company Benefit Plan in which such Continuing Employee participated, and (ii) for
purposes of each New Plan providing medical, dental, pharmaceutical, vision, disability and/or
life benefits to any Continuing Employee (or his or her covered dependents) (collectively, the
“Parent Welfare Plans”), Parent shall use commercially reasonable efforts to (A) cause all pre-
existing condition exclusions and limitations, waiting requirements and actively-at-work
requirements of such Parent Welfare Plan to be waived for such Continuing Employee and his or
her covered dependents, and (B) cause all eligible expenses incurred by such Continuing
Employee and his or her covered dependents under the corresponding Company Benefit Plan
during the portion of the plan year of such Company Benefit Plan ending on the date such
Continuing Employee’s participation in the corresponding Parent Welfare Plan begins (such
initial plan year of participation, the “Initial Year of Participation”) to be credited under such
Parent Welfare Plan for purposes of satisfying all deductible, copayment, coinsurance and
maximum out-of-pocket requirements applicable to such Continuing Employee and his or her
covered dependents for the Initial Year of Participation as if such amounts had been paid in
accordance with such Parent Welfare Plan.
(c) Parent hereby acknowledges that a “change of control,” “change in control,”
“approved sale” or similar phrase within the meaning of the Company Benefit Plans, will occur at
or prior to the Effective Time, as applicable.
(d) From and after the Effective Time, the Company and its Subsidiaries shall, and
Parent shall cause the Surviving Corporation and its Subsidiaries to, honor all Company Benefit
Plans in accordance with their terms, provided that nothing herein shall be construed as
prohibiting the amendment or termination of any of the foregoing in accordance with its terms.
(e) It is expressly acknowledged, understood and agreed that nothing in
Sections 5.6(a)-(d) or otherwise contained in this Agreement is intended to or does or shall
39
constitute an amendment to or establishment of any Company Benefit Plan, New Plans or any
employee benefit or other plan or, subject to the express provisions of this Section 5.6, shall
prevent the amendment or termination of any such plan. Nothing in this Section 5.6 shall be
deemed to (i) be a guarantee to any Continuing Employee of employment or, without limiting the
express provisions of this Section 5.6, any specific term or condition of employment, (ii) create
any right or benefit in any person other than the signatories of this Agreement, or (iii) preclude
the ability of Parent or the Surviving Corporation to terminate the employment of any Continuing
Employee.
Section 5.7. Efforts; Consents and Approvals.
(a) Subject to the terms and conditions set forth in this Agreement, each of the
parties hereto shall use its best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper
or advisable under applicable Laws and regulations or otherwise to consummate and make
effective the Transactions as promptly as practicable, including (i) causing the conditions to the
Merger set forth in Article VI to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, clearances, approvals, and expirations or terminations of waiting
periods, including the Company Approvals and the Parent Approvals, from Governmental
Entities and the making of all necessary registrations, declarations and filings and the taking of all
steps as may be necessary to obtain an approval, clearance or waiver from, or to avoid an action
or proceeding by, any Governmental Entity (all of the foregoing, collectively, the “Governmental
Consents”), (iii) the obtaining of all necessary consents, approvals or waivers from, and
delivering of all necessary notifications to, third parties (including pursuant to any Material
Contracts and Real Property Leases so as to seek to maintain and preserve the benefits to the
Surviving Corporation of such Material Contracts and Real Property Leases as of and following
the consummation of the Transactions), (iv) the defending of any lawsuits or other Actions,
whether judicial or administrative, challenging this Agreement or the consummation of the
Transactions and (v) the execution and delivery of any additional instruments reasonably
necessary to consummate the Transactions; provided that in no event shall the Company or any of
its Subsidiaries be required to pay prior to the Effective Time any fee, penalty or other
consideration to any third party for any consent or approval required for the consummation of the
Transactions under any contract or agreement.
(b) Subject to the terms and conditions herein provided and without limiting the
foregoing, the Company and Parent shall cooperate with each other in (i) determining whether
any filings are required to be made with, or Governmental Consents are required to be obtained
from, any Governmental Entities (including in any foreign jurisdiction in which the Company or
its Subsidiaries are operating any business) and (ii) to the extent not made prior to the date hereof,
timely making or causing to be made all such applications and filings as reasonably determined
by Parent and the Company as promptly as practicable. Each party shall supply as promptly as
practicable such information, documentation, other material or testimony that may be requested
by any Governmental Entity, any other Governmental Consent and any such other applicable
Laws for additional information, documents or other materials received by Parent or the
Company or any of their respective Subsidiaries from the Federal Trade Commission or the
Department of Justice, or any other Governmental Entity in connection with such applications or
filings or the Merger.
(c) The Company hereby agrees that from the date of this Agreement through the
Closing, the Company shall remain in compliance with the terms and conditions contained in the
Credit Agreement (as may be further amended), and shall not permit to occur or suffer to exist an
40
Event of Default (as defined in the Credit Agreement), including as a result of entering into this
Agreement or the consummation of the Transactions, in each case that is not waived by the
lenders pursuant to the Credit Agreement prior to the Closing.
Section 5.8. Takeover Statute. Each of the Company, the Company Board, Parent and
Merger Sub will use their reasonable best efforts to ensure that no Takeover Statute is or becomes
applicable to the Transaction. If any Takeover Statute is or may become applicable to the Transactions
after the date of this Agreement, the Company and the Company Board shall each use its reasonable best
efforts to grant such approvals and take such actions as are reasonably necessary so that the Transactions
may be consummated as promptly as practicable on the terms contemplated by this Agreement and
otherwise act to eliminate or minimize, to the extent possible, the effects of such Takeover Statute on the
Transactions.
Section 5.9. Notification of Certain Matters. At all times during the period commencing with
the execution and delivery of this Agreement and continuing until the earlier to occur of the
(1) termination of this Agreement pursuant to Article VII and (2) the Effective Time, (A) the Company
shall give prompt notice to Parent and Merger Sub, and Parent and Merger Sub shall give prompt notice
to the Company, of (a) any notice or other communication received by such party from any Governmental
Entity in connection with this Agreement or the Merger, or from any Person alleging that the consent of
such Person is or may be required in connection with the Transactions, if the subject matter of such
communication or the failure of such party to obtain such consent could be material to the Company, the
Surviving Corporation or Parent and (b) any Transaction Litigation, (B) the Company shall give prompt
notice to Parent and Merger Sub of (i) any change, condition, circumstance or event (including any
renewal, termination, or amendment of, or any proposed modification to, any Material Contract) that
results or could reasonably be expected to result in the Company failing to comply with or satisfy any
covenant, condition or agreement (including any condition set forth in Article VI); or (ii) the discovery of
any fact or circumstance that, or the occurrence or non-occurrence of any event which, would cause or
result in any of the conditions to the Merger set forth in Article VI not being satisfied or satisfaction of
those conditions being materially delayed and (C) Parent will give prompt notice to the Company upon
becoming aware that any representation or warranty made by Parent or Merger Sub in this Agreement has
become untrue or inaccurate in any material respect, or of any failure by Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to be complied with or
satisfied by it pursuant to this Agreement, in each case if and only to the extent that such untruth,
inaccuracy or failure would reasonably be expected to cause any of the conditions to the obligations of the
Company to consummate the Merger set forth in Section 6.3(a) or Section 6.3(b) to fail to be satisfied at
the Closing. No notification under this Section 5.9 will affect or be deemed to modify any representation
or warranty of Parent, Merger Sub or the Company set forth in this Agreement or the conditions to the
obligations of the parties hereto to consummate the Merger or the remedies available to the parties hereto
under this Agreement. The terms and conditions of the Confidentiality Agreement apply to any
information provided to Parent, Merger Sub or Company, as applicable, pursuant to this Section 5.9.
Section 5.10. Public Announcements. Parent and the Company agree to issue a joint press
release announcing this Agreement that is reasonably acceptable to the Company and Parent. Thereafter,
the Company, one the one hand, and Parent and Merger Sub, on the other hand, will use their respective
reasonable best efforts to consult with and provide each other the opportunity to review and comment
upon any press release or other public statement or comment, prior to the issuance of such press release or
other public statement or comment relating to this Agreement or the Transactions, and shall not issue any
such press release or other public statement or comment prior to such consultation except as may be
required by applicable Law or by obligations imposed by any national securities exchange or as may be
requested by a Governmental Entity; provided, that the restrictions in this Section 5.10 shall not apply to
any Company communication regarding an Acquisition Proposal or a Change of Recommendation
41
(subject to any applicable terms of Section 5.5). Notwithstanding the foregoing, Parent, Merger Sub, and
their respective Affiliates may provide ordinary course communications regarding this Agreement and the
Transactions to existing or prospective general or limited partners, equity holders, members, managers
and investors of such Person.
Section 5.11. Indemnification and Insurance.
(a) The Surviving Corporation, Parent and Merger Sub agree that all rights to
exculpation, indemnification and advancement of expenses now existing in favor of the current or
former directors or officers, as the case may be, of the Company or its Subsidiaries as provided in
their respective Articles of incorporation or code of regulations or other organizational documents
or in any agreement with the Company or any of its Subsidiaries set forth on Section 5.11(a) of
the Company Disclosure Letter and provided to Parent prior to the date hereof, and such
obligations shall survive the Merger and shall continue in full force and effect. For a period of
six (6) years from the Effective Time, the Surviving Corporation shall maintain in effect the
exculpation, indemnification and advancement of expenses provisions of the Company’s and any
of its Subsidiaries’ Articles of incorporation and code of regulations or similar organizational
documents as in effect immediately prior to the Effective Time or in any indemnification
agreements of the Company or its Subsidiaries with any of their respective directors or officers as
in effect immediately prior to the Effective Time set forth on Section 5.11(a) of the Company
Disclosure Letter and provided to Parent prior to the date hereof, and shall not amend, repeal or
otherwise modify any such provisions in any manner that would adversely affect the rights
thereunder of any individuals who at the Effective Time were current or former directors or
officers of the Company or any of its Subsidiaries. From and after the Effective Time, Parent
shall assume, be jointly and severally liable for, and honor, guaranty and stand surety for, and
shall cause the Surviving Corporation and its Subsidiaries to honor, in accordance with their
respective terms, each of the covenants contained in this Section 5.11.
(b) For a period of six (6) years from and after the Effective Time, each of Parent
and the Surviving Corporation shall, to the fullest extent permitted under applicable Law,
indemnify and hold harmless (and advance funds in respect of each of the Indemnified Parties)
each current and former director or officer of the Company or any of its Subsidiaries (each,
together with such Person’s heirs, executors or administrators, an “Indemnified Party”) against
any reasonable and documented costs or expenses (including advancing reasonable attorneys’
fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement (collectively, “Losses”) in connection with any actual or threatened claim, action, suit,
litigation, proceeding or investigation, whether civil, criminal, administrative or investigative,
brought by or pending before any Governmental Entity (an “Action”), arising out of, relating to
or in connection with any action or omission occurring or alleged to have occurred whether
before, at or after the Effective Time in connection with such Indemnified Party’s service as a
director or officer of the Company or any of its Subsidiaries (or acts or omissions in connection
with such Indemnified Party’s service as officer or director of the Company or any of its
Subsidiaries), including, without limitation, an Action arising in whole or in part out of, or
pertaining to this Agreement or any of the Transactions, whether in any case asserted or arising
before or after the Effective Time. In the event of any such Action, (A) the Surviving Corporation
will have the right to control the defense thereof after the Effective Time, (B) each Indemnified
Party will be entitled to retain his or her own counsel (the reasonable and documented fees and
expenses of which will be paid by the Surviving Corporation), whether or not the Surviving
Corporation elects to control the defense of any such Action, (C) upon receipt of an undertaking
to repay such advances if it is ultimately determined that such Indemnified Party is not entitled to
indemnification, the Surviving Corporation will advance all fees and expenses (including
42
reasonable attorneys’ fees and expenses) as incurred by an Indemnified Party in the defense of
such Action, whether or not the Surviving Corporation elects to control the defense of any such
Action, (D) no Indemnified Party will be liable for any settlement of such Action effected without
his or her prior written consent (unless such settlement relates only to monetary damages for
which the Surviving Corporation is entirely responsible).
(c) For a period of six (6) years from the Effective Time, the Surviving Corporation
shall (and Parent shall cause the Surviving Corporation to) maintain in effect the current policies
of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the
Company and its Subsidiaries with respect to matters arising on or before the Effective Time. In
satisfying its obligations pursuant to this Section 5.11(c), the Surviving Corporation will not be
obligated to pay annual premiums in excess of 250% of the amount paid by the Company for
coverage for its last full fiscal year (such 250% amount, the “Maximum Annual Premium”). If
the annual premiums of such insurance coverage exceed the Maximum Annual Premium, then the
Surviving Corporation will be obligated to obtain a policy with the greatest coverage available for
a cost not exceeding the Maximum Annual Premium from an insurance carrier with the same or
better credit rating as the Company’s current directors’ and officers’ liability insurance carrier. In
lieu of maintaining the insurance coverage described in the first sentence of this Section 5.11(c),
the Company may (or, if the Parent requests, the Company will) purchase, for effectiveness on
the Effective Time, a six-year prepaid “tail” policy on terms and conditions providing equivalent
or greater benefits as the current policies of directors’ and officers’ liability insurance and
fiduciary liability insurance maintained by the Company and its Subsidiaries with respect to
matters arising on or before the Effective Time, covering without limitation the Transactions. If
such “tail” prepaid policy has been obtained by the Company prior to the Effective Time, the
Surviving Corporation shall (and Parent will cause the Surviving Corporation to) cause such
policy to be maintained in full force and effect, for its full term.
(d) Parent shall or shall cause to be paid all reasonable and documented expenses,
including reasonable attorneys’ fees, that may be incurred by any Indemnified Party in enforcing
the indemnity, advancement and other obligations provided in this Section 5.11.
(e) The rights of each Indemnified Party hereunder shall be in addition to, and not in
limitation of, any other rights such Indemnified Party may have under the Articles of
incorporation or code of regulations or other organizational documents of the Company or any of
its Subsidiaries or the Surviving Corporation, any other indemnification arrangement or
otherwise. Notwithstanding anything in this Agreement to the contrary, the obligations under this
Section 5.11 shall not be terminated or modified in such a manner as to adversely affect any
Indemnified Party without the consent of such Indemnified Party.
(f) In the event Parent, the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and shall not be the
continuing or Surviving Corporation or entity in such consolidation or merger or (ii) transfers all
or substantially all of its properties and assets to any Person, then, and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume in writing the obligations set forth in this Section 5.11.
Section 5.12. Financing Cooperation.
(a) Prior to the Effective Time, the Company will use its reasonable best efforts,
and will cause each of its Subsidiaries to use its respective reasonable best efforts, to provide
Parent and Merger Sub with all cooperation reasonably requested by Parent or Merger Sub or
43
the Financing Sources to assist them in causing any conditions in the Debt Commitment Letters
to be satisfied or as is otherwise reasonably requested by Parent or Merger Sub or the Financing
Sources in connection with Parent and Merger Sub obtaining the Debt Financing, including:
(i) participating (and causing senior management and Representatives of the
Company to participate), upon reasonable advance notice and during normal business
hours, in a reasonable number of meetings, calls, presentations and due diligence sessions
(including accounting due diligence sessions), otherwise cooperating with the marketing
efforts for the Debt Financing;
(ii) promptly furnishing Parent and the Financing Sources with the Required
Information and other financial and other pertinent information regarding the Company
as may be reasonably requested by Parent, including financial information contemplated
by the Debt Commitment Letters and causing the Required Information to remain
Compliant and to continue to satisfy the applicable requirements set forth in the
definition of “Required Information”;
(iii) assisting Parent and the Financing Sources with the timely preparation of
customary bank information memoranda, lender presentations and similar documents
required in connection with the Debt Financing, including (solely with respect to
financial information and data derived from the Company’s historical books and records),
reasonably assisting Parent with the preparation of pro forma financial information and
pro forma financial statements upon Parent’s written request;
(iv) executing and delivering any definitive financing documents, including
pledge and security documents, guarantees, currency or interest hedging arrangements
and other certificates or documents as may be reasonably requested by Parent or the
Financing Sources and permitting evaluation of the assets of the Company and its
Subsidiaries and otherwise reasonably facilitating the pledging of collateral and the
granting of security interests in respect of the Debt Financing, it being understood that
such documents will not take effect until the Effective Time;
(v) (A) deliver notices of prepayment, effective as of the Closing, in a timely
fashion as required by the Credit Agreement and take any actions at or prior to the
Effective Time reasonably requested by Parent to facilitate such prepayment (it being
understood and agreed that any prepayment is (and shall be) contingent upon the
occurrence of the Closing); and (B) arrange for customary payoff letters, lien
terminations and instruments and acknowledgements of discharge (it being understood
that no such lien terminations or and discharges shall become effective until the Effective
Time and the payoff of the Credit Agreement) in respect of the Credit Agreement (the
“Debt Payoff Letters”) to be delivered to Parent prior to the Closing Date (with drafts
being delivered in advance as reasonably requested by Parent), and take other actions
reasonably necessary to provide for the payoff and termination of the Credit Agreement
and related loan documents, and the termination and release of liens thereunder
concurrently with the Closing;
(vi) providing authorization letters to the Financing Sources authorizing the
distribution of information to prospective lenders and containing a customary
representation to the Financing Sources contemplated by the Debt Commitment Letters;
and
44
(vii) promptly furnishing Parent and the Financing Sources within two (2)
Business Days of any requests with all documentation and other information about the
Company and its Subsidiaries as is reasonably requested by Parent relating to applicable
“know your customer” and anti-money laundering rules and regulations.
(b) Nothing in this Section 5.12 will require the Company or any of its Subsidiaries
to (i) waive or amend any terms of this Agreement or agree to pay any fees or expenses prior to
the Effective Time for which it will not receive reimbursement or is not otherwise indemnified by
or on behalf of Parent; (ii) enter into any definitive agreement (other than customary
representation letters and authorization letters (including with respect to the presence or absence
of material non-public information and the accuracy of the information contained in the
disclosure and marketing materials related to the Debt Financing)) that is not contingent on the
occurrence of the Effective Time; (iii) give any indemnities in connection with the Debt
Financing that are effective prior to the Effective Time; (iv) approve of the Financing prior to the
Effective Time or (v) take any action that, in the good faith determination of the Company, (a)
would reasonably be expected to conflict with or violate the organizational documents of the
Company or any of its Subsidiaries of Law, (b) would unreasonably interfere with the conduct of
the business of the Company and its Subsidiaries or (c) create an unreasonable risk of damage or
destruction to any property or assets of the Company or any of its Subsidiaries. In addition, no
action, liability or obligation of the Company, any of its Subsidiaries or any of their respective
Representatives pursuant to any certificate, agreement, arrangement, document or instrument
relating to the Debt Financing (other than customary representation letters and authorization
letters (including with respect to the presence or absence of material non-public information and
the accuracy of the information contained in the disclosure and marketing materials related to the
Debt Financing)) will be effective until the Effective Time.
(c) The Company consents to the customary and reasonable use of the Company’s
and its Subsidiaries’ logos solely in connection with any Debt Financing or any alternative
financing from alternative financing sources (“Alternative Financing”); provided, that such logos
are used solely in a manner that is not intended, or reasonably likely, to harm or disparage the
Company or any of its Subsidiaries or Affiliates or the reputation or goodwill of the Company or
any of its Subsidiaries or Affiliates.
(d) The Company hereby expressly authorizes the use of the financial statements and
other information provided hereunder for purposes of the Debt Financing or any Alternative
Financing and is not aware of any limitation on the use of such financial statements required by
any independent accountant.
(e) Parent shall, promptly upon request by the Company, reimburse the Company for
all reasonable and documented out-of-pocket costs (including reasonable attorneys’ fees) incurred
by the Company and its Subsidiaries in performing their obligations under this Section 5.12, and
indemnify the Company and its Subsidiaries or any of their respective directors, officers,
employees and other representatives for any and all Losses suffered or incurred by the Company
or any of its Subsidiaries or any of their respective directors, officers, employees and other
representatives arising therefrom (other than (i) as a result of information provided by the
Company or any of its Subsidiaries or any of their respective directors, officers, employees and
other representatives containing any untrue statement of a material fact or omitting to state a
material fact necessary in order to make the statements therein, in light of the circumstances in
which they are made, not misleading or (ii) to the extent arising from the bad faith, gross
negligence, fraud or willful misconduct of the Company or any of its Subsidiaries or any of their
45
respective directors, officers, employees and other representatives) (such Parent’s obligations
pursuant to this Section 5.12(e) are referred to collectively as the “Reimbursement Obligations”).
Section 5.13. Transaction Litigation. At all times during the period commencing with the
execution and delivery of this Agreement and continuing until the earlier to occur of the (1) termination
of this Agreement pursuant to Article VII and (2) the Effective Time, the Company will provide Parent
with prompt notice of all Transaction Litigation (including by providing copies of all pleadings with
respect thereto) and keep Parent reasonably informed with respect to the status thereof. The Company will
(a) give Parent the opportunity to participate in the defense, settlement or prosecution of any Transaction
Litigation; (b) consult with Parent with respect to the defense, settlement and prosecution of any
Transaction Litigation; and (c) consider in good faith Parent’s advice with respect to any Transaction
Litigation. The Company may not compromise, settle or come to an arrangement regarding, or agree to
compromise, settle or come to an arrangement regarding, any Transaction Litigation unless Parent has
consented thereto in writing (which consent shall be in Parent’s sole discretion).
Section 5.14. Stock Exchange Delisting; Deregistration. Prior to the Effective Time, the
Company will cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all
actions and do, or cause to be done, all things reasonably necessary, proper or advisable on its part
pursuant to applicable Law and the rules and policies of the NASDAQ to cause (a) the delisting of the
Company Common Shares from the NASDAQ as promptly as practicable after the Effective Time; and
(b) the deregistration of the Company Common Shares pursuant to the Exchange Act as promptly as
practicable after such delisting.
Section 5.15. Merger Sub. Parent will take all actions necessary to (a) cause Merger Sub to
perform its obligations under this Agreement and to consummate the Merger on the terms and conditions
set forth in this Agreement, (b) cause the Surviving Corporation to perform its obligations under this
Agreement and (c) ensure that, prior to the Effective Time, Merger Sub shall not conduct any business or
make any investments other than as specifically contemplated by this Agreement, or incur or guarantee
any Indebtedness.
Section 5.16. Section 16(b). Prior to the Effective Time, the Company and the Company
Board (or a committee thereof) shall take such steps as may be reasonably necessary or advisable hereto
to cause the Transactions and any dispositions of Company equity securities (including derivative
securities) pursuant to the Transactions by each individual who is a director or officer of the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.17. Control of Operations. Nothing contained in this Agreement shall give Parent or
Merger Sub, directly or indirectly, the right to control or direct the Company’s operations prior to the
Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its operations.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligations of each party to consummate the Merger are subject to the satisfaction or (to the extent
permitted by Law) waiver by the Company and Parent at or prior to the Effective Time of the following
conditions:
(a) Orders. No Governmental Entity having jurisdiction over the Company or any of
its Subsidiaries shall have enacted, issued, promulgated, enforced or entered any Law or Order
46
which is then in effect and has the effect of enjoining or otherwise prohibiting the consummation
of the Merger or the other Transactions; provided that each party shall use reasonable best efforts
to cause such Order to be lifted.
(b) Shareholder Approval. This Agreement shall have been duly approved and
adopted by the Requisite Company Vote.
(c) Governmental Consents. The Company shall have received the consents or
approvals from the applicable Governmental Entities set forth in Section 6.1(c) of the Company
Disclosure Letter.
Section 6.2. Conditions to Obligations of Parent and Merger Sub. The obligations of each of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction, or waiver by Parent, on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and warranties of the
Company set forth in Section 3.1(b), Section 3.2(a), Section 3.2(b) and Section 3.2(c) shall be
true and correct in all respects, except for de minimis inaccuracies, as though made on and as of
the Closing Date (except for representations and warranties made as of a specified date, the
accuracy of which will be determined as of that specified date); (ii) the representations and
warranties of the Company set forth in Section 3.1(a) (Organization and Qualification;
Subsidiaries), Section 3.3 (Corporate Authority and Approval), Section 3.9(ii) (Absence of
Certain Changes), Section 3.21 (Finders or Brokers; Fees), Section 3.22 (Vote Required), shall be
true and correct in all respects, as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, the accuracy of which shall be
determined as of that specified date); and (iii) each of the other representations and warranties of
the Company set forth in this Agreement shall be true and correct in all respects, without regard
to any “materiality” or “Company Material Adverse Effect” qualifications contained therein, as
though made on and as of the Closing Date (except for representations and warranties made as of
a specified date, the accuracy of which shall be determined as of that specified date), unless the
failure or failures of such representations and warranties to be true and correct in all respects
would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(b) Performance of Obligations. The Company shall have performed and complied in
all material respects with all covenants and obligations of this Agreement required to be
performed and complied with by it under this Agreement at or prior to the Closing.
(c) Officer’s Certificate. Parent shall have received a certificate of the Company,
signed by the chief executive officer or chief financial officer of the Company, certifying that the
conditions set forth in Section 6.2(a), Section 6.2(b) and Section 6.2(d) have been satisfied.
(d) No Company Material Adverse Effect. Since the date of this Agreement there
shall not have been a Company Material Adverse Effect.
Section 6.3. Conditions to Obligations of the Company. The obligation of the Company to
effect the Merger is also subject to the satisfaction, or waiver by the Company, on or prior to the Closing
Date of the following conditions:
(a) Representations and Warranties. Each of the other representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct in all
47
material respects, without regard to any “materiality” qualifications contained therein, as though
made on and as of the Closing Date (except for representations and warranties made as of a
specified date, the accuracy of which shall be determined as of that specified date), unless the
failure or failures of such representations and warranties to be true and correct in all material
respects would not reasonably be expected to, individually or in the aggregate, prevent, materially
impair or materially delay the consummation of the Merger or ability of Parent and Merger Sub to
perform their respective obligations under this Agreement.
(b) Performance of Obligations. Each of Parent and Merger Sub shall have
performed and complied in all material respects with all obligations and covenants required to be
performed and complied with by it under this Agreement at or prior to the Closing Date.
(c) Officer’s Certificate. The Company shall have received a certificate of
Parent, signed by a senior executive officer of Parent, certifying that the conditions set forth in
Section 6.3(a) and Section 6.3(b) have been satisfied.
Section 6.4. Frustration of Closing Conditions. None of the Company, Parent or Merger Sub
may rely on the failure of any condition set forth in this Article VI to be satisfied if such failure was
caused by such party’s failure to comply with or perform any of its covenants or obligations set forth in
this Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination by Mutual Consent. This Agreement may be validly terminated at
any time prior to the Effective Time by mutual written consent of Parent, Merger Sub and the Company.
Section 7.2. Termination by Either Parent or the Company. This Agreement may be validly
terminated by either Parent or the Company at any time prior to the Effective Time:
(a) if the Merger has not been consummated by 11:59 p.m., Eastern Time on
September 7, 2018 (the “Termination Date”); provided, however, that the right to terminate this
Agreement under this Section 7.2(a) shall not be available to any party to this Agreement whose
breach of any representations or warranties set forth in this Agreement, or whose failure to fulfill
any of its obligations hereunder, has been a principal cause of, or primarily resulted in, (i) the
failure to consummate the Merger by the Termination Date or (ii) the failure to satisfy the
conditions to the obligations of the terminating party to consummate the Merger set forth in
Article VI prior to the Termination Date;
(b) if this Agreement has been submitted to the Company Shareholders for approval
and adoption at a duly convened Company Shareholders Meeting (or adjournment or
postponement thereof), such Company Shareholders Meeting has been completed and the
Requisite Company Vote is not obtained upon a vote taken thereon;
(c) if any statute, rule or regulation shall have been enacted or promulgated by any
Governmental Entity of competent jurisdiction that prohibits, makes illegal or enjoins the
consummation of the Merger; or
(d) if any permanent Order restrains, enjoins, makes illegal or otherwise prohibits
consummation of the Merger, and such Order has become final and nonappealable.
48
Notwithstanding the foregoing, the right to terminate this Agreement pursuant to Section 7.2(c) or
Section 7.2(d) will not be available to any party that has failed to use its reasonable best efforts to
resist, appeal, obtain consent pursuant to, resolve or lift, as applicable, such Order, statute, rule or
regulation.
Section 7.3. Termination by Parent. This Agreement may be validly terminated by Parent at
any time prior to the Effective Time:
(a) if the Company Board makes a Change of Recommendation or the Company
commits a Willful and Material Breach of its obligations under Section 5.3 or Section 5.5; or
(b) if the Company breaches or fails to perform in any material respect any of its
representations, warranties, covenants or agreements contained in this Agreement, which breach
(i) would give rise to the failure of a condition set forth in Section 6.1 or Section 6.2 and (ii) is
incapable of being cured by the Termination Date, or, if capable of being cured by the
Termination Date, has not been cured by the Company within thirty (30) days after the
Company’s receipt of written notice of such breach from Parent.
Section 7.4. Termination by the Company. This Agreement may be validly terminated by the
Company at any time prior to the Effective Time:
(a) in accordance with Section 5.5(c); or
(b) if Parent breaches or fails to perform in any material respect any of its
representations, warranties, covenants or agreements contained in this Agreement, which breach
(i) would give rise to the failure of a condition set forth in Section 6.1 or Section 6.3 and (ii) is
incapable of being cured by the Termination Date, or, if capable of being cured by the
Termination Date, has not been cured by Parent within thirty (30) days after Parent’s receipt of
written notice of such breach from the Company.
Section 7.5. Manner and Effect of Termination. In the event that this Agreement is
terminated pursuant to this Article VII, it shall become void and of no further force and effect, with no
liability on the part of any party to this Agreement (or any shareholder, partner, member, manager,
director, officer, employee, Affiliate, agent or Representative of such party) except as contemplated by
the next sentence and except that no such termination shall relieve any party of liability for (a) the Willful
and Material Breach by any party to perform its obligations, (b) the Willful and Material Breach by any
party of its representations or warranties contained in this Agreement or (c) Fraud. The provisions of the
Confidentiality Agreement, the Equity Commitment Letter, this Section 7.5, and the provisions of Section
5.4(b) (Access; Confidentiality), Section 5.10 (Public Announcements), Section 5.12(e) (Reimbursement
Obligations), Section 7.6 (Termination Payment) and Article VIII (Miscellaneous) shall survive any
termination of this Agreement in accordance with their respective terms.
Section 7.6. Termination Payments. Any provision in this Agreement to the contrary
notwithstanding,
(a) The Company shall pay, or cause to be paid, to Parent by wire transfer of
immediately available funds to an account or accounts designated in writing by Parent an amount
equal to the Company Termination Fee:
49
(i) if this Agreement is validly terminated by the Company pursuant to
Section 7.4(a), in which case the Company shall make such payment concurrently with
such termination;
(ii) if this Agreement is validly terminated by Parent pursuant to Section
7.3(a), in which case payment shall be made within three (3) Business Days of such
termination; or
(iii) if (A) an Acquisition Proposal shall have been made or proposed to the
Company or otherwise publicly announced (and is not withdrawn), (B) this Agreement is
validly terminated by either Parent or the Company pursuant to Section 7.2(a) or Section
7.2(b) or is terminated by Parent pursuant to Section 7.3(b) and (C) within twelve
(12) months following the date of such termination, the Company enters into a Contract
for or relating to, or otherwise consummates any Acquisition Proposal (whether or not
such Acquisition Proposal is the same Acquisition Proposal referred to in clause (A)), in
which case payment shall be made within three (3) Business Days of the date on which
the Company enters into such Contract or consummates such Acquisition Proposal.
(iv) Following receipt by Parent of the Company Termination Fee in
accordance with this Section 7.5, the Company shall have no further liability with respect
to this Agreement or the Transactions to Parent or Merger Sub.
(b) If this Agreement is validly terminated pursuant to Section 7.2(b), then the
Company must concurrently with such termination pay or cause to be paid to Parent or its
designee an amount equal to that required to reimburse Parent, Merger Sub and their respective
Affiliates for all fees and expenses incurred in connection with this Agreement and the
Transactions in an amount not to exceed $1,087,000 (the “Parent Expenses”) by wire transfer of
immediately available funds to an account or accounts designated in writing by Parent. To the
extent that Parent Expenses are paid and the Company Termination Fee is subsequently due
pursuant to Section 7.6(a)(iii), the amount of Parent Expenses actually paid shall be deducted
from the amount due pursuant to the Company Termination Fee.
(c) Notwithstanding anything to the contrary set forth in this Agreement, the parties
agree that in no event shall the Company be required to pay the Company Termination Fee on
more than one occasion, whether or not the Company Termination Fee may be payable pursuant
to more than one provision of this Agreement at the same or at different times and upon the
occurrence of different events.
(d) Each of the Company, Parent and Merger Sub acknowledges that the agreements
contained in this Section 7.6 are an integral part of the Transactions, that the damages resulting
from the termination of this Agreement under circumstances where a Company Termination Fee
or Parent Expenses is or are payable are uncertain and incapable of accurate calculation and that,
without these agreements, the parties would not enter into this Agreement, and, therefore, the
Company Termination Fee and the Parent Expenses, as applicable, if, as and when required
pursuant to this Section 7.6, shall not constitute a penalty, but rather liquidated damages, and in a
reasonable amount that will compensate the party receiving such amount in the circumstances in
which it is payable for the efforts and resources expended and opportunities foregone while
negotiating this Agreement and in reliance on this Agreement and on the expectation of the
consummation of the Merger. If the Company fails to promptly pay any amount due pursuant to
Section 7.6(a) or Section 7.6(b), as applicable, and, in order to obtain such payment, Parent
commences an Action that results in a judgment against the Company for the amount set forth in
50
Section 7.6(a) or Section 7.6(b), as applicable, then the Company will pay or cause to be paid to
Parent reasonable and documented out-of-pocket costs and expenses (including reasonable and
documented attorneys’ fees) of Parent in connection with such Action, together with interest on
such amount or portion thereof at an annual rate equal to the prime rate as published in The Wall
Street Journal in effect on the date that such payment or portion thereof was required to be made
through the date that such payment or portion thereof was actually received, or a lesser rate that is
the maximum permitted by applicable Law.
(e) Notwithstanding anything to the contrary set forth in this Agreement, but subject
to Section 8.5 with respect to the enforcement of the provisions of this Section 7.6, Parent’s right
to receive payment from the Company of the Company Termination Fee to the extent owed
pursuant to this Section 7.6 shall constitute the sole and exclusive remedy of Parent, Merger Sub
and the Financing Sources against the Company and its Subsidiaries and any of their respective
former, current or future general or limited partners, shareholders, members, managers, directors,
officers, employees, agents, attorneys, Affiliates or assignees (collectively, the “Company
Specified Persons”) in respect of this Agreement and the Transactions or the Financing Letters,
and upon payment of such amount, none of the Company Specified Persons shall have any further
monetary liability or obligation to Parent, Merger Sub or the Financing Sources relating to or
arising out of this Agreement or the Transactions, the Financing Letters or any ancillary
agreements contemplated hereby or thereby.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties. The representations, warranties,
covenants and agreements in this Agreement and any certificate delivered pursuant hereto by any party
hereto shall terminate at the Effective Time or, except as provided in Section 7.5, upon the termination of
this Agreement pursuant to Sections 7.1 to 7.4, as the case may be, except that this Section 8.1 shall not
limit any covenant or agreement of the parties which by its terms contemplates performance after the
Effective Time or after termination of this Agreement, including those contained in Section 5.6 and
Section 5.11.
Section 8.2. Expenses. Except as otherwise specifically provided in this Agreement, all
Expenses incurred in connection with this Agreement and the Transactions shall be paid by the party
incurring such Expense. All filing fees and similar charges payable to a Governmental Entity in
connection with obtaining any consents, shall be borne by Parent.
Section 8.3. Counterparts; Effectiveness. This Agreement may be executed in two or more
consecutive counterparts (including by facsimile or PDF transmission), each of which shall be deemed to
be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by each of the parties and
delivered (electronically or otherwise) to the other parties.
Section 8.4. Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with, the
Laws of the State of Delaware, without regard to the Laws that might otherwise govern under
applicable principles of conflicts of law, except to the extent that the authorization, effectiveness
and effect of the Merger are required to be governed by the Law of the State of Ohio. The parties
to this Agreement irrevocably submit to the jurisdiction of the Court of Chancery of the State of
Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of
51
Chancery of the State of Delaware does not have subject matter jurisdiction, any state or federal
court in the State of Delaware) (each, a “Chosen Court”) solely in respect of the interpretation
and enforcement of the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the Transactions, and hereby waive, and agree not to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any
such document, that it is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any such document may not (as a result of a lack of personal jurisdiction)
be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding may be heard and determined in such a Delaware state or
federal court. The parties to this Agreement agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section 8.9 or in such
other manner as may be permitted by applicable Laws, shall be valid and sufficient service
thereof.
(b) Notwithstanding anything in this Agreement to the contrary, each of the parties
acknowledges and irrevocably agrees (i) that any Action, whether at law or in equity, whether in
contract or in tort or otherwise, involving the Financing Sources arising out of, or relating to, the
Merger, the Debt Financing, the Debt Commitment Letters, or the performance of services
thereunder or related will be subject to the exclusive jurisdiction of any state or federal court
sitting in the State of New York in the borough of Manhattan and any appellate court thereof, and
each party hereto submits for itself and its property with respect to any such Actions to the
exclusive jurisdiction of such court; (ii) not to bring or permit any of their Affiliates to bring or
support anyone else in bringing any such Action in any other court; (iii) that service of process,
summons, notice or document by registered mail addressed to them at their respective addresses
provided in the Debt Commitment Letters will be effective service of process against them for
any such Action brought in any such court; (iv) to waive and hereby waive, to the fullest extent
permitted by applicable Law, any objection which any of them may now or hereafter have to the
laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such
Action in any such court; and (v) any such Action will be governed and construed in accordance
with the Laws of the State of New York.
Section 8.5. Remedies; Specific Enforcement.
(a) The parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached and that monetary damages would not be an adequate remedy therefor. Each
party agrees that in the event of any breach or threatened breach by any other party of any
covenant or obligation contained in this Agreement (including Parent’s and Merger Sub’s
obligation to pay the Merger Consideration upon satisfaction of the conditions set forth in Article
VI hereof), the non-breaching party shall be entitled (in addition to any other remedy that may be
available to it whether in law or equity, including monetary damages) to (i) a decree or order of
specific performance or other equitable relief to enforce the observance and performance of such
covenant or obligation and (ii) an injunction restraining such breach or threatened breach. If a
non-breaching party commences an Action that results in a judgment against a breaching party to
this Agreement pursuant to this Section 8.5, then the breaching party will pay or cause to be paid
to the non-breaching party the reasonable and documented out of pocket costs and expenses
(including reasonable and documented attorneys’ fees) of the non-breaching party incurred in
connection with such Action.
52
(b) Each party further agrees that (i) it will not oppose the granting of an injunction,
specific performance and other equitable relief as provided herein on the basis that any other
party has an adequate remedy at law or an award of specific performance is not an appropriate
remedy for any reason at law or equity and (ii) no other party or any other Person shall be
required to obtain, furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 8.5, and each party irrevocably
waives any right it may have to require the obtaining, furnishing or posting of any such bond or
similar instrument.
Section 8.6. Non-Recourse. All Actions (whether in Contract or in tort, in law or in equity)
that may be based upon, arise out of or relate to this Agreement or any ancillary agreement hereto,
including the Equity Commitment Letter, or the negotiation, execution, performance or non-performance
of this Agreement or any ancillary agreement hereto (including any representation or warranty made in or
in connection with this Agreement, the ancillary agreements hereto or as an inducement to enter into this
Agreement or such ancillary agreements) may be made by any party hereto only against the Persons that
are expressly identified as parties hereto or thereto, including, in the case of the Equity Commitment
Letter, directly against the Equity Investor. In no event shall any named party to this Agreement or any
ancillary agreement hereto have any shared or vicarious liability for the actions or omissions of any other
Person, except, in the case of the Equity Investor, the obligation to fund the Merger Consideration
hereunder on behalf of Parent and Merger Sub pursuant to the Equity Commitment Letter. No Person
who is not a named party to this Agreement or any ancillary agreement hereto, including any director,
officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or Representative
of any named party to this Agreement that is not itself a named party to this Agreement or any ancillary
agreement hereto (“Non-Party Affiliates”), shall have any liability (whether in Contract or in tort, in law
or in equity, or based upon any theory that seeks to impose liability of an entity party against its owners or
Affiliates) to any party to this Agreement for any liabilities arising under, in connection with or related to
this Agreement, the ancillary agreements hereto or for any claim based on, in respect of, or by reason of
this Agreement, the ancillary agreements hereto or their negotiation or execution; and each party hereto or
thereto waives and releases all such liabilities, claims and obligations against any such Non-Party
Affiliates; provided, for the avoidance of doubt, nothing in this Section 8.6 shall impact the Equity
Investor’s obligations to fund the Merger Consideration pursuant to the terms of the Equity Commitment
Letter. The parties acknowledge and agree that the Non-Party Affiliates are intended third-party
beneficiaries of this Section 8.6.
Section 8.7. No Limitation. It is the intention of the parties hereto that, to the extent possible,
unless provisions are mutually exclusive and effect cannot be given to both or all such provisions, (a) the
representations, warranties, covenants and closing conditions in this Agreement will be construed to be
cumulative; (b) each representation, warranty, covenant and closing condition in this Agreement will be
given full, separate and independent effect; and (c) nothing set forth in any provision in this Agreement
will (except to the extent expressly stated) in any way be deemed to limit the scope, applicability or effect
of any other provision of this Agreement.
Section 8.8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS
AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY
ARISE PURSUANT TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY
AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE TRANSACTIONS, INCLUDING THE MERGER, THE EQUITY COMMITMENT LETTER, THE
FINANCING LETTERS OR THE FINANCING (INCLUDING ANY SUCH ACTION, PROCEEDING
53
OR COUNTERCLAIM INVOLVING THE FINANCING SOURCES). EACH PARTY (A) MAKES
THIS WAIVER VOLUNTARILY AND UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER AND (B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS CONTAINED IN THIS SECTION 8.8.
Section 8.9. Notices. Any notice required to be given hereunder shall be sufficient if in
writing, and sent by reliable overnight delivery service (with proof of service), hand delivery, facsimile or
electronic mail (having received electronic delivery thereof and followed by overnight courier) addressed
as follows:
To Parent or Merger Sub:
c/o GP Investments, Ltd.,
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇ of ▇▇▇▇▇▇▇▇, HM12
Bermuda
Attention: Mara ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇-▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
To the Company:
Bravo Brio Restaurant Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Email: dreed@bbrg,com
with copies (which shall not constitute notice) to:
Dechert LLP
▇▇▇▇ Centre
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
54
301 East Fourth Street
Suite ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Email: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
or to such other address as the party to receive such notice as provided above shall specify by written
notice so given, and such notice shall be deemed to have been delivered to the receiving party as of the
date so delivered or received. Any party to this Agreement may notify any other party of any changes to
the address or any of the other details specified in this paragraph; provided that such notification shall
only be effective on the date specified in such notice or two (2) Business Days after the notice is given,
whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed
address of which no notice was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
Section 8.10. Assignment; Binding Effect. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other parties; provided, however, that Parent
and Merger Sub will have the right to assign all or any portion of their respective rights and obligations
pursuant to this Agreement from and after the Effective Time (a) in connection with a merger or
consolidation involving Parent or Merger Sub or other disposition of all or substantially all of the assets
of Parent, Merger Sub or the Surviving Corporation; (b) to any of their respective Affiliates; or (c) to any
Financing Source pursuant to the terms of the Financing for purposes of creating a security interest herein
or otherwise assigning as collateral in respect of the Financing. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Any purported assignment not permitted under this Section 8.10 shall be null and
void. No permitted assignment by any Party will relieve such Party of any of its obligations hereunder.
Section 8.11. Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced under any present or future Law, or public policy, (a) such term or other
provision shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid,
illegal or unenforceable provision had never comprised a part hereof, and (c) all other conditions and
provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable term or other provision or by its severance herefrom so long as the economic or
legal substance of the Merger is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated
as originally contemplated to the fullest extent possible.
Section 8.12. Entire Agreement; Third-Party Beneficiaries. This Agreement and the exhibits
and schedules hereto (including the Company Disclosure Letter) and the documents and instruments and
other agreements among the Parties as contemplated by or referred to herein, including the
Confidentiality Agreement, the Equity Commitment Letter and the Financing Letters, constitute the entire
agreement, and supersede all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof. Except as (a) provided
below and Section 5.11 (which shall be for the benefit of the Indemnified Parties) and (b) the provisions
of Section 5.12, Section 7.5, Section 7.6, Section 8.4, Section 8.8, this Section 8.12 and Section 8.13 will
inure to the benefit of the Financing Sources and their successors and assigns, each of whom are intended
to be third-party beneficiaries thereof (it being understood and agreed that Section 5.12, Section 8.4,
55
Section 8.8, this Section 8.12 and Section 8.13 will be enforceable by the Financing Sources and their
respective successors and assigns), this Agreement is not intended to and shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective successors and permitted
assigns. The representations and warranties in this Agreement are the product of negotiations among the
parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations
and warranties are subject to waiver by the parties hereto in accordance with Section 8.13 without notice
or liability to any other Person. The representations and warranties in this Agreement may represent an
allocation among the parties hereto of risks associated with particular matters regardless of the knowledge
of any of the parties hereto. Accordingly, Persons other than the parties hereto may not rely upon the
representations and warranties in this Agreement as characterizations of actual facts or circumstances as
of the date of this Agreement or as of any other date.
Section 8.13. Amendments; Waivers. This Agreement may be amended at any time by the
parties to this Agreement at any time prior to the Effective Time, whether before or after obtaining the
Requisite Company Vote, so long as (a) no amendment that requires further shareholder approval under
applicable Laws after the Requisite Company Vote shall be made without such required further
shareholder approval and (b) such amendment has been duly approved by the board of directors of each
of Parent, Merger Sub and the Company. This Agreement may not be amended except by an instrument
in writing signed by each of the parties to this Agreement. Notwithstanding anything to the contrary in
this Agreement, the provisions relating to the Financing Sources set forth in Section 5.12, Section 7.5,
Section 7.6, Section 8.4, Section 8.8, this Section 8.12 and Section 8.13 (and the defined terms used
therein) may not be amended, modified or altered without the prior written consent of the Financing
Sources. At any time prior to the Effective Time, Parent and Merger Sub, on the one hand, and the
Company, on the other hand, may (a) extend the time for the performance of any of the obligations of the
other party, (b) waive any inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document delivered under this Agreement, or (c) subject to applicable Laws,
waive compliance with any of the covenants or conditions contained in this Agreement. Any agreement
on the part of a party to any extension or waiver shall be valid only if set forth in an instrument in writing
signed by such party. The failure of any party to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights. In order to be effective, (a) any amendment of this
Agreement shall require the prior approval of that action by the board of directors of each party seeking to
amend this Agreement, (b) any termination of this Agreement shall require the prior approval of that
action by the board of directors of the party seeking to terminate this Agreement, and (c) any extension or
waiver of any obligation under this Agreement or condition to the consummation of this Agreement shall
require the prior approval of a duly authorized officer or the board of directors of the party or parties
entitled to extend or waive that obligation or condition.
Section 8.14. Headings. Headings of the Articles and Sections of this Agreement are for
convenience of the parties only and shall be given no substantive or interpretive effect whatsoever. The
table of contents to this Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.15. Interpretation. When a reference is made in this Agreement to an Article,
Section or Exhibit, such reference shall be to an Article, Section or Exhibit of this Agreement, as
applicable, unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this Agreement, unless otherwise
indicated. Unless the context otherwise requires, the words “neither,” “nor,” “any,” “either” and “or”
when used in this Agreement are not exclusive. The word “extent” in the phrase “to the extent” shall
mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.
56
All terms defined in this Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and instruments incorporated
therein. When used in this Agreement, references to “$” or “Dollars” are references to U.S. dollars. Each
of the parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or
question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the
parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
Section 8.16. Obligations of Merger Sub. Whenever this Agreement requires Merger Sub to
take any action, such requirement shall be deemed to include an undertaking on the part of Parent to cause
Merger Sub to take such action.
Section 8.17. Definitions. References in this Agreement to specific laws or to specific
provisions of laws shall include all rules and regulations promulgated thereunder.
(a) For purposes of this Agreement, the following terms (as capitalized below) will
have the following meanings when used herein:
“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code (or
any analogous combined, consolidated, unitary or similar group defined under state, local or non-
U.S. Law).
“Affiliates” means, with respect to any Person, any other Person that, directly or
indirectly, controls, or is controlled by, or is under common control with, such Person. As used in
this definition, “control” (including, with its correlative meanings, “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or policies of a Person,
whether through the ownership of securities or partnership or other ownership interests, by
contract or otherwise.
“Business Day” means any day other than a Saturday, Sunday or a day on which the
banks in New York, New York are authorized or required by Law or executive order to be closed.
“Capital Stock” means, with respect to any Person, capital stock or voting securities of,
or other equity interests in, such Person.
“Code” means the Internal Revenue Code of 1986.
“Company” has the meaning set forth in the Preamble.
“Company Intellectual Property” shall mean (i) the Intellectual Property that is owned or
purported to be owned by the Company or any of its Subsidiaries and (ii) other material
Intellectual Property that is used by the Company or any of its Subsidiaries in the conduct of its
business.
57
“Company Material Adverse Effect” means any fact, development, circumstance,
change, event, occurrence or effect (each, an “Effect”) that, individually or taken together with all
other Effects, (A) have a material adverse effect on the financial or other condition, business
properties, assets, liabilities or results of operations of the Company and its Subsidiaries taken as
a whole, or (B) would reasonably be expected to prevent or materially impair or materially delay
the consummation of the Merger; provided that, solely with respect to clause (A) above, none of
the following, and no Effect arising out of or relating to the following, in each case, to the extent
occurring after the date of this Agreement, shall constitute a “Company Material Adverse Effect”
or be taken into account in determining whether a “Company Material Adverse Effect” has
occurred or may, would or could occur (subject to the limitations set forth below): (a) any Effect
or Effects generally affecting (x) any of the industries in which the Company and its Subsidiaries
operate or (y) the economy, credit or financial or capital markets in the United States or
elsewhere in the world, including changes in interest or exchange rates, or (b) any Effect, arising
out of, resulting from or attributable to (i) changes in Law, applicable regulations of any
Governmental Entity, generally accepted accounting principles, or any changes in, or issuance of
any administrative or judicial notice, decision or other guidance with respect to, the interpretation
or enforcement of any of the foregoing, (ii) the execution, public announcement or pendency of
this Agreement or the consummation of the Merger or the other Transactions, including the
impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors,
partners, employees or regulators (it being understood that the exceptions in this clause (b)(ii)
will not apply with respect to references to Company Material Adverse Effect set forth in the
representations contained in Section 3.4 (and in Sections 6.2(a) and 7.3(b) to the extent related to
such portions of such representations and warranties)), (iii) acts of war (whether or not declared),
sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not
declared), sabotage or terrorism, (iv) pandemics, earthquakes, hurricanes, tornados, drought or
other natural disasters, (v) any action taken by the Company or its Subsidiaries at the written
request or with the written consent of Parent, (vi) any decline in the market price, or change in
trading volume, of any Capital Stock of the Company, in each case in and of itself (it being
understood that any cause of such change may be deemed to constitute, in and of itself, a
Company Material Adverse Effect and may be taken into consideration when determining
whether a Company Material Adverse Effect has occurred) or (vii) any failure, in and of itself, by
the Company and its Subsidiaries to meet any internal or public projections, forecasts or estimates
of revenue, earnings, cash flow or cash position (it being understood that any cause of any such
failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may
be taken into consideration when determining whether a Company Material Adverse Effect has
occurred); provided, however, that with respect clauses (a), (b)(i), (b)(iii) and b(iv) above, such
exceptions will not apply to the extent that such Effect has had a disproportionate adverse effect
on the Company relative to other companies operating in the industries in which the Company
and its Subsidiaries conduct business, and in such cases only the incremental disproportionate
adverse impact may be taken into account in determining whether there has occurred a Company
Material Adverse Effect.
“Company Option” means an option to purchase Company Common Shares issued
under any Company Share Plan.
“Company Recommendation” shall mean the recommendation of the Company Board
that the Company Shareholders approve and adopt this Agreement and the Transactions.
“Company Restricted Shares” means any Company Common Share issued under any
Company Share Plan that is unvested as of immediately prior to the Effective Time.
58
“Company Share Plans” means the Bravo Brio Restaurant Group, Inc. Stock Incentive
Plan and the Bravo Brio Restaurant Group, Inc. 2006 Stock Option Plan.
“Company Shareholders” means the holders of shares of Company Common Shares.
“Company Termination Fee” means $3,261,000.
“Compliant” means, with respect to the Required Information, that (i) such Required
Information does not contain any untrue statement of a material fact regarding the Company and
its Subsidiaries, or omit to state any material fact regarding the Company and its Subsidiaries
necessary in order to make such Required Information not misleading in light of the
circumstances under which such statement is made, (ii) the Company’s independent accountants
shall have not withdrawn their audit opinion with respect to any financial statements contained in
or that includes the Required Information for which they have provided an opinion and (iii) the
Company has not publicly announced its intention to, or determined that it must, restate any
historical financial statements or other financial information included in or that includes the
Required Information or any such restatement is under active consideration, in which case, the
Required Information shall be deemed to not to be Compliant under this clause (iii) unless and
until such restatement has been completed and the applicable Required Information has been
amended and updated or the Company has publicly announced or informed Parent that it has
concluded, in good faith, that no restatement shall be required.
“Contract” shall mean any contract, agreement, deed, lease, license, indenture, loan,
guarantee of indebtedness or credit agreement, debenture, note, bond, mortgage, guarantee, deed
of trust, purchase or sale order or other contract, undertaking, permit, concession, franchise or
similar instrument, and any legally binding obligation, commitment, arrangement or
understanding, whether written or oral.
“Credit Agreement” means that certain Credit Agreement, dated as of November 5,
2014, by and among, the Company, the domestic subsidiaries of the Company from time to time
parties thereto, as guarantors, the Lender Parties thereto and ▇▇▇▇▇ Fargo Bank, National
Association, as administrative agent, as amended by the First Amendment to the Credit
Agreement and Waiver, effective as of October 31, 2016, the Waiver and Second Amendment to
the Credit Agreement, dated as of August 1, 2017 and the Third Amendment to the Credit
Agreement, dated as of February 9, 2018.
“Debt Commitment Letter” shall mean any commitment letter, including all exhibits,
annexes, supplements and amendments thereto regarding the Debt Financing.
“Debt Financing” shall mean the amounts set forth in the Debt Commitment Letters (if
any) for the purposes of financing the Transactions and related fees and expenses.
“Dissenting Holder” shall mean a holder of Company Common Shares who is entitled to
demand and properly demands, without withdrawal of such demand, payment of the fair cash
value of such Company Common Shares pursuant to, and who complies in all respects with, the
provisions of Section 1701.85 of the OGCL.
“Equity Financing” shall mean the cash amounts set forth in the Equity Commitment
Letter for the purpose of funding the Transactions and related fees and expenses.
59
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“Expenses” shall mean all out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or related to the evaluation,
authorization, preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement and all SEC and other regulatory
filing fees incurred in connection with the Merger, the solicitation of shareholder approvals, any
filing with, and obtaining of any necessary action or non-action, consent or approval from any
Governmental Entity pursuant to any antitrust Laws, engaging the services of the Paying Agent,
obtaining third party consents, any other filings with the SEC and all other matters related to the
Closing of the Merger and the other Transactions.
“Filed Company SEC Documents” means the Company SEC Documents filed or
furnished and publicly available after January 1, 2016.
“Financing” shall mean the Equity Financing together with the Debt Financing.
“Financing Letters” means the Equity Commitment Letter together with any Debt
Commitment Letter.
“Financing Sources” means the Persons that have committed to provide the debt
financing contemplated by, or have otherwise entered into agreements in connection with, the
Debt Commitment Letters or alternative debt financings in connection with the Merger, and any
joinder agreements, indentures or credit agreements entered into pursuant thereto or relating
thereto.
“Fraud” means common law fraud that is committed with actual (as opposed to imputed
or constructive) knowledge of falsity and with the intent to deceive or mislead (as opposed to
reckless indifference to the truth) another who is relying thereon.
“GAAP” means United States generally accepted accounting principles.
“Governmental Entity” means (i) any national, federal, state, county, local, municipal or
foreign government or any entity exercising executive, legislative, judicial, regulatory (including
stock exchange), taxing, or administrative functions of or pertaining to government (ii) any
agency, division, bureau, department, or other political subdivision of any government, entity or
organization described in the foregoing clause (i) of this definition, (iii) company, business,
enterprise, or other entity owned, in whole or in part, or controlled by any government, entity,
organization, or other Person described in the foregoing clauses (i) or (ii) of this definition.
“Indebtedness” shall mean, with respect to any person, without duplication, all
obligations or liabilities (including all obligations in respect of principal, accrued interest,
penalties, fees, premiums, related expenses, prepayment penalties, commitment and other fees,
sale or liquidity participation amounts, reimbursements, indemnities and all other amounts
payable in connection therewith) of such person: (a) for borrowed money (including obligations
in respect of drawings under overdraft facilities) or with respect to deposits or advances of any
kind to such Person; (b) evidenced by notes, bonds, debentures or similar Contracts , instruments
or debt securities; (c) for the deferred purchase price of property, goods or services (other than
trade payables or accruals incurred in the ordinary course of business consistent with past
60
practice); (d) under capital leases (in accordance with GAAP); (e) in respect of letters of credit,
bank guarantees, bankers’ acceptances and other similar contractual obligations (in each case,
whether or not drawn, contingent or otherwise); (f) pursuant to securitization or factoring
programs or arrangements; (g) pursuant to guarantees and arrangements having the economic
effect of a guarantee of such Person of any Indebtedness of any other Person; (h) for Contracts or
agreements relating to interest rate or currency rate protection, swap agreements, collar
agreements and similar hedging agreements; (i) pursuant to conditional sale or title retention
agreements; (j) with respect to vendor advances or any other advances; (k) in respect of deferred
purchase price, earnouts or other contingent payment obligations related to past acquisitions; (l)
for severance, change of control payments, stay bonuses, retention bonuses, success bonuses and
other bonuses and similar liabilities; (m) under sale and leaseback transactions, agreements to
repurchase securities sold and other similar financing transactions; (n) arising from any breach of
the foregoing; and (o) indebtedness of the type referred to in clauses (a) through (n) of others
guaranteed by the Company or any of its Subsidiaries or secured by any Lien.
“Intellectual Property” shall mean any and all intellectual and industrial property rights
of any kind, nature or description in any jurisdiction throughout the world, whether registered or
unregistered, including all patents, patentable inventions and other patent rights, trademarks, trade
names, service marks, company names, brand names, source identifiers, domain names, social
media account identifiers, copyrights, works of authorship, Software, trade secrets, know-how,
inventions (whether or not patentable), confidential business information and other proprietary
information, together with the goodwill associated with any of the foregoing and all issuances,
applications, registrations, extensions and renewals of any of the foregoing.
“IRS” means the United States Internal Revenue Service.
“IT Assets” means computers, software, hardware, servers, peripherals, routers, hubs,
switches, circuits, networks, Internet sites, data communications lines and all other information
technology assets that are owned, licensed, leased or used by the Company, including related
documentation and specifications.
“Knowledge” means (a) with respect to Parent, the actual knowledge of any of the
individuals listed on Section 8.18(b) of the Parent Disclosure Letter and (b) with respect to the
Company, the actual knowledge of the individuals listed on Section 8.18(b) of the Company
Disclosure Letter.
“Labor Laws” means all federal, state and local Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, nondiscrimination
in employment, occupational safety and health, the calculation and payment of wages, equal
employment opportunity (including Laws prohibiting discrimination and/or harassment on the
basis of race, national origin, religion, gender, disability, age, or any other protected
classification), workers’ compensation, unemployment, employment of minors, labor relations,
unions, tips and overtime of any kind, pay equity, employee classification, family and medical
leave, the Immigration Reform and Control Act, the Worker Adjustment and Retraining Act of
1998 or any similar applicable Laws.
“Law” or “Laws” means all applicable laws (including common law), statutes,
constitutions, rules, regulations, judgments, orders, directives, rulings, orders, ordinances, codes,
decrees or stock exchange listing requirements or other requirements issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority of any
Governmental Entity and any orders or decisions of an applicable arbitrator or arbitration panel.
61
“Lien” means any (i) mortgage, pledge, title defect, claim, charge, hypothecation,
security interest, encumbrance, deeds of trust, rights of first offer or first refusal, restriction,
option, easement, right of way, covenant, condition, encroachment, survey defect or lien of any
kind or nature, and (ii) covenants, conditions, restrictions, easements, encroachments, title
retention agreements or other third Person rights or title or survey defects of any kind or nature.
“NASDAQ” means NASDAQ Global Select Market.
“Order” means any order, judgment, injunction, award, decree or writ handed down,
adopted or imposed by any Governmental Entity.
“Permitted Lien” means (a) Lien for Taxes or governmental assessments, charges or
claims of payment not yet due and delinquent, the amount or validity of which are being
contested in good faith and for which adequate accruals or reserves have been established in
accordance with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s
or other similar liens arising in the ordinary course of business which are being contested in good
faith and for which adequate accruals or reserves have been established in accordance with
GAAP, (c) zoning, entitlements, building codes or other land use or environmental regulations,
ordinances or legal requirements imposed by any Governmental Entity in accordance with
GAAP, (d) any state of facts which an accurate survey or inspection of the real property owned or
leased by the Company and its Subsidiaries would disclose and which, individually or in the
aggregate, would not be reasonably expected to materially detract from the value of any of the
property, rights, or assets of the business of the Company or any of its Subsidiaries or materially
interfere with the use thereof as currently used by the Company or any of its Subsidiaries, (e) title
exceptions disclosed by any title insurance commitment or title insurance policy for any real
property owned or leased by the Company and its Subsidiaries issued by a title company and
delivered or otherwise made available to Parent which do not secure payment of a sum of money
and which, individually or in the aggregate, would not be reasonably expected to materially
detract from the value of any of the property, rights, or assets of the business of the Company or
any of its Subsidiaries or materially interfere with the use thereof as currently used by the
Company or any of its Subsidiaries, (f) statutory Liens in favor of lessors arising in connection
with any property leased to the Company and its Subsidiaries, (g) any defects, irregularities or
imperfections of title, encroachments, easements, servitudes, permits, rights of way, flowage
rights, restrictions, leases, licenses, covenants, sidetrack agreements and oil, gas, mineral and any
mining reservations and rights, which, individually or in the aggregate, would not be reasonably
expected to materially detract from the value of any of the property, rights, or assets of the
business of the Company or any of its Subsidiaries or materially interfere with the use thereof as
currently used by the Company or any of its Subsidiaries, (h) Liens that are disclosed on the most
recent consolidated balance sheet of the Company or notes thereto (or securing liabilities
reflected on such balance sheet), or (i) any non-exclusive licenses to Company Intellectual
Property.
“Person” means an individual, a corporation, a partnership, a limited liability company,
an association, joint venture, estate, trust, firm, trust or any other entity, group (as such term is
used in Section 13(d)(3) of the Exchange Act) or organization, whether domestic or foreign,
including, without limitation, a Governmental Entity, and any permitted successors and assigns of
such Person.
“Required Information” means all financial statements, financial data and other
information regarding the Company or any of its Subsidiaries of the type and form customarily
included in marketing documents used to consummate transactions of the type contemplated by
62
the Debt Commitment Letter, or as may be reasonably requested by Parent to consummate the
Debt Financing, including all information required by Exhibit I to the Debt Commitment Letter
and financial statements prepared in accordance with GAAP.
“Requisite Company Vote” shall mean the affirmative vote of the holders of a majority
of the issued and outstanding Company Common Shares.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Software” means computer programs in object code and source code formats, including
related documentation and specifications.
“SOX” means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended.
“Subsidiaries” means, with respect to any Person, any corporation, limited liability
company, partnership, association, trust or other form of legal entity of which (i) more than 50%
of the outstanding voting securities are directly or indirectly owned by such Person or by one or
more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of
such Person, or (ii) such Person or any Subsidiary of such Person is a general partner or managing
member and has the power to direct the policies, management and affairs of such company
(excluding partnerships or limited liability companies in which such Person or any Subsidiary of
such Person does not have a majority of the voting interests in such partnership or limited liability
company, as applicable).
“Transaction Litigation” means any Action commenced or threatened against a party to
this Agreement or any of its Subsidiaries, Affiliates or directors or otherwise relating to,
involving or affecting such party or any of its Subsidiaries or Affiliates, in each case in
connection with, arising from or otherwise relating to this Agreement or the Transactions,
including any Action alleging or asserting any misrepresentation or omission in the Proxy
Statement or any Other Required Company Filing.
“Transactions” means the transactions contemplated by this Agreement, including the
Merger.
“Treasury Regulations” means the Treasury regulations promulgated under the Code.
“Willful and Material Breach” means a material breach that is a consequence of any
action undertaken by the breaching party with the actual knowledge at the time it took such action
that the taking of such action would, or would reasonably be expected to, cause a breach of this
Agreement.
(b) For purposes of this Agreement, the following terms (as capitalized below) will
have the respective meanings given to them in the respective Sections of this Agreement set forth
opposite each of the terms below:
Term Section
Acceptable Confidentiality Agreement .................................................................... 5.5(b)
63
Term Section
Acquisition Proposal ................................................................................................ 5.5(e)
Action ....................................................................................................................... 5.11(b).
Agreement ................................................................................................................ Preamble
Alternative Acquisition Agreement ......................................................................... 5.5(a)
Alternative Financing ............................................................................................... 5.12(c)
Anti-Corruption Laws .............................................................................................. 3.26(a)
Articles of Incorporation .......................................................................................... 1.4
Audited Company Balance Sheet ........................................................................... 3.7
Book-Entry Shares ................................................................................................... 2.1(a)
Capitalization Date ................................................................................................... 3.2(a)
Certificate of Merger ................................................................................................ 1.3
Certificates ............................................................................................................... 2.1(a)
Change of Recommendation .................................................................................... 5.5(c)
Chosen Court ........................................................................................................... 8.4
Closing ..................................................................................................................... 1.2
Closing Date............................................................................................................. 1.2
Code of Regulations ................................................................................................. 1.5
Company .................................................................................................................. Preamble
Company Approvals ................................................................................................ 3.4(a)
Company Benefit Plans ............................................................................................ 3.12(a)
Company Board ....................................................................................................... Recitals
Company Common Shares ...................................................................................... 2.1(a)
Company Disclosure Letter ..................................................................................... III
Company Material Contracts ................................................................................... 3.19(a)
Company Permits ..................................................................................................... 3.10(b)
Company Preferred Shares ...................................................................................... 3.2(a)
Company SEC Documents ...................................................................................... 3.5(a)
Company Shareholders Meeting .............................................................................. 3.14
Company Specified Person ...................................................................................... 7.6(d)
Confidentiality Agreement ....................................................................................... 5.4(b)
Continuing Employees ............................................................................................. 5.6(a)
Debt Payoff Letters .................................................................................................. 5.13(a)(vii)
Dissenting Shares ..................................................................................................... 2.1(e)
Effective Time ......................................................................................................... 1.3
Environmental Law .................................................................................................. 3.11(b)
Equity Commitment Letter ...................................................................................... Recitals
Equity Investor ......................................................................................................... Recitals
ERISA ...................................................................................................................... 3.12(a)
Exchange Fund......................................................................................................... 2.2(a)
Excluded Shares ....................................................................................................... 2.1(b)
Governmental Consents ........................................................................................... 5.7(a)
Hazardous Substance ............................................................................................... 3.11(d)
Indemnified Party ..................................................................................................... 5.11(b)
Initial Year of Participation ..................................................................................... 5.6(a)
Intervening Event ..................................................................................................... 5.5(c)
Leased Property ....................................................................................................... 3.18(b)
Liquor Licenses ........................................................................................................ 3.11(c)
Material Lease .......................................................................................................... 3.18(b)
Merger ...................................................................................................................... Recitals
Merger Sub............................................................................................................... Preamble
64
Term Section
New Plans ................................................................................................................ 5.6(a)
OGCL ....................................................................................................................... Recitals
Option Cash Payment .............................................................................................. 2.3(a)
Other Required Company Filing .............................................................................. 5.2(e)
Other Required Parent Filing ................................................................................... 5.2(f)
Owned Real Property ............................................................................................... 3.18(a)
Parent ....................................................................................................................... Preamble
Parent Approvals ...................................................................................................... 4.3(a)
Parent Disclosure Letter ........................................................................................... IV
Parent Representatives ............................................................................................. 5.4(a)
Parent Welfare Plans ................................................................................................ 5.6(a)
Paying Agent ............................................................................................................ 2.2(a)
▇▇▇▇▇ ▇▇▇▇▇▇▇ ............................................................................................................. 3.20
Proxy Statement ....................................................................................................... 3.14
Real Property Lease ................................................................................................. 3.18(b)
Representatives ........................................................................................................ 5.5(a)
Restricted Share Cash Payments .............................................................................. 2.3(b)
Superior Proposal ..................................................................................................... 5.5(g)
Surviving Corporation ............................................................................................. Recitals
Takeover Statutes ..................................................................................................... 3.23
Tax Return ............................................................................................................... 3.15(b)
Taxes ........................................................................................................................ 3.15(b)
Termination Date ..................................................................................................... 7.2(a)
[Remainder of this page intentionally left blank. Signature page(s) follow on next page.]
[Signature Page to the Agreement and Plan of Merger]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
and delivered as of the date first above written.
BRAVO BRIO RESTAURANT GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇’▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇’▇▇▇▇▇▇
Title: President and Chief Executive Officer
BUGATTI PARENT, INC.
By: /s/ ▇▇▇▇▇▇▇ Buscolo
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BUGATTI MERGER SUB, INC.
By: /s/ ▇▇▇▇▇▇▇ Buscolo
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President