INVESTMENT AGREEMENT by and among THE ONE GROUP HOSPITALITY, INC., HPC III KAIZEN LP and HPS INVESTMENT PARTNERS, LLC Dated as of March 26, 2024
Exhibit 10.2
by and among
THE ONE GROUP HOSPITALITY, INC.,
HPC III KAIZEN LP
and
HPS INVESTMENT PARTNERS, LLC
Dated as of March 26, 2024
NOTE TO EXHIBIT: Certain exhibits and schedules to this Investment Agreement are not filed herewith. The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.
Explanatory Note: The Investment Agreement (the “Agreement”) contains representations and warranties by the parties thereto made only for the purposes of the Agreement. The Agreement is filed with this report only to provide investors with information regarding its terms and conditions, and not to provide any other factual information regarding the Company or its business. A party’s representations and warranties were made solely for the benefit of the other party or parties and (i) were not intended to be treated as categorical statements of fact, but rather as a way to allocate risk if a representation and warranty proves to be inaccurate; (ii) may have been qualified in the Agreement by disclosures that were made to the other party or parties in connection with the negotiation of the Agreement (provided that any specific facts that contradict the representations and warranties in the Agreement in any material respect have been disclosed); (iii) may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and (iv) were made only as of the date of the Agreement or such other date or dates as may be specified in the Agreement. Accordingly, they should not be relied upon by investors as statements of factual information.
TABLE OF CONTENTS
Article I
Definitions
Article II
Purchase and Sale
Article III
Representations and Warranties of the Company
i
TABLE OF CONTENTS
(cont’d)
Article IV
Representations and Warranties of the Investors
Article V
Additional Agreements
ii
TABLE OF CONTENTS
(cont’d)
Article VI
Conditions to Closing
Article VII
Termination; Survival
Article VIII
Miscellaneous
Exhibit A:Acquisition Agreement
Exhibit B:Form of Certificate of Designation
Exhibit C-1:Form of Xxxxx Warrant Agreement
Exhibit C-2:Form of Market Warrant Agreement
iii
TABLE OF CONTENTS
(cont’d)
Exhibit D:Hill Path Equity Commitment Letter
Exhibit E:Form of Registration Rights Agreement
Schedules
Schedule I:Disqualified Holders
Schedule II:Purchased Security Allocation
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INVESTMENT AGREEMENT, dated as of March 26, 2024 (this “Agreement”), by and between The ONE Group Hospitality, Inc., a Delaware corporation (the “Company”), HPC III Kaizen LP, a Delaware limited partnership (together with its successors and any Permitted Affiliate Transferee that becomes a party hereto pursuant to Section 8.03, the “Hill Path Investor”), and HPS Investment Partners, LLC, a Delaware limited liability company (together with its successors and any Permitted Affiliate Transferee that becomes a party hereto pursuant to Section 8.03, the “HPS Investor” and, together with the Hill Path Investor, each an “Investor” and collectively the “Investors”).
WHEREAS, the Company, TOG Kaizen Acquisition, LLC, a Delaware limited liability company and a direct or indirect subsidiary of the Company (“Buyer”), Safflower Holdings LLC, a Delaware limited liability company (“Seller”), and Safflower Holdings Corp., a Delaware corporation (the “Target”), are concurrently entering into a Stock Purchase Agreement, dated as of the date hereof (the “Acquisition Agreement”) (a copy of which is attached hereto as Exhibit A), pursuant to which, among other things and subject to its terms and conditions, Buyer will acquire 100% of the outstanding equity securities of the Target from Seller (the “Acquisition”).
WHEREAS, subject to the terms and conditions set forth herein, at the Closing (as defined below) the Company desires to issue, sell and deliver to the Investors, and the Investors desire to purchase and acquire from the Company, (a) an aggregate of 160,000 shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), having the designation, preferences, rights, privileges, powers, and terms and conditions, as specified in the form of the Certificate of Designations of Series A Preferred Stock attached hereto as Exhibit B (the “Certificate of Designation”), (b) warrants (the “Xxxxx Warrants”) to purchase a number of shares of Common Stock (as defined below) that will represent 5.33% of the fully diluted shares of Common Stock as of immediately prior to the Closing and after giving effect to the issuance of the Xxxxx Warrants, pursuant to the form of warrant agreement hereto as Exhibit C-1 (the “Xxxxx Warrant Agreement”) and (c) warrants (the “Market Warrants” and together with the Xxxxx Warrants, the “Warrants” and the Warrants, together with the Preferred Stock, the “Purchased Securities”) to purchase, in the aggregate, up to 1,066,667 shares of Common Stock (subject to adjustment in accordance with the terms thereof) pursuant to the form of warrant agreement attached hereto as Exhibit C-2 (the “Market Warrant Agreement” and together with the Xxxxx Warrant Agreement, the “Warrant Agreements”).
WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the willingness of the Company to enter into this Agreement, the Hill Path Fund (as defined below) has executed and delivered an equity commitment letter, a copy of which attached hereto as Exhibit D (the “Hill Path Equity Commitment Letter”).
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
“5% Beneficial Holding Requirement” means that the Investor Parties continue to beneficially own Warrants and/or Warrant Shares that represent, in the aggregate (on an as-exercised basis), a number of shares of Common Stock equal to at least 5% of the issued and outstanding Common Stock (on an as-exercised basis).
“Accumulated Liquidation Preference” has the meaning set forth in the Certificate of Designation.
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person; provided, however, that (i) the Company and its Subsidiaries shall not be deemed to be Affiliates of any Investor Party or any of its Affiliates, and (ii) other than in the case of the definitions of “Hill Path Investor Party”, “HPS Investor Party”, “Hill Path Investor Related Party”, “HPS Investor Related Party” or “Permitted Affiliate Transferee”, Section 4.08, Section 5.04, Section 5.09(g), Section 5.09(i), Article VII or Section 8.13, in no event shall any of the Investor Parties or any of their respective Subsidiaries be considered an Affiliate of any portfolio company or investment fund affiliated with or managed by affiliates of Hill Path or HPS, nor shall any other portfolio company or investment fund affiliated with or managed by affiliates of Hill Path or HPS be considered to be an Affiliate of an Investor Party or any of their respective Affiliates. For this purpose, “control” (including, with its correlative meanings, “controlling”, “controlled by” and “under common control with”) 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.
“Anti-Corruption and Anti-Bribery Laws” means any provision of the Foreign Corrupt Practices Act of 1977, as amended, the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery or anti-corruption Law.
“Anti-Terrorism and Anti-Money Laundering Laws” means all applicable anti-money laundering Laws, including the Bank Secrecy Act of 1970, as amended by the USA PATRIOT ACT of 2001, and the rules and regulations promulgated thereunder, and all other applicable anti-money laundering Laws of the various jurisdictions in which the Group Companies conduct their business.
“as-exercised basis” means with respect to the outstanding shares of Common Stock as of any date, all outstanding shares of Common Stock calculated on a basis in which all Warrant Shares issuable upon exercise of the outstanding Warrants are assumed to be outstanding as of such date.
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“Board” means the Board of Directors of the Company.
“Business Day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by applicable Law to be closed.
“Change in Control” has the meaning set forth in the Certificate of Designation.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Committee” means any or all of the Audit Committee, the Compensation Committee, the Nominating and Governance Committee, and any other committee of the Board.
“Common Stock” means the common stock, par value $0.0001 per share, of the Company.
“Company Charter Documents” means the Company’s amended and restated certificate of incorporation and amended and restated bylaws, each as in effect as of the date of this Agreement, and shall include the Certificate of Designation upon the filing thereof with the Secretary of State of the State of Delaware.
“Company Equity Awards” means the Company Stock Options, Company RSUs, Company PSUs and any other award granted under the Company Stock Plan.
“Company Material Adverse Effect” means any event, fact, condition, occurrence, effect, development, circumstance, matter or change (each, an “Effect”) that, individually or in the aggregate, together with all other Effects, (a) has had, or would reasonably be expected to have, a material adverse effect upon the financial condition, business, results of operations or assets or liabilities of the Group Companies, taken as a whole, or (b) prevents, delays or impedes, or would reasonably be expected to prevent, delay or impede the performance by the Company of its obligations under this Agreement or the consummation of the Transactions; provided, however, that “Company Material Adverse Effect” shall not include in the case of clause (a) any Effect to the extent resulting from any of the following that occurs on or after the date of this Agreement: (i) conditions affecting the United States economy or any foreign economy generally, or any regulatory environment in the United States and elsewhere in the world; (ii) any national, international or supranational political, geopolitical or social conditions, including any civil commotion, civil disorder, or any other type of civil unrest (including riots, public demonstrations, protests, looting, and revolutions), the threat, engagement, cessation or escalation by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any other country, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country; (iii) changes to financial, banking, credit, currency, commodity (including food), capital or securities markets (including any disruption thereof and any increase or decrease therein), changes to the price of any market index or changes in interest rates or exchange rates; (iv) changes or prospective changes in GAAP or in accounting standards or the interpretation or enforcement thereof after the date hereof; (v) changes or prospective changes in any applicable Laws after the date hereof; (vi) any change that is generally applicable to the industries or markets in which the Group Companies
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operate; (vii) any national or international calamities, crises or natural disasters (including those arising from storms, hurricanes, tornados, flooding, earthquakes, volcanic eruptions, epidemics or pandemics (including COVID-19) or other force majeure events, together with any restrictions, sanctions, other limitations or policies enacted or applied by a Governmental Authority in response to any of the foregoing (including any measures taken in response to COVID-19)); (viii) any changes to the credit rating of any Group Company (although any facts and circumstances that may have given rise or contributed to any such changes that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether there has been a Company Material Adverse Effect); (ix) the negotiation, execution, announcement or existence of this Agreement or the transactions contemplated hereby, the identity of an Investor, its Affiliates or public announcement of this Agreement and the Transactions; (x) any action taken by an Investor contemplated, permitted or required by this Agreement or the Transaction Documents (including the obtaining of approval or consent from any Governmental Authority or other third-party in connection with the consummation of the transactions contemplated hereby and thereby) or at an Investor’s request or with an Investor’s consent; (xi) the failure to take any action by the Group Companies if that action is prohibited by this Agreement or the Transaction Documents and the Investor either did not consent to such action or withheld, delayed or conditioned its consent; (xii) any failure by the Group Companies to meet any internal or published projections, forecasts, estimates or predictions of revenue, earnings, cash flow or cash position and any changes in the results of operations of the Group Companies for any period ending prior to, on or after the date of this Agreement (although any facts and circumstances that may have given rise or contributed to any such failure that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether there has been a Company Material Adverse Effect); provided, however, that Effects set forth in the foregoing clauses (i) through (vii) may be taken into account in determining whether there has been or is a Company Material Adverse Effect, to the extent that such Effects have an incremental disproportionate adverse effect on the financial condition, business, results of operations, assets or liabilities of the Group Companies, taken as a whole, compared to other companies of similar size operating in the same industry as the Group Companies.
“Company Preferred Stock” means the preferred stock, par value $0.0001, of the Company.
“Company PSU” means a restricted stock unit of the Company subject to both time-based and performance-based vesting conditions.
“Company Related Party” means the Group Companies and any of their former, current or future Affiliates and any of the foregoing’s respective former, current or future, direct or indirect Representatives or any of their respective successors or assigns.
“Company RSU” means a restricted stock unit of the Company subject solely to time-based vesting conditions.
“Company SEC Documents” means all forms, reports, schedules, statements, exhibits, definitive proxy statements, registration statements and other documents required to be filed (or furnished) by the Company with the SEC under the Exchange Act or the Securities Act
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and publicly available prior to the date hereof, such documents have since the time of their filing been amended, modified or supplemented prior to the date hereof.
“Company Stock Plan” means The ONE Group Hospitality, Inc. 2019 Equity Incentive Plan, as may be amended from time to time.
“Company Stock Option” means an option to purchase shares of Common Stock; provided that it excludes the Warrants.
“Competition Law” shall mean the Xxxxxxx Antitrust Act, the Xxxxxxx Antitrust Act, the Federal Trade Commission Act, and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or strengthening of a dominant position through merger or acquisition.
“Confidentiality Agreement” means that certain agreement between Hill Path and the Company dated as of April 20, 2023, as may be amended from time to time in accordance with its terms.
“Credit Agreement” means the Credit and Guaranty Agreement, dated as of October 4, 2019, by and among the Company, The ONE Group, LLC, certain subsidiary guarantors, Xxxxxxx Xxxxx Specialty Lending Group, L.P., as administrative agent, and Xxxxxxx Xxxxx Bank USSA, as collateral agent, and the lender parties thereto, as amended by the First Amendment to Credit and Guaranty Agreement, dated as of May 8, 2020, the Second Amendment to Credit and Guaranty Agreement, dated as of August 10, 2020, the Third Amendment to Credit and Guaranty Agreement, dated as of August 6, 2021, and the Fourth Amendment to Credit and Guaranty Agreement, dated as of December 13, 2022.
“Debt Commitment Letter” means the Commitment Letter, dated as of the date hereof, among The One Group, LLC, Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, HPS Investment Partners, LLC and XX Xxxx Capital Management, LLC.
“DGCL” means the Delaware General Corporation Law, as amended, supplemented or restated from time to time.
“Disqualified Holder” mean each Person identified on Schedule I hereto.
“Enforceability Exception” means (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and (ii) equitable remedies, including specific performance, whether considered in a proceeding at law or in equity.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is (or was at any relevant time) a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first
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entity, trade or business, or that is (or was at any relevant time) a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Existing Company Policies” means the Company’s Corporate Code of Conduct and Ethics and Xxxxxxx Xxxxxxx Policy, in each case as in effect as of the date of this Agreement.
“Expense Reimbursement Side Letter” means that certain agreement between Hill Path and the Company dated as of January 4, 2024.
“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as reasonably determined in good faith by a majority of the Board, or an authorized committee thereof.
“Fraud” means a false statement of a material fact with respect to the making of any of the representations and warranties by a party as set forth in this Agreement or in any other Transaction Document (a) where the party making such false statement (i) has actual knowledge (as opposed to constructive knowledge) of the falsity of such statement and that such falsity would constitute a breach of any of the representations and warranties made by the party as set forth in this Agreement or in any other Transaction Document, (ii) makes such false statement with the intent to deceive the party to whom such false statement is made and (iii) makes such false statement with the intent to induce reliance in the party to whom such false statement is made, and (b) where the party to whom such false statement is made justifiably relies on such false statement.
“GAAP” means generally accepted accounting principles in the United States, consistently applied.
“Governmental Authority” means any government, court, regulatory or administrative agency, commission, arbitrator (public or private), arbitral body (public or private), tribunal, judicial body, commission, department, or other governmental entity, instrumentality or including any self-regulatory organization, whether federal, state, local, municipal, territorial, provincial, domestic, foreign or multinational.
“Group Companies” means, collectively, the Company and each of its Subsidiaries and each of them, individually, is a “Group Company.”
“Hill Path” means Hill Path Capital LP.
“Hill Path Fund” means Hill Path Capital Partners III LP.
“Hill Path Investor” has the meaning set forth in the Preamble. Any reference to any action by the Hill Investor Parties in this Agreement shall require an instrument in writing signed by the Hill Path Investor so long as it is the sole Hill Path Investor Party or each of the Hill Path Investor Parties.
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“Hill Path Investor Parties” means the Hill Path Investor and each Affiliate of the Hill Path Investor to whom shares of Preferred Stock, Warrants or Warrant Shares are transferred in accordance with the terms of this Agreement.
“Hill Path Investor Related Party” means the Hill Path Investor and any other financing sources of the Hill Path Investor, the Hill Path Fund and any of the foregoing’s respective former, current or future Affiliates and any of the foregoing’s respective former, current or future, direct or indirect, Representatives, affiliates, stockholders, equityholders, lenders or any of the foregoing’s respective successors or assigns.
“HPS” means HPS Investment Partners, LLC, a Delaware limited liability company.
“HPS Investor” has the meaning set forth in the Preamble. Any reference to any action by the HPS Investor Parties in this Agreement shall require an instrument in writing signed by the HPS Investor so long as it is the sole HPS Investor Party or each of the HPS Investor Parties.
“HPS Investor Parties” means the HPS Investor and each Affiliate of the HPS Investor to whom shares of Preferred Stock, Warrants or Warrant Shares are transferred in accordance with the terms of this Agreement.
“HPS Investor Related Party” means the HPS Investor and any other financing sources of the HPS Investor, HPS and any of the foregoing’s respective former, current or future Affiliates and any of the foregoing’s respective former, current or future, direct or indirect, Representatives, affiliates, stockholders, equityholders, lenders or any of the foregoing’s respective successors or assigns.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Investor” has the meaning set forth in the Preamble.
“Investor Director” means a member of the Board who was elected to the Board as an Investor Director Designee.
“Investor Material Adverse Effect” means any effect, change, event, development or occurrence that does or would reasonably be expected to, individually or in the aggregate, prevent or materially delay or impair (a) the consummation by an Investor of any of the Transactions on a timely basis or (b) the performance by the Investor of its material obligations under this Agreement.
“Investor Parties” means each of the Hill Path Investor Parties and the HPS Investor Parties.
“Investor Related Party” means each of the Hill Path Investor Related Parties and the HPS Investor Related Parties.
“IRS” means the United States Internal Revenue Service.
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“Knowledge” means, with respect to the Company, the actual knowledge of Xxxxxxx Xxxxxxx, Xxxxx Xxx and Xxxx Xxxxxxxx (none of whom shall have any personal liability or obligations of inquiry regarding knowledge).
“Law” means applicable laws, common laws, statutes, rules, regulations, codes, ordinances, executive orders, judgments, injunctions, governmental guidelines or interpretations that have the force of law, permits, decrees, orders or other similar requirement enacted, adopted, promulgated or applied by any Governmental Authorities.
“Leased Real Property” means all right, title and interest of the Group Companies to any leasehold interests in any real property, together with all buildings, structures, improvements and fixtures thereon.
“Liens” means liens, encumbrances, mortgages, charges, claims, restrictions, pledges, security interests, title defects, easements, rights-of-way, covenants, encroachments, outstanding options, rights of first refusal or rights of first offer, or other adverse claims of any kind with respect to a property or asset.
“NASDAQ” means the NASDAQ Global Select Market.
“Permitted Affiliate Transferee” means (a) an investment fund or vehicle of which Hill Path, HPS or a Subsidiary thereof serves as the general partner or discretionary manager, advisor or subadvisor with the right to control such investment fund or vehicle and (b) any Subsidiary of the foregoing; provided that no investment fund or vehicle, or Subsidiary thereof, shall be a Permitted Affiliate Transferee if the applicable investment fund or vehicle has a direct or indirect investment in any Disqualified Holder.
“Person” means an individual, corporation, limited liability company, partnership, joint venture, joint stock company, association, estate, trust, firm, unincorporated organization or any other entity, organization or association, including a Governmental Authority.
“Personal Data” means information relating to or reasonably capable of being associated with an identified or identifiable person, device, or household, including, but not limited to, “personal data,” “personal information,” or other similar information defined under applicable data privacy and cybersecurity Laws.
“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by the Company and each Investor, the form of which is set forth as Exhibit E hereto.
“Representatives” means, with respect to any Person, its officers, directors, principals, partners, managers, members, employees, consultants, agents, financial advisors, investment bankers, attorneys, accountants, other advisors and other representatives.
“Sanction” means any sanctions administered or enforced by the U.S. government, including the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including the designation as a “specially designated national” or “blocked
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person,” the European Union, any European Union Member State, His Majesty’s Treasury, the United Nations Security Council, or other relevant sanctions authority.
“Sanctioned Country” means any country or territory that is the subject or the target of Sanctions (currently, the Crimea region of Ukraine, the non-government controlled areas of the Kherson and Zaporizhzhia regions of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea and Syria).
“Sanctioned Persons” means any Person or Persons owned or controlled by, or acting on behalf of, any Person subject or the target of Sanctions or located, organized or resident in a Sanctioned Country.
“Xxxxxxxx-Xxxxx Act” means the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations promulgated thereunder.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Senior Credit Agreement” has the meaning provided in the Certificate of Designation.
“Security Incident” means (i) any unauthorized processing of confidential data, information, and data compilation contained in the Systems or on the databases of the Group Companies, including Personal Data used by or necessary to the Group Companies’ business; (ii) any unauthorized access to the Group Companies’ Systems; or (iii) any incident that may require notification to any Person, Governmental Authority, or any other entity under applicable data privacy and cybersecurity Laws.
“Subsidiary” or “Subsidiaries” of any Person (other than an individual), means any Person, corporation, limited liability company, partnership, association, trust or other entity of which (x) securities or other ownership interests representing more than 50% of the voting power (or, in the case of a partnership, more than 50% of the general partnership interests) or (y) sufficient voting rights to elect at least a majority of the board of directors or other governing body are, as of such date, owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Systems” means the computer software, websites and information technology systems owned or used by the Group Companies.
“Tax” means any and all United States federal, state, local or non-United States taxes, fees, levies, duties, tariffs, imposts, and other similar charges (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes; license, registration and
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documentation fees; and customs duties, tariffs and similar charges, together with any interest or penalty, in addition to tax or additional amount imposed by any Taxing Authority.
“Tax Return” means returns, reports, claims for refund, declarations of estimated Taxes and information statements, including any schedule or attachment thereto or any amendment thereof, with respect to Taxes filed or required to be filed with any Governmental Authority, including consolidated, combined and unitary tax returns.
“Taxing Authority” means any Governmental Authority having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).
“Transaction Documents” means this Agreement, the Certificate of Designation, the Hill Path Equity Commitment Letter, the Warrant Agreements, the Registration Rights Agreement and all other documents, certificates or agreements executed pursuant to an express term of this Agreement, the Certificate of Designation, the Hill Path Equity Commitment Letter, the Warrant Agreements or the Registration Rights Agreement; provided, that, for the avoidance of doubt, “Transaction Document” shall not include the Acquisition Agreement or ancillary documents thereunder or any transaction documents regarding the debt financing in connection with the Acquisition.
“Transactions” means the transactions expressly contemplated by this Agreement and the other Transaction Documents; provided, that, for the avoidance of doubt, “Transactions” shall not include the Acquisition or any debt financing in connection with the Acquisition.
“Transfer” by any Person means, directly or indirectly (including by way of a change in the ownership of any Investor Party or any of its direct or indirect owners), to sell, transfer, assign, pledge, encumber, hypothecate or otherwise dispose of or transfer (by the operation of law or otherwise), or to enter into any Contract, option or other arrangement, agreement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or other disposition or transfer (by the operation of law or otherwise), of any voting, economic or other interest in any equity securities (including the Purchased Securities) beneficially owned by such Person; provided, however, that, notwithstanding anything to the contrary in this Agreement, a Transfer shall not include (i) the exercise of one or more Warrants for Warrant Shares, (ii) the redemption or other acquisition of Warrants, Warrant Shares or Preferred Stock by the Company, (iii) the transfer (other than by an Investor Party) of any limited partnership interests or other equity interests in the Investor Party (or any direct or indirect parent entity of such Investor Party) (provided that if any of the Purchased Securities ceases to be controlled (directly or indirectly) by the Person (directly or indirectly) controlling such Person immediately prior to such transfer, such event shall be deemed to constitute a “Transfer”) or (iv) any transfer in connection with a transaction or agreement contemplated by Section 5.13.
“Warrant Shares” means the shares of Common Stock that may be issued upon exercise of the Warrants.
“Willful Breach” means a material breach of any provision in this Agreement which is the consequence of an act or failure to act undertaken by the breaching party with the actual
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knowledge that the taking of, or failure to take, such act would, or would reasonably be expected to, result in a material breach of this Agreement.
Section | ||
|---|---|---|
Recitals | ||
Recitals | ||
Section 3.07 | ||
Preamble | ||
Section 5.10(c) | ||
Section 5.04 | ||
Recitals | ||
Recitals | ||
Section 2.01 | ||
Section 2.01 | ||
Preamble | ||
Article III | ||
Section 3.04(b) | ||
Section 5.05 | ||
Section 5.02(c) | ||
Section 5.13 | ||
Section 5.15(a) | ||
Section 3.08(b) | ||
Section 4.04 | ||
Section 5.02(c) | ||
Section 6.03(a) | ||
Section 5.09(g) | ||
Recitals | ||
Section 5.09(g) | ||
Section 5.09(i) | ||
Section 5.09(i) | ||
Preamble | ||
Section 5.09(a) | ||
Recitals | ||
Recitals | ||
Section 3.09 | ||
Section 5.09(g) | ||
Section 5.15(b)(ii) | ||
Recitals | ||
Recitals | ||
Recitals | ||
Section 5.15(b)(i) | ||
Section 2.01 | ||
Recitals | ||
Section 5.09(i) | ||
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Except as set forth in (i) the Company SEC Documents filed or furnished by the Company with the SEC after January 1, 2023 and publicly available prior to the date hereof and that is reasonably apparent on the face of the applicable disclosure to be applicable to the representation and warranty set forth herein but excluding any disclosure contained under the heading “Risk Factors” in any “forward-looking statements” legend or in any other disclosures contained or referenced therein of information, factors, or risks that are predictive, cautionary, or forward-looking in nature or (ii) the confidential disclosure schedules of the Company delivered to the Investors prior to the execution of this Agreement (the “Company Disclosure Letter”) (it being understood that any information, item or matter set forth in one section or subsection of the Company Disclosure Letter shall only be deemed to apply to and qualify the section or subsection to which it corresponds in number and each other section or subsection to the extent that is reasonably apparent on the face of such disclosure that such information, item or matter is relevant to such other section or subsection), the Company hereby represents and warrants to each Investor as of the date hereof and as of the Closing (which is prior to the consummation of the Acquisition and such representations and warranties do not give effect to the consummation of the Acquisition) as follows:
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extent party to a Material Contract, is in compliance in all material respects with all Material Contracts and has performed all obligations required to be performed by it, except where such noncompliance, individually or in the aggregate, has not been and would not reasonably be expected to be material to the business of the Group Companies.
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Company nor, to the Knowledge of the Company, any Person acting on its behalf has made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering or issuance of Purchased Securities under this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would result in none of Regulation D or any other applicable exemption from registration under the Securities Act to be available, nor will the Company take any action or steps that would cause the offering or issuance of Purchased Securities under this Agreement to be integrated with other offerings by the Company.
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OR ORAL, ON BEHALF OF THE COMPANY OR ANY OF ITS AFFILIATES, INCLUDING ANY REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE COMPANY FURNISHED OR MADE AVAILABLE TO EACH INVESTOR AND ITS REPRESENTATIVES OR AS TO THE FUTURE REVENUE, PROFITABILITY OR SUCCESS OF THE COMPANY OR ANY REPRESENTATION OR WARRANTY ARISING FROM STATUTE OR OTHERWISE IN LAW.
Each Investor, severally and not jointly, represents and warrants to the Company solely with respect to itself, as of the date hereof and as of the Closing Date:
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accuracy of such forward-looking information so furnished to such Investor (including the reasonableness of the assumptions underlying such forward-looking information), and that except for the representations and warranties made by the Company in Article III or the Transaction Documents and other than for Fraud, such Investor will have no claim against the Company with respect thereto.
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Representatives on a non-confidential basis, or (d) was independently developed by the Investor, any of its Affiliates or any of their respective Representatives without reference to, incorporation of, or other use of any Confidential Information; provided, that Confidential Information may be disclosed (i) to an Investor’s Affiliates and its and their respective Representatives, in each case, in the ordinary course of business (including in connection with monitoring, administrating or managing an Investor’s investment in the Company) (provided that such Investor’s Affiliates and the respective Representatives agree to maintain the confidentiality of such Confidential Information and such Investor will remain liable for any damages arising out of a failure by such Investor’s Affiliates and the respective Representatives to keep such Confidential Information confidential in accordance with the provisions hereof unless such Affiliate or Representative has entered into a confidentiality agreement enforceable by the Company), (ii) to existing or prospective limited partners or other equityholders in investment funds affiliated with or managed by Affiliates of Hill Path, HPS and their respective Representatives in the ordinary course of business (provided that such recipients agree to maintain the confidentiality of such Confidential Information and the Hill Path Investor (in the case of disclosure to existing or prospective Hill Path-Affiliated investment fund investors) and the HPS Investor (in the case of disclosure to existing or prospective HPS-Affiliated investment fund investors) will remain liable for any damages arising out of a failure by such recipients to keep such Confidential Information confidential in accordance with the provisions hereof unless such recipient has entered into a confidentiality agreement enforceable by the Company, and provided further that no information disclosed pursuant to this clause (ii) shall include any material non-public information of the Company), (iii) to any prospective financing sources in connection with a hedge or other derivative transaction, or the syndication and marketing of any Equity Loan, in each case, as long as such prospective purchaser or lender, as applicable, is subject to customary confidentiality restriction, (iv) as may be reasonably determined by an Investor to be necessary in connection with such Investor’s enforcement of its rights in connection with this Agreement or its investment in the Company and its Subsidiaries, (v) to another Investor, such other Investor’s Affiliates and its and their respective Representatives, in each case, in connection with monitoring, administrating or managing the Investors’ investment in the Company (provided that the recipient Investor will be solely liable, and will solely remain liable for any damages arising out of a failure by such recipient Investor, its Affiliates and their respective Representatives to keep such Confidential Information confidential in accordance with the provisions hereof unless, in the case of Affiliates or Representatives, such Affiliates or Representative has entered into a confidentiality agreement enforceable by the Company) or (vi) as may otherwise be required by applicable Law, regulation, Judgment, stock exchange rule or other applicable judicial or governmental process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process), provided, that in the case of disclosure pursuant to this clause (vi), the applicable Investor, its Affiliates and its and their respective Representatives, as the case may be, shall, to the extent legally permitted and reasonably practicable, provide notice to the Company sufficiently in advance of any such disclosure so that the Company will have a reasonable opportunity to timely seek (at its sole cost and expense) to limit, condition or quash such disclosure. The Confidentiality Agreement shall terminate simultaneously with the Closing.
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the issuance of the number of Warrant Shares then issuable upon exercise of the then-outstanding Warrants, subject to official notice of issuance, or comply with the relevant procedures required by such other primary exchange as to which the Common Stock is then admitted for trading.
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(a) All certificates or other instruments representing the Purchased Securities and any Warrant Shares will bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS, OR EXCEPT, WITH RESPECT TO ANY COMMON STOCK, WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
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immediately prior to such action, or (y) any modification, amendment, consent or waiver to the definition of “Company Material Adverse Effect” in the Acquisition Agreement), (B) waive the conditions set forth in Sections 7.1 or 7.2 of the Acquisition Agreement or (C) extend the Outside Date (as defined in the Acquisition Agreement), in each case without the prior written consent of the Hill Path Investor (which shall not be unreasonably withheld, conditioned or delayed).
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secure an exemption therefrom, required by any state or country prior to the offer and sale of the Preferred Stock, the Warrants and the Warrant Shares, and (b) cause such authorization, approval, permit or qualification to be effective as of the Closing (and as of any exercise of the Warrants if at least 15 Business Days’ prior written notice of the proposed exercise is given to the Company); provided, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction or subject itself to taxation in any jurisdiction in which it is not otherwise subject to taxation on the date of this Agreement.
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provided, however, that, in each case and subject to compliance with the terms and conditions set forth in Section 5.15(h), the Company shall not be required to offer to issue or sell to the Investor Parties (or to any of them) the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities under the listing rules of NASDAQ or any other securities exchange or any other applicable Law (provided, further, however, that (x) if the number of Proposed Securities to be issued is reduced, then such reduction will be apportioned pro rata among the Hill Path Investor Parties and the HPS Investor Parties and (y) the Company shall still be obligated to provide written notice of such proposed issuance to the Investor Parties pursuant to Section 5.15(b)(i), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof (the “Restricted Issuance Information”)).
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provided, that the Company shall not be obligated to provide such access or materials if the Company determines, in its reasonable judgment, that doing so would reasonably be expected to (A) result in the disclosure of trade secrets or competitively sensitive information to third parties who are not subject to a non-disclosure agreement with the Company, (B) violate applicable Law, an applicable order or a Contract or obligation of confidentiality owing to a third party or (C) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege (provided, however, that in each such case the Company shall use reasonable efforts to provide alternative, redacted or substitute documents or information in a manner that would not result in the loss of the ability to assert attorney-client privilege, attorney work product protection or other legal privileges).
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subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of the following condition:
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Section 7.02 and Article VIII, all of which shall survive termination of this Agreement and the Confidentiality Agreement (which shall survive in accordance with its terms)), and there shall be no liability on the part of any Investor or the Company or their respective directors, officers and Affiliates in connection with this Agreement, except that no such termination shall relieve any party from liability for damages (as determined by a court of competent jurisdiction in accordance with Delaware law) for Willful Breach or Fraud.
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exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
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0000 Xxxxxx Xxxxxx, Xxxxx 000
Denver, Colorado 80202
Attention: Chief Executive Officer and Chief Financial Officer
Email: XxxxxXxxxxxx@xxxxx.xxx
with a copy to (which shall not constitute notice):
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Portland, OR 97205
Attention: Xxxxxx X. Xxxx; Xxxx Xxxxxxxx
Email: xxxxxx.xxxx@xxxxx.xxx; xxxx.xxxxxxxx@xxxxx.xxx
HPC III Kaizen LP
000 Xxxx 00xx Xxxxxx 32nd Floor
New York, NY 10155
Attention: Xxxxx Xxxxxxxx
Email: xxxxxxxx@Xxxxxxxxxxx.xxx
with a copy to (which will not constitute notice):
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
New York, NY 10017
Attention: Xxxxxx X. Xxxxxxx;
Xxxxxxx X. Xxxxxx
Email: xxxxxx.xxxxxxx@xxxxxx.xxx;
xxxxxxx@xxxxxx.xxx
HPS Investment Partners, LLC
00 Xxxx 00xx Xxxxxx
New York, NY 10019
Attention: Xxxxxx Xxxxxx
Email: xxxxxx.xxxxxx@xxxxxxxxxxx.xxx
with a copy to (which will not constitute notice):
Milbank LLP
55 Xxxxxx Yards
New York, NY 10001-2163
Attention: Xxxx Xxxxxxx
Email: XXxxxxxx@xxxxxxx.xxx
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or such other address or email address as such party may hereafter specify by like notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
THE ONE GROUP HOSPITALITY, INC.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: President and Chief Executive Officer
[Signature Page to Investment Agreement]
HPC III KAIZEN LP
By: HILL PATH CAPITAL PARTNERS III GP LLC, its General Partner
By:/s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Authorized Signatory
[Signature Page to Investment Agreement]
HPS INVESTMENT PARTNERS, LLC
By:/s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Managing Director
[Signature Page to Investment Agreement]
Exhibit A
Acquisition Agreement
Exhibit B
Form of Certificate of Designation
Exhibit C-1
Form of Xxxxx Warrant Agreement
Exhibit C-2
Form of Market Warrant Agreement
Exhibit D
Hill Path Equity Commitment Letter
Exhibit E
Form of Registration Rights Agreement
Schedule I
Disqualified Holder
Schedule II
Purchased Security Allocation
Investor | Preferred Stock | Xxxxx Warrants* | Market Warrants |
Hill Path Investor | 150,000 shares | 5.00% of the fully diluted shares of Common Stock as of immediately prior to the Closing and after giving effect to the issuance of the Xxxxx Warrants | Warrants to purchase, in the aggregate, 1,000,000 shares of Common Stock (subject to adjustment in accordance with the terms thereof) |
HPS Investor | 10,000 shares | 0.33% of the fully diluted shares of Common Stock as of immediately prior to the Closing and after giving effect to the issuance of the Xxxxx Warrants | Warrants to purchase, in the aggregate, 66,667 shares of Common Stock (subject to adjustment in accordance with the terms thereof) |
*For this purpose, fully diluted shares of Common Stock means: (a) the number of all outstanding shares of common stock (excluding any held by the Company in treasury), plus (b) the number of all outstanding stock options (both vested and unvested), plus (c) the number of all outstanding unvested RSUs and PSUs, plus (d) the number of shares issuable under the Xxxxx Warrants. This calculation does not include, for confirmation, shares reserved but not issued and outstanding under the Company 2019 Equity Incentive Plan. For an illustration, if this calculation were completed using the outstanding shares of Common Stock (as of February 29, 2024) and outstanding stock options (both vested and unvested) and unvested RSUs and PSUs of the Company (in each case as of December 31, 2023), in each case as specified in the Company’s Form 10-K filed on March 14, 2024, then 1,762,865 and 117,524 shares of Common Stock would be issuable under the Xxxxx Warrants issued to the Hill Path Investor and HPS Investor, respectively. This calculation will be updated as of immediately prior to closing under the same methodology.
