Contract
Exhibit 2.1
EXECUTION
COPY
BY
AND AMONG
00XX XXXXXX
GENERAL ACQUISITION CORP.,
00XX XXXXXX
MERGER SUB LLC,
CRUMBS
HOLDINGS LLC,
THE
MEMBERS OF CRUMBS HOLDINGS LLC,
AND
THE
MEMBER REPRESENTATIVES
Dated
as of January 9, 2011
This
Business Combination Agreement (this “Agreement”) is made and
entered into as of January 9, 2011 by and among 00xx Xxxxxx
General Acquisition Corp., a Delaware corporation (“Parent”), 57th Street
Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary
of Parent (“Merger
Sub”), Crumbs Holdings LLC, a Delaware limited liability company (the
“Company”), the members
of the Company as set forth on the signature page hereto (each a “Member” and, collectively, the
“Members”), and the
representatives of the Company and the Members (the “Member
Representatives”). Parent, Merger Sub, the Company, the
Members and the Member Representatives are sometimes referred to herein
individually as a “Party” and collectively as the
“Parties”.
WITNESSETH:
A. The
Parties intend to effect the merger of Merger Sub with and into the Company (the
“Merger”), with the
Company continuing as the surviving entity in the Merger, and as a result of
which all issued and outstanding Old Crumbs Units (as defined herein) of the
Company will be deemed for all purposes to represent the right to receive the
Merger Consideration (as defined hereafter) upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the Delaware
Limited Liability Company Act, as amended (the “DLLCA”).
B. Each
of the individuals constituting the board of managers of the Company (the “Company Board”), the members
of the Board of Directors of Parent (the “Parent Board”) and the board
of managers of Merger Sub (the “Merger Sub Board”), respectively, have
unanimously approved this Agreement and each of them has determined that this
Agreement, the Merger and the other transactions contemplated hereby are
advisable and in the respective best interests of each of the Company, Parent
and Merger Sub, respectively, and their respective stockholders and/ or
members.
NOW,
THEREFORE, in consideration of the premises set forth above, which are
incorporated in this Agreement as if fully set forth below, and the
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE
I.
TERMS OF THE MERGER
1.1 The
Merger.
(a) Upon
the terms and subject to the conditions of this Agreement and in accordance with
the DLLCA, at the Effective Time (as hereafter defined), the Merger Sub shall be
merged with and into the Company. Upon the consummation of the
Merger, the separate existence of the Merger Sub shall thereupon cease and the
Company, as the surviving company in the Merger (hereafter sometimes referred to
as the “Surviving
Company”), shall continue its corporate existence under the laws of the
State of Delaware as a non-wholly owned subsidiary of Parent.
-1-
(b) On
the Closing Date as promptly as practicable after the Effective Time, Parent and
Merger Sub shall cause the following aggregate consideration to be paid or
issued to the Members in accordance with the terms and conditions of this
Agreement, the allocation of Merger Consideration (as defined herein) (the
“Member Allocation”) and
the flow of funds memorandum (the “Flow of Funds Memo”) attached
hereto as Exhibit
1.1(b): (A) Twenty Seven Million Dollars ($27,000,000.00) in
cash (as adjusted pursuant to this Agreement, the “Cash Consideration”), and (B)
Three Million Nine Hundred Thousand (3,900,000) newly issued Class B units of
the Surviving Company with such terms and conditions as set forth in the
Surviving Company LLC Agreement (the “New Crumbs Class B
Exchangeable Units”) and Three Hundred and
Ninety Thousand (390,000) shares of Series A voting preferred stock of Parent,
par value $0.0001 per share, with such terms and conditions as set forth in the
Certificate of Designation (as hereafter defined) (such series the “Parent Series A Voting Preferred
Stock” and such shares together with such units of New Crumbs Class B
Exchangeable Units, the “Equity Consideration” and,
collectively with the Cash Consideration, the “Closing Merger
Consideration”). The Closing Merger Consideration shall be
subject to adjustment in accordance with Section 1.3
(Working Capital Adjustment). The receipt of the Equity Consideration
is further subject to the execution of Lock Up Agreements (as defined in Section 1.6) by the
Members pursuant to Section
1.6. In addition to the Closing Merger Consideration, the
Members shall be entitled to receive, to the extent it becomes due and payable
in accordance with the terms hereof, the Contingency Consideration (as defined
hereinafter) in accordance with Section 1.4 (the
Contingency Consideration and the Closing Merger Consideration, as adjusted in
accordance with the terms of this Agreement, being referred to herein as the
“Merger
Consideration”).
(c) At
the Effective Time, all the Old Crumbs Units issued and outstanding immediately
prior to the Effective Time, by virtue of the Merger and without any action on
the part of the Members, Parent, Merger Sub or the Company, shall be cancelled
and automatically deemed for all purposes to represent the right to receive the
Merger Consideration, and each Member shall cease to have any other rights in
and to the Company with respect thereto. From and after the Effective
Time, any certificate representing Old Crumbs Units of the Company shall be
deemed for all purposes to represent the right to receive the Merger
Consideration, into which such Old Crumbs Units represented thereby were
exchanged in accordance with this Agreement without surrender or exchange of
such certificate.
(d) At
the Effective Time, all the issued and outstanding units of membership interests
of Merger Sub immediately prior to the Effective Time, by virtue of the Merger
and without any action on the part of the Members, Parent, Merger Sub or the
Company, shall be cancelled and automatically converted into a number
of newly issued Class A units of Crumbs with such terms and
conditions as set forth in the Surviving Company LLC Agreement equal to the
number of issued and outstanding shares of Common Stock (as hereafter defined)
as of immediately prior to the Effective Time (as hereafter defined), and Parent
shall cease to have any other rights in and to Merger Sub with respect
thereto.
(e) On
the Closing Date, and upon the terms and subject to the conditions of this
Agreement, Parent shall cause the Trustee (as hereafter defined) to distribute
the proceeds of the Trust Account (as hereafter defined) in accordance with
Section 3.17,
which shall include payment of the Cash Consideration to the
Members.
-2-
(f) By
virtue of the Merger, [A] the certificate of formation of the Surviving Company
as in effect immediately prior to the Effective Time, shall be amended and
restated in its entirety on terms and conditions reasonably satisfactory to the
Parties and shall be at and after the Effective Time the certificate of
formation of the Surviving Company (the “Surviving Company Certificate
of Formation”) and [B]
the limited liability company agreement of the Surviving Company as in effect
immediately prior to the Effective Time, shall be amended and restated in its
entirety on terms and conditions reflecting and consistent with the term sheet
set forth on Exhibit
1.1(e)-2 and such other terms and conditions reasonably satisfactory to
the Parties and shall be at and after the Effective Time the limited liability
agreement of the Surviving Company (the “Surviving Company LLC Agreement”).
(g) At
and after the Effective Time, except as otherwise expressly set forth herein,
the Surviving Company shall possess all properties, rights, privileges, powers
and franchises of the Company and Merger Sub and all of the claims, obligations,
liabilities, debts and duties of the Company and Merger Sub shall become the
claims, obligations, liabilities, debts and duties of the Surviving
Company.
1.2 The Closing; Effective Time;
Effect.
(a) Unless
this Agreement shall have been terminated in accordance with Section 7.1 and
subject to the satisfaction or waiver of the conditions set forth in Article VI, the
closing of the Merger (the “Closing”) shall take place by
the exchange of original or facsimile or electronic copies of this Agreement and
each ancillary agreement hereto at 10:00 a.m. (EST) no later than the third
Business Day (as defined herein) after the date that all of the closing
conditions set forth in Article VI have been
satisfied or waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) unless another time, date or place is agreed upon in writing by the
Parties hereto; provided, however, that the
Closing shall occur, subject to the satisfaction or waiver of the conditions set
forth in Article VI, no
later than May 31, 2011 (the “Drop Dead
Date”). The date on which the Closing occurs is herein
referred to as the “Closing
Date.”
(b) Subject
to the terms and conditions hereof, concurrently with the Closing and after the
satisfaction or, if permissible, waiver of the conditions set forth in Article VI, the
Parties shall as promptly as practicable cause the Merger to be consummated by
filing with the Secretary of State of the State of Delaware (the “Secretary of State”) a
certificate of merger for the Merger in accordance with the DLLCA (referred to
herein as the “Certificate of
Merger”) executed in accordance with the relevant provisions of the DLLCA
and shall make all other filings or recordings required under the DLLCA in order
to effect the Merger. The Merger shall become effective upon the
filing of the Certificate of Merger or at such other time (on or before the Drop
Dead Date) as is agreed in writing by the Parties hereto and specified in the
Certificate of Merger. The time when the Merger shall become
effective is herein referred to as the “Effective
Time.”
-3-
1.3 Working Capital
Adjustment.
(a) Estimated Closing Working
Capital. As soon as practicable after the Closing Date, but no
later than the thirtieth (30th) day after the Closing Date, Parent (or its audit
committee or accountants) shall prepare and deliver to each Member
Representative Parent’s calculation of the Adjusted Net Working Capital (the
“Estimated Adjusted Net Working
Capital”) as at the close of business on the Closing Date. For
purposes of this Section 1.3, “Adjusted Net Working Capital”
means (a) Current Assets of the Company as of the Closing Date minus
(b) Current Liabilities of Company as of the Closing Date plus (c) any payables
accrued on the Company’s balance sheet as of the Closing with respect to
construction in progress or other costs related to opening of stores or other
facilities and any cash or cash equivalents expended between January 1, 2011 and
the Closing in satisfaction of such payables, plus (d) any
liabilities accrued on the Company’s balance sheet as of the Closing Date with
respect to Tax distributions contemplated by Section 4.1 of the Old Crumbs LLC
Agreement and any cash or cash equivalents expended between January 1, 2011 and
the Closing in satisfaction of such liabilities. For purposes of this Section 1.3, “Current Assets of the Company”
means the current assets of the Company and the Company Subsidiaries calculated
in accordance with Signing GAAP. For purposes of this Section 1.3, “Current Liabilities of the
Company” means the current liabilities of the Company and the Company
Subsidiaries calculated in accordance with Signing GAAP..
(b) Objection Period; Dispute
Resolution. The Member Representatives shall have forty
five (45) days following its receipt of the Estimated Adjusted Net Working
Capital calculation (the “WC
Objection Period”) to accept or dispute its accuracy. During
the WC Objection Period, the Member Representatives and their accountant shall
be permitted to review the pertinent accounting books and records and work
papers of Parent used in the preparation of the Estimated Adjusted Net Working
Capital and Parent shall, and shall cause its independent accountants to,
cooperate and assist in the conduct of such audit and review and make available,
to the extent reasonably necessary, its personnel. Unless the Member
Representatives deliver a written objection to Parent on or prior to the
expiration of the WC Objection Period, the Estimated Adjusted Net Working
Capital shall be deemed to be the final amount of Adjusted Net Working Capital
(the “Final Adjusted Net
Working Capital”) and will become final and binding on the
Parties. If the Member Representatives do object, the written
objection shall specify the items or calculations with which they take
issue. If the Member Representatives object in accordance with the
previous sentence to the Estimated Adjusted Net Working Capital delivered in
accordance with this Section 1.3,
Parent and the Member Representatives shall, during the 30-day period following
such objection, negotiate in good faith to reach agreement on the disputed items
or amounts. If Parent and the Member Representatives resolve their
disagreements in accordance with the foregoing sentence, the Estimated Adjusted
Net Working Capital with those modifications, if any, to which Parent and the
Member Representatives shall have agreed shall be deemed to be the Final
Adjusted Net Working Capital. If, upon completion of such 30-day
period, Parent and the Member Representatives are unable to reach agreement on
all the disputed items, they shall promptly thereafter cause an independent
accounting firm reasonably acceptable to each of the Parties (the “Independent Accountant”) to
review this Agreement and the disputed items or calculations and all records
related thereto for the purpose of calculating the Final Adjusted Net Working
Capital; provided that the Independent
Accountant may consider only those items or amounts in the calculation of
Estimated Adjusted Net Working Capital as to which Parent and the Member
Representatives have disagreed and shall be limited to deciding each such
disagreement in an amount which shall be equal to or between the amounts
proposed by Parent, on the one hand, and the Member Representatives, on the
other hand, and no more and no less; provided, further, that the
Independent Accountant shall act as an expert and not as an
arbitrator. Parent and the Member Representatives shall require the
Independent Accountant to deliver to them, as promptly as practicable, a report
setting forth its calculations. Such report will be final and binding
upon the Parties hereto and shall be deemed to be the Final Adjusted Net Working
Capital. Parent, on the one hand, and the Member Representatives, on
the other hand, shall bear the costs of the Independent Accountant
proportionately in relation to the amount by which the amounts in dispute differ
from the Independent Accountant’s determination thereof.
-4-
(c) Post-Closing
Adjustment. If the Final Adjusted Net Working Capital (as
determined in accordance with this Section 1.3) is
greater than the Adjusted Net Working Capital Benchmark, the Members shall be
entitled to receive (in accordance with the Member Allocation) from Parent, in
cash and without interest thereon, an amount equal to the amount by which the
Final Adjusted Net Working Capital exceeds the Adjusted Net Working Capital
Benchmark on a dollar-for-dollar basis. If the Final Adjusted Net
Working Capital is less than the Adjusted Net Working Capital Benchmark (such
amount, the “Working Capital
Shortfall”), Parent shall be entitled to receive from each Member, in
cash and without interest thereon, an amount equal to its pro rata share
determined in accordance with the Member Allocation) of the amount by which the
Adjusted Net Working Capital Benchmark exceeds the Final Adjusted Net Working
Capital on a dollar-for-dollar basis. For purposes of this Section 1.3,
“Adjusted Net Working Capital
Benchmark” shall mean a normalized level of Adjusted Net Working Capital
of the Company and the Company Subsidiaries as of the Closing taking into
account the historical operation of the business in the ordinary course and
adjusting for Expenses paid or accrued as of the Closing as agreed upon by the
Parties acting in good faith, provided, however, in the event
Closing shall have not occurred by March 31, 2011, the Parties shall negotiate
in good faith to adjust the Adjusted Net Working Capital
Benchmark. Any payment required by this Section 1.3(c)
to be paid to the Members shall be paid by wire transfer to the account
designated by the Member Representatives and, with respect to any payment
required by this Section 1.3(c) to be
paid to Parent, shall be paid by wire transfer to the account designated by
Parent, within ten (10) days after final determination of the Final Net
Working Capital in accordance with this Section 1.3. Any
adjustments to the Cash Consideration and/ or the Equity Consideration under
this Section 1.3
shall be deemed an adjustment to the Merger Consideration.
1.4 Contingency
Consideration.
(a) Contingency Consideration to
the Members. In addition to the Merger Consideration payable
pursuant to Section 1.1(b)
above, the Members shall be entitled to up to an aggregate of Four Million Four
Hundred Thousand (4,400,000) New Crumbs Class B Exchangeable Units and Four
Hundred and Forty Thousand (440,000) shares of Parent Series A Voting Preferred
Stock (the “Contingency Consideration”) as
follows (subject to adjustment pursuant to Section
1.4(b)):
(i)
One Million Four Hundred Sixty Six Thousand and Six Hundred Sixty Six
and Seven Tenths (1,466,666.7) New Crumbs Class B Exchangeable Units and One
Hundred Forty Six Thousand and Six Hundred Sixty Six and Seven Tenths
(146,666.7) shares of Parent Series A Voting Preferred Stock in the event the
common stock of Parent, par value $.0001 per share (the “Common Stock”), has a Trading
Price at Fifteen Dollars ($15) or above for twenty (20) Trading Days (as
hereafter defined) out of thirty (30) consecutive Trading Days during the
calendar year 2011 (“First
Stock Target”); and/ or
-5-
(ii) One
Million Four Hundred Sixty Six Thousand and Six Hundred Sixty Six and
Seven Tenths (1,466,666.7) New Crumbs Class B Exchangeable Units and One Hundred
Forty Six Thousand and Six Hundred Sixty Six and Seven Tenths (146,666.7) shares
of Parent Series A Voting Preferred Stock in the event the Common Stock has a
Trading Price at Seventeen Dollars and Fifty Cents ($17.50) or above for twenty
(20) Trading Days out of thirty (30) consecutive Trading Days during either the
calendar year 2011 or 2012 (“Second Stock Target”); and/
or
(iii) One
Million Four Hundred Sixty Six Thousand and Six Hundred Sixty Six and
Six Tenths (1,466,666.6) New Crumbs Class B Exchangeable Units and One Hundred
Forty Six Thousand and Six Hundred Sixty Six and Six Tenths (146,666.6) shares
of Parent Series A Voting Preferred Stock in the event the Common Stock has a
Trading Price at Twenty Dollars ($20) or above for twenty (20) Trading Days out
of thirty (30) consecutive Trading Days during any of the calendar
years 2011, 2012 or 2013 (“Third Stock Target” and
together with the First Stock Target and the Second Stock Target, the “Stock Targets”); and/
or
(iv) to
the extent that not all of the foregoing Stock Targets have been achieved, Two
Million and Two Hundred Thousand (2,200,000) New Crumbs Class B Exchangeable
Units and Two Hundred and Twenty Thousand (220,000) shares of Parent Series A
Voting Preferred Stock in the event the Parent achieves Seventeen Million Five
Hundred Thousand Dollars ($17,500,000) in Adjusted EBITDA for the twelve (12)
months ending December 31, 2013 (“2013 EBITDA Target”); and/
or
(v) to
the extent that not all of the foregoing Stock Targets have been achieved, Two
Million and Two Hundred Thousand (2,200,000) New Crumbs Class B Exchangeable
Units and Two Hundred and Twenty Thousand (220,000) shares of Parent Series A
Voting Preferred Stock in the event the Parent achieves Twenty Five Million
Dollars ($25,000,000) in Adjusted EBITDA for the twelve (12) months ending
December 31, 2014 (“2014
EBITDA Target”); and/ or
(vi) any
remaining Contingency Consideration not otherwise achieved hereunder up to the
Maximum Contingency Consideration in the event the Parent achieves Thirty
Million Dollars ($30,000,000) in Adjusted EBITDA for the twelve (12) months
ending December 31, 2015 (“2015
EBITDA Target” and together with the 2013 EBITDA Target and the 2014
EBITDA Target, the “EBITDA
Targets”).
-6-
For the
avoidance of doubt, the Parties hereby agree, except as required to satisfy any
adjustments pursuant to Section 1.9(a) upon an Organic Dilution Event, the
Contingency Consideration earned under Section 1.4(a)(i)-(v)
shall not exceed 4,400,000 New Crumbs Class B Exchangeable Units and 440,000
shares of Parent Series A Voting Preferred Stock in the aggregate (the “Maximum Contingency
Consideration”). For purposes of this Section 1.4,
“Adjusted EBITDA” shall mean shall mean
consolidated net earnings of the Company, including net earnings attributable to
any non-controlling interest, determined in accordance with Signing GAAP (as
hereafter defined) before interest income or expense, income taxes and any gains
or losses resulting from the change in estimate relating to the Tax Receivable
Agreement, depreciation, amortization, losses or gains resulting from
adjustments to the fair value of the contingent consideration, stock-based
compensation expense, extraordinary or non-recurring expenses (including the
Expenses) and all other extraordinary non-cash items for the applicable period
and as applied on a consistent basis. “Trading Day” shall mean any
day on which the Common Stock is traded and/ or quoted on the OTCBB or, if the
OTCBB is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is
then traded. “Trading Price” shall mean on
any particular Trading Day (i) if the Common Stock is quoted on the OTCBB or
listed or quoted on another principal trading market, the closing or last
reported price of a share of Common Stock for such Trading Day on such trading
market (as reported by Bloomberg L.P. or a similar organization or agency
succeeding to its functions of reporting prices), or (ii) in the event no
trading price is established for the Common Stock for a Trading Day, the greater
of (A) the last price established for the Common Stock in the most recent
preceding Trading Day in which such Common Stock was traded or (B) the last bid
for the Common Stock in the most recent preceding Trading Day in which such
Common Stock was traded (in each case, as reported by Bloomberg L.P. or a
similar organization or agency succeeding to its functions of reporting prices).
“Signing GAAP” means
GAAP as in effect as of the date hereof.
(b) Achievement of
Targets. In the event the First Stock Target is not achieved
but the Second Stock Target is subsequently achieved, upon achievement of the
Second Stock Target, the Members shall be entitled to both the Contingency
Consideration for the First Stock Target and the Second Stock
Target. In the event both the First Stock Target and Second Stock
Target are not achieved but the Third Stock Target is subsequently achieved,
upon achievement of the Third Stock Target, the Members shall be entitled to the
Contingency Consideration for the First Stock Target, the Contingency
Consideration for the Second Stock Target and the Contingency Consideration for
the Third Stock Target. In the event the First Stock Target is
achieved, the Second Price Target is not achieved but the Third Stock Target is
subsequently achieved, upon achievement of the Third Stock Target, the Members
shall be entitled to the Contingency Consideration for the Second Stock Target
and the Contingency Consideration for the Third Stock Target. In the event the
2013 EBITDA Target is not achieved but the 2014 EBITDA Target is subsequently
achieved, the Members shall be entitled to both the Contingency Consideration
for the 0000 XXXXXX Target and the 2014 EBITDA
Target. Notwithstanding the foregoing, in the event all
or a combination of the Stock Targets set forth in Section 1.4(a) are
achieved, the Contingency Consideration issued to the Members shall not exceed
the Maximum Contingency Consideration. Upon the expiration of the
2015 EBITDA Target, to the extent the Members have not become entitled to any
portion of the Contingency Consideration pursuant to this Agreement, the New
Crumbs Class B Exchangeable Units and shares of Parent Series A Voting Preferred
Stock representing such Contingency Consideration shall be forfeit and cancelled
by the Surviving Company and the Parent, respectively.
-7-
(c) Audit. As
soon as practicable after the applicable target period for the Contingency
Consideration, as the case may be, but no later than the thirtieth (30th) day
after such target period, Parent (or its audit committee or accountants) shall
prepare and deliver to the Member Representatives a statement setting forth in
reasonable detail the Adjusted EBITDA achieved by the Surviving Company for the
applicable target period together with the calculation used to determine the
Adjusted EBITDA for the applicable period (the “EBITDA
Statement”). The Member Representatives shall have
thirty (30) days following its receipt of the EBITDA Statement (the “EBITDA Objection Period”) to
accept or dispute its accuracy. During the EBITDA Objection Period,
the Member Representatives and their accountants shall be permitted to review
the pertinent accounting books and records and work papers of the Surviving
Company used in the preparation of the EBITDA Statement and the Surviving
Company shall, and shall cause its independent accountants to, cooperate and
assist in the conduct of such audit and review and make available, to the extent
reasonably necessary, its personnel. Unless the Member
Representatives deliver a written objection to Parent on or prior to the
expiration of the EBITDA Objection Period, the Adjusted EBITDA set forth in the
EBITDA Statement shall be deemed to be the final amount of Adjusted EBITDA for
such target period (the “Final
EBITDA”) and will become final and binding on the Parties. If
any Member Representative does object, the written objection must specify the
items or calculations with which he takes issue. If a Member
Representative objects in accordance with the previous sentence to the Adjusted
EBITDA Statement delivered in accordance with this Section 1.4(c),
Parent and the objecting Member Representative shall, during the 30-day period
following such objection, negotiate in good faith to reach agreement on the
disputed items or amounts. If Parent and the objecting Member
Representative resolve their disagreements in accordance with the foregoing
sentence, the Adjusted EBITDA set forth in the EBITDA Statement with those
modifications, if any, to which Parent and the objecting Member Representative
shall have agreed shall be deemed to be the Final EBITDA for the applicable
period. If, upon completion of such 30-day period, Parent and the
Member Representatives are unable to reach agreement on all the disputed items,
they shall promptly thereafter cause the Independent Accountant to review this
Agreement and the disputed items or calculations and all records related thereto
for the purpose of preparing the EBITDA Statement; provided that the Independent
Accountant may consider only those items or amounts in the EBITDA Statement as
to which Parent and the Member Representatives have disagreed and shall be
limited to deciding each such disagreement in an amount which shall be equal to
or between the amounts proposed by Parent, on the one hand, and the Member
Representatives, on the other hand, and no more and no less; provided, further, that the
Independent Accountant shall act as an expert and not as an
arbitrator. Parent and the Member Representatives shall require the
Independent Accountant to deliver to them, as promptly as practicable, a report
setting forth its calculations. Such report will be final and binding
upon the Parties hereto and shall be deemed to be the Final
EBITDA. Parent, on the one hand, and the Member Representatives, on
the other hand, shall bear the costs of the Independent Accountant
proportionately in relation to the amount by which the amounts in dispute differ
from the Independent Accountant’s determination of the Final
EBITDA.
(d) Stock Target
Achievement. In the event any of the Stock Targets set forth
in Section
1.4(a) shall have been achieved, the Member Representatives shall
promptly notify Parent of such achievement (the “Stock Achievement
Notice”). Parent shall have ten (10) Business Days
following its receipt of such notice to accept or dispute its
accuracy. Unless Parent delivers a written objection to the Member
Representatives on or prior to the expiration of such 10 Business Day period,
the Stock Target set forth in such Stock Achievement Notice shall be deemed to
have been achieved and will become final and binding on the
Parties. If Parent does object, the written objection must specify
the price and/ or dates with which it takes issue. If Parent objects
in accordance with the previous sentence to the Stock Achievement Notice
delivered in accordance with this Section 1.4(d),
Parent and the Member Representatives shall, during the 30-day period following
such objection, negotiate in good faith to reach an agreement. If,
upon completion of such 30-day period, Parent and the Member Representatives are
unable to reach agreement, they shall promptly thereafter cause Independent
Accountant to review this Agreement and the disputed price and/ or dates for the
purpose determining whether such stock price target was achieved; provided that Independent
Accountant may consider only those items as to which Parent and the Member
Representatives have disagreed; provided, further, that the
Independent Accountant shall act as an expert and not as an
arbitrator. Parent and the Member Representatives shall require the
Independent Accountant to deliver to them, as promptly as practicable, its
determination. Such determination will be final and binding upon the
Parties hereto. The fees and expenses charged by the Independent
Accountant in its determination of whether such Stock Target was achieved shall
be borne by the Party who was unsuccessful in such
determination.
-8-
(e) Escrow. At
Closing, Parent, Merger Sub, the Company, the Member Representatives and
Continental Stock Transfer & Trust Company (the “Escrow Agent”) shall enter
into an Escrow Agreement, in the form and substance reasonably satisfactory to
the Parties (the “Escrow
Agreement”) and Merger Sub and Parent shall deposit with the Escrow Agent
pursuant to the terms of the Escrow Agreement [A] certificates for Four Million
Four Hundred Thousand (4,400,000) New Crumbs Class B Exchangeable Units and Four
Hundred and Forty Thousand (440,000) shares of Parent Series A Voting Preferred
Stock representing the aggregate Contingency Consideration payable to the
Members pursuant to this Section 1.4, and [B]
certificates for the Claim Shares (as defined below). The Escrow
Agent shall release the relevant portion of the Contingency Consideration, if
any, within 10 (ten) days after (i) the relevant determination of the Final
EBITDA for the applicable target period in accordance with Section 1.4(c),
(ii) the relevant determination of the Trading Prices for the applicable Stock
Target in accordance with Section 1.4(d),
or (iii) the occurrence of a Change of Control of Parent or the Company. To the
extent an Organic Dilution Event (as hereafter defined) occurs following the
date hereof, but prior to release of all the Contingency Consideration from
Escrow, Parent and Merger Sub shall deposit additional certificates of New
Crumbs Class B Exchangeable Units and Parent Series A Voting Shares as may be
required pursuant to Section
1.9. The Contingency Consideration, if any, will be allocated
among the Members in accordance with the Member Allocation. The
Escrow Agent shall release the relevant portion of the Claim Shares pursuant to
Section 1.6(b)
herein below.
1.5 Earnout Acceleration.
From and after the Effective Time until the earlier of (i) the time
when all Contingency Consideration has been delivered to the Members after the
achievement of any of the targets set forth Section 1.4 or (ii) the expiration
of the 2015 EBITDA Target (the “Earnout Period”), upon the
occurrence of a “Change of Control” (as defined below) of Parent or the Company,
the remaining portion of the Contingency Consideration (not to exceed the
Maximum Contingency Consideration) shall immediately vest and the Members shall
be entitled to receive their allocable portions of such Contingency
Consideration in accordance with the Member Allocation. For the
Purposes of this Agreement, “Permitted Holder” means the
Members, their Permitted Family Transferees (as defined below) and any other
holders of Series A Voting Preferred Stock. For the purposes of this
Agreement, a “Change of Control” shall have been deemed to occur with respect to
a Person upon:
-9-
(a) the
sale, lease, license, distribution, dividend or transfer, license in one or a
series of related transactions, of 50% or more of the assets of such Person and
its subsidiaries taken as a whole, to a Person other than any of the Permitted
Holders;
(b) a
merger, consolidation or other business combination of such Person (or any
subsidiary or subsidiaries that alone or together represent all or substantially
all of such Person’s consolidated business at that time) or any successor or
other entity holding all or substantially all the assets of such Person and its
Subsidiaries that results in the stockholders of such Person (or such subsidiary
or subsidiaries) or any successor or other entity holding all or substantially
all the assets of such Person and its Subsidiaries or the surviving entity
thereof, as applicable, immediately before the consummation of such transaction
or a series of related transactions holding, directly or indirectly, less than 50% of the
voting power of such Person (or such subsidiary or subsidiaries) or any
successor, other entity or surviving entity thereof, as applicable, immediately
following the consummation of such transaction or series of related
transactions;
(c) a
transaction or series of related transactions in which a majority of the board
of directors or equivalent governing body of such Person (or any successor or
other entity holding all or substantially all the assets of such Person and its
subsidiaries) immediately following or as a proximate cause of such transaction
is comprised of persons who were not members of the board of directors or
equivalent governing body of such Person (or such successor or other entity)
immediately prior to such transaction and are not designees of the Members;
or
(d) any
person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the Closing Date), (other than any combination of
the Permitted Holders or, in the case of the Company, Parent) shall obtain
beneficial ownership (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act) of the voting stock of such Person representing more than 35% of the voting
power of the capital stock of such Person entitled to vote for the election of
directors of such Person other than directly from a Permitted Holder in a
transaction here the ultimate purchaser is known to the Permitted
Holder.
1.6 .Restrictions on Transfer;
Claims and Escrow.
(a) Restrictions on
Transfer. Each Member, with respect to any Equity
Consideration that he, she or it receives pursuant to this Agreement, shall
enter into a “lock-up” agreement substantially in the form set forth in Exhibit 1.6 (the
“Lock Up Agreement”)
whereby (i) 33.33% of the Equity Consideration (or any securities exchangeable
for such Equity Consideration) shall not be transferable for six (6) months
following the Closing Date (the “6 Month Lock-Up Shares”), (ii)
33.33% of the Equity Consideration (or any securities exchangeable for such
Equity Consideration) shall not be transferable for nine (9) months following
the Closing Date, and (iii) 33.33% of the Equity Consideration (or any
securities exchangeable for such Equity Consideration) shall not be transferable
until one (1) month after the audited financial statements of Parent for fiscal
year 2011 shall have been completed (the “Audit Lock Up Shares”), in
each case on the terms and conditions set forth in the Lock Up
Agreements.
-10-
(b) Claims and
Escrow. As the sole remedy of the Parent and Parent
Indemnified Parties for the indemnification obligations of the Company and the
Members set forth in Section 5.3, if
any, one-half of the Audit Lock Up Shares (the “Claim Shares”) shall be
applied to satisfy, or be reserved with respect to, indemnification obligations
of the Members to the Parent Indemnified Parties (as hereafter defined) in
connection with claims made pursuant to Section 5.3
(collectively, the “Parent
Claims”) and such Claim Shares shall be placed in escrow pursuant to the
terms of the Escrow Agreement. The Claim Shares shall be allocated
among the Members in accordance with the Member Allocation and shall no longer
be subject to any Parent Claims after one (1) month after the audited financial
statements of Parent for fiscal year 2011 shall have been completed (the “Claim Termination Date”),
provided, however, that with
respect to any Parent Claims that remain unresolved at the time of the Claim
Termination Date and notice of which was properly and timely delivered pursuant
to this Section 1.6(b) and
Section 5.3, a
portion of the Claim Shares reasonably necessary to satisfy such Parent Claims
shall remain subject to the terms of the Lock Up Agreement and in escrow
pursuant to the terms of the Escrow Agreement until such Parent Claim shall have
been disposed pursuant to Sections 1.3 and
5.3. With
respect to any Parent Claims (and any satisfaction thereof), a pair of (i) a New
Crumbs Class B Exchangeable Unit and (ii) one-tenth of a share of Parent Series
Voting Stock (or a share of Common Stock exchangeable for a New Crumbs Class B
Exchangeable Unit underlying such Claim Shares) shall be deemed to be valued at
Ten Dollars ($10.00) per pair (or share of Common Stock) (such pair being a
“Common Stock Equivalent
Pair”), as the case may be. In lieu of having his, her, or its
Claim Shares being applied to satisfy indemnifiable Damages payable with respect
to a Parent Claim, the Members shall have the right to pay cash in an amount
equal to indemnifiable Damages payable to satisfy such Parent Claim and upon
payment of such amount, the Escrow Agent shall release to the Members in
accordance with the Member Allocation, a number of Common Stock Equivalent Pairs
equal to the amount of such indemnity payment divided by
$10.00.
1.7 Other Effects of the
Merger. The Merger shall have all further effects as specified
in the applicable provisions of the DLLCA.
1.8 Additional
Actions. If, at any time after the Effective Time, the
Surviving Company shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Company its right, title or interest in, to or under any of the rights,
properties or assets of the Company or Merger Sub, or otherwise carry out this
Agreement, the officers and managers of the Surviving Company shall be
authorized to execute and deliver, in the name and on behalf of the Company and
Merger Sub, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of the Company or Merger Sub, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Company or otherwise to carry out this
Agreement.
-11-
1.9 Organic Anti-Dilution;
Equitable Adjustment of EBITDA Targets.
(a) The
Equity Consideration, the Contingency Consideration and the Stock Targets shall
be adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Common Stock), extraordinary cash dividends,
reorganization, recapitalization, reclassification, combination, exchange of
shares or other like change with respect to the Common Stock (each, an “Organic Dilution Event”), in
the case of the Equity Consideration, occurring on or after the date hereof and
prior to the Effective Time and, in the case of the Contingency Consideration
and the Stock Targets, occurring on or after the date hereof and prior to the
time any such Contingency Consideration is delivered to the Members, if
any. Notwithstanding the foregoing, (i) the issuance, exchange,
combination or other like change of the Equity Consideration and the Contingent
Consideration (and the securities underlying the Equity Consideration and the
Contingent Consideration) as contemplated by Section 1.4 of this
Agreement shall not be deemed an Organic Dilution Event, and/ or (ii) the
issuance of Common Stock and/ or other securities of Parent pursuant to any
exercise or conversion of securities of Parent issued and outstanding as of the
date of this Agreement shall not be deemed an Organic Dilution
Event.
(b) In
the event Parent or any of its subsidiaries engages in a transaction or series
of related transactions outside the ordinary course that would reasonably be
expected to cause a material decrease in Adjusted EBITDA during the Earnout
Period, the audit committee of Parent would equitably adjust the applicable
EBITDA Targets downward in the relevant time periods.
1.10 No Right of Set
Off. Notwithstanding any other provision of this Agreement,
the Parent and the Parent Indemnified Parties shall have no right to set-off any
obligation they may have with respect to the Contingency Consideration against
any amounts they believe the Members owe them under this Agreement.
Article
II.
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND MEMBERS
The
following representations and warranties by the Company and the Members to
Parent and Merger Sub are qualified by those disclosures and exceptions set
forth in the Company disclosure schedule (the “Company Disclosure
Schedule”). The Company represents and warrants to Parent and
Merger Sub with respect to the following representations and warranties (other
than the Member Representations) and each Member represents and warrants as
follows on a several and not joint basis, only those representations
and warranties contained in Sections 2.2(b), 2.2(h), 2.2(i), 2.4(b), 2.5(b), 2.6(b), 2.12(b), 2.18(b), 2.25 and 2.28 (the “Member Representations”) of
this Article II
solely to the extent such representation is made with respect to such Member
and/ or with respect to such Member’s Old Crumbs Units), in each case as of the
date hereof and as of the Closing, as follows:
-12-
2.1 Due Organization and Good
Standing. Each of the Company and each subsidiary of the
Company listed on Section 2.1 of the
Company Disclosure Schedule (each a “Company Subsidiary” and
collectively, the “Company
Subsidiaries”) is a corporation, limited liability company or other
entity, duly incorporated, formed, or organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation, formation, or
organization and has all requisite corporate, limited liability, or other
organizational power and authority to own, lease and operate its respective
properties and to carry on its respective business as now being
conducted. Each of the Company and each Company Subsidiary is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the character of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not reasonably be expected to result in a Company Material
Adverse Effect. The Company has heretofore made available to Parent
accurate and complete copies of the Company’s certificate of formation and
limited liability company agreement, as amended to date and as currently in
effect (the “Company
Organization Documents”), and the certificate of formation or equivalent
organizational document of each of the Company Subsidiaries, each as amended to
date and as currently in effect (the “Company Subsidiary Organization
Documents”). None of the Company or any Company Subsidiary is
in violation of any Company Organization Document or Company Subsidiary
Organization Document, as the case may be.
For
purposes of this Agreement, the term “Company Material Adverse
Effect” shall mean any change or effect that, individually or in the
aggregate, has, or would reasonably be expected to have, a material adverse
effect upon the financial condition or operating results of the Company and the
Company Subsidiaries, taken as a whole, except any changes or effects directly
or indirectly attributable to, resulting from, relating to or arising out of the
following (by themselves or when aggregated with any other, changes or effects)
shall not be deemed to be, constitute, or be taken into account when determining
whether there has or may, would, or could have occurred a Company Material
Adverse Effect: (i) the effect of any change in the general
political, economic, financial, capital market or industry-wide conditions
(except to the extent that the Company is affected in a disproportionate manner
relative to other companies in the industries in which the Company and the
Company Subsidiaries conduct business), (ii) the effect of any change that
generally affects any industry or market in which the Company or any of the
Company Subsidiaries operate to the extent that it does not disproportionately
affect, individually or in aggregate, the Company and Company Subsidiaries taken
as a whole, relative to other participants in the industries in which the
Company and Company Subsidiaries operate; (iii) the effect of any change arising
in connection with any international or national calamity, commencement,
continuation or escalation of a war, armed hostilities or act of terrorism which
does not disproportionately affect the Company and Company Subsidiaries taken as
a whole, relative to other participants in the industries in which the Company
and Company Subsidiaries operate; (iv) the announcement of the execution of
this Agreement, the pendency of or the consummation of the Merger or the other
transaction contemplated hereby, including the identity of Parent or the conduct
of the Tender Offer and the Warrant Tender Offer (v) any change in
applicable Law or GAAP or interpretation thereof, (vi) the execution by the
Company and performance of or compliance by the Company with this Agreement or
the taking of any action contemplated by this Agreement, (vii) any matter
disclosed on the Company Disclosure Schedule or (viii) any failure to meet
any financial or other projections.
2.2 Title to Securities;
Capitalization.
(a) The
authorized capital of the Company consists of 652,174 Old Crumbs Units of which
(i) 300,00 are designated Old Crumbs Class A Units, (ii) 315,385 are designated
Old Crumbs Class B Units and (iii) 36,798 are designated Old Crumbs Class C
Units. As of the date hereof, there are 300,000 Old Crumbs Class A Units and
315,385 Old Crumbs Class B Units issued and outstanding and no Old Crumbs Class
C Units issued and outstanding. For the purposes of this Agreement, (i) “Old Crumbs Unit” has the
meaning ascribed to the term “Unit” in the Crumbs LLC Agreement, (ii) “Old Crumbs Class A Units” has
the meaning ascribed to the term “Class A Units” in the Crumbs LLC Agreement,
(iii) “Old Crumbs Class B
Units” has the meaning ascribed to the term “Class B Units” in the Crumbs
LLC Agreement, (iv) “Old Crumbs
Class C Units” has the meaning ascribed to the term “Class C Units” in
the Crumbs LLC Agreement, and (v) “Crumbs LLC Agreement” means
the Second Amended and Restated Limited Liability Company Agreement by and among
the Company and the Members dated as of September 30, 2008.
-13-
(b) Such
Member holds of record and owns all of the Old Crumbs Units set forth opposite
such Member’s name on Section 2.2(b)(i) of
the Company Disclosure Schedule and, except as provided in the Crumbs LLC
Agreement, such Units are held by such Member free and clear of any restrictions
on transfer, Encumbrances (other than as disclosed on Section 2.2(b)(ii) of the
Company Disclosure Schedule, any restriction under the Securities Act of
1933, as amended (the “Securities Act”), or any state
“blue sky” securities Laws), Taxes (other than Taxes the payment of which is not
yet due or is being contested in good faith), warrants, purchase rights,
contracts, assignments, commitments, equities, claims and demands. No
such Member is a party to any option, warrant, purchase right, or other contract
or commitment that could require such Member to sell, transfer, or otherwise
dispose of his, her or its Old Crumbs Units, other than this
Agreement. No such Member is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of his, her or its
Old Crumbs Units, other than this Agreement and the Crumbs LLC
Agreement . The Old Crumbs Units held by such Member
are not subject to preemptive rights, conversion price adjustment rights or
rights of first refusal created by any agreement to which such Member is a
party.
(c) Except
as disclosed on Section 2.2(c) of the
Company Disclosure Schedule, and except for the Old Crumbs Units held by
the Members, no membership or other equity or voting interest of the Company, or
options, warrants or other rights to acquire any such membership or other equity
or voting interest, of the Company is issued and outstanding. The Old
Crumbs Units are duly authorized, validly issued, fully paid and non-assessable
and were not issued in material violation of any applicable foreign, federal or
state securities Laws or the Company Organization Documents. Except
for the Old Crumbs LLC Agreement and the subscription agreements contemplated
thereby, the Company has not entered into any other agreements or commitments to
issue any membership interests and has not split, combined or reclassified the
Old Crumbs Units.
(d) Except
as otherwise described on Section 2.2(d) of the
Company Disclosure Schedule, the Company directly or indirectly owns all
of the capital stock of, or other equity interests in, the Company
Subsidiaries. There are no (i) outstanding options, warrants,
puts, calls, convertible securities, preemptive or similar rights,
(ii) bonds, debentures, notes or other Indebtedness having general voting
rights or that are convertible or exchangeable into securities having such
rights, or (iii) subscriptions or other rights, agreements, arrangements,
contracts or commitments of any character, relating to the issued or unissued
membership interests of, or other equity interests in, the Company or any of the
Company Subsidiaries or obligating the Company or any of the Company
Subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered, sold or repurchased any options or membership interests
of, or other equity interest in, the Company or any of the Company Subsidiaries
or securities convertible into or exchangeable for such shares or equity
interests, or obligating any of the Company Subsidiaries to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment for such equity interest. There
are no outstanding obligations of the Company or any Company Subsidiaries to
repurchase, redeem or otherwise acquire any membership interests, capital stock
of, or other equity interests in, the Company or any of the Company Subsidiaries
or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
-14-
(e) Except
for the Old Crumbs LLC Agreement, there are no stockholders or members
agreements, voting trusts or other agreements or understandings to which the
Company or any Company Subsidiary is a party with respect to the voting of the
Old Crumbs Units or the capital stock or equity interests of any Company
Subsidiary.
(f) Except
as disclosed on Section 2.2(f) of the
Company Disclosure Schedule, no Indebtedness of the Company or any of the
Company Subsidiaries contains any restriction upon (i) the prepayment of
any of such Indebtedness, (ii) the incurrence of Indebtedness by the
Company or any of the Company Subsidiaries, or (iii) the ability of the
Company or any of the Company Subsidiaries to grant any Encumbrance on its
properties or assets. As used in this Agreement, “Indebtedness” means (A) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than Expenses and current trade liabilities incurred in the
ordinary course of business consistent with past practice and payable in
accordance with customary practices), (B) any other indebtedness that is
evidenced by a note, bond, debenture, credit agreement or similar instrument,
(C) all obligations under leases that should be classified as capital leases in
accordance with GAAP, (D) all obligations in respect of acceptances issued or
created, (E) all indebtedness referred to in clauses (A) through (D) secured by
an Encumbrance on any property of such Person and (F) all guarantee obligations
for indebtedness of others referred to in clauses (A) through (E).
(g) From
March 7, 2008 through the date hereof, except for tax distributions contemplated
by Section 4.1 of the Old Crumbs LLC Agreement and as otherwise described on
Section 2.2(g) of
the Company Disclosure Schedule, the Company has not declared or paid any
distribution or dividend in respect of the Old Crumbs Units and has not
repurchased, redeemed or otherwise acquired any Old Crumbs Units of the Company,
and the Company Board has not authorized any of the foregoing.
(h) Such
Member is a sophisticated seller with respect to the Old Crumbs Units, has
adequate information concerning the business and financial condition of Parent
and the Parent Subsidiaries (as defined herein) and their respective assets, has
been given the information necessary to make an informed decision regarding this
Agreement and the transactions contemplated hereby and has independently made
his, her or its analysis and decision to enter into and consummate this
Agreement based upon such information the Members deem
appropriate. Notwithstanding the foregoing, no information or
knowledge obtained by such Member as described herein will affect or be deemed
to modify any representation or warranty contained herein or the conditions to
the obligations of the Parties to consummate the Merger or the other
transactions contemplated hereby.
-15-
(i)
Such Member is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act. The financial condition of such
Member is such that he, she or it is able to bear the risk of holding the Equity
Consideration and/ or Common Stock for an indefinite period of time and the risk
of loss of his, her or its entire investment. Such Members has had
the opportunity to ask questions of and receive answers from the management
of Parent and the Parent Subsidiaries concerning the investment in the
Equity Consideration and/ or Common Stock and has sufficient knowledge and
experience in investing in companies similar to Parent and the Parent
Subsidiaries in terms of their stage of development so as to be able to
evaluate the risks and merits of its investment in Parent and/ or the Parent
Subsidiaries. Such Member understands that the Equity Consideration
and Common Stock are “restricted securities” as defined in Rule 144 under the
Securities Act and have not been registered under the Securities Act and such
Member is purchasing the Equity Consideration and/ or Common Stock in accordance
with an exemption from registration under the Securities Act. Such Member is
acquiring the Equity Consideration and/ or Common Stock for investment,
for their own account, and not for resale or with a view to distribution
thereof in violation of the Securities Act, and the rules and regulations
promulgated thereunder. Such Member has not entered into an agreement
or understanding with any other Person to resell or distribute the Equity
Consideration and/ or Common Stock. Such Member acknowledges that he, she or it
will not reoffer, resell, pledge or otherwise transfer any Equity Compensation
and/ or Common Stock except pursuant to an applicable exemption under the
Securities Act or an effective registration statement, in each case in
accordance with any applicable securities laws of any state of the United States
or any other relevant jurisdiction. Such Member acknowledges that the Equity
Consideration and/ or Common Stock are not being received as a result of any
general solicitation or general advertising (as those terms are used in
Regulation D promulgated under the Securities Act), including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar media or broadcast over radio or television, or any seminar or
meeting whose attendees have been invited by general solicitation or general
advertising.
2.3 Subsidiaries.
(a) Section 2.3(a) of the
Company Disclosure Schedule sets forth a true, complete and correct list
of each of the Company Subsidiaries and their respective jurisdictions of
incorporation, formation or organization. Except as otherwise set
forth on Section 2.3(a) of the
Company Disclosure Schedule, all of the capital stock and other equity
interests of the Company Subsidiaries are owned, directly or indirectly, by the
Company free and clear of any Encumbrance (other than any restriction under the
Securities Act, or any state “blue sky” securities Laws) with respect
thereto. All of the outstanding shares of capital stock or other
equity interests in each of the Company Subsidiaries that is a corporation are
duly authorized, validly issued, fully paid and non-assessable, and with respect
to the Company Subsidiaries that are limited liability companies, are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive rights and were not issued in material violation of any applicable
foreign, federal or state securities Laws. Neither the Company nor
any Company Subsidiary owns, directly or indirectly, any shares of capital stock
or other equity or voting interests in (including any securities exercisable or
exchangeable for or convertible into capital stock or other equity or voting
interests in) any other Person other than publicly traded securities
constituting less than five percent (5%) of the outstanding equity of the
issuing entity, other than capital stock or other equity interest of the Company
Subsidiaries owned by the Company or another Company
Subsidiary.
-16-
(b) Section 2.3(b) of the
Company Disclosure Schedule lists all jurisdictions in which each of the
Company and each Company Subsidiary is qualified to conduct its respective
business.
2.4 Authorization; Binding
Agreement.
(a) The
Company has all requisite limited liability company power and authority to
execute and deliver this Agreement and each other ancillary agreement related
hereto to which it is a party, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
each other ancillary agreement related hereto to which it is a party and the
consummation of the transactions contemplated hereby and thereby (i) have
been duly and validly authorized by the Company Board and the Members, and
(ii) no other limited liability company proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
and each other ancillary agreement related hereto to which it is a party or to
consummate the transactions contemplated hereby and thereby. This
Agreement has been, and each ancillary agreement to which the Company is a party
shall be when delivered, duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery of this Agreement
and such ancillary agreements by the other Parties hereto and thereto,
constitutes, or when delivered shall constitute, the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws of general application affecting the enforcement of creditors’ rights
generally, and the fact that equitable remedies or relief (including, but not
limited to, the remedy of specific performance) are subject to the discretion of
the court from which such relief may be sought (collectively, the “Enforceability
Exceptions”).
(b) Such
Member has the legal capacity to execute and deliver this Agreement and each
ancillary agreement and to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and each ancillary agreement to
which such Member is a party shall be when delivered, duly and validly executed
and delivered by the Member and, assuming the due authorization, execution and
delivery of this Agreement by the other Parties hereto, constitute the legal,
valid and binding obligation of such Member, enforceable against such Member in
accordance with its terms, except for the Enforceability
Exceptions.
-17-
2.5 Governmental
Approvals.
(a) Except
as otherwise described in Section 2.5(a) of the
Company Disclosure Schedule, no consent, approval, waiver, authorization
or permit of, or notice to or declaration or filing with (each, a “Consent”), any nation or
government, any state or other political subdivision thereof, any entity,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
governmental or regulatory authority, agency, department, board, commission,
administration or instrumentality, any court, tribunal or arbitrator or any
self-regulatory organization (each, a “Governmental Authority”), on
the part of the Company or any of the Company Subsidiaries is required to be
obtained or made in connection with the execution, delivery or performance by
the Company of this Agreement and each other ancillary agreement related hereto
to which it is a party or the consummation by the Company of the transactions
contemplated hereby and thereby, other than (i) such filings as may be
required in any jurisdiction where the Company or any Company Subsidiary is
qualified or authorized to do business as a foreign corporation in order to
maintain such qualification or authorization, (ii) pursuant to Antitrust
Laws, (iii) such filings as contemplated by this Agreement pursuant to the
Merger, (iv) for applicable requirements, if any, of the Securities Act,
the Exchange Act of 1934, as amended (the “Exchange Act”), or any state
“blue sky” securities Laws, and the rules and regulations thereunder, and
(v) where the failure to obtain or make such Consents or to make such
filings or notifications, would not reasonably be expected to result in a
Company Material Adverse Effect or prevent consummation of the transactions
contemplated by this Agreement.
(b) No
Consent from any Governmental Authority on the part of such Member is required
to be obtained or made in connection with the execution, delivery or performance
by such Member of this Agreement or the consummation by such Member of the
transactions contemplated hereby other than (i) pursuant to Antitrust Laws,
(ii) such filings as contemplated by this Agreement pursuant to the Merger,
(iii) for applicable requirements, if any, of the Securities Act, the
Exchange Act, or any state “blue sky” securities Laws, and the rules and
regulations thereunder, and (iv) where the failure to obtain or make such
Consents or to make such filings or notifications, would not reasonably be
expected to result in a Company Material Adverse Effect or prevent consummation
of the transactions contemplated by this Agreement.
2.6 No
Violations.
(a) Except
as otherwise described in Section 2.6(a) of the
Company Disclosure Schedule, the execution and delivery by the Company of
this Agreement and each other ancillary agreement related hereto to which it is
a party, the consummation by the Company of the transactions contemplated hereby
and thereby, and compliance by the Company with any of the provisions hereof and
thereof, will not, (i) conflict with or violate any provision of any
Company Organization Document or Company Subsidiary Organization Document,
(ii) require any Consent under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, amendment or acceleration)
under, any Company Material Contract or Tenant Lease, (iii) result
(immediately or with the passage of time or otherwise) in the creation or
imposition of any Encumbrances (as hereafter defined) (other than any Permitted
Encumbrances) upon any of the properties, rights or assets of the Company or any
of the Company Subsidiaries, or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 2.5
hereof, and the waiting periods referred to therein having expired, and any
condition precedent to such consent, approval, authorization or waiver having
been satisfied, conflict with or violate any foreign, federal, state or local
Order, statute, law, rule, regulation, ordinance, principle of common law,
constitution, treaty enacted, or any writ, arbitration award, injunction,
directive, judgment, or decree, promulgated, issued, enforced or entered by any
Governmental Authority (each, a “Law” and collectively, the
“Laws”) to which the
Company or any of the Company Subsidiaries or any of their respective assets or
properties is subject, except, in the case of clauses (ii), (iii) and
(iv) above, for any deviations from any of the foregoing that would not
reasonably be expected to result in a Company Material Adverse
Effect. For purposes of this Agreement, “Encumbrance” means any
mortgage, pledge, security interest, attachment, right of first refusal, option,
proxy, voting trust, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in the nature
thereof), restrictions (whether on voting, sale, transfer, disposition or
otherwise), any subordination arrangement in favor of another Person, any filing
or agreement to file a financing statement as debtor under the Uniform
Commercial Code or any similar statute.
-18-
(b) The
execution and delivery by such Member of this Agreement, the consummation by
such Member of the transactions contemplated hereby, and compliance by such
Member with any of the provisions hereof, will not (i) result (immediately
or with the passage of time or otherwise) in the creation or imposition of any
Encumbrance (other than as set forth in Section 2.6(b) of the
Company Disclosure Schedule, any restriction under the Securities Act, or
any state “blue sky” securities Laws) on the Old Crumbs Units owned by such
Member, or (ii) conflict with, contravene or violate in any Law applicable
to such Member, except, with respect to clause (ii), for any deviations from any
of the foregoing that would not reasonably be expected to result in a Company
Material Adverse Effect.
2.7 Company Financial
Statements.
(a) As
used herein, the term “Signing
Company Financials” means the Company’s (i) audited consolidated
financial statements (including, in each case, any related notes thereto),
consisting of the Company’s consolidated balance sheets as of December 31, 2008
and December 31, 2009, and the related statements of operations, changes in
members’ equity and cash flows for the years then ended and (ii) the unaudited
consolidated financial statements, consisting of the Company’s consolidated
balance sheet as of September 30, 2010, and the related statements of
operations, changes in members’ equity and cash flows for the nine months then
ended. As used herein, the term “Closing Company Financials” means the
Company’s audited consolidated financial statements (including, in each case,
any related notes thereto), consisting of the Company’s consolidated balance
sheet , as of December 31, 2010, and the related statements of operations,
changes in members’ equity and cash flows for the years then
ended. As used herein, the term “Company Financials” means the
Signing Company Financials and the Closing Company Financials. True
and correct copies of the Signing Company Financials are attached hereto on
Section 2.7(a) of the
Company Disclosure Schedule. The Signing Company Financials
(i) in all material respects accurately reflect the Company’s books and records
as of the times and for the periods referred to therein, (ii) were
prepared in accordance with GAAP methodologies applied on a consistent basis
throughout the periods involved (except as set forth on Section 2.7(a) of the
Company Disclosure Schedule and except for the absence of footnotes and
audit adjustments in the case of unaudited Signing Company Financials),
(iii) fairly present in all material respects the consolidated financial
position of the Company as of the respective dates thereof and the consolidated
results of the Company’s operations and cash flows for the periods indicated and
(iv) to the extent required for inclusion in the filings with the
Securities Exchange Commission (“SEC”) and mailings to Parent’s
stockholders and warrantholders as it relates to the Tender Offer and the
Warrant Tender Offer, comply, in all material respects with the Securities Act,
Regulation S-X and the published general rules and regulations of the
SEC. Any Closing Company Financials delivered pursuant to the terms
of this Agreement will when delivered (i) in all material
respects accurately reflect the Company’s books and records as of the times and
for the periods referred to therein, and (ii) be prepared in accordance with
GAAP methodologies applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto and except for the absence of
footnotes and audit adjustments in the case of unaudited Closing Company
Financials), (iii) fairly present in all material respects the consolidated
financial position of the Company as of the respective dates thereof and the
consolidated results of the Company’s operations and cash flows for the periods
indicated and (iv) to the extent required for inclusion in the filings with
the SEC and mailings to Parent’s stockholders and warrantholders as it relates
to the Tender Offer and the Warrant Tender Offer, will comply as of the Closing
Date, [A] in all material respects with the Securities Act, Regulation S-X and
the published general rules and regulations of the SEC. For purposes
of this Agreement, “GAAP” means United States
generally accepted accounting principles consistently applied, as in effect from
time to time.
-19-
(b) The
Company has disclosed to Parent, the Company’s outside auditors and Company
Board any material fraud that to Company’s knowledge has arisen that involves
management or other employees who have a significant role in the Company’s
internal controls over financial reporting.
(c) None
of the Company, any Company Subsidiary, or any manager, director, officer, or to
the Company’s knowledge, any auditor or accountant of the Company or any Company
Subsidiary or any employee of the Company or any Company Subsidiary has received
any material written complaint, allegation, assertion or claim from any
Governmental Authority regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any Company Subsidiary or
their respective internal accounting controls, including any material written
complaint, allegation, assertion or claim that the Company or any Company
Subsidiary has engaged in questionable accounting or auditing
practices. No employee and no member of Company Board has received
written notice from any Governmental Authority or any Person of any material
violation of securities Laws by the Company, any Company Subsidiary or any of
their respective officers, managers, directors, employees or
agents.
2.8 Absence of Certain
Changes.
(a) From
December 30, 2008 through the date hereof, except as described in Section 2.8 of the
Company Disclosure Schedule, the Merger and the other transactions
contemplated hereby, the Company and the Company Subsidiaries have conducted
their respective businesses in the ordinary course of business consistent with
past practice and since such time, there has not occurred any action that would
constitute a breach of Section 4.1.
(b) From
March 7, 2008 through the date hereof, there has not been any fact, change,
effect, occurrence, event, development or state of circumstances that has had or
would reasonably be expected to result in a Company Material Adverse
Effect.
-20-
2.9 Absence of Undisclosed
Liabilities. Neither the Company nor any Company Subsidiary is
subject to any material liabilities or obligations of the type required to be
reflected on a balance sheet prepared in accordance with GAAP that is not
adequately reflected or reserved on or provided for in the Company Financials,
other than (i) liabilities or obligations of the type that have been incurred in
the ordinary course of business consistent with past practice, (ii) liabilities
or obligations reflected in the Company Disclosure Schedule, and (iii)
liabilities or obligation under the payment terms of Company Material Contracts
(but not including liabilities for breaches or for indemnification obligations
thereunder).
2.10 Compliance with
Laws. Except as set forth in Section 2.10 of the Company
Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries is in conflict with, or in default or violation of, nor has it
received, from March 7, 2008 through the date hereof, any written notice of any
conflict with, or default or violation of, (A) any applicable Law by which it or
any property or asset of the Company or any Company Subsidiary is bound or
affected including, without limitation, consumer protection, insurance or
securities Laws, or (B) any Company Material Contract, except, in each case, for
any deviations from any of the foregoing that would not reasonably be expected
to result in a Company Material Adverse Effect.
2.11 Regulatory Agreements;
Permits.
(a) Except
as disclosed in Section 2.11(a) of the
Company Disclosure Schedule, there are no material written agreements,
memoranda of understanding, commitment letters, or cease and desist orders, to
which the Company or any Company Subsidiary is a party, on the one hand, and any
Governmental Authority is a party or addressee, on the other hand.
(b) Except
as disclosed in Section 2.11(b) of the
Company Disclosure Schedule, each of the Company, the Company
Subsidiaries, and each employee of the Company or any Company Subsidiary who is
legally required to be licensed by a Governmental Authority in order to perform
his or her duties with respect to his or her employment with the Company or such
Company Subsidiary, hold all material permits, licenses, franchises,
grants, authorizations, consents, exceptions, variances, exemptions, orders and
other authorizations of Governmental Authorities, certificates, consents and
approvals necessary to lawfully conduct the Company’s or the Company
Subsidiaries’ respective business as presently conducted, and to own, lease and
operate the Company’s or the Company Subsidiaries’ respective assets and
properties (collectively, the “Company
Permits”). The Company shall have provided to Parent true,
correct and complete copies of all material Company Permits as of the Closing
Date. All of the Company Permits are in full force and effect,
and no suspension or cancellation of any of the Company Permits is pending or,
to the Company’s knowledge, threatened, except, in each case, where the failure
of any Company Permits to have been in full force and effect, or the suspension
or cancellation of any of the Company Permits, would not reasonably be expected
to result in a Company Material Adverse Effect. The Company and the
Company Subsidiaries are not in violation in any material respect of the terms
of any Company Permit.
(c) To
the Company’s knowledge, no investigation, review or market conduct examination
by any Governmental Authority with respect to the Company or any Company
Subsidiary is pending or threatened.
-21-
2.12 Litigation.
(a) Except
as disclosed in Section 2.12(a)(i) of
the Company Disclosure Schedule, there is no private, regulatory or
governmental inquiry, action, suit, proceeding, litigation, claim, arbitration
or investigation pending before any Governmental Authority of competent
jurisdiction (each, an “Action”), or, to the knowledge
of the Company, threatened against the Company, any of the Company Subsidiaries
or any of their respective properties, rights or assets or any of their
respective managers, officers or directors (in their capacities as such) that
would reasonably be expected to result in a Company Material Adverse
Effect. There is no decree, directive, order, writ, judgment,
stipulation, determination, decision, award, injunction, temporary restraining
order, cease and desist order or other order by, or any supervisory agreement or
memorandum of understanding with any Governmental Authority (each, an “Order”) binding against the
Company, any of the Company Subsidiaries or any of their respective properties,
rights or assets or any of their respective managers, officers or directors (in
their capacities as such) that would prohibit, prevent, enjoin, restrict or
alter or delay any of the transactions contemplated by this Agreement, or that
would reasonably be expected to result in a Company Material Adverse
Effect. The Company and the Company Subsidiaries are in material
compliance with all Orders. Except as disclosed in Section 2.12(a)(ii) of
the Company Disclosure Schedule, as of the date hereof there is no
material Action that the Company or any of the Company Subsidiaries has pending
against other parties. There is no material Action pending or, to the
knowledge of the Company, threatened against the Company involving a claim
against the Company for false advertising with respect to any of the Company’s
products or services.
(b) There
is no Action pending or, to the knowledge of the Member, threatened against such
Member that would reasonably be expected to, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated by
this Agreement. There is no Order binding against such Member or his,
her or its Old Crumbs Units that would prohibit, prevent, enjoin, restrict or
materially alter or delay any of the transactions contemplated by this
Agreement.
2.13 Restrictions on Business
Activities. There is no Order binding upon the Company or any
of the Company Subsidiaries that has or would reasonably be expected to have the
effect of prohibiting, preventing, restricting or impairing in any respect, any
business practice of the Company or any of the Company Subsidiaries as their
businesses are currently conducted, any acquisition of property by the Company
or any of the Company Subsidiaries, the conduct of business by the Company or
any of the Company Subsidiaries as currently conducted, or the ability of the
Company or any of the Company Subsidiaries from engaging in business as
currently conducted or from competing with other parties, except, in each case,
for such Orders that would not reasonably be expected to result in a Company
Material Adverse Effect.
2.14 Material
Contracts.
(a) Section 2.14(a)(i) of
the Company Disclosure Schedule sets forth a list of, and the Company has
made available to Parent, except as set forth in Section 2.14(a)(ii) of
the Company Disclosure Schedule and the Company Permits, true, correct
and complete copies of, each material written contract, agreement, commitment,
arrangement, lease, license, or plan and each other instrument (other than this
Agreement or any ancillary agreement contemplated hereby and subject to Sections 2.11 and
2.19 with
respect to the provision of Permits and Tenant Leases) in effect to which the
Company or any Company Subsidiary is a party or by which the Company, any
Company Subsidiary, or any of their respective properties or assets are bound or
affected as of the date hereof (each, a “Company Material Contract”)
that:
-22-
(i) contains
covenants that materially limit the ability of the Company or any Company
Subsidiary (or which, following the consummation of the Merger, could materially
restrict the ability of Parent or any of its affiliates) (A) to compete in any
line of business or with any Person or in any geographic area or to sell, or
provide any service or product, including any non-competition covenants,
exclusivity restrictions, rights of first refusal or most-favored pricing
clauses or (B) to purchase or acquire an interest in any other entity, except,
in each case, for any such contract that may be canceled without any penalty or
other liability to the Company or any Company Subsidiary upon notice of 60 days
or less;
(ii) involves
any joint venture, partnership, limited liability company or other similar
agreement or arrangement relating to the formation, creation, operation,
management or control of any partnership or joint venture that is material to
the business of the Company and the Company Subsidiaries, taken as a
whole;
(iii) involves
any exchange traded, over the counter or other swap, cap, floor, collar,
futures, contract, forward contract, option or other derivative financial
instrument or contract, based on any commodity, security, instrument, asset,
rate or index of any kind or nature whatsoever, whether tangible or intangible,
including currencies, interest rates, foreign currency and indices;
(iv) evidences
Indebtedness (whether incurred, assumed, guaranteed or secured by any asset)
having an outstanding principal amount in excess of $100,000;
(v) involves
the acquisition or disposition (to the extent such transaction would be
consummated after the date hereof), directly or indirectly (by merger or
otherwise), of assets with an aggregate value in excess of $100,000 (other than
in the ordinary course of business) or capital stock or other equity interests
of another Person;
(vi) by
its terms calls for aggregate payments by the Company or the Company
Subsidiaries under such contract of more than $100,000 per year (excluding the
historical Tenant Leases);
(vii) with
respect to any material acquisition of another Person, pursuant to which the
Company or any Company Subsidiary has (A) any continuing indemnification
obligations in excess of $100,000 or (B) any “earn out” or other contingent
payment obligations;
(viii) other
than in the ordinary course of business, obligates the Company or any Company
Subsidiary to provide continuing indemnification or a guarantee of obligations
of a third party after the date hereof in excess of $100,000;
(ix) is
between the Company or any Company Subsidiary and any of their respective
managers, directors or executive officers that cannot be cancelled by the
Company (or the applicable Company Subsidiary) within 60 days’ notice without
material liability, penalty or premium;
-23-
(x) other
than in the ordinary course of business, obligates the Company or any Company
Subsidiary to make any capital commitment or expenditure in excess of $100,000
(including pursuant to any joint venture) (excluding capital commitments or
expenditures relating to the Tenant Leases); or
(xi) relates
to the development, ownership, licensing or use of any Intellectual Property
material to the business of the Company or any Company Subsidiary, other than
“shrink wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for
software commercially available on reasonable terms to the public generally with
license, maintenance, support and other fees of less than $100,000 per
year (collectively, “Off-the-Shelf Software
Agreements”).
(b) Except
as disclosed on Section 2.14(b) of the
Company Disclosure Schedule, with respect to each Company Material
Contract: (i) such Company Material Contract is valid and
binding and enforceable in all respects against the Company or the Company
Subsidiary party thereto (subject to Enforceability Exceptions) and, to the
Company’s knowledge, the other party thereto, and other than such contracts that
have expired by their terms or terminated pursuant to the terms of this
Agreement, are in full force and effect; (ii) the consummation of the
transactions contemplated by this Agreement will not affect the validity or
enforceability of the Company Material Contract against Parent or such Company
Subsidiary and, to the Company’s knowledge, the other party thereto; (iii)
neither the Company nor any Company Subsidiary is in breach or default in any
respect, and no event has occurred that with the passage of time or giving of
notice or both would constitute a breach or default by the Company or any
Company Subsidiary, or permit termination or acceleration by the other party
thereto, under such Company Material Contract; (iv) to the Company’s
knowledge, no other party to such Company Material Contract is in breach or
default in any respect, and no event has occurred that with the passage of time
or giving of notice or both would constitute such a breach or default by such
other party, or permit termination or acceleration by the Company or any of the
Company Subsidiaries, under such Company Material Contract, and (v) no
other party to such Company Material Contract has notified the Company or any
Company Subsidiary in writing that it is terminating or considering terminating
the handling of its business by the Company or any Company Subsidiary or in
respect of any particular product, project or service of the Company, or is
planning to materially reduce its future business with the Company or any
Company Subsidiary in any manner except, with respect to each of clauses
(i) through (v), for any deviations from any of the foregoing or that would
not reasonably be expected to result in a Company Material Adverse
Effect.
-24-
2.15 Intellectual
Property.
(a) Section 2.15(a)(i) of
the Company Disclosure Schedule contains a list
of: (i) all registered Intellectual Property and Intellectual
Property that is the subject of a pending application for registration in each
case that is, owned by the Company or any of the Company Subsidiaries and is
material to the business of the Company as currently conducted (“Company Intellectual
Property”); and (ii) all material Intellectual Property, other than
as may be licensed pursuant to Off-the-Shelf Software Agreements, that is
licensed to the Company or any of the Company Subsidiaries and is material to
the business of the Company (“Licensed Intellectual
Property”). Except where failure to own, license or otherwise
possess such rights has not had and would not reasonably be expected to result
in a Company Material Adverse Effect, each of the Company and the Company
Subsidiaries (x) has all right, title and interest in and to the Company
Intellectual Property owned by it, free and clear of all Encumbrances, other
than rights and interest licensed to any other Person and Permitted
Encumbrances, and (y) has valid rights to use the Licensed Intellectual
Property. Except as set forth in Section 2.15(a)(ii) of
the Company Disclosure Schedule, neither the Company nor any of the
Company Subsidiaries has received any written notice alleging that it has
infringed, diluted or misappropriated, or, by conducting its business as
currently conducted, has infringed, diluted or misappropriated, the Intellectual
Property rights of any Person, and, except as set forth in Section 2.15(a)(ii) of
the Company Disclosure Schedule, to the knowledge of the
Company there is no valid basis for any such allegation. Except as
set forth in Section 2.15(a)(iii) of
the Company Disclosure Schedule, to the Company’s knowledge neither the
execution nor delivery of this Agreement nor the consummation of the
transactions contemplated hereby will materially impair or materially alter the
Company’s or any Company Subsidiary’s rights to any Company Intellectual
Property or Licensed Intellectual Property. To the Company’s
knowledge, all of the Company Intellectual Property and the license rights to
the Licensed Intellectual Property are valid, enforceable and subsisting and, as
of the date hereof, there is no material Action that is pending or, to the
Company’s knowledge, threatened that challenges the rights of the Company or any
of the Company Subsidiaries in any material respect of any Company Intellectual
Property or Licensed Intellectual Property or the validity, enforceability or
effectiveness thereof. The Company Intellectual Property and the
Licensed Intellectual Property constitute all material Intellectual Property
owned by or licensed to the Company or the Company Subsidiaries and used in or
necessary for the operation by the Company and the Company Subsidiaries of their
respective businesses as currently conducted. Neither the Company nor
any of the Company Subsidiaries is in breach or default in any material respect
(or would with the giving of notice or lapse of time or both be in such breach
or default) under any license to use any of the Licensed Intellectual
Property.
(b) For
purposes of this Agreement, “Intellectual Property” means
(i) United States, international and foreign patents and patent
applications, including divisionals, continuations, continuations-in-part,
reissues, reexaminations and extensions thereof and counterparts claiming
priority therefrom; utility models; invention disclosures; and statutory
invention registrations and certificates; (ii) United States and foreign
registered, pending and unregistered trademarks, service marks, trade dress,
logos, trade names, corporate names and other source identifiers, domain names
and registrations and applications for registration for any of the foregoing,
together with all of the goodwill associated therewith; (iii) United States
and foreign copyrights, and registrations and applications for registration
thereof; and copyrightable works, including website content; (iv) all
inventions and design rights (whether patentable or unpatentable) and all
categories of trade secrets as defined in the Uniform Trade Secrets Act,
including business, technical and financial information; and
(v) confidential and proprietary information including, without limitation,
know-how, recipes and formulas.
-25-
2.16 Employee Benefit
Plans.
(a) Section 2.16(a) of the
Company Disclosure Schedule lists, with respect to the Company and the
Company Subsidiaries, (i) all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”)),
(ii) material loans from the Company to managers, officers and directors
other than advances for expense reimbursements incurred in the ordinary course
of business, (iii) any securities option, securities stock purchase, phantom
securities, securities appreciation right, equity-related, supplemental
retirement, severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code section 125) or dependent care
(Code Section 129), life insurance or accident insurance plans, programs,
agreements or arrangements, (iv) all bonus, pension, retirement, profit
sharing, savings, deferred compensation or incentive plans, programs, policies,
agreements or arrangements, (v) other material fringe, perquisite, or
employee benefit plans, programs, policies, agreements or arrangements, and
(vi) any current or former employment, change of control, retention or
executive compensation, termination or severance plans, programs, policies,
collective bargaining, agreements or arrangements, written or otherwise, as to
which material unsatisfied liabilities or obligations, contingent or otherwise,
remain for the benefit of, or relating to, any present or former employee,
consultant, manager or director, or which could reasonably be expected to have
any material liabilities or obligations (together, the “Company Benefit
Plans”). The term Company Benefit Plans also includes all
benefit plans subject to Title IV of ERISA in connection with which any trade or business
(whether or not incorporated) that is treated as a single employer with the
Company and the Company Subsidiaries within the meaning of Section 414(b),
(c), (m) or (o) of the Code (a “Company ERISA Affiliate”) has
any liability.
(b) Other
than as would not reasonably be expected to result in a Company Material Adverse
Effect, (i) there has been no “prohibited transaction,” as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, by the
Company or by any trusts created thereunder, any trustee or administrator
thereof or any other Person, with respect to any Company Benefit Plan,
(ii) each Company Benefit Plan has been administered in material accordance
with its terms and in material compliance with the requirements prescribed by
any and all applicable Laws (including ERISA and the Code), (iii) the
Company and each Company ERISA Affiliate have performed in all material respects
all obligations required to be performed by them under, are not in any respect
in default under or violation of, and have no knowledge of any default or
violation by any other party to, any of the Company Benefit Plans that are
subject to Title IV of ERISA, (iv) all contributions and premiums required
to be made by the Company or any Company ERISA Affiliate to any Company Benefit
Plan subject to Title IV of ERISA have been made on or before their due dates,
including any legally permitted extensions. Except with respect to
claims for benefits in the ordinary course, no Action has been brought, or to
the knowledge of the Company is threatened, against or with respect to any such
Company Benefit Plan, including any audit or inquiry by the IRS, United States
Department of Labor (the “DOL”) or other Governmental
Authority (other than as would not result in a Company Material Adverse
Effect). Each Company Benefit Plan that is a “nonqualified deferred
compensation plan” within the meaning of Section 409A of the Code and any
awards thereunder, in each case that is subject to Section 409A of the
Code, has been operated in good faith compliance, in all material respects, with
Section 409A of the Code since January 1, 2005.
-26-
(c) Except
as otherwise provided in this Agreement, any ancillary agreement related hereto
or as provided by applicable Law, with respect to the Company Benefit Plans, the
consummation of the transactions contemplated by this Agreement and any
ancillary agreement related hereto to which the Company is a party, will not,
either alone or in combination with any other event or events, (i) entitle
any current or former employee, manager, director or consultant of the Company
or any of the Company Subsidiaries to any payment of severance pay, golden
parachute payments, or bonuses, (ii) accelerate, forgive indebtedness,
vest, distribute, or increase benefits or obligation to fund benefits with
respect to any employee or director of the Company or any of the Company
Subsidiaries, or (iii) accelerate the time of payment or vesting of options
to purchase securities of the Company, or increase the amount of compensation
due any such employee, director or consultant.
(d) None
of the Company Benefit Plans contains any provision requiring a gross-up
pursuant to Section 280G or 409A of the Code or similar Tax
provisions.
(e) No
Company Benefit Plan maintained by the Company or any of the Company
Subsidiaries provides material benefits, including death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any of the Company Subsidiaries after termination of employment
(other than (i) coverage mandated by applicable Laws, (ii) death
benefits or retirement benefits under any “employee pension benefit plan,” as
that term is defined in Section 3(2) of ERISA, or (iii) benefits, the
full direct cost of which is borne by the current or former employee (or
beneficiary thereof)).
(f) Neither
the Company nor any Company ERISA Affiliate has any liability with respect to
any (i) employee pension benefit plan that is subject to Part 3 of Subtitle
B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code,
(ii) ”multiemployer plan” as defined in Section 3(37) of ERISA or
(iii) ”multiple employer plan” within the meaning of Sections 4063 and
4064 of ERISA or Section 413(c) of the Code.
2.17 Taxes and
Returns.
(a) The
Company has or will have timely filed, or caused to be timely filed, all
material federal, state, local and foreign Tax returns and reports required to
be filed by it or the Company Subsidiaries (taking into account all available
extensions) (collectively, “Tax
Returns”), which Tax Returns are true, accurate, correct and complete in
all material respects, and has paid, collected or withheld, or caused to be
paid, collected or withheld, all material Taxes required to be paid, collected
or withheld, other than such Taxes for which adequate reserves in the Company
Financials have been established.
(b) Section 2.17(b) of the
Company Disclosure Schedule sets forth each jurisdiction where the
Company and each Company Subsidiary files or is required to file a Tax
Return.
(c) To
the Knowledge of the Company and as of the date hereof, neither the Company nor
any of the Company Subsidiaries is being audited by any taxing authority or has
been notified by any Tax authority that any such audit is contemplated or
pending.
-27-
(d) There
are no material claims, assessments, audits, examinations, investigations or
other proceedings pending against the Company or any of the Company Subsidiaries
in respect of any Tax, and neither the Company nor any of the Company
Subsidiaries has been notified in writing of any proposed Tax claims or
assessments against the Company or any of the Company Subsidiaries (other than,
in each case, claims or assessments for which adequate reserves in the Company
Financials have been established or are immaterial in amount).
(e)
There are no material liens with respect to any Taxes upon any of the Company’s
or the Company Subsidiaries’ assets, other than (i) Taxes, the payment of
which is not yet due, or (ii) Taxes or charges being contested in good
faith by appropriate proceedings and for which adequate reserves in the Company
Financials have been established.
(f) Neither
the Company nor any of the Company Subsidiaries has any outstanding waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. There are no outstanding requests by the Company or
any of the Company Subsidiaries for any extension of time within which to file
any Tax Return or within which to pay any Taxes shown to be due on any Tax
Return.
(g) Neither
the Company nor any of the Company Subsidiaries has made any change in
accounting method or received a ruling from, or signed an agreement with, any
taxing authority that would reasonably be expected to result in a Company
Material Adverse Effect following the Closing.
(h) Neither
the Company nor any of the Company Subsidiaries participated in, or sold,
distributed or otherwise promoted, any “reportable transaction,” as defined in
Treasury Regulation section 1.6011-4.
(g)
Neither the Company nor any Company Subsidiary has any liability or potential
liability for the Taxes of another Person (i) under any applicable Tax Law, (ii)
as a transferee or successor, or (iii) by contract, indemnity or
otherwise.
(h)
Neither the Company nor any Company Subsidiary is a party to or bound by any Tax
indemnity agreement, Tax sharing agreement or Tax allocation agreement or
similar agreement, arrangement or practice with respect to material Taxes
(including advance pricing agreement, closing agreement or other agreement
relating to Taxes with any taxing authority) that will be binding on the Company
or any Company Subsidiary with respect to any period following the Closing
Date.
(i)
The Company and each Company Subsidiary is and at all times has been a
partnership or disregarded entity for U.S. federal income tax purposes pursuant
to Treasury Regulation Section 301.7701.
(j) Neither
the Company nor any Company Subsidiary has requested or is the subject of or
bound by any private letter ruling, technical advice memorandum, closing
agreement or similar ruling, memorandum or agreement with any taxing authority
with respect to any material Taxes, nor is any such request
outstanding.
-28-
(l) The
representations and warranties contained in Section 2.17 are the only
representations and warranties being made by the Company or any of its
Subsidiaries with respect to Taxes related to the Company or any of its
Subsidiaries or this Agreement or its subject matter, and no other
representation and warranty contained in any other Section of this Agreement
shall apply to any such Tax matters and no other representation or warranty,
express or imply, is being made with respect thereto.
(m) For
purposes of this Agreement, the term “Tax” or “Taxes” shall mean any tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, imposed by any Governmental Authority (including any federal, state,
local, foreign or provincial income, gross receipts, property, sales, use, net
worth, premium, license, excise, franchise, employment, payroll, social
security, workers compensation, unemployment compensation, alternative or added
minimum, ad valorem, transfer or excise tax) together with any interest,
addition or penalty imposed thereon.
2.18 Finders and Investment
Bankers.
(a) Except
as set forth on Section 2.18 of the
Company Disclosure Schedule, the Company has not incurred, nor will it
incur, any liability for any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Company.
(b) No
Member has incurred, nor will he, she or it incur, any liability for any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Member.
2.19 Title to Properties;
Assets.
(a) Section 2.19(a)(i) of
the Company Disclosure Schedule contains a correct and complete list of
all real property and interests in real property leased or subleased by or for
the benefit of the Company or any of the Company Subsidiaries from or to any
Person (collectively, the “Company Real
Property”). The list set forth in Section 2.19(a)(i) of
the Company Disclosure Schedule contains, with respect to each of the
Company Real Properties, all existing leases, subleases, licenses, guarantees or
other occupancy contracts to which the Company or any of the Company
Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries is bound, and all assignments, amendments, modifications,
extensions and supplements thereto (collectively, the “Tenant Leases”), the terms of
which have been complied with by the Company and any Company Subsidiary in all
material respects, except as set forth in Section 2.6(a) of the
Company Disclosure Schedule. The Company Real Property set
forth in Section 2.19(a)(i) of
the Company Disclosure Schedule comprises all of the real property
necessary and/ or currently used in the operations of the business of the
Company and the Company Subsidiaries. The Company does not own any
real property. Except as set forth on Section 2.19(a)(ii) of
the Company Disclosure Schedule, the Company or a Company Subsidiary has
good and valid title to, a valid leasehold interest in, or valid license to use,
all of the material personal property, assets and rights used by them in the
operation of their respective businesses, free and clear of all Encumbrances
other than Permitted Encumbrances.
-29-
(b) Except
as set forth in Section 2.19(b)(i) of
the Company Disclosure Schedule, a true, correct, complete and full
execution copy of each Tenant Lease set forth in Section 2.19(a)(i) of
the Company Disclosure Schedule has been provided to Parent prior to the
Closing Date. Except as set forth in Section 2.19(b) (ii) of
the Company Disclosure Schedule, as of the date hereof the Company or the
Company Subsidiary’s interests in each of the Tenant Leases (other than the
Stockholder Leases) are free and clear of all Encumbrances, other than Permitted
Encumbrances, and each of the Tenant Leases is in full force and effect and, as
of the Effective Time, the Company or the Company Subsidiary’s interests in each
of the Tenant Leases (including the Restructured Leases assigned to the Company
pursuant to Section
5.14) are free and clear of all Encumbrances, other than Permitted
Encumbrances, and each of the Tenant Leases is in full force and
effect. Except as set forth in Section 2.20(b)(ii) of the
Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries nor, to the knowledge of the Company, any other party to any Tenant
Lease is in breach of or in default under (with or without notice or lapse of
time or both), in any material respect, any of the Tenant Leases. The
Company and the Company Subsidiaries enjoy peaceful and undisturbed possession
under all such Tenant Leases and have not received notice of any material
default, delinquency or breach on the part of the Company or any Company
Subsidiary. For purposes of this Agreement, the term “Permitted Encumbrances” means
(i) Encumbrances for water and sewer charges, Taxes or assessments and
similar governmental charges or levies, which either are [A] not delinquent
or [B] being contested in good faith and by appropriate proceedings, and
adequate reserves have been established on the Company’s or any Company
Subsidiary’s books with respect thereto, (ii) other Encumbrances imposed by
operation of Law (including mechanics’, couriers’, workers’, repairers’,
materialmen’s, warehousemen’s, landlord’s and other similar Encumbrances)
arising in the ordinary course of business for amounts which are not due and
payable and as would not in the aggregate materially adversely affect the value
of, or materially adversely interfere with the use of, the property subject
thereto, (iii) Encumbrances incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance or other types of social security, (iv) Encumbrances on goods in
transit incurred pursuant to documentary letters of credit, in each case arising
in the ordinary course of business, (v) title of a lessor under a capital
or operating lease and the terms and conditions of a lease creating any
leasehold interest, (vi) Encumbrances arising under this Agreement or any
ancillary agreement hereto or created by or through Parent or any Parent
Subsidiary, and (vii) such other imperfections in title as are not, in the
aggregate, reasonably likely to have a Company Material Adverse
Effect.
2.20 Employee
Matters.
(a) There
are no material Actions pending or, to the knowledge of the Company, threatened
involving the Company or any Company Subsidiary and any of their respective
employees or former employees (with respect to their status as an employee or
former employee, as applicable) including any harassment, discrimination,
retaliatory act or similar claim. To the Company’s knowledge, since
March 7, 2008, there has been: (i) no labor union organizing or attempting
to organize any employee of the Company or any of the Company Subsidiaries into
one or more collective bargaining units with respect to their employment with
the Company or any of the Company Subsidiaries; and (ii) no labor dispute,
strike, work slowdown, work stoppage or lock out or other collective labor
action by or with respect to any employees of the Company or any of the Company
Subsidiaries pending with respect to their employment with the Company or any of
the Company Subsidiaries or threatened against the Company or any of the Company
Subsidiaries. Neither the Company nor any of the Company Subsidiaries
is a party to, or bound by, any collective bargaining agreement or other
agreement with any labor organization applicable to the employees of the Company
or any of the Company Subsidiaries and no such agreement is currently being
negotiated.
-30-
(b) Except
as set forth on Section 2.20(b) of the
Company Disclosure Schedule, the Company and the Company Subsidiaries
(i) are in compliance in all material respects with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, health and safety and wages and hours, including Laws relating to
discrimination, disability, labor relations, hours of work, payment of wages and
overtime wages, pay equity, immigration, workers compensation, working
conditions, employee scheduling, occupational safety and health, family and
medical leave, and employee terminations, and have not received written notice,
or any other form of notice, that there is any Action involving unfair labor
practices against the Company or any of the Company Subsidiaries pending,
(ii) are not liable for any material arrears of wages or any material
penalty for failure to comply with any of the foregoing, and (iii) are not
liable for any material payment to any trust to any Governmental Authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for employees, independent contractors or consultants (other than
routine payments to be made in the ordinary course of business and consistent
with past practice). Except as would not result in any material
liability to the Company or any Company Subsidiary, there are no Actions pending
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary brought by or on behalf of any applicant for employment, any
current or former employee, any Person alleging to be a current or former
employee, or any Governmental Authority, relating to any such Law or regulation,
or alleging breach of any express or implied contract of employment, wrongful
termination of employment, or alleging any other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
2.21 Environmental
Matters.
(a) Neither
the Company nor any of the Company Subsidiaries is the subject of any federal,
state, local or foreign Order, judgment or written claim, and neither the
Company nor any of the Company Subsidiaries has received any written notice or
claim, or entered into any negotiations or agreements with any Person, in each
case that would impose a material liability or obligation under any
Environmental Law;
(b) The
Company and the Company Subsidiaries are in material compliance with all
applicable Environmental Laws;
(c) Neither
the Company nor any of the Company Subsidiaries has manufactured, treated,
stored, disposed of, arranged for or permitted the disposal of, generated,
handled or released any Hazardous Substance, or owned or operated any property
or facility, in a manner that has given or would reasonably be expected to give
rise to any material liability under applicable Environmental Laws;
and
(d) Each
of the Company and the Company Subsidiaries holds and is in material compliance
with all Company Permits required to conduct its business and operations under
all applicable Environmental Laws.
-31-
“Environmental Laws” means any
Law relating to (a) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource), or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as in
effect at the date hereof.
“Hazardous Substance” means any
substance listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous or as a pollutant or contaminant under any
Environmental Law. Hazardous Substances include any substance to
which exposure is regulated by any Governmental Authority or any Environmental
Law, including (a) petroleum or any derivative or byproduct thereof, toxic
mold, asbestos or asbestos containing material or polychlorinated biphenyls and
(b) all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National and Hazardous Substances Contingency Plan, 40
C.F.R. Section 300.5.
2.22 Transactions with
Affiliates. Except as set forth in Section 2.22 of the
Company Disclosure Schedule, other than (i) for payment of salary
and benefits for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company or any Company Subsidiary, (iii) for
other employee benefits made generally available to all employees,
(iv) with respect to any Person’s ownership of membership interests,
capital stock or other securities of the Company or any Company Subsidiary or
such Person’s employment with the Company or any Company Subsidiary, (v) as set
forth in Section 2.22 of the Company Disclosure Schedule, (vi) any Company
Material Contract or (vi) as stated in the Company Financials, there are no
contracts or arrangements that are in existence as of the date of this Agreement
under which there are any material existing or future liabilities or obligations
between the Company or any of the Company Subsidiaries, on the one hand, and, on
the other hand, any (y) present manager, officer or director of either the
Company or any of the Company Subsidiaries or (z) record or beneficial
owner of more than 5% of the outstanding Old Crumbs Units as of the date hereof
(each, an “Affiliate
Transaction”).
2.23 Insurance. Section 2.23 of the
Company Disclosure Schedule sets forth a correct and complete list of all
material insurance policies issued in favor of the Company or any Company
Subsidiary, or pursuant to which the Company or any Company Subsidiary is a
named insured or otherwise a beneficiary. With respect to each such
insurance policy, (i) the policy is in full force and effect and all
premiums due thereon have been paid and (ii) neither the Company nor any
Company Subsidiary is in any material respect, in breach of or default under,
and neither the Company nor any Company Subsidiary has taken any action or
failed to take any action which, with notice or the lapse of time or both, would
constitute such a breach or default, or permit termination or modification of,
any such policy.
2.24 Books and
Records. All of the financial books and records of the Company
and the Company Subsidiaries are complete and accurate in all material respects
and have been maintained in the ordinary course consistent with past practice
and in accordance with applicable Laws.
-32-
2.25 Information
Supplied. None of the information supplied or to be supplied
by the Company or such Member with respect to such Member expressly for
inclusion or incorporation by reference in the filings with the SEC or the
mailings to Parent’s stockholders and warrant holders as it relates to the
Tender Offer and Warrant Tender Offer will, at the date of filing or mailing, or
any amendment thereto, as the case may be, 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 (subject to the
qualifications and limitations set forth in the materials provided by the
Company and/ or Members or that is included in the SEC filings or
mailings). None of the information supplied or to be supplied by the
Company or such Member with respect to such Member expressly for inclusion or
incorporation by reference in any of the Signing Filing, the Signing Press
Release, the Closing Filing and the Closing Press Release (each such capitalized
term, as hereafter defined) (collectively, the “Ancillary Public Disclosures”) will, at
the time 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 (subject to the qualifications and limitations set
forth in the materials provided by the Company and/ or Members or that is
included in the Ancillary Public Disclosures). Notwithstanding
the foregoing, the Company and the Members make no representation, warranty or
covenant with respect to any information supplied by Parent or any Parent
Subsidiary.
2.26 Accounts
Receivable. All accounts, notes and other receivables, whether
or not accrued, and whether or not billed, of the Company and/ or the Company
Subsidiaries, in accordance with GAAP (the “Accounts Receivable”) arose in
the ordinary course of business and represent bona fide revenues of the Company
and/ or the Company Subsidiaries arising from their respective
businesses. To the Company’s knowledge, none of the Accounts
Receivable are subject to any right of recourse, defense, deduction, return of
goods, counterclaim, offset, or set off on the part of the obligor in excess of
any amounts reserved therefore on the Company Financial Statements.
2.27 Inventory. The
inventory of the Company and the Company Subsidiaries (a) is of good
quality, (b) is usable and saleable in the ordinary course for the purposes
for which it was intended and merchantable and fit for the purpose for which it
was procured or manufactured (except for allowance for obsolete or excess
inventory consistent with past practice or as otherwise reflected in the Company
Financial Statements), (c) meets applicable manufacturing specifications,
requirements of applicable Law, and the Company and the Company Subsidiaries
customers’ policies on shelf life and “sell by dates”in all material respects,
and (d) is not spoiled, damaged or contaminated (except for allowance for
obsolete or excess inventory consistent with past practice or as otherwise
reflected in the Company Financial Statements).
2.28 No Additional
Representations. The Company and each Member acknowledge that neither
Parent, Merger Sub or their respective officers, managers, directors, members or
stockholders, nor any Person has made any representation or warranty, express or
implied, of any kind, including without limitation any representation or
warranty as to the accuracy or completeness of any information regarding Parent
or Merger Sub furnished or made available to the Company or the Members and any
of their representatives, in each case except as expressly set forth in Article
III. Without limiting the foregoing, Parent and Merger Sub
make no representation or warranty to the Company and/ or the Members with
respect to any projections, forecasts or other estimates, plans or budgets of
future revenues, future expenses or future expenditures, future results of
operations (or any component thereof), future cash flows (or any component
thereof) or future financial condition (or any component thereof) of Parent or
the future business, future operations or future affairs of Parent heretofore or
hereafter delivered to or made available to the Company and/ or the Members or
their respective representatives or affiliates.
-33-
ARTICLE
III.
REPRESENTATIONS AND
WARRANTIES OF PARENT
The
following representations and warranties by Parent to the Company and the
Members are qualified by those disclosures and exceptions set forth in the
Parent disclosure schedule (the “Parent Disclosure
Schedule”). Parent hereby represents and warrants to the
Company and the Members as of the date hereof and as of the Closing as
follows:
3.1 Due Organization and Good
Standing. Each of Merger Sub and any subsidiary of Merger Sub
or Parent (collectively, the “Parent Subsidiaries”) and
Parent is a corporation or limited liability company duly incorporated or
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate or limited liability company power and authority to own, lease and
operate its respective properties and to carry on its respective business as now
being conducted. Each of Parent and the Parent Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
where the nature of its business or its ownership or leasing of its properties
or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed and
in good standing would not reasonably be expected to result in a Parent Material
Adverse Effect. Parent has heretofore made available to Company
accurate and complete copies of Parent’s certificate of incorporation and
bylaws, each as amended to date and as currently in effect (the “Parent Organization
Documents”) and the equivalent organizational documents of each Parent
Subsidiary including, without limitation, the Merger Sub certificate of
formation and the Merger Sub limited liability company agreement (collectively,
the “Parent Subsidiary Organization
Documents”), each as amended to date and as currently in
effect. Neither Parent nor any Parent Subsidiary is in violation of
any provision of the Parent Organization Documents or Parent Subsidiary
Organization Documents, as the case may be.
-34-
3.2 Capitalization.
(a) The
authorized capital stock of Parent consists of 100,000,000 shares of Common
Stock and 1,000,000 shares of preferred stock, par value $.0001 per share, of
which 6,062,556 shares of Common Stock are issued and outstanding as of the
date hereof and, as of the Effective Time, 6,062,556 shares of Common Stock
(less any
shares of Common Stock accepted by the Parent in the Tender Offer) shall be
issued and outstanding and no shares of preferred stock are issued and
outstanding. Except as set forth in Section 3.2(c)
below, no shares of capital stock or other voting securities of Parent are
issued, reserved for issuance or outstanding. There are 5,456,300 IPO
Shares (as defined in the Parent Organization Documents) and 606,256 shares of
Common Stock held of record by the Parent Founder. All
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any purchase
option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the Delaware General Corporations Law
(“DGCL”), the Parent
Organization Documents or any contract to which Parent is a party or by which
Parent is bound. Except as set forth in the Parent Organization
Documents, the Prospectus and the Parent SEC Reports, there are no outstanding
contractual obligations of Parent or Merger Sub to repurchase, redeem or
otherwise acquire any shares of Common Stock or any capital equity of Merger
Sub. There are no outstanding contractual obligations of Parent to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, Merger Sub or any other Person.
(b) An
aggregate of 6,062,556 units of membership interests of the Merger Sub are
issued and outstanding, all of which are owned by Parent free and clear of any
restrictions on transfer, Encumbrances (other than any restriction under the
Securities Act, or any state “blue sky” securities Laws), Taxes (other than
Taxes the payment of which is not yet due or is being contested in good faith),
warrants and, except as contemplated by this Agreement, purchase rights,
contracts, assignments, commitments, equities, claims and
demands. Except as set forth above, no shares of capital equity or
other voting securities of Merger Sub are issued, reserved for issuance or
outstanding. All outstanding Units are duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any applicable foreign, federal or state securities Laws, any purchase
option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the DLLCA, Merger Sub’s Subsidiary
Organization Documents or any contract to which Merger Sub is a party or
bound.
(c) Except
for warrants issued to 00xx Xxxxxx
GAC Holdings LLC (the “Parent
Founder”) and Xxxxxx Xxxxxx LLC (as underwriter of the IPO) (the “Underwriter”) to purchase
3,700,000 shares of Common Stock (the “Sponsor Warrants”), warrants
issued to Parent’s public stockholders to purchase 5,456,300 shares of Common
Stock (the “Stockholder
Warrants” and, together with the Sponsor Warrants, the “57th Street Warrants”), there are
no (i) outstanding options, warrants, puts, calls, convertible securities,
preemptive or similar rights, (ii) bonds, debentures, notes or other
Indebtedness having general voting rights or that are convertible or
exchangeable into securities having such rights, or (iii) except as
contemplated by this Agreement, subscriptions or other rights, agreements,
arrangements, contracts or commitments of any character, relating to the issued
or unissued capital equity of Parent or Merger Sub or obligating Parent or
Merger Sub to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered, sold or repurchased any options, their respective
capital stock or securities convertible into or exchangeable for such shares or
interests, or obligating Parent or Merger Sub to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement, arrangement
or commitment for such capital equity. All shares of Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non assessable.
-35-
(d) The
shares of (i) Parent Series A Voting Preferred Stock and (ii) New Crumbs Class B
Exchangeable Units to be issued pursuant to the Merger in accordance with this
Agreement will be duly authorized, validly issued, fully paid and non
assessable, not subject to or issued in violation of any purchase option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL or the DLLCA, the Parent Organization Documents
or Parent Subsidiaries Organization Documents or any contract to which Parent or
Merger Sub is a party or by which Parent or Merger Sub is bound and not subject
to preemptive rights created by statute, the Parent Organization Documents or
Merger Sub Organization Documents or any agreement to which the Parent or Merger
Sub is a party or is bound.
(e) Upon
delivery of the (i) Parent Series A Voting Preferred Stock and (ii) New Class B
Exchangeable Units pursuant to this Agreement, the Members will have good title
to such stock free and clear of any restrictions on transfer, Encumbrances
(other than any restriction under the Securities Act, or any state “blue sky”
securities Laws), warrants, purchase rights, contracts, assignments,
commitments, equities, claims and demands; other than the Lock Up
Agreements.
(f) There
are no registration rights (except as set forth in the Parent SEC Reports and
the Prospectus), and there is no voting trust, proxy, rights plan, anti-takeover
plan or other contracts or understandings to which Parent is a party or by which
Parent is bound with respect to any of its capital stock. As a result of the
consummation of the Merger, no shares of capital stock, warrants, options or
other securities of Parent are issuable and no rights in connection with any
shares, warrants, rights, options or other securities of Parent accelerate or
otherwise become triggered (whether as to vesting, exercisability,
convertibility or otherwise).
3.3 Parent
Subsidiaries.
(a) All
Units of Merger Sub are owned by Parent, free and clear of all
Encumbrances.
(b) Except
for 100% ownership of Merger Sub, Parent does not as of the date hereof own,
directly or indirectly, any capital stock, membership interest, partnership
interest, joint venture interest or other equity interest or other investment in
any Person. Merger Sub does not as of the date hereof own, directly
or indirectly, any capital stock, membership interest, partnership interest,
joint venture interest or other equity interest or other investment in any
Person.
(c) Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. Since the date of their
respective incorporation or organization, the Parent Subsidiaries have not
carried on any business or conducted any operations other than the execution of
this Agreement, and the performance of their respective obligations
hereunder.
-36-
3.4 Authorization; Binding
Agreement. Parent and each Parent Subsidiary have all
requisite corporate power and authority to execute and deliver this Agreement
and each other ancillary agreement related hereto to which it is a party, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each other ancillary agreement
related hereto to which it is a party and the consummation of the transactions
contemplated hereby and thereby, (i) have been duly and validly authorized
by the Parent Board, the Merger Sub Board and Parent (as the sole member of
Merger Sub) and (ii) no other corporate proceedings on the part of Parent
or any Parent Subsidiary are necessary to authorize the execution and delivery
of this Agreement and each other ancillary agreement related hereto to which it
is a party or to consummate the Merger, and the other transactions contemplated
hereby and thereby. This Agreement has been, and each ancillary
agreement to which Parent and each Parent Subsidiary are a party shall be when
delivered, duly and validly executed and delivered by each of Parent and the
Parent Subsidiaries and assuming the due authorization, execution and delivery
of this Agreement and any such ancillary agreements by the Company and the
Members party thereto constitutes, or when delivered shall constitute, the
legal, valid and binding obligation of each of Parent and the Parent
Subsidiaries party thereto, enforceable against each of Parent and the Parent
Subsidiaries party thereto in accordance with its terms, subject to the
Enforceability Exceptions. Unless Parent has opted out of Section 203
of the DGCL or Section 203 of the DGCL otherwise does not apply to Parent (and
in which case the following representation or warranty is not being made by
Parent), the Parent Board has approved this Agreement and ancillary agreements
related hereto and the transactions contemplated hereby and thereby for purposes
of Section 203 of the DGCL. To the knowledge of Parent, no other
state takeover statute is applicable to Parent as it relates to the Merger or
other transactions contemplated by this Agreement or the ancillary agreements
related thereto.
3.5 Governmental
Approvals. No Consent of or with any Governmental Authority on
the part of Parent or any Parent Subsidiary is required to be obtained or made
in connection with the execution, delivery or performance by Parent or any
Parent Subsidiary of this Agreement or any ancillary agreement related hereto or
the consummation by Parent or any Parent Subsidiary of the transactions
contemplated hereby or thereby other than (i) such filings as contemplated
by this Agreement and pursuant to the Merger, (ii) for applicable
requirements of the Securities Act and Exchange Act or any state “blue sky”
securities Laws, and the rules and regulations thereunder, (iii) pursuant
to Antitrust Laws, and (iv) where the failure to obtain or make such Consents or
to make such filings or notifications would not reasonably be expected to result
in a Parent Material Adverse Effect or prevent the consummation of the
transactions contemplated by this Agreement.
For
purposes of this Agreement, the term “Parent Material Adverse
Effect” shall mean any change or effect that, individually or in the
aggregate, has, or would reasonably be expected to have, a material adverse
effect upon the financial condition or operating results of Parent and the
Parent Subsidiaries, taken as a whole, except any changes or effects directly or
indirectly attributable to, resulting from, relating to or arising out of the
following (by themselves or when aggregated with any other, changes or effects)
shall not be deemed to be, constitute, or be taken into account when determining
whether there has or may, would, or could have occurred a Parent Material
Adverse Effect: (i) the effect of any change in the general
political, economic, financial, capital market or industry-wide conditions
(except to the extent that Parent is affected in a disproportionate manner
relative to other companies in the industries in which Parent and the Parent
Subsidiaries conduct business), (ii) the effect of any change that generally
affects any industry or market in which Parent or any of the Parent Subsidiaries
operate to the extent that it does not disproportionately affect, individually
or in aggregate, Parent and Parent Subsidiaries taken as a whole, relative to
other participants in the industries in which Parent and Parent Subsidiaries
operate; (iii) the effect of any change arising in connection with any
international or national calamity, commencement, continuation or escalation of
a war, armed hostilities or act of terrorism which does not disproportionately
affect Parent and Parent Subsidiaries taken as a whole, relative to other
participants in the industries in which Parent and Parent Subsidiaries operate;
(iv) the announcement of the execution of this Agreement, the pendency of
or the consummation of the Merger or the other transaction contemplated hereby,
(v) any change in applicable Law or GAAP or interpretation thereof,
(vi) the execution by Parent and performance of or compliance by Parent
with this Agreement or the taking of any action contemplated by this Agreement,
(vii) any matter disclosed on the Parent Disclosure Schedule or (viii) any
failure to meet any financial or other projections.
-37-
3.6 No
Violations. The execution and delivery by Parent and the
Parent Subsidiaries of this Agreement and each other ancillary agreement related
hereto and the consummation by Parent and the Parent Subsidiaries of the
transactions contemplated hereby and thereby and compliance by Parent and the
Parent Subsidiaries with any of the provisions hereof or thereof will not
(i) conflict with or violate any provision of the Parent Organization
Documents or the Parent Subsidiary Organization Documents, (ii) require any
Consent under or result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any Parent Material
Contract, (iii) result (immediately or with the passage of time or
otherwise) in the creation or imposition of any Encumbrance (except for
Permitted Encumbrances) upon any of the properties, rights or assets of Parent
or the Parent Subsidiaries or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 3.5
hereof, and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization or waiver has been
satisfied, conflict with, contravene or violate in any respect any Law to which
Parent, the Parent Subsidiaries or any of their respective assets or properties
is subject, except, in the case of clauses (ii), (iii) and (iv) above,
for any deviations from the foregoing that would not reasonably be expected to
result in a Parent Material Adverse Effect.
-38-
3.7 SEC Filings and Parent
Financial Statements.
(a) Parent
has filed all forms, reports, schedules, statements and other documents,
including any exhibits thereto, required to be filed or furnished by Parent with
the SEC since Parent’s formation under the Exchange Act or the Securities Act,
together with any amendments, restatements or supplements thereto, and will file
all such forms, reports, schedules, statements and other documents required to
be filed subsequent to the date of this Agreement (the “Additional Parent SEC
Reports”). Section 3.7 of the
Parent Disclosure Schedule lists and Parent has delivered to the Company
copies in the form filed with the SEC of all of the following, except to the
extent available in full without redaction on the SEC’s website through XXXXX
for at least two (2) days prior to the date of this
Agreement: (i) Parent’s Annual Reports on Form 10-K for each
fiscal year of Parent beginning with the first year Parent was required to file
such a form, (ii) Parent’s Quarterly Reports on Form 10-Q for each fiscal
quarter that Parent was required to file a Quarterly Report on Form 10-Q in each
of the fiscal years of Parent referred to in clause (i) above,
(iii) all proxy statements relating to Parent’s meetings of stockholders
(whether annual or special) held, and all information statements relating to
stockholder consents, since the beginning of the first fiscal year referred to
in clause (i) above, (iv) its Current Reports on Form 8-K filed since
the beginning of the first fiscal year referred to in clause (i) above,
(v) all other forms, reports, registration statements and other documents
(other than preliminary materials if the corresponding definitive materials have
been provided to the Company pursuant to this Section 3.7)
filed by Parent with the SEC since Parent’s formation (the forms, reports,
registration statements and other documents referred to in clauses (i), (ii),
(iii), (iv) and (v) above, whether or not available through XXXXX,
are, collectively, the “Parent
SEC Reports”) and (vi) all certifications and statements required by
(x) Rule 13a-14 or 15d-14 under the Exchange Act, or (y) 18 U. S. C.
§1350 (Section 906) of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”) with
respect to any report referred to in clause (i) or (ii) above
(collectively, the “Certifications”). The
Parent SEC Reports were, and the Additional Parent SEC Reports will be, prepared
in all material respects in accordance with the requirements of the Securities
Act, the Exchange Act, and the Xxxxxxxx-Xxxxx Act, as the case may be, and the
rules and regulations thereunder. The Parent SEC Reports did not, and
the Additional Parent SEC Reports will not, at the time they were or are filed,
as the case may be, with the SEC (except to the extent that information
contained in any Parent SEC Report or Additional Parent SEC Report has been or
is revised or superseded by a later filed Parent SEC Report or Additional Parent
SEC Report, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The Certifications are each true and
correct. Parent and the Parent Subsidiaries maintain disclosure
controls and procedures required by Rule 13a-15(e) or 15d-15(e) under the
Exchange Act; such controls and procedures are effective to ensure that all
material information concerning Parent and the Parent Subsidiaries is made known
on a timely basis to the individuals responsible for the preparation of Parent’s
filings with the SEC and other public disclosure documents. Except as
set forth in Section 3.7 of the
Parent Disclosure Schedule, each director and executive officer of Parent
has filed with the SEC on a timely basis all statements required by
Section 16(a) of the Exchange Act and the rules and regulations thereunder
since the date of Parent’s formation. As used in this Section 3.7, the
term “file” shall be broadly construed to include any manner in which a document
or information is furnished, supplied or otherwise made available to the
SEC.
(b) The
financial statements and notes contained or incorporated by reference in the
Parent SEC Reports or to be incorporated by reference in the Additional Parent
SEC Reports (“Parent
Financials”) fairly present, or will fairly present at the time of
filing, as the case may be, the financial condition and the results of
operations, changes in stockholders’ equity, and cash flow of Parent and the
Parent Subsidiaries as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with (i) GAAP and
(ii) Regulation S-X or Regulation S-K, as applicable, subject, in the case
of interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the omission of notes to the extent permitted by Regulation S-X or
Regulation S-K, as applicable. Parent has designed and maintains a
system of internal controls over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act, sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP. No financial statements other than those of Parent and the
Parent Subsidiaries are required by GAAP to be included in the consolidated
financial statements of Parent. Section 3.7 of the
Parent Disclosure Schedule contains a description of all non-audit
services performed by Parent’s auditors for Parent and the Parent Subsidiaries
since the date of Parent’s formation and the fees paid for such services;
further, all such non-audit services were approved by the audit committee of the
Parent Board. Parent has no off-balance sheet
arrangements.
-39-
(c) Neither
Parent nor any Parent Subsidiary, or any manager, director, officer or employee
of Parent or any Parent Subsidiary, or to the knowledge of Parent, any auditor
or accountant of Parent or the Parent Subsidiaries has received any
written complaint, allegation, assertion or claim regarding the accounting or
auditing practices, procedures, methodologies or methods of Parent or any Parent
Subsidiary or their respective internal accounting controls, including any
complaint, allegation, assertion or claim that Parent or any Parent Subsidiary
has engaged in questionable accounting or auditing practices. No
employee and no member of the Parent Board nor any attorney representing Parent
or any Parent Subsidiary, whether or not employed by Parent or any Parent
Subsidiary, has received written notice from any Governmental Authority or any
Person of any violation of consumer protection, insurance or securities Laws,
breach of fiduciary duty or similar violation by Parent or any of its officers,
directors, employees or agents or reported written evidence of any such
violation to the Parent Board or any committee thereof or to any director or
executive officer of Parent.
(d) The
Parent Subsidiaries have never been subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
(e) Parent
does not now conduct and has never conducted any business or operations and has
not engaged in any other material transaction other than valuation and pursuit
of transactions such as the Merger.
3.8 Absence of Undisclosed
Liabilities. Except as and to the extent reflected or reserved
against in the Parent Financials and/ or set forth in the Parent SEC Reports
(excluding any risk factor disclosures and any disclosure included in any
“forward looking statements” disclaimer, forward looking statements or other
statements that are predictive, forward looking, non-specific or primarily
cautionary in nature), neither the Parent nor any Parent Subsidiary has incurred
any liabilities or obligations of any kind, other than liabilities that have
been incurred in the ordinary course of business (taking into account Parent is
a special purpose acquisition company and the Expenses of Parent).
3.9 Information
Supplied. None of the information supplied or to be supplied
by Parent or any Parent Subsidiary expressly for inclusion or incorporation by
reference in the filings with the SEC and mailings to Parent’s stockholders and
warrant holders with respect to the Tender Offer and Warrant Tender Offer will,
at the date of filing and/ or mailing, as the case may be, 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 (subject to the
qualifications and limitations set forth in the materials provided by Parent
and/ or any Parent Subsidiary or that is included in the SEC filings or
mailings). None of the information supplied or to be supplied
by Parent in writing expressly for inclusion or incorporation by reference in
any of the Ancillary Public Disclosures will, at the time 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
(subject to the qualifications and limitations set forth in the materials
provided by Parent and/ or any Parent Subsidiary or that is included in
Ancillary Public Disclosures). Notwithstanding the foregoing, Parent
and each Parent Subsidiary make no representation, warranty or covenant with
respect to any information supplied by the Company or the
Members.
-40-
3.10 Absence of Certain
Changes.
(a) From
the date of formation of Parent through the date hereof, except as set forth in
Section 3.10 of
the Parent Disclosure Schedule and the Parent SEC Reports (excluding any
risk factor disclosures and any disclosure included in any “forward looking
statements” disclaimer, forward looking statements or other statements that are
predictive, forward looking, non-specific or primarily cautionary in nature) and
excluding the Merger, Parent and the Parent Subsidiaries have conducted their
respective businesses in the ordinary course of business consistent with past
practice and, since such time, there has not occurred any action that would
constitute a breach of Section 4.1.
(b) From
the date of formation of Parent, except as set forth in the Parent SEC Reports
(excluding any risk factor disclosures and any disclosure included in any
“forward looking statements” disclaimer, forward looking statements or other
statements that are predictive, forward looking, non-specific or primarily
cautionary in nature), there has not been any fact, change, effect, occurrence,
event, development or state of circumstances that has had or would reasonably be
expected to result in a Parent Material Adverse Effect.
3.11 Taxes and
Returns.
(a) Parent
has or will have timely filed, or caused to be timely filed, all material
federal, state, local and foreign Tax Returns and reports required to be filed
by it (taking into account all available extensions), which Tax Returns are
true, accurate, correct and complete in all material respects, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
Taxes required to be paid, collected or withheld, other than such Taxes for
which adequate reserves in the Parent Financials have been
established.
(b) Section 3.11(b) of the
Parent Disclosure Schedule sets forth each jurisdiction where Parent
files or is required to file a Tax Return.
(c) To
the knowledge of Parent and as of the date hereof, Parent is not being audited
by any Tax authority nor has it been notified by any Tax authority that any such
audit is contemplated or pending.
(d) There
are no material claims, assessments, audits, examinations, investigations or
other proceedings pending against Parent in respect of any Tax, and Parent has
not been notified in writing of any proposed Tax claims or assessments against
Parent (other than, in each case, claims or assessments for which adequate
reserves in the Parent Financials have been established or are immaterial in
amount).
(e) There
are no material liens with respect to any Taxes upon any of Parent’s assets,
other than (i) Taxes, the payment of which is not yet due, or (ii) Taxes or
charges being contested in good faith by appropriate proceedings and for which
adequate reserves in the Parent Financials have been established.
-41-
(f) Parent
does not have any outstanding waivers or extensions of any applicable statute of
limitations to assess any material amount of Taxes. There are no
outstanding requests by the Parent for any extension of time within which to
file any Tax Return or within which to pay any Taxes shown to be due on any Tax
Return.
(g) Parent
has not made any change in accounting method or received a ruling from, or
signed an agreement with, any taxing authority that would reasonably be expected
to result in a Parent Material Adverse Effect following the
Closing.
(h) Parent
has not participated in, or sold, distributed or otherwise promoted, any
“reportable transaction,” as defined in Treasury Regulation section
1.6011-4.
(i) Parent
has no liability or potential liability for the Taxes of another Person (i)
under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by
contract, indemnity or otherwise.
(j) Parent
is not a party to or bound by any Tax indemnity agreement, Tax sharing agreement
or Tax allocation agreement or similar agreement, arrangement or practice with
respect to material Taxes (including advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority) that
will be binding on Parent with respect to any period following the Closing
Date.
(k) Merger
Sub is and at all times has been a disregarded entity for U.S. federal income
tax purposes pursuant to Treasury Regulation Section 301.7701.
(l) Parent
has not requested, nor is it the subject of or bound by any private letter
ruling, technical advice memorandum, closing agreement or similar ruling,
memorandum or agreement with any taxing authority with respect to any material
Taxes, nor is any such request outstanding.
(m) The
representations and warranties contained in Section 3.11 are the
only representations and warranties being made by the Parent with respect to
Taxes related to Parent or this Agreement or its subject matter, and no other
representation and warranty contained in any other Section of this Agreement
shall apply to any such Tax matters and no other representation or warranty,
express or imply, is being made with respect thereto
3.12 Employee Benefit
Plans. None of Parent or Parent Subsidiary, or any trade or
business (whether or not incorporated) that is treated as a single employer with
the Parent or Parent Subsidiary, within the meaning of Section 414(b), (c),
(m) or (o) of the Code (a “Parent ERISA Affiliate”) maintains or
has any liability in connection with any (i) employee benefit plan (as
defined in Section 3(3) of ERISA), (ii) loan to managers, officers or
directors other than advances for expense reimbursements incurred in the
ordinary course of business; (iii) securities option, securities stock
purchase, phantom securities, securities appreciation right, equity-related,
supplemental retirement, severance, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident insurance
plans, programs, agreements or arrangements, (iv) bonus, pension,
retirement, profit sharing, savings, deferred compensation or incentive plans,
programs, policies, agreements or arrangements, (v) other material fringe,
perquisite, or employee benefit plans, programs, policies, agreements or
arrangements or (vi) current or former employment, consulting, change of
control, retention or executive compensation, termination or severance plans,
programs, policies, agreements or arrangements, written or otherwise, as to
which material unsatisfied liabilities or obligations (contingent or otherwise)
remain for the benefit of, or relating to, any present or former employee,
consultant, manager or director (together, the “Parent Benefit
Plans”). The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in
any payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director or employee of Parent or Parent
Subsidiary, (ii) accelerate, forgive indebtedness, vest, distribute, or
increase benefits or obligation to fund benefits with respect to any employee or
director of Parent or Parent Subsidiary, or (iii) result in the
acceleration of the time of payment or vesting of any such
benefits. None of Parent, Parent Subsidiary or any Parent ERISA
Affiliate has any liability with respect to any (i) employee pension
benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code, (ii) ”multiemployer plan” as
defined in Section 3(37) of ERISA or (iii) ”multiple employer plan”
within the meaning of Sections 4063 and 4064 of ERISA or
Section 413(c) of the Code.
-42-
3.13 Employee
Matters. Neither Parent nor any Parent Subsidiary has ever had
any current or former paid employees. Neither Parent nor any Parent
Subsidiary has any unsatisfied liability with respect to any current or former
unpaid employee.
3.14 Material
Contracts.
(a) Except
as set forth in the Parent SEC Reports filed prior to the date hereof, or on
Section 3.14(a)-1
of the Parent Disclosure Schedule, there are no written
contracts, agreements, leases, mortgages, indentures, notes, bonds, liens,
license, permit, franchise, purchase orders, sales orders or other
understandings, commitments or obligations (including without limitation
outstanding offers or proposals) of any kind to which Parent or any Parent
Subsidiary is a party or by or to which any of the properties or assets of
Parent or any Parent Subsidiary may be bound, subject or affected, which either
(i) creates or imposes a liability greater than $100,000, or (ii) may
not be cancelled by Parent on less than 60 days’ or less prior notice without
penalty (the “Parent Material
Contracts”). True and complete copies of all Parent Material
Contracts have been made available to the Company, and are set forth in Section 3.14(a)-2 of
the Parent Disclosure Schedule.
(b) With
respect to each Parent Material Contract: (i) the Parent Material Contract
is valid, binding and enforceable in all respects against Parent (or any Parent
Subsidiary Party thereto) and, to Parent’s knowledge, the other party thereto
and is in full force and effect (except as such enforcement may be limited by
the Enforceability Exceptions or other than such contracts that have expired by
their terms); (ii) neither Parent nor any Parent Subsidiary is in breach or
default in any material respect, and no event has occurred that with the passage
of time or giving of notice or both would constitute such a breach or default by
Parent or any Parent Subsidiary, or permit termination or acceleration by the
other party, under the Parent Material Contract; (iii) the consummation of the
transactions contemplated by the Agreement will not affect the terms, validity
or enforceability of the Parent Material Contract against Parent, the Surviving
Corporation or any Parent Subsidiary and, to Parent’s knowledge, the other party
thereto; and (iv) to the Parent’s knowledge, no other party to the Parent
Material Contract is in breach or default in any respect, and no event has
occurred that with the passage of time or giving of notice or both would
constitute such a breach or default by such other party, or permit termination
or acceleration by Parent or any Parent Subsidiary, under any Parent Material
Contract except, with respect to each of clauses (i) through (v), for any
deviations from any of the foregoing or that would not reasonably be expected to
result in a Parent Material Adverse Effect.
-43-
3.15 Litigation. There
is no Action pending, or, to the knowledge of Parent, threatened against Parent,
any Parent Subsidiary, any of their respective subsidiaries or any of their
respective properties, rights or assets or, any of their respective officers,
directors, partners, managers or members (in their capacities as such) that
would reasonably be expected to result in a Parent Material Adverse
Effect. There is no Order binding against Parent, any Parent
Subsidiary, any of their respective subsidiaries or any of their respective
properties, rights or assets or any of their respective officers, directors,
partners, managers or members (in their capacities as such) that would prohibit,
prevent, enjoin, restrict or alter or delay any of the transactions contemplated
by this Agreement, or that would reasonably be expected to result in a Parent
Material Adverse Effect. There is no material Action that Parent or
any Parent Subsidiary has pending against other
parties.
3.16 Transactions with
Affiliates. Other than as set forth in the Parent SEC Reports,
there are no (a) contracts or arrangements that are in existence as of the date
of this Agreement under which there are any existing or future liabilities or
obligations between Parent or any Parent Subsidiary, on the one hand, and on the
other hand, any (i) director, officer, employee or affiliate of either
Parent or any Parent Subsidiary, or (ii) record or beneficial owner of more
than five percent (5%) of the outstanding Common Stock as of the date hereof and
(b) there are no contracts, agreements or transactions between Parent or any
Parent Subsidiary and any other Person of a type that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act and the
Exchange Act and no loans by Parent to any of its employees, officers or
directors, or any of its affiliates.
3.17 Trust
Fund.
(a) As
of the date of this Agreement (and immediately prior to the Effective Time),
Parent has (and will have immediately prior to the Effective Time) at least
$54,476,303 (the “Minimum Trust
Amount”) in the trust fund established by Parent for the benefit of its
public stockholders (the “Trust
Fund”) in a trust account at XX Xxxxxx Xxxxx Bank, N.A. (the “Trust Account”), such monies
invested in United States Government securities or money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act
of 1940, as amended (the “Investment Company Act”), and
held in trust by Continental Stock Transfer & Trust Co., Inc. (the “Trustee”) pursuant to the
Investment Management Trust Agreement, dated as of May 19, 2010, between Parent
and Trustee (the “Trust
Agreement”). Immediately following consummation of the Merger
and notice thereof to the Trustee pursuant to the Trust Agreement, Parent shall
cause the Trustee to, and the Trustee shall thereupon be obligated to, release
as promptly as practicable, the Cash Consideration to the Members in accordance
with this Agreement; provided, however that the
liabilities and obligations of Parent and each Parent Subsidiary due and owing
or incurred at or prior to the Effective Time shall be paid as and when due,
including all amounts payable (i) to stockholders of Parent holding shares
of Common Stock sold in Parent’s initial public offering (“IPO”) who shall have tendered
their shares of Common Stock pursuant to Parent’s certificate of incorporation,
(ii) to the Underwriter as to approximately $600,193 representing deferred
underwriting commissions and discounts payable upon consummation of the Merger
(the “Deferred Underwriting
Amount”), (iii) with respect to filings, applications and/ or other
actions taken pursuant to this Agreement required under any Antitrust Laws, (iv)
to third parties (e.g., professionals, advisors, printers, etc.) who have
rendered services to Parent and/ or any Parent Subsidiary or, in accordance with
Section 7.3,
the Company or any Member in connection with efforts to effect the Merger; provided, further, that, after
payment of all the aforementioned liabilities and obligations from the Minimum
Trust Amount as described herein, the remaining monies in the Trust Fund shall,
as a result of the Merger, become an asset of Parent at and after the Effective
Time. Set forth on Section 3.17 of the Parent
Disclosure Schedule is Parent’s good faith estimate of the amounts
described in items (ii) through (iv) above as of the Effective
Time.
-44-
(b) As
of the Effective Time and upon the filing of the amendment to Parent’s
certificate of incorporation, those obligations of Parent to dissolve or
liquidate within a specified time period as contained in Parent’s certificate of
incorporation will be terminated and Parent shall no obligation whatsoever to
dissolve and liquidate the assets of Parent by reason of the consummation of the
Merger, and no Parent stockholder shall be entitled to receive any amount from
the Trust Account except, with respect to the Trust Account only, to the extent
such stockholder tenders his, her or its shares of Common Stock pursuant to
Parent’s certificate of incorporation.
3.18 Investment Company
Act. Parent is not an “investment company” or a person
directly or indirectly “controlled” by or acting on behalf of an “investment
company”, in each case within the meaning of the Investment Company
Act.
3.19 Finders and Investment
Bankers. Except as set forth in Section 3.19 of the Parent
Disclosure Schedule, Parent has not incurred, nor will it incur, any
liability for any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of Parent or any Parent Subsidiary.
3.20 Title to Properties.
Parent and the Parent Subsdiaries have good and valid title to, a valid
leasehold interest in, or valid license to use, all of the material personal
property, assets and rights used by them in the operation of their respective
businesses, free and clear of all Encumbrances other than Permitted
Encumbrances. Neither Parent nor any Parent Subsidiary has ever
owned, leased, subleased or had any other interest in any real
property.
3.21 Indebtedness. Except
as set forth in Section 3.21 of the Parent
Disclosure Schedule and/ or the Parent SEC Reports, none of Parent or any
Parent Subsidiary has any Indebtedness.
3.22 Listing. The
Common Stock is quoted for trading on the OTCBB. Except as set forth
in Section 3.22 of the
Parent Disclosure Schedule, there is no action or proceeding pending or,
to Parent’s knowledge, threatened against Parent by the OTCBB with respect to
any intention by such entity to prohibit or terminate the quotation of the
Common Stock on the OTCBB.
-45-
3.23 Board Approval; Tender
Offer. The Parent Board (including any required committee or
subgroup of the Parent Board) has, as of the date of this Agreement, unanimously
(i) declared the advisability of the Merger and approved this Agreement and
the transactions contemplated hereby, (ii) determined that the Merger is in
the best interests of the stockholders of Parent, and (iii) determined that
the Merger constitutes a “Business Transaction” as such term is defined in the
Parent’s certificate of incorporation, as amended. Assuming no more than
eighty-eight percent (88%) of the “IPO Shares” as defined in the Parent’s
certificate of incorporation, as amended, elect to redeem their Common Stock in
the Tender Offer in accordance with Section 5.6(a), no
other action on the part of Parent’s stockholders is required to consummate the
Merger and upon consummation of the Merger, Article Sixth of Parent’s
certificate of incorporation, as amended, shall no longer be
applicable.
3.24 Insurance. Section 3.24 of the
Parent Disclosure Schedule sets forth a correct and complete list of all
material insurance policies issued in favor of Parent or any Parent Subsidiary,
or pursuant to which the Parent or any Parent Subsidiary is a named insured or
otherwise a beneficiary. With respect to each such insurance policy,
(i) the policy is in full force and effect and all premiums due thereon
have been paid and (ii) neither Parent nor any Parent Subsidiary is in any
material respect, in breach of or default under, and neither Parent nor any
Parent Subsidiary has taken any action or failed to take any action which, with
notice or the lapse of time or both, would constitute such a breach or default,
or permit termination or modification of, any such
policy.
3.25 Environmental
Matters. Except for such matters that are not reasonably
likely to result in a Parent Material Adverse Effect: (i) Parent
and each Parent Subsidiary has complied with all applicable Environmental Laws;
(ii) Parent and each Parent Subsidiary is not subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(iii) None of Parent or any Parent Subsidiary has manufactured, treated,
stored, disposed of, arranged for or permitted the disposal of, generated,
handled or released any Hazardous Substance; and (iv) None of Parent or any
Parent Subsidiary is subject to any Orders of any Governmental Authority or
subject to any indemnity or other agreement with any third Person relating to
liability under any Environmental Law or relating to Hazardous
Substances.
3.26 Intellectual
Property. Except for their respective corporate names, none of
Parent or any Parent Subsidiary owns, licenses or otherwise has any right, title
or interest in any Intellectual Property whether or not
registered.
3.27 Regulatory Agreements;
Permits.
(a) There
are no written agreements, memoranda of understanding, commitment letters, or
cease and desist orders, to which Parent or any Parent Subsidiary is a party, on
the one hand, and any Governmental Authority is a party or addressee, on the
other hand.
-46-
(b) Except
as disclosed in Section 3.27(b) of the
Parent Disclosure Schedule, Parent and the Parent Subsidiaries hold all
permits, licenses, franchises, grants, authorizations, consents, exceptions,
variances, exemptions, orders and other authorizations of Governmental
Authorities, certificates, consents and approvals necessary to lawfully conduct
their businesses as presently conducted, and to own, lease and operate their
assets and properties (collectively, the “Parent Permits”) all of which
have been made available to Company and all of which are in full force and
effect, and no suspension or cancellation of any of the Parent Permits is
pending or, to the knowledge of Parent, threatened, except where the failure of
any Parent Permits to have been in full force and effect, or the suspension or
cancellation of any of the Parent Permits, would not reasonably be expected to
result in a Parent Material Adverse Effect. Parent and the Parent
Subsidiaries are not in violation in any material respect of the terms of any
Parent Permit.
(c) To
Parent’s knowledge, no investigation, review or market conduct examination by
any Governmental Authority with respect to Parent or any Parent Subsidiary is
pending or threatened.
3.28 No Additional
Representations.
(a) Parent
and Merger Sub acknowledge that neither the Company, the Members or their
respective officers, managers, directors, members or stockholders, nor any
Person has made any representation or warranty, express or implied, of any kind,
including without limitation any representation or warranty as to the accuracy
or completeness of any information regarding the Company or the Members
furnished or made available to Parent or Merger Sub and any of their
representatives, in each case except as expressly set forth in Article II. Without
limiting the foregoing, the Company and Members make no representation or
warranty to Parent or Merger Sub with respect to any projections, forecasts or
other estimates, plans or budgets of future revenues, future expenses or future
expenditures, future results of operations (or any component thereof), future
cash flows (or any component thereof) or future financial condition (or any
component thereof) of the Company or the future business, future operations or
future affairs of the Company heretofore or hereafter delivered to or made
available to Parent or Merger Sub or its respective representatives or
affiliates.
-47-
ARTICLE
IV.
COVENANTS
4.1 Conduct of Business of the
Company and of Parent and Parent Subsidiaries.
(a) Unless
the other Parties hereto shall otherwise consent in writing (such consent not to
be unreasonably withheld, conditioned or delayed), during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement in accordance with Section 7.1 or
the Closing (the “Executory
Period”), except as expressly contemplated by this Agreement or as set
forth on Section 4.1 of the
Company Disclosure Schedule with respect to the Company or Company
Subsidiaries or Section 4.1 of the
Parent Disclosure Schedule with respect to the Parent or Parent
Subsidiaries, respectively, (i) the Company, the Company Subsidiaries,
Parent, and the Parent Subsidiaries shall use commercially reasonable efforts to
conduct their respective business, in all material respects in the ordinary
course of business consistent with past practice and (ii) the Company and
Parent shall use its respective commercially reasonable efforts consistent with
the foregoing to preserve intact, in all material respects, its business
organization, to keep available the services of its respective, and with respect
to the Company, the Company Subsidiaries’ respective, and with respect to
Parent, the Parent Subsidiaries’ respective, managers, directors, officers,
employees and consultants, to maintain, in all material respects, existing
relationships with all Persons with whom it, and with respect to the Company,
the Company Subsidiaries, and with respect to Parent, the Parent Subsidiaries,
do significant business, and to preserve the possession, control and condition
of its respective, and with respect to the Company, the Company Subsidiaries’
respective, and with respect to Parent, the Parent Subsidiaries’ respective,
assets, all as consistent with past practice.
(b) Without
limiting the generality of the foregoing clause (a), during the Executory
Period, none of the Company, any of the Company Subsidiaries, Parent, or any
Parent Subsidiary will (except as contemplated by the terms of this Agreement or
as set forth on Section 4.1 of the
Company Disclosure Schedule (or except as such action is in the ordinary
course of business consistent with past practice in all material respects or
necessary or incidental for the Company to pursue the business objectives set
forth in the business plan attached hereto as Exhibit 4.1)) with
respect to the Company or Company Subsidiaries or Section 4.1 of the
Parent Disclosure Schedule with respect to the Parent or Parent
Subsidiaries, respectively), without the prior written consent of the other
Parties (such consent not to be unreasonably withheld, conditioned or
delayed):
(i) amend,
waive or otherwise change, in any respect, any of its respective Charter
Documents;
(ii)
authorize for issuance, issue, grant, sell, pledge, dispose of
or propose to issue, grant, sell, pledge or dispose of any of its capital stock
(and with respect to the Company, any Membership Interests), or any options,
warrants, commitments, subscriptions or rights of any kind to acquire or sell
any of its capital stock (and with respect to the Company, any Membership
Interests), or other securities or equity interests, including any securities
convertible into or exchangeable for any of its capital stock (and with respect
to the Company, any Membership Interests) or equity interest of any class and
any other equity-based awards, or engage in any hedging transaction with a third
Person with respect to such capital stock (and with respect to the Company, any
Membership Interests) or other securities or equity interests;
(iii) split,
combine, recapitalize or reclassify any of its equity interests or issue any
other securities in respect thereof or, except for any tax distributions
contemplated by Section 4.1 of the Old Crumbs LLC Agreement declare, pay or set
aside any distribution or other dividend (whether in cash, equity or property or
any combination thereof) in respect of its equity interests, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any of its
capital equity or other securities or equity interests;
(iv) incur,
create, assume, prepay or otherwise become liable for any Indebtedness
(directly, contingently or otherwise), in the case of the Company not to exceed
$100,000 individually or $250,000 in the aggregate, make a loan or advance to or
investment in any third party, or guarantee or endorse any indebtedness,
liability or obligation of any Person (other than a Company
Subsidiary);
-48-
(v) increase
the wages, salaries or compensation of any of its employees by more than five
percent (5%), or increase bonuses for the foregoing individuals in excess of
five percent (5%), or make commitments to advance with respect to bonuses for
fiscal year 2011 or 2012, or materially increase other benefits of any of the
foregoing individuals, or enter into, establish, materially amend or terminate
any Company Benefit Plan with, for or in respect of any current consultant,
officer, manager director or employee, in each case other than as required by
applicable Law, pursuant to the terms of any Company Benefit Plans or in the
ordinary course of business consistent with past practice;
(vi) make
or rescind any material election relating to Taxes, settle any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, file any amended Tax Return or claim for refund, or make any
material change in its accounting or Tax policies or procedures, in each case
except as required by applicable Law or in compliance with GAAP;
(vii) transfer
or license to any Person or otherwise extend, materially amend or modify, permit
to lapse or fail to preserve any of the Company Intellectual Property or
Licensed Intellectual Property, other than nonexclusive licenses in the ordinary
course of business consistent with past practice, or disclose to any Person who
has not entered into a confidentiality agreement any trade secrets;
(viii) terminate
or waive or assign any material right under any Company Material Contract or any
Tenant Lease or enter into any contract (A) involving amounts potentially
exceeding $250,000 per year or (B) that would be a Company Material Contract or
(C) with a term longer than one year that cannot be terminated without payment
of a material penalty and upon notice of 60 days or less;
(ix) fail
to maintain its books, accounts and records in all material respects in the
ordinary course of business consistent with past practice;
(x) establish
any subsidiary, except in the case of the Companies and the Company Subsidiaries
as necessary to open new stores consistent with past practice, or enter into any
new line of business except, in the case of Company and the Company
Subsidiaries;
(xi) fail
to use commercially reasonable efforts to keep in force insurance policies or
replacement or revised policies providing insurance coverage with respect to the
assets, operations and activities of the Company and the Company Subsidiaries in
an amount and scope of coverage as are currently in effect;
(xii) revalue
any of its material assets or make any change in accounting methods, principles
or practices, except in compliance with GAAP and approved by the Company’s
outside auditors;
-49-
(xiii) waive,
release, assign, settle or compromise any claim, action or proceeding (including
any suit, action, claim, proceeding or investigation relating to this Agreement
or the transactions contemplated hereby), other than waivers, releases,
assignments, settlements or compromises that involve only the payment of
monetary damages (and not the imposition of equitable relief on, or the
admission of wrongdoing by, the Company or any of the Company Subsidiaries) not
in excess of $100,000 individually or $250,000 in the aggregate, or otherwise
pay, discharge or satisfy any claims, liabilities or obligations, unless such
amount has been reserved in the Company Financials;
(xiv) close
or materially reduce the Company’s or any Company Subsidiary’s activities, or
effect any layoff or other Company-initiated personnel reduction or change, at
any of the Company’s or any Company Subsidiary’s facilities other than in the
ordinary course of business;
(xv) acquire,
including by merger, consolidation, acquisition of stock or assets, or any other
form of business combination, any corporation, partnership, limited liability
company, other business organization or any division thereof, or any material
amount of assets outside the ordinary course of business;
(xvi) make
capital expenditures in excess of $100,000 individually and $250,000 in the
aggregate;
(xvii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(xviii) voluntarily
incur any liability or obligation (whether absolute, accrued, contingent or
otherwise) in excess of $100,000 individually or $500,000 in the aggregate
outside the ordinary course of business other than pursuant to the terms of a
Material Contract, Tenant Lease, or Company Benefit Plan;
(xix) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or
encumber (including securitizations), or otherwise dispose of any material
portion of its properties, assets or rights other than the sale of inventory in
the ordinary course of business;
(xx) enter
into any agreement, understanding or arrangement with respect to the voting of
the Old Crumbs Units or the capital equity of any Company
Subsidiary;
(xxi) take
any action that would reasonably be expected to delay or impair the obtaining of
any consents or approvals of any Governmental Authority to be obtained in
connection with this Agreement;
(xxii) enter
into, amend, waive or terminate (other than terminations in accordance with
their terms) any Affiliate Transaction; or
(xxiii) authorize
or agree to do any of the foregoing actions.
-50-
For
purposes of this Agreement, “Charter Documents” means any
of the Company Organization Documents, Company Subsidiary Organization
Documents, Parent Organization Documents, or Parent Subsidiary Organization
Documents.
(c) It
is agreed that, notwithstanding anything to the contrary contained in this
Agreement, subject to compliance with applicable Laws, Parent and its affiliates
shall be permitted to, and shall use its commercially reasonable efforts to
negotiate and execute agreements to obtain commitments from holders of Common
Stock not to tender into the Tender Offer; provided that such
agreement shall be on terms and conditions reasonably acceptable to the Members
and shall not adversely affect the Merger Consideration.
(d) It
is agreed that, notwithstanding anything to the contrary contained in this
Agreement, to the extent the Closing shall not have occurred by March 31, 2011,
the Company shall have the right to pursue a capital financing to be consummated
after the Drop Dead Date.
4.2 Access and Information;
Confidentiality.
(a) Between
the date of this Agreement and the Closing, each of the Company and the Company
Subsidiaries, on the one hand, and Parent and the Parent Subsidiaries, on the
other hand, shall give, and shall direct its accountants and legal counsel to
give, Parent and the Parent Subsidiaries, on the one hand, and the Company and
the Company Subsidiaries, on the one hand, respectively, and its respective
Representatives, at reasonable times and upon reasonable intervals and notice,
and subject to any confidentiality agreements with third Persons (the existence
and scope of which have been disclosed to the other Parties), access to all
offices and other facilities and to all employees, properties, contracts,
agreements, commitments, books and records, financial and operating data and
other information (including Tax Returns, internal working papers, client files,
client contracts and director service agreements), of or pertaining to such
Party and its subsidiaries, as the requesting Party or its Representatives may
reasonably request regarding such Party’s business, assets, liabilities,
employees and other aspects (including unaudited quarterly financial statements,
including a consolidated quarterly balance sheet and income statement, each as
they become available during the Executory Period, a copy of each material
report, schedule and other document filed with or received by a Governmental
Authority pursuant to the requirements of applicable securities Laws, and
independent public accountant’s work papers (subject to the consent or any other
conditions required by such accountant, if any)) and instruct such Party’s
Representatives to reasonably cooperate with the requesting Party in its
investigation; provided that the
requesting Party shall conduct any such activities in such a manner as not to
interfere unreasonably with the business or operations of such Party providing
such information; provided further that in no
event shall a Party have access to any information that (x) based on advice of
counsel, could reasonably violate applicable Laws, including U.S. Antitrust
Laws, or could jeopardize any legal privilege or (y) in the reasonable judgment
of the other Party could (A) result in the disclosure of any trade secrets of
third parties or (B) violate any obligation of such other Party with respect to
confidentiality so long as, with respect to confidentiality, such party has made
reasonable efforts to obtain a waiver regarding the possible disclosure from the
third party to whom it owes an obligation of confidentiality. No information or
knowledge obtained by any Party hereto pursuant to this Section 4.2(a) will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the Parties to consummate the
Merger.
-51-
(b) All
information obtained by the Company or any Company Subsidiary, on the one hand,
and Parent or any Parent Subsidiary, on the other hand, pursuant to this
Agreement shall be kept confidential in accordance with and subject to the
Confidentiality Agreement, dated October 28, 2010, between Parent and the
Company (the “Confidentiality
Agreement”). The Parties further acknowledge and agree that the existence
and terms of this Agreement and the Merger are strictly confidential and that
they and their respective officers, managers, directors, employees, accountants,
consultants, legal counsel, financial advisors, agents or other representatives
(collectively, the “Representatives”) shall not
disclose to the public or to any third Person terms of this Agreement and the
Merger other than with the express prior written consent of the other Parties,
except (i) as may be required by applicable Law or at the request of any
Governmental Authority having jurisdiction over the such Party or any of its
Representatives, control persons or affiliates (including, without limitation,
and rules or regulations of the SEC or the Financial Industry Regulatory
Authority), (ii) as required to carry out a Party’s obligations hereunder, or
(iii) as may be required to defend any action brought against such Person in
connection with the Merger, in each case in accordance with and subject to the
Confidentiality Agreement.
4.3 No Solicitation.
(a) For
purposes of this Agreement, “Acquisition Proposal” means
(other than the transactions contemplated by this Agreement, including the
Merger) any inquiry, proposal or offer, or any indication of interest in making
an offer or proposal, from any Person or group at any time relating to a merger,
reorganization, recapitalization, consolidation, share exchange, business
combination or similar transaction, including any single or multi-step
transaction or series of related transactions involving any of the Company and/
or the Company Subsidiaries, on the one hand, and any third Person, on the other
hand, or acquisition or purchase of assets of the Company and/ or the Company
Subsidiaries fifty percent (50%) or more of such Person’s assets or business,
any tender offer (including a self-tender offer) or exchange offer that, if
consummated, would result in a third party beneficially owning fifty percent
(50%) or more of any class of equity or voting securities of Parent or the
Company as applicable or, with respect to Parent only, a “Business Combination”
as defined in the Parent Organization Documents.
-52-
(b) During
the Executory Period, in order to induce Parent and the Company to continue to
commit to expend management time and financial resources in furtherance of the
transactions contemplated hereby, neither the Company nor any Company
Subsidiary, on the one hand, nor Parent nor Merger Sub, on the other hand,
shall, directly or indirectly, authorize or permit any of its respective
Representatives to, (i) solicit, assist, initiate or facilitate the making,
submission or announcement of, or intentionally encourage, any Acquisition
Proposal, (ii) furnish any non-public information regarding the Company or any
Company Subsidiary, on the one hand, or the Parent or Merger Sub, on the other
hand, to any Person or group (other than a Party to this Agreement or their
respective Representatives) in connection with or in response to an Acquisition
Proposal, (iii) engage or participate in discussions or negotiations with any
Person or group with respect to, or that could be expected to lead to, an
Acquisition Proposal, (iv) withdraw or propose publicly to withdraw, in a manner
adverse to Parent or the Company and the Members, the approval of this Agreement
or the Merger or the Company Board’s or the Parent Board’s, respective
recommendation that holders of such Party’s capital equity adopt this Agreement
(with respect to the Parent, such recommendation being the “Parent Board Recommendation”),
(v) approve, endorse or recommend, or publicly propose to approve, endorse or
recommend, any Acquisition Proposal, (vi) negotiate or enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal, or (vii) release any third Person from, or
waive any provision of, any confidentiality agreement to which the Company or
any Company Subsidiary is a party (except as permitted pursuant to Section 4.2(a)).
Without limiting the foregoing, each of the Company and Parent agrees that it
shall be responsible for the actions of its and the Company Subsidiaries’
Representatives or Parent Subsidiaries’ Representatives, as the case may be,
that would constitute a violation of the restrictions set forth in this Section 4.3 if done
by such Person. The Company and Parent shall promptly inform their respective
Representatives and the Company Subsidiaries’ Representatives and Parent
Subsidiaries’ Representatives, as the case may be, of the obligations undertaken
in this Section
4.3.
(c) Each
of the Company and Parent shall notify the other hereto as promptly as
practicable (and in any event within 48 hours) orally and in writing of the
receipt by the Company, the Company Subsidiaries or any of their respective
Representatives, on one hand, or Parent, the Parent Subsidiaries or any of their
respective Representatives, on the other hand, of (i) any bona fide inquiries,
proposals or offers, requests for information or requests for discussions or
negotiations regarding or constituting any Acquisition Proposal or any bona fide
inquiries, proposals or offers, requests for information or requests for
discussions or negotiations that could be expected to result in an Acquisition
Proposal, and (ii) any request for non-public information relating to the
Company or any Company Subsidiary or Parent or any Parent Subsidiary, as
applicable, specifying in each case the material terms and conditions thereof
(including a copy thereof if in writing or a written summary thereof if verbal)
and the identity of the party making such inquiry, proposal, offer or request
for information. The Company or Parent, as applicable, shall keep the other
hereto promptly informed of the status of any such inquiries, proposals, offers
or requests for information. During the Executory Period, the Company and Parent
shall immediately cease and cause to be terminated any solicitations,
discussions or negotiations with any Person with respect to any Acquisition
Proposal and shall direct, and use their respective reasonable best efforts to
cause, the Company’s Representatives, the Company Subsidiaries and their
respective Representatives, on one hand, and Parent’s Representatives, the
Parent Subsidiaries and their respective Representatives, on the other hand, to
cease and terminate any such solicitations, discussions or
negotiations.
(d) Notwithstanding
this Section
4.3, if (i) Parent receives an Acquisition Proposal which the Parent
Board concludes in good faith, after consultation with outside legal counsel and
its financial advisors, constitutes a Superior Proposal after giving effect to
all of the adjustments to the terms of this Agreement which may be offered by
the Company and the Members, the Parent Board may, if it determines in good
faith and after consultation with outside legal counsel, that not taking such
action would be inconsistent with the fiduciary duties of the Parent Board to
its stockholders under applicable Law, the Parent Board may withdraw, modify or
qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse
to the Company or the Members, the Parent Board Recommendation to undertake the
Merger (a “Change of Board
Recommendation”), approve or recommend such Superior Proposal and
provided, further, that the Parent Board may not withdraw, modify or amend the
Parent Board Recommendation in a manner adverse to the Company pursuant to the
foregoing clause, or approve or recommend any Superior Proposal pursuant to the
foregoing, unless such Superior Proposal did not result from a breach by Parent
of this Section
4.3.
-53-
(e) For
the purposes of this Agreement, a “Superior Proposal” means any
bona fide written Acquisition Proposal made in writing that the Parent Board has
determined in its good faith judgment (after consultation with Parent’s legal
counsel and financial advisor and after taking into account all legal, financial
(including the financing terms of such proposal), regulatory, timing and other
aspects of the proposal as well as any modifications to this Agreement the
Company and the Members propose to make) are more favorable to the stockholders
of Parent from a financial point of view than this Agreement and which after
taking into account all legal, financial (including the financing terms of such
proposal), regulatory, timing and other aspects of the proposal (as well as any
modifications to this Agreement that the Company and the Members propose to
make), is reasonably likely to be consummated.
(f) Notwithstanding
anything to the contrary contained in this Agreement, for the purposes of this
Section 4.3, the “Executory
Period” applicable to the Company and the Company Subsidiaries
obligations hereunder shall expire on the earlier of (i) March 31, 2011 and (ii)
the Effective Time.
4.4 Non-Competition.
(a) Each
Member hereby agrees that, from the Closing Date through the later of (i) the
third (3rd)
anniversary of the Closing Date or (ii) the date that is one year from the date
that such Member is no longer employed by the Company or any affiliate thereof
(the later of clauses (i) or (ii), “the Non-Compete Termination
Date”), he, she or it will not at any time directly or indirectly,
whether as a consultant, agent, independent contractor, partner, shareholder,
member, participant, owner, operator, advisor, lender, lessor, guarantor,
investor or otherwise (other than ownership as a passive investor of less than
one (5%) percent of the voting stock of a company listed on a national stock
exchange), for his own account or for the benefit of any other Person, and
except in rendering his duties as an employee of Parent or its
affiliates:
(i) engage
in a business (a “Competing
Business”) that derives more than 50% of its consolidated revenues from
the business of selling, marketing, and developing cupcakes as currently
conducted or planned to be conducted by the Company and the Company Subsidiaries
(the “Business”),
materially assist any other Person engaging in a Competing Business or encourage
any other Person to enter a Competing Business;
(ii) provide
or solicit services associated with the Business, or materially assist or
encourage any other Person to do so;
(iii) induce
or attempt to induce any customer of Parent or its subsidiaries to reduce or
terminate the provision of services associated with the Business, or assist or
encourage any other Person to do so;
-54-
(iv) induce
or attempt to induce any vendor or other Person with whom Parent or its
affiliates contracts or otherwise transacts business to reduce the level of
business it does with Parent or its subsidiaries or terminate its relationship
with Parent or its subsidiaries as it relates to the Business; or
(v) solicit
any employee of Parent or its subsidiaries engaged in the Business to leave the
employ of Parent or its affiliates or directly or indirectly hire any such
employee, or assist or encourage any other Person to do so other than pursuant
to a general solicitation not targeted at such employees.
(b) Each
Member acknowledges and agrees that his, her or its breach of this Section 4.4 would
result in irreparable harm to Parent or its affiliates for which Parent’s or its
affiliates’ remedies at law would be inadequate. Each Member therefore agrees
and acknowledges that temporary and permanent injunctive relief may be granted
to Parent in a proceeding brought to enforce this Section 4.4, and each
Member will not claim as a defense thereto that Parent has an adequate remedy at
law. If it is judicially determined that a Member has violated any of his, her
or its obligations under this Section 4.4, then the
period of the covenants contained in this Section 4.4
automatically will be extended by a period of time equal in length to the period
during which such violation(s) occurred.
(c) Each
Member acknowledges and agrees that (i) such Member will materially benefit from
the consummation of the Merger, (ii) the agreement of such Member to the
covenants in this Section 4.4 is a
material inducement by such Member to persuade Parent to consummate the Merger,
and Parent would not have otherwise done so if the Members did not agree to such
covenants, and (iii) such Member is agreeing to the covenants of this Section 4.4 freely,
voluntarily, and without duress or coercion.
(d) If
the scope or duration of the restrictions set forth in this Section 4.4 is found
to be invalid, illegal or unenforceable by a court of competent jurisdiction,
the Parties agree the scope or duration of the restrictions set forth in this
Section 4.4
shall be replaced by a scope or duration which is valid, legal and
enforceable.
4.5 Parent Founder Stock.
The Parent Founder shall execute the letter agreement under terms and conditions
reasonably acceptable to the Parties and the Parent Founder (the “Letter Agreement”) whereby, at
the Effective Time, One Hundred Fifty Thousand (150,000) shares of Common Stock
issued to the Parent Founder (the “Founder Restricted Stock”),
shall remain in escrow pursuant to that certain Escrow Agreement, dated May 19,
2010, between the Parent Founder and Continental Stock Transfer & Trust
Company. While in escrow, such Founder Restricted Stock shall continue to remain
issued and outstanding. Parent shall direct Continental Stock Transfer &
Trust Company to release the Founder Restricted Stock from escrow to the Parent
Founder as follows (subject o adjustment pursuant to the subsequent
paragraph):
(a) Fifty
Thousand (50,000) shares of Founder Restricted Stock in the event the First
Stock Target has been achieved pursuant to Section 1.4; and/
or
-55-
(b) Fifty
Thousand (50,000) shares of Founder Restricted Stock in the event the Second
Stock Target has been achieved pursuant to Section 1.4; and/
or
(c) Fifty
Thousand (50,000) shares of Founder Restricted Stock in the event the Third
Stock Target has been achieved pursuant to Section 1.4; and/
or
(d) to
the extent the foregoing Stock Targets have not been fully achieved, Seventy
Five Thousand (75,000) shares of Founder Restricted Stock in the event the 2013
EBITDA Target has been achieved pursuant to Section 1.4; and/
or
(e) to
the extent the foregoing Stock Targets have not been fully achieved, Seventy
Five Thousand (75,000) shares of Founder Restricted Stock in the event the 2014
EBITDA Target has been achieved pursuant to Section 1.4; and/
or
(f) any
remaining Founder Restricted Stock not otherwise released hereunder in the event
the 2015 EBITDA Target has been achieved pursuant to Section
1.4.
For the
avoidance of doubt, the maximum number of shares of Founder Restricted Stock
that are required to be released hereunder shall not exceed One Hundred Fifty
Thousand (150,000) shares of Common Stock (the “Maximum Founder Restricted
Stock”). In the event the First Stock Target is not achieved but the
Second Stock Target is subsequently achieved, upon achievement of the Second
Stock Target, the Parent Founder shall be entitled to both portions of Founder
Restricted Stock for the First Stock Target and the Second Stock Target. In the
event both the First Stock Target and Second Stock Target are not achieved but
the Third Stock Target is subsequently achieved, upon achievement of the Third
Stock Target, the Parent Founder shall be entitled to the portion of Founder
Restricted Stock for the First Stock Target, the portion of Founder Restricted
Stock for the Second Stock Target and the portion of Founder Restricted Stock
for the Third Stock Target. In the event First Stock Target is achieved, the
Second Stock Price Target is not achieved but the Third Stock Target is
subsequently achieved, upon achievement of the Third Stock Price Target, the
Parent Founder shall be entitled to the portion of Founder Restricted Stock for
the Second Stock Target and the portion of Founder Restricted Stock for the
Third Stock Target. In the event the 2013 EBITDA Target is not achieved but the
2014 EBITDA Target is subsequently achieved, the Parent Founder shall be
entitled to both portions of Founder Restricted Stock for the 0000 XXXXXX Target
and the 2014 EBITDA Target. Notwithstanding the foregoing, in the event all or a
combination of the Stock Targets set forth in Section 1.4(a) are
achieved, the Founder Restricted Stock released to the Parent Founder shall not
exceed the Maximum Founder Restricted Stock. Upon the expiration of the 2015
EBITDA Target, any portion of the Founder Restricted Stock for which Parent
Founder is not entitled to have released pursuant to the foregoing shall be
forfeited and cancelled by Continental Stock Transfer & Trust Company.
Parent shall direct Continental Stock Transfer & Trust Company to release
the relevant portion of the Founder Restricted Stock, if any, to the Parent
Founder promptly after the relevant final determination of the Final EBITDA
target and/ or Stock Target for the applicable target period in accordance with
Section 1.4.
Upon the occurrence of a Change of Control of Parent or the Company during the
Earnout Period, any portion of the Founder Restricted Stock not previously
released to the Parent Founder pursuant to this Section 4.5 shall be
released from escrow to the Parent Founder. Parent shall take, and shall use
commercially reasonable efforts to cause the Parent Founder to take, any and all
actions as may be necessary to effect the transactions described in this Section 4.5 and the
Letter Agreement.
-56-
4.6 Member
Representatives. The Company and each Member hereby agree that Xxxxx
Xxxxx shall be appointed as the Member Representative, with respect to himself,
Xxx Xxxxx and Xxxxxx Xxxxx, and Xxxxx Xxxxx shall be appointed as Member
Representative with respect to himself and Xxxxx Ireland, in each case as the
attorney-in-fact for and on behalf of each of them, and the taking by the Member
Representative of any and all actions and the making of any decisions required
or permitted to be taken by him under this Agreement or the Escrow Agreement to
which the Company and/ or any Member is a party, including the exercise of the
power to (i) agree to, negotiate, enter into settlements and compromises of and
comply with orders of courts with respect to any indemnification claims, (ii)
resolve any indemnification claims, and (iii) take all actions necessary in the
judgment of the Member Representative for the accomplishment of the other terms,
conditions and limitations of this Agreement. Accordingly, the Member
Representatives have authority and power to act on behalf of the Company prior
to Closing and each Member represented by such Member Representative with
respect to this Agreement and the disposition, settlement or other handling of
all indemnification claims, rights or obligations arising from and taken
pursuant to this Agreement or any ancillary agreement hereto to which the
Company and/ or any Member is a party. Each Member will be bound by all actions
taken by its Member Representative in connection with this Agreement to which
such Party is a party and Parent shall only be required to acknowledge or act
upon written communication signed by the Member Representatives. Such agency may
be changed with respect to each such Member Representative by the majority of
the Members represented thereby; provided, however, that no such Member
Representative may be removed unless any such majority agrees to such removal
and to the identity of the substituted agent. Notwithstanding the foregoing,
each Member Representative may resign at any time by providing written notice of
intent to resign to the Members, which resignation shall be effective upon the
earlier of (A) thirty (30) calendar days following delivery of such written
notice or (B) the appointment of a successor by the relevant Members. No bond
shall be required of any Member Representative, and no Member Representative
shall receive any compensation for its services. No Member Representative shall
be liable to the Members for any act done or omitted hereunder as Member
Representative while acting in good faith and in the exercise of reasonable
judgment, even if such act or omission constitutes negligence on the part of
such Member Representative. Each Member Representative shall only have the
duties expressly stated in this Agreement and shall have no other duty, express
or implied. Each Member Representative may engage attorneys, accountants and
other professionals and experts. Each Member Representative may in good faith
rely conclusively upon information, reports, statements and opinions prepared or
presented by such professionals, and any action taken by such Member
Representative based on such reliance shall be deemed conclusively to have been
taken in good faith and in the exercise of reasonable judgment. The Members
shall indemnify their respective Member Representative and hold such Member
Representative harmless against any loss, liability or expense incurred on the
part of such Member Representative (so long as such Member Representative was
acting in good faith in connection therewith) and arising out of or in
connection with the acceptance or administration of the Member Representative’s
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Member Representative.
-57-
ARTICLE
V.
ADDITIONAL COVENANTS OF THE
PARTIES
5.1 Notification of Certain
Matters.
(a) Parent,
on one hand, and each of the Company and the Members, on the other hand, shall
give prompt notice to the other (and, if in writing, furnish copies of) if any
of the following occurs during the Executory Period: (i) there has been a
material failure on the part of the Party providing the notice to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; (ii) receipt of any notice or other communication in writing from
any third Person alleging that the Consent of such third Person is or may be
required in connection with the transactions contemplated by this Agreement;
(iii) receipt of any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(iv) the discovery of any fact or circumstance that, or the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which, would
reasonably be expected to cause or result in any of the conditions to the Merger
set forth in Article
VI not being satisfied or the satisfaction of any of those conditions
being materially delayed; or (v) the commencement or threat, in writing, of any
Action against any Party or any of its affiliates, or any of their respective
properties or assets, or, to the knowledge of the Company or Parent, as
applicable, any officer, director, partner, member or manager, in his or her
capacity as such, of the Company or Parent, as applicable, or any of their
affiliates with respect to the consummation of the Merger. No such notice to any
Party shall constitute an acknowledgement or admission by the Party providing
notice regarding whether or not any of the conditions to Closing or to the
consummation of the Merger have been satisfied or in determining whether or not
any of the representations, warranties or covenants contained in this Agreement
have been breached. Moreover, no information or knowledge obtained by any Party
hereto pursuant to this Section 5.1 will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the Parties to consummate the
Merger.
(b) The
Company and the Members shall have, upon written notice to Parent (a “New Disclosure Notice”), the
right at any time after the date of this Agreement and prior to the Closing to
amend the Company Disclosure Schedules to reflect any new disclosure information
not set forth in the Company Disclosure Schedules as of the date of this
Agreement. Notwithstanding this Section 5.1(b) and
except for disclosures resulting from the performance of or compliance by the
Company with this Agreement or the taking of any action required of the Company
by this Agreement, Parent and Merger Sub shall not be obligated to accept any
new disclosure information in the Company Disclosure Schedules in its reasonable
discretion to the extent Parent notifies the Company and Members in writing of
such determination within ten (10) Business Days of receipt of the New
Disclosure Notice (a “Disclosure Rejection Notice”).
Failure by Parent to reject such new disclosure information within such 10
Business Day period shall be deemed an acceptance by Parent of such new
disclosure information in the Company Disclosure Schedules. Furthermore, if the
Company and the Members fail to revoke, by notice to Parent, any such additional
disclosure rejected by Parent within 5 business days following receipt of a
Disclosure Rejection Notice, Parent and Merger Sub shall have the right to
terminate this Agreement pursuant to Section 7.1(i) in the
event they do not accept such new disclosure information. In the event Parent
and Merger Sub accept (or are deemed to have accepted) the new disclosure
information made by the Company and the Members to the Company Disclosure
Schedules prior to the Closing Date, such new disclosure information shall be
deemed part of the Company Disclosure Schedules and the Company and the Members
shall have no liability with respect to otherwise indemnifiable Damages relating
thereto.
-58-
5.2 Commercially Reasonable
Efforts.
(a) Subject
to the terms and conditions of this Agreement, prior to the expiration of the
Executory Period, each Party shall use commercially reasonable efforts, and
shall cooperate fully with the other Parties, to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement (including the receipt of all
Requisite Regulatory Approvals), and to comply as promptly as practicable with
all requirements of Governmental Authorities applicable to the transactions
contemplated by this Agreement. In furtherance and not in limitation of the
foregoing, to the extent required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and any other Laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (“Antitrust Laws”), each Party
hereto agrees to make any required filing or application under Antitrust Laws,
as applicable, with respect to the transactions contemplated hereby as promptly
as practicable, to supply as promptly as reasonably practicable any additional
information and documentary material that may be requested pursuant to Antitrust
Laws and to take all other actions necessary, proper or advisable to cause the
expiration or termination of the applicable waiting periods under Antitrust Laws
as soon as practicable, including by requesting early termination of the waiting
period provided for under the Antitrust Laws.
(b) Each
of Parent and the Parent Subsidiaries, on the one hand, and the Company, on the
other hand, shall, in connection with the efforts referenced in Section 5.2(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under any Antitrust Law, use its commercially
reasonable efforts to: (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
Person; (ii) keep the other Party reasonably informed of any communication
received by such Party from, or given by such Party to, the Federal Trade
Commission (the “FTC”),
the Antitrust Division of the Department of Justice (the “DOJ”) or any other U.S. or
foreign Governmental Authority and of any communication received or given in
connection with any proceeding by a private Person, in each case regarding any
of the transactions contemplated hereby; and (iii) permit the other Party and
its outside counsel to review any communication given by it to, and consult with
each other in advance of any meeting or conference with, the FTC, the DOJ or any
other Governmental Authority or, in connection with any proceeding by a private
Person, with any other Person, and to the extent permitted by the FTC, the DOJ
or such other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
-59-
(c) In
furtherance and not in limitation of the covenants of the Parties contained in
Section 5.2(a)
and Section
5.2(b), if any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or any other applicable Law or if
any suit is instituted (or threatened to be instituted) by the FTC, the DOJ or
any other applicable Governmental Authority or any private Person challenging
any of the transactions contemplated hereby as violative of any Antitrust Law or
any other applicable Law or which would otherwise prevent, materially impede or
materially delay the consummation of the transactions contemplated hereby, each
of Parent, the Parent Subsidiaries and the Company shall use its commercially
reasonable efforts to resolve any such objections or suits so as to permit
consummation of the transactions contemplated by this Agreement, including in
order to resolve such objections or suits which, in any case if not resolved,
could reasonably be expected to prevent, materially impede or materially delay
the consummation of the transactions contemplated hereby.
(d) In
the event that any administrative or judicial action or proceeding is instituted
(or threatened to be instituted) by a Governmental Authority or private Person
challenging the Merger or any other transaction contemplated by this Agreement,
or any other ancillary agreement contemplated hereby, each of Parent, the Parent
Subsidiaries and the Company shall cooperate in all respects with each other and
use its respective commercially reasonable efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(e) Prior
to the expiration of the Executory Period, the Company shall use its
commercially reasonable efforts to obtain any Consents of third Persons with
respect to any Company Material Contract or Tenant Lease as may be necessary or
appropriate for the consummation of the transactions contemplated hereby or
required by the terms of any contract as a result of the execution, performance
or consummation of the transactions contemplated hereby.
(f) Notwithstanding
anything herein to the contrary, neither Parent nor the Company shall be
required to agree to any commercially unreasonable consent fee, term, condition
or modification with respect to obtaining any Consents or Requisite Regulatory
Approvals in connection with the Merger and consummation of the transactions
contemplated by this Agreement provided that the Party deeming such consent fee,
term, condition or modification commercially unreasonable shall negotiate with
the other Parties in good faith with respect to other commercially reasonable
alternatives and other accommodations.
5.3 Survival of Representations
and Warranties; Indemnification.
(a) Survival; Limitations on
Indemnification; Exclusive Remedy. The representations, warranties and
covenants to be performed prior to the Closing of a Party made in or pursuant to
this Agreement will survive the Closing until one month after the audited
financial statement of parent for fiscal year 2011 have been completed; provided, however, that the
Fundamental Representations and Warranties will survive until the applicable
statute of limitations; provided, further, that any
representation or warranty the violation of which is made the basis of a claim
for indemnification pursuant to Section 5.3 will
survive until such claim is finally resolved if the Indemnified Representative
notifies in writing the Indemnifying Representative of such claim in reasonable
detail prior to the expiration of the applicable survival period of such claim
in accordance with this Section 5.3(a). For
purposes of this Agreement, the “Fundamental Representations and
Warranties” means those representations and warranties set forth in Sections 2.1, 2.2(a) – (d), 2.4, 2.17, 2.18, 2.20(b)(iii), 2.21 and 3.1, 3.2, 3.11, 3.17, 3.19, 3.23 and 3.25.
-60-
(b) Indemnification by the
Members.
(i) Subject
to the terms and conditions of this Section 5.3, from and
after the Closing, each of the Members shall jointly and severally indemnify and
hold harmless each of Parent, the Parent Subsidiaries, their affiliates and each
of their respective successors and permitted assigns, and their respective
officers, directors, employees and agents (each, a “Parent Indemnified Party”)
from and against any liabilities, claims (including claims by third parties),
demands, judgments, losses, costs, damages or expenses whatsoever (including
reasonable attorneys’, consultants’ and other professional fees and
disbursements of every kind, nature and description) (collectively, “Damages”), that such Parent
Indemnified Party may sustain, suffer or incur and that result from, arise out
of or relate to any breach by the Company or any Company Subsidiary of any of
their representations, warranties, or the covenants or agreements contained in
this Agreement. The indemnification provided pursuant to this Section 5.3(b)(i)
shall not include any matter for which indemnification is provided pursuant to
Section
5.3(b)(ii).
(ii)
Subject to the terms and conditions of this Section 5.3, from and
after the Closing, each of the Members shall severally, but not jointly,
indemnify and hold harmless each Parent Indemnified Party from and against any
Damages, that such Parent Indemnified Party may sustain, suffer or incur and
that result from, arise out of or relate to (i) any breach by such Member of any
of such Member’s representations or warranties contained in this Agreement (but
not including the representations and warranties of or pertaining to any other
Member or the Company or any Company Subsidiary in any of such provisions), and/
or (ii) any breach by such Member of any of his, her or its covenants or
agreements contained in this Agreement.
(c) Indemnification by
Parent. From and after the Closing, Parent shall indemnify and hold
harmless the Company, the Members, their affiliates and each of their respective
successors, heirs, estate, permitted assigns, managers, officers, directors,
employees and agents (each, a “Company Indemnified Party”)
from and against any Damages that such Company Indemnified Party may sustain,
suffer or incur and that result from, arise out of or relate to any breach by
either Parent or any Parent Subsidiary of any of their representations,
warranties, or covenants or agreements contained in this Agreement.
(d) Certain Limitations on
Indemnification.
(i)
No claim may be asserted nor may any action be
commenced against a Party hereto for breach of any representation, warranty,
covenant or agreement contained herein unless written notice of such claim or
action is received by such Party describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or action on or
prior to the date on which the representation, warranty, covenant or agreement
on which such claim or Action is based ceases to survive as set forth in Section
5.3(a), irrespective of whether the subject matter of such claim or action shall
have occurred before or after such date.
-61-
(ii) Notwithstanding
anything to the contrary contained in this Agreement: (i) the Members shall not
be liable for any claim for indemnification pursuant to this Section 5.3, unless
and until the aggregate amount of indemnifiable Damages to the Parent
Indemnified Parties which may be recovered from the Members equals or exceeds
$200,000, after which the Members shall be liable to such parties only for those
Damages in excess of $200,000; (ii) the maximum amount of indemnifiable Damages
which may be recovered from the Members pursuant to this Section 5.3 shall not
exceed the value of the Claim Shares as determined in accordance with Section 1.6(b) (the
“Aggregate Cap”); provided, however that no
Member shall be liable for indemnifiable Damages in excess of his, her or its
pro rata share of the Aggregate Cap based on the Members allocable share of the
Merger Consideration set forth in the Member Allocation and no Member shall be
liable for the breaches of another Member of such other Member’s Member
Representations or covenants or agreements;
(iii) Notwithstanding
anything to the contrary contained in this Agreement: (i) Parent shall not be
liable for any claim for indemnification pursuant to this Section 5.3, unless
and until the aggregate amount of indemnifiable Damages to the Company
Indemnified Parties which may be recovered from Parent equals or exceeds
$200,000, after which Parent shall be liable to such party only for those
Damages in excess of $200,000; and (ii) except with respect to the Merger
Consideration, the maximum amount of indemnifiable Damages which may be
recovered from Parent pursuant to this Section 5.3 shall not
exceed the Aggregate Cap;
(iv) Subject
to the terms and conditions of this Section 5.3 and Section
1.6(b), the indemnities set forth above in Section 5.3(b) of
this Agreement will be satisfied solely through the surrender by the Members
(without any payment therefor by the Parent Indemnified Parties) to Parent, in
lieu of cash (subject to the Members right of substitution contained in Section 1.6(b), of a
portion of the Claim Shares as determined in accordance with Section 1.6(b) of
this Agreement (such surrender of such Claim Shares in satisfaction of Damages,
the “Equitable
Recoupment”). Except in the case of fraud, willful misconduct or
intentional breach (the “Additional Remedies”),
following the Closing, the Parent Indemnified Parties shall not be entitled to
pursue any claims for indemnification against the Members and their affiliates
(including the Company and the Company Subsidiaries) pursuant this Agreement
other than through the aforementioned Equitable Recoupment, it being agreed
that, except for the Additional Remedies, such Equitable Recoupment is the sole
and exclusive remedy of the Parent Indemnified Parties with respect to any and
all indemnification claims regarding this Agreement and the transactions
contemplated hereby following the Closing.
(e) Indemnification of Third
Party Claims. The indemnification obligations and liabilities under this
Section 5.3
with respect to Actions brought against a Parent Indemnified Party or a Company
Indemnified Party (each in such capacity, an “Indemnitee”) by a Person other
than a Party hereto (a “Third
Party Claim”) shall be subject to the following terms and conditions (for
purposes of this Agreement, the “Indemnified Representative”
means Parent, with respect to an indemnification claim by a Parent Indemnified
Party, and the applicable Member Representative (or with respect to the Company,
both Member Representatives), with respect to an indemnification claim by a
Company Indemnified Party, and the “Indemnifying Representative”
means the applicable Member Representative (or with respect to the Company, both
Member Representatives), with respect to an indemnification claim by a Parent
Indemnified Party, and Parent, with respect to an indemnification claim by a
Company Indemnified Party):
-62-
(i) The
Indemnified Representative will give the Indemnifying Representative within thirty (30) days after
receiving written notice of any Third Party Claim, specifying the nature and the
amount (the “Claim
Notice”). The failure of the Indemnified Representative to give timely
notice shall not affect the Indemnified Representative’s rights to
indemnification hereunder except to the extent that the Indemnifying
Representative
demonstrates that it was materially prejudiced by such
failure.
(ii) The
Indemnifying Representative shall notify the Indemnified Representative within
fifteen (15) days after receipt of the Claim Notice whether the Indemnifying
Representative will undertake, conduct, and control, through counsel of its own
choosing (subject to the consent of the Indemnified Representative, such consent
not to be unreasonably withheld, conditioned or delayed) and at its expense, the
settlement or defense thereof, and Indemnified Representative shall cooperate
with Indemnifying Representative in connection therewith, provided that if
Indemnifying Representative undertakes such defense: (A) the Indemnifying
Representative shall use commercially reasonable efforts to prevent and/ or
remove any Encumbrances or other adverse charge upon any asset of the
indemnified party and shall not thereby settle such action without first
obtaining the consent of Indemnified Representative (which consent cannot be
unreasonably withheld, conditioned or delayed), except for settlements solely
covering monetary matters for which Indemnifying Representative has acknowledged
responsibility for payment; (B) the Indemnifying Representative shall permit the
Indemnified Representative (at the Indemnified Representative’s sole cost and
expense) to participate in such settlement or defense through counsel chosen by
the Indemnified Representative; and (C) the Indemnifying Representative shall
agree promptly to reimburse the Indemnified Representative for the full amount
of any loss resulting from such claim and all related expenses incurred by the
Indemnified Representative, except for those costs expressly assumed by the
Indemnified Representative hereunder. The Indemnified Representative agrees to
preserve and provide access to all evidence that may be useful in defending
against such claim and to provide reasonable cooperation in the defense thereof
or in the prosecution of any action against a third Person in connection
therewith. The Indemnifying Representative’s defense of any claim or demand
shall not constitute an admission or concession of liability therefor or
otherwise operate in derogation of any rights Indemnifying Representative may
have against Indemnified Representative or any third Person. So long as the
Indemnifying Representative is reasonably contesting any such claim in good
faith, the Indemnified Representative shall not pay or settle any such claim. If
the Indemnifying Representative does not notify the Indemnified Representative
within fifteen (15) days after receipt of Indemnified Representative’s Claim
Notice that it elects to undertake the defense thereof, the Indemnified
Representative shall (upon further written notice), subject to the limitation
set forth in Section
5.3(a), shall have the right to contest, settle or compromise the claim
at the expense of the Indemnifying Representative (provided that the
Indemnifying Representative shall not be required to pay the Indemnified
Representative’s expenses for the defense, settlement or compromise of claims
which are not covered by the Indemnifying Representative’s obligations pursuant
to this Section
5.3) and shall not settle or compromise such claim without first
obtaining the consent of the Indemnified Representative (which cannot be
unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing,
in the event the indemnifying party does not undertake the defense of the claim,
the indemnified party shall use commercially reasonable efforts to contest,
settle or compromise such claim in a commercially reasonable manner. Unless the
Indemnifying Representative has consented to a settlement of a Third Party Claim
(not to be unreasonably withheld, conditioned or delayed), the amount of the
settlement shall not be a binding determination of the amount of the Damages and
such amount shall be determined in accordance with the provisions of this
Agreement and the Escrow Agreement. Notwithstanding anything herein to the
contrary, the Indemnifying Representative shall not be entitled to assume
control of any defense described herein if (i) the Third Party Claim relates to
or arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (ii) the Third Party Claim seeks, as one of its
principal claims, an injunction or equitable relief against an Indemnitee; or
(iii) there is a reasonable probability that a Third Party Claim may materially
and adversely affect the Indemnitee other than as a result of money damages or
other money payments.
-63-
(iii) Damages
calculated pursuant to this Section 5.3 shall be calculated net of any amounts
actually recovered by an Indemnitee pursuant to any indemnification agreement
with any third party, including any insurer (after deducting the costs of
incurred in pursuing such recovery). To the extent that any Damages that are
subject to indemnification pursuant to this Section 5.3 are
covered by insurance, the Indemnitees shall use commercially reasonable efforts
to obtain the maximum recovery under such insurance. If an Indemnitee has
received the payment required by this Agreement from the Indemnifying
Representative in respect of any Damages and later receives proceeds from
insurance or other amounts in respect of such Damages, then it shall hold such
proceeds or other amounts (after deducting the costs of incurred in pursuing
such recovery) in trust for the benefit of the Indemnifying Representative and
shall pay to the Indemnifying Representative, as promptly as practicable after
receipt, a sum equal to the amount of such proceeds or other amount received
(after deducting the costs of incurred in pursuing such recovery), up to the
aggregate amount of any payments received from the Indemnifying Representative
pursuant to this Agreement in respect of such Damages. Notwithstanding any other
provisions of this Agreement, it is the intention of the Parties that no insurer
or any other third Person shall be (i) entitled to a benefit it would not be
entitled to receive in the absence of the foregoing indemnification provisions,
or (ii) relieved of the responsibility to pay any claims for which it is
obligated. To the extent that any Damages that are subject to indemnification
pursuant to this Section 5.3 would
result in Tax benefits to an Indemnitee, the amount of such Damages shall be
reduced by the Tax benefits that may be available to such Person as a result of
such Damages.
(f) Limitation. In no
event shall Damages be deemed to include any special, indirect, consequential or
punitive damages. The rights of the Parties for indemnification relating to this
Agreement or the transactions contemplated hereby shall be strictly limited to
those contained in this Section 5.3 and,
except as specifically set forth in Section 9.10 and Section 7.3, such
indemnification rights shall be the sole and exclusive remedies of the Parties
with respect to any matter arising under or in connection with this Agreement.
To the maximum extent permitted by applicable Law, the Parties hereby waive all
other rights and remedies with respect to any matter arising under or in
connection with this Agreement, whether under any applicable Law, at common law
or otherwise.
-64-
5.4 Public Announcements.
Parent and the Company agree that no public release or announcement concerning
this Agreement or the Merger shall be issued by either Party or any of their
affiliates without the prior written consent of the other Party (which consent
shall not be unreasonably withheld, conditioned or delayed), except as such
release or announcement may be required by applicable Law or the rules or
regulations of any securities exchange, in which case the applicable Party shall
use reasonable best efforts to allow the other Party reasonable time to comment
on, and arrange for any required filing with respect to, such release or
announcement in advance of such issuance; provided, however, that either
Parent or the Company may make any public statement in response to specific
questions by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as any such
statements are not inconsistent with previous public releases or announcements
made by Parent or the Company in compliance with this Agreement and so long as
appropriate filings are timely made with respect to the statements which
constitute pre-commencement or other Tender Offer and/ or Warrant Tender Offer
communications.
5.5 Incentive Plan.
Parent shall establish, effective as of the Effective Time an incentive option,
warrant or other equity plan for the Members, directors, managers, employees and
consultants of Parent and its affiliates (the “Incentive Plan”). Parent shall
use commercially reasonably efforts to obtain all necessary approval and
authorization from the holders of Common Stock for such plan. The number of
shares of Common Stock authorized and reserved for issuance under the Incentive
Plan shall be seven percent (7%) of the Common Stock issued and outstanding on a
fully diluted basis (inclusive of the Incentive Plan) as of the time immediately
prior to the Effective Time. The Incentive Plan shall provide for a three (3)
year vesting period for all options issued to directors, managers, employees and
consultants of Parent and its affiliates at an exercise price of no less than
Eleven Dollars and Fifty Cents ($11.50) per share of Common
Stock.
-65-
5.6 Tender Offer; Warrant Tender
Offer.
(a) Tender Offer. Prior
to the Closing Date, Parent will provide its stockholders with the opportunity
to redeem their shares of Common Stock for cash equal to their pro rata share of
the aggregate amount then on deposit in the Trust Account, less Taxes, upon the
consummation of the Merger (the “Tender Offer”). Unless
otherwise agreed to by the Parties, Parent shall use its commercially reasonably
best efforts (subject to market conditions) to conduct the Tender Offer without
stockholder vote pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act
(as modified, waived or otherwise agreed to with the SEC) which regulates issuer
tender offers and compliance with the requirement of Article Sixth of its
charter, and will file Tender Offer documents with the SEC. The Tender Offer
documents will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder and in
addition shall contain substantially the same financial and other information
about the Merger and the redemption rights as is required under Regulation 14A
of the Exchange Act which regulates the solicitation of proxies. The obligation
of Parent to accept for payment shares of Common Stock validly tendered and not
validly withdrawn pursuant to the Tender Offer shall be subject to (i) the
condition (the “Maximum Tender
Condition”) that no more than a number of shares of the Common Stock
equal to eighty-eight percent (88%) of the IPO Shares (as defined in Parent’s
certificate of incorporation as amended) shall have been validly tendered and
not validly withdrawn pursuant to and prior to the expiration of the Tender
Offer and (ii) the satisfaction of each of the other conditions set forth in
Annex A hereto. Parent may not waive the Maximum Tender Condition or the other
conditions set forth in Annex A (except for conditions to be satisfied by the
Company and/ or Members) without the consent of the Company and the Members and,
unless agreed to by the Parties or required by the SEC, no material change may
be made to the Tender Offer which imposes conditions to the Tender Offer in
addition to those set forth in Annex A hereto or is
inconsistent with this Section 5.6 except as
required to comply with any rule, regulation or interpretation of the SEC, or
the staff thereof, applicable to the Tender Offer. The Parties hereby agree to
negotiate in good faith to amend Annex A to reflect any changes that may be
reasonably required as a result of discussions with the SEC or its staff.
Furthermore, Parent may not waive any failure by a holder to validly tender his,
her or its shares of Common Stock prior to the expiration of the Tender Offer,
without the prior written consent of the Members. Notwithstanding the foregoing,
Parent may, without the consent of the Company and the Members, (i) extend the
Offer for one or more period(s) beyond the scheduled expiration date, which
initially shall be no earlier than twenty (20) Business Days following the
commencement of the Tender Offer (the “Initial Expiration Date”), if,
at any scheduled expiration of the Tender Offer, the Maximum Tender Condition
and/ or the conditions set forth in Annex A, have not
been satisfied or waived, or (ii) extend or amend the Tender Offer for any
period (the Initial Expiration Date as extended, the “Expiration Time”) required by
any rule, regulation or interpretation of the SEC, or the staff thereof,
applicable to the Tender Offer.
(b) Warrant Tender Offer.
Prior to the Closing Date, Parent will provide holders of the 00xx Xxxxxx
Warrants with the opportunity to redeem their warrants for cash equal to One
Dollar ($1.00) per warrant to be paid upon consummation of the Merger (the “Warrant Tender Offer” and
together with the Tender Offer, the “Tender Offers”). Parent shall
conduct the Warrant Tender Offer without stockholder vote pursuant to Rule 13e-4
and Regulation 14E of the Exchange Act (as modified, waived or otherwise agreed
to with the SEC) which regulates issuer tender offers, and will file Warrant
Tender Offer documents with the SEC. The Warrant Tender Offer documents will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. The obligation of Parent to accept
for payment the Sponsor Warrants and Stockholder Warrants validly tendered and
not validly withdrawn pursuant to the Warrant Tender Offer shall only occur,
subject to compliance with Rule 13e-4 and Regulation 14E of the Exchange Act,
simultaneously upon the Parent’s acceptance of the shares of Common Stock
validly tendered and not validly withdrawn in the Tender Offer and the
satisfaction or waiver of each of the conditions set forth in Annex A hereto.
Parent may not waive the conditions set forth in Annex A (except for
conditions to be satisfied by the Company and/ or Members) and no change may be
made to the Warrant Tender Offer which increases the price being offered per
warrant or imposes conditions to the Warrant Tender Offer in addition to those
set forth in Annex
A hereto or is inconsistent with this Section 5.6 without
the consent of Company and the Members except as required to comply with any
rule, regulation or interpretation of the SEC, or the staff thereof, applicable
to the Warrant Tender Offer. Furthermore, Parent may not waive any failure by a
holder to validly tender his, or or its warrants prior to the expiration of the
Tender Offer, without the prior written consent of the Members. Notwithstanding
the foregoing, Parent may, without the consent of the Company and Members, (i)
extend the Warrant Tender Offer for one or more periods beyond the scheduled
expiration date, which initially shall be twenty (20) Business Days following
the commencement of the Warrant Tender Offer (the “Initial Warrant Expiration
Date”) if, at any scheduled expiration of the Warrant Tender Offer, any
of the conditions set forth in Annex A, have not been satisfied or waived, or
(ii) extend the Warrant Tender Offer for any period (the Initial Warrant
Expiration Date as extended, the “Warrant Expiration Time”)
required by any rule, regulation or interpretation of the SEC, or the staff
thereof, applicable to the Warrant Tender Offer.
-66-
(c) Payment Obligations.
If the payment to a registered holder under the Tender Offer or the Warrant
Tender Offer is to be made to a person other than the person in whose name the
surrendered certificate formerly evidencing Common Stock, Sponsor Warrant or
Stockholder Warrant, as applicable, is registered on the transfer books of the
Company, it shall be a condition of payment that the certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of such consideration to a person other than
the registered holder of the certificate surrendered, or shall have established
to the reasonable satisfaction of Parent that such taxes either have been paid
or are not applicable.
(d) Tender Offer
Documents. Parent shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the “Schedule TO”) with respect to
the Tender Offers which shall contain the materials set forth in Section 5.6(e). Each
Schedule TO shall contain or shall incorporate by reference an offer to purchase
(an “Offer to Purchase”)
and forms of the related letter of transmittal and any related summary
advertisement (such Schedule TOs, Offers to Purchase and such other documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the “Offer
Documents”). Each of Parent, the Company and the Members agree to correct
promptly any information provided by it for use in the Offer Documents that
shall have become false or misleading in any material respect, and Parent
further agrees to take all steps necessary to cause the Schedule TOs, as so
corrected, to be filed with the SEC, and the other Offer Documents, as so
corrected, to be disseminated to holders of Common Stock, in each case as and to
the extent required by applicable federal securities laws. No filing of, or
amendment or supplement to, the Offer Documents shall be made by Parent without
the prior consent (which shall not be unreasonably withheld, delayed or
conditioned) of the Company and the Members. Parent shall give the Company, the
Members and their counsel a reasonable opportunity to review and comment on the
Offer Documents prior to such documents being filed with the SEC or disseminated
to holders of the Common Stock, Sponsor Warrants and/ or Stockholder Warrants
and shall not file any such Offer Documents without the Members and the Company
approving the pro forma working capital figure in the Offer Documents. Parent
shall provide the Company, the Members and its counsel with any comments that
Parent or its counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and shall provide
the Company and its counsel with a reasonable opportunity to participate in the
response of Parent to such comments.
-67-
(e) Company Cooperation.
The Company acknowledges that a substantial portion of the filings with the SEC
and mailings to Parent’s stockholders and warrantholders with respect to the
Tender Offers shall include disclosure regarding the Company and its management,
operations and financial condition. Accordingly, the Company agrees to as
promptly as reasonably practical provide Parent with such information as shall
be reasonably requested by Parent for inclusion in or attachment to the Offer
Documents to be filed and/or mailed as of and following the commencement of the
Tender Offer and the Warrant Tender Offer, that is accurate in all material
respects and complies as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder and in
addition shall contain substantially the same financial and other information
about the Company and its Members as is required under Regulation 14A of the
Exchange Act regulating the solicitation of proxies even if such information is
not required under the tender offer rules. The Company and the Members
understand that such information shall be included in the Offer Documents and/or
responses to comments from the SEC or its staff in connection therewith and
mailings. The Company shall make its, and cause each Company Subsidiary to make
its, managers, directors, officers and employees available to Parent and its
counsel in connection with the drafting of such filings and mailings and
responding in a timely manner to comments from the SEC.
(f) Termination of Tender
Offers. Parent shall not terminate the Tender Offers prior to any
scheduled Expiration Time without the prior consent of the Company except in the
event this Agreement is terminated pursuant to the terms hereof.
5.7 Reservation of Common
Stock. Parent hereby agrees that at or prior to Closing there shall be,
or Parent shall cause to be, reserved for issuance and/ or delivery, and Parent
shall thereafter maintain a reserve for issuance and/or delivery, such number of
shares of Common Stock as shall be required for the conversion or exchange of
the New Crumbs Class B Exchangeable Units (including upon issuance of the
Contingency Consideration) and pursuant to the Exchange and Support Agreement by
and between the Members, the Company and Parent, on terms and conditions
reflecting and consistent with the term sheet set forth in Exhibit 5.7 attached
hereto and such other terms and conditions reasonably satisfactory to the
Parties (the “Exchange and
Support Agreement”) and the amount to be reserved under the Incentive
Plan.
5.8 Other Actions.
Notwithstanding anything to the contrary in Section
5.4:
(a) as
promptly as practicable after the execution of this Agreement, Parent and the
Company shall mutually agree on and issue a press release announcing the
execution of this Agreement (the “Signing Press Release”).
Immediately after the issuance of the Signing Press Release, Parent shall
prepare and file a pre-commencement Schedule TO-C and/ or Current Report on Form
8-K pursuant to the Exchange Act to report the execution of this Agreement,
attaching this Agreement and the Signing Press Release thereto (“Signing Filing”), which the
Company shall review, comment upon and approve (which approval shall not be
unreasonably withheld, conditioned or delayed) prior to filing.
(b) as
promptly as practicable after the completion of the Tender Offer and Warrant
Tender Offer, Parent shall prepare a draft amendment to Schedule TO and/ or Form
8-K announcing such offers, and announcing the Closing, if applicable, together
with, or incorporating by reference, the financial statements prepared by the
Company and its accountant, and such other information that may be required to
be disclosed with respect to such results, including the Merger, if applicable,
in any report or form to be filed with the SEC (“Closing Filing”), which the
Company shall review, comment upon and approve (which approval shall not be
unreasonably withheld, conditioned or delayed) prior to filing. As promptly as
practicable after the completion of the Tender Offer and Warrant Tender Offer,
Parent and the Company shall mutually agree on and issue a press release
announcing such voting results and, if applicable, the consummation of the
Merger (“Closing Press
Release”). Concurrently with the Closing, Parent shall distribute the
Closing Press Release and shall file the Closing Filing with the
SEC.
-68-
5.9 Required Information.
In connection with the preparation of the Signing Form 8-K, the Signing Press
Release, the Closing Filing, the Closing Press Release, or any other report,
statement, filing notice or application made by or on behalf of Parent, Merger
Sub and/ or the Company to any Government Authority, the OTCBB or other third
Person in connection with the Merger and the other transactions contemplated
hereby, and for such other reasonable purposes, the Company, Parent and Merger
Sub each shall, upon request by the other, furnish the other with all
information concerning themselves, their respective directors, officers,
managers, members and stockholders, and such other matters as may be reasonably
necessary or advisable in connection with the Merger, or any other report,
statement, filing, notice or application made by or on behalf of the Company,
Parent or Merger Sub to any third party and/ or any Governmental Authority in
connection with the Merger and the other transactions contemplated hereby.
5.10 Merger. If Parent or
any of its successors or permitted assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of such Person assume the obligations of such Person pursuant to this
Agreement, including, without limitation, the payment of the Contingency
Consideration.
5.11 Certificate of Designation
of Parent. Prior the Closing, Parent shall adopt the Certificate of
Designation and shall file it with the Secretary of State of
Delaware.
5.12 Ancillary Agreements.
The parties agree to use their commercially reasonable efforts to negotiate and
finalize the (i) Surviving Company Certificate of Formation, (ii) Surviving
Company LLC Agreement, (iii) Lock Up Agreements, (iv) Letter Agreement, (v)
Escrow Agreement, (vi) Exchange and Support Agreement, (vii) Tax Agreement,
(vii) the Registration Rights Agreement, (viii) the Certificate of Designation,
(ix) the Employment Agreements and (x) any other agreements contemplated by this
Agreement, as soon as reasonably practicable following the date hereof; provided, however, that nothing
herein shall require either such Parties to agree to any terms not reasonably
satisfactory to such Party.
5.13 Directors and Officers of
Parent After Closing. To the extent that no amendment to Parent’s
certificate of incorporation or any stockholder vote shall be required, Parent
shall take all necessary action, including causing directors to resign, so that
five persons to be designated by the Members, (at least two of whom shall be
independent under the applicable rules of the SEC and the applicable stock
exchange), (the “New
Directors”) are appointed or elected, as applicable, to the positions of
directors of Parent in classes as designated by the Members to serve in such
positions as of the Closing and such directors shall constitute the entire
board, and so that persons to be designated by the Members are appointed or
elected, as applicable, to the positions of officers of Parent (the “Officers”) and to serve in
such positions as of the Effective Time.
-69-
5.14 Lease Restructuring.
Between the date hereof and the Closing, the Company and Crumbs Inc. shall use
commercially reasonable efforts to obtain the consents of the landlords with
respect to the assignment to and assumption by the Company of the Tenant Leases
of Crumbs Inc. set forth on Section 5.14 of the Company
Disclosure Schedule (the “Restructured Leases”) on terms
and conditions reasonably acceptable by the Parties. Upon obtaining any such
consent, the Company and Crumbs Inc. shall enter into assignment and assumption
agreements pursuant to which Crumbs Inc. shall assign, convey and transfer all
its right title and interest in and to each such Restructured Lease to the
Company (or a designated Company Subsidiary) and such party shall assume and
obtain all rights and obligations related to such Restructured
Leases.
5.15 Letter of Credit
Collateral. The Company and EHL Holdings LLC shall use their respective
commercially reasonable efforts to negotiate with Southeastern Bank in order to
amend (i) the Promissory Note among Southeastern Bank, Magnolia Bluff, Inc.
(“Magnolia”) and the
Company (the “Promissory
Note”) and (ii) the Loan Agreement dated as of Jne 16, 2008 between
Southeastern Bank, the Company and Magnolia (the “Loan Agreement”) to (x) remove
Magnolia as a borrower thereunder, (y) arrange for the substitution of cash
collateral, a certificate of deposit or similar instrument of the Company not to
exceed $570,000 as a replacement for the property pledged by Magnolia thereunder
and (z) obtain the unconditional release of Xxxxx Xxxxx from all obligations and
liabilities arising out of or related to the Guaranty made by Xxxxx Xxxxx in
favor of Southeastern Bank. The Company shall enter into and, if necessary, file
with appropriate Governmental Authorities such customary documentation
reasonably necessary to effect such transactions including a full release of
Magnolia from all such pledge obligations and a release of all Encumbrances
related thereto. Furthermore, from and after the Closing, the Parent shall
indemnify and hold harmless Magnolia and Xxxxx Xxxxx from all Damages arising
out of or related to such matters.
5.16 Substitution of Lease
Guarantee(s). The Company shall use its commercially reasonable efforts
to obtain prior to Closing the unconditional release of Xxxxx Xxxxx and Xxxxxx
Xxxxx from all obligations and liabilities arising out of or related to any
guaranties made by Xxxxx Xxxxx or Xxxxxx Xxxxx, as applicable, with respect to
any Tenant Lease, including without limitation by substituting a guaranty of the
Company or and Company Subsidiary. If any such releases have not been obtained
prior to the Closing, the Company shall continue to use such commercially
reasonable efforts to obtain such releases and shall not extend the term of such
lease or otherwise materially amend the terms of such lease in a manner adverse
to Xxxxx Xxxxx and Xxxxxx Xxxxx,. Furthermore, from and after the Closing,
Parent shall indemnify and hold harmless Xxxxx Xxxxx and Xxxxxx Xxxxx from all
Damages arising out of or related to such guaranties.
-70-
5.17 Trust Account. Parent
shall make appropriate arrangements to cause the funds in the Trust Account to
be disbursed in accordance with the Trust Agreement and Section 3.17 hereof
and (i) the Cash Consideration to the Members in accordance with this Agreement,
(ii) all amounts payable to stockholders of Parent holding shares of Common
Stock sold in Parent’s initial public offering (“IPO”) who shall have validly
tendered and not withdrawn their shares of Common Stock in the Tender Offer upon
acceptance by the Parent of such shares (the “Tender Consideration”), (iii)
all amounts payable to holders of Sponsor Warrants and Stockholder Warrants who
have validly tendered and not withdrawn their warrants in the Warrant Tender
Offer upon acceptance by the Parent of such warrants (the “Warrant Tender
Consideration”), (iv) the Deferred Underwriting Amount to the
Underwriter, (iii) the Expenses to the third parties to which they are owed and
(iv) the remaining monies in the Trust Fund to Parent.
5.18 Merger Filings.
Parent shall make, and shall cause the Parent Subsidiaries to make, all
necessary filings with respect to the Merger and the transactions contemplated
thereby under the Securities Act and the Exchange Act and applicable “blue sky”
laws and the rules and regulations thereunder.
5.19 Section 16 Matters.
Prior to the Effective Time, Parent shall take all commercially reasonable steps
as may be required to cause any acquisitions of Parent securities (including
derivative securities with respect to the Common Stock) resulting from the
Merger or the other transactions contemplated hereby by each Person who is or
can be reasonably expected to become as a result of the Merger subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to
Parent, to be exempt under Rule 16b-3 promulgated under the Exchange
Act.
5.20 Certain Tax Matters.
The Parties agree and acknowledge that (i) the Company shall be considered as
continuing for purposes of Subchapter K of the Code, (ii) the exchange right
associated with the New Crumbs Class B Exchangeable Units shall be treated as a
separate put option on the stock of the Parent pursuant to the terms and
conditions of the Exchange Agreement, and (iii) the Merger shall be treated for
U.S. tax purposes as a purchase by the Parent of Class A Units (as defined in
the Surviving Company LLC Agreement) in exchange for (a) the Merger
Consideration (adjusted to reflect the units treated as retained by the Members
for U.S. federal income tax purposes) and (b) the right to receive the Tax
Benefit Payments (as such term is defined in the Tax Receivable Agreement)
attributable to the transactions contemplated by this Agreement.
5.21 Further Assurances.
The Company and Parent shall further cooperate with each other and use their
respective commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on their part under this Agreement and applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as soon as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain (in accordance with
this Agreement) as soon as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
Person and/ or any Governmental Authority.
-71-
ARTICLE
VI.
CONDITIONS
6.1 Conditions to Each Party’s
Obligations. The obligations of each Party to consummate the Merger and
other transactions described herein shall be subject to the satisfaction or
waiver (where permissible), at or prior to the earlier of the Effective Time or
Drop Dead Date, of the following conditions:
(a) Tender Offer. The
Tender Offer shall have been conducted in accordance with Section 5.6 and
Parent shall have accepted the shares of Common Stock validly tendered and not
validly withdrawn pursuant to the Tender Offer and no more than a number of
shares of the Common Stock equal to eighty eight percent (88%) of the IPO Shares
(as defined in Parent’s certificate of incorporation) shall have been validly
tendered and not validly withdrawn prior to the expiration of the Tender
Offer.
(b) Warrant Tender Offer.
The Warrant Tender Offer shall have been conducted in accordance with Section
5.6 and Parent shall have accepted the Sponsor Warrants and any Stockholder
Warrants validly tendered and not validly withdrawn pursuant to the Tender Offer
and the Parent Founder shall have tendered all of its Founder Warrants in the
Warrant Tender Offer in accordance with Section
5.6(b).
(c) Antitrust Laws. The
applicable waiting period (and any extension thereof) under any Antitrust Laws
shall have expired or been terminated.
(d) Requisite Regulatory
Approvals and Consents. All authorizations, approvals and permits
required to be obtained from or made with any Governmental Authority in order to
consummate the transactions contemplated by this Agreement (the “Requisite Regulatory
Approvals”), and all Consents from third Persons required in connection
with the transactions contemplated by this Agreement (except for Consents
relating to the Tenant Leases which is subject to Section 6.1(i)),
shall have been obtained or made.
(e) Lease Restructuring.
The transactions contemplated by Section 5.14 shall
have been completed in a manner reasonably satisfactory to the
Parties.
(f)
No Law. No
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary, preliminary or permanent) or Order that is
then in effect and has the effect of making the Merger or the other transactions
contemplated by this Agreement or the agreements contemplated by this Agreement
illegal or otherwise preventing or prohibiting consummation of the Merger or
such transactions contemplated by this Agreement, the Certificate of Designation
or the other ancillary agreements related to this Agreement.
(g) The Escrow Agreement.
The Escrow Agreement shall have been finalized with terms and conditions
reasonably satisfactory to the Parties and duly executed and delivered by the
parties thereto.
-72-
(h) Certificate of
Designation. The Certificate of Designation for the Parent Series A
Voting Preferred Stock shall have been finalized on terms and conditions
reflecting and consistent with the term sheet set forth on Exhibit 6.1(h) and
such other terms and conditions reasonably satisfactory to the Parties (the
“Certificate of
Designation”) and Parent shall have filed with the Secretary of State,
and the Secretary of State shall have accepted, the Certificate of Designation
duly adopted by the Parent Board.
(i)
Tenant Leases. An
aggregate of retail stores of the Company representing at least Seventy Five
Percent (75%) of the revenues of the Company on a consolidated basis (as
reflected in the statement of income of the Closing Company Financials) either
(a) shall have obtained Consents from third Persons required in connection with
the Tenant Leases for such retail store and/ or (b) have Tenant Leases that do
not require Consent from any third Person.
6.2 Conditions to Obligations of
Parent and the Parent Subsidiaries. The obligations of Parent and the
Parent Subsidiaries to consummate the Merger are subject to the satisfaction or
waiver by Parent, at or prior to the Effective Time, of the following additional
conditions:
(a) Representations and
Warranties. Each of the representations and warranties of the Company and
the Members set forth in this Agreement shall be true and correct as of the date
of this Agreement and as of the Effective Time as though made as of the
Effective Time Date, except (i) to the extent that such representations and
warranties refer specifically to an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date, and (ii) this condition shall be deemed satisfied unless the
incorrectness of such representations and warranties would, in the aggregate,
reasonably be expected to result in a Company Material Adverse
Effect.
(b) Agreements and
Covenants. The Company and the Members shall have performed in all
material respects all of their respective obligations and complied with all of
their respective agreements and covenants to be performed or complied with by
them under this Agreement at or prior to the Effective Time.
(c) Officer Certificate.
The Company shall have delivered to Parent a certificate, dated the Closing
Date, signed by an executive manager of the Company, certifying in such capacity
as to the satisfaction of the conditions specified in Sections 6.2(a),
6.2(b) and
6.2(e).
(d) Secretary’s
Certificate. The Company shall have delivered to Parent a true copy of
the resolutions of the Company Board authorizing the execution of this Agreement
and the consummation of the Merger and transactions contemplated herein,
certified by the Secretary of the Company or similar officer.
(e) Company Material Adverse
Effect. No Company Material Adverse Effect shall have occurred since the
date of this Agreement.
(f) LLC Agreement. Parent
shall have received the Surviving Company Limited Liability Agreement, duly
executed by the Members.
-73-
(g) Legal Opinion. Parent
shall have received an opinion of the Company’s transaction counsel, Akin Gump
Xxxxxxx Xxxxx & Xxxx LLP, , in form and substance reasonably satisfactory to
the Parent, addressed to Parent and the Parent Subsidiaries, and dated as of the
Closing Date.
(h) Lock Up Agreements.
Parent shall have received the Lock Up Agreements, duly executed by the
Members.
(i)
Employment
Agreements. Parent shall have received employment agreements from each of
Xxxxx Xxxxx, Xxx Xxxxx and Xxxxx Ireland, substantially in the form attached
hereto as Exhibit
6.1(i) (the “Employment
Agreements”).
(j)
Exchange and Support
Agreement. Parent shall have received the Exchange and Support Agreement,
duly executed by the Members.
(k) Tax Agreement. Parent
shall have received the Tax Receivables Agreement, in the form set forth in
Exhibit 6.2(k)
attached hereto and on such other terms and conditions reasonably acceptable to
the Parties (the “Tax
Agreement”), duly executed by the Company.
(l)
Registration Rights
Agreement. Parent shall have received the Registration Rights Agreement
(as defined below), duly executed by the Members.
(m) Name Change. Crumbs
Inc. shall have filed an amendment to its certificate of incorporation changing
its name to a name that does not utilize the word “Crumbs”, and the Secretary of
State of the State of New York shall have accepted such amendment.
6.3 Conditions to Obligations of
the Company and the Members. The obligations of the Company and the
Members to consummate the Merger are subject to the satisfaction or waiver by
the Company, at or prior to the Effective Time, of the following additional
conditions:
(a) Representations and
Warranties. Each of the representations and warranties of the Parent and/
or any Parent Subsidiary set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Effective Time as though made as
of the Effective Time, except (i) to the extent that any of such representations
and warranties refer specifically to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date, and (ii) this condition shall be deemed satisfied unless the incorrectness
or such representations and warranties would, in the aggregate, reasonably be
expected to result in a Parent Material Adverse Effect.
(b) Agreements and
Covenants. Each of Parent and the Parent Subsidiaries shall have
performed, in all material respects, its obligations and complied with, in all
material respects, its agreements and covenants to be performed or complied with
by it under this Agreement at or prior to the Effective Time.
(c) Officer Certificate.
Parent shall have delivered to the Company a certificate, dated the Closing
Date, signed by the chief executive officer or chief financial officer of
Parent, certifying in such capacity as to the satisfaction of the conditions
specified in Sections
6.3(a), 6.3(b) and 6.3(e).
-74-
(d) Secretary’s
Certificate. The Parent shall have delivered to the Company a
true copy of the resolutions of the Parent Board, and Merger Sub Board, each
authorizing the execution of this Agreement and the consummation of the Merger
and transactions contemplated herein, certified by the Secretary of each of
Parent and Merger Sub, or similar officer.
(e) Parent Material Adverse
Effect. No Parent Material Adverse Effect shall have occurred
since the date of this Agreement.
(f) Legal
Opinion. The Company shall have received an opinion of the
Parent’s and the Parent Subsidiaries’ counsel, Ellenoff Xxxxxxxx &
Schole LLP, in form and substance reasonably satisfactory to the Company and the
Members, addressed to the Company and the Members, and dated as of the Closing
Date.
(g) LLC Agreement. The
Members shall have received the Surviving Company Limited Liability Agreement,
duly executed by Parent.
(h) Intentionally
Omitted.
(i) Founder Letter
Agreement. The Letter Agreements shall be in full force and
effect in accordance with its terms.
(j) Exchange and Support
Agreement. The Members shall have received the Exchange and
Support Agreement, duly executed by Parent.
(k) SEC
Compliance. Immediately prior to Closing, Parent shall be in
compliance in all material respects with the reporting requirements under the
Exchange Act.
(l) Directors and Officer of
Parent. Parent shall have delivered resignations of the existing
directors of Parent effective as of the Effective Time in form and substance
reasonably satisfactory to the Members and the Company and shall have caused the
New Directors to be appointed to the board of directors of Parent and the
Officers to be appointed to their respective positions, in each case as of the
Effective Time.
(m) Registration Rights
Agreement. The Registration Rights Agreement among Parent and
the Members shall have been finalized on terms and conditions reflecting and
consistent with the term sheet set forth on Exhibit 6.1(m) and
such other terms and conditions reasonably satisfactory to the Parties and the
Members shall have received the Registration Rights Agreement (the “Registration Rights
Agreement”), duly executed by Parent.
(n) Employment
Agreements. The Employment Agreements shall have been received
by Parent, in form and substance reasonably satisfactory to the parties
thereto.
-75-
(o) Tax
Agreement. The Members shall have received the Tax Agreement,
duly executed by Parent.
6.4 Waiver of Closing
Conditions. In the event a Party (the “Waiving Party”) waives a
Closing condition he, she or it has the right to require the satisfaction of as
set forth in this Article VI and the
Merger and the transactions contemplated by this Agreement are subsequently
consummated, the Waiving Party (on behalf of itself and the Parent Indemnified
Parties or the Company Indemnified Parties, as applicable) hereby
waives any and all rights and claims against the Party failing to satisfy such
Closing condition (the “Failing
Party”) for Damages arising from the breach by the Failing Party of the
Failing Party’s representations, warranties and/ or covenant as it specifically
relates to the Closing condition waived by the Waiving Party.
ARTICLE
VII.
TERMINATION AND
ABANDONMENT
7.1 Termination. This
Agreement may be terminated and the Merger and the other transactions
contemplated hereby may be abandoned at any time prior to the earlier of the
Effective Time or the Drop Dead Date, notwithstanding any approval of the
matters presented in connection with the Merger by the stockholders of Parent or
Members (the date of any such termination, the “Termination Date”), as
follows:
(a) by
mutual written consent of each of the Company and Parent, as duly authorized by
the Parent Board and the Company Board;
(b) by
written notice by either Parent or the Company if all the condition to the
obligations of the Parties to consummate the Merger have been satisfied and the
Merger has not been consummated by the Drop Dead Date; provided, however, that
the right to terminate this Agreement under this Section 7.1(b) shall
not be available to Parent or the Company if the failure of the
Closing to occur by the Drop Dead Date is due to the failure by Parent or any
Parent Subsidiary, on one hand, or the Company, the Members and/ or any Company
Subsidiary, on the other hand, to fulfill in all material respects its
obligations under this Agreement.
(c)
by written notice by either Parent or the Company if the Closing conditions set
forth in Section 6.1 have
not been satisfied by the Company or Parent, as the case may be (or waived by
Parent or the Company as the case may be) by the Drop Dead Date; provided, however, that the
right to terminate this Agreement under this Section 7.1(c)
shall not be available to Parent or the Company due to failure by Parent or any
Parent Subsidiary, on one hand, or the Company, any Company Subsidiary or the
Members, on the other hand, to fulfill in all material respects any of their
respective obligations under this Agreement which results in, or otherwise
causes, the failure of such condition to be satisfied;
-76-
(d) by
written notice by either Parent or the Company, if (i) any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any Order
or Law or taken any other Action that is, in each case, then in effect and is
final and nonappealable and has the effect of restraining, enjoining or
otherwise preventing or prohibiting the transactions contemplated by this
Agreement or the agreements contemplated hereby or (ii) any Governmental
Authority shall have finally, without the right to appealable, declined to grant
any of the Requisite Regulatory Approvals; provided, however, that the
right to terminate this Agreement under this Section 7.1(c)
shall not be available to any Party who has failed to comply with Section 5.2 as it
relates to such Order or Action or whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, any such Order to have
been enacted, issued, promulgated, enforced or entered;
(e) by
written notice by Parent, if there has been a breach by the Company or any
Member of any of their respective representations, warranties, covenants or
agreements contained in this Agreement, or if any representation or warranty of
the Company or any Member shall have become untrue or inaccurate, in either
case, that would result in a failure of a condition set forth in Section 6.2 (a
“Terminating Company
Breach”); provided, however, that if such
Terminating Company Breach is curable by the Company or any Member prior to the
Drop Dead Date, then Parent may not terminate this Agreement under this Section 7.1(e)
for fourteen (14) calendar days after delivery of written notice from
Parent to Company of such Terminating Company Breach, provided Company or such
Member continues to exercise commercially reasonable efforts to cure such breach
(it being understood that Parent may not terminate this Agreement pursuant to
this Section 7.1(e)
if it shall have materially breached this Agreement or if such Terminating
Company Breach by the Company or a Member is cured during such
fourteen (14) calendar day period).
(f) by
written notice by the Company, if there has been a breach by Parent or the
Parent Subsidiaries of any of their respective representations, warranties,
covenants or agreements contained in this Agreement, or if any representation or
warranty of Parent or any Parent Subsidiary shall have become untrue or
inaccurate, in either case, that would result in a failure of a condition set
forth in Section 6.3 (a
“Terminating Parent
Breach”); provided, however, that if such
Terminating Parent Breach is curable by Parent prior to the Drop Dead, then
Company may not terminate this Agreement under this Section 7.1(f)
for fourteen (14) calendar days after delivery of written notice from
Company to Parent of such Terminating Parent Breach, provided Parent continues
to exercise commercially reasonable efforts to cure such Terminating Parent
Breach (it being understood that the Company may not terminate this Agreement
pursuant to this Section 7.1(f)
if it shall have materially breached this Agreement or if such Terminating
Parent Breach by the Parent is cured during such
fourteen (14) calendar day period).
(g) by
written notice by Parent if the Closing conditions set forth in Section 6.2 have
not been satisfied by the Company and the Members (or waived by Parent) by the
Drop Dead Date; provided, however, that the
right to terminate this Agreement under this Section 7.1(g)
shall not be available to Parent if Parent or any Parent Subsidiary is in
material breach of any representation, warranty or covenant contained in this
Agreement which results in, or otherwise causes, the failure of any such
condition to be satisfied; or
(h) by
written notice by Company if the Closing conditions set forth in Section 6.3 have
not been satisfied by Parent (or waived by Company) by the Drop Dead Date; provided, however, that the
right to terminate this Agreement under this Section 7.1(h)
shall not be available to Company or any Member if the Company or any Member is
in material breach of any representation, warranty or covenant contained in this
Agreement which results in, or otherwise causes, the failure of any such
condition to be satisfied.
-77-
(i) by
written notice by either Parent or the Company if (i) the Parent Board (or any
committee thereof) shall (A) approve, adopt or recommend any Acquisition
Proposal or (B) approve, recommend or enter into, or allow Parent or any of
Parent Subsidiaries to enter into, a letter of intent, agreement in principle or
definitive agreement for any Acquisition Proposal, and/ or (ii) within ten (10)
Business Days of delivery of written request by the Company for Parent to
reaffirm the Parent Board Recommendation following the date any
Acquisition Proposal with respect to Parent or any material modification thereto
is first published or sent or given to the Parent, Parent fails to reaffirm the
Parent Board Recommendation, (iv) Parent shall have failed to include in the
Offer Documents distributed to its stockholders the Parent Board Recommendation
or (v) the Parent or the Board of Directors (or any committee thereof) shall
publicly propose any of the foregoing.
(j) by
written notice by Parent if the Company fails to revoke any new
material disclosure information within five (5) Business Days following the
receipt of a Disclosure Rejection Notice from Parent.
(k)
by written notice by the Company to the extent there is a material adjustment to
the cash portion of the pro forma working capital figure in the Offer Documents
which is attributable to Parent’s or the Parent Subsidiaries financial
condition.
7.2 Effect of
Termination. In the event of the termination of this Agreement
and the abandonment of the Merger pursuant to Section 7.1,
this Agreement shall forthwith become void, and there shall be no liability on
the part of any Party hereto or any of their respective affiliates or the
directors, officers, partners, members, managers, employees, agents or other
Representatives of any of them, and all rights and obligations of each Party
hereto shall cease, except (i) as set forth in this Section 7.2 and
in Sections 7.3 and
7.4 and Article VIII and
(ii) subject to Sections 7.4 and
5.3, nothing
herein shall relieve any Party from liability for any fraud or willful breach of
any of its respective representations, warranties, covenants or agreements
contained in this Agreement prior to termination. Without limiting
the foregoing, Section 4.2(b),
Section 5.3,
this Section 7.2,
Section 7.3,
Article VIII
and Section 9.4
shall survive the termination of this Agreement.
-78-
7.3 Fees and
Expenses. Except as otherwise set forth in this Agreement,
including Section 5.2 and
this Section 7.3, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such expenses, whether
or not the Merger or any other related transaction is consummated. As
used in this Agreement, “Expenses” shall include all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, financing sources, 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 authorization, preparation, negotiation, execution or performance
of this Agreement or any ancillary agreement related hereto, the preparation,
filing, mailing and printing of the Tender Offer and Warrant Tender Offer
documents and all other matters related to the consummation of the
Merger. Notwithstanding the foregoing and in the event the Merger is
consummated pursuant to the terms of this Agreement, Parent shall pay the
reasonable Expenses incurred by the Company and the Members in connection with
this Agreement and the transactions contemplated hereby. Any Expenses
incurred and/ or otherwise due and owing by Parent or any Parent Subsidiary
shall be paid out of remaining amounts of the Trust Fund released to Parent at
Closing in accordance with Section 3.17. In
the event [A] this Agreement is terminated (i) by the Company pursuant to Section 7.1(b) (Drop
Dead Date), (ii) by the Company or by Parent pursuant to Section 7.1(c)
(Mutual Closing Conditions) either (x) as a result of the failure to satisfy the
conditions set forth in Sections 6.1(a)
(Tender Offer), 6.1(b) (Warrant
Tender Offer) or 6.1(c) (Antitrust
Laws) or (y) as a result of the failure to satisfy the conditions set forth in
Sections 6.1(g)
(Escrow Agreement) or 6.1(h) (Certificate
of Designation), unless such failure was due to the Company’s and/ or a Member’s
failure to comply with their respective obligations pursuant to Sections 5.2, 5.6 and/ or 5.12 or to deliver
any requisite counterparts contemplated by such conditions, (iii) by the Company
pursuant to Section
7.1(d) (Governmental Order) to the extent Parent is in breach of its
obligations pursuant to Section 5.2 as it
relates to the relevant Order or Action, (iv) by the Company pursuant to Section 7.1(f)
(Terminating Parent Breach), (v) by Parent pursuant to Section 7.1(g)
(Parent Closing Conditions) as a result of the failure to satisfy the conditions
set forth in Section
6.2(f) (LLC Agreement), Section 6.2(h) (Lock
Up Agreements), Section 6.2(i)
(Employment Agreements), Section 6.2(j)
(Exchange and Support Agreement), Section 6.2(k) (Tax
Agreement), or Section
6.2(l) (Registration Rights Agreement) unless such failure was due to the
Company’s and/ or a Member’s failure to comply with their respective obligations
pursuant to Section
5.12 or to deliver any requisite counterparts contemplated by such
conditions, (vi) by the Company pursuant to Section 7.1(h)
(Company Closing Conditions), (vii) by Company or Parent pursuant to Section 7.1(i)
(Acquisition Proposal), or (v) by the Company pursuant to Section 7.1(k) (Pro
Forma Adjustment), and [B] Parent
subsequently consummates a Business Combination with any Person other than the
Company, Parent shall reimburse the Company for its documented and reasonable
legal expenses the Company incurred up to Five Hundred Thousand Dollars
($500,000.00) in the aggregate (the “Maximum Recovery
Amount”).
7.4 Maximum
Recovery. Notwithstanding anything to the contrary in this
Agreement, if the Company or any of the Members fail to effect the Closing for
any or no reason or otherwise breach this Agreement (whether
willfully, intentionally, unintentionally or otherwise) or fail to perform
hereunder (whether willfully, intentionally, unintentionally or otherwise) prior
to Closing, then, except for an order of specific performance as and only to the
extent expressly permitted by Section 9.10,
Parent’s and the Parent Indemnified Parties’ sole and exclusive remedy (whether
at law, in equity, in contract, in tort or otherwise) against the Company, the
Company Subsidiaries and any of their respective former, current and future
direct or indirect equity holders, controlling Persons, stockholders, directors,
officers, employees, agents, affiliates, members, managers, general or limited
partners or assignees (each a “Related Party” and
collectively, the “Related
Parties”) for any breach, loss or Damage shall be to terminate this
Agreement and the maximum liability of the Related Parties shall
be an amount equal to the Maximum Recovery Amount. Other
than the Maximum Recovery Amount. Parent and the Parent Indemnified
Parties shall not have any rights or claims against any of the Related Parties
under this Agreement or otherwise, whether at law or equity, in contract, in
tort or otherwise, and none of the Related Parties shall have any further
liability or obligation relating to or arising out of this Agreement or the
transactions contemplated by this Agreement.
-79-
7.5 Amendment. This
Agreement may only be amended pursuant to a written agreement signed by each of
the Parties hereto.
7.6 Waiver. At
any time prior to the Effective Time, subject to applicable Law, any Party
hereto may in its sole discretion (i) extend the time for the performance
of any obligation or other act of any other non-affiliated Party hereto,
(ii) waive any inaccuracy in the representations and warranties by such
other non-affiliated Party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance by such other non-affiliated
Party with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the Party or Parties to be bound thereby. Notwithstanding
the foregoing, no failure or delay by the Company, Parent or any Parent
Subsidiary in exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
ARTICLE
VIII.
TRUST FUND
WAIVER
8.1 Trust Fund
Waiver. Reference is made to the final prospectus of Parent,
dated and filed with the SEC on May 19, 2010 (File No. 333-163134) (the “Prospectus”). Each
of the Company and the Members warrants and represents that he, she or it has
read the Prospectus and understands that Parent has established the Trust Fund
containing the proceeds of its IPO and certain additional proceeds (to include
the initial principal and interest accrued from time to time thereon) initially
in an amount of $54,476,303 for the benefit of Parent’s public stockholders
(“Public Stockholders”)
and certain parties (including the underwriters of the IPO) and that, except for
a portion of the interest earned on the amounts held in the Trust Fund, Parent
may disburse monies from the Trust Fund only: (i) to the Public Stockholders in
the event they elect to redeem their shares of Common Stock in connection with
the consummation of its Initial Business Combination, (ii) to the Public
Stockholders if Parent fails to consummate its Initial Business Combination
within 15 months from the date of the Prospectus or (iii) to Parent after or
concurrently with the consummation of its Initial Business
Combination. For and in consideration of Parent entering into this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of the Company and the Members
hereby agrees he, she or it does not now and shall not at any time hereafter
have any right, title, interest or claim of any kind in or to any monies in the
Trust Fund or distributions therefrom (except as set forth in (iii) of this
paragraph) (“Distributions”), or make any
claim against the Trust Fund and/ or Distributions, regardless of whether such
claim arises as a result of, in connection with or relating in any way to, any
proposed or actual business relationship between Parent, on one hand, or the
Company or the Members, on the other hand, this Agreement or any other matter,
and regardless of whether such claim arises based on contract, tort,
equity or any other theory of legal liability (any and all such claims are
collectively referred to hereafter as the “Claims”). Each of
the Company and the Members hereby irrevocably waives any Claims he, she or it
may have against the Trust Fund and/ or Distributions now or in the future as a
result of, or arising out of, any negotiations, contracts or agreements with
Parent and will not seek recourse against the Trust Fund for any reason
whatsoever (including, without limitation, for an alleged breach of this
Agreement). Each of the Company and the Members agrees and
acknowledges that such irrevocable waiver is material to this letter and
specifically relied upon by Parent to induce it to enter in this Agreement, and
each of the Company and the Members further intends and understands such waiver
to be valid, binding and enforceable under applicable law. To the
extent the Company or any Member commences any action or proceeding based
upon, in connection with, relating to or arising out of any matter relating to
Parent, which proceeding seeks, in whole or in part, monetary relief against
Parent, each of the Company and the Members hereby acknowledges and agrees
his, her or its sole remedy shall be against funds held outside of the Trust
Fund and Distributions and that such Claim shall not permit the Company or any
Member (or any Person claiming on the Company’s or any Member’s behalf or
in lieu of the Company or any Member) to have any Claim against the Trust Fund,
Distributions and/ or any amounts contained therein. In the event
that the Company or any Member commences any action or proceeding based
upon, in connection with, relating to or arising out of any matter relating to
Parent, which proceeding seeks, in whole or in part, relief against the Trust
Fund or the Public Stockholders, whether in the form of money damages or
injunctive relief, Parent shall be entitled to recover from the Company or
the Member, as the case may be, the associated legal fees and costs in
connection with any such action, in the event Parent prevails in such
action or proceeding. Notwithstanding the
foregoing, nothing in this Section 8.1 shall
relieve Parent of its obligations under Section
7.3.
-80-
ARTICLE
IX.
MISCELLANEOUS
9.1 Survival. The
Confidentiality Agreement, the last sentence of Section 7.3 and the
Company’s, the Members’ and the Member Representatives’ waiver set forth in
Section 8.1,
shall survive termination of this Agreement in accordance with Section 7.1.
9.2 Notices. All
notices, consents, waivers and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile or other electronic means, receipt confirmed, or on the next Business
Day when sent by reliable overnight courier to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
(i) if
to the Company and the Members or to Parent (following Closing),
to:
Crumbs
Holdings LLC
000 Xxxx
00xx
Xxxxxx
Xxxxx
000
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxx
Xxxxx
Facsimile: (000)
000-0000
with a
copy to (but which shall not constitute notice to the Company or the
Members):
Akin Gump
Xxxxxxx Xxxxx & Xxxx LLP
Xxx
Xxxxxx Xxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx Xxxxxxxxxx
Facsimile: (000)
000-0000
-81-
(ii) if
to the Member Representatives to:
Xxxxx
Xxxxx
Crumbs
Holdings LLC
000 Xxxx
00xx
Xxxxxx
Xxxxx
000
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxx
Xxxxx
Facsimile: (000)
000-0000
Xxxxx
Xxxxx
000 X.
Xxxxxx Xx. Xxx 0
Xxxxxx,
XX 00000
Facsimile:
4106731385
with a
copy to (but which shall not constitute notice to the Member
Representatives):
Akin Gump
Xxxxxxx Xxxxx & Xxxx LLP
Xxx
Xxxxxx Xxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx Xxxxxxxxxx
Facsimile: (000)
000-0000
(iii) if
to Parent or Merger Sub (before the Closing) to:
00xx Xxxxxx
Acquisition Corp.
000
Xxxxxxx Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxx
Xxxxx
Facsimile: (000)
000-0000
with a
copy to (but which shall not constitute notice to Parent or Merger
Sub):
Ellenoff
Xxxxxxxx & Schole LLP
000 Xxxx
00xx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxxx
Xxxxxxxx, Esq.
Facsimile: (000)
000-0000
-82-
9.3 Binding Effect;
Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns. This Agreement shall not
be assigned by operation of Law or otherwise without the prior written consent
of the other Parties, and any assignment without such consent shall be null and
void; provided
that no such assignment shall relieve the assigning Party of its obligations
hereunder; provided, further, that each
Member may assign all or a portion of its rights to receive its allocable
portion of the Merger Consideration to the following (each a “Permitted Family Transferee”):
(i) if the Member is not a natural Person, to its equity holders, (ii) to the
immediate family members (including spouses, significant others, lineal
descendants, brothers and sisters) of the Member or its equity holders, (iii) a
family trust, foundation or partnership established for the exclusive benefit of
the Member, its equity holders or any of their respective immediate family
members, (iv) a charitable foundation controlled by the Member, its equity
holders or any of their respective immediate family members or (v), by will or
intestacy to the undersigned’s immediate family or to a trust, the beneficiaries
of which are exclusively the undersigned and a member or members of the
undersigned’s immediate family or a charitable foundation controlled by any such
persons.
9.4 Governing Law;
Jurisdiction. This Agreement shall be governed by, construed
and enforced in accordance with the Laws of the State of Delaware without regard
to the conflict of laws principles thereof. All Actions arising out
of or relating to this Agreement shall be heard and determined exclusively in
any state or federal court located in Delaware. The Parties hereto
hereby (A) submit to the exclusive jurisdiction of any Delaware state or federal
court for the purpose of any Action arising out of or relating to this Agreement
brought by any Party hereto and (B) irrevocably waive, and agree not to assert
by way of motion, defense or otherwise, in any such Action, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the transactions contemplated hereby may not be enforced
in or by any of the above-named courts. Each of Parent, the Parent
Subsidiaries and the Company agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Each of
Parent, the Parent Subsidiaries and the Company irrevocably consents to the
service of the summons and complaint and any other process in any other action
or proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such Party. Nothing in this Section 9.4
shall affect the right of any Party to serve legal process in any other manner
permitted by Law.
9.5 Waiver of Jury
Trial. Each of the Parties hereto hereby waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with
respect to any Action directly or indirectly arising out of, under or in
connection with this Agreement or the transactions contemplated
hereby. Each of the Parties hereto (i) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of any Action, seek
to enforce that foregoing waiver and (ii) acknowledges that it and the
other Parties hereto have been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this Section 9.5.
9.6 Counterparts. This
Agreement may be executed and delivered (including by facsimile or other
electronic transmission) in one or more counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
-83-
9.7 Interpretation. The
article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall not
in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term “Person” shall mean and include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an association, an unincorporated organization, a
Governmental Authority and any other entity, (ii) unless otherwise
specified herein, the term “affiliate,” with respect to
any Person, shall mean and include any Person, directly or indirectly, through
one or more intermediaries controlling, controlled by or under common control
with such Person, (iii) the term “subsidiary” of any specified
Person shall mean any corporation a majority of the outstanding voting power of
which, or any partnership, joint venture, limited liability company or other
entity a majority of the total equity interests of which, is directly or
indirectly (either alone or through or together with any other subsidiary) owned
by such specified Person, (iv) the term “knowledge,” when used with
respect to the Company, shall mean the actual knowledge of the Members,
(excluding Xxxxx Xxxxx and Xxxxxx Xxxxx) after due inquiry and, when used with
respect to Parent, shall mean the knowledge of the executive officers of Parent
after due inquiry, and (v) the term “Business Day” means any day on
which the principal offices of the SEC in Washington,
D. C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the State of Delaware. 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,” “hereby” 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. The Parties have
participated jointly in the negotiation and drafting of this
Agreement. Consequently, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
9.8 Entire
Agreement. This Agreement and the documents or instruments
referred to herein, including any exhibits attached hereto and the Disclosure
Schedules referred to herein, which exhibits and Disclosure Schedules are
incorporated herein by reference and the Confidentiality Agreement embody the
entire agreement and understanding of the Parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement and such
other agreements supersede all prior agreements and the understandings among the
Parties with respect to such subject matter.
9.9 Severability. In
case any provision in this Agreement shall be held invalid, illegal or
unenforceable in a jurisdiction, such provision shall be modified or deleted, as
to the jurisdiction involved, only to the extent necessary to render the same
valid, legal and enforceable, and the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision be
affected thereby in any other jurisdiction. 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.
-84-
9.10 Specific
Performance. The Parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed by the Company or the Parent or the Parent Subsidiaries in accordance
with their specific terms or were otherwise breached. Accordingly,
the Parties further agree that prior to the termination of this Agreement in
accordance with Section 7.1,
each Party shall be entitled to seek an injunction or restraining order to
prevent breaches of this Agreement and to seek to enforce specifically the terms
and provisions hereof, this being in addition to any other right or remedy to
which such Party may be entitled under this Agreement, at law or in
equity.
9.11 Third
Parties. Except for the rights of the Indemnitees pursuant to
Sections 5.3 and
5.15, nothing contained in this Agreement or in any instrument or
document executed by any party in connection with the transactions contemplated
hereby shall create any rights in, or be deemed to have been executed for the
benefit of, any Person that is not a Party hereto or thereto or a successor or
permitted assign of such a Party.
9.12 Disclosure Schedules.
The disclosure of any matter in the Company Disclosure Schedule or the Parent
Disclosure Schedule, as the case may be, shall be deemed to be a disclosure on
all other section of the Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be, if such disclosure is in sufficient detail to make
it readily apparent to a reasonable Person that such disclosure applies to the
other sections thereof to which such disclosure is
responsive. Certain of the information set forth in each of th
Company Disclosure Schedule and the Parent Disclosure Schedule is included
solely for informational purposes and may not be required to be disclosed
pursuant to this Agreement. The disclosure of any information shall
not be deemed to constitute an acknowledgement that such information is required
to be disclosed in connection with the representations and warranties made by
the Parties in this Agreement, nor shall such information be deemed to establish
a standard of materiality.
9.13 Certain
Definitions. For purpose of this Agreement, the following
capitalized terms have the following meanings.
|
Term
|
Section
|
|
|
6
Month Lock-Up Shares
|
1.6(a)
|
|
|
2013
Stock Target
|
1.4(a)(iii)
|
|
|
2014
EBITDA Target
|
1.4(a)(v)
|
|
|
2015
EBITDA Target
|
1.4(a)(vi)
|
|
|
57th
Steret Warrants
|
3.2(c)
|
|
|
Acceleration
Event
|
1.9
|
|
|
Accounts
Receivable
|
2.26
|
|
|
Acquisition
Proposal
|
4.3(a)
|
|
|
Action
|
2.12(a)
|
|
|
Additional
Parent SEC Reports
|
3.
7(a)
|
|
|
Additional
Remedies
|
5.3(d)(iv)
|
|
|
Adjusted
EBITDA
|
|
1.4(a)
|
-85-
|
Term
|
Section
|
|
|
Adjusted
Net Working Capital
|
1.3(a)
|
|
|
Adjusted
Net Working Capital Benchmark
|
1.3(c)
|
|
|
Affiliate
|
9.
7
|
|
|
Affiliate
Transaction
|
2.
22
|
|
|
Aggregate
Cap
|
5.3(d)(ii)
|
|
|
Agreement
|
Preamble
|
|
|
Ancillary
Public Disclosures
|
2.
25
|
|
|
Antitrust
Laws
|
5.
2(a)
|
|
|
Business
|
4.4(a)(i)
|
|
|
Business
Day
|
9.
7
|
|
|
Cash
Consideration
|
1.
1(b)
|
|
|
Certificate
of Designation
|
6.1(h)
|
|
|
Certificate
of Merger
|
1.2(b)
|
|
|
Certifications
|
3.
7(a)
|
|
|
Change
of Board Recommendation
|
4.3(d)
|
|
|
Change
of Control
|
1.5
|
|
|
Charter
Documents
|
4.1(b)
|
|
|
Claims
|
8.
1
|
|
|
Claim
Notice
|
5.
3(e)(i)
|
|
|
Claim
Termination Date
|
1.6(b)
|
|
|
Closing
|
1.
2(a)
|
|
|
Closing
Company Financials
|
2.7(a)
|
|
|
Closing
Date
|
1.2(a)
|
|
|
Closing
Filing
|
5.8(b)
|
|
|
Closing
Merger Consideration
|
1.1(b)
|
|
|
Closing
Press Release
|
5.8(b)
|
|
|
Code
|
2.17(h)
|
|
|
Common
Stock
|
1.4(a)(i)
|
|
|
Common
Stock Equivalent Pair
|
1.6(b)
|
|
|
Company
|
Preamble
|
|
|
Company
Benefit Plans
|
2.
16(a)
|
|
|
Company
Board
|
Recitals
|
|
|
Company
Disclosure Schedule
|
Preamble
Article II
|
|
|
Company
ERISA Affiliate
|
2.
16(a)
|
|
|
Company
Financials
|
2.
7(a)
|
|
|
Company
Indemnified Party
|
5.
3(c)
|
|
|
Company
Intellectual Property
|
2.
15(a)
|
|
|
Company
Board
|
Recitals
|
|
|
Company
Material Adverse Effect
|
2.1
|
|
|
Company
Material Contract
|
2.14(a)
|
|
|
Company
Permits
|
2.11(b)
|
|
|
Company
Organization Documents
|
2.1
|
|
|
Company
Real Property
|
2.19(a)
|
-86-
|
Term
|
Section
|
|
|
Company
Subsidiary or Company Subsidiaries
|
2.1
|
|
|
Company
Subsidiary Organization Documents
|
2.1
|
|
|
Competing
Business
|
4.4(a)(i)
|
|
|
Confidentiality
Agreement
|
4.2(b)
|
|
|
Consent
|
2.5(a)
|
|
|
Contingency
Consideration
|
1.4(a)
|
|
|
Crumbs
LLC Agreement
|
2.2(a)
|
|
|
Current
Assets of the Company
|
1.3(a)
|
|
|
Current
Liabilities of the Company
|
1.3(a)
|
|
|
Damages
|
5.3(b)(i)
|
|
|
Deferred
Underwriting Amount
|
3.17(a)
|
|
|
DGCL
|
3.2(a)
|
|
|
DLLCA
|
Recitals
|
|
|
Disclosure
Rejection Notice
|
5.1(b)
|
|
|
Distributions
|
8.1
|
|
|
DOJ
|
5.2(b)
|
|
|
DOL
|
2.16(b)
|
|
|
Drop
Dead Date
|
1.2(a)
|
|
|
Earnout
Period
|
1.5
|
|
|
EBITDA
Objection Period
|
1.4(c)
|
|
|
EBITDA
Statement
|
1.4(c)
|
|
|
Effective
Time
|
1.2(b)
|
|
|
Employment
Agreements
|
6.2(i)
|
|
|
Encumbrance
|
2.6(a)
|
|
|
Enforceability
Exceptions
|
2.4(a)
|
|
|
Environmental
Laws
|
2.21
|
|
|
Equitable
Recoupment
|
5.3(d)(iv)
|
|
|
Equity
Consideration
|
1.1(b)
|
|
|
ERISA
|
2.16(a)
|
|
|
Escrow
Agent
|
1.4(e)
|
|
|
Escrow
Agreement
|
1.4(e)
|
|
|
Estimated
Adjusted Net Working Capital
|
1.3(a)
|
|
|
Exchange
Act
|
2.5(a)
|
|
|
Exchange
Agreement
|
5.7
|
|
|
Executory
Period
|
4.1(a)
|
|
|
Expenses
|
7.3
|
|
|
Expiration
Time
|
5.6(a)
|
|
|
Failing
Party
|
6.4
|
|
|
Final
EBITDA
|
1.4(c)
|
|
|
Final
Net Working Capital
|
1.3(b)
|
|
|
First
Stock Target
|
1.4(a)(i)
|
|
|
Flow
of Funds Memo
|
1.1(b)
|
|
|
Founder
Restricted Stock
|
4.5
|
-87-
|
Term
|
Section
|
|
|
FTC
|
5.2(b)
|
|
|
Fundamental
Representations and Warranties
|
5.3(a)
|
|
|
GAAP
|
2.7(a)
|
|
|
Governmental
Authority
|
2.5(a)
|
|
|
Hazardous
Substance
|
2.21
|
|
|
Incentive
Plan
|
5.5
|
|
|
Indebtedness
|
2.2(f)
|
|
|
Indemnified
Representative
|
5.3(e)
|
|
|
Indemnifying
Representative
|
5.3(e)
|
|
|
Indemnitee
|
5.3(e)
|
|
|
Independent
Accountant
|
1.3(b)
|
|
|
Initial
Expiration Date
|
5.6(a)
|
|
|
Initial
Warrant Expiration Date
|
5.6(b)
|
|
|
Intellectual
Property
|
2.15(b)
|
|
|
Investment
Company Act
|
3.17(a)
|
|
|
IPO
|
3.17(a)
|
|
|
Knowledge
|
9.7
|
|
|
Law
or Laws
|
2.6(a)
|
|
|
Letter
Agreement
|
4.5
|
|
|
Licensed
Intellectual Property
|
2.15(a)
|
|
|
Loan
Agreement
|
5.15
|
|
|
Lock
Up Agreement
|
1.6
|
|
|
Magnolia
|
5.15
|
|
|
Maximum
Contingency Consideration
|
1.4(a)
|
|
|
Maximum
Founder Restricted Stock
|
4.5
|
|
|
Maximum
Recovery Amount
|
7.2
|
|
|
Maximum
Tender Condition
|
5.6(a)
|
|
|
Member
or Members
|
Preamble
|
|
|
Member
Allocation
|
1.1(b)
|
|
|
Member
Warrants
|
5.5
|
|
|
Member
Representations
|
Preamble
Article II
|
|
|
Member
Representatives
|
Preamble
|
|
|
Merger
|
Recitals
|
|
|
Merger
Consideration
|
1.1(b)
|
|
|
Merger
Sub
|
Preamble
|
|
|
Merger
Sub Board
|
Recitals
|
|
|
Minimum
Trust Amount
|
3.17(a)
|
|
|
New
Crumbs Class B Exchangeable Units
|
1.1(b)
|
|
|
New
Directors
|
5.13
|
|
|
Non-Compete
Termination Date
|
4.4(a)
|
|
|
Off-the-Shelf
Software Agreements
|
2.14(a)(xi)
|
|
|
Offer
Documents
|
5.6(d)
|
|
|
Offer
to Purchase
|
5.6(d)
|
-88-
|
Term
|
Section
|
|
|
Officers
|
5.13
|
|
|
Old
Crumbs Unit
|
2.2(a)
|
|
|
Old
Crumbs Class A Units
|
2.2(a)
|
|
|
Old
Crumbs Class B Units
|
2.2(a)
|
|
|
Old
Crumbs Class C Units
|
2.2(a)
|
|
|
Order
|
2.12(a)
|
|
|
Parent
|
Preamble
|
|
|
Parent
Benefit Plans
|
3.12
|
|
|
Parent
Board
|
Recitals
|
|
|
Parent
Claims
|
1.6(b)
|
|
|
Parent
Disclosure Schedule
|
Preamble
Article III
|
|
|
Parent
ERISA Affiliate
|
3.12
|
|
|
Parent
Financials
|
3.7(b)
|
|
|
Parent
Indemnified Party
|
5.3(b)(i)
|
|
|
Parent
Material Adverse Effect
|
3.5
|
|
|
Parent
Material Contracts
|
3.14(a)
|
|
|
Parent
Organization Documents
|
3.1
|
|
|
Parent
Permits
|
3.27(b)
|
|
|
Parent
SEC Reports
|
3.7(a)
|
|
|
Parent
Series A Voting Preferred Stock
|
1.1(b)
|
|
|
Parent
Subsidiaries
|
3.1
|
|
|
Parent
Subsidiary Organization Documents
|
3.1
|
|
|
Party
or Parties
|
Preamble
|
|
|
Permitted
Encumbrances
|
2.19(b)
|
|
|
Permitted
Family Trasnferee
|
9.3
|
|
|
Permitted
Holder
|
1.5
|
|
|
Person
|
9.7
|
|
|
Promissory
Note
|
5.15
|
|
|
Prospectus
|
8.1
|
|
|
Public
Stockholders
|
8.1
|
|
|
Registration
Rights Agreement
|
6.3(m)
|
|
|
Related
Party
|
7.3
|
|
|
Representatives
|
4.2(b)
|
|
|
Requisite
Regulatory Approvals
|
6.1(d)
|
|
|
Restructured
Leases
|
5.14
|
|
|
Xxxxxxxx-Xxxxx
Act
|
3.7(a)
|
|
|
Schedule
TO
|
5.6(d)
|
|
|
SEC
|
2.7
|
|
|
Secretary
of State
|
1.2(b)
|
|
|
Second
Stock Target
|
1.4(a)(ii)
|
|
|
Securities
Act
|
2.2(b)
|
|
|
Signing
GAAP
|
1.4(a)
|
|
|
Signing
Company Financials
|
2.7(a)
|
-89-
|
Term
|
Section
|
|
|
Signing
Filing
|
5.8(a)
|
|
|
Signing
Press Release
|
5.8(a)
|
|
|
Sponsor
Warrants
|
3.2(c)
|
|
|
Stock
Achievement Notice
|
1.4(d)
|
|
|
Stock
Targets
|
1.4(iii)
|
|
|
Stockholder
Warrants
|
3.2(c)
|
|
|
Subsidiary
|
9.7
|
|
|
Superior
Proposal
|
4.3(e)
|
|
|
Surviving
Company
|
1.1(a)
|
|
|
Surviving
Company Certificate of Formation
|
1.1(e)
|
|
|
Surviving
Company LLC Agreement
|
1.1(e)
|
|
|
Tax
or Taxes
|
2.17(m)
|
|
|
Tax
Agreement
|
6.2(k)
|
|
|
Tax
Returns
|
2.17(a)
|
|
|
Tenant
Leases
|
2.19(a)
|
|
|
Tender
Consideration
|
5.17
|
|
|
Tender
Offer
|
5.6(a)
|
|
|
Tender
Offers
|
5.6(b)
|
|
|
Tender
Support Agreement
|
6.3(h)
|
|
|
Terminating
Company Breach
|
7.1(d)
|
|
|
Terminating
Parent Breach
|
7.1(e)
|
|
|
Termination
Date
|
7.1
|
|
|
Third
Stock Target
|
1.4(a)(iii)
|
|
|
Trading
Day
|
1.4(a)
|
|
|
Trading
Price
|
1.4(a)
|
|
|
Trust
Account
|
3.17(a)
|
|
|
Trust
Agreement
|
3.17(a)
|
|
|
Trust
Fund
|
3.17(a)
|
|
|
Trustee
|
3.17(a)
|
|
|
Underwriter
|
3.2(c)
|
|
|
Waiving
Party
|
6.4
|
|
|
Warrant
Cap
|
5.69b)
|
|
|
Warrant
Expiration Time
|
5.6(b)
|
|
|
Warrant
Tender Consideration
|
5.17
|
|
|
Warrant
Tender Offer
|
5.6(b)
|
|
|
WC
Objection Period
|
1.3(b)
|
|
|
Working
Capital Shortfall
|
|
1.3(c)
|
[SIGNATURE
PAGE FOLLOWS]
-90-
SIGNATURE
PAGE TO
IN
WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and
delivered by its respective duly authorized officer as of the date first above
written.
|
57TH
STREET GENERAL ACQUISITION CORP.
|
||
|
By:
|
/s/
Xxxx Xxxxx
|
|
|
Name: Xxxx
Xxxxx
|
||
|
Title: Chief
Executive Officer
|
||
|
57TH
STREET MERGER SUB LLC
|
||
|
By:
|
/s/ Xxxx Xxxxx
|
|
|
Name: Xxxx
Xxxxx
|
||
|
Title: Manager
|
||
|
CRUMBS
HOLDGINGS LLC
|
||
|
By:
|
/s/ Xxxxx Xxxxx | |
|
Name:
Xxxxx
Xxxxx
|
||
|
Title:
Cheif Executive
Officer
|
||
|
MEMBERS:
|
||
|
/s/ Xxxxx Xxxxx
|
||
|
Xxxxx
Xxxxx
|
||
|
/s/ Xxx Xxxxx
|
||
|
Xxx
Xxxxx
|
||
|
/s/ Xxxxxx Xxxxx
|
||
|
Xxxxxx
Xxxxx
|
||
|
CRUMBS,
INC.
|
||
|
By:
|
/s/ Xxxxx Xxxxx | |
|
Name:
Xxxxx Xxxxx
|
||
|
Title:
President
|
||
|
EHL
HOLDINGS LLC
|
||
|
By:
|
/s/ Xxxxx Xxxxx | |
|
Name:
Xxxxx
Xxxxx
|
||
|
Title:
Chairman
|
||
|
/s/ Xxxx X. Ireland
|
||
|
Xxxx
X. Ireland
|
||
-2-
|
MEMBER
REPRESENTATIVES:
|
|
|
/s/ Xxxxx Xxxxx
|
|
|
Xxxxx
Xxxxx
|
|
|
/s/ Xxxxx Xxxxx
|
|
|
Xxxxx
Xxxxx
|
-3-
|
Page
|
|||
|
Article
I.
|
TERMS
OF THE MERGER
|
1
|
|
|
1.1
|
The
Merger
|
1
|
|
|
1.2
|
The
Closing; Effective Time; Effect
|
3
|
|
|
1.3
|
Working
Capital Adjustment
|
4
|
|
|
1.4
|
Contingency
Consideration
|
5
|
|
|
1.5
|
Earnout
Acceleration
|
9
|
|
|
1.6
|
Restrictions
on Transfer; Claims and Escrow
|
10
|
|
|
1.7
|
Other
Effects of the Merger
|
11
|
|
|
1.8
|
Additional
Actions
|
11
|
|
|
1.9
|
Organic
Anti-Dilution; Equitable Adjustment of EBITDA Targets
|
12
|
|
|
1.10
|
No
Right of Set Off
|
12
|
|
|
Article
II.
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND MEMBERS
|
12
|
|
|
2.1
|
Due
Organization and Good Standing
|
13
|
|
|
2.2
|
Title
to Securities; Capitalization
|
13
|
|
|
2.3
|
Subsidiaries
|
16
|
|
|
2.4
|
Authorization;
Binding Agreement
|
17
|
|
|
2.5
|
Governmental
Approvals
|
18
|
|
|
2.6
|
No
Violations
|
18
|
|
|
2.7
|
Company
Financial Statements
|
19
|
|
|
2.8
|
Absence
of Certain Changes
|
20
|
|
|
2.9
|
Absence
of Undisclosed Liabilities
|
21
|
|
|
2.10
|
Compliance
with Laws
|
21
|
|
|
2.11
|
Regulatory
Agreements; Permits
|
21
|
|
|
2.12
|
Litigation
|
22
|
|
|
2.13
|
Restrictions
on Business Activities
|
22
|
|
|
2.14
|
Material
Contracts
|
22
|
|
|
2.15
|
Intellectual
Property
|
25
|
|
|
2.16
|
Employee
Benefit Plans
|
26
|
|
|
2.17
|
Taxes
and Returns
|
27
|
-i-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
2.18
|
Finders
and Investment Bankers
|
29
|
|
|
2.19
|
Title
to Properties; Assets
|
29
|
|
|
2.20
|
Employee
Matters
|
30
|
|
|
2.21
|
Environmental
Matters
|
31
|
|
|
2.22
|
Transactions
with Affiliates
|
32
|
|
|
2.23
|
Insurance
|
32
|
|
|
2.24
|
Books
and Records
|
32
|
|
|
2.25
|
Information
Supplied
|
33
|
|
|
2.26
|
Accounts
Receivable
|
33
|
|
|
2.27
|
Inventory
|
33
|
|
|
2.28
|
No
Additional Representations
|
33
|
|
|
Article
III.
|
REPRESENTATIONS
AND WARRANTIES OF PARENT
|
34
|
|
|
3.1
|
Due
Organization and Good Standing
|
34
|
|
|
3.2
|
Capitalization
|
35
|
|
|
3.3
|
Parent
Subsidiaries
|
36
|
|
|
3.4
|
Authorization;
Binding Agreement
|
37
|
|
|
3.5
|
Governmental
Approvals
|
37
|
|
|
3.6
|
No
Violations
|
38
|
|
|
3.7
|
SEC
Filings and Parent Financial Statements
|
39
|
|
|
3.8
|
Absence
of Undisclosed Liabilities
|
40
|
|
|
3.9
|
Information
Supplied
|
40
|
|
|
3.10
|
Absence
of Certain Changes
|
41
|
|
|
3.11
|
Taxes
and Returns
|
41
|
|
|
3.12
|
Employee
Benefit Plans
|
42
|
|
|
3.13
|
Employee
Matters
|
43
|
|
|
3.14
|
Material
Contracts
|
43
|
|
|
3.15
|
Litigation
|
44
|
|
|
3.16
|
Transactions
with Affiliates
|
44
|
|
|
3.17
|
Trust
Fund
|
44
|
|
|
3.18
|
Investment
Company Act
|
45
|
-ii-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
3.19
|
Finders
and Investment Bankers
|
45
|
|
|
3.20
|
Title
to Properties
|
45
|
|
|
3.21
|
Indebtedness
|
45
|
|
|
3.22
|
Listing
|
45
|
|
|
3.23
|
Board
Approval; Tender Offer
|
46
|
|
|
3.24
|
Insurance
|
46
|
|
|
3.25
|
Environmental
Matters
|
46
|
|
|
3.26
|
Intellectual
Property
|
46
|
|
|
3.27
|
Regulatory
Agreements; Permits
|
46
|
|
|
3.28
|
No
Additional Representations
|
47
|
|
|
Article
IV.
|
COVENANTS
|
48
|
|
|
4.1
|
Conduct
of Business of the Company and of Parent and Parent
Subsidiaries
|
48
|
|
|
4.2
|
Access
and Information; Confidentiality
|
51
|
|
|
4.3
|
No
Solicitation
|
52
|
|
|
4.4
|
Non-Competition
|
54
|
|
|
4.5
|
Parent
Founder Stock
|
55
|
|
|
4.6
|
Member
Representatives
|
57
|
|
|
Article
V.
|
ADDITIONAL
COVENANTS OF THE PARTIES
|
58
|
|
|
5.1
|
Notification
of Certain Matters
|
58
|
|
|
5.2
|
Commercially
Reasonable Efforts
|
59
|
|
|
5.3
|
Survival
of Representations and Warranties; Indemnification
|
60
|
|
|
5.4
|
Public
Announcements
|
65
|
|
|
5.5
|
Incentive
Plan
|
65
|
|
|
5.6
|
Tender
Offer; Warrant Tender Offer
|
66
|
|
|
5.7
|
Reservation
of Common Stock
|
68
|
|
|
5.8
|
Other
Actions
|
68
|
|
|
5.9
|
Required
Information
|
69
|
|
|
5.10
|
Merger
|
69
|
|
|
5.11
|
Certificate
of Designation of Parent
|
69
|
-iii-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
5.12
|
Ancillary
Agreements
|
69
|
|
|
5.13
|
Directors
and Officers of Parent After Closing
|
69
|
|
|
5.14
|
Lease
Restructuring
|
70
|
|
|
5.15
|
Letter
of Credit Collateral
|
70
|
|
|
5.16
|
Substitution
of Lease Guarantee(s)
|
70
|
|
|
5.17
|
Trust
Account
|
71
|
|
|
5.18
|
Merger
Filings
|
71
|
|
|
5.19
|
Section
16 Matters
|
71
|
|
|
5.20
|
Certain
Tax Matters
|
71
|
|
|
5.21
|
Further
Assurances
|
71
|
|
|
Article
VI.
|
CONDITIONS
|
72
|
|
|
6.1
|
Conditions
to Each Party’s Obligations
|
72
|
|
|
6.2
|
Conditions
to Obligations of Parent and the Parent Subsidiaries
|
73
|
|
|
6.3
|
Conditions
to Obligations of the Company and the Members
|
74
|
|
|
6.4
|
Waiver
of Closing Conditions
|
76
|
|
|
Article
VII.
|
TERMINATION
AND ABANDONMENT
|
76
|
|
|
7.1
|
Termination
|
76
|
|
|
7.2
|
Effect
of Termination
|
78
|
|
|
7.3
|
Fees
and Expenses
|
79
|
|
|
7.4
|
Maximum
Recovery
|
79
|
|
|
7.5
|
Amendment
|
80
|
|
|
7.6
|
Waiver
|
80
|
|
|
Article
VIII.
|
TRUST
FUND WAIVER
|
80
|
|
|
8.1
|
Trust
Fund Waiver
|
80
|
|
|
Article
IX.
|
MISCELLANEOUS
|
81
|
|
|
9.1
|
Survival
|
81
|
|
|
9.2
|
Notices
|
81
|
|
|
9.3
|
Binding
Effect; Assignment
|
83
|
|
|
9.4
|
Governing
Law; Jurisdiction
|
83
|
|
|
9.5
|
Waiver
of Jury Trial
|
83
|
-iv-
TABLE
OF CONTENTS
(continued)
|
Page
|
|||
|
9.6
|
Counterparts
|
83
|
|
|
9.7
|
Interpretation
|
84
|
|
|
9.8
|
Entire
Agreement
|
84
|
|
|
9.9
|
Severability
|
84
|
|
|
9.10
|
Specific
Performance
|
85
|
|
|
9.11
|
Third
Parties
|
85
|
|
|
9.12
|
Disclosure
Schedules
|
85
|
|
|
9.13
|
Certain
Definitions
|
85
|
-v-
Annex A
Conditions to the Tender
Offers
Reference
is made to the Agreement and Plan of Merger, dated as of January 9, 2011 (the
“Agreement”), among
00xx
Xxxxxx General Acquisition Corp., a Delaware corporation (“Parent”), 57th Street
Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary
of Parent (“Merger
Sub”), Crumbs Holdings LLC, a Delaware limited liability company (the
“Company”), the members
of the Company as set forth on the signature page hereto (each a “Member” and, collectively, the
“Members”), and the
representatives of the Company and the Members (the “Member
Representatives”). Capitalized terms that are used but not
otherwise defined in this Annex A shall have the respective meanings ascribed
thereto in the Agreement. Notwithstanding any other provisions of the Tender
Offers or either of them, and in addition to (and not in limitation of) the
rights and obligations of Parent to extend, terminate and/or modify the Tender
Offers (subject to the terms and conditions of the Agreement), Parent
(i) shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC (including Rule 14e-1(c) under
the Exchange Act (relating to the obligation of Parent to pay for or return
tendered Common Stock, Sponsor Warrants and/or Stockholder Warrants promptly
after termination or withdrawal of either of the Tender Offers)), pay for, or
may delay the acceptance for payment of or, subject to the restriction referred
to above, the payment for, any tendered Common Stock, Sponsor Warrants and/or
Stockholder Warrants and (ii) may terminate or amend the Tender Offers as
to Common Stock, Sponsor Warrants and/or Stockholder Warrants not then paid for,
in the event that at the then-scheduled Initial Expiration Date or Initial
Warrant Expiration Date as applicable (as it may be extended pursuant to
Section 5.6 of the Agreement) or immediately prior to such payment,
(A) any waiting period (and extensions thereof) applicable to the
transactions contemplated by the Agreement (including the Tender Offers and the
Merger) under the HSR Act shall not have expired or been terminated, or any
Requisite Regulatory Approval or any Consent from a third Person that is
required in connection with the transactions contemplated by the Agreement
(provided that with respect to Consents relating to Tenant Leases to the extent
required to satisfy the condition set forth in Section 6.1(i) of the
Agreement) which in
the reasonable judgment of Parent is required or advisable to consummate the
transactions contemplated by the Agreement, including the Tender Offers and the
Merger, shall not have been obtained or made or shall not remain in full force
and effect (or any statutory waiting period in respect thereof shall not have
expired), (B) the Maximum Tender Condition shall not have been satisfied,
or (C) any of the following shall have occurred:
(a)
(i) any restraining order, preliminary or permanent injunction or other
Order or similar legal restraint or prohibition shall have been issued by any
Governmental Authority of competent jurisdiction and shall then be in effect, or
(ii) any suit, action or other proceeding shall have been instituted by any
Governmental Authority and shall remain pending that would reasonably be
expected to result in a restraining order, preliminary or permanent injunction
or other Order or similar legal restraint or prohibition, in the case of either
clause “(i)” or “(ii)” preventing the consummation of the Tender Offers, the
Merger and/or the other transactions contemplated by the Agreement;
(b) any
of the representations and warranties of the Company and the Members set forth
in the Agreement shall not be true and correct as of the date of the Agreement
and as immediately prior to the expiration of the Tender Offers as though made
as of immediately prior to the expiration of the Tender Offers,
except (i) to the extent that such representations and warranties refer
specifically to an earlier date, in which case such representations and
warranties shall not have been true and correct as of such earlier date, and
(ii) this condition shall be deemed satisfied unless the incorrectness of such
representations and warranties would, in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect;
(c) (i) in
the event such Tender Offer or Warrant Tender Offer would expire concurrently
with the Effective Time, the Company and the Members shall have failed to
perform or comply in all material respects with all of their respective
obligations, agreements and covenants to be performed or complied with by them
under the Agreement at or prior to the Effective Time, (ii) in the event such
Tender Offer or Warrant Tender Offer would expire prior to the Effective Time
the Company and the Members shall have failed to perform or comply in all
material respects with all of their respective obligations, agreements and
covenants to be performed or complied with by them prior to the Effective Time
other than those that by their nature are to be satisfied as of the Effective
Time and the Company or the Members shall not be capable of complying with any
such obligations as of the Effective Time;
1
(d) A
Company Material Adverse Effect shall have occurred since the date of the
Agreement;
(e) the
Company shall have failed to deliver to Parent a certificate signed by the Chief
Executive Officer or another senior executive officer of the Company, dated as
of the then-scheduled Expiration Time, certifying that the conditions specified
in clauses (b), (c) and (d)of this Annex A do not exist, and in the case
the date of the Expiration Time occurs prior to the Closing Date that the
Company and the Members are prepared to consummate the Merger at the Effective
Time (subject to the satisfaction or waiver of the conditions set forth in
Sections 6.1 and 6.3 thereof);
(d) the
Agreement shall have been terminated in accordance with its terms;
or
(e) No
general suspension of trading in, or limitation on prices for, securities on any
U.S. national securities exchange or in the over-the-counter markets in the
United States or a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, whether or not mandatory,
shall have occurred.
The
foregoing conditions are for the sole benefit of Parent and, subject to the
terms and conditions of the Agreement, may be waived by Parent, in whole or in
part at any time and from time to time in the sole discretion of Parent. The
failure or delay by Parent at any time to exercise any of the foregoing rights
shall not operate as a waiver of any such right, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to
time.
2
