SPONSOR GUARANTEE May 9, 2010
May
9, 2010
This
Guarantee (this “Guarantee”) is made
and entered into as of the date set forth above by Mill Road, L.P., a Delaware
limited partnership (the “Guarantor”), in favor
and for the benefit of Rubio’s Restarants, Inc. (the “Company”).
1. Guarantee;
Obligations. To induce the Company to enter into that certain
Agreement and Plan of Merger, dated as of May 9, 2010 (as the same may be
amended, supplemented, restated, or otherwise modified from time to time, the
“Merger
Agreement”), by and among the Company, MRRC Merger Co., a Delaware
corporation (“Merger
Sub”) and MRRC Hold Co., a Delaware corporation (“Parent”), pursuant to
which, and subject to the terms and conditions thereof, Merger Sub will merge
with and into the Company, the Guarantor absolutely, unconditionally, and
irrevocably guarantees to the Company (i) the due, punctual and complete payment
and performance, as and when due, of all of Parent’s payment obligations with
respect to the Merger Consideration required to be paid by Parent at Closing
pursuant to Section 2.2 of the Merger Agreement (subject, among other things, to
the procedures set forth in Section 2.3 of the Merger Agreement and the other
terms and conditions of the Merger Agreement) (the “Payment Obligations”)
and (ii) full and timely payment by Parent and Merger Sub of any and all losses
and damages incurred by the Company or its stockholder as a result of a breach
by Parent of the Payment Obligations (the obligations described above being
referred to herein as the “Obligations”). Notwithstanding
anything herein to the contrary, this Guarantee shall terminate at such time
(the “Termination
Time”) as all of the Obligations have been terminated, paid in full or
fully provided for by the irrevocable deposit of immediately available funds to
the Exchange Fund described in Section 2.3 of the Merger Agreement, and none of
Guarantor, Parent, Merger Sub or the Surviving Corporation shall have any
obligations hereunder following the Termination Time. All payments by
Guarantor hereunder shall be made in immediately available
funds. Capitalized terms used in this Guarantee but not otherwise
defined herein have the respective meanings given to such terms in the Merger
Agreement.
2. Unconditional Nature of
Guarantee. The Company shall not be obligated to file any
claim relating to the Obligations in the event that Parent or Merger Sub becomes
subject to a bankruptcy, reorganization or similar proceeding, and the failure
of the Company to so file shall not affect the Guarantor’s obligations
hereunder. This is an unconditional guarantee of payment and
performance and not of collectibility, and one or more separate actions may be
brought and prosecuted against Guarantor to enforce this Guarantee, irrespective
of whether any action is brought against Parent or Merger Sub or whether Parent
or Merger Sub is joined in any such action or actions, provided that
Guarantor shall have the right to assert defenses that Parent or Merger Sub may
have to the payment of any Obligations under the terms of the Merger Agreement,
other than any such defense arising out of, due to, or as a result of, the
insolvency or bankruptcy of Parent or Merger Sub. If any payment by
Parent or Merger Sub of the Obligations is rescinded or must otherwise be
returned for any reason whatsoever (other than pursuant to the terms of the
Merger Agreement or due to a breach of the Merger Agreement by the Company), the
Guarantor shall remain liable hereunder with respect to the Obligations (plus
any Prevailing Party Cost, as defined in Section 16 below) as if such payment
had not been made.
3. Changes in Obligations;
Certain Waivers.
(a) The
Guarantor agrees that the Company may at any time and from time to time, without
notice to or further consent of the Guarantor, make any agreement with Parent or
Merger Sub for the extension, renewal, payment, compromise, discharge, or
release of any of the Obligations, in whole or in part, or for any modification
of the terms thereof or of any agreement between the Company and Parent or
Merger Sub without in any way impairing or affecting this
Guarantee. The Guarantor agrees that the obligations of the Guarantor
hereunder shall not be released or discharged, in whole or in part, or otherwise
affected by (i) the failure of the Company to assert any claim or demand or to
enforce any right or remedy against Parent or Merger Sub with respect to the
Obligations; (ii) any agreement with Parent or Merger Sub with respect to (a)
any change in the time, place or manner of payment of any of the Obligations,
(b) any rescission, waiver, compromise, consolidation, or other amendment or
modification of any of the terms or provisions of the Merger Agreement or (c)
any other agreement evidencing, securing, or otherwise executed in connection
with any of the Obligations; (iii) any change in the corporate existence,
structure or ownership of Parent or Merger Sub; (v) any insolvency, bankruptcy,
reorganization, or other similar proceeding affecting Parent or Merger Sub; (vi)
the existence of any claim, set-off or other right that the Guarantor may have
at any time against Parent or Merger Sub, whether in connection with the Merger
Agreement, the Obligations, or otherwise; or (vi) the adequacy of any other
means the Company may have of obtaining repayment of any of the
Obligations.
(b) To
the fullest extent permitted by law, the Guarantor hereby expressly waives any
and all rights or defenses arising by reason of any law that would otherwise
require any election of remedies by the Company. The Guarantor waives
promptness, diligence, notice of the acceptance of this Guarantee and of the
Obligations, presentment, demand for payment, notice of non-performance,
default, dishonor and protest, notice of any Obligations incurred, and any and
all other notices of any kind (except for notices to be provided to Parent and
Merger Sub in accordance with Section 9.1 of the Merger Agreement), all defenses
that may be available by virtue of any valuation, stay, moratorium law, or other
similar law now or hereafter in effect, any right to require the marshalling of
assets of Parent or Merger Sub with respect to any of the Obligations, and all
suretyship defenses generally (whether at law or in equity), other than breach
by the Company of this Guarantee. The Guarantor acknowledges that it
will receive substantial direct and indirect benefits from the transactions
contemplated by the Merger Agreement and that the waivers set forth in this
Guarantee are knowingly made in contemplation of such benefits and after the
advice of counsel.
4. No Waiver; Cumulative
Rights. No failure on the part of the Company to exercise, and
no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Company of any
right, remedy or power hereunder preclude any other or future exercise of any
right, remedy or power. Each and every right, remedy and power hereby granted to
the Company or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by the Company at any time or from
time to time. The Company shall not have any obligation to proceed at
any time or in any manner against, or exhaust any or all of the Company’s rights
against, Parent or Merger Sub prior to proceeding against
Guarantor.
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5. Representations and
Warranties. The Guarantor hereby represents and warrants to
the Company that:
(a) the
Guarantor has full power and authority to execute and deliver this Guarantee and
to pay and perform the Obligations;
(b) the
execution, delivery and performance of this Guarantee have been duly authorized
by all necessary corporate, partnership or limited liability company action and
do not contravene any provision of the Guarantor’s charter, partnership
agreement, operating agreement, or similar organizational documents or any law,
regulation, rule, decree, order, judgment, or contractual restriction binding on
the Guarantor or its assets;
(c) all
consents, approvals, authorizations, permits of, or filings with and
notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Guarantee by the Guarantor have been obtained
or made, and all conditions thereof have been duly complied with, and no other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required in connection with the execution, delivery or
performance of this Guarantee;
(d) this
Guarantee constitutes a legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its terms, subject to (i)
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors’ rights generally, and (ii)
general equitable principles (whether considered in a proceeding in equity or at
law); and
(e) Guarantor
has the financial capacity to pay and perform its obligations under this
Guarantee, and all funds necessary for the Guarantor to fulfill its Obligations
under this Guarantee are currently available to Guarantor and shall remain
available to the Guarantor for so long as this Guarantee shall remain in effect
in accordance with Section 8 hereof.
6. Assignment. The
Guarantor may not assign or delegate, as applicable, its rights, interests, or
obligations hereunder to any other person (whether by operation of law or
otherwise) without the prior written consent of the Company. The
rights of the Company under this Guarantee may not be assigned without the prior
written consent of Guarantor.
7. Notices. All
notices, requests and other communications given or made pursuant to this
Guarantee shall be in writing (including facsimile transmission) and shall be
given as follows:
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If
to the Guarantor:
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Mill
Road Capital, L.P.
000
Xxxxxxxxx Xxxxxx, Xxxxx Xxx
Xxxxxxxxx,
Xxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx and Xxxxx
Xxxxxxxxx
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with
a copy to:
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Xxxxx
Xxxx LLP
Seaport
World Trade Center West
000
Xxxxxxx Xxxxxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Fax: (000)
000-0000
Attention: Xxxxx
X. Xxxxxxxxx, Esq.
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| If to the Company: | |
| Xxxxx’x Restaurants, Inc. | |
| 0000 Xxxxxx Xxxxx, Xxxxx 000 | |
| Xxxxxxxx, Xxxxxxxxxx 00000 | |
| Fax: (000) 000-0000 | |
| Attention: Chief Financial Officer | |
| with a copy to: | |
| DLA Piper LLP (US) | |
| 0000 Xxxxxxxxxx Xxxxxx | |
| Xxxx Xxxx Xxxx, Xxxxxxxxxx 00000 | |
|
Fax: (000) 000-0000
Attention: Xxxxx
Xxxx
Xxxxxxx
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or to
such other address or facsimile number as the party entitled to receive such
notice may hereafter specify for the purpose. All such notices,
requests and other communications shall be deemed received (a) on the date
of delivery if delivered personally, (b) on the date of confirmation of
receipt of transmission by facsimile transmission, or (c) on the date of
confirmation of receipt if delivered by an internationally recognized courier
service.
8. Continuing
Guarantee. This Guarantee shall remain in full force and
effect and shall be binding on the Guarantor and its successors and assigns with
respect to each Obligation until the Termination Time.
9. Governing
Law. This Guarantee shall be governed by, construed, and
enforced in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State, without giving effect
to the conflict or choice of law provisions thereof that would give rise to the
application of the domestic substantive law of any other
jurisdiction. All actions arising out of or relating to this
Guarantee shall be heard and determined exclusively in the Court of Chancery of
the State of Delaware (or, in the case of any claim as to which the federal
courts have exclusive subject matter jurisdiction, the federal court of the
United States of America) sitting in the State of Delaware. Each of
the Guarantor and the Company hereby (a) irrevocably submits to the exclusive
jurisdiction of any of these courts sitting in the State of Delaware (and of the
appellate courts therefrom) for the purpose of any action arising out of or
relating to this Guarantee, and (b) irrevocably waives, and agrees 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 Guarantee or the transactions contemplated hereby may not be enforced
in or by the above-named courts.
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10. Waiver of Jury
Trial. EACH OF THE GUARANTOR AND THE COMPANY HEREBY EXPRESSLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS
GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH OF THE GUARANTOR AND THE
COMPANY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE OTHER
PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH PARTY TO THE WAIVER OF SUCH PARTY’S
RIGHT TO TRIAL BY JURY.
11. Counterparts. This
Guarantee may be executed 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 instrument.
12. Entire
Agreement. This Guarantee and the Merger Agreement constitute
the entire agreement with respect to the subject matter hereof and supersede any
and all prior discussions, negotiations, proposals, undertakings, understandings
and agreements, whether written or oral, among Parent, Merger Sub and the
Guarantor or any of their respective affiliates, on the one hand, and the
Company or any of its affiliates on the other hand, with respect to such subject
matter only.
13. Amendment. This
Guarantee may not be amended except by an instrument in writing signed by the
parties hereto.
14. Severability. If
any term or other provision of this Guarantee is invalid, illegal or incapable
of being enforced by rule of law, or public policy, all other conditions and
provisions of this Guarantee shall nevertheless remain in full force and
effect.
15. No
Subrogation. The Guarantor hereby unconditionally and
irrevocably waives and agrees not to exercise any rights that it may now have or
hereafter acquire against one or both of Parent and Merger Sub that arise from
the existence, payment, performance, or enforcement of the Guarantor’s
obligations under or in respect of this Guarantee or any other agreement in
connection therewith, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Company against one or both of Parent
or Merger Sub, whether or not such claim, remedy or right arises in equity or
under contract or any applicable law, including, without limitation, the right
to take or receive from one or both of Parent or Merger Sub, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations and Prevailing Party Costs (as defined below), if
applicable, shall have been terminated, paid in full or, in the case of the
Obligations, fully provided for by the irrevocable deposit of immediately
available funds to the Exchange Fund described in Section 2.3 of the Merger
Agreement. If any amount shall be paid to the Guarantor in violation
of the immediately preceding sentence at any time prior to the payment in full
in cash of the Obligations and Prevailing Party Costs, if applicable, such
amount shall be received and held in trust for the benefit of the Company, shall
be segregated from other property and funds of the Guarantor and shall forthwith
be paid or delivered to the Company in the same form as so received (with any
necessary endorsement or assignment) to be credited and applied to the
Obligations and Prevailing Party Costs, if applicable, whether matured or
unmatured.
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16. Costs and
Expenses. In any action at law or suit in equity to enforce
this Guarantee or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to recover from the
non-prevailing party its reasonable and documented attorneys’ fees and all other
reasonable court costs and expenses incurred in such action or suit (“Prevailing Party
Costs”). The parties agree that the determination of who is the
prevailing party and the amount of such costs and expenses shall be made by the
court in any such action.
17. Specific
Performance. The Guarantor agrees that irreparable damage
would occur if the Merger Agreement is not performed in accordance with its
terms, and accordingly, in addition to any other remedy available at law or in
equity, the Company shall be entitled to obtain an order requiring Guarantor to
cause Parent and Merger Sub to complete the closing of the transactions
contemplated by the Merger Agreement in accordance with the terms of the Merger
Agreement, if such completion is required by the terms of the Merger
Agreement.
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IN
WITNESS WHEREOF, this Guarantee has been duly executed under seal and delivered
by the Guarantor to the Company as of the date first above written.
| MILL ROAD CAPITAL, L.P. | |||
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By:
Its:
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Mill
Road Capital GP LLC
General Partner
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| By: | /s/ Xxxxx X. Xxxxxxxx | ||
| Name: Xxxxx X. Xxxxxxxx | |||
| Title: Management Committee Director | |||
ACKNOWLEDGED
AND AGREED:
XXXXX’X
RESTAURANTS, INC.
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By:
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/s/ Xxx Xxxxxxx |
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Name:
Xxx Xxxxxxx
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Title:
President & Chief Executive
Officer
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