UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 16, 2024
Carrols Restaurant
Group, Inc.
(Exact name of registrant as specified in its
charter)
Delaware |
|
001-33174 |
|
83-3804854 |
(State or other jurisdiction of incorporation or organization) |
|
(Commission File Number) |
|
(I.R.S. Employer
Identification No.) |
968 James Street
Syracuse, New York |
|
13203 |
(Address of principal executive office) |
|
(Zip Code) |
Registrant’s telephone
number, including area code: (315) 424-0513
N/A
(Former name or former
address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
| ☐ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading
Symbol(s) |
|
Name of each exchange
on which registered |
Common stock, $0.01 par value per share |
|
TAST |
|
The NASDAQ Global Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01
Entry into a Material Definitive Agreement.
Merger Agreement
On January 16, 2024, Carrols
Restaurant Group, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Restaurant Brands International Inc., a corporation existing under the laws of Canada (“RBI”),
and BK Cheshire Corp, a Delaware corporation and subsidiary of RBI. (“Merger Sub”, and together with RBI, the “Buyer
Parties”), providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation
(the “Merger”). Capitalized terms used herein but not otherwise defined have the meaning set forth in the Merger Agreement.
A special transaction committee (the “Special
Committee”) of independent and disinterested members of the Company’s board of directors (the “Company Board”)
unanimously adopted resolutions recommending that the Company Board approve and adopt the Merger Agreement and the transactions contemplated
thereby and agreeing to recommend that the Unaffiliated Company Stockholders adopt the Merger Agreement. Thereafter, the Company Board
unanimously approved the Merger Agreement and agreed to recommend that the stockholders of the Company adopt the Merger Agreement. The
Special Committee determined that the Merger Agreement and the transaction contemplated thereby are advisable and in the best interest
of the Company and the Unaffiliated Company Stockholders. The Company Board
determined that the Merger Agreement and the transactions contemplated thereby are advisable and in the best interest of the Company
and its stockholders.
At
the effective time of the Merger (the “Effective Time”):
| ● | each
share of common stock, par value $0.01 per share of the Company (the “Carrols Common
Stock”) outstanding immediately prior to the Effective Time (other than shares
of Carrols Common Stock that are (A)(1) held by the Company and its Subsidiaries; (2) owned
by RBI or Merger Sub; or (3) owned by any direct or indirect Subsidiary of RBI or Merger
Sub as of immediately prior to the Effective Time (the “Owned Carrols Shares”),
or (B) issued and outstanding as of immediately prior to the Effective Time and held by stockholders
of the Company who have neither voted in favor of the Merger nor consented thereto in writing
and who have properly and validly exercised their statutory rights of appraisal in respect
of such shares of Carrols Common Stock in accordance with Section 262 of the General Corporation
Law of the State of Delaware (the “Dissenting Shares”)) will be cancelled
and extinguished and automatically converted into the right to receive cash in an amount
equal to $9.55, without interest thereon (the “Merger Consideration”); |
| ● | each
Owned Carrols Share outstanding immediately prior to the Effective Time will remain issued
and outstanding as a share of common stock of the surviving corporation; and |
| ● | each
share of Series D Preferred Stock outstanding as of immediately prior to the Effective Time
will remain issued and outstanding as a share of Series D Preferred Stock of the surviving
corporation, on the terms set forth in the Series D Certificate of Designation. |
The
Merger Agreement also provides that, at the Effective Time, by virtue of the Merger:
| ● | each
award of restricted stock of the Company issued under the Company Equity Plans, other than
a Carrols PSA (as defined below) (“Carrols RSA”), whether vested or unvested,
that is outstanding as of immediately prior to the Effective Time will be fully vested, cancelled
and automatically converted, without any required action on the part of the holder thereof,
into the right to receive an amount in cash equal to the product of (i) the aggregate number
of shares of Carrols Common Stock subject to such Carrols RSA, multiplied by (ii) the Merger
Consideration, subject to any applicable withholding Taxes payable in respect thereof; |
| ● | each
award of restricted stock of the Company granted under the Company Equity Plans whose vesting
is conditioned in full or in part based on achievement of performance goals or metrics (“Carrols
PSA”), whether vested or unvested, that is outstanding as of immediately prior
to the Effective Time shall be fully vested, cancelled and automatically converted, without
any required action on the part of the holder thereof, into the right to receive an amount
in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock
subject to such Carrols PSA (with any performance conditions deemed to be earned based on
target performance), multiplied by (ii) the Merger Consideration, subject to any applicable
withholding Taxes payable in respect thereof; |
| ● | each
restricted stock unit award granted under the Company Equity Plans, other than a Carrols
PSU (as defined below) (“Carrols RSU”), whether vested or unvested, that
is outstanding as of immediately prior to the Effective Time shall be fully vested, cancelled
and automatically converted, without any required action on the part of the holder thereof,
into the right to receive an amount in cash equal to the product of (i) the aggregate number
of shares of Carrols Common Stock subject to such Carrols RSU (together with any accrued
and unpaid dividends or dividend equivalents corresponding to such Carrols RSU), multiplied
by (ii) the Merger Consideration, subject to any applicable withholding Taxes payable in
respect thereof; |
| ● | each
restricted stock unit award granted under the Company Equity Plans whose vesting is conditioned
in full or in part based on achievement of performance goals or metrics (“Carrols
PSU”), whether vested or unvested, that is outstanding as of immediately prior
to the Effective Time shall be fully vested, cancelled and automatically converted, without
any required action on the part of the holder thereof, into the right to receive an amount
in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock
subject to such Carrols PSU (together with any accrued and unpaid dividends or dividend equivalents
corresponding to such Carrols PSU) (with any performance conditions deemed to be earned based
on the greater of “target” or “actual” performance, as measured through
the Effective Time and extrapolated over the full performance period, provided, that, if
the Effective Time occurs on or prior to December 31, 2024, the performance conditions for
the Carrols PSUs granted in 2024 shall be deemed to be earned based on target performance),
multiplied by (ii) the Merger Consideration, subject to any applicable withholding Taxes
payable in respect thereof; and |
| ● | each
option to purchase shares of Carrols Common Stock granted under the Company Equity Plans
(“Carrols Option”), whether vested or unvested, that is unexpired, unexercised,
and outstanding as of immediately prior to the Effective Time shall be fully vested, cancelled
and automatically converted, without any required action on the part of the holder thereof,
into the right to receive an amount in cash equal to the product of (i) the aggregate number
of shares of Carrols Common Stock subject to such Carrols Option, multiplied by (ii) the
excess, if any, of the Merger Consideration over the applicable per share exercise price
under such Carrols Option, subject to any applicable withholding Taxes payable in respect
thereof (provided that any Carrols Option
that is not in-the-money shall be cancelled immediately upon the Effective Time
without payment or consideration). |
If the Merger is consummated,
the Carrols Common Stock will be delisted from The NASDAQ Global Market and deregistered under the Securities Exchange Act of 1934, as
amended, as promptly as practicable following the Effective Time.
Consummation of the Merger
is subject to certain conditions set forth in the Merger Agreement, including, but not limited to, the: (A) affirmative vote of the holders
of (i) a majority of all of the outstanding shares of Company capital stock to adopt the Merger Agreement and (ii) a majority of all of
the outstanding shares of Carrols Common Stock held by the Unaffiliated Company Stockholders to adopt the Merger Agreement; (B) expiration
or termination of any waiting periods (and any extensions thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (C) absence of any law or order in the United States
restraining, enjoining or otherwise prohibiting the Merger; and (D) absence of a Company Material Adverse Effect.
From the execution of the
Merger Agreement until 11:59 p.m., Eastern time, on the date that is 30 days after the date of the Merger Agreement (the “No-Shop
Period Start Date”), the Company and its representatives have the right to:
| (i) | solicit, initiate, propose, knowingly encourage or facilitate, any proposal or inquiry that constitutes,
or is reasonably expected to lead to, an Acquisition Proposal; |
| (ii) | furnish to any Person (and its representatives and financing sources), subject to the terms and obligation
of an Acceptable Confidentiality Agreement, any non-public information relating to the Company or its Subsidiaries with the intent to
induce the making, submission or announcement of, or to knowingly encourage or facilitate, any proposal or inquiry that constitutes, is
reasonably expected to lead to, an Acquisition Proposal; and |
| (iii) | participate or engage in discussions or negotiations with any such Person (and such representatives and
financing sources) with respect to an Acquisition Proposal. |
From the No-Shop Period Start
Date until the earlier to occur of the termination of the Merger Agreement and the Effective Time, the Company will be subject to customary
“no-shop” restrictions on its ability to solicit alternative Acquisition Proposals from third parties and to provide information
to, and participate in discussions and engage in negotiations with, third parties regarding any alternative Acquisition Proposals, subject
to a customary “fiduciary out” provision that allows the Company, under certain specified circumstances, to provide information
to, and participate in discussions and engage in negotiations with, third parties with respect to an Acquisition Proposal if the Special
Committee of the Company’s Board of Directors determines in good faith (after consultation with its financial advisor and outside
legal counsel) that such alternative Acquisition Proposal constitutes a Superior Proposal or is reasonably expected to lead to a Superior
Proposal, and the failure to take such actions would be inconsistent with its fiduciary duties pursuant to applicable law.
The Merger Agreement contains
certain termination rights for the Company, on the one hand, and the Buyer Parties, on the other hand. Upon termination of the Merger
Agreement under specified circumstances, including the Company terminating the Merger Agreement to enter into an Alternative Acquisition
Agreement with respect to a Superior Proposal or RBI terminating the Merger Agreement due to the Company’s Board of Directors’
withdrawal of its recommendation to the Company’s stockholders in favor of the Merger, the Company will be required to pay RBI a
termination fee of $19,000,000 (or, if termination occurs in certain circumstances prior to the No-Shop Period Start Date, $9,500,000).
The termination fee will also be payable by the Company if the Merger Agreement is terminated under certain circumstances and prior to
such termination, an Acquisition Proposal for an Acquisition Transaction is publicly announced or disclosed and such Acquisition Transaction
is consummated or the Company enters into an agreement providing for the consummation of such Acquisition Transaction within one year
of the termination. In addition to the foregoing termination rights, and subject to certain limitations, the Company or RBI may terminate
the Merger Agreement if the Merger is not consummated by November 30, 2024.
Each of RBI, Merger Sub and
the Company made customary representations and warranties in the Merger Agreement and agreed to customary covenants, including, among
others, a covenant on the part of the Company regarding the operation of the business of the Company and its Subsidiaries prior to the
consummation of the Merger. The Merger Agreement also provides that the Company, on the one hand, or the Buyer Parties, on the other hand,
may specifically enforce the obligations under the Merger Agreement, including the obligation to consummate the Merger if the conditions
set forth in the Merger Agreement are satisfied.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to full text of the Merger Agreement, which is filed
as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The
Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other
factual information about the Company or its subsidiaries or affiliates. The representations, warranties and covenants contained in the
Merger Agreement were made only for purposes of the Merger Agreement as of the specific date therein, were solely for the benefit of
the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead of
establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the
representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition
of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of
representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully
reflected in the Company’s public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction
with the other information regarding the parties that is or will be contained in, or incorporated by reference into, the Forms 10-K,
Forms 10-Q and other documents that the Company filed or will file with the Securities and Exchange Commission (“SEC”).
Voting
Agreement
On
January 16, 2024, RBI entered into a Voting Agreement (the “Voting Agreement”) with Cambridge Franchise Holdings,
LLC, Alexander Sloane and Matthew Perelman (collectively, the “Cambridge Signatories”), pursuant to which the Cambridge
Signatories have agreed, among other things, to vote their shares of Carrols Common Stock (A) in favor of (i) the adoption of the Merger
Agreement and the Merger, (ii) the approval of any proposal to adjourn the special meeting of the Company’s stockholders to a later
date, if there are not sufficient affirmative votes (in person or by proxy) to obtain the Requisite Stockholder Approval and RBI proposes
or requests such postponement or adjournment in accordance with the Merger Agreement, and (iii) any other matter or action necessary
for the consummation of the transactions contemplated by the Merger Agreement, and (B) against (i) any action or agreement that would
reasonably be expected to result in a breach of any covenant, representation or warranty or other obligation or agreement of the Company
in the Merger Agreement or result in any condition of the Merger not being satisfied prior to the Termination Date, (ii) any Acquisition
Proposal or (iii) approval of any other proposal, transaction, agreement or action that would reasonably be expected to prevent, materially
delay or materially impede the consummation of the Merger or any other transactions contemplated by the Merger Agreement.
The
Voting Agreement will terminate upon the earlier to occur of (A) the Effective Time, (B) the termination of the Merger Agreement
in accordance with its terms, and (C) the date on which any amendment to the Merger Agreement is effected, or any waiver of the
Company’s rights under the Merger Agreement is granted, in each case, without the prior written consent of the Cambridge Signatories,
that (i) diminishes the Merger Consideration to be received by the stockholders of the Company, (ii) changes the form in which the Merger
Consideration is payable to the stockholders of the Company, (iii) extends the Termination Date or (iv) imposes any additional conditions
on the Cambridge Signatories’ rights to receive the Merger Consideration.
From
the execution of the Voting Agreement until the termination of the Voting Agreement, the Cambridge Signatories will be subject to customary
transfer restrictions with respect to their shares of Carrols Common Stock.
The
foregoing description of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to full text
of the Voting Agreement, which is filed as Exhibit 2.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
No. |
|
Description |
2.1 |
|
Agreement and Plan of Merger, dated as of January 16, 2024, by and among Restaurant Brands International Inc., BK Cheshire Corp., and Carrols Restaurant Group, Inc.* |
2.2 |
|
Voting
Agreement, dated as of January 16, 2024, by and among Restaurant Brands International Inc., Cambridge Franchise Holdings, LLC,
Alexander Sloane, and Matthew Perelman |
99.1 |
|
Press Release, dated January 16, 2024 |
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document) |
* |
The
schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally
a copy of such schedules and exhibits, or any section thereof, to the SEC upon request. |
Cautionary
Statement Regarding Forward-Looking Statements
This
communication includes certain “forward-looking statements” within the meaning of, and subject to the safe harbor created
by, the federal securities laws, including statements related to the proposed merger of the Company with an affiliate of RBI (the “Transaction”),
including financial estimates and statements as to the expected timing, completion and effects of the Transaction. These forward-looking
statements are based on the Company’s current expectations, estimates and projections regarding, among other things, the expected
date of closing of the Transaction and the potential benefits thereof, its business and industry, management’s beliefs and certain
assumptions made by the Company, all of which are subject to change. Forward-looking statements often contain words such as “expect,”
“anticipate,” “intend,” “aims,” “plan,” “believe,” “could,” “seek,”
“see,” “will,” “may,” “would,” “might,” “considered,” “potential,”
“estimate,” “continue,” “likely,” “expect,” “target” or similar expressions
or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. By their nature,
forward-looking statements address matters that involve risks and uncertainties because they relate to events and depend upon future
circumstances that may or may not occur, such as the consummation of the Transaction and the anticipated benefits thereof. These and
other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could
cause actual results to differ materially from those expressed in any forward-looking statements. Important risk factors that may cause
such a difference include, but are not limited to: (i) the completion of the Transaction on anticipated terms and timing, including obtaining
required stockholder and regulatory approvals, and the satisfaction of other conditions to the completion of the Transaction; (ii) the
ability of affiliates of RBI to obtain the necessary financing arrangements set forth in the commitment letters received in connection
with the Transaction; (iii) potential litigation relating to the Transaction that could be instituted against RBI, the Company or their
respective directors, managers or officers, including the effects of any outcomes related thereto; (iv) the risk that disruptions from
the Transaction will harm the Company’s business, including current plans and operations; (v) the ability of the Company to retain
and hire key personnel; (vi) potential adverse reactions or changes to business relationships resulting from the announcement or completion
of the Transaction; (vii) continued availability of capital and financing and rating agency actions; (viii) legislative, regulatory and
economic developments affecting the Company’s business; (ix) general economic and market developments and conditions; (x) potential
business uncertainty, including changes to existing business relationships, during the pendency of the Transaction that could affect
the Company’s financial performance; (xi) certain restrictions during the pendency of the Transaction that may impact the Company’s
ability to pursue certain business opportunities or strategic transactions; (xii) unpredictability and severity of catastrophic events,
including but not limited to acts of terrorism, pandemics, outbreaks of war or hostilities, as well as the Company’s response to
any of the aforementioned factors; (xiii) significant transaction costs associated with the Transaction; (xiv) the possibility that the
Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xv) the occurrence
of any event, change or other circumstance that could give rise to the termination of the Transaction, including in circumstances requiring
the Company to pay a termination fee or other expenses; (xvi) competitive responses to the Transaction; (xvii) the risks and uncertainties
pertaining to the Company’s business, including those set forth in Part I, Item 1A of the Company’s most recent Annual Report
on Form 10-K and Part II, Item 1A of the Company’s subsequent Quarterly Reports on Form 10-Q, as such risk factors may be amended,
supplemented or superseded from time to time by other reports filed by the Company with the SEC; and (xviii) the risks and uncertainties
that will be described in the Proxy Statement available from the sources indicated below. These risks, as well as other risks associated
with the Transaction, will be more fully discussed in the Proxy Statement. While the list of factors presented here is, and the list
of factors to be presented in the Proxy Statement will be, considered representative, no such list should be considered a complete statement
of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking
statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could
include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar
risks, any of which could have a material impact on the Company’s financial condition, results of operations, credit rating or
liquidity. These forward-looking statements speak only as of the date they are made, and the Company does not undertake to and specifically
disclaims any obligation to publicly release the results of any updates or revisions to these forward-looking statements that may be
made to reflect future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated
events.
Important
Additional Information and Where to Find It
In
connection with the Transaction, the Company will file with the SEC a Proxy Statement, the definitive version of which will be sent or
provided to Company stockholders. The Company and affiliates of the Company intend to jointly file a transaction statement on Schedule
13E-3 (the “Schedule 13E-3”). The Company may also file other documents with the SEC regarding the Transaction. This
Current Report on Form 8-K is not a substitute for the Proxy Statement, the Schedule 13E-3 or any other document which the Company may
file with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT, THE SCHEDULE 13E-3 AND ANY OTHER RELEVANT DOCUMENTS
THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS. Investors and security holders
may obtain free copies of the Proxy Statement, Schedule 13E-3 (when it is available) and other documents that are filed or will be filed
with the SEC by the Company through the website maintained by the SEC at www.sec.gov, the Company’s website at https://www.carrols.com/
or by contacting the Company’s Investor Relations Team at InvestorRelations@carrols.com.
The
Transaction will be implemented solely pursuant to the Merger Agreement dated as of January 16, 2024, among the Company, RBI, and Merger
Sub, which contains the full terms and conditions of the Transaction.
Participants
in the Solicitation
The
Company and certain of its directors, executive officers and other employees may be deemed to be participants in the solicitation of
proxies from the Company’s stockholders in connection with the Transaction. Additional information regarding the identity of the
participants, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in
the Proxy Statement and other materials to be filed with the SEC in connection with the Transaction (if and when they become available).
Information relating to the foregoing can also be found in the Company’s proxy statement for its 2023 annual meeting of stockholders,
which was filed with the SEC on April 27, 2023 (the “Annual Meeting Proxy Statement”). To the extent holdings of securities
by potential participants (or the identity of such participants) have changed since the information printed in the Annual Meeting Proxy
Statement, such information has been or will be reflected on the Company’s Statements of Change in Ownership on Forms 3 and 4 filed
with the SEC. You may obtain free copies of these documents using the sources indicated above.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
|
Carrols
Restaurant Group, Inc. |
|
|
|
Date:
January 16, 2024 |
By: |
/s/
Deborah M. Derby |
|
Name: |
Deborah
M. Derby |
|
Title: |
President
and Chief Executive Officer |
7
Exhibit
2.1
Execution
Version
AGREEMENT
AND PLAN OF MERGER
by
and among
RESTAURANT
BRANDS INTERNATIONAL INC.
BK
CHESHIRE CORP.
and
CARROLS
RESTAURANT GROUP, INC.
Dated
as of January 16, 2024
TABLE
OF CONTENTS
|
|
|
Page |
|
|
|
|
ARTICLE I DEFINITIONS & INTERPRETATIONS |
5 |
|
|
|
1.1 |
CERTAIN DEFINITIONS |
5 |
|
1.2 |
ADDITIONAL DEFINITIONS |
15 |
|
1.3 |
CERTAIN INTERPRETATIONS |
17 |
|
|
|
|
ARTICLE II THE MERGER |
19 |
|
|
|
2.1 |
THE MERGER |
19 |
|
2.2 |
THE EFFECTIVE TIME |
19 |
|
2.3 |
THE CLOSING |
20 |
|
2.4 |
EFFECT OF THE MERGER |
20 |
|
2.5 |
CERTIFICATE OF INCORPORATION AND BYLAWS |
20 |
|
2.6 |
DIRECTORS AND OFFICERS |
20 |
|
2.7 |
EFFECT OF MERGER ON COMPANY CAPITAL STOCK |
20 |
|
2.8 |
EQUITY AWARDS |
22 |
|
2.9 |
EXCHANGE OF CERTIFICATES |
23 |
|
2.10 |
NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL STOCK |
26 |
|
2.11 |
LOST, STOLEN OR DESTROYED CERTIFICATES |
26 |
|
2.12 |
REQUIRED WITHHOLDING |
26 |
|
2.13 |
NO DIVIDENDS OR DISTRIBUTIONS |
26 |
|
2.14 |
NECESSARY FURTHER ACTIONS |
26 |
|
|
|
|
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
26 |
|
|
|
3.1 |
ORGANIZATION; GOOD STANDING |
26 |
|
3.2 |
CORPORATE POWER; ENFORCEABILITY |
27 |
|
3.3 |
COMPANY
BOARD APPROVAL; FAIRNESS OPINION; ANTI-TAKEOVER LAWS |
27 |
|
3.4 |
REQUISITE STOCKHOLDER APPROVAL |
28 |
|
3.5 |
NON-CONTRAVENTION |
28 |
|
3.6 |
REQUISITE GOVERNMENTAL APPROVALS |
28 |
|
3.7 |
COMPANY CAPITALIZATION |
29 |
|
3.8 |
SUBSIDIARIES |
30 |
|
3.9 |
COMPANY SEC REPORTS |
31 |
|
3.10 |
COMPANY
FINANCIAL STATEMENTS; INTERNAL CONTROLS; INDEBTEDNESS
| 31 |
|
3.11 |
NO UNDISCLOSED LIABILITIES |
32 |
|
3.12 |
ABSENCE OF CERTAIN CHANGES |
32 |
|
3.13 |
MATERIAL CONTRACTS |
32 |
|
3.14 |
REAL PROPERTY |
33 |
|
3.15 |
ENVIRONMENTAL MATTERS |
34 |
|
3.16 |
INTELLECTUAL PROPERTY |
34 |
|
3.17 |
TAX MATTERS |
35 |
|
3.18 |
EMPLOYEE PLANS |
36 |
|
3.19 |
LABOR MATTERS |
38 |
|
3.20 |
PERMITS |
39 |
|
3.21 |
COMPLIANCE WITH LAWS |
39 |
|
3.22 |
LEGAL PROCEEDINGS; ORDERS |
39 |
|
3.23 |
INSURANCE |
40 |
|
3.24 |
RELATED PERSON TRANSACTIONS |
40 |
|
3.25 |
BROKERS |
40 |
|
3.26 |
FOREIGN MATTERS. |
40 |
|
|
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES |
40 |
|
|
|
4.1 |
ORGANIZATION; GOOD STANDING |
40 |
|
4.2 |
POWER; ENFORCEABILITY |
41 |
|
4.3 |
NON-CONTRAVENTION |
41 |
|
4.4 |
REQUISITE GOVERNMENTAL APPROVALS |
41 |
|
4.5 |
LEGAL PROCEEDINGS; ORDERS |
41 |
|
4.6 |
OWNERSHIP OF COMPANY CAPITAL STOCK |
42 |
|
4.7 |
BROKERS |
42 |
|
4.8 |
OPERATIONS OF MERGER SUB |
42 |
|
4.9 |
NO PARENT VOTE OR APPROVAL REQUIRED |
42 |
|
4.10 |
STOCKHOLDER AND MANAGEMENT ARRANGEMENTS |
42 |
|
4.11 |
SUFFICIENT FUNDS |
42 |
|
4.12 |
EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES |
43 |
|
|
|
|
ARTICLE V INTERIM OPERATIONS OF THE COMPANY |
43 |
|
|
|
5.1 |
AFFIRMATIVE OBLIGATIONS |
43 |
|
5.2 |
FORBEARANCE COVENANTS |
44 |
|
5.3 |
GO SHOP; NO SOLICITATION |
47 |
|
|
|
|
ARTICLE VI ADDITIONAL COVENANTS |
51 |
|
|
|
6.1 |
REQUIRED ACTION AND FORBEARANCE; EFFORTS |
51 |
|
6.2 |
FILINGS |
51 |
|
6.3 |
PROXY
STATEMENT, SCHEDULE 13E-3 AND OTHER REQUIRED SEC FILINGS |
53 |
|
6.4 |
COMPANY STOCKHOLDER MEETING |
54 |
|
6.5 |
COOPERATION WITH DEBT FINANCING |
55 |
|
6.6 |
ANTI-TAKEOVER LAWS |
56 |
|
6.7 |
ACCESS |
57 |
|
6.8 |
SECTION 16(B) EXEMPTION |
57 |
|
6.9 |
DIRECTORS’ AND OFFICERS’ EXCULPATION, INDEMNIFICATION
AND INSURANCE |
57 |
|
6.10 |
EMPLOYEE MATTERS |
59 |
|
6.11 |
DELIVERY OF SUBSIDIARY ORGANIZATIONAL DOCUMENTS |
62 |
|
6.12 |
OBLIGATIONS OF THE BUYER PARTIES AND THE COMPANY |
62 |
|
6.13 |
NOTIFICATION OF CERTAIN MATTERS |
62 |
|
6.14 |
PUBLIC STATEMENTS AND DISCLOSURE |
63 |
|
6.15 |
TRANSACTION LITIGATION |
63 |
|
6.16 |
STOCK EXCHANGE DELISTING; DEREGISTRATION |
63 |
|
6.17 |
ADDITIONAL AGREEMENTS |
63 |
|
6.18 |
PARENT VOTE |
63 |
|
6.19 |
COMPANY CREDIT AGREEMENT |
64 |
|
|
|
|
ARTICLE VII CONDITIONS TO THE MERGER |
64 |
|
|
|
7.1 |
CONDITIONS TO EACH PARTY’S OBLIGATIONS TO EFFECT
THE MERGER |
64 |
|
7.2 |
CONDITIONS TO THE OBLIGATIONS OF THE BUYER PARTIES |
64 |
|
7.3 |
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT
THE MERGER |
65 |
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER |
66 |
|
|
|
8.1 |
TERMINATION |
66 |
|
8.2 |
MANNER AND NOTICE OF TERMINATION; EFFECT OF TERMINATION |
67 |
|
8.3 |
FEES AND EXPENSES |
68 |
|
8.4 |
AMENDMENT |
69 |
|
8.5 |
EXTENSION; WAIVER |
69 |
|
8.6 |
SPECIAL COMMITTEE APPROVAL |
70 |
|
|
|
|
ARTICLE IX GENERAL PROVISIONS |
70 |
|
|
|
9.1 |
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS |
70 |
|
9.2 |
NOTICES |
70 |
|
9.3 |
ASSIGNMENT |
71 |
|
9.4 |
CONFIDENTIALITY |
71 |
|
9.5 |
ENTIRE AGREEMENT |
71 |
|
9.6 |
THIRD PARTY BENEFICIARIES |
72 |
|
9.7 |
SEVERABILITY |
71 |
|
9.8 |
REMEDIES |
72 |
|
9.9 |
GOVERNING LAW |
72 |
|
9.10 |
CONSENT TO JURISDICTION |
73 |
|
9.11 |
WAIVER OF JURY TRIAL |
73 |
|
9.12 |
COMPANY DISCLOSURE LETTER REFERENCES |
73 |
|
9.13 |
COUNTERPARTS |
73 |
|
9.14 |
NO LIMITATION |
73 |
|
9.15 |
NON-RECOURSE |
73 |
Exhibits
Exhibit A |
Form of Surviving Corporation Certificate
of Incorporation |
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of January 16, 2024, by and among Restaurant
Brands International Inc., a corporation existing under the laws of Canada (“Parent”), BK Cheshire Corp., a Delaware
corporation and Subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”),
and Carrols Restaurant Group, Inc., a Delaware corporation (the “Company”). Each of the Company, Parent and Merger
Sub is sometimes referred to as a “Party.” All capitalized terms that are used in this Agreement have the respective
meanings given to them in Article I.
RECITALS
A. The
Company Board has established a special transaction committee of independent and disinterested members of the Company Board (the “Special
Committee”).
B. The
Special Committee has (i) determined that it is in the best interests of the Company and the Unaffiliated Company Stockholders, and declared
it advisable, to enter into this Agreement providing for the merger of Merger Sub with and into the Company (the “Merger”)
in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) upon the terms and subject to
the conditions set forth herein; (ii) approved and adopted this Agreement and (iii) resolved to recommend that the Company Board approve
and adopt this Agreement.
C. The
Company Board has (i) determined that it is in the best interests of the Company and the Company Stockholders (including the Unaffiliated
Company Stockholders), and declared it advisable, to enter into this Agreement providing for the Merger in accordance with the DGCL upon
the terms and subject to the conditions set forth herein; (ii) approved and adopted this Agreement and approved the execution and delivery
of this Agreement by the Company, the performance by the Company of its covenants and other obligations hereunder, and the consummation
of the Merger upon the terms and subject to the conditions set forth herein; and (iii) resolved to recommend that the stockholders of
the Company adopt this Agreement and approve the Merger in accordance with the DGCL and directed that such matter be submitted for consideration
of the stockholders of the Company at the Company Stockholders’ Meeting.
D.
Each of the board of directors of Parent and the board of directors of Merger Sub has( i) declared it advisable to enter into this
Agreement; and (ii) approved the adoption, execution and delivery of this Agreement, the performance of the respective covenants and
other obligations of Parent and Merger Sub hereunder, and the consummation of the Merger upon the terms and subject to the
conditions set forth herein.
E. Prior
to the execution and delivery of this Agreement, and as a condition to the willingness of the Buyer Parties to enter into this Agreement,
certain stockholders of the Company have entered into a Voting Agreement (the “Voting Agreement”) in connection with
the Merger.
F. The
Buyer Parties and the Company desire to (i) make certain representations, warranties, covenants and agreements in connection with this
Agreement and the Merger; and (ii) prescribe certain conditions with respect to the consummation of the Merger.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein,
as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending
to be legally bound hereby, the Buyer Parties and the Company agree as follows:
ARTICLE
I
DEFINITIONS
& INTERPRETATIONS
1.1
Certain Definitions. For all purposes of and pursuant to this Agreement, the following capitalized terms have the following respective
meanings:
(a) “Acceptable
Confidentiality Agreement” means an agreement with the Company that is either (i) in effect as of the execution and delivery
of this Agreement or (ii) executed, delivered and effective after the execution and delivery of this Agreement, in either case containing
provisions that require any counterparty thereto (and any of its Affiliates and representatives) that receives non-public information
of or with respect to the Company Group to keep such information confidential; provided, however, that, in each case, the
provisions contained therein are no less restrictive in any material respect to such counterparty (and any of its Affiliates and representatives
named therein) than the terms of the Confidentiality Agreement, it being understood that such agreement need not contain any “standstill”
or similar provisions or otherwise prohibit the making of any Acquisition Proposal.
(b) “Acquisition
Proposal” means any offer or proposal (other than an offer or proposal by the Buyer Parties) to engage in an Acquisition Transaction.
(c) “Acquisition
Transaction” means any transaction or series of related transactions (other than the transactions contemplated hereby) involving:
(i) any
direct or indirect purchase or other acquisition by any Person or “group” (as defined pursuant to Section 13(d) of the Exchange
Act) of Persons (in each case, other than the Buyer Parties or their Affiliates or any group that includes the Buyer Parties or their
Affiliates), whether from the Company or any other Person(s), of securities representing more than 15% of the total outstanding equity
securities of the Company (by vote or economic interests) after giving effect to the consummation of such purchase or other acquisition,
including pursuant to a tender offer or exchange offer by any Person or “group” of Persons that, if consummated in accordance
with its terms, would result in such Person or “group” of Persons beneficially owning more than 15% of the total outstanding
equity securities of the Company (by vote or economic interests) after giving effect to the consummation of such tender or exchange offer;
(ii) any
direct or indirect purchase, license or other acquisition by any Person or “group” (as defined pursuant to Section 13(d)
of the Exchange Act) of Persons (in each case, other than the Buyer Parties or their Affiliates or any group that includes the Buyer
Parties or their Affiliates) of assets constituting or accounting for more than 15% of the consolidated assets, revenue or net income
of the Company Group, taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition); or
(iii) any
merger, consolidation, share exchange, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction
involving the Company pursuant to which (A) any Person or “group” (as defined pursuant to Section 13(d) of the Exchange Act)
of Persons (in each case, other than the Buyer Parties or their Affiliates or any group that includes the Buyer Parties or their Affiliates)
would hold securities representing more than 15% of the total outstanding equity securities of the Company (by vote or economic interests)
after giving effect to the consummation of such transaction
(d) “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control
with such Person. For the avoidance of doubt, for purposes of this Agreement, (i) Parent and its Affiliates (other than the Company and
its Subsidiaries) shall not be deemed to be Affiliates of the Company and its Subsidiaries and (ii) the Company and its Subsidiaries
shall not be deemed to be Affiliates of the Parent and its Affiliates. For purposes of this definition, the term “control”
(including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.
(e) “Antitrust
Law” means the Sherman Antitrust Act, the Clayton Antitrust Act, the HSR Act, the Federal Trade Commission Act and all other
laws, whether in any domestic or foreign jurisdiction, that are designed or intended to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade or significant impediments or lessening of competition or the creation
or strengthening of a dominant position through merger or acquisition, in any case that are applicable to the Merger.
(f) “Audited
Company Balance Sheet” means the consolidated balance sheet (and the notes thereto) of the Company Group as of January 1, 2023
set forth in the Company’s Annual Report on Form 10-K filed by the Company with the SEC for the fiscal year ended January 1, 2023.
(g) “Business
Day” means each day that is not a Saturday, Sunday or other day on which the Federal Reserve Bank of New York is closed.
(h) “Business
Systems” means all computer hardware (whether general or special purpose), electronic data processing systems, information
technology systems and computer systems, including any outsourced electronic data processing, information technology, or computer systems
that are owned or used by or for any of the Company Group in the conduct of the business of the Company Group.
(i) “Code” means the Internal Revenue Code of 1986.
(j) “Company Board” means the Board of Directors of the Company.
(k) “Company Capital Stock” means the Company Common Stock and the Company Preferred Stock.
(l) “Company Common Stock” means the Common Stock, par value $0.01 per share, of the Company.
(m) “Company
Credit Agreement” means that certain credit agreement, dated as of April 30, 2019, by and among the Company, the guarantors
party thereto, the lenders party thereto and Wells Fargo Bank, National Association as the administrative agent, and as further amended,
restated, amended and restated.
(n) “Company
Equity Plans” means the Carrols Restaurant Group, Inc. 2016 Stock Incentive Plan, as amended and restated effective June 16,
2023, and the Carrols Restaurant Group, Inc. 2006 Stock Incentive Plan (as amended from time to time), in each case, that provide for
the issuance of any Company Equity Awards.
(o) “Company Group” means the Company and its Subsidiaries.
(p) “Company
Indenture” means that certain Indenture, dated as of June 28, 2021, by and among the Company, as issuer, the guarantors party
thereto and The Bank of New York Mellon, as trustee, and as further supplemented, amended, restated, amended and restated.
(q) “Company
Material Adverse Effect” means any change, event, violation, inaccuracy, effect or circumstance (each, an “Effect”)
that, individually or taken together with all other Effects that have occurred on or prior to the date of determination of the occurrence
of the Company Material Adverse Effect, is or would reasonably be expected to have a material adverse effect on the business, financial
condition or results of operations of the Company Group, taken as a whole; provided, however, that none of the following
(by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when
determining whether a Company Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth
below):
(i)
changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in
the global economy generally;
(ii) changes
in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the
world, including (1) changes in interest rates or credit ratings in the United States or any other country; (2) changes in exchange rates
for the currencies of any country; or (3) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities)
generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the
world;
(iii)
changes in conditions in the industries in which the Company Group generally conducts business;
(iv) changes
in regulatory, legislative or political conditions in the United States or any other country or region in the world;
(v) any
geopolitical conditions, outbreak of hostilities, acts or declarations of war, sabotage, terrorism (including cyberterrorism) or military
actions, or any other similar event (including any escalation or general worsening of any of the foregoing) in the United States or any
other country or region in the world;
(vi) earthquakes,
hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, any acts of God, epidemics,
pandemics or disease outbreaks and other force majeure events (including any escalation or general worsening of any of the foregoing)
in the United States or any other country or region in the world;
(vii) any
Effect resulting from the announcement of this Agreement or the pendency of the Merger and the transactions contemplated hereby (including
the identity of Parent, Merger Sub or their Affiliates), including the impact thereof on the relationships, contractual or otherwise,
of the Company Group with employees, labor unions, suppliers, customers, partners, vendors or any other third Person or other business
relationships (other than for purposes of any representation or warranty contained in Section 3.5 or Section 3.6, and the related conditions
to the Closing);
(viii) the
compliance by any Party with the terms of this Agreement, including any action taken or refrained from being taken pursuant to or in
accordance with the terms of this Agreement (other than for purposes of any representation or warranty contained in Section 3.5 or Section
3.6, and the related conditions to the Closing);
(ix)
any action taken or refrained from being taken, in each case which Parent has expressly approved, consented to or requested in writing
following the date hereof;
(x)
changes or proposed changes in GAAP or other accounting standards or in any applicable laws or regulations (or the enforcement or interpretation
of any of the foregoing);
(xi) changes
in the price or trading volume of the Company Common Stock or any change in the credit rating of the Company or any of its securities,
in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material
Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred);
(xii) any
failure, in and of itself, by the Company Group to meet (A) any public estimates or expectations of the Company’s revenue, earnings
or other financial performance or results of operations for any period; or (B) any internal budgets, plans, projections or forecasts
of its revenues, earnings or other financial performance or results of operations (it being understood that any cause of any such failure
may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining
whether a Company Material Adverse Effect has occurred);
(xiii) the availability or cost of equity, debt or other financing to the Buyer Parties;
(xiv) any breach by Parent or Merger Sub of this Agreement;
(xv) any
action taken or refrained from being taken pursuant to the express terms of any Franchise Agreement in the ordinary course of business
(excluding any incurrence of capital expenditures, other than capital expenditures for necessary maintenance costs with respect to any
restaurants operated by the Company Group), and any action taken by Parent or its Affiliates in connection with the Franchise Agreements
(in each case, it being understood that any cause of any such action by Parent may be deemed to constitute, in and of itself, a Company
Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred);
and
(xvi)
any Transaction Litigation or other Legal Proceeding threatened, made or brought by any of the current or former Company
Stockholders (on their own behalf or on behalf of the Company) against the Company, any of its executive officers or other employees
or any member of the Company Board arising out of the Merger or any other transaction contemplated by this Agreement; except, with
respect to clauses (i), (ii), (v), (vi) and (x), to the extent that such Effect has had a disproportionate adverse effect on the
Company relative to other companies operating in the industries in which the Company Group conducts business, in which case only the
incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a Company Material
Adverse Effect.
(r) “Company Notes” means those certain 5.875% senior notes due 2029 under the Company Indenture.
(s) “Company Option” means each option to purchase shares of Company Common Stock granted under the Company Equity Plans.
(t) “Company
Preferred Stock” means the Preferred Stock, par value $0.01 per share, of the Company, including the Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock.
(u) “Company
PSA” each award of restricted stock of the Company issued under the Company Equity Plans whose vesting is conditioned in full
or in part based on achievement of performance goals or metrics.
(v) “Company
PSU” means each restricted stock unit award granted under the Company Equity Plans whose vesting is conditioned in full or
in part based on achievement of performance goals or metrics.
(w) “Company
RSA” means each award of restricted stock of the Company issued under the Company Equity Plans, other than a Company PSA.
(x) “Company
RSU” means each restricted stock unit award granted under the Company Equity Plans, other than a Company PSU.
(y) “Company Stockholders” means the holders of shares of Company Capital Stock.
(z) “Continuing
Employees” means each individual who is an employee of the Company Group immediately prior to the Effective Time and continues
to be an employee of Parent or one of its Subsidiaries (including the Surviving Corporation) on and immediately following the Effective
Time.
(aa)
“Contract” means any (i) written contract, subcontract, note, bond, mortgage, indenture, lease, license,
sublicense or (ii) other legally binding agreement, excluding purchase orders in either instance.
(bb) “Data
Security Requirements” means, collectively, all of the following to the extent relating to privacy, data protection, data security,
or security breach notification requirements and to the extent applicable to a Company Group entity from time to time: (i) the Company
Group’s written policies, procedures and published privacy policies; (ii) all applicable laws, rules and regulations (“Data
Protection Laws”); and (iii) any binding standards (including, if applicable, the Payment Card Industry Data Security Standard
(PCI DSS)).
(cc) “DOJ” means the United States Department of Justice or any successor thereto.
(dd) “Environmental
Law” means any applicable law (including common law) or order relating to pollution, the protection of the environment (including
ambient air, surface water, groundwater or land) or exposure of any Person with respect to Hazardous Substances or otherwise relating
to the production, use, storage, treatment, transportation, recycling, disposal, discharge, release or other handling of any Hazardous
Substances, or the investigation, clean-up or remediation thereof.
(ee) “ERISA” means the Employee Retirement Income Security Act of 1974.
(ff) “Exchange Act” means the Securities Exchange Act of 1934.
(gg) “Franchise
Agreements” means any and all franchise agreements, development agreements, master franchise agreements and any bailment, advertising,
master program or other similar agreements (excluding, for the avoidance of doubt, (i) agreements relating to Parent’s or its Affiliates’
ownership of securities of the Company and (ii) this Agreement), by and between Parent or any of its Affiliates, on the one hand, and
the Company or any of its Subsidiaries, on the other hand.
(hh) “FTC” means the United States Federal Trade Commission or any successor thereto.
(ii) “GAAP” means generally accepted accounting principles, consistently applied, in the United States.
(jj) “Governmental
Authority” means any government, governmental or regulatory entity or body, department, commission, bureau, council, board,
agency or instrumentality, and any court, tribunal, arbitrator or arbitral body (public or private) or judicial body, in each case whether
federal, state, county or provincial, and whether local or foreign.
(kk) “Hazardous
Substance” means any substance, material or waste that is characterized or regulated by a Governmental Authority pursuant to
any Environmental Law as “hazardous,” “pollutant,” “contaminant,” “toxic” or “radioactive,”
or for which liability or standards of conduct may be imposed pursuant to any Environmental Law, including petroleum and petroleum products,
polychlorinated biphenyls, per- and polyfluoroalkyl substances and friable asbestos.
(ll) “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
(mm) “In-the-Money
Company Options” means Company Options with an exercise price per share less than the Per Share Price.
(nn) “Indebtedness”
means any of the following liabilities or obligations: (i) indebtedness for borrowed money (including any principal, premium, accrued
and unpaid interest, related expenses, prepayment penalties, commitment and other fees, sale or liquidity participation amounts, reimbursements,
indemnities and all other amounts payable in connection therewith); (ii) liabilities evidenced by bonds, debentures, notes or other similar
instruments or debt securities; (iii) liabilities pursuant to or in connection with letters of credit or banker’s acceptances or
similar items (in each case whether or not drawn, contingent or otherwise); (iv) liabilities pursuant to capitalized leases; (v) liabilities
arising out of interest rate and currency swap arrangements and any other arrangements designed to provide protection against fluctuations
in interest or currency rates; (vi) deferred purchase price liabilities related to past acquisitions; (vii) payment obligations arising
in connection with earnouts or other contingent payment obligations under Contracts (other than contingent indemnification obligations
that have not matured and as to which no claims have been made, or to the Knowledge of the Company, threatened); (viii) liabilities arising
from any breach of any of the foregoing; and (ix) indebtedness of others guaranteed by the Company Group or secured by any lien or security
interest on the assets of the Company Group.
(oo)
“Intellectual Property” means the rights associated with the following: (i) all United States and foreign patents
and applications therefor (“Patents”); (ii) all copyrights, copyright registrations and applications therefor and
all other rights corresponding thereto throughout the world (“Copyrights”); (iii) trademarks, service marks, trade
dress rights, domain name registrations, and similar designation of origin and rights therein (“Marks”); (iv) all
rights in mask works, and all mask work registrations and applications therefor; (v) rights in Software, trade secrets and confidential
information; (vi) rights of publicity; and (vii) any other intellectual property or proprietary rights or similar, corresponding or equivalent
rights to any of the foregoing anywhere in the world.
(pp) “IRS” means the United States Internal Revenue Service or any successor thereto.
(qq) “Knowledge”
of the Company, with respect to any matter in question, means the actual knowledge of the Company’s Chief Executive Officer, Chief
Financial Officer, General Counsel, Chief Development Officer, Chief Restaurant Officer and Controller. “Knowledge”
of Parent, with respect to any matter in question, means the actual knowledge of Parent’s Chief Executive Officer, Chief Financial
Officer, General Counsel and Controller, in each case after reasonable inquiry of those employees who would reasonably be expected to
have actual knowledge of the matter in question.
(rr) “Legal
Proceeding” means any claim, action, charge, audit, lawsuit, litigation, complaint, hearing, arbitration, investigation (to
the Knowledge of the Company, as used in relation to the Company Group) or other similarly formal legal proceeding brought by or pending
before any Governmental Authority, arbitrator, mediator or other tribunal.
(ss)
“Material Contract” means any of the following Contracts other than Franchise Agreements:
(i) any
“material contract” (as defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC, other than those agreements
and arrangements described in Item 601(b)(10)(iii) of Regulation S-K) with respect to the Company Group, taken as a whole;
(ii) (A)
any material Contract with any supplier or service provider to the Company Group whose annual expenditures for the fiscal year ended
January 1, 2023 or January 1, 2022 represented in excess of $500,000 for such fiscal year;
(iii) any
Contract (A) relating to the disposition or acquisition of assets by the Company Group with a value or purchase price greater than $500,000
after the date hereof other than in the ordinary course of business; or (B) pursuant to which the Company Group will acquire any material
ownership interest in any other Person or other business enterprise;
(iv) any
mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money,
extension of credit or other Indebtedness, in each case relating to Indebtedness with an aggregate principal amount or total commitments
in excess of $500,000, other than (A) accounts receivables and payables in the ordinary course of business; and (B) loans to Subsidiaries
of the Company in the ordinary course of business;
(v) any contract providing for property management or similar services;
(vi) any
Contract providing for indemnification of any officer, director or employee by the Company Group, other than Contracts entered into on
substantially the same form as the Company Group’s standard forms previously made available to Parent;
(vii) any
Contract that is an agreement in settlement of a dispute that imposes material obligations on the Company Group after the date hereof;
and
(viii) any
Contract that involves a joint venture entity, limited liability company or legal partnership with a third party (excluding, for avoidance
of doubt, reseller agreements and other commercial agreements that do not involve the formation of an entity with any third Person).
(tt) “Nasdaq” means The Nasdaq Global Select Market and any successor stock exchange.
(uu)
“Notes” means the Company’s 5.875% Senior Notes due 2029, governed by the Company Indenture.
(vv) “NYSE” means the New York Stock Exchange and any successor stock exchange.
(ww) “Payoff
Letter” means, with respect to the Company Credit Agreement, a customary payoff letter executed by the lenders or other creditors
thereunder (or their duly authorized agent or representative), which states the aggregate amount of outstanding obligations of the Company
and its Subsidiaries under the Company Credit Agreement as of the date specified in such letter (together with a customary per diem for
payment following such date) and the instructions for payment of the same to discharge such obligations, which letter shall also state
that, upon receipt of payment of such amount (together with the per diem, to the extent applicable) in cash in immediately available
funds, (a) all obligations and liabilities of the Company and its Subsidiaries under the Company Credit Agreement (other than those liabilities
that expressly survive the termination thereof) shall be satisfied and all guarantees provided by, and all other agreements of, the Company
and its Subsidiaries under the Company Credit Agreement shall be terminated (to the extent applicable, other than any issued and outstanding
letters of credit thereunder for which alternative arrangements may have been agreed), (b) all liens on the equity interests and assets
of the Company and its Subsidiaries created in connection with the Company Credit Agreement (to the extent applicable, other than any
cash collateral or other arrangements to backstop any letters of credit issued and outstanding thereunder that are not terminated at
Closing) shall be released, and the Company and its Subsidiaries or Parent or any of its Affiliates are authorized to file such documents
and instruments as are necessary to evidence such release and (c) provide for delivery to the Company (or their designee) on or promptly
following the Closing Date all possessory collateral (if any) in such lenders’ possession.
(xx)
“Permitted Liens” means any of the following: (i) liens for Taxes, assessments and governmental charges or levies
either not yet delinquent or that are being contested in good faith and by appropriate proceedings and for which appropriate reserves
have been established to the extent required by GAAP; (ii) mechanics, carriers’, workmen’s, warehouseman’s, repairmen’s,
materialmen’s or other liens or security interests that are not yet delinquent or that are being contested in good faith and by
appropriate proceedings and for which appropriate reserves have been established to the extent required by GAAP; (iii) leases, subleases
and licenses (other than capital leases and leases underlying sale and leaseback transactions); (iv) liens imposed by applicable law
(other than Tax law); (v) pledges or deposits to secure obligations pursuant to workers’ compensation laws or similar legislation
or to secure public or statutory obligations; (vi) pledges and deposits to secure the performance of bids, trade contracts, leases, surety
and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (vii)
defects, imperfections or irregularities in title, easements, covenants and rights of way (unrecorded and of record) and other similar
liens (or other encumbrances of any type), and zoning, building and other similar codes or restrictions, in each case that do not adversely
affect in any material respect the current use or value of the applicable property owned, leased, used or held for use by the Company
Group; (viii) liens the existence of which are disclosed in the notes to the consolidated financial statements of the Company included
in the Company SEC Reports filed as of the date hereof; (ix) any other liens that do not secure a liquidated amount, that have been incurred
or suffered in the ordinary course of business, and that would not, individually or in the aggregate, have a material effect on the Company
Group, taken as a whole; (x) statutory, common law or contractual liens (or other encumbrances of any type) of landlords or liens against
the interests of the landlord or owner of any Leased Real Property unless caused by the Company Group; (xi) liens (or other encumbrances
of any type) that do not materially and adversely affect the use or operation of the property subject thereto; or (xii) liens pertaining
to Indebtedness that has been disclosed to Parent and that, pursuant to the terms of such Indebtedness, is permitted to remain outstanding
following Closing.
(yy) “Person”
means any individual, corporation (including any non-profit corporation), limited liability company, joint stock company, general partnership,
limited partnership, limited liability partnership, joint venture, estate, trust, firm, Governmental Authority or other enterprise, association,
organization or entity.
(zz) “Personally
Identifiable Information” means all data that identifies an individual or, in combination with any other information or data,
is capable of identifying an individual, or which is otherwise classified as ‘personal data,’ ‘personally identifiable
information,’ ‘protected health information,’ or similar term under applicable Data Protection Laws.
(aaa) “Processed”
or “Processing” means to store, collect, copy, process, transfer, transmit, display, access, use, adapt, record, retrieve,
organize, structure, erase or disclose, and any actions that are otherwise defined as ‘processed’ or ‘processing’
under applicable Data Protection Laws.
(bbb) “Representatives”
means, with respect to any Person, its directors, officers, employees, consultants, agents, representatives and advisors.
(ccc) “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
(ddd)
“SEC” means the United States Securities and Exchange Commission or any successor thereto.
(eee) “Securities Act” means the Securities Act of 1933.
(fff) “Series
A Convertible Preferred Stock” means the Series A Convertible Preferred Stock, par value $0.01 per share, of the Company.
(ggg) “Series
B Convertible Preferred Stock” means the Series B Convertible Preferred Stock, par value $0.01 per share, of the Company.
(hhh) “Series
C Convertible Preferred Stock” means the Series C Convertible Preferred Stock, par value $0.01 per share, of the Company.
(iii) “Series
D Convertible Preferred Stock” means the Series D Convertible Preferred Stock, par value $0.01 per share, of the Company.
(jjj) “Series
D Convertible Preferred Stock Certificate of Designation” means the Certificate of Designation for the Series D Convertible
Preferred Stock, dated December 20, 2022.
(kkk) “Software”
means all computer software (in object code or source code format), associated databases, and related documentation and materials.
(lll) “Specified
Letter” means a pre-consummation letter from the Federal Trade Commission in similar form to that set forth in its blogpost
dated August 3, 2021 and posted at this link: https://www.ftc.gov/system/files/attachments/blog_posts/Adjusting%20merger%20review%20to%20deal%20with%20the%20surge%20in%20merger%20filings/sample_pre-consummation_warning_letter.pdf, or a letter of, and limited to, similar substance
from the Federal Trade Commission or DOJ.
(mmm) “Specified
Data Breach” means the unauthorized (i) disclosure of Personally Identifiable Information in the possession, custody or control
of any member of the Company Group or that is processed on behalf of any member of the Company Group; or (ii) access, use, theft, transmission
or transfer of Personally Identifiable Information Processed by or in the possession, custody or control of any member of the Company
Group that, in the case of each of clauses (i) or (ii), would reasonably be expected to (A) negatively impact in any material respect,
the business, reputation, or results of operation of the Company Group; or (B) result in any member of the Company Group having any material
obligation under applicable Data Protection Law to provide notification regarding any of the foregoing to any Person or Governmental
Authority.
(nnn) “Subsidiary”
of any Person means (i) a corporation of which more than 50% of the combined voting power of the outstanding voting equity securities
of such corporation is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person
and one or more other Subsidiaries of such Person; (ii) a partnership of which such Person or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to
direct the policies, management and affairs of such partnership; (iii) a limited liability company of which such Person or one or more
other Subsidiaries of such Person or such Person and one or more other Subsidiaries of such Person, directly or indirectly, is the manager
or managing member and has the power to direct the policies, management and affairs of such limited liability company; or (iv) any other
Person (other than a corporation, partnership or limited liability company) in which such Person or one or more other Subsidiaries of
such Person or such Person and one or more other Subsidiaries of such Person, directly or indirectly, has at least a majority ownership
and the power to direct the policies, management and affairs thereof. Notwithstanding anything to the contrary in this Agreement, for
purposes of this Agreement, following the Closing, each of the Surviving Corporation and its Subsidiaries will be deemed to be a Subsidiary
of Parent.
(ooo) “Superior
Proposal” means any bona fide written Acquisition Proposal for an Acquisition Transaction on terms that the Special
Committee has determined in good faith, after consultation with its financial advisor and outside legal counsel, (1) is reasonably likely
to be consummated in accordance with its terms, taking into account all legal, regulatory and financing aspects of the proposal (including
certainty of closing) and the identity of the Person making the proposal and other aspects of the Acquisition Proposal that the Special
Committee deems relevant, and (2) if consummated, would be more favorable, from a financial point of view, to the Company Stockholders
(including the Unaffiliated Company Stockholders) (in their capacity as such) than the Merger (taking into account any revisions to this
Agreement made or proposed in writing by Parent prior to the time of such determination). For purposes of the reference to an “Acquisition
Proposal” in this definition, all references to “15%” in the definition of “Acquisition Transaction” will
be deemed to be references to “50%.”
(ppp) “Tax”
means any United States federal, state, local and non-United States taxes, assessments and similar governmental charges and impositions
in the nature of taxes (including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation and value
added, ad valorem, transfer, franchise, withholding, payroll, employment, excise and property taxes), together with all interest, penalties
and additions imposed with respect to such amounts imposed by any Governmental Authority.
(qqq) “Transaction
Litigation” means any Legal Proceeding commenced or threatened by any Person (including any current or former holder of Company
Capital Stock or any other securities of any member of the Company Group) against a Party or any of its Subsidiaries or any of its or
their Representatives or otherwise relating to, involving or affecting such Party or any of its Subsidiaries or any of its or their Representatives,
in each case in connection with, arising from or otherwise relating to or regarding the Merger or any other transaction contemplated
by this Agreement, including any Legal Proceeding alleging or asserting any misrepresentation or omission in the Proxy Statement, the
Schedule 13E-3, any Other Required Company Filing or any other communications to the Company Stockholders, other than any Legal Proceedings
among the Parties related to this Agreement.
(rrr) “TSX” means the Toronto Stock Exchange and any successor stock exchange.
(sss)
“Unaffiliated Company Stockholders” means the Company Stockholders other than (i) Parent, Merger Sub and their Affiliates,
(ii) any members of the Company Board who are employees of Parent or its Affiliates, (iii) any officer of the Company and (iv) any member
of any of the foregoing’s “immediate family” (as defined in Rule 16a-1 of the Exchange Act), or any “affiliate”
or “associate” (as defined in Rule 12b-2 of the Exchange Act) of any of the foregoing.
(ttt) “WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988 and any similar foreign, state or local law, regulation
or ordinance.
(uuu) “Willful
and Material Breach” means, with respect to any covenant, representation, warranty or other agreement set forth in this Agreement,
a material breach that is a consequence of an act or failure to act undertaken or omitted to be taken by the breaching Party with the
actual or constructive knowledge (which shall be deemed to include knowledge of facts that a Person acting reasonably should have known,
based on reasonable due inquiry) that the taking of such act or failure to take such act would, or would reasonably be expected to, cause,
or constitute a breach of the relevant covenant, representation, warranty or other agreement.
1.2
Additional Definitions. The following capitalized terms have the respective meanings given to them in the respective Sections
of this Agreement set forth opposite each of the capitalized terms below:
Term |
|
Section Reference |
401(k) Plan |
|
6.10(f) |
Advisor |
|
3.3(c) |
Agreement |
|
Preamble |
Alternative Acquisition Agreement |
|
5.3(a) |
Buyer Parties |
|
Preamble |
Bylaws |
|
3.1 |
Capitalization Date |
|
3.7(a) |
Certificate of Merger |
|
2.2 |
Certificates |
|
2.9(c) |
Charter |
|
2.5(a) |
Chosen Courts |
|
9.10 |
Closing |
|
2.3 |
Closing Date |
|
2.3 |
Collective Bargaining Agreement |
|
3.19(a) |
Company |
|
Preamble |
Company Board Recommendation |
|
3.3(a) |
Company Board Recommendation Change |
|
5.3(c)(i) |
Company Disclosure Letter |
|
Article III |
Company Equity Awards |
|
3.18(j)3.7(b) |
Company Incentive Programs |
|
6.10(f) |
Company Option Consideration |
|
2.8(e) |
Company PSA Consideration |
|
2.8(b) |
Company PSU Consideration |
|
2.8(d) |
Company RSA Consideration |
|
2.8(a) |
Company RSU Consideration |
|
2.8(c) |
Company SEC Reports |
|
3.9 |
Term |
|
Section
Reference |
Company Securities |
|
3.7(c) |
Company Stockholder Meeting |
|
6.4(a) |
Company Termination Fee |
|
8.3(b)(i) |
Confidentiality Agreement |
|
9.4 |
Consent |
|
3.6 |
Copyrights |
|
1.1(oo) |
D&O Insurance |
|
6.9(c) |
DCP |
|
6.10(g) |
Debt Financing |
|
6.5(a) |
Debt Offer |
|
6.5(c) |
DGCL |
|
Recitals |
Discharge |
|
6.5(c) |
Dissenting
Company Shares |
|
2.7(c)(i) |
DTC
|
|
2.9(d) |
DTC
Payment |
|
2.9(d) |
EDGAR |
|
3.9 |
Effect
|
|
1.1(p) |
Effective
Time |
|
2.2 |
Electronic Delivery |
|
9.13 |
Employee Plan |
|
3.18(a) |
Enforceability Limitations |
|
3.2 |
ePrivacy Directive |
|
1.1(bb) |
ERISA Affiliate |
|
3.18(a) |
Exchange Fund |
|
2.9(b) |
GDPR |
|
1.1(bb) |
Go Shop Period |
|
5.3(a) |
Government Closure |
|
6.2(a) |
Indemnified
Persons |
|
6.9(a) |
Intervening
Event |
|
5.3(d)(i) |
IP
Contracts |
|
3.16(b) |
Lease |
|
3.14(b) |
Leased Real Property |
|
3.14(b) |
Marks |
|
1.1(oo) |
Material
Relationships |
|
1.1(ss)(ii) |
Maximum
Annual Premium |
|
6.9(c) |
Merger |
|
Recitals |
Merger
Sub |
|
Preamble |
New
Plans |
|
6.10(d) |
No Shop Period Start Date |
|
5.3(a) |
Notice Period |
|
5.3(d)(ii)(3) |
Old
Plans |
|
6.10(d) |
Other Required Company Filing |
|
6.3(b) |
Other
Required Parent Filing |
|
6.3(d) |
Owned
Company Share |
|
2.7(a)(iii) |
Owned Real Property |
|
3.14(a) |
Parent |
|
Preamble |
Parent
401(k) Plan |
|
6.10(f) |
Parent
Disclosure Letter |
|
Article IV |
Term |
|
Section Reference |
Party |
|
Preamble |
Patents |
|
1.1(oo) |
Payment Agent |
|
2.9(a) |
Per Share Price |
|
2.7(a)(ii) |
Permits |
|
3.20 |
Proxy Statement |
|
6.3(a) |
Real Property |
|
3.14(b) |
SEC Reports |
|
Article III |
Redemption |
|
6.5(c) |
Requisite Stockholder Approval |
|
3.4 |
Schedule 13E-3 |
|
6.3(b) |
Service Proration |
|
6.10(f) |
Special Committee |
|
Recitals |
Sublease |
|
3.14(c) |
Surviving Corporation |
|
2.1 |
Tax Returns |
|
3.17(a) |
Termination Date |
|
8.1(c) |
Uncertificated Shares |
|
2.9(c) |
Voting Agreement |
|
Recitals |
1.3 Certain
Interpretations.
(a) When
a reference is made in this Agreement to an Article or a Section, such reference is to an Article or a Section of this Agreement unless
otherwise indicated, and references to “paragraphs” or “clauses” are to separate paragraphs or clauses of the
Section or subsection in which the reference occurs. When a reference is made in this Agreement to a Schedule or Exhibit, such reference
is to a Schedule or Exhibit to this Agreement, as applicable, unless otherwise indicated.
(b) When
used herein, (i) the words “hereof,” “herein” and “herewith” and words of similar import will, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; and (ii)
the words “include,” “includes” and “including” will be deemed in each case to be followed by the
words “without limitation.” When used herein, the phrase “the date hereof” means “the date of this Agreement.”
(c) Unless the context otherwise requires, “neither,” “nor,” “any,” “either” and “or” are not exclusive.
(d) The
word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and does
not simply mean “if.”
(e)
When used in this Agreement, references to “$” or “Dollars” are references to U.S. dollars.
(f) The
meaning assigned to each capitalized term defined and used in this Agreement is equally applicable to both the singular and the plural
forms of such term, and words denoting any gender include all genders. Where a word or phrase is defined in this Agreement, each of its
other grammatical forms has a corresponding meaning.
(g) When
reference is made to any party to this Agreement or any other agreement or document, such reference includes such Party’s successors
and permitted assigns. References to any Person include the successors and permitted assigns of that Person.
(h) Unless
the context otherwise requires, all references in this Agreement to the Subsidiaries of a Person will be deemed to include all direct
and indirect Subsidiaries of such entity.
(i) When
used herein, references to “ordinary course” or “ordinary course of business” will be construed to mean “ordinary
course of business, consistent with past practices.”
(j) A
reference to any specific legislation or to any provision of any legislation includes any amendment to, and any modification, re-enactment
or successor thereof, any legislative provision substituted therefor and all rules, regulations and statutory instruments issued thereunder
or pursuant thereto, except that, for purposes of any representations and warranties in that Agreement that are made as a specific date,
references to any specific legislation will be deemed to refer to such legislation or provision (and all rules, regulations and statutory
instruments issued thereunder or pursuant thereto) as of such date. A reference to “law” will refer to any federal, state,
local or foreign legislation, statute, law (including common law), ordinance, rule, regulation, code, directive, determination or stock
exchange listing requirement, as applicable, and “order” will refer to any decree, ruling, judgment, injunction or other
order in any Legal Proceedings by or with any Governmental Authority. References to any agreement or Contract are to that agreement or
Contract as amended, modified or supplemented from time to time, and any exhibits, schedules, annexes, statements of work, riders and
other documents attached thereto.
(k) All
accounting terms used herein will be interpreted, and all accounting determinations hereunder will be made, in accordance with GAAP.
An item arising with respect to a specific representation or warranty will be deemed to be “reflected on” or “set forth
in” a balance sheet or financial statements, to the extent that any such phrase appears in such representation or warranty, if
(i) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that is specifically
related to such item; or (ii) such item is specifically set forth on the balance sheet or financial statements or is specifically set
forth in the notes thereto (provided that an amount with respect to such item is included in such notes), in each case of clauses
(i) and (ii), if an amount is so shown or set forth on such balance sheet or financial statement or notes thereto, solely to the extent
of such amount.
(l) The
table of contents and headings set forth in this Agreement are for convenience of reference purposes only and will not affect or be deemed
to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.
(m) The
measure of a period of one month or year for purposes of this Agreement will be the date of the following month or year corresponding
to the starting date. If no corresponding date exists, then the end date of such period being measured will be the next actual date of
the following month or year (for example, one month following May 18 is June 18 and one month following May 31 is July 1). When calculating
the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the
date that is the reference date in calculating such period will be excluded. References to “from” or “through”
any date mean, unless otherwise specified, from and including or through and including such date, respectively.
(n) The
Parties agree that they have been represented by legal counsel during the negotiation and execution of this Agreement and therefore waive
the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document
will be construed against the Party drafting such agreement or document.
(o) No
summary of this Agreement or any Exhibit or Schedule delivered herewith prepared by or on behalf of any Party will affect the meaning
or interpretation of this Agreement or such Exhibit or Schedule.
(p) The
information contained in this Agreement and in the Company Disclosure Letter and Parent Disclosure Letter is disclosed solely for purposes
of this Agreement, and no information contained herein or therein will be deemed to be an admission by any Party to any third Person
of any matter whatsoever, including (i) any violation of law or breach of contract; or (ii) that such information is material or that
such information is required to be referred to or disclosed under this Agreement. Nothing in the Company Disclosure Letter constitutes
an admission against the Company’s interest or represents the Company’s legal position or legal rights on the matter so disclosed.
No reference in this Agreement to dollar amount thresholds will be deemed to be evidence of a Company Material Adverse Effect or materiality.
(q) The
representations and warranties in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the
Parties. Any inaccuracies in such representations and warranties are subject to waiver by the Parties in accordance with Section 8.5
without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent
an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Consequently,
Persons other than the Parties may not rely on the representations and warranties in this Agreement as characterizations of actual facts
or circumstances as of the date hereof or as of any other date.
(r) Documents
or other information or materials will be deemed to have been “made available,” “furnished,” “provided”
or “delivered” by the Company if such documents, information or materials have been physically or electronically delivered
to the relevant Party prior to the date of this Agreement, including by being posted to a virtual data room managed by the Company at
www.cscglobal.com or to the Company internal lease database prior to 12:00 p.m. Eastern time on January 15, 2024 or filed with or furnished
to the SEC and available on EDGAR.
(s) References
to “writing” mean the representation or reproduction of words, symbols or other information in a visible form by any method
or combination of methods, whether in electronic form or otherwise, and including writings delivered by Electronic Delivery. “Written”
will be construed in the same manner.
ARTICLE
II
THE
MERGER
2.1
The Merger. Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of the DGCL,
at the Effective Time, (a) Merger Sub will be merged with and into the Company; (b) the separate corporate existence of Merger Sub will
thereupon cease; and (c) the Company will continue as the surviving corporation of the Merger. The Company, as the surviving corporation
of the Merger, is sometimes referred to herein as the “Surviving Corporation.”
2.2
The Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent, Merger
Sub and the Company will cause the Merger to be consummated pursuant to the DGCL by filing a certificate of merger in customary form
and substance (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in accordance with
the applicable provisions of the DGCL (the time of such filing and acceptance for record by the Secretary of State of the State of Delaware,
or such later time as may be agreed in writing by Parent, Merger Sub and the Company and specified in the Certificate of Merger, being
referred to herein as the “Effective Time”).
2.3
The Closing. The consummation of the Merger (the “Closing”) shall take place by the remote exchange of electronic
copies of documents and signatures (including by Electronic Delivery) on a date to be agreed upon by Parent and the Company that is no
later than (a) the second Business Day after the satisfaction or waiver (to the extent permitted hereunder) of the last to be satisfied
or waived of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing,
but subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions); or (b) such other time, location and/or
date as Parent and the Company mutually agree in writing. The date on which the Closing actually occurs is referred to as the “Closing
Date.”
2.4
Effect of the Merger. At the Effective Time, the effect of the Merger will be as provided in this Agreement and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all (a) of the property,
rights, privileges, powers and franchises of the Company and Merger Sub will vest in the Surviving Corporation; and (b) debts, liabilities
and duties of the Company and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation.
2.5 Certificate
of Incorporation and Bylaws.
(a) Surviving
Corporation Certificate of Incorporation. At the Effective Time, subject to the provisions of Section 6.9(a), the Amended and Restated
Certificate of Incorporation of the Company, as amended (the “Charter”), will be amended and restated in its entirety
to read as set forth in Exhibit A attached hereto, and such amended and restated certificate of incorporation will become the
certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the
DGCL and such certificate of incorporation.
(b) Surviving
Corporation Bylaws. At the Effective Time, subject to the provisions of Section 6.9(a), the bylaws of the Company will be amended
and restated in their entirety to read as the bylaws of Merger Sub until thereafter amended in accordance with the applicable provisions
of the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws.
2.6 Directors
and Officers.
(a) Directors
of the Surviving Corporation. At the Effective Time, the initial directors of the Surviving Corporation will be the directors of
Merger Sub as of immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal.
(b) Officers
of the Surviving Corporation. At the Effective Time, the initial officers of the Surviving Corporation will be the officers of the
Company as of immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws
of the Surviving Corporation until their respective successors are duly appointed or until their earlier death, resignation or removal.
2.7 Effect
of Merger on Company Capital Stock.
(a) Company
Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the Buyer Parties, the Company
or the holders of any of the following securities, the following will occur:
(i)
each share of common stock, par value $0.001 per share, of Merger Sub that is outstanding as of immediately prior to the Effective
Time will be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation, and
thereupon each certificate representing ownership of such shares of common stock of Merger Sub will thereafter represent ownership
of shares of common stock of the Surviving Corporation;
(ii) each
share of Company Common Stock that is outstanding as of immediately prior to the Effective Time (other than Owned Company Shares or Dissenting
Company Shares, and other than Company RSAs and Company PSAs, which will be treated in accordance with Section 2.8) will be cancelled
and extinguished and automatically converted into the right to receive cash in an amount equal to $9.55, without interest thereon (the
“Per Share Price”), in accordance with the provisions of Section 2.9 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in accordance with the provisions of Section 2.11);
(iii) each
share of Company Common Stock that is (A) held by the Company Group; (B) owned by the Buyer Parties; or (C) owned by any direct or indirect
Subsidiary of the Buyer Parties as of immediately prior to the Effective Time (each, an “Owned Company Share”) shall
remain issued and outstanding as a share of common stock of the Surviving Corporation; and
(iv) each
share of Series D Convertible Preferred Stock that is outstanding as of immediately prior to the Effective Time shall remain issued and
outstanding as a share of Series D Convertible Preferred Stock of the Surviving Corporation, on the terms set forth in the Series D Convertible
Preferred Stock Certificate of Designation.
(b) Adjustment
to the Per Share Price. The Per Share Price will be adjusted appropriately (and subject to the terms of the Charter) to reflect the
effect of any stock split, reverse stock split, stock distribution or dividend (including any dividend or other distribution of securities
convertible into Company Capital Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other
similar change with respect to Company Capital Stock occurring on or after the date hereof and prior to the Effective Time.
(c) Statutory Rights of Appraisal.
(i)
Notwithstanding anything to the contrary set forth in this Agreement, all shares of Company Common Stock that are issued and
outstanding as of immediately prior to the Effective Time and held by Company Stockholders who shall have neither voted in favor of
the Merger nor consented thereto in writing and who shall have properly and validly exercised their statutory rights of appraisal in
respect of such shares of Company Common Stock in accordance with Section 262 of the DGCL (such shares being referred to
collectively as the “Dissenting Company Shares” until such time as the holder thereof fails to perfect, withdraws
or otherwise loses such holder’s appraisal rights under the Laws of the State of Delaware with respect to such shares) will
not be converted into, or represent the right to receive, the Per Share Price pursuant to this Section 2.7. Holders of Dissenting
Company Shares will be entitled to receive payment of the appraised value of such Dissenting Company Shares in accordance with the
provisions of Section 262 of the DGCL (and in such case, at the Effective Time, the Dissenting Company Shares will no longer be
outstanding and will automatically be canceled and cease to exist, and each holder of Dissenting Company Shares will cease to have
any rights with regard thereto except such holder’s right to receive the appraised value of such Dissenting Company Shares to
the extent afforded by Section 262 of the DGCL), except that all Dissenting Company Shares held by Company Stockholders who shall
have failed to perfect or who shall have effectively withdrawn or lost their rights to appraisal of such Dissenting Company Shares
pursuant to Section 262 of the DGCL will cease to be Dissenting Company Shares and will thereupon be deemed to have been converted
into, and to have become exchangeable for, as of the Effective Time, the right to receive the Per Share Price, without interest
thereon, upon surrender of the Certificates or Uncertificated Shares that formerly evidenced such shares of Company Common Stock in
the manner provided in Section 2.9.
(ii) The
Company will give Parent (A) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands and any
other instruments served pursuant to the DGCL and received by the Company in respect of Dissenting Company Shares; and (B) the opportunity
to participate in all negotiations and Legal Proceedings with respect to demands for appraisal pursuant to the DGCL in respect of Dissenting
Company Shares. The Company may not, except with the prior written consent of Parent, make any payment with respect to any demands for
appraisal or settle or offer to settle any such demands for payment in respect of Dissenting Company Shares. For purposes of this Section
2.7(c)(ii), “participate” means that Parent will be kept apprised of proposed strategy and other significant decisions with
respect to demands for appraisal pursuant to the DGCL in respect of Dissenting Company Shares (to the extent that the attorney-client
privilege between the Company and its counsel is not undermined or otherwise affected), and Parent may offer comments or suggestions
with respect to such demands but will not be afforded any decision-making power or other authority over such demands except for the payment,
settlement or compromise consent set forth above.
2.8 Equity
Awards.
(a) Company
RSAs. At the Effective Time, by virtue of the Merger, each Company RSA, whether vested or unvested, that is outstanding as of immediately
prior to the Effective Time shall be fully vested, cancelled and automatically converted, without any required action on the part of
the holder thereof, into the right to receive an amount in cash equal to the product of (A) the aggregate number of shares of Company
Common Stock subject to such Company RSA, multiplied by (B) the Per Share Price, subject to any applicable withholding Taxes payable
in respect thereof (the “Company RSA Consideration”).
(b) Company
PSAs. At the Effective Time, by virtue of the Merger, each Company PSA, whether vested or unvested, that is outstanding as of immediately
prior to the Effective Time shall be fully vested, cancelled and automatically converted, without any required action on the part of
the holder thereof, into the right to receive an amount in cash equal to the product of (A) the aggregate number of shares of Company
Common Stock subject to such Company PSA (with any performance conditions deemed to be earned based on “target” performance),
multiplied by (B) the Per Share Price, subject to any applicable withholding Taxes payable in respect thereof (the “Company
PSA Consideration”).
(c) Company
RSUs. At the Effective Time, by virtue of the Merger, each Company RSU, whether vested or unvested, that is outstanding as of immediately
prior to the Effective Time shall be fully vested, cancelled and automatically converted, without any required action on the part of
the holder thereof, into the right to receive an amount in cash equal to the product of (A) the aggregate number of shares of Company
Common Stock subject to such Company RSU (together with any accrued and unpaid dividends or dividend equivalents corresponding to such
Company RSU), multiplied by (B) the Per Share Price, subject to any applicable withholding Taxes payable in respect thereof (the “Company
RSU Consideration”).
(d) Company
PSUs. At the Effective Time, by virtue of the Merger, each Company PSU, whether vested or unvested, that is outstanding as of
immediately prior to the Effective Time shall be fully vested, cancelled and automatically converted, without any required action on
the part of the holder thereof, into the right to receive an amount in cash equal to the product of (A) the aggregate number of
shares of Company Common Stock subject to such Company PSU (together with any accrued and unpaid dividends or dividend equivalents
corresponding to such Company PSU) (with any performance conditions deemed to be earned based on the greater of “target”
or “actual” performance, as measured through the Effective Time and extrapolated over the full performance period;
provided, that, if the Effective Time occurs on or prior to December 31, 2024, the performance conditions for the Company PSUs
granted in 2024 shall be deemed to be earned based on “target” performance), multiplied by (B) the Per Share Price,
subject to any applicable withholding Taxes payable in respect thereof (the “Company PSU
Consideration”).
(e) Company
Options. At the Effective Time, by virtue of the Merger, each Company Option, whether vested or unvested, that is unexpired, unexercised,
and outstanding as of immediately prior to the Effective Time shall be fully vested, cancelled and automatically converted, without any
required action on the part of the holder thereof, into the right to receive an amount in cash equal to the product of (A) the aggregate
number of shares of Company Common Stock subject to such Company Option, multiplied by (B) the excess, if any, of the Per Share Price
over the applicable per share exercise price under such Company Option, subject to any applicable withholding Taxes payable in respect
thereof (the “Company Option Consideration”). Notwithstanding the foregoing, any Company Option that is not an In-the-Money
Company Option shall be cancelled immediately upon the Effective Time pursuant to this Section 2.8(e) without payment or consideration.
(f) Payment
Procedures. The Surviving Corporation or its Subsidiaries, as applicable, shall pay (and Parent shall cause the Surviving Corporation
or its Subsidiaries, as applicable, to so pay) or, at the Company’s election and with Parent’s consent, a payroll agent identified
by the Company shall pay), no later than the first payroll date following the Closing Date, the aggregate Company Option Consideration,
Company RSA Consideration, Company PSA Consideration, Company RSU Consideration, and Company PSU Consideration, as applicable, payable
with respect to each of the Company Options, Company RSAs, Company PSAs, Company RSUs and Company PSUs, respectively, through the Company
Group’s payroll (or, at the Company’s election and with Parent’s consent, through a payroll agent identified by the
Company) to the applicable holders of such Company Options, Company RSAs, Company PSAs, Company RSUs, and Company PSUs. The Company will
only be permitted, with Parent’s consent, to identify a third-party payroll agent pursuant to the foregoing to the extent such
payroll agent is capable of, and agrees to, handle all applicable tax withholding related to the payments to be made pursuant to the
immediately preceding sentence. Notwithstanding the foregoing, if any payment owed to such holders cannot be made through the Company
Group’s payroll system or a payroll provider or agent, then the Company Group (or, if elected by the Company and with Parent’s
consent, a paying agent that is capable of processing all related) will issue a check for such payment to such holder, which check will
be sent by overnight courier to such holder promptly following the Closing Date (but in no event later than the first payroll date following
the Closing Date) or, if paid by a paying agent, through the process identified by such paying agent and paid no later than March 15th
of the calendar year following the calendar year in which the Effective Time occurs).
(g) Further
Actions. Prior to the Effective Time, the Company will pass resolutions approving and take other actions as may be reasonably necessary
or required to effect the cancellation of Company Options, Company PSUs, Company RSUs, Company RSAs and Company PSAs upon the Effective
Time, and to give effect to this Section 2.8 (including the satisfaction of the requirements of Rule 16b-3(e) promulgated under the Exchange
Act). The Company Equity Plans will terminate as of the Effective Time, and the provisions in any other Employee Plan or Contract providing
for the issuance or grant of any other interest in respect of the capital stock or other equity interests of the Company Group will be
cancelled as of the Effective Time, and the Company will take all action necessary to effect the foregoing. The Company will use its
reasonable best efforts to ensure that following the Effective Time, no participant in the Company Equity Plans or other Employee Plan
will have any right thereunder to acquire any equity securities of the Company, the Surviving Corporation or any of their respective
Subsidiaries.
2.9 Exchange
of Certificates.
(a) Payment
Agent. Prior to the Closing, (i) Parent will select a bank or trust company reasonably acceptable to the Company to act as the
payment agent for the Merger (the “Payment Agent”); and (ii) Parent and one or more of its Subsidiaries will
enter into a payment agent agreement, in form and substance reasonably acceptable to the Company, with such Payment
Agent.
(b) Exchange
Fund. At or prior to the Closing, Parent will deposit (or cause to be deposited), on behalf of Merger Sub, with the Payment Agent,
by wire transfer of immediately available funds, for payment to the holders of shares of Company Common Stock pursuant to Section 2.7,
an amount of cash equal to the aggregate consideration to which such holders become entitled pursuant to Section 2.7. Until disbursed
in accordance with the terms and conditions of this Agreement, such cash will be invested by the Payment Agent, as directed by Parent
or the Surviving Corporation, in (i) obligations of or fully guaranteed by the United States or any agency or instrumentality thereof
and backed by the full faith and credit of the United States with a maturity of no more than 30 days; (ii) commercial paper obligations
rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively; or (iii)
certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1,000,000,000
(based on the most recent financial statements of such bank that are then publicly available) (such cash and any proceeds thereon, the
“Exchange Fund”). To the extent that (A) there are any losses with respect to any investments of the Exchange Fund;
(B) the Exchange Fund diminishes for any reason below the level required for the Payment Agent to promptly pay the cash amounts contemplated
by Section 2.7; or (C) all or any portion of the Exchange Fund is unavailable for the prompt payment of the cash amounts contemplated
by Section 2.7 for any reason, Parent will, or will cause the Surviving Corporation or one of its Subsidiaries to, promptly replace or
restore the amount of cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times fully available for distribution
and maintained at a level sufficient for the Payment Agent to make the payments contemplated by Section 2.7. Any income from investment
of the Exchange Fund will be payable, as directed by Parent, to Parent, the Surviving Corporation, or otherwise as Parent directs.
(c) Payment
Procedures. Promptly following the Closing (and in any event within three Business Days following the Closing), Parent and the
Surviving Corporation will cause the Payment Agent to mail to each holder of record (as of immediately prior to the Effective Time)
of (i) a certificate or certificates that immediately prior to the Effective Time represented outstanding shares of Company Capital
Stock (other than Dissenting Company Shares and Owned Company Shares, as applicable) (the “Certificates”); or
(ii) uncertificated shares of Company Capital Stock (other than Dissenting Company Shares and Owned Company Shares, as applicable)
(the “Uncertificated Shares”): (A) in the case of holders of Certificates, a letter of transmittal in customary
form (which will specify that delivery will be effected, and risk of loss and title to the Certificates will pass, only upon
delivery of the Certificates to the Payment Agent); and (B) instructions for use in effecting the surrender of the Certificates and
Uncertificated Shares, as applicable, in exchange for the Per Share Price, payable in respect thereof pursuant to Section 2.7. Upon
surrender of Certificates for cancellation to the Payment Agent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of such Certificates will be entitled to receive in
exchange therefor an amount in cash (less any applicable withholding Taxes payable in respect thereof) equal to the product obtained
by multiplying (1) the aggregate number of shares of Company Capital Stock represented by such Certificate; by (2) the Per Share
Price, and the Certificates so surrendered will forthwith be cancelled. Upon receipt of an “agent’s message” by
the Payment Agent (or such other evidence, if any, of transfer as the Payment Agent may reasonably request) in the case of a
book-entry transfer of Uncertificated Shares, the holders of such Uncertificated Shares will be entitled to receive in exchange
therefor an amount in cash (less any applicable withholding Taxes payable in respect thereof) equal to the product obtained by
multiplying (x) the aggregate number of shares of Company Capital Stock represented by such holder’s transferred
Uncertificated Shares; by (y) the Per Share Price, and the transferred Uncertificated Shares so surrendered will be cancelled. The
Payment Agent will accept such Certificates and transferred Uncertificated Shares upon compliance with such reasonable terms and
conditions as the Payment Agent may impose to cause an orderly exchange thereof in accordance with normal exchange practices. No
interest will be paid or accrued for the benefit of holders of the Certificates and Uncertificated Shares on the Per Share Price,
payable upon the surrender of such Certificates and Uncertificated Shares pursuant to this Section 2.9(c). Until so surrendered,
outstanding Certificates and Uncertificated Shares will be deemed from and after the Effective Time to evidence only the right to
receive the Per Share Price without interest thereon, payable in respect thereof pursuant to Section 2.7. Notwithstanding anything
to the contrary in this Agreement, no holder of Uncertificated Shares will be required to provide a Certificate or an executed
letter of transmittal to the Payment Agent in order to receive the payment that such holder is entitled to receive pursuant to
Section 2.7.
(d) DTC
Payment. Prior to the Closing, Parent and the Company will cooperate to establish procedures with the Payment Agent and the Depository
Trust Company (“DTC”) with the objective that (i) if the Closing occurs at or prior to 11:30 a.m., Eastern time, on
the Closing Date, then the Payment Agent will transmit to DTC or its nominees on the Closing Date an amount in cash, by wire transfer
of immediately available funds, equal to (A) the number of shares of Company Common Stock (other than Owned Company Shares and Dissenting
Company Shares) held of record by DTC or such nominee immediately prior to the Effective Time; multiplied by (B) the Per Share Price
(such amount, the “DTC Payment”); and (ii) if the Closing occurs after 11:30 a.m., Eastern time, on the Closing Date,
then the Payment Agent will transmit the DTC Payment to DTC or its nominees on the first Business Day after the Closing Date.
(e) Transfers
of Ownership. Subject, in all cases, to the terms and conditions of the Charter in respect of Company Capital Stock, if a transfer
of ownership of shares of Company Capital Stock is not registered in the stock transfer books or ledger of the Company or if the Per
Share Price is to be paid in a name other than that in which the Certificates or Uncertificated Shares surrendered or transferred in
exchange therefor are registered in the stock transfer books or ledger of the Company, the Per Share Price may be paid to a Person other
than the Person in whose name the Certificate or Uncertificated Share so surrendered or transferred is registered in the stock transfer
books or ledger of the Company, as applicable, only if, in the case of shares of Company Capital Stock represented by Certificates, such
Certificate is properly endorsed and otherwise in proper form for surrender and transfer, or in the case of Uncertificated Shares, a
proper transfer instruction is presented, and in either case the Person requesting such payment has paid to Parent (or as directed by
Parent) any transfer Taxes required by reason of the payment of the Per Share Price to a Person other than the registered holder of such
Certificate, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer Taxes have been paid
or are otherwise not payable.
(f) No
Liability. Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the Surviving
Corporation or any other Party will be liable to a holder of shares of Company Capital Stock, for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(g) Distribution
of Exchange Fund to the Surviving Corporation. Any portion of the Exchange Fund that remains undistributed to the holders of the
Certificates or Uncertificated Shares on the date that is one year after the Closing Date, as applicable, will be delivered to the
Surviving Corporation (or as directed by the Surviving Corporation) upon demand, and any holders of shares of Company Capital Stock
that were issued and outstanding immediately prior to the Effective Time, who have not theretofore surrendered or transferred their
Certificates or Uncertificated Shares representing such shares of Company Capital Stock, for exchange pursuant to this Section 2.9
will thereafter look for payment of the Per Share Price without interest thereon, payable in respect of the shares of Company
Capital Stock represented by such Certificates or Uncertificated Shares solely to the Surviving Corporation (subject to abandoned
property, escheat or similar laws), solely as general creditors thereof, for any claim to the Per Share Price, to which such holders
may be entitled pursuant to Section 2.7. Any amounts remaining unclaimed by holders of any such Certificates or Uncertificated
Shares two years after the Closing Date, or at such earlier date as is immediately prior to the time at which such amounts would
otherwise escheat to, or become property of, any Governmental Authority, will, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of any claims or interest of any such holders (and their successors, assigns
or personal representatives) previously entitled thereto.
2.10
No Further Ownership Rights in Company Capital Stock. Except as otherwise provided in Section 2.7, from and after the Effective
Time, (a) all shares of Company Capital Stock will no longer be outstanding and will automatically be converted or cancelled and retired,
as applicable, in accordance with Section 2.7 and cease to exist; and (b) each holder of Certificates or Uncertificated Shares theretofore
representing any shares of Company Capital Stock will cease to have any rights with respect thereto, except the right to receive the
Per Share Price, payable therefor in accordance with Section 2.7, or in the case of Dissenting Company Shares, the rights pursuant to
Section 2.7(c). The Per Share Price paid in accordance with the terms of this Article II will be deemed to have been paid in full satisfaction
of all rights pertaining to such shares of Company Capital Stock. From and after the Effective Time, there will be no further registration
of transfers on the records of the Surviving Corporation of shares of Company Capital Stock that were issued and outstanding immediately
prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior
to the Effective Time. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation
for any reason, they will (subject to compliance with the exchange procedures of Section 2.9(c)) be cancelled and exchanged as provided
in this Article II.
2.11
Lost, Stolen or Destroyed Certificates. In the event that any Certificates have been lost, stolen or destroyed, the Payment Agent
will issue in exchange therefor, upon the making of an affidavit of that fact by the holder thereof, the Per Share Price payable in respect
thereof pursuant to Section 2.7. Parent or the Payment Agent may, in its discretion and as a condition precedent to the payment of such
Per Share Price, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such customary amount as it may
direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Payment Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
2.12
Required Withholding. Each of the Payment Agent, Parent, the Company, the Surviving Corporation and any other withholding agent
will be entitled to deduct and withhold from any cash amounts payable pursuant to this Agreement, such amounts as are required to be
deducted or withheld therefrom pursuant to any Tax laws. To the extent that such amounts are so deducted or withheld and paid over to
the appropriate Governmental Authority, such amounts will be treated for all purposes of this Agreement as having been paid to the Person
to whom such amounts would otherwise have been paid.
2.13
No Dividends or Distributions. No dividends or other distributions with respect to the capital stock of the Surviving Corporation
with a record date on or after the Effective Time will be paid to the holder of any unsurrendered Certificates or Uncertificated Shares.
2.14 Necessary Further Actions. If, at any time after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company or Merger Sub, then the directors and officers of the Company and Merger Sub
will take all such lawful and necessary action.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
With
respect to any Section of this Article III, except (a) as disclosed in the reports, statements and other documents filed by the
Company with the SEC or furnished by the Company to the SEC, in each case, pursuant to the Exchange Act on or after January 4, 2021
and prior to the date hereof (other than any disclosures contained or referenced therein under the captions “Risk
Factors,” “Special Note Regarding Forward-Looking Statements,” “Quantitative and Qualitative Disclosures
About Market Risk” and any other disclosures contained or referenced therein of information, factors or risks that are
predictive, cautionary or forward-looking in nature) (the “SEC Reports”) (it being acknowledged that nothing
disclosed in the SEC Reports will be deemed to modify or qualify the representations and warranties set forth in Section 3.7 or
Section 3.12(a)(ii)); or (b) subject to the terms of Section 9.12, as set forth in the disclosure letter delivered by the Company to
the Buyer Parties on the date hereof (the “Company Disclosure Letter”), the Company hereby represents and
warrants to the Buyer Parties as follows:
3.1
Organization; Good Standing. The Company (a) is a corporation duly incorporated, validly existing and in good standing pursuant
to the DGCL; and (b) has the requisite corporate power and authority to conduct its business as it is presently being conducted and to
own, lease or operate its properties and assets. The Company is duly qualified to do business and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where
the failure to be so qualified or in good standing would not have a Company Material Adverse Effect. The Company has made available to
Parent true, correct and complete copies of the Charter and the Amended and Restated Bylaws of the Company, as amended (the “Bylaws”).
The Company is not in violation of the Charter or the Bylaws.
3.2 Corporate
Power; Enforceability. The Company has the requisite corporate power and authority to (a) execute and deliver this Agreement;
(b) perform its covenants and obligations hereunder; and (c) subject to receiving the Requisite Stockholder Approval, consummate the
Merger. The execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and obligations
hereunder, and the consummation of the Merger have been duly authorized and approved by all necessary corporate action on the part
of the Company and no additional corporate actions on the part of the Company are necessary to authorize (i) the execution and
delivery of this Agreement by the Company; (ii) the performance by the Company of its covenants and obligations hereunder; or (iii)
subject to the receipt of the Requisite Stockholder Approval, the filing of the Certificate of Merger and the consummation of the
Merger. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and
delivery by the Buyer Parties, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting or relating to creditors’ rights generally; and (B) is subject to general
principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) (collectively, the
“Enforceability Limitations”).
3.3 Company
Board Approval; Fairness Opinion; Anti-Takeover Laws.
(a) Special
Committee Approval. The Special Committee has (i) determined that it is in the best interests of the Company and the Unaffiliated
Company Stockholders, and declared it advisable, to enter into this Agreement and consummate the Merger and the other transactions contemplated
by this Agreement, including the Voting Agreement, in accordance with the DGCL upon the terms and subject to the conditions set forth
herein; (ii) approved and adopted this Agreement and (iii) resolved to recommend that the Company Board approve and adopt this Agreement.
(b) Company
Board Approval. The Company Board has (i) determined that it is in the best interests of the Company and the Company
Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into this Agreement and
consummate the Merger and the other transactions contemplated by this Agreement, including the Voting Agreement, in accordance with
the DGCL upon the terms and subject to the conditions set forth herein; (ii) approved and adopted the execution and delivery of this
Agreement by the Company, the performance by the Company of its covenants and other obligations hereunder, and the consummation of
the Merger and the other transactions contemplated by this Agreement, including the Voting Agreement, in accordance with the DGCL
upon the terms and conditions set forth herein; and (iii) resolved to recommend that the Company Stockholders adopt this Agreement
in accordance with the DGCL (collectively, the “Company Board Recommendation”), which Company Board
Recommendation has not been withdrawn, rescinded or modified in any way as of the date hereof.
(c) Fairness
Opinion. The Special Committee and the Company Board have received the written opinion of Jefferies LLC (the “Advisor”),
to the effect that, as of the date of such opinion, and based upon and subject to the various limitations, qualifications, assumptions
and other matters set forth therein, the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to this Agreement
is fair, from a financial point of view, to such holders (it being understood and agreed that such written opinion is for the benefit
of the Special Committee and may not be relied upon by the Buyer Parties). The Company shall, following the execution of this Agreement
by all Parties, furnish an accurate, complete and confidential copy of said opinion to Parent solely for informational purposes.
(d) Anti-Takeover
Laws. Assuming that the representations of the Buyer Parties set forth in Section 4.6 and Section 4.10 are true and correct, the
Company Board has taken all necessary actions so that the restrictions on business combinations set forth in Section 203 of the DGCL
and any other similar applicable “anti-takeover” law will not be applicable to the Merger, the Voting Agreement or the other
transactions contemplated by this Agreement or the Voting Agreement.
3.4
Requisite Stockholder Approval. Except for the affirmative vote of the holders of (a) a majority of the voting power of the outstanding
Company Capital Stock entitled to vote thereon, voting together as a single class to adopt and approve this Agreement and the Merger
and (b) a majority of the outstanding Company Common Stock held by the Unaffiliated Company Stockholders to adopt and approve this Agreement
and the Merger (the vote described in this clause (b), the “Unaffiliated Stockholder Approval” and, together with
the vote described in clause (a), the “Requisite Stockholder Approval”), no other vote of the holders of any class
or series of Company Capital Stock is necessary pursuant to applicable law, the Charter or the Bylaws to adopt and approve this Agreement
and consummate the Merger or the other transactions contemplated by this Agreement, including the Voting Agreement.
3.5
Non-Contravention. The execution and delivery of this Agreement by the Company, the performance by the Company of its covenants
and obligations hereunder, and the consummation of the Merger do not (a) violate or conflict with any provision of the Charter or the
Bylaws; (b) violate, conflict with, result in the breach of, constitute a default (or an event that, with notice or lapse of time or
both, would become a default) pursuant to, result in the termination of, accelerate the performance required by, or result in a right
of termination or acceleration pursuant to any Material Contract; (c) assuming compliance with the matters referred to in Section 3.6
and, in the case of the consummation of the Merger, subject to obtaining the Requisite Stockholder Approval and the adoption of this
Agreement by the sole stockholder of Merger Sub, violate or conflict with any law or order applicable to the Company Group or by which
any of its properties or assets are bound; or (d) result in the creation of any lien (other than Permitted Liens) upon any of the properties
or assets of the Company Group, except in the case of each of clauses (b), (c) and (d) for such violations, conflicts, breaches, defaults,
terminations, accelerations or liens that would not have a Company Material Adverse Effect.
3.6 Requisite
Governmental Approvals. No consent, approval, order or authorization of, filing or registration with, or notification to (any of
the foregoing, a “Consent”) any Governmental Authority is required on the part of the Company in connection with
(a) the execution and delivery of this Agreement by the Company; (b) the performance by the Company of its covenants and obligations
pursuant to this Agreement; or (c) the consummation of the Merger, except (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy the applicable laws of states
in which the Company Group is qualified to do business; (ii) such filings and approvals as may be required by any federal or state
securities laws, including compliance with any applicable requirements of the Exchange Act; (iii) such filings as may be required
under the rules and regulations of Nasdaq, (iv) compliance with any applicable requirements of the HSR Act; and (v) such other
Consents the failure of which to obtain or make would not have a Company Material Adverse Effect.
3.7 Company
Capitalization.
(a)
Capital Stock. The authorized capital stock of the Company consists of (i) 100,000,000 shares of Company Common Stock, and (ii)
20,000,000 shares of Company Preferred Stock. As of 5:00 p.m., Eastern time, on January 12, 2024 (such time and date, the “Capitalization
Date”), (A) 51,602,340 shares of Company Common Stock were issued and outstanding; (B) no shares of Series A Convertible Preferred
Stock were issued and outstanding; (C) no shares of Series B Convertible Preferred Stock were issued and outstanding; (D) no shares of
Series C Convertible Preferred Stock were issued and outstanding; (E) 100 shares of Series D Convertible Preferred Stock were issued
and outstanding; and (F) 2,251,737 shares of Company Common Stock were held by the Company as treasury shares. All outstanding shares
of Company Common Stock are validly issued, fully paid, nonassessable and free of any preemptive rights. From the Capitalization Date
to the date hereof, the Company has not issued or granted any Company Securities other than pursuant to the exercise or settlement of
Company Equity Awards granted prior to the date hereof.
(b) As
of the Capitalization Date, after giving effect to the grants to be made effective as of January 16, 2024, the Company has 2,190,099
shares of Company Common Stock remaining available for issuance pursuant to the Company Equity Plans. As of the Capitalization Date,
after giving effect to the grants to be made effective as of January 16, 2024, there were outstanding the following (the “Company
Equity Awards”): (i) Company Options to acquire 925,000 shares of Company Common Stock, of which (A) 925,000 shares of Company
Common Stock are In-the-Money Company Options and (B) 0 shares of Company Common Stock are not In-the-Money Company Options, with a weighted
average exercise price of $7.12, (ii) Company RSAs with respect to 3,380,569 shares of Company Common Stock (including Company RSAs vesting
on January 15, 2024, for which shares of Company Common Stock have not yet been delivered), (iii) Company PSAs with respect to 150,000
shares of Company Common Stock (assuming satisfaction of applicable performance criteria at maximum levels), (iv) Company RSUs representing
the right to receive up to 17,523 shares of Company Common Stock (inclusive of the number of dividend equivalent units accrued thereon),
(v) Company PSUs granted prior to 2024 representing the right to receive up to 1,598,023 shares of Company Common Stock (assuming satisfaction
of applicable performance criteria at maximum levels, and inclusive of the number of dividend equivalent units accrued thereon) and (vi)
Company PSUs granted in 2024 representing the right to receive up to 243,900 shares of Company Common Stock (assuming satisfaction of
applicable performance criteria at target levels). The Company has made available to Parent (or will make available to Parent within
thirty (30) Business Days following the date of this Agreement), a true, correct and complete list, as of January 16, 2024, and with
respect to each outstanding Company Equity Award, of the name of the holder of such Company Equity Award, the grant date of such Company
Equity Award, and, to the extent applicable, the per share exercise price of such Company Equity Award.
(c) Company
Securities. Except as set forth in this Section 3.7, as of the Capitalization Date, there were (i) no outstanding shares of
capital stock of, or other equity or voting interest in (including voting debt), the Company; (ii) no outstanding securities of the
Company convertible into or exchangeable or exercisable for shares of capital stock of, or other equity or voting interest
(including voting debt) in, the Company; (iii) no outstanding options, warrants or other rights or binding arrangements to acquire
from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interest in, or any
securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest (including voting
debt) in, the Company; (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right,
convertible, exchangeable or exercisable security, or other similar Contract relating to any capital stock of, or other equity or
voting interest (including any voting debt) in, the Company; (v) no outstanding shares of restricted stock, restricted stock units,
stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights
that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of,
or other securities or ownership interests in, the Company (the items in clauses (i), (ii), (iii), (iv) and (v), collectively with
the Company Capital Stock, the “Company Securities”); (vi) no voting trusts, proxies or similar arrangements or
understandings to which the Company is a party or by which the Company is bound with respect to the voting of any shares of capital
stock of, or other equity or voting interest in, the Company; (vii) except as provided in the Charter or the Bylaws, no obligations
or binding commitments of any character restricting the transfer of any shares of capital stock of, or other equity or voting
interest in, the Company to which the Company is a party or by which it is bound; and (viii) no other obligations by the Company to
make any payments based on the price or value of any Company Securities. The Company is not party to any Contract that obligates it
to repurchase, redeem or otherwise acquire any Company Securities. There are no accrued and unpaid dividends with respect to any
outstanding shares of Company Capital Stock. The Company does not have a stockholder rights plan in effect.
(d) Other
Rights. The Company is not a party to any Contract relating to the voting of, requiring registration of, or granting any preemptive
rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any Company Securities.
3.8 Subsidiaries.
(a) Subsidiaries.
Section 3.8(a) of the Company Disclosure Letter contains a true, correct and complete list of the name, jurisdiction of
organization, and schedule of stockholders or equity holders (other than any member of the Company Group) of each Subsidiary of the
Company. Each Subsidiary of the Company (i) is duly organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of organization; and (ii) has the requisite corporate (or similar) power and authority to carry on its business as it
is presently being conducted and to own, lease or operate its properties and assets, except where the failure to be so organized,
validly existing and in good standing would not have a Company Material Adverse Effect. Each Subsidiary of the Company is duly
qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the
nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing would
not have a Company Material Adverse Effect. No Subsidiary of the Company is in violation of its charter, bylaws or other similar
organizational documents, except for such violations that would not have a Company Material Adverse Effect.
(b) Capital
Stock of Subsidiaries. All of the outstanding capital stock of, or other equity or voting interest in, each Subsidiary of the Company
(i) has been duly authorized, validly issued and is fully paid and nonassessable; and (ii) except for directors’ qualifying or
similar shares, is owned, directly or indirectly, by the Company, free and clear of all liens (other than Permitted Liens) and any other
restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting
interest) that would prevent such Subsidiary from conducting its business as of the Effective Time in substantially the same manner that
such business is conducted on the date hereof.
(c) Other
Securities of Subsidiaries. There are no outstanding (i) securities convertible into or exchangeable or exercisable for shares
of capital stock of, or other equity or voting interest in, any Subsidiary of the Company; (ii) options, warrants or other rights or
arrangements obligating the Company Group to acquire from any Subsidiary of the Company, or that obligate any Subsidiary of the
Company to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable
for, shares of capital stock of, or other equity or voting interest (including any voting debt) in, any Subsidiary of the Company;
or (iii) obligations of any Subsidiary of the Company to grant, extend or enter into any subscription, warrant, right, convertible
or exchangeable security, or other similar Contract relating to any capital stock of, or other equity or voting interest (including
any voting debt) in, such Subsidiary to any Person other than the Company or one of its Subsidiaries.
(d) Other
Investments. Other than equity securities held in the ordinary course of business for cash management purposes, the Company does
not own or hold the right to acquire any equity securities, ownership interests or voting interests (including voting debt) of, or securities
exchangeable or exercisable therefor, or investments in, any other Person.
3.9
Company SEC Reports. Since January 4, 2021, the Company has filed all forms, reports and documents with the SEC that have been
required to be filed by it pursuant to applicable laws prior to the date hereof (the “Company SEC Reports”). Each
Company SEC Report complied, as of its filing date, in all material respects with the applicable requirements of the Securities Act or
the Exchange Act, as the case may be, each as in effect on the date that such Company SEC Report was filed. True, correct and complete
copies of all Company SEC Reports are publicly available in the Electronic Data Gathering, Analysis and Retrieval database of the SEC
(“EDGAR”). As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date
of such amended or superseded filing), each Company SEC Report did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made,
not misleading. No Subsidiary of the Company is required to file any forms, reports or documents with the SEC.
3.10 Company
Financial Statements; Internal Controls; Indebtedness.
(a) Company
Financial Statements. The consolidated financial statements (including any related notes and schedules) of the Company Group filed
with the Company SEC Reports (i) were prepared in accordance with GAAP (except as may be indicated in the notes thereto or as otherwise
permitted by Form 10-Q with respect to any financial statements filed on Form 10-Q); and (ii) fairly present, in all material respects,
the consolidated financial position of the Company Group as of the dates thereof and the consolidated results of operations and cash
flows for the periods then ended (subject, in the case of any financial statements filed on Form 10-Q, to normal year-end adjustments).
Except as have been described in the Company SEC Reports, there are no unconsolidated Subsidiaries of the Company or any off-balance
sheet arrangements of the type required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K promulgated by the SEC.
(b) Disclosure
Controls and Procedures. The Company has established and maintains “disclosure controls and procedures” and “internal
control over financial reporting” (in each case as defined pursuant to Rule 13a-15 and Rule 15d-15 promulgated under the Exchange
Act). The Company’s disclosure controls and procedures are reasonably designed to ensure that all (i) material information required
to be disclosed by the Company in the reports and other documents that it files or furnishes pursuant to the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the SEC; and (ii) such material information
is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure
and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. The Company’s management has
completed an assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal year ended January 1, 2023, and such assessment concluded that such
system was effective. Since January 4, 2021, the principal executive officer and principal financial officer of the Company have made
all certifications required by the Sarbanes-Oxley Act. Neither the Company nor its principal executive officer or principal financial
officer has received notice from any Governmental Authority challenging or questioning the accuracy, completeness, form or manner of
filing of such certifications.
(c) Internal
Controls. The Company has established and maintains a system of internal accounting controls that are designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including
policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company Group; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company Group are being
made only in accordance with appropriate authorizations of the Company’s management and the Company Board; and (iii) provide assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company Group. Neither
the Company nor, to the Knowledge of the Company, the Company’s independent registered public accounting firm has identified or
been made aware of (A) any significant deficiency or material weakness in the system of internal control over financial reporting utilized
by the Company Group that has not been subsequently remediated; or (B) any fraud that involves the Company’s management or other
employees who have a role in the preparation of financial statements or the internal control over financial reporting utilized by the
Company Group. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect
to the Company SEC Reports.
3.11
No Undisclosed Liabilities. The Company Group has no liabilities of a nature required to be reflected or reserved against on a
balance sheet (or the notes thereto) of the Company Group prepared in accordance with GAAP, other than liabilities (a) reflected or otherwise
reserved against in the Audited Company Balance Sheet or in the consolidated financial statements of the Company Group (including the
notes thereto) included in the Company SEC Reports filed prior to the date hereof; (b) arising pursuant to this Agreement or incurred
in connection with the Merger; (c) incurred in the ordinary course of business on or after January 1, 2023; (d) liabilities incurred
in connection with the transactions contemplated by this Agreement and the process leading thereto; or (e) that would not have, individually
or in the aggregate, a Company Material Adverse Effect.
3.12 Absence
of Certain Changes.
(a) Absence
of Company Material Adverse Effect. Since January 1, 2023 through the date of this Agreement, (i) the business of the Company Group
has been conducted, in all material respects, in the ordinary course of business and (ii) there has not occurred a Company Material Adverse
Effect.
(b) Forbearance.
Since January 1, 2023 through the date hereof, the Company has not taken any action that would be prohibited by Sections 5.2(a), 5.2(b),
5.2(d), 5.2(e), 5.2(f), 5.2(g), 5.2(h), 5.2(n), 5.2(o), 5.2(r), 5.2(x), or 5.2(y) (to the extent related to the foregoing subsections)
if taken or proposed to be taken after the date hereof.
3.13 Material
Contracts.
(a) List
of Material Contracts. Section 3.13(a) of the Company Disclosure Letter contains a true, correct and complete list of all Material
Contracts to or by which the Company Group is a party or is bound as of the date hereof (other than any Employee Plans, and Material
Contracts contemplated by clause (i) of the definition of Material Contract and any Material Contracts listed in Section 3.18(a) of the
Company Disclosure Letter), and a true, correct and complete copy of each Material Contract has been made available to Parent.
(b) Validity.
Each Material Contract is valid and binding on the Company or each such Subsidiary of the Company party thereto and is in full force
and effect, and none of the Company, any of its Subsidiaries party thereto or, to the Knowledge of the Company, any other party
thereto is in breach of or default pursuant to any such Material Contract, except in each case as would not have a Company Material
Adverse Effect. No event has occurred that, with notice or lapse of time or both, would constitute such a breach or default pursuant
to any Material Contract by the Company Group, or, to the Knowledge of the Company, any other party thereto, except for such
breaches and defaults that would not have a Company Material Adverse Effect.
(c) Contracts
Restricting Business of the Company Group. Other than the Franchise Agreements and the Leases, to the Knowledge of the Company, none
of the Company or its Subsidiaries is party to a Contract containing any covenant or other provision (i) limiting the right of the Company
Group to engage in any material line of business or to compete with any Person in any line of business that is material to the Company
Group; (ii) prohibiting the Company Group from engaging in any business with any Person or levying a fine, charge or other payment for
doing so; or (iii) containing and limiting the right of the Company Group pursuant to any “most favored nation” or “exclusivity”
provisions, in each case other than any such Contracts that (1) may be cancelled without material liability to the Company or its Subsidiaries
upon notice of 90 days or less, or (2) are not material to the Company Group, taken as a whole.
(d) Notices
from Material Relationships. To the Knowledge of the Company, since the date of the Audited Company Balance Sheet to the date hereof,
the Company has not received any notice in writing from or on behalf of any Material Relationship indicating that such Material Relationship
(i) intends to terminate, not renew or otherwise materially and adversely modify any Material Contract with such Material Relationship
or (ii) has ceased, or will cease, to supply or make available all or substantially all of the products, equipment, goods or services
currently supplied to the Company Group by such Material Relationship.
3.14 Real
Property.
(a) Owned
Real Property. Section 3.14(a) of the Company Disclosure Letter sets forth the address of each Owned Real Property. Except as would
not have a Company Material Adverse Effect, with respect to each Owned Real Property: (i) the Company or Subsidiary (as the case may
be) has good and marketable indefeasible fee simple title to all of its Owned Real Property and tangible assets, free and clear of all
liens, except for Permitted Liens; (ii) other than the right of Parent pursuant to this Agreement, there are no outstanding options,
rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein; (iii)
there is no pending, or to the Knowledge of the Company, threatened condemnation, eminent domain or similar proceedings affecting any
of the Owned Real Property; and (iv) neither the Company nor any of its Subsidiaries has leased or otherwise granted to any Person the
right to use or occupy such Owned Real Property or any portion thereof. For purposes hereof, “Owned Real Property”
means all land, together with all buildings, structures, improvements, and fixtures located thereon, and all easements and other rights
and interests appurtenant thereto, owned by the Company or any Subsidiary thereof.
(b) Leased
Real Property. Section 3.14(b) of the Company Disclosure Letter contains a true, correct and complete list, as of the date
hereof, of all of the existing leases, subleases, licenses or other agreements pursuant to which the Company Group uses or occupies,
or has the right to use or occupy, now or in the future, any real property (such property, the “Leased Real
Property,” and each such lease, sublease, license or other agreement, a “Lease,” and together with the
Owned Real Property, the “Real Property”). The Company has made available to Parent true, correct and complete
(in all material respects) copies of all Leases (including all material modifications, amendments and supplements thereto). With
respect to each Lease and except as would not be material to the business of the Company Group, taken as a whole, (i) to the
Knowledge of the Company, there are no disputes with respect to such Lease; (ii) the Company or one of its Subsidiaries has not
collaterally assigned or granted any other security interest in such Lease or any interest therein; and (iii) there are no liens
(other than Permitted Liens) on the estate or interest created by such Lease. The Company or one of its Subsidiaries has valid
leasehold estates in the Leased Real Property, free and clear of all liens (other than Permitted Liens). To the Knowledge of the
Company, neither the Company Group, nor to the Knowledge of the Company, any other party to the Lease is in material breach of or
default pursuant to any Lease. The Real Property constitutes all of the material real property used in connection with the business
of the Company.
(c) Subleases.
Section 3.14(c) of the Company Disclosure Letter contains a true, correct and complete list of all of the existing material subleases,
licenses or similar agreements (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto,
each, a “Sublease”) granting to any Person, other than the Company Group, any right to use or occupy, now or in the
future, the Leased Real Property. With respect to each of the Subleases, (i) to the Knowledge of the Company, there are no disputes with
respect to such Sublease that would result in material liability to the Company Group, taken as a whole; and (ii) the other party to
such Sublease is not an Affiliate of the Company Group. Except as set forth in Section 3.14(c) of the Company Disclosure Letter, neither
the Company nor its Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy any of the Leased
Real Property.
3.15 Environmental
Matters. Except as would not have a Company Material Adverse Effect, none of the members of the Company Group (a) has received
any written notice alleging that the Company or any Subsidiary has violated, or has any liability under, any applicable
Environmental Law; (b) has transported, produced, processed, manufactured, generated, used, treated, handled, stored, released or
disposed, or arranged for the disposal, of any Hazardous Substances in violation of or in a manner giving rise to liability under
any applicable Environmental Law; (c) has exposed any employee or other Person to Hazardous Substances in violation of or in a
manner giving rise to liability under any applicable Environmental Law; (d) is a party to or is the subject of any pending or, to
the Knowledge of the Company, threatened Legal Proceeding (i) alleging the noncompliance by the Company Group with any Environmental
Law; or (ii) seeking to impose any responsibility for any investigation, cleanup, removal or remediation pursuant to any
Environmental Law; (e) has failed or is failing to comply with any Environmental Law, which compliance includes possession and
maintenance of all Permits required under applicable Environmental Laws; or (f) owns or operates, or has owned or operated, any
property or facility contaminated by any Hazardous Substance, so as to result in liability to the Company or any Subsidiary under
Environmental Law.
3.16 Intellectual
Property.
(a) Use
of Intellectual Property. The Company Group does not own any material Intellectual Property. All material Intellectual Property that
is used in or necessary for the operation of the business of the Company Group is licensed to the Company Group under the IP Contracts.
The Company Group has a valid and enforceable license to use all material Intellectual Property that is used in or necessary for the
operation of the business of the Company Group, except as would not be material to the business of the Company Group, taken as a whole.
(b) IP
Contracts. Section 3.16(b) of the Company Disclosure Letter sets forth a correct and complete list of all IP Contracts. For
purposes of this Agreement, “IP Contracts” means all Contracts to which the Company Group is a party (i) as to
which the breach, nonperformance, cancellation or failure to renew by any party thereto would reasonably be expected to have a
Company Material Adverse Effect; and (ii) pursuant to which a third Person has licensed or transferred any Intellectual Property to
the Company Group, which Intellectual Property is material to the operation of the business of the Company Group, taken as a whole,
including, without limitation, the Franchise Agreements, other than any (x) non-disclosure agreements entered into in the ordinary
course of business; (y) non-exclusive licenses of commercially available software and technology; and (z) non-exclusive licenses to
software and materials licensed as open-source, public-source or freeware.
(c) No
Notice of Infringement. Since January 4, 2021, the Company Group has not received written notice from any third Person, or been
involved in any Legal Proceeding, alleging that the operation of the business of the Company Group or of the Company’s or any
of its Subsidiaries’ products infringes, misappropriates, dilutes or otherwise violates the Intellectual Property of any third
Person or constitutes unfair competition or unfair trade practices pursuant to the laws of any jurisdiction, except as would not be
material to the business of the Company Group, taken as a whole.
(d) Business
Systems. The Company Group owns, leases, licenses, or otherwise has the legal right to use all Business Systems, and such Business
Systems are reasonably sufficient for the needs of the Company Group’s business as it is currently conducted, except as would not
have a Company Material Adverse Effect. The Company Group has implemented and maintains commercially reasonable security, disaster recovery,
and business continuity plans, procedures, and facilities designed to provide substantially continuous monitoring and alerting of material
operational problems or issues with the Business Systems in the possession or operational control of the Company Group, except where
the failure to implement and maintain such plans, procedures, or facilities would not have a Company Material Adverse Effect. To the
Knowledge of the Company, in the last 12 months, with respect to any of the Business Systems, there has not, as of the date hereof, been
any (A) unauthorized access or use; or (B) failure that has not been remedied or replaced, except, in the case of the foregoing (A) or
(B), as would not be material to the business of the Company Group, taken as a whole.
(e) Data
Security and Privacy. The Company and each of its Subsidiaries (i) is, and since January 4, 2021 has been, in material compliance
with all Data Security Requirements, except for noncompliance that would have a Company Material Adverse Effect; and (ii) since January
4, 2021, has taken commercially reasonable steps consistent with standard industry practice by companies of similar size and maturity,
and in compliance in all material respects with the Data Security Requirements to protect (A) the confidentiality, integrity, availability,
and security of its Business Systems that are involved in the Processing of Personally Identifiable Information, in the conduct of the
business of the Company and its Subsidiaries as currently conducted; and (B) Personally Identifiable Information Processed by the Company
or such Subsidiary or on their behalf from unauthorized use, access, disclosure, theft, and modification, except in each case as would
not be material to the business of the Company Group, taken as a whole. As of the date hereof, except as would not have a Company Material
Adverse Effect, (i) there are no pending complaints, investigations, inquiries, notices, enforcement proceedings, or actions by or before
any Governmental Authority and (ii) since January 4, 2021, no fines or other penalties have been imposed on or written claims for compensation
have been received by the Company or any Subsidiary, relating to any Specified Data Breach. The Company and each of its Subsidiaries
have not since January 4, 2021, (1) experienced any Specified Data Breaches; or (2) been involved in any Legal Proceedings related to
or alleging any violation of any Data Security Requirements by the Company Group or any Specified Data Breaches, each except as would
not be material to the business of the Company Group, taken as a whole.
3.17 Tax
Matters.
(a) Tax
Returns. Except as would not have a Company Material Adverse Effect, each member of the Company Group has (i) timely filed (taking
into account valid extensions) all United States federal, state, local and non-United States returns, estimates, information statements
and reports (including amendments thereto) relating to any and all Taxes (“Tax Returns”) required to be filed by any
of them with the appropriate Governmental Authority (taking into account any valid extensions with respect thereto) and all such Tax
Returns are true, complete and correct; and (ii) paid, or has adequately reserved on the face of the Audited Company Balance Sheet (in
accordance with GAAP) for the payment of, all Taxes that are due and payable;
(b)
Except as would not have a Company Material Adverse Effect, none of the members of the Company Group has executed any waiver, except
in connection with any ongoing Tax examination, of any statute of limitations on, or extended the period for the assessment or
collection of, any material Tax, in each case that has not since expired;
(c) Taxes
Paid. Except as would not have a Company Material Adverse Effect, each member of the Company Group has timely paid or withheld with
respect to their employees and other third Persons (and paid over any amounts withheld to the appropriate Tax authority) all United States
federal and state income taxes, Federal Insurance Contribution Act, Federal Unemployment Tax Act and other similar Taxes required to
be paid or withheld;
(d) No
Audits. (i) No audits or other examinations with respect to material Taxes of the Company Group are presently in progress or have
been asserted or proposed in writing and (ii) none of the members of the Company Group has received a written claim by a Governmental
Authority in a jurisdiction where the Company Group does not file Tax Returns that the Company or such Subsidiary, as the case may be,
is or may be subject to material tax in that jurisdiction;
(e) No
Material Liens. There are no material pledges, liens, charges, mortgages, encumbrances or security interests of any kind or nature
whatsoever for Taxes on the property or assets of any member of the Company Group, except for Permitted Liens;
(f) Spin-offs.
In the past three years, none of the members of the Company Group has constituted either a “distributing corporation” or
a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment pursuant to Section 355
of the Code;
(g) No
Listed Transaction. None of the members of the Company Group has engaged in a “listed transaction” as set forth in Treasury
Regulations Section 1.6011-4(b)(2);
(h)
Tax Agreements. None of the members of the Company Group (i) is a party to or bound by, or currently has any material liability
pursuant to, any Tax sharing, allocation or indemnification agreement or obligation, other than any such agreement or obligation solely
between and among members of the Company Group, or entered into in the ordinary course of business the primary purpose of which is unrelated
to Taxes; or (ii) has any material liability for the Taxes of any Person other than the Company Group pursuant to Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or non-United States law) as a transferee or successor, or otherwise;
(i) No
Rulings or Agreements. No private letter rulings, technical advance memoranda, closing agreement or similar agreements or rulings
have been entered into or issued by any Governmental Authority with respect to a material amount of Taxes of any member of the Company
Group that are binding on any such member in respect of any taxable year for which the statute of limitations has not yet expired; and
(j) Foreign
Taxation. Neither the Company nor any of its Subsidiaries has, in the past three years, engaged in a trade or business, had a permanent
establishment (within the meaning of an applicable Tax treaty or convention between the United States and such foreign country), or otherwise
been subject to taxation in any country other than the country of its formation.
3.18 Employee
Plans.
(a) Employee
Plans. Section 3.18(a) of the Company Disclosure Letter sets forth a true, correct and complete list, as of the date hereof, of
all material Employee Plans. For purposes of this Agreement, “Employee Plan” shall mean (collectively) (i) all
“employee benefit plans” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA; and (ii) all other
material employment, natural person consultant or other service, bonus, stock option, stock purchase or other equity-based, benefit,
incentive compensation, profit sharing, savings, retirement, disability, insurance, vacation, deferred compensation, severance,
termination, retention, change in control compensation and other similar material fringe, welfare or other employee benefit plans,
programs, agreement, contracts, policies or binding arrangements (whether or not in writing) (x) sponsored, maintained or
contributed to (or required to be contributed to) by any member of the Company Group; or (y) otherwise with respect to which the
Company Group has any liability, contingent or otherwise. Except where otherwise indicated on Section 3.18(a) of the Company
Disclosure Letter, with respect to each material Employee Plan, the Company has made available to Parent true, correct and complete
copies of the plan document or summary plan description (or, in the case of any unwritten plan, a written description
thereof).
(b) Absence
of Certain Plans. Neither the Company nor any other trade or business (whether or not incorporated) that would be treated as a single
employer with the Company Group pursuant to Section 414 of the Code (an “ERISA Affiliate”) has, in the last six years,
maintained, sponsored or contributed to or currently maintains, sponsors or participates in, or contributes to, or has any liability
or obligation with respect to, (i) a “multiemployer plan” (as defined in Section 3(37) of ERISA); (ii) a “multiple
employer plan” (as defined in Section 4063 or Section 4064 of ERISA); (iii) a “defined benefit plan” (as defined in
Section 3(35) of ERISA) or a plan that otherwise is or was subject to Section 302 of Title I of ERISA, Section 412 of the Code or Title
IV of ERISA; or (iv) a “multiple employer welfare arrangement” (within the meaning of Section 210 of ERISA or Section 413(c)
of the Code). Except as would not result in material liability to the Company Group, no member of the Company Group has any current or
contingent liability by reason of at any time being treated as a single employer with any other Person under Section 414 of the Code.
(c)
Compliance. Except as would not be material to the business of the Company Group, taken as a whole: (i) each Employee Plan has
been established, maintained, funded, operated and administered in accordance with its terms and with all applicable law, including the
applicable provisions of ERISA, the Code and any applicable regulatory guidance issued by any Governmental Authority; (ii) all required
contributions, premiums and other payments relating to the Employee Plans have been timely and accurately made, and no Employee Plan
has any unfunded liabilities that have not been fully accrued; (iii) each Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination or opinion letter from the IRS as to its qualified status, and, to the Knowledge
of the Company, nothing has occurred that could reasonably be expected to adversely affect such Employee Plan’s qualified status;
and (iv) no member of the Company Group has incurred, whether or not assessed, any Tax or penalty under Sections 4980B, 4980D, 4980H,
6721 or 6722 of the Code.
(d) Employee
Plan Legal Proceedings. As of the date hereof, there are no material Legal Proceedings pending or, to the Knowledge of the Company,
threatened on behalf of or against any Employee Plan, the assets of any trust pursuant to any Employee Plan, or the plan sponsor, plan
administrator or any fiduciary of any Employee Plan with respect to the administration or operation of such plans, other than routine
claims for benefits that have been or are being handled through an administrative claims procedure.
(e) No
Prohibited Transactions. Except as would not have a Company Material Adverse Effect, none of the Company, any of its Subsidiaries,
or, to the Knowledge of the Company, any of their respective directors, officers, employees or agents has, with respect to any Employee
Plan, engaged in or been a party to any breach of fiduciary duty or non-exempt “prohibited transaction” (as defined in Section
4975 of the Code or Section 406 of ERISA) that could reasonably be expected to result in the imposition of any penalty assessed pursuant
to Section 502(i) of ERISA or a Tax imposed by Section 4975 of the Code, in each case applicable to the Company Group or any Employee
Plan, or for which the Company Group has any indemnification obligation.
(f) No
Welfare Benefit Plan. No Employee Plan provides post-termination or retiree life insurance, health or other welfare benefits to any
person, except as may be required by Section 4980B of the Code or any similar law for which the covered Person pays the full cost of
coverage. Within thirty (30) Business Days following the date of this Agreement, the Company shall provide or otherwise make available
to Parent, a copy of each Form 1095-B and Form 1095-C, as applicable, for the last three (3) years. Except as would not be material to
the business of the Company Group, taken as a whole, since January 4, 2021, the Company has timely filed each Form 1095-B and Form 1095-C,
as applicable.
(g) No
Additional Rights. Except as expressly provided for by the terms of this Agreement, none of the execution and delivery of this Agreement
or the consummation of the Merger will, either alone or in conjunction with any other event (whether contingent or otherwise), (i) result
in, or accelerate the time of payment, funding or vesting of, any payment (including severance, change in control, stay or retention
bonus or otherwise) or benefits becoming due under any Employee Plan or otherwise; (ii) increase any compensation or benefits otherwise
payable under any Employee Plan or otherwise; (iii) result in the acceleration of the time of payment or vesting of any compensation
or benefits under any Employee Plan or otherwise; (iv) trigger any other obligation under, or result in the breach or violation of, any
Employee Plan; or (v) limit or restrict the right of Parent to merge, amend or terminate any material Employee Plan on or after the Effective
Time (other than ordinary notice and administration requirements and expenses or routine claims for benefits).
(h) Section
280G. No payment or benefit payable to any “disqualified individual” (as such term is defined in Treasury Regulations
Section 1.280G-1) in connection with the consummation of the Merger (either alone or in connection with any other event) would reasonably
be expected to be characterized as an “excess parachute payment” within the meaning of Section 280G of the Code, and the
Company Group has no obligation to gross-up or indemnify any individual with respect to any Tax under Section 4999 of the Code.
(i) Section
409A. Except as would not have a Company Material Adverse Effect, each Employee Plan has been maintained, in form and operation,
in all respects in compliance with Section 409A of the Code. The Company Group has no obligation to gross-up or indemnify any individual
with respect to any such Tax.
3.19 Labor
Matters.
(a) Union
Activities. The Company Group is not a party to or bound by any collective bargaining agreement, labor union contract or trade union
agreement or other Contract with any labor union, works council or other labor organization (each, a “Collective Bargaining
Agreement”), and no employees of the Company Group are represented by a labor union, works council or other labor organization
with respect to their employment with the Company Group. To the Knowledge of the Company, there are no pending or threatened activities
or proceedings of any labor union, works council, or other labor organization or trade union or group of employees to organize any employees
of the Company Group with regard to their employment with the Company Group, and no such activities or proceedings have occurred within
the past three years. No Collective Bargaining Agreement is being negotiated by the Company Group. There is no material strike, lockout,
organized slowdown, organized work stoppage, or other material labor dispute involving a union against the Company Group pending, or
to the Knowledge of the Company, threatened against the Company Group, and no such labor disputes have occurred within the past three
years.
(b) Wage
and Hour and Legal Compliance. Except as would not be material to the business of the Company Group, taken as a whole, the
Company Group is in compliance, and has complied, with applicable laws and orders with respect to labor and employment (including,
but not limited to, applicable laws, statutes, acts, codes, orders, rules and regulations regarding wage and hour, worker
classification, immigration, harassment, whistleblowing, disability rights or benefits, equal opportunity, plant closures and
layoffs (including the WARN Act), employee trainings and notices, workers’ compensation, labor relations, employee leave
issues, affirmative action, unemployment insurance, discrimination or retaliation in employment, employee health and safety, and
collective bargaining).
(c) Sexual
Harassment. Since January 1, 2021, there have been no collective Legal Proceedings pending or (to the Knowledge of the Company) threatened
related to any allegations of sexual or racial harassment, discrimination, or retaliation by any employee of the Company Group. Since
January 1, 2021, there have been no investigations by or reports made to the Company’s audit committee related to any allegations
of sexual or racial harassment, discrimination, or retaliation by any employee of the Company Group. To the Knowledge of the Company,
there are no allegations of, and no investigations by third parties pending or threatened relating to allegations of, sexual or racial
harassment, discrimination, or retaliation by any corporate-level employee of the Company. To the Knowledge of the Company, there are
no allegations of, and no investigations by third parties pending or threatened relating to allegations of, sexual or racial harassment,
discrimination, retaliation or other types of misconduct by any employee of the Company Group that is a non-corporate level employee
of the Company that would be material to the business of the Company Group, taken as a whole.
(d) WARN
Act. Within the past three (3) years, the Company Group has not implemented any plant closing or layoff of employees that implicated
the WARN Act or any similar Law.
3.20
Permits. Except as would not have a Company Material Adverse Effect, the Company Group holds, to the extent legally required,
all permits, licenses, variances, clearances, consents, commissions, franchises, exemptions, orders and approvals from Governmental Authorities
that are required for the operation of the business of the Company Group as currently conducted (“Permits”). The Company
Group complies with the terms of all Permits, and no suspension or cancellation of any of the Permits is pending or, to the Knowledge
of the Company, threatened, except for such noncompliance, suspensions or cancellations that would not have a Company Material Adverse
Effect.
3.21
Compliance with Laws. The Company and each of its Subsidiaries is in compliance with all laws and orders that are applicable to
the Company Group or to the conduct of the business or operations of the Company Group, except for noncompliance that would not have
a Company Material Adverse Effect. No representation or warranty is made in this Section 3.21 with respect to (a) compliance with the
Exchange Act, which is exclusively addressed by Section 3.9 and Section 3.10; (b) compliance with Environmental Law, which is exclusively
addressed by Section 3.15; (c) compliance with applicable Tax laws, which is exclusively addressed by Section 3.17 and Section 3.18;
(d) compliance with ERISA and other applicable laws relating to employee benefits, which is exclusively addressed by Section 3.18; or
(e) compliance with labor law matters, which is exclusively addressed by Section 3.19.
3.22 Legal
Proceedings; Orders.
(a) No
Legal Proceedings. There are no Legal Proceedings pending or, to the Knowledge of the Company, threatened against the Company Group
or, as of the date hereof, against any present or former officer or director of the Company Group in such individual’s capacity
as such that are material to the business of the Company Group, taken as a whole.
(b) No
Orders. As of the date hereof, none of the Company Group is subject to any material order of any kind or nature that would prevent
or materially delay the consummation of the Merger or the ability of the Company to perform in all material respects its covenants and
obligations pursuant to this Agreement.
3.23
Insurance. As of the date hereof, the Company Group has all material policies of insurance covering the Company Group and any
of its employees, properties or assets, including policies of property, fire, workers’ compensation, products liability, directors’
and officers’ liability and other casualty and liability insurance, that is customarily carried by Persons conducting business
similar to that of the Company Group. As of the date hereof, all such insurance policies are in full force and effect, no notice of cancellation
has been received and there is no existing default or event that, with notice or lapse of time or both, would constitute a default by
any insured thereunder, except for such defaults that would not have a Company Material Adverse Effect.
3.24
Related Person Transactions. Except for indemnification, compensation or other employment arrangements in the ordinary course
of business, there are no Contracts, transactions, arrangements or understandings between the Company Group, on the one hand, and any
Affiliate (including any director or officer) thereof, but not including any wholly-owned Subsidiary of the Company, on the other hand,
that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in the Company’s Form 10-K
or proxy statement pertaining to an annual meeting of stockholders.
3.25
Brokers. Except for the Advisor, there is no financial advisor, investment banker, broker, finder, agent or other Person that
has been retained by or is authorized to act on behalf of the Company Group, the Company Board or any committee thereof, including the
Special Committee, who is entitled to any financial advisor’s, investment banking, brokerage, finder’s or other non-hours
based fee or commission in connection with the Merger. The Company has made available to Parent complete and correct copies of all agreements
under which such fee, commission, or other like payment is payable and all indemnification and other agreements under which any such
fee or commission is payable.
3.26
Foreign Matters. None of the Company or any of its Subsidiaries has, or had in the past five years, any operations, assets, properties,
employees, businesses or activities outside of the United States.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE BUYER PARTIES
Except
as set forth in the disclosure letter delivered by the Buyer Parties on the date hereof (the “Parent Disclosure Letter”),
the Buyer Parties hereby, jointly and severally, represent and warrant to the Company as follows:
4.1 Organization;
Good Standing.
(a) Parent.
Parent (i) is duly organized, validly existing and in good standing pursuant to the laws of its jurisdiction of organization; and (ii)
has the requisite power and authority to conduct its business as it is presently being conducted and to own, lease or operate its properties
and assets.
(b) Merger
Sub. Merger Sub (i) is a corporation duly incorporated, validly existing and in good standing pursuant to the DGCL; and (ii) has
the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its
properties and assets.
(c)
Organizational Documents. Parent has made available to the Company true, correct and complete copies of the certificate of incorporation,
bylaws and other similar organizational documents of the Buyer Parties, each as amended to date. No Buyer Party is in violation of its
certificate of incorporation, bylaws or other similar organizational document.
4.2
Power; Enforceability. Each Buyer Party has the requisite power and authority to (a) execute and deliver this Agreement; (b) perform
its covenants and obligations hereunder; and (c) consummate the Merger. The execution and delivery of this Agreement by the Buyer Parties,
the performance by each Buyer Party of its respective covenants and obligations hereunder and the consummation of the Merger have been
duly authorized, adopted and approved by all necessary action on the part of each Buyer Party and no additional actions on the part of
any Buyer Party are necessary to authorize (i) the execution and delivery of this Agreement by each Buyer Party; (ii) the performance
by each Buyer Party of its respective covenants and obligations hereunder; or (iii) subject to the adoption of this Agreement by the
sole stockholder of Merger Sub, the consummation of the Merger. This Agreement has been duly executed and delivered by each Buyer Party
and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each
Buyer Party, enforceable against each Buyer Party in accordance with its terms, subject to the Enforceability Limitations.
4.3
Non-Contravention. The execution and delivery of this Agreement by each Buyer Party, the performance by each Buyer Party of its
covenants and obligations hereunder, and the consummation of the Merger do not (a) violate or conflict with any provision of the certificate
of incorporation, bylaws or other similar organizational documents of the Buyer Parties; (b) violate, conflict with, result in the breach
of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) pursuant to, or result in the
termination of, or accelerate the performance required by, or result in a right of termination or acceleration pursuant to any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation
to which any Buyer Party is a party or by which the Buyer Parties or any of their properties or assets may be bound; (c) assuming the
consents, approvals and authorizations referred to in Section 4.4 have been obtained and, in the case of the consummation of the Merger,
subject to obtaining the Requisite Stockholder Approval and the adoption of this Agreement by the sole stockholder of Merger Sub, violate
or conflict with any law or order applicable to the Buyer Parties or by which any of their properties or assets are bound; or (d) result
in the creation of any lien (other than Permitted Liens) upon any of the properties or assets of the Buyer Parties, except in the case
of each of clauses (b), (c) and (d) for such violations, conflicts, breaches, defaults, terminations, accelerations or liens that would
not, individually or in the aggregate, prevent or materially delay the consummation of the Merger or the ability of the Buyer Parties
to fully perform their respective covenants and obligations pursuant to this Agreement.
4.4
Requisite Governmental Approvals. No Consent of any Governmental Authority is required on the part of the Buyer Parties or any
of their Affiliates (a) in connection with the execution and delivery of this Agreement by each Buyer Party; (b) the performance by each
Buyer Party of its covenants and obligations pursuant to this Agreement; or (c) the consummation of the Merger, except (i) the filing
of the Certificate of Merger with the Secretary of State of the State of Delaware and such filings with Governmental Authorities to satisfy
the applicable laws of states in which the Company Group is qualified to do business; (ii) such filings and approvals as may be required
by any federal or state securities laws, including compliance with any applicable requirements of the Exchange Act; (iii) such filings
as may be required under the rules and regulations of NYSE or TSX; (iv) compliance with any applicable requirements of the HSR Act; and
(v) such other Consents the failure of which to obtain would not, individually or in the aggregate, prevent or materially delay the consummation
of the Merger or the ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to this Agreement.
4.5 Legal
Proceedings; Orders.
(a) No
Legal Proceedings. As of the date hereof, there are no Legal Proceedings pending or, to the knowledge of Parent or any of its Affiliates,
threatened against the Buyer Parties that would, individually or in the aggregate, prevent or materially delay the consummation of the
Merger or the ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to this Agreement.
(b) No
Orders. No Buyer Party is subject to any order of any kind or nature that would prevent or materially delay the consummation of the
Merger or the ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to this Agreement.
4.6
Ownership of Company Capital Stock. Other than the Series D Convertible Preferred Stock beneficially owned by Parent or its Affiliates,
none of the Buyer Parties or any of their respective directors, executive officers, general partners or, to the knowledge of Parent,
any of its controlled Affiliates or any employees of the Buyer Parties or any of their controlled Affiliates owns any shares of Company
Capital Stock (or any rights to acquire, directly or indirectly, such shares).
4.7
Brokers. There is no financial advisor, investment banker, broker, finder, agent or other Person that has been retained by or
is authorized to act on behalf of the Buyer Parties or any of their Affiliates who is entitled to any financial advisor’s, investment
banking, brokerage, finder’s or other fee or commission payable by the Company in connection with the Merger.
4.8
Operations of Merger Sub. Merger Sub has been formed solely for the purpose of engaging in the Merger, and, prior to the Effective
Time, Merger Sub will not have engaged in any other business activities and will have incurred no liabilities or obligations other than
as contemplated by this Agreement. Burger King Company LLC owns beneficially and of record all of the outstanding capital stock, and
other equity and voting interest in, Merger Sub free and clear of all liens.
4.9
No Parent Vote or Approval Required. No vote or consent of the holders of any capital stock of, or other equity or voting interest
in, Parent is necessary to approve this Agreement and the Merger. The vote or consent of the sole stockholder of Merger Sub is the only
vote or consent of the capital stock of, or other equity interest in, Merger Sub necessary to approve this Agreement and the Merger.
4.10
Stockholder and Management Arrangements. As of the date hereof, except for the Voting Agreement and any arrangement between Parent
or its Affiliates, on the one hand, and the Company Group, on the other hand, in the ordinary course of their ongoing business arrangements,
none of Parent or any of its Affiliates is a party to any Contract, or has authorized, made or entered into, or committed or agreed to
enter into, any formal or informal arrangements or other understandings (whether or not binding) with any stockholder, director, officer,
employee or other Affiliate of the Company Group (other than Parent and its Affiliates) (a) relating to (i) this Agreement or the Merger;
or (ii) the Surviving Corporation or any of its Subsidiaries, businesses or operations (including as to continuing employment) from and
after the Closing; or
(b) pursuant
to which any (i) such holder of Company Capital Stock would be entitled to receive consideration of a different amount or nature than
the Per Share Price in respect of such holder’s shares of Company Capital Stock; (ii) such holder of Company Capital Stock has
agreed to approve this Agreement or vote against any Superior Proposal; or (iii) such stockholder, director, officer, employee or other
Affiliate of the Company Group has agreed to provide, directly or indirectly, equity investment to the Buyer Parties or the Company to
finance any portion of the Merger.
4.11
Sufficient Funds. Parent will at the Effective Time have access to the funds necessary for the payment of all amounts payable
pursuant to Article II in connection with or as a result of the Merger.
4.12 Exclusivity
of Representations and Warranties.
(a) No
Other Representations and Warranties. Each Buyer Party, on behalf of itself and its Subsidiaries, acknowledges and agrees that, except
for the representations and warranties expressly set forth in Article III:
(i) neither
the Company nor any of its Subsidiaries (or any other Person) makes, or has made, any representation or warranty relating to the Company,
its Subsidiaries or any of their businesses, operations or otherwise in connection with this Agreement or the Merger;
(ii) no
Person has been authorized by the Company Group or any of its Affiliates or Representatives to make any representation or warranty relating
to the Company Group or any of its businesses or operations or otherwise in connection with this Agreement or the Merger, and if made,
such representation or warranty must not be relied upon by the Buyer Parties or any of their respective Affiliates or Representatives
as having been authorized by the Company Group or any of its Affiliates or Representatives (or any other Person); and
(iii) the
representations and warranties made by the Company in this Agreement are in lieu of and are exclusive of all other representations and
warranties, including any express or implied or as to merchantability or fitness for a particular purpose, and the Company hereby disclaims
any other or implied representations or warranties, notwithstanding the delivery or disclosure to the Buyer Parties or any of their respective
Affiliates or Representatives of any documentation or other information (including any financial information, supplemental data or financial
projections or other forward-looking statements).
(b) No
Reliance. Each of Parent and Merger Sub has conducted its own independent review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition and prospects of the Company and its Subsidiaries and acknowledges that each
of Parent and Merger Sub has been provided access for such purposes. Each Buyer Party, on behalf of itself and its Subsidiaries, acknowledges
and agrees that, except for the representations and warranties expressly set forth in Article III, it is not acting (including, as applicable,
by entering into this Agreement or consummating the Merger) in reliance on:
(i) any representation or warranty, express or implied;
(ii) any
estimate, projection, prediction, data, financial information, memorandum, presentation or other materials or information provided or
addressed to the Buyer Parties or any of their respective Affiliates or Representatives, including any materials or information made
available in the electronic data room hosted by or on behalf of the Company in connection with the Merger, in connection with presentations
by the Company’s management or in any other forum or setting; or
(iii) the
accuracy or completeness of any other representation, warranty, estimate, projection, prediction, data, financial information, memorandum,
presentation or other materials or information.
ARTICLE
V
INTERIM
OPERATIONS OF THE COMPANY
5.1
Affirmative Obligations. Except (a) as expressly contemplated by this Agreement or required by applicable law or the express terms
of the Franchise Agreements (excluding any incurrence of capital expenditures, other than capital expenditures for necessary maintenance
costs with respect to any restaurants operated by the Company Group in an aggregate amount not to exceed $17,000 per restaurant on an
annual basis); (b) as set forth in Section 5.1 or Section 5.2 of the Company Disclosure Letter; or (c) as requested or approved by Parent
in writing (with email being sufficient) (which approval will not be unreasonably withheld, conditioned or delayed), at all times during
the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination
of this Agreement pursuant to Article VIII and the Effective Time, the Company will, and will cause each of its Subsidiaries to, use
reasonable best efforts to (i) maintain its existence in good standing (to the extent applicable) pursuant to applicable law; (ii) subject
to the restrictions and exceptions set forth in Section 5.2 or elsewhere in this Agreement, conduct its business and operations in the
ordinary course of business; and (iii) use its respective commercially reasonable efforts to (A) preserve intact its material assets,
properties, Contracts or other legally binding understandings, licenses and business organizations; (B) keep available the services of
its current officers and key employees; and (C) preserve the current relationships with customers, vendors, distributors, partners (including
system integrators, platform partners, referral partners, consulting and implementation partners), lessors, licensors, licensees, creditors,
contractors and other Persons with which the Company Group has material business relations (other than Parent and its Affiliates).
5.2
Forbearance Covenants. Except (i) as set forth in Section 5.2 of the Company Disclosure Letter; (ii) as approved by Parent in
writing (with email being sufficient) (which approval will not be unreasonably withheld, conditioned or delayed); or (iii) as expressly
contemplated by the terms of this Agreement or required by applicable law or the express terms of the Franchise Agreements (excluding
any incurrence of capital expenditures, other than capital expenditures for necessary maintenance costs with respect to any restaurants
operated by the Company Group in an aggregate amount not to exceed $17,000 per restaurant on an annual basis), at all times during the
period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this
Agreement pursuant to Article VIII and the Effective Time, the Company will not, and will not permit any of its Subsidiaries, to:
(a) amend the Charter, the Bylaws, or any other similar organizational document;
(b) propose
or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(c) issue,
sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any Company Securities, except (A) for the issuance or sale of shares of Company Common
Stock in connection with the exercise or settlement (as applicable) of the Company Equity Awards outstanding on or prior to the date
hereof, in accordance with their terms as in effect on the date hereof; or (B) in connection with agreements in effect on the date hereof
and made available to Parent (or the form of such agreement has been made available to Parent and any such agreement is substantially
identical to such form), including the maximum amount of Company Securities to be issued thereunder;
(d)
directly or indirectly acquire, repurchase or redeem any securities, except for (A) repurchases, withholdings, or cancellations of Company
Securities in connection with the exercise or settlement or other disposition or issuance of Company Equity Awards outstanding on or
prior to the date hereof in accordance with their terms as in effect on the date hereof; or (B) transactions between the Company and
any of its direct or indirect Subsidiaries;
(e) (A)
adjust, split, combine or reclassify any shares of capital stock, or issue or authorize or propose the issuance of any other Company
Securities in respect of, in lieu of or in substitution for, any shares of its capital stock or other equity or voting interest; (B)
declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect
of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect
of any shares of capital stock or other equity or voting interest, except for (i) cash dividends made by any direct or indirect wholly-owned
Subsidiary of the Company to the Company, or one of the Company’s other wholly-owned Subsidiaries or (ii) cash dividends that are
consistent with past practice, at a rate not to exceed the amount set forth in Section 5.2(e)(ii) of the Company Disclosure Letter and
with record and payment dates consistent with past practice of the Company during the prior 12 months; (C) pledge or encumber any shares
of its capital stock or other equity or voting interest; or (D) modify the terms of any shares of its capital stock or other equity or
voting interest;
(f)
(A) incur or assume any Indebtedness (including any long-term or short-term debt) or issue any debt securities, except (1) for trade
payables incurred in the ordinary course of business; (2) obligations incurred pursuant to business credit cards in the ordinary
course of business; (3) intercompany loans or advances between or among the Company and its direct or indirect wholly-owned
Subsidiaries; and (4) borrowings under the Credit Agreement in the ordinary course of business in an outstanding principal amount
not in excess of $10,000,000 in the aggregate; or (B) assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of any direct or
indirect wholly-owned Subsidiaries of the Company;
(g) mortgage
or pledge any of its and its Subsidiaries’ assets, tangible or intangible, or create or incur any lien thereupon (other than Permitted
Liens), other than in connection with financing transactions permitted by Section 5.2(f) or consented to by Parent;
(h) make
any loans, advances or capital contributions to, or investments in, any other Person, except for (1) advances to directors, officers
and other employees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance
in all material respects with the Company Group’s policies related thereto; and (2) loans, advances or capital contributions to,
or other extensions of credit or investments in, the Company or any direct or indirect wholly-owned Subsidiaries of the Company;
(i) acquire,
lease, license, sell, sell and leaseback, abandon, transfer, assign, guarantee, or exchange any assets, tangible or intangible, in each
case in excess of $150,000 individually, and other than (1) the sale of products or services of the Company Group in the ordinary course
of business; (2) the acquisition, lease or license of products or services by the Company Group in the ordinary course of business; and
(3) any capital expenditures permitted by (or consented to by Parent under) Section 5.2(p);
(j)
encumber or dispose of any Owned Real Property or acquire a fee interest in any real property;
(k) close
any restaurants operated by the Company Group as of the date hereof, other than the restaurants set forth in Section 5.2(k) of the Company
Disclosure Letter;
(l)
(A) enter into, adopt, or amend (including accelerating the vesting, payment or funding), modify or terminate any bonus, profit sharing,
compensation, severance, termination, option, appreciation right, performance unit, phantom equity, stock equivalent, share purchase
agreement, pension, retirement, deferred compensation, employment, severance or other Employee Plan in any manner (other than in connection
with at-will offer letters entered into in the ordinary course of business with new hires permitted pursuant to clause (D) of this paragraph,
provided that the terms thereof shall not include the granting of any equity or equity-based awards); (B) increase or decrease the compensation
of any director, officer, employee, individual consultant, former employee, individual independent contractor, or other individual service
provider of the Company Group with an annual base salary of $150,000 or more, provided that any compensation increase to an individual
with an annual base salary below $150,000 shall be made in connection with the Company’s annual performance review and shall not
exceed fifteen percent (15%) for any individual or four percent (4%) in the aggregate, in each case, with respect to the annual base
salary levels in effect for calendar year 2023; (C) enter into any change in control, severance or similar agreement or any retention
or similar agreement with any officer, employee, director, individual independent contractor, individual consultant, or other individual
service provider of the Company Group, or (D) hire, terminate (other than for “cause”), furlough or temporarily lay off any
officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of the Company
Group with an annual base salary or wages (or, in the case of non-employee service providers, equivalent compensation) of $150,000 or
more;
(m) settle,
release, waive or compromise any pending or threatened material Legal Proceeding or other claim, except for the settlement of any Legal
Proceeding or other claim that is (A) reflected or reserved against in the consolidated financial statements of the Company Group with
a reserve of at least $100,000 as of the end of the most recently completed fiscal quarter of the Company Group included in the Company
SEC Reports filed prior to the date hereof and; (B) for solely monetary payments of, net of insurance recovery, no more than $100,000
individually and $500,000 in the aggregate; or (C) settled in compliance with Section 6.15;
(n) except
as required by applicable law or GAAP, (A) revalue in any material respect any of its properties or assets, including writing-off notes
or accounts receivable, other than in the ordinary course of business; or (B) make any change in any of its accounting principles or
practices;
(o)
(A) make (other than in the ordinary course of business) or change any material Tax election; (B) settle, consent to or compromise any
material Tax claim or assessment or surrender a right to a material Tax refund; (C) consent to any extension or waiver of any limitation
period with respect to any material Tax claim or assessment (other than pursuant to extensions of time to file any Tax Return); (D) file
an amended Tax Return that could materially increase the Taxes payable by any member of the Company Group; or (E) request any rulings
from, or enter into a closing agreement with, any Governmental Authority regarding any material Tax;
(p) incur or commit to incur any capital expenditure(s);
(q)
(A) modify, amend or terminate any Material Contract, (B) enter into any Contract that would have been a Material Contract if such Contract
was in existence as of the date hereof, (C) enter into, modify, amend or extend any contract with any key technology vendor, (D) enter
into, modify, amend or extend any Lease or any other Contract providing for the purchase of real property, (E) enter into any Contract
containing any covenant or other provision (i) limiting the right of the Company Group to engage in any material line of business or
to compete with any Person in any line of business that is material to the Company Group; (ii) prohibiting the Company Group from engaging
in any business with any Person or levying a fine, charge or other payment for doing so; or (iii) containing and limiting the right of
the Company Group pursuant to any “most favored nation” or “exclusivity” provisions, in each case other than
any such Contracts that (1) may be cancelled without material liability to the Company or its Subsidiaries upon notice of 90 days or
less, or (2) are not material to the Company Group, taken as a whole, or (F) enter into any sale leaseback Contract or arrangement relating
to any real property;
(r)
maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice;
(s) engage
in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person
covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;
(t) effectuate
or announce any closing, employee layoff, furlough, reduction to terms and conditions of employment or other event affecting in whole
or in part any site of employment, facility, operating unit or employee that would result in liability of the Company Group under the
WARN Act;
(u) acquire
(by merger, consolidation or acquisition of stock or assets) any other Person or any material portion thereof or material equity interest
therein or enter into any joint venture, limited liability company or legal partnership or similar arrangement (excluding, for avoidance
of doubt, reseller agreements and other commercial agreements that do not involve the formation of an entity with any third Person);
(v) (A)
enter into any Collective Bargaining Agreement or agreement or arrangement to form a works council or other Contract with any labor union
or other labor organization or works council, except to the extent required by applicable law; provided that the Company or its
applicable Subsidiaries must first, to the extent not prohibited by law, provide Parent and its counsel reasonable advance notice thereof
and a reasonable opportunity to review and comment thereon, and the Company or such Subsidiaries will give due consideration to all reasonable
additions, deletions, changes or other recommendations suggested thereto by Parent or its counsel; or (B) recognize or certify any labor
union, works council or other labor organization, or group of employees, as the bargaining representative for any employees of the Company
Group, except as required by applicable law;
(w) waive
or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation
of any current or former employee or independent contractor;
(x) adopt
or implement any stockholder rights plan or similar arrangement, in each case, applicable to the Merger or any other transaction consummated
pursuant to Parent’s rights under Section 5.3(d)(i)(2) or Section 5.3(d)(ii)(3); or
(y) enter
into, authorize any of, or agree or commit to enter into a Contract to take any of the actions prohibited by this Section 5.2.
5.3 Go
Shop; No Solicitation.
(a)
Go Shop; No Solicitation or Negotiation. Notwithstanding anything to the contrary set forth in this Agreement but subject to Section
5.3(d), during the period (the “Go-Shop Period”) beginning on the date of this Agreement and continuing until 11:59
p.m., Eastern time, on the date that is 30 days following the date hereof (the “No-Shop Period Start Date”), the Company
and its Affiliates and their respective Representatives shall have the right to: (i) solicit, initiate, propose or induce the making,
submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or is reasonably
expected to lead to, an Acquisition Proposal; (ii) subject to the entry into, and in accordance with, an Acceptable Confidentiality Agreement,
furnish to any Person (and its Representatives and financing sources subject to the terms and obligations of such Acceptable Confidentiality
Agreement applicable to such Person) any non-public information relating to the Company Group or afford to any such Person (and such
Representatives and financing sources) access to the business, properties, assets, books, records or other non-public information, or
to any personnel, of the Company Group, in any such case with the intent to induce the making, submission or announcement of, or to knowingly
encourage, facilitate or assist, any proposal or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal,
provided, however, that the Company will promptly (and in any event within 24 hours) provide to Parent, or provide Parent
access to, any such non-public information concerning the Company Group that is provided to any such Person or its Representatives that
was not previously provided to Parent or its Representatives; and (iii) participate or engage in discussions or negotiations with any
such Person (and such Representatives and financing sources) with respect to an Acquisition Proposal. Subject to the terms of Section
5.3(b), from the No-Shop Period Start Date until the earlier to occur of the termination of this Agreement pursuant to Article VIII and
the Effective Time, the Company Group will not, will cause its directors, officers and employees not to, and will instruct its other
Representatives not to, and will not knowingly permit its other Representatives to, directly or indirectly, (1) solicit, initiate, propose
or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes,
or could reasonably be expected to lead to, an Acquisition Proposal; (2) furnish to any Person (other than to Parent or any designees
of Parent) any non-public information relating to the Company Group or afford to any Person access to the business, properties, assets,
books, records or other non-public information, or to any personnel, of the Company Group (other than Parent or any designees of Parent),
in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist,
any proposal or inquiry that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal; (3) participate or engage
in discussions or negotiations with any Person with respect to an Acquisition Proposal (other than informing such Persons of the provisions
contained in this Section 5.3 and contacting the Person making the Acquisition Proposal to the extent necessary to clarify the terms
of the Acquisition Proposal); (4) approve, endorse or recommend any proposal that constitutes, or could reasonably be expected to lead
to, an Acquisition Proposal; or (5) enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement
or other Contract relating to an Acquisition Transaction, other than an Acceptable Confidentiality Agreement (any such letter of intent,
memorandum of understanding, merger agreement, acquisition agreement or other Contract relating to an Acquisition Transaction, an “Alternative
Acquisition Agreement”). The Company will immediately cease, and will cause its directors, officers and employees to immediately
cease, and will use its reasonable best efforts to cause its other Representatives to immediately cease, any and all discussions or negotiations
that existed on or prior to the date of this Agreement with any parties conducted heretofore with respect to any Acquisition Proposal.
The Company will (A) promptly request the return or destruction of all non-public information concerning the Company Group furnished
to any Person that has executed a confidentiality agreement since January 16, 2023 in connection with any Acquisition Proposal; (B) cease
providing any further information with respect to the Company Group or any Acquisition Proposal to any such Person or its Representatives;
and (C) promptly terminate all access granted to any such Person and its Representatives to any physical or electronic data room. Notwithstanding
anything herein to the contrary, the Company will not be required to enforce, and will be permitted to grant a waiver, amendment or release
under any provision of any standstill or confidentiality agreement solely to the extent that (x) such waiver, amendment or release would
allow a confidential proposal (or amendment to a confidential proposal) being made to Company or the Special Committee or would otherwise
allow a Person to engage with the Company and its Representatives in discussions regarding a confidential proposal, Acquisition Proposal
or other proposal that would be reasonably likely to lead to an Acquisition Proposal or (y) the Special Committee has determined that
the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law.
(b)
Superior Proposals. Notwithstanding anything to the contrary set forth in this Section 5.3, from the date hereof until the Company’s
receipt of the Requisite Stockholder Approval, the Company and the Special Committee may, directly or indirectly through one or more
of their Representatives (including the Advisor), contact the Person or group of Persons making such Acquisition Proposal to clarify
the terms and conditions thereof so as to determine whether such Acquisition Proposal constitutes, or could reasonably be expected to
result in, a Superior Proposal, participate or engage in discussions or negotiations with, furnish any non-public information relating
to the Company Group to, or afford access to the business, properties, assets, books, records or other non-public information, or to
any personnel, of the Company Group pursuant to an Acceptable Confidentiality Agreement to any Person or its Representatives that has
made or delivered to the Company an Acquisition Proposal after the date hereof, in each case with respect to an Acquisition Proposal
that did not result from any material breach of Section 5.3(a); provided, however, that prior thereto, the Special Committee
has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (i) such Acquisition Proposal
either constitutes a Superior Proposal or is reasonably expected to lead to a Superior Proposal, and (ii) the failure to take the actions
contemplated by this Section 5.3(b) would be inconsistent with its fiduciary duties pursuant to applicable law; and provided further,
however, that the Company will promptly (and in any event within 24 hours) make available to Parent any non-public information
concerning the Company Group that is provided to any such Person or its Representatives that was not previously made available to Parent;
and provided further, however, that if any such Person or its Representatives is a competitor of the Company Group, the
Company Group shall not provide any information that in the good faith determination of the Company constitutes commercially sensitive
non-public information to such Person in connection with any actions permitted by this Section 5.3(b) other than in accordance with “clean
room” or other similar procedures designed to limit any potential adverse effect on the Company from sharing such information.
(c) No
Change in Company Board Recommendation or Entry into an Alternative Acquisition Agreement. Except as provided by Section 5.3(d),
at no time after the date hereof may the Company Board (or a committee thereof including the Special Committee):
(i) (A)
withhold, withdraw, amend, qualify or modify, or publicly propose to withhold, withdraw, amend, qualify or modify, the Company Board
Recommendation in a manner adverse to Parent in any material respect; (B) adopt, approve, endorse, recommend or otherwise declare advisable
an Acquisition Proposal; (C) fail to publicly reaffirm the Company Board Recommendation, within ten Business Days after Parent so requests
in writing or in connection with the public disclosure by the Company of an Acquisition Proposal (other than of the type referred to
in the following clause (D)) by any Person other than Parent and Merger Sub; provided, however, that the Company shall not be required
to make such reaffirmation more than once in respect of such public disclosure of an Acquisition Proposal except in connection with any
material amendment of such Acquisition Proposal (and no more than once in connection with each such amendment); (D) take any formal action
or make any recommendation or public statement in connection with a tender or exchange offer, other than a recommendation against such
offer or a “stop, look and listen” communication by the Company Board (or a committee thereof including the Special Committee)
to the Company Stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication),
or fail to recommend against any tender or exchange offer (it being understood that the Company Board (or a committee thereof including
the Special Committee) may refrain from taking a position with respect to an Acquisition Proposal that is a tender or exchange offer
until the close of business on the tenth Business Day after the commencement of a tender or exchange offer in connection with such Acquisition
Proposal without such action being considered a violation of this Section 5.3); or (E) fail to include the Company Board Recommendation
in the Proxy Statement (any action described in clauses (A) through (E), a “Company Board Recommendation Change”);
provided, however, that, for the avoidance of doubt, none of (1) the determination by the Special Committee that an Acquisition
Proposal constitutes a Superior Proposal or (2) the delivery by the Company to Parent of any notice contemplated by Section 5.3(d) will
constitute a Company Board Recommendation Change; or
(ii)
cause or permit the Company Group to enter into an Alternative Acquisition Agreement.
(d) Company
Board Recommendation Change; Entry into Alternative Acquisition Agreement. Notwithstanding anything to the contrary set forth in
this Agreement, at any time prior to obtaining the Requisite Stockholder Approval:
(i)
other than in connection with a bona fide Acquisition Proposal that constitutes a Superior Proposal, the Company Board (or a committee
thereof), upon the recommendation of the Special Committee, may effect a Company Board Recommendation Change in response to any material
event, occurrence or development or material change in circumstances with respect to the Company and its Subsidiaries, taken as a whole,
that (A) was not actually known to, or reasonably expected by, the Special Committee or the Company Board as of the date hereof; and
(B) does not relate to (1) any Acquisition Proposal; or (2) the mere fact, in and of itself, that the Company meets or exceeds any internal
or published projections, forecasts, estimates or predictions of revenue, earnings or other financial or operating metrics for any period
ending on or after the date hereof, or changes after the date hereof in the market price or trading volume of the Company Common Stock
or the credit rating of the Company (it being understood that the underlying cause of any of the foregoing in this clause (B) may be
considered and taken into account) (each such event, an “Intervening Event”), if the Special Committee determines
in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent
with its fiduciary duties pursuant to applicable law and if and only if:
(1) the
Company has provided prior written notice to Parent at least five Business Days in advance to the effect that the Company Board (or a
committee thereof), upon the recommendation of the Special Committee, has (A) so determined; and (B) resolved to effect a Company Board
Recommendation Change pursuant to this Section 5.3(d)(i), which notice will specify the applicable Intervening Event in reasonable detail;
and
(2) prior
to effecting such Company Board Recommendation Change, the Company and its Representatives, during such five Business Day period, must
have negotiated with Parent and its Representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments
to the terms and conditions of this Agreement so that the Special Committee no longer determines that the failure to make a Company Board
Recommendation Change in response to such Intervening Event would be inconsistent with its fiduciary duties pursuant to applicable law;
or
(ii) if
the Company has received a bona fide Acquisition Proposal after the date hereof that the Special Committee has concluded in good faith
(after consultation with its financial advisor and outside legal counsel) is a Superior Proposal, then the Company Board, upon the recommendation
of the Special Committee, may (A) effect a Company Board Recommendation Change with respect to such Acquisition Proposal; or (B) authorize
the Company to terminate this Agreement to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal,
in each case if and only if:
(1) the
Special Committee determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure
to do so would be inconsistent with its fiduciary duties pursuant to applicable law;
(2) the
Company Group and its Representatives have complied in all material respects with their obligations pursuant to this Section 5.3 with
respect to such Acquisition Proposal;
(3) (i)
the Company has provided prior written notice to Parent at least five Business Days in advance (the “Notice Period”)
to the effect that the Company Board (or a committee thereof), upon the recommendation of the Special Committee, has (A) received a bona
fide Acquisition Proposal that has not been withdrawn; (B) concluded in good faith that such Acquisition Proposal constitutes a Superior
Proposal; and (C) resolved to effect a Company Board Recommendation Change or to terminate this Agreement pursuant to this Section 5.3(d)(ii)
absent any revision to the terms and conditions of this Agreement, which notice will include the identity of the Person or “group”
of Persons making such Acquisition Proposal, the material terms thereof and copies of all relevant documents relating to such Acquisition
Proposal; and (ii) prior to effecting such Company Board Recommendation Change or termination, the Company and its Representatives, during
the Notice Period, must have negotiated with Parent and its Representatives in good faith (to the extent that Parent desires to so negotiate)
to make such adjustments to the terms and conditions of this Agreement so that such Acquisition Proposal would cease to constitute a
Superior Proposal; provided, however, that in the event of any material revisions to such Acquisition Proposal, the Company
will be required to deliver a new written notice to Parent and to comply with the requirements of this Section 5.3(d)(ii)(2) with respect
to such new written notice (it being understood that the “Notice Period” in respect of such new written notice will be three
Business Days); and
(4)
in the event of any termination of this Agreement in order to cause or permit the Company Group to enter into an Alternative Acquisition
Agreement with respect to such Acquisition Proposal, the Company will have validly terminated this Agreement in accordance with Section
8.1(h), including with respect to complying with its obligation to pay the Company Termination Fee in accordance with Section 8.3(b)(iii).
(e)
Notice. From the date of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII
and the Effective Time, the Company will promptly (and, in any event, within 24 hours following the receipt thereof) notify Parent if
any inquiries, offers or proposals that constitute an Acquisition Proposal are received by the Company or any of its Representatives
or any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the
Company or any of its Representatives with respect to an Acquisition Proposal. Such notice must include (i) the identity of the Person
or “group” of Persons making such offers or proposals (unless, in each case, such disclosure is prohibited pursuant to the
terms of any confidentiality agreement with such Person or “group” of Persons that is in effect on the date of this Agreement);
and (ii) a summary of the material terms and conditions of such offers or proposals. Thereafter, the Company must keep Parent reasonably
informed, on a prompt basis (and, in any event, within 24 hours) of any modification of the material terms of any inquiry, offer or proposal
(including any amendments thereto) and any material changes and developments in the status of any discussions or negotiations.
(f) Certain
Disclosures. Nothing in this Agreement will prohibit the Company or the Company Board (or a committee thereof including the Special
Committee) from (i) taking and disclosing to the Company Stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or complying with Rule 14d-9 promulgated under the Exchange Act, including a “stop, look and listen” communication
by the Company Board (or a committee thereof including the Special Committee) to the Company Stockholders pursuant to Rule 14d-9(f) promulgated
under the Exchange Act (or any substantially similar communication); (ii) complying with Item 1012(a) of Regulation M-A promulgated under
the Exchange Act; (iii) informing any Person of the existence of the provisions contained in this Section 5.3; or (iv) making any disclosure
to the Company Stockholders (including regarding the business, financial condition or results of operations of the Company Group) that
the Company Board (or a committee thereof, including the Special Committee) has determined to make in good faith in order to comply with
applicable law, regulation or stock exchange rule or listing agreement, it being understood that any such statement or disclosure made
by the Company Board (or a committee thereof, including the Special Committee) pursuant to this Section 5.3(f) must be subject to the
terms and conditions of this Agreement and will not limit or otherwise affect the obligations of the Company or the Company Board (or
any committee thereof including the Special Committee) and the rights of Parent under this Section 5.3, it being understood that nothing
in the foregoing will be deemed to permit the Company or the Company Board (or a committee thereof including the Special Committee) to
effect a Company Board Recommendation Change other than in accordance with Section 5.3(d). In addition, it is understood and agreed that,
for purposes of this Agreement, a factually accurate public statement by the Company or the Company Board (or a committee thereof including
the Special Committee), to the extent required by law, that describes the Company’s receipt of an Acquisition Proposal, the identity
of the Person making such Acquisition Proposal, the material terms of such Acquisition Proposal and the operation of this Agreement with
respect thereto will not, in and of itself, be deemed to be (A) a withholding, withdrawal, amendment, or modification, or proposal by
the Company Board (or a committee thereof) to withhold, withdraw, amend or modify, the Company Board Recommendation; (B) an adoption,
approval or recommendation with respect to such Acquisition Proposal; or (C) a Company Board Recommendation Change.
(g)
Breach by Representatives. The Company will not authorize, direct or knowingly permit any consultant or employee of the Company
to breach this Section 5.3, and upon becoming aware of any breach or threatened breach of this Section 5.3 by a consultant or employee
of the Company, shall use its reasonable best efforts to stop such breach or threatened breach.
ARTICLE
VI
ADDITIONAL
COVENANTS
6.1 Required
Action and Forbearance; Efforts.
(a) Reasonable
Best Efforts. Upon the terms and subject to the conditions set forth in this Agreement, the Buyer Parties, on the one hand, and
the Company, on the other hand, will use their respective reasonable best efforts to (A) take (or cause to be taken) all actions;
(B) do (or cause to be done) all things; and (C) assist and cooperate with the other Parties in doing (or causing to be done) all
things, in each case, as are necessary, proper or advisable pursuant to applicable law or otherwise to consummate and make
effective, in the most expeditious manner practicable, the Merger, including by:
(i) subject
to Section 6.2 with respect to Antitrust Laws, (1) obtaining all consents, waivers, approvals, orders and authorizations from Governmental
Authorities; and (2) making all registrations, declarations and filings with Governmental Authorities, in each case, that are necessary
or advisable to consummate the Merger;
(ii) obtaining
all consents, waivers and approvals and delivering all notifications pursuant to any Material Contracts in connection with this Agreement
and the consummation of the Merger so as to maintain and preserve the benefits to the Surviving Corporation of such Material Contracts
as of and following the consummation of the Merger; and
(iii) executing
and delivering any Contracts and other instruments that are reasonably necessary to consummate the Merger.
(b) No
Omission to Take Necessary Action. In addition to the foregoing, subject to the terms and conditions of this Agreement (including
subject to clause (D) of the second sentence of Section 6.2(a)), neither the Buyer Parties, on the one hand, nor the Company, on the
other hand, will take any action, or omit to take any action, which action or omission is intended to or has (or would reasonably be
expected to have) the effect of preventing, impairing, delaying or otherwise adversely affecting (i) the consummation of the Merger;
or (ii) the ability of such Parties to fully perform their obligations pursuant to this Agreement. For the avoidance of doubt, no action
by the Company taken in compliance with Section 5.3 will be considered a violation of this Section 6.1.
(c) No
Consent Fee. Notwithstanding anything to the contrary set forth in this Section 6.1 or elsewhere in this Agreement, the Company Group
will not be required to agree to the payment of a consent fee, “profit sharing” payment or other consideration (including
increased or accelerated payments), the provision of additional security (including a guarantee), or otherwise make any accommodation,
commitment or incur any liability or obligation to any third party, in connection with the Merger, including in connection with obtaining
any consent pursuant to any Material Contract.
6.2 Filings.
(a)
Filing Under the HSR Act. The Buyer Parties (and their respective Affiliates, if applicable), on the one hand, and the Company
(and its Subsidiaries, if applicable), on the other hand, will, to the extent required in the reasonable judgment of counsel to Parent
and the Company, (i) file with the FTC and the Antitrust Division of the DOJ a Notification and Report Form relating to this Agreement
and the Merger as required by the HSR Act within ten Business Days following the date hereof; provided that in the event that
the FTC and/or the Antitrust Division of the DOJ is closed or not accepting such filings under the HSR Act (a “Government Closure”),
such day shall be extended day-for-day, for each Business Day the Government Closure is in effect; and (ii) as soon as practicable after
the date of this Agreement file comparable pre-merger or post-merger notification filings, forms and submissions with any Governmental
Authority (including in draft form where applicable) pursuant to any other applicable Antitrust Laws, with Parent having primary responsibility
for the making of such filings. Each of Parent and the Company will use reasonable efforts to (A) cooperate and coordinate (and cause
its respective Affiliates to cooperate and coordinate) with the other in the making of such filings; (B) supply the other (or cause the
other to be supplied) with any information that may be required in order to make such filings; (C) supply (or cause the other to be supplied)
any additional information that may be required or requested by the FTC, the DOJ or the Governmental Authorities of any other applicable
jurisdiction in which any such filing is made; and (D) subject to the limitations set forth in Section 6.2(b), take all action necessary
to (1) cause the expiration or termination of the applicable waiting periods (including where applicable, by way of a positive clearance
decision) pursuant to the HSR Act and any other applicable Antitrust Laws, including requesting early termination of the HSR waiting
period; and (2) obtain the required consents pursuant to any other applicable Antitrust Laws, in each case as soon as practicable. If
any Party or Affiliate thereof receives a request for additional information or documentary material from any Governmental Authority
with respect to the Merger pursuant to the HSR Act or any other applicable Antitrust Laws, then such Party will make (or cause to be
made), as soon as reasonably practicable and after consultation with the other Parties, an appropriate response to such request.
(b) Impediments.
Notwithstanding anything to the contrary contained in this Agreement, neither any Buyer Party nor any of their respective Affiliates
shall be required to or agree to, and without the prior written consent of Parent, the Company and its Subsidiaries shall not, (i) offer,
negotiate, commit to or effect the sale, divestiture, license or other disposition, by consent decree, hold separate or otherwise, of
any of the assets, properties or businesses of the Buyer Parties (or their Affiliates) or any assets, properties or businesses of the
Company Group, (ii) terminate, modify, or assign any existing relationships, joint ventures, Contracts, or obligations of any of the
Buyer Parties or any of their respective Affiliates or of the Company Group, (iii) modify any course of conduct regarding future operations
of any of the Buyer Parties or any of their respective Affiliates, or of the Company Group, (iv) undertake or agree to any requirement
or obligation to provide prior notice to, or obtain prior approval from, any Governmental Authority with respect to any transaction or
(v) offer, negotiate or commit to any other restrictions on the activities of any of the Buyer Parties or any of their respective Affiliates
or of the Company Group, including the freedom of action of any of the Buyer Parties or any of their respective Affiliates or of the
Company Group with respect to, or their ability to retain, one or more of their respective operations, divisions, businesses, product
lines, customers, assets or rights or interests, or their freedom of action with respect to the assets, properties, or businesses to
be acquired pursuant to this Agreement. Subject to and without limiting this Section 6.2(b), the Company shall, and shall cause its Affiliates
and Representatives to, reasonably cooperate, with Parent and its Affiliates on any sale, divestiture, license, hold separate, or other
action undertaken or proposed to be undertaken by the Buyer Parties which the Buyer Parties reasonably conclude, in good faith, may be
necessary to consummate and make effective the Merger; provided, however, that neither Parent, nor Merger Sub, the Company nor their
respective Subsidiaries shall have an obligation to offer, negotiate, commit to or effect any of the foregoing actions, if such action
is not conditioned on the closing of the Merger.
(c)
Cooperation. In furtherance and not in limitation of the foregoing, the Company and the Buyer Parties shall (and shall cause their
respective Affiliates to), subject to any restrictions under applicable laws, (i) promptly notify the other Parties of, and, if in writing,
furnish the others with copies of (or, in the case of oral communications, advise the others of the contents of) any material communication
received by such Person from a Governmental Authority in connection with the Merger and permit the other Parties to review and discuss
in advance (and to consider in good faith any comments made by the other parties in relation to) any proposed draft notifications, formal
notifications, filing, submission or other written communication (and any analyses, memoranda, white papers, presentations, correspondence
or other documents submitted therewith) made in connection with the Merger to a Governmental Authority; (ii) keep the other Parties reasonably
informed with respect to the status of any such submissions and filings to any Governmental Authority in connection with the Merger and
any material developments, meetings or discussions with any Governmental Authority in respect thereof, including with respect to (A)
the receipt of any non-action, action, clearance, consent, approval or waiver, (B) the expiration of any waiting period, (C) the commencement
or proposed or threatened commencement of any investigation, litigation or administrative or judicial action or proceeding under applicable
laws and (D) the nature and status of any objections raised or proposed or threatened to be raised by any Governmental Authority with
respect to the Merger; and (iii) not independently participate in any meeting, hearing, proceeding or material discussions (whether in
person, by telephone or otherwise) with or before any Governmental Authority in respect of the Merger without giving the other Parties
reasonable prior notice of such meeting or discussions and, unless prohibited by such Governmental Authority, the opportunity to attend
or participate. However, each of the Company and the Buyer Parties and their respective Affiliates, if applicable, may designate any
non-public information provided to any Governmental Authority as restricted to “outside counsel” only and any such information
shall not be shared with employees, officers or directors or their equivalents of the other Party without approval of the Party providing
the non-public information; provided , however, that each of the Company and the Buyer Parties and their respective Affiliates,
if applicable, may redact any valuation and related information, or information that is protected by legal privilege, before sharing
any information provided to any Governmental Authority with another Party on an “outside counsel” only basis. Notwithstanding
anything herein to the contrary, Parent shall have the right to control and (having taken into consideration in good faith all comments,
proposals and suggestions made by the Company) direct the process, strategy and determinations with respect to any Antitrust Law in connection
with the Merger, including in dealing with any Governmental Authority with respect thereto. Neither Parent nor the Company will (and
each of the Company and Parent will cause their Subsidiaries and affiliates not to) agree to stay, toll or extend any applicable waiting
period under any Antitrust Law or enter into or extend a timing agreement with any Governmental Authority, without the prior written
consent of the other party.
(d) Limitation
on Other Transactions. During the period commencing with the execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article VIII and the Closing, unless the Company otherwise consents in writing,
Parent and Merger Sub will not acquire or agree to acquire by merging or consolidating with, by purchasing a portion of the assets of
or equity in, or by acquiring in any other manner, any brand or business set forth in Section 6.2(d) of the Company Disclosure Letter.
6.3 Proxy
Statement, Schedule 13E-3 and Other Required SEC Filings.
(a) Proxy
Statement. Promptly (but in no event later than 45 days) following the date hereof, the Company will prepare and file with the SEC
a preliminary proxy statement (as amended or supplemented, the “Proxy Statement”) relating to the Company Stockholder
Meeting. Subject to Section 5.3(d), the Company must include the Company Board Recommendation in the Proxy Statement; provided,
that if the Company Board shall have effected a Company Board Recommendation Change in accordance with Section 5.3(d), then in submitting
this Agreement to the Company Stockholders, the Company Board may submit this Agreement to the Company Stockholders without the Company
Board Recommendation, in which event the Company Board or the Special Committee may communicate the basis for its lack of recommendation
to the Company Stockholders in the Proxy Statement or an appropriate amendment thereof or supplement thereto. The Company will use its
reasonable best efforts to cause the Proxy Statement to comply as to form in all material respects with the applicable requirements of
the Exchange Act and the rules of the SEC and Nasdaq. Parent agrees to provide or cause to be provided all information with respect to
itself, its Affiliates and their respective Representatives as may be reasonably requested by the Company for inclusion in the Proxy
Statement and any such other filings.
(b) Schedule
13E-3. Promptly (but in no event later than 45 days) following the date hereof, the Company and Parent shall jointly prepare and
file with the SEC a Rule 13E-3 transaction statement on Schedule 13E-3 relating to the adoption of this Agreement by the Company Stockholders
(the “Schedule 13E-3”). The Company, Parent and Merger Sub shall jointly assist and cooperate in the preparation of
the Schedule 13E-3 and the resolution of any comments thereto received from the SEC. The Company and the Buyer Parties will use their
respective best efforts to cause the Schedule 13E-3, as to themselves and their Affiliates, to comply as to form in all material respects
with the applicable requirements of the Exchange Act and the rules of the SEC, Nasdaq, NYSE and TSX. The information supplied by the
Company, the Buyer Parties and their respective Affiliates for inclusion or incorporation by reference in the Schedule 13E-3 will not,
at the time that the Schedule 13E-3 is filed with the SEC, the date of mailing to the Company Stockholders and at the time of the Company
Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding
the foregoing, no covenant is made by the Company with respect to any information supplied by the Buyer Parties or any of their Affiliates
in writing expressly for inclusion or incorporation by reference in the Schedule 13E-3 and no covenant is made by the Buyer Parties with
respect to any information supplied by the Company in writing expressly for inclusion or incorporation by reference in the Schedule 13E-3.
(c) Other
Required Company Filing. If the Company determines that it is required to file any document other than the Proxy Statement with the
SEC in connection with the Merger pursuant to applicable law (such document, as amended or supplemented, an “Other Required
Company Filing”), then the Company will promptly prepare and file such Other Required Company Filing with the SEC. The Company
will use its reasonable best efforts to cause any Other Required Company Filing to comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules of the SEC and Nasdaq. The Company may not file the Proxy Statement, the Schedule
13E-3 or any Other Required Company Filing with the SEC without first providing Parent and its counsel a reasonable opportunity to review
and comment thereon, and the Company will give due consideration to all reasonable additions, deletions or changes suggested thereto
by Parent or its counsel. On the date of filing, the date of mailing to the Company Stockholders (if applicable) and at the time of the
Company Stockholder Meeting, neither the Proxy Statement nor any Other Required Company Filing will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not false or misleading. Notwithstanding the foregoing, no covenant is made
by the Company with respect to any information supplied by the Buyer Parties or any of their Affiliates in writing expressly for inclusion
or incorporation by reference in the Proxy Statement or any Other Required Company Filing. The information supplied by the Company for
inclusion or incorporation by reference in any Other Required Parent Filings will not, at the time that such Other Required Parent Filing
is filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
(d)
Other Required Parent Filing. If Parent determines that any Buyer Party (or any of their respective Affiliates, if applicable)
is required to file any document with the SEC in connection with the Merger or the Company Stockholder Meeting pursuant to applicable
law (an “Other Required Parent Filing”), then the Buyer Parties will, and will cause their respective Affiliates to,
promptly prepare and file such Other Required Parent Filing with the SEC. The Buyer Parties will cause, and will cause their respective
Affiliates to cause, any Other Required Parent Filing to comply as to form in all material respects with the applicable requirements
of the Exchange Act and the rules of the SEC, NYSE and TSX. Neither the Buyer Parties nor any of their respective Affiliates may file
the Schedule 13E-3 or any Other Required Parent Filing (or any amendment thereto) with the SEC without first providing the Company and
its counsel a reasonable opportunity to review and comment thereon, and Parent will give due consideration to all reasonable additions,
deletions or changes suggested thereto by the Company or its counsel. On the date of filing, the date of mailing to the Company Stockholders
(if applicable) and at the time of the Company Stockholder Meeting, no Other Required Parent Filing may 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 false or misleading. Notwithstanding the foregoing, no covenant is made
by the Buyer Parties with respect to any information supplied by the Company in writing expressly for inclusion or incorporation by reference
in any Other Required Parent Filing. The information supplied by the Buyer Parties and their respective Affiliates for inclusion or incorporation
by reference in the Proxy Statement or any Other Required Company Filing will not, at the time that the Proxy Statement or such Other
Required Company Filing is filed with the SEC, contain any untrue statement of a material fact or omit to state any material 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.
(e) Furnishing
Information. Each of the Company, on the one hand, and the Buyer Parties, on the other hand, will furnish all information concerning
it and its Affiliates, if applicable, as the other Party may reasonably request in connection with the preparation and filing with the
SEC of the Proxy Statement, the Schedule 13E-3 and any Other Required Company Filing or any Other Required Parent Filing. If at any time
prior to the Company Stockholder Meeting any information relating to the Company, the Buyer Parties or any of their respective Affiliates
should be discovered by the Company, on the one hand, or Parent, on the other hand, that should be set forth in an amendment or supplement
to the Proxy Statement, the Schedule 13E-3, any Other Required Company Filing or any Other Required Parent Filing, as the case may be,
so that such filing would not include any misstatement of a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, then the Party
that discovers such information will promptly notify the other, and an appropriate amendment or supplement to such filing describing
such information will be promptly prepared and filed with the SEC by the appropriate Party and, to the extent required by applicable
law or the SEC or its staff, disseminated to the Company Stockholders.
(f) Consultation
Prior to Certain Communications. The Company and its Affiliates, on the one hand, and Parent and its Affiliates, on the other hand,
may not communicate in writing with the SEC or its staff with respect to the Proxy Statement, the Schedule 13E-3, any Other Required
Company Filing or any Other Required Parent Filing, as the case may be, without first providing the other Party a reasonable opportunity
to review and comment on such written communication, and each Party will give due consideration to all reasonable additions, deletions
or changes suggested thereto by the other Parties or their respective counsel.
(g) Notices.
The Company, on the one hand, and Parent, on the other hand, will promptly advise the other, of any receipt of (i) a request by the SEC
or its staff for any amendment or revisions to the Proxy Statement, the Schedule 13E-3, any Other Required Company Filing or any Other
Required Parent Filing, as the case may be; (ii) comments from the SEC or its staff on the Proxy Statement, the Schedule 13E-3, any Other
Required Company Filing or any Other Required Parent Filing, as the case may be; or (iii) a request by the SEC or its staff for additional
information in connection therewith.
(h) Dissemination
of Proxy Statement and Schedule 13E-3. Subject to applicable law, the Company will use its reasonable best efforts to cause the Proxy
Statement and Schedule 13E-3 to be disseminated to the Company Stockholders as promptly as reasonably practicable following the filing
thereof with the SEC and confirmation from the SEC that it will not review, or that it has completed its review of, the Proxy Statement
and the Schedule 13E-3.
6.4 Company
Stockholder Meeting.
(a) Call
of Company Stockholder Meeting. Subject to the provisions of this Agreement, the Company will take all action necessary in accordance
with the DGCL, the Exchange Act, the Charter, the Bylaws and the rules of Nasdaq to establish a record date for (and the Company will
not change the record date without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or
delayed)) and, duly call, give notice of, convene and hold, a meeting of its stockholders (the “Company Stockholder Meeting”),
in each case, as promptly as reasonably practicable following the mailing of the Proxy Statement and the Schedule 13E-3 to the Company
Stockholders for the purpose of obtaining the Requisite Stockholder Approval. Within five Business Days after the date of this Agreement
(and thereafter, upon the reasonable request of Parent made not more than one time every two weeks), the Company shall conduct a “broker
search” in accordance with Rule 14a-13 of the Exchange Act assuming that, for such purposes only, the record date of the Company
Stockholder Meeting will be 20 Business Days after the date the broker search is conducted. Notwithstanding anything to the contrary
in this Agreement, the Company will not be required to convene and hold the Company Stockholder Meeting at any time prior to the 20th
Business Day following the mailing of the Proxy Statement and the Schedule 13E-3 to the Company Stockholders. Subject to Section 5.3(d)
and unless there has been a Company Board Recommendation Change, the Company will use its reasonable best efforts to solicit proxies
to obtain the Requisite Stockholder Approval.
(b) Adjournment
of Company Stockholder Meeting. Notwithstanding anything to the contrary in this Agreement, nothing will prevent the Company from
postponing or adjourning the Company Stockholder Meeting if (i) there are holders of an insufficient number of shares of the Company
Common Stock present or represented by proxy at the Company Stockholder Meeting to constitute a quorum at the Company Stockholder Meeting
or to obtain the Requisite Stockholder Approval (it being understood that the Company may not postpone or adjourn the Company Stockholder
Meeting more than two times pursuant to this clause (i) without Parent’s prior written consent) (which consent shall not be unreasonably
withheld, conditioned or delayed); (ii) to allow reasonable additional time to solicit additional proxies if the Company has not received
proxies representing a sufficient number of shares of Common Stock to adopt this Agreement, whether or not a quorum is present; (iii)
the Company is required to postpone or adjourn the Company Stockholder Meeting by applicable law, order or a request from the SEC or
its staff or (iv) to the extent necessary to ensure that any supplement or amendment to the Proxy Statement that is required by applicable
law is provided to the Company Stockholders within a reasonable amount of time in advance of the Company Stockholder Meeting. Unless
this Agreement is validly terminated in accordance with Section 8.1, the Company will submit this Agreement to the Company Stockholders
at the Company Stockholder Meeting for the purpose of obtaining the Requisite Stockholder Approval even if the Company Board (or a committee
thereof), upon the recommendation of the Special Committee, has effected a Company Board Recommendation Change.
6.5 Cooperation
With Debt Financing.
(a)
Cooperation with Debt Financing. Prior to the Effective Time, and in all cases subject to the limitations set forth herein, the
Company shall, and shall cause its Subsidiaries to, and shall use its commercially reasonable efforts to cause its Representatives to,
provide all reasonable and customary cooperation as may be reasonably requested by Parent to assist Parent in the arrangement and consummation
of any debt financing obtained in connection with the transactions contemplated by this Agreement (the “Debt Financing”).
Such cooperation shall include (i) preparing and furnishing all financial and other pertinent information that is available regarding
the Company and its Subsidiaries that is reasonably requested by Parent and that is required in connection with or proper for the Debt
Financing or customarily used to arrange transactions similar to the Debt Financing by companies of a comparable size in a comparable
industry as the Company; provided, however, that no member of the Company Group will be required to provide any information
or assistance with respect to the preparation of pro forma financial statements and forecasts of financing statements, including relating
to (A) the determination of the proposed aggregate amount of the Debt Financing, the interest rates thereunder or the fees and expenses
relating thereto; (B) the determination of any post-Closing or pro forma cost savings, synergies, capitalization, ownership or other
pro forma adjustments desired to be incorporated into any information used in connection with the Debt Financing; or (C) any financial
information related to Parent or any of its Subsidiaries or any adjustments whether or not directly related to the acquisition of the
Company Group; (ii) if reasonably requested by Parent, upon reasonable prior notice and at times and locations to be mutually agreed,
participating in a reasonable number of meetings, presentations and due diligence sessions and sessions with rating agencies, (iii) reasonably
facilitating the pledging of collateral, provided that no such documents or agreements shall be effective prior to the Effective Time,
(iv) taking all corporate actions, subject to the occurrence of the Effective Time, reasonably requested by Parent to permit the consummation
of the Debt Financing and (iv) promptly furnishing (but in no event later than three (3) Business Days prior to the Closing Date) Parent
and any lenders involved in such Debt Financing with all documentation and other information about the Company Group as is reasonably
requested in writing by Parent as may be required under applicable “know your customer” and anti-money laundering rules and
regulations, including the USA PATRIOT Act, to the extent requested in writing at least ten (10) Business Days prior to the Closing Date.
(b)
Obligation of the Company. Nothing in this Section 6.5 will require the Company Group to (i) waive or amend any terms of this
Agreement, pay any commitment fee or similar fee or agree to pay any other fees or reimburse any expenses or otherwise issue or provide
any indemnities prior to the Effective Time for which it has not received prior reimbursement or is not otherwise indemnified by or on
behalf of Parent; (ii) enter into, approve, modify or perform any definitive agreement or commitment or distribute any cash (except to
the extent subject to concurrent reimbursement by Parent) that will be effective prior to the Closing Date (other than customary authorization
letters in connection with the Debt Financing); (iii) give any indemnities in connection with the Debt Financing that are effective prior
to the Effective Time and only to the extent previously agreed in writing by the Company; (iv) take any action that, in the good faith
determination of the Company, would unreasonably interfere with the conduct of the business of the Company Group or create an unreasonable
risk of damage or destruction to any property or assets of the Company Group; (v) provide any authorization letters, presentations, memoranda
or other materials or documents used in the connection with the Debt Financing with respect to which any of the Company Group or their
respective Representatives provided cooperation pursuant to their obligation under this Section 6.5 or any of such documents or materials
containing information based on financial information or data derived from the Company Group’s historical books and records, in
all cases, (x) which does not include language that exculpates the Company Group and their respective Representatives and Affiliates
from any liability in connection with the unauthorized use or misuse by the recipients thereof of all such presentations, memoranda and
other materials and documents and information set forth therein, and (y) which the Company and its Representatives have not been given
reasonable opportunity to review and comment on; (vi) prepare separate financial statements for any of the Company Group to the extent
not customarily prepared by the Company Group and to the extent such preparation would be unduly burdensome or change any fiscal period;
(vii) adopt any resolutions, execute any consents or otherwise take any corporate or similar action to be effective prior to the Closing;
(viii) provide any legal opinion prior to the Closing; or (ix) take any action that will conflict with or violate its organizational
documents or any applicable laws or would result in a material violation or breach of, or default under, any material agreement to which
any member of the Company Group is a party. In addition, (A) no action, liability or obligation of the Company Group or any of its Representatives
pursuant to any certificate, agreement, arrangement, document or instrument relating to the Debt Financing (other than customary authorization
letters (including with respect to the presence or absence of material non-public information and the accuracy of the information contained
in the disclosure and marketing materials related to the Debt Financing based on financial information and data derived from the Company’s
historical books and records)) will be effective until the Effective Time, and the Company Group will not be required to take any action
pursuant to any certificate, agreement, arrangement, document or instrument (other than customary authorization letters (including with
respect to the presence or absence of material non-public information and the accuracy of the information contained in the disclosure
and marketing materials related to the Debt Financing based on financial information and data derived from the Company’s historical
books and records)) that is not contingent on the occurrence of the Closing or that must be effective prior to the Effective Time; and
(B) any bank information memoranda required in relation to the Debt Financing will contain disclosure reflecting the Parent or its Affiliate,
the Surviving Corporation or its Subsidiaries as the obligor. Nothing in this Section 6.5 will require (1) any officer, employee or Representative
of the Company Group to deliver any certificate or opinion or take any other action under this Section 6.5 that could reasonably be expected
to result in personal liability to such officer or Representative; or (2) the Company Board to approve any financing or Contracts related
thereto, effective prior to the Closing Date. For the avoidance of doubt, neither the Company nor any of its Subsidiaries shall be required
to be an issuer or obligor with respect to the Debt Financing prior to the Effective Time.
(c)
Company Notes. Prior to the Effective Date, if requested in writing by the Buyer Parties, the Company shall, and shall cause each
of its Subsidiaries and each of their respective Representatives to, reasonably cooperate with the Buyer Parties to, and take such actions
as are necessary to, allow or effect, as the case may be, (a) (i) consent solicitations (the “Consent Solicitations”)
and/or (ii) offers to purchase, tender offers or exchange offers in connection with the Company Notes (each a “Debt Offer”),
(b) the satisfaction and discharge on the Closing Date of all the outstanding aggregate principal amount of Company Notes (the “Discharge”)
or (c) the conditional redemption of all of the outstanding aggregate principal amount of the Company Notes pursuant to the applicable
provisions of the Company Indenture at the Closing Date (the “Redemption”). The (i) Buyer Parties shall be responsible
for preparation of the necessary documents in connection with the Consent Solicitations with (the “Consent Solicitation Documents”),
(ii) the Buyer Parties shall consult the Company and afford the Company a reasonable opportunity to review and comment on the Consent
Solicitation Documents and will give reasonable and good faith consideration to the comments, if any, raised by the Company and (iii)
the Buyer Parties shall be (or shall cause one or more of its Subsidiaries to be) responsible for the payment of all fees and expenses
in connection with such Consent Solicitation. For the avoidance of doubt, the Buyer Parties shall be permitted to identify and engage
(or, to the extent reasonably requested by the Buyer Parties, request that the Company or its applicable Subsidiary engage) any solicitation
agents and other agents and advisors in connection with the Consent Solicitation. The Consent Solicitations shall be conducted in compliance
with the Company Indenture and the applicable global security governing the Company Notes and with applicable laws, including, for the
avoidance of doubt, applicable SEC rules and regulations. The Company shall, and shall cause its Subsidiaries and shall use its reasonable
best efforts to cause their respective Representatives to, in each case, at the Buyer Parties’ sole expense, provide all cooperation
reasonably requested by the Buyer Parties in connection with any Consent Solicitation, including, without limitation, by (to the extent
requested by the Buyer Parties) executing and delivering the Consent Solicitation Documents, entering into any solicitation agency and
similar agreements related to such Consent Solicitation and participating in the preparation of the Consent Solicitation Documents. Promptly
following the expiration of a Consent Solicitation and subject to the receipt of any requisite consents, (i) the Company shall execute
one or more supplemental indentures to the Company Indenture governing the Company Notes subject to the applicable Consent Solicitation,
in accordance with the terms of the Company Indenture and providing for the amendments contemplated in the Consent Solicitation Documents
and (ii) shall use reasonable best efforts to cause the trustee under the Company Indenture to enter into such supplemental indentures;
provided, however, that notwithstanding the fact that such supplemental indentures may become effective earlier, the proposed
amendments set forth therein shall not become operative until the Effective Time. Any Debt Offer, Redemption and/or Discharge, and all
notices or instructions with respect thereto must be conditioned on the occurrence of the Closing or shall occur on or after the Closing
Date. Parent shall ensure that, at or prior to the Closing, the Buyer Parties shall have funds necessary in connection with any such
Consent Solicitation, Debt Offer, Redemption and/or Discharge. The Parties hereby agree that none of Parent, the Company, any Subsidiary
of the Company or any of the foregoing Person’s respective Representatives shall be required to pay or deposit any amounts required
in connection with a Consent Solicitation, Debt Offer, Redemption or the Discharge, except to the extent such amounts have been
previously provided by the Buyer Parties to such Person expressly for such purpose. If requested by the Buyer Parties, the Company shall
use its reasonable best efforts to cause its counsel to provide all customary legal opinions customary or required in connection with
the transactions contemplated by this Section 6.5(c) to the extent such legal opinion is customary or required to be delivered prior
to the Closing Date and shall deliver all such officer’s certificates customary or required in connection with such transactions.
(d) Confidentiality.
All non-public or other confidential information provided by the Company or any of its Representatives pursuant to this Agreement will
be kept confidential in accordance with the Confidentiality Agreement, except that Parent will be permitted to disclose such information
to any financing sources of the Buyer Parties or prospective financing sources of the Buyer Parties and other financial institutions
and investors that may become parties to the Debt Financing (and, in each case, to their respective counsel and auditors) so long as
such Persons (i) agree to be bound by the Confidentiality Agreement as if parties thereto; or (ii) are subject to other confidentiality
undertakings reasonably satisfactory to the Company and of which the Company is a beneficiary.
(e) Reimbursement.
Promptly upon request by the Company, Parent will reimburse the Company (or cause the Company to be reimbursed) for any documented and
reasonable out-of-pocket costs and expenses (including attorneys’ fees of one outside counsel) incurred by the Company Group in
connection with the cooperation of the Company Group contemplated by this Section 6.5; provided that, such reimbursement shall
not include costs and expenses incurred in connection with the preparation of any historical financial statements or data that would
be prepared by the Company, its Subsidiaries, or any of their respective Representatives notwithstanding this Section 6.5.
(f) Indemnification.
The Company Group and its Representatives will be indemnified and held harmless by the Buyer Parties from and against any and all liabilities,
losses, damages, claims, costs, expenses (including attorneys’ fees of one outside counsel), interest, awards, judgments, penalties
and amounts paid in settlement suffered or incurred by them in connection with any cooperation provided pursuant to this Section 6.5
or the provision of information utilized in connection therewith; except to the extent such liabilities, losses, damages, claims, costs,
expenses, interest, awards, judgments, penalties or amounts paid in settlement arise from (i) the gross negligence, bad faith or willful
misconduct of the Company, its Subsidiaries or any of their respective Representatives, or (ii) any historical information pertaining
to the Company and its Subsidiaries provided by the Company or its Subsidiaries in writing to the Parent.
(g) No
Financing Condition. The Buyer Parties acknowledge and agree that obtaining the Debt Financing is not a condition to the Closing.
Except in the case of a Willful and Material breach that has not been cured by the Company within a reasonable period of time after Parent
has provided written notice to the Company of the specific breach, the Company’s breach of this Section 6.5 will not be asserted
as the basis for (A) any conditions set forth in Article VII to consummate the Merger having not been satisfied or (B) the termination
of this Agreement pursuant to Section 8.1(e). If the Debt Financing has not been obtained, the Buyer Parties will each continue to be
obligated, subject to the satisfaction or waiver of the conditions set forth in Article VII, to consummate the Merger.
6.6
Anti-Takeover Laws. The Company and the Company Board (and any committee empowered to take such action, if applicable) will (a)
take all actions within their power to ensure that no “anti-takeover” statute or similar statute or regulation is or becomes
applicable to the Merger; and (b) if any “anti-takeover” statute or similar statute or regulation becomes applicable to the
Merger, take all action within their power to ensure that the Merger may be consummated as promptly as practicable on the terms contemplated
by this Agreement and otherwise to minimize or make inapplicable the effect of such statute or regulation on the Merger.
6.7
Access. At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article VIII and the Closing, the Company will afford Parent and its Representatives
reasonable access during normal business hours, upon reasonable advance notice, to the properties, books and records and personnel of
the Company Group, in each case, solely for purposes of consummating the Merger (including for integration planning), except that the
Company may restrict or otherwise prohibit access to any documents or information to the extent that (a) any applicable law or regulation
requires the Company Group to restrict or otherwise prohibit access to such documents or information; (b) access to such documents or
information would give rise to a material risk of waiving any attorney-client privilege, work product doctrine or other privilege applicable
to such documents or information; (c) access to a Contract to which the Company Group is a party or otherwise bound would violate or
cause a default pursuant to, or give a third Person the right terminate or accelerate the rights pursuant to, such Contract; (d) access
would result in the disclosure of any trade secrets of third Persons; or (e) such documents or information are reasonably pertinent to
any adverse Legal Proceeding between the Company and its Affiliates, on the one hand, and Parent and its Affiliates, on the other hand.
Nothing in this Section 6.7 will be construed to require the Company Group or any of its Representatives to prepare any reports, analyses,
appraisals, opinions or other information. Any investigation conducted pursuant to the access contemplated by this Section 6.7 will be
conducted in a manner that does not unreasonably interfere with the conduct of the business of the Company Group or create a risk of
damage or destruction to any property or assets of the Company Group. Any access to the properties of the Company Group will be subject
to the Company’s reasonable security measures and insurance requirements and will not include the right to perform invasive testing.
Notwithstanding anything to the contrary in this Agreement, the Company may satisfy its obligations set forth above by electronic means
if physical access is not permitted under applicable law. The terms and conditions of the Confidentiality Agreement will apply to any
information obtained by Parent or any of its Representatives in connection with any investigation conducted pursuant to the access contemplated
by this Section 6.7, other than any information that has been made, is or becomes available to Parent or any of its Representatives by
or from the Company or any of its Representatives in the ordinary course of their ongoing business arrangements consistent with past
practice, including in connection with Parent’s preparation of its consolidated financial statements or its public reporting obligations,
or that Parent receives or has a right to receive in connection with any franchise, development or other commercial agreement by and
between Parent or any of its Affiliates, on the one hand, and the Company or any of its Affiliates, on the other hand. All requests for
access pursuant to this Section 6.7 must be directed to the General Counsel of the Company, or another person designated by the Company.
6.8
Section 16(b) Exemption. The Company will take all actions reasonably necessary to cause the Merger, and any dispositions of equity
securities of the Company (including derivative securities) in connection with the Merger by each individual who is a director or officer
subject to the reporting requirements of Section 16(a) of the Exchange Act of the Company to be exempt pursuant to Rule 16b-3 promulgated
under the Exchange Act.
6.9 Directors’
and Officers’ Exculpation, Indemnification and Insurance.
(a) Indemnified
Persons. The Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving Corporation and its
Subsidiaries to) honor and fulfill, in all respects, the obligations of the Company Group pursuant to any indemnification agreements
between a member of the Company Group and any of its current or former directors or officers (and any person who becomes a director
or officer of a member of the Company Group prior to the Effective Time) (collectively, the “Indemnified
Persons”) or employees for any acts or omissions by such Indemnified Persons or employees occurring prior to the Effective
Time. In addition, during the period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the
Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving Corporation and its Subsidiaries to) cause the
certificates of incorporation, bylaws, and other similar organizational documents of the Surviving Corporation and its Subsidiaries
to contain provisions with respect to indemnification, exculpation from liabilities and the advancement of expenses that are at
least as favorable as the indemnification, exculpation and advancement of expenses provisions set forth in the Charter, the Bylaws
and the other similar organizational documents of the Subsidiaries of the Company, as applicable, as of the date hereof. During such
six-year period, such provisions may not be repealed, amended or otherwise modified in any adverse manner except as required by
applicable law.
(b) Indemnification
Obligation. Without limiting the generality of the provisions of Section 6.9(a), during the period commencing at the Effective Time
and ending on the sixth anniversary of the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation
to) indemnify and hold harmless, to the fullest extent permitted by applicable law or pursuant to any indemnification agreements with
the Company and any of its Subsidiaries in effect on the date hereof, each Indemnified Person from and against any costs, fees and expenses
(including attorneys’ fees and investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement or compromise in connection with any Legal Proceeding, whether civil, criminal, administrative or investigative, to the
extent that such Legal Proceeding arises, directly or indirectly, out of or pertains, directly or indirectly, to (i) any action or omission,
or alleged action or omission, in such Indemnified Person’s capacity as an Affiliate, director, officer, employee or agent of the
Company Group or its Affiliates to the extent that such action or omission, or alleged action or omission, occurred prior to or at the
Effective Time; and (ii) the Merger, as well as any actions taken by the Company or the Buyer Parties with respect thereto (including
any disposition of assets of the Surviving Corporation or any of its Subsidiaries that is alleged to have rendered any of the Surviving
Corporation or any of its Subsidiaries insolvent), except that if, at any time prior to the sixth anniversary of the Effective Time,
any Indemnified Person delivers to Parent a written notice asserting a claim for indemnification pursuant to this Section 6.9(b), then
the claim asserted in such notice will survive the sixth anniversary of the Effective Time until such claim is fully and finally resolved.
In the event of any such Legal Proceeding, (A) the Surviving Corporation will have the right to control the defense thereof after the
Effective Time (it being understood that, by electing to control the defense thereof, the Surviving Corporation, on behalf of itself
and its Affiliates, will be deemed to have waived any right to object to the Indemnified Person’s entitlement to indemnification
hereunder with respect thereto); (B) each Indemnified Person will be entitled to retain his or her own counsel, whether or not the Surviving
Corporation elects to control the defense of any such Legal Proceeding; (C) the Surviving Corporation will advance all fees and expenses
(including fees and expenses of any counsel) as incurred by an Indemnified Person in the defense of such Legal Proceeding promptly (and
in any event within ten (10) days) after receipt by Parent or the Surviving Corporation of a written request for such advance to the
fullest extent permitted under applicable law, whether or not the Surviving Corporation elects to control the defense of any such Legal
Proceeding; and (D) no Indemnified Person will be liable for any settlement of such Legal Proceeding effected without his or her prior
written consent (unless such settlement relates only to monetary damages for which the Surviving Corporation is entirely responsible).
Notwithstanding anything to the contrary in this Agreement, none of Parent, the Surviving Corporation nor any of their respective Affiliates
will settle or otherwise compromise or consent to the entry of any judgment with respect to, or otherwise seek the termination of, any
Legal Proceeding for which indemnification may be sought by an Indemnified Person pursuant to this Agreement unless such settlement,
compromise, consent or termination includes an unconditional release of all Indemnified Persons from all liability arising out of such
Legal Proceeding.
(c)
D&O Insurance. During the period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time,
the Surviving Corporation will (and Parent will cause the Surviving Corporation to) maintain in effect the Company’s directors’
and officers’ liability insurance in effect on the date hereof (“D&O Insurance”) in respect of acts or omissions
occurring at or prior to the Effective Time on terms (including with respect to coverage, conditions, retentions, limits and amounts)
that are equivalent to those of the D&O Insurance. In satisfying its obligations pursuant to this Section 6.9(c), the Surviving Corporation
will not be obligated to pay annual premiums in excess of 300% of the amount paid by the Company for coverage for its last full fiscal
year (such 300% amount, the “Maximum Annual Premium”). If the annual premiums of such insurance coverage exceed the
Maximum Annual Premium, then the Surviving Corporation will be obligated to obtain a policy with the greatest coverage available for
a cost not exceeding the Maximum Annual Premium from an insurance carrier with the same or better credit rating as the Company’s
directors’ and officers’ liability insurance carrier on the date hereof. The Company may purchase a prepaid “tail”
policy with respect to the D&O Insurance from an insurance carrier with the same or better credit rating as the Company’s directors’
and officers’ liability insurance carrier on the date hereof on terms (including with respect to coverage, conditions, retentions,
limits and amounts) that are no less favorable than those of the D&O Insurance so long as the aggregate cost for such “tail”
policy does not exceed the Maximum Annual Premium. If the Company elects to purchase such a “tail” policy, the Surviving
Corporation will (and Parent will cause the Surviving Corporation to) maintain such “tail” policy in full force and effect
and continue to honor its obligations thereunder for so long as such “tail” policy is in full force and effect.
(d) Successors
and Assigns. If Parent, the Surviving Corporation or any of their respective successors or assigns will (i) consolidate with or merge
into any other Person and not be the continuing or surviving corporation or entity in such consolidation or merger; or (ii) transfer
all or substantially all of its properties and assets to any Person, then proper provisions will be made so that the successors and assigns
of Parent, the Surviving Corporation or any of their respective successors or assigns will assume all of the obligations of Parent and
the Surviving Corporation set forth in this Section 6.9.
(e) No
Impairment. The obligations set forth in this Section 6.9 may not be terminated, amended or otherwise modified in any manner that
adversely affects any Indemnified Person (or any other person who is a beneficiary pursuant to the D&O Insurance or the “tail”
policy referred to in Section 6.9(c) (and their heirs and representatives)) without the prior written consent of such affected Indemnified
Person or other person. Each of the Indemnified Persons or other persons who are beneficiaries pursuant to the D&O Insurance or the
“tail” policy referred to in Section 6.9(c) (and their heirs and representatives) are intended to be third party beneficiaries
of this Section 6.9, with full rights of enforcement as if such person were a Party. The rights of the Indemnified Persons (and other
persons who are beneficiaries pursuant to the D&O Insurance or the “tail” policy referred to in Section 6.9(c) (and their
heirs and representatives)) pursuant to this Section 6.9 will be in addition to, and not in substitution for, any other rights that such
persons may have pursuant to (i) the Charter and the Bylaws; (ii) the similar organizational documents of the Subsidiaries of the Company;
(iii) any and all indemnification agreements entered into with the Company Group; or (iv) applicable law (whether at law or in equity).
(f) Joint
and Several Obligations. The obligations of the Surviving Corporation, Parent and their respective Subsidiaries pursuant to this
Section 6.9 will be joint and several.
(g) Other
Claims. Nothing in this Agreement is intended to, or will be construed to, release, waive or impair any rights to directors’
and officers’ insurance claims pursuant to any applicable insurance policy or indemnification agreement that is or has been in
existence with respect to the Company Group for any of its directors, officers or other employees, it being understood and agreed that
the indemnification provided for in this Section 6.9 is not prior to or in substitution for any such claims pursuant to such policies
or agreements.
6.10 Employee
Matters.
(a) Acknowledgement.
Parent hereby acknowledges and agrees that a “change in control” (or similar phrase) within the meaning of each of the Employee
Plans, as applicable, will occur as of the Effective Time.
(b) Existing
Arrangements. Subject to Section 6.10, from and after the Effective Time, the Surviving Corporation will (and Parent will cause the
Surviving Corporation to) honor all of the Employee Plans in accordance with their terms as in effect immediately prior to the Effective
Time. Notwithstanding the foregoing, nothing will prohibit the Surviving Corporation from in any way amending, modifying or terminating
any such Employee Plans in accordance with their terms or if otherwise permitted pursuant to applicable law.
(c) Employment;
Benefits. As of the Closing, the Surviving Corporation or one of its Subsidiaries will continue to employ the employees of the Company
Group as of the Effective Time. From and after the Effective Time until the first anniversary of the Effective Time (or, if earlier,
the termination date of an applicable Continuing Employee), the Surviving Corporation and its Subsidiaries will (and Parent will cause
the Surviving Corporation and its Subsidiaries to) provide each Continuing Employee with an annual base salary or hourly wage rate (as
applicable) and annual (or quarterly, if applicable) cash incentive compensation opportunities, in each case, that, in the aggregate
for such Continuing Employee are no less favorable than the annual base salary or hourly wage rate (as applicable) and annual (or quarterly,
if applicable) cash incentive compensation opportunities, in the aggregate of such Continuing Employee provided to such Continuing Employee
immediately prior to the Effective Time. From and after the Effective Time until December 31, 2024 (or, if earlier, the termination date
of an applicable Continuing Employee), the Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving Corporation
and its Subsidiaries to) provide each Continuing Employee with all other employee compensation and benefits (other than defined benefit
pension, nonqualified deferred compensation, post-employment or retiree health or welfare, or change in control, retention or equity-based
benefits) that are substantially comparable in the aggregate to those provided to such Continuing Employees immediately prior to the
Effective Time (subject to the same foregoing exclusions). From and after the Effective Time until the first anniversary of the Effective
Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) provide severance benefits to eligible employees
in accordance with the Company’s severance plans, guidelines and practices as in effect on the date hereof that have been made
available to Parent prior to the date hereof. Notwithstanding the foregoing, nothing in this Section 6.10 shall obligate the Surviving
Corporation and its Subsidiaries to continue the employment of any Continuing Employee for any specific period.
(d) New
Plans. To the extent that a benefit plan of Parent is made available to any Continuing Employee at or after the Effective Time,
the Surviving Corporation and its Subsidiaries will (and Parent will cause the Surviving Corporation and its Subsidiaries to) cause
to be granted to such Continuing Employee credit for all service with the Company Group prior to the Effective Time for purposes of
eligibility to participate, vesting and for purposes of future vacation accrual and determining severance amounts, except that (i)
such service need not be credited to the extent that it would result in duplication of coverage or benefits, (ii) such service shall
only be credited to the same extent and for the same purpose as such service was credited under an analogous Employee Plan, and
(iii) no service shall be required to be credited under any plan that provides for equity or equity-based defined benefit pension,
deferred compensation or post-employment or retiree welfare benefits. In addition, and without limiting the generality of the
foregoing, the Surviving Corporation shall use commercially reasonable efforts to ensure that (i) each Continuing Employee will be
immediately eligible to participate, without any waiting period, in any and all employee benefit plans sponsored by the Surviving
Corporation and its Subsidiaries to the extent that coverage pursuant to any such plans (the “New Plan”) replaces
coverage previously provided under a comparable Employee Plan in which such Continuing Employee participates immediately before the
Effective Time (such plans, the “Old Plans”); and (ii) during the plan year in which the Closing Date occurs, for
purposes of each New Plan providing medical, dental, pharmaceutical or vision benefits to any Continuing Employee, (x) the Surviving
Corporation will cause all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and
actively-at-work or similar requirements of such New Plan to be waived for such Continuing Employee and his or her covered
dependents, and (y) the Surviving Corporation will cause any eligible expenses incurred by such Continuing Employee and his or her
covered dependents during the portion of the plan year ending on the Closing Date to be given full credit pursuant to such New Plan
for purposes of satisfying all deductible, coinsurance, co-pay, offsets and maximum out-of-pocket requirements applicable to such
Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance
with such New Plan. Any vacation or paid time off accrued but unused by a Continuing Employee as of immediately prior to the
Effective Time will be credited to such Continuing Employee following the Effective Time, and will not be subject to accrual limits
or other forfeiture and will not limit future accruals (except to the extent that such limits or forfeitures applied under the
Employee Plans in effect as of the date hereof).
(e) No
Third Party Beneficiary Rights. Notwithstanding anything to the contrary set forth in this Agreement, this Section 6.10 will not
be deemed to (i) guarantee employment for any period of time for, or preclude the ability of Parent, the Surviving Corporation or any
of its Subsidiaries to terminate any Continuing Employee for any reason; (ii) require Parent, the Surviving Corporation or any of their
respective Subsidiaries to continue any Employee Plan or other compensation or benefit plan or arrangement, or prevent the amendment,
modification or termination thereof after the Effective Time; (iii) create any third party beneficiary rights in any Person; or (iv)
establish, amend or modify any benefit plan, program, agreement or arrangement.
(f) Non-Qualified
Deferred Compensation Plan. The Surviving Corporation shall pay (and Parent shall cause the Surviving Corporation to pay) all amounts
that become payable under the Company’s Amended and Restated Deferred Compensation Plan (the “DCP”) in connection
with the Closing, in accordance with the terms of the DCP and in accordance with Section 409A of the Code and the regulations thereunder.
(g) 401(k)
Plan Termination. To the extent requested by Parent in writing no later than ten (10) Business Days prior to the Effective Time,
The Company Board (or the appropriate committee thereof) shall take actions necessary to terminate the Company 401(k) Plan (the “401(k)
Plan”), with such termination to be effective as of the day prior to the Closing Date and contingent upon the occurrence of
the Effective Time. If Parent provides such written notice to the Company, then no later than two (2) days prior to the Closing Date,
the Company shall provide Parent with evidence that the 401(k) Plan has been terminated pursuant to resolutions of the Company Board
(effective as of the day immediately preceding the Closing Date), the form and substance of which shall be subject to reasonable review
and comment by Parent. Parent shall, effective as of the Closing Date, offer participation in Parent’s tax qualified defined contribution
plan (the “Parent 401(k) Plan”) to each Continuing Employee who was an active participant in the Company 401(k) Plan
as of the date of its termination and who satisfies the eligibility requirements of the Parent 401(k) Plan. If elected by such Continuing
Employee in accordance with applicable Law, Parent shall permit the Parent 401(k) Plan to, following the Closing Date, accept a “direct
rollover” to such Parent 401(k) Plan of the account balances (including any participant loans) of such Continuing Employee.
(h) Delivery
of Materials Related to Employee Plans. Within 30 Business Days following the date of this Agreement, the Company shall provide
or otherwise make available to Parent, with respect to each material Employee Plan, to the extent applicable, (A) true, correct and
complete copies of the plan document (or, if unwritten, a written description of the material terms thereof), or summary plan
description; (B) the most recent annual report on Form 5500 required to have been filed with the IRS for each Employee Plan,
including all schedules thereto; (C) the most recent determination or opinion letter, if any, from the IRS for any Employee Plan
that is intended to qualify pursuant to Section 401(a) of the Code; (D) summary plan descriptions; and (E) any notices to or from
the IRS or any office or representative of the United States Department of Labor or any similar Governmental Authority relating to
any material compliance issues in respect of any such Employee Plan during the past three years. Within thirty (30) Business Days
following the date of this Agreement, the Company shall provide or otherwise make available to Parent, a copy of each Form 1095-B
and Form 1095-C, as applicable, for the last three (3) years.
6.11
Delivery of Subsidiary Organizational Documents. Within 30 Business Days following the date of this Agreement, the Company shall
provide or otherwise make available to Parent, true, correct and complete copies of the certificates of incorporation, bylaws and other
similar organizational documents of each “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X promulgated
by the SEC) of the Company, each as amended as of the date hereof.
6.12
Obligations of the Buyer Parties and the Company. Parent will take all action necessary to cause Merger Sub and the Surviving
Corporation to perform their respective obligations pursuant to this Agreement and to consummate the Merger upon the terms and subject
to the conditions set forth in this Agreement. Each of the Buyer Parties will be jointly and severally liable for any breach of this
Agreement by any Buyer Party (or, following the Closing, the Surviving Corporation) or any other failure by any Buyer Party (or, following
the Closing, the Surviving Corporation) to perform and discharge any of its respective covenants, agreements and obligations pursuant
to this Agreement.
6.13 Notification
of Certain Matters.
(a) Notification
by the Company. At all times during the period commencing with the execution and delivery of this Agreement and continuing until
the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company will give prompt
notice to Parent upon becoming aware that any representation or warranty made by it in this Agreement has become untrue or inaccurate
in any material respect, or of any failure by the Company to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement, in each case if and only to the extent that such untruth,
inaccuracy, or failure would reasonably be expected to cause any of the conditions to the obligations of the Buyer Parties to consummate
the Merger set forth in Section 7.2(a) or Section 7.2(b) to fail to be satisfied at the Closing, except that no such notification will
affect or be deemed to modify any representation or warranty of the Company set forth in this Agreement or the conditions to the obligations
of the Buyer Parties to consummate the Merger or the remedies available to the Parties under this Agreement. The terms and conditions
of the Confidentiality Agreement apply to any information provided to Parent pursuant to this Section 6.13(a).
(b) Notification
by Parent. At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier
to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, Parent will give prompt notice to the
Company upon becoming aware that any representation or warranty made by the Buyer Parties in this Agreement has become untrue or inaccurate
in any material respect, or of any failure by the Buyer Parties to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it pursuant to this Agreement, in each case if and only to the extent that such untruth,
inaccuracy or failure would reasonably be expected to cause any of the conditions to the obligations of the Company to consummate the
Merger set forth in Section 7.3(a) or Section 7.3(b) to fail to be satisfied at the Closing, except that no such notification will affect
or be deemed to modify any representation or warranty of the Buyer Parties set forth in this Agreement or the conditions to the obligations
of the Company to consummate the Merger or the remedies available to the Parties under this Agreement. The terms and conditions of the
Confidentiality Agreement apply to any information provided to the Company pursuant to this Section 6.13(b).
(c) Impact
of Non-Compliance. The Company’s or the Buyer Parties’ failure to comply with this Section 6.13 will not be taken into
account for purposes of determining whether any conditions set forth in Article VII to consummate the Merger have been satisfied or whether
any termination rights set forth in Article VIII are available.
6.14
Public Statements and Disclosure. The Company, Parent and Merger Sub shall consult with and provide each other the opportunity
to review and comment upon any press release or other public statement or comment prior to the issuance of such press release or other
public statement or comment relating to this Agreement or the transactions contemplated hereby and shall not issue any such press release
or other public statement or comment prior to such consultation, except as may be required by applicable law or by obligations pursuant
to any listing agreement with any national securities exchange or as may be requested by a Governmental Authority; provided that the
restrictions in this Section 6.13 shall not apply to (i) any Company communication regarding an Alternative Acquisition Agreement, Superior
Proposal or Intervening Event or from and after a Recommendation Change, in each case, to the extent permitted by Section 5.3 or (ii)
any press release, filings with the SEC or other public statement or comment the contents of which are substantially consistent with
prior public statements and other communications made by the Company, Parent or Merger Sub in compliance with this Agreement. Parent
and the Company agree to issue a joint press release as the first public disclosure of this Agreement.
6.15
Transaction Litigation. Prior to the Effective Time, the Company will provide Parent with prompt notice of all Transaction Litigation
(including by providing copies of all pleadings with respect thereto) and keep Parent reasonably informed with respect to the status
thereof. The Company will (a) give Parent the opportunity to participate in the defense, settlement or prosecution of any Transaction
Litigation; and (b) consult with Parent with respect to the defense, settlement and prosecution of any Transaction Litigation. The Company
may not compromise, settle or come to an arrangement regarding, or agree to compromise, settle or come to an arrangement regarding, any
Transaction Litigation unless Parent has consented thereto in writing (which consent will not be unreasonably withheld, conditioned or
delayed). For purposes of this Section 6.15, “participate” means that Parent will be kept apprised of proposed strategy and
other material decisions and filings with respect to the Transaction Litigation by the Company (to the extent that the attorney-client
privilege between the Company and its counsel is not undermined), and Parent may offer comments or suggestions with respect to such Transaction
Litigation but will not be afforded any decision-making power or other authority over such Transaction Litigation except for the settlement
or compromise consent set forth above.
6.16 Stock Exchange Delisting; Deregistration. Prior to the Effective Time, the Company will cooperate with Parent and use its reasonable
best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable
on its part pursuant to applicable law and the rules and regulations of Nasdaq to cause (a) the delisting of the Company Common Stock
from Nasdaq as promptly as practicable after the Effective Time; and (b) the deregistration of the Company Common Stock pursuant to the
Exchange Act as promptly as practicable after such delisting.
6.17
Additional Agreements. If at any time after the Effective Time any further action is necessary or desirable to carry out the purposes
of this Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises
of either of the Company or Merger Sub, then the proper officers and directors of each Party will use their reasonable best efforts to
take such action.
6.18
Parent Vote. Immediately following the execution and delivery of this Agreement, Parent will cause the sole stockholder of Merger
Sub to execute and deliver to Merger Sub and the Company a written consent approving the Merger in accordance with the DGCL. Parent shall
consent to, in its capacity as holder of Company Preferred Stock, the adoption of this Agreement or actions required to be taken in connection
therewith, in its capacity as the purchaser under the Agreement (and not, for the avoidance of doubt, under any Alternative Acquisition
Agreement), or with respect to any Contracts by and between Parent and its Affiliates, on the one hand, and the Company or any of its
Subsidiaries, on the other hand. Parent shall vote or cause to be voted any shares of Company Capital Stock beneficially owned by it
or any of its Subsidiaries or which it or any of its Subsidiaries has the power to cause to be voted, in favor of the adoption of this
Agreement at the Company Stockholder Meeting or any other meeting of stockholders of the Company at which this Agreement shall be submitted
for adoption, including all adjournments, recesses or postponements thereof; provided that, such agreement to vote in favor of
the adoption of this Agreement shall terminate, and Parent and its Subsidiaries shall have no obligation with respect thereto, in the
event that the Company Board effects a Company Board Recommendation Change.
6.19
Company Credit Agreement. The Company shall use commercially reasonable efforts to (a) to deliver a draft of the Payoff Letter
prior to the Closing Date, (b) to deliver or facilitate the delivery of the executed Payoff Letter at least two (2) Business Day prior
to Closing Date and (c) cooperate with any back-stop, “roll-over” or termination of any existing letters of credit under
the Company Credit Agreement.
ARTICLE
VII
CONDITIONS
TO THE MERGER
7.1
Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of the Buyer Parties and the Company
to consummate the Merger are subject to the satisfaction or waiver (where permissible pursuant to applicable law) of each of the following
conditions:
(a) Requisite
Stockholder Approval. The Company will have received the Requisite Stockholder Approval at the Company Stockholder Meeting.
(b) HSR
Clearance. The waiting period (and any extensions thereof) applicable to the Merger pursuant to the HSR Act will have expired or
otherwise been terminated.
(c) No
Prohibitive Laws or Injunctions. No temporary restraining order, preliminary or permanent injunction or other judgment or order issued
by any court of competent jurisdiction in the United States or other legal or regulatory restraint or prohibition in the United States
preventing the consummation of the Merger will be in effect, nor will any action have been taken by any Governmental Authority of competent
jurisdiction in the United States, and no statute, rule, regulation or order in the United States will have been enacted, entered, enforced
or deemed applicable to the Merger, that, in each case, prohibits, makes illegal, or enjoins the consummation of the Merger. For the
avoidance of doubt, the receipt of a Specified Letter by the Buyer Parties or the Company shall not be the basis for concluding that
any conditions set forth in this Article VII to consummate the Merger have not been satisfied.
7.2
Conditions to the Obligations of the Buyer Parties. The obligations of the Buyer Parties to consummate the Merger will be subject
to the satisfaction or waiver (where permissible pursuant to applicable law) of each of the following conditions, any of which may be
waived exclusively by Parent:
(a) Representations and Warranties.
(i) Other
than the representations and warranties listed in Section 7.2(a)(ii) and Section 7.2(a)(iii), the representations and warranties of the
Company set forth in this Agreement will be true and correct (without giving effect to any materiality or Company Material Adverse Effect
qualifications set forth therein) as of the Closing Date as if made at and as of the Closing Date (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct
as of such earlier date), except for such failures to be true and correct that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(ii)
The representations and warranties set forth in Section 3.1 (Organization; Good Standing) (other than the second sentence
thereof), Section 3.2 (Corporate Power; Enforceability), Section 3.3(d) (Anti-Takeover Laws), the last two sentences
of Section 3.7(a) (Company Capitalization – Capital Stock), the last sentence of Section 3.7(b) (Company
Capitalization – Stock Reservation), Section 3.7(c) (Company Capitalization – Company Securities) (other than
the first sentence thereof), Section 3.7(d) (Company Capitalization – Other Rights), and 3.12(a)(ii) (Absence of
Company Material Adverse Effect) that (A) are not qualified by Company Material Adverse Effect or other materiality
qualifications will be true and correct in all material respects as of the Closing Date as if made at and as of the Closing Date
(except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such
representation and warranty will be true and correct in all material respects as of such earlier date); and (B) are qualified by
Company Material Adverse Effect or other materiality qualifications will be true and correct in all respects (without disregarding
such Company Material Adverse Effect or other materiality qualifications) as of the Closing Date as if made at and as of the Closing
Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such
representation and warranty will be true and correct in all respects as of such earlier date).
(iii) The
representations and warranties set forth in Section 3.7(a) (Company Capitalization – Capital Stock) (other than the last
two sentences thereof), Section 3.7(b) (other than the last sentence thereof) (Company Capitalization – Stock Reservation),
the first sentence of Section 3.7(c) (Company Capitalization – Company Securities) and Section 3.25 (Brokers), will
be true and correct in all respects as of the Closing Date (in each case (A) without giving effect to any Company Material Adverse Effect
or other materiality qualifications; and (B) except to the extent that any such representation and warranty expressly speaks as of an
earlier date, in which case such representation and warranty will be true and correct as of such earlier date), except for any inaccuracies
that are de minimis in nature and amount.
(b) Performance
of Obligations of the Company. The Company will have performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement required to be performed and complied with by it at or prior to the Closing.
(c) Officer’s
Certificate. The Buyer Parties will have received a certificate of the Company, validly executed for and on behalf of the Company
and in the name of the Company by a duly authorized executive officer thereof, certifying that the conditions set forth in Section 7.2(a),
Section 7.2(b) and Section 7.2(d) have been satisfied.
(d) Company
Material Adverse Effect. No Company Material Adverse Effect will have occurred after the date hereof that is continuing.
7.3 Conditions to the Obligations of the Company to Effect the Merger. The obligations of the Company to consummate the Merger are
subject to the satisfaction or waiver (where permissible pursuant to applicable law) of each of the following conditions, any of which
may be waived exclusively by the Company:
(a) Representations
and Warranties. The representations and warranties of the Buyer Parties set forth in this Agreement will be true and correct on
and as of the Closing Date with the same force and effect as if made on and as of such date, except for (i) any failure to be so
true and correct that would not, individually or in the aggregate, prevent or materially delay the consummation of the Merger or the
ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to this Agreement; and (ii) those
representations and warranties that address matters only as of a particular date, which representations will have been true and
correct as of such particular date, except for any failure to be so true and correct that would not, individually or in the
aggregate, prevent or materially delay the consummation of the Merger or the ability of the Buyer Parties to fully perform their
respective covenants and obligations pursuant to this Agreement.
(b) Performance
of Obligations of the Buyer Parties. The Buyer Parties will have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and complied with by the Buyer Parties at or prior to the Closing.
(c) Officer’s
Certificate. The Company will have received a certificate of the Buyer Parties, validly executed for and on behalf of the Buyer Parties
and in the respective names of the Buyer Parties by a duly authorized officer thereof, certifying that the conditions set forth in Section
7.3(a) and Section 7.3(b) have been satisfied.
ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
8.1
Termination. This Agreement may be validly terminated only as follows (it being understood and agreed that this Agreement may
not be terminated for any other reason or on any other basis):
(a) at
any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder Approval) by mutual written
agreement of Parent and the Company;
(b) by
either Parent or the Company, at any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder
Approval) if (i) any permanent injunction or other judgment or order issued by a Governmental Authority of competent jurisdiction in
the United States or other legal or regulatory restraint or prohibition imposed by a Governmental Authority in the United States preventing
the consummation of the Merger will be in effect, or any action has been taken by any Governmental Authority of competent jurisdiction
in the United States, that, in each case, prohibits, makes illegal or enjoins the consummation of the Merger and has become final and
non-appealable; or (ii) any statute, rule, regulation or order in the United States will have been enacted, entered, enforced or deemed
applicable to the Merger that prohibits, makes illegal or enjoins the consummation of the Merger, except that the right to terminate
this Agreement pursuant to this Section 8.1(b) will not be available to any Party whose failure to comply with its obligations under
Section 6.2 resulted in the failure to resolve or lift, as applicable, such injunction, action, statute, rule, regulation or order (it
being understood that Parent and Merger Sub shall be deemed a single party for purposes of the foregoing proviso);
(c) by
either Parent or the Company, at any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder
Approval) if the Closing has not occurred by 11:59 p.m., Eastern time, on November 30, 2024 (the “Termination Date”);
provided that, the right to terminate this Agreement pursuant to this Section 8.1(c) will not be available to (i) (A) Parent if the Company
has the valid right to terminate this Agreement pursuant to Section 8.1(g); or (B) the Company if Parent has the valid right to terminate
this Agreement pursuant to Section 8.1(e); and (ii) any Party whose action or failure to act (which action or failure to act constitutes
a breach by such Party of this Agreement) has been the primary cause of, or primarily resulted in, either (1) the failure to satisfy
the conditions to the obligations of the terminating Party to consummate the Merger set forth in Article VII prior to the Termination
Date; or (2) the failure of the Closing to have occurred prior to the Termination Date (it being understood that Parent and Merger Sub
shall be deemed a single party for purposes of the foregoing proviso);
(d)
by either Parent or the Company, at any time prior to the Effective Time if the Company fails to obtain the Requisite Stockholder
Approval at the Company Stockholder Meeting (or any adjournment or postponement thereof) at which a vote is taken on the Merger,
except that the right to terminate this Agreement pursuant to this Section 8.1(d) will not be available to any Party whose action or
failure to act (which action or failure to act constitutes a breach by such Party of this Agreement) has been the cause of, or
resulted in, the failure to obtain the Requisite Stockholder Approval at the Company Stockholder Meeting (or any adjournment or
postponement thereof);
(e) by
Parent (whether prior to or after the receipt of the Requisite Stockholder Approval), if the Company has breached or failed to perform
in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach
or failure to perform would result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) except that (i) if such
breach or failure to perform is capable of being cured by the Termination Date, Parent will not be entitled to terminate this Agreement
pursuant to this Section 8.1(e) prior to the delivery by Parent to the Company of written notice of such breach, delivered at least 45
days prior to such termination (or such shorter period of time as remains prior to the Termination Date), stating Parent’s intention
to terminate this Agreement pursuant to this Section 8.1(e) and the basis for such termination, it being understood that Parent will
not be entitled to terminate this Agreement if such breach or failure to perform has been cured prior to such termination and (ii) the
right to terminate this Agreement pursuant to this Section 8.1(e) will not be available to Parent if it is then in breach of any provision
of this Agreement or has failed to perform or comply with, or there is any inaccuracy of, any of its representations, warranties, covenants
or agreements set forth in this Agreement, which breach, failure to perform or inaccuracy would give rise to the failure of the conditions
set forth in Section 7.3(a) or Section 7.3(b);
(f) by
Parent at any time prior to the receipt of the Requisite Stockholder Approval if the Company Board (or a committee thereof) has effected
a Company Board Recommendation Change;
(g) by
the Company (whether prior to or after the receipt of the Requisite Stockholder Approval), if the Buyer Parties have breached or failed
to perform in any material respect any of its respective representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform would result in a failure of a condition set forth in Section 7.1 or Section 7.3, except
that (i) if such breach or failure to perform is capable of being cured by the Termination Date, the Company will not be entitled to
terminate this Agreement pursuant to this Section 8.1(g) prior to the delivery by the Company to Parent of written notice of such breach,
delivered at least 45 days prior to such termination (or such shorter period of time as remains prior to the Termination Date), stating
the Company’s intention to terminate this Agreement pursuant to this Section 8.1(g) and the basis for such termination, it being
understood that the Company will not be entitled to terminate this Agreement if such breach or failure to perform has been cured prior
to such termination and (ii) that the right to terminate this Agreement pursuant to this Section 8.1(g) will not be available to the
Company if it is then in breach of any provision of this Agreement or has failed to perform or comply with, or there is any inaccuracy
of, any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach, failure to perform or
inaccuracy would give rise to the failure of the conditions set forth in Section 7.2(a) or Section 7.2(b); or
(h)
by the Company, at any time prior to receiving the Requisite Stockholder Approval if (i) the Company has received a Superior
Proposal; (ii) the Company Board (or a committee thereof), upon the recommendation of the Special Committee, has authorized the
Company to enter into a definitive Alternative Acquisition Agreement to consummate the Acquisition Transaction contemplated by that
Superior Proposal; (iii) and the Company has complied in all material respects with Section 5.3 with respect to such Superior
Proposal; and (iv) concurrently with such termination the Company pays the Company Termination Fee due in accordance with Section
8.3(b).
8.2 Manner
and Notice of Termination; Effect of Termination.
(a) Manner
of Termination. The Party terminating this Agreement pursuant to Section 8.1 (other than pursuant to Section 8.1(a)) must
deliver prompt written notice thereof to the other Parties setting forth in reasonable detail the provision of Section 8.1 pursuant
to which this Agreement is being terminated and the facts and circumstances forming the basis for such termination pursuant to such
provision.
(b) Effect
of Termination. Any proper and valid termination of this Agreement pursuant to Section 8.1 will be effective immediately upon the
delivery of written notice by the terminating Party to the other Parties. In the event of the termination of this Agreement pursuant
to Section 8.1, this Agreement will be of no further force or effect without liability of any Party (or any partner, member, manager,
stockholder, director, officer, employee, Affiliate, agent or other representative of such Party) to the other Parties, as applicable,
except that the Confidentiality Agreement, Section 6.5(e), Section 6.5(f), Section 6.14, this Section 8.2, Section 8.3 and Article IX
will each survive the termination of this Agreement in accordance with their respective terms. Notwithstanding the foregoing, nothing
in this Agreement will relieve any Party from any liability for any Willful and Material breach of this Agreement. In addition to the
foregoing, no termination of this Agreement will affect the rights or obligations of any Party pursuant to the Confidentiality Agreement,
which rights, obligations and agreements will survive the termination of this Agreement in accordance with their respective terms.
8.3 Fees
and Expenses.
(a) General.
Except as set forth in this Section 8.3 or as otherwise expressly provided herein, all fees and expenses incurred in connection with
this Agreement and the Merger will be paid by the Party incurring such fees and expenses whether or not the Merger is consummated. For
the avoidance of doubt, Parent or the Surviving Corporation will be responsible for all fees and expenses of the Payment Agent.
(b) Company Payments.
(i) If
(A) this Agreement is validly terminated pursuant to Section 8.1(d) or Section 8.1(e), (B) at the time of such termination, the Company
is not then able to terminate this Agreement pursuant to Section 8.1(b), and the conditions set forth in Section 7.3(a) and Section 7.3(b)
would be satisfied if the date of such termination was the Closing Date; (C) following the execution and delivery of this Agreement and
prior to the termination of this Agreement pursuant to Section 8.1(d) or Section 8.1(e), as applicable, an Acquisition Proposal for an
Acquisition Transaction has been publicly announced or publicly disclosed and not withdrawn or otherwise abandoned; and (D) within twelve
(12) months following the termination of this Agreement pursuant to Section 8.1(d) or Section 8.1(e), as applicable, either such Acquisition
Transaction is consummated or the Company enters into a definitive agreement providing for the consummation of such Acquisition Transaction
which is ultimately consummated, then the Company will concurrently with the consummation of such Acquisition Transaction pay or cause
to be paid to Parent (or as directed by Parent) an amount equal to $19,000,000 (the “Company Termination Fee”). For
purposes of this Section 8.3(b)(i), all references to “15%” in the definition of “Acquisition Transaction” will
be deemed to be references to “50%”.
(ii) If
this Agreement is validly terminated pursuant to Section 8.1(f), then the Company must promptly (and in any event within two Business
Days) following such termination pay or cause to be paid to Parent (or as directed by Parent) the Company Termination Fee.
(iii) If
this Agreement is validly terminated pursuant to Section 8.1(h), then the Company must prior to or concurrently with such termination
pay or cause to be paid to Parent (or as directed by Parent) the Company Termination Fee; provided, that if (A) such termination
occurs prior to the No-Shop Period Start Date and (B) the Company has entered into a definitive Alternative Acquisition Agreement to
consummate an Acquisition Transaction in connection with such termination, then the “Company Termination Fee” shall mean
an amount equal to $9,500,000.
(c) Single
Payment Only. The Parties acknowledge and agree that in no event will the Company be required to pay more than one termination fee,
collectively, or be required to pay the Company Termination Fee on more than one occasion, whether or not the Company Termination Fee
may be payable pursuant to more than one provision of this Agreement at the same or at different times and upon the occurrence of different
events.
(d) Payments;
Default. The Parties acknowledge that the agreements contained in this Section 8.3 are an integral part of this Agreement and the
Merger, and that, without these agreements, the Parties would not enter into this Agreement. Accordingly, if the Company fails to promptly
pay any amount due pursuant to Section 8.3(b) and, in order to obtain such payment, Parent commences a Legal Proceeding that results
in a judgment against the Company for the amount set forth in Section 8.3(b) or any portion thereof, the Company will pay to Parent (or
as directed by Parent) its reasonable and documented out-of-pocket costs and expenses (including reasonable and documented attorneys’
fees) in connection with such Legal Proceeding, together with interest on such amount or portion thereof at the annual rate of 5% plus
the prime rate as published in The Wall Street Journal in effect on the date that such payment or portion thereof was required
to be made through the date that such payment or portion thereof was actually received, or a lesser rate that is the maximum permitted
by applicable law. All payments under this Section 8.3 shall be made by the Company to Parent (or as directed by Parent) by wire transfer
of immediately available funds to an account designated by Parent in writing to the Company.
(e) Acknowledgement
Regarding Specific Performance. Notwithstanding the availability of monetary damages, it is agreed that the Buyer Parties and the
Company will be entitled to an injunction, specific performance or other equitable relief as provided in Section 9.8(b), except that,
although the Buyer Parties and the Company, in their respective sole discretion, may determine their choice of remedies hereunder, including
by pursuing specific performance in accordance with, but subject to the limitations of, Section 9.8(b), under no circumstances will the
Buyer Parties or the Company be permitted or entitled to receive both specific performance that results in the occurrence of the Closing
and any monetary damages, including, with respect to the Buyer Parties, the Company Termination Fee.
8.4
Amendment. Subject to applicable law and subject to the other provisions of this Agreement, this Agreement may be amended by the
Parties at any time by execution of an instrument in writing signed on behalf of each of the Buyer Parties and the Company (pursuant
to authorized action by the Special Committee), except that (a) in the event that the Company has received the Requisite Stockholder
Approval, no amendment may be made to this Agreement that requires the approval of the Company Stockholders pursuant to the DGCL without
such approval and (b) the definition of the term “Unaffiliated Stockholder Approval” may not be amended, and the condition
precedent set forth in Section 7.1(a) regarding the receipt the Unaffiliated Stockholder Approval may not be amended.
8.5
Extension; Waiver. At any time and from time to time prior to the Effective Time, any Party may, to the extent legally allowed
and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other
Parties, as applicable; (b) waive any inaccuracies in the representations and warranties made to such Party contained herein or in any
document delivered pursuant hereto; and (c) subject to the requirements of applicable law, waive compliance with any of the agreements
or conditions for the benefit of such Party contained herein; provided that the condition precedent set forth in Section 7.1(a)
regarding the receipt the Unaffiliated Stockholder Approval may not be waived. Any agreement on the part of a Party to any such extension
or waiver will be valid only if set forth in an instrument in writing signed by such Party. Any delay in exercising any right pursuant
to this Agreement will not constitute a waiver of such right.
8.6
Special Committee Approval. Notwithstanding anything to the contrary herein, prior to the Effective Time, no amendment or waiver
of any provision of this Agreement and no action shall be taken by or on behalf of the Company under or with respect to this Agreement
without first obtaining the approval of the Special Committee.
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Company and the
Buyer Parties contained in this Agreement will terminate at the Closing, except that any covenants that by their terms survive the Closing
will survive the Closing in accordance with their respective terms.
9.2
Notices. All notices and other communications hereunder must be in writing and will be deemed to have been duly delivered and
received hereunder (i) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid;
(ii) one Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service;
or (iii) immediately upon delivery by hand or by email transmission, in each case to the intended recipient as set forth below:
(a) if to the Buyer Parties to:
Restaurant Brands International Inc.
130
King Street West, Suite 300
Toronto,
Ontario
Canada,
M5X 1E1
Attention: Jill
Granat, General Counsel
Email: JGranat@rbi.com
with
a copy (which will not constitute notice) to:
Paul,
Weiss, Rifkind, Wharton & Garrison LLP
1285
Avenue of the Americas
New
York, New York 10019
Attention: Scott
A. Barshay
Laura
C. Turano
Email: sbarshay@paulweiss.com
lturano@paulweiss.com
(b) if to the Company (prior to the Effective Time) to:
Carrols Restaurant Group, Inc.
968
James Street
Syracuse,
NY 13203
Attention: Jared
Landaw, General Counsel
Email: jlandaw@carrols.com
with
a copy (which will not constitute notice) to:
Milbank
LLP
55
Hudson Yards
New
York, NY 10001-2163
Attention: Derek
Winokur
Iliana
Ongun
Email: dwinokur@milbank.com
IOngun@milbank.com
Any
notice received by email at the addressee’s email address or otherwise at the addressee’s location on any Business Day
after 5:00 p.m., addressee’s local time, or on any day that is not a Business Day will be deemed to have been received at 9:00
a.m., addressee’s local time, on the next Business Day. From time to time, any Party may provide notice to the other Parties
of a change in its address or email address through a notice given in accordance with this Section 9.2, except that notice of any
change to the address, email address or any of the other details specified in or pursuant to this Section 9.2 will not be deemed to
have been received until, and will be deemed to have been received upon, the later of the date (A) specified in such notice; or (B)
that is five Business Days after such notice would otherwise be deemed to have been received pursuant to this Section
9.2.
9.3
Assignment. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties, except that (a) the Buyer Parties will have the right to assign all or any portion of their respective
rights and obligations pursuant to this Agreement, including by Parent transferring its interests in Merger Sub, (i) in connection with
a merger or consolidation involving the Buyer Parties or other disposition of all or substantially all of the assets of the Buyer Parties
or the Surviving Corporation; or (ii) to any of their respective Affiliates; and (b) the Buyer Parties will have the right to assign
all or any portion of their respective rights and obligations pursuant to this Agreement to the lenders party to Parent’s credit
facilities from time to time (including for purposes of creating a security interest herein or otherwise assign as collateral in respect
of obtaining financing to consummate the transactions contemplated by this Agreement), it being understood that, in each case, such assignment
will not impede or delay the consummation of the Merger or otherwise materially impede the rights of the holders of shares of Company
Capital Stock and Company Equity Awards pursuant to this Agreement. Subject to the preceding sentence, this Agreement will be binding
upon and will inure to the benefit of the Parties and their respective successors and permitted assigns. No assignment by any Party will
relieve such Party of any of its obligations hereunder.
9.4 Confidentiality. The Buyer Parties and the Company hereby acknowledge that Parent and the Company have executed that certain
confidentiality agreement dated as of December 18, 2023 (the “Confidentiality Agreement”), that will continue in full
force and effect in accordance with its terms. Each of the Buyer Parties and their respective Representatives will hold and treat all
documents and information concerning the Company Group furnished or made available to the Buyer Parties or their respective Representatives
in connection with the Merger in accordance with the Confidentiality Agreement. By executing this Agreement, each of the Buyer Parties
agree to be bound by, and to cause their Representatives to be bound by, the terms and conditions of the Confidentiality Agreement as
if they were parties thereto.
9.5 Entire
Agreement. This Agreement and the documents and instruments and other agreements among the Parties as contemplated by or
referred to herein, including the Confidentiality Agreement, the Company Disclosure Letter and the Parent Disclosure Letter,
constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the Parties with respect to the subject matter hereof. Notwithstanding anything to the
contrary in this Agreement, the Confidentiality Agreement will (a) not be superseded; (b) survive any termination of this Agreement;
and (c) continue in full force and effect until the earlier to occur of the Effective Time and the date on which the Confidentiality
Agreement expires in accordance with its terms or is validly terminated by the parties thereto.
9.6 Third Party Beneficiaries. Except as set forth in Section 6.9 and this Section 9.6, the Parties agree that their respective
representations, warranties and covenants set forth in this Agreement are solely for the benefit of the other Parties in accordance with
and subject to the terms of this Agreement. This Agreement is not intended to, and will not, confer upon any other Person any rights
or remedies hereunder, except (a) as set forth in or contemplated by Section 6.9; (b) if a court of competent jurisdiction has declined
to grant specific performance and has instead granted an award of damages, then the Company may enforce such award and seek additional
damages on behalf of the holders of shares of Company Common Stock and Company Equity Awards (which the Buyer Parties acknowledge and
agree may include damages based on a decrease in share value or lost premium); (c) if any of the Buyer Parties wrongfully terminate or
willfully breach this Agreement, then, following the termination of this Agreement, the Company may seek damages and other relief (including
equitable relief) on behalf of the holders of shares of Company Common Stock and Company Equity Awards (which the Buyer Parties acknowledge
and agree may include damages based on a decrease in share value or lost premium); and (d) from and after the Closing, the rights of
the holders of shares of Company Common Stock and Company Equity Awards, to receive the consideration set forth in Article II. The rights
granted pursuant to clause (c) of the second sentence of this Section 9.6 will only be enforceable on behalf of the holders of shares
of Company Common Stock and Company Equity Awards by the Company, in its sole and absolute discretion, as agent for such holders, and
it is understood and agreed that any and all interests in such claims will attach to such shares of the Company Common Stock and Company
Equity Awards, and subsequently transfer therewith and, consequently, any damages, settlements or other amounts recovered or received
by the Company with respect to such claims (net of expenses incurred by the Company in connection therewith and) may, in the Company’s
sole and absolute discretion, be (A) distributed, in whole or in part, by the Company to such holders as of any date determined by the
Company; or (B) retained by the Company for the use and benefit of the Company Group in any manner that the Company deems fit.
9.7
Severability. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect,
and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of
the Parties. The Parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.
9.8 Remedies.
(a) Remedies
Cumulative. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law or equity upon such Party, and the exercise by a Party of any one
remedy will not preclude the exercise of any other remedy. Although the Company may pursue both a grant of specific performance and monetary
damages, under no circumstances will the Company be permitted or entitled to receive both a grant of specific performance that results
in the occurrence of the Closing and monetary damages (including any monetary damages in lieu of specific performance).
(b) Specific Performance.
(i)
The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy would occur
in the event that the Parties do not perform the provisions of this Agreement (including any Party failing to take such actions as
are required of it hereunder in order to consummate this Agreement) in accordance with its specified terms or otherwise breach such
provisions. The Parties acknowledge and agree that, (A) the Parties will be entitled, in addition to any other remedy to which they
are entitled at law or in equity, to an injunction, specific performance and other equitable relief to prevent breaches (or
threatened breaches) of this Agreement and to enforce specifically the terms and provisions hereof; and (B) the right of specific
enforcement is an integral part of this Agreement and the Merger and without that right, neither the Company nor the Buyer Parties
would have entered into this Agreement. It is explicitly agreed that the Company shall have the right to an injunction, specific
performance or other equitable remedies in connection with enforcing the Buyer Parties’ obligations to consummate the
Merger.
(ii) The
Parties agree not to raise any objections to (A) the granting of an injunction, specific performance or other equitable relief to prevent
or restrain breaches or threatened breaches of this Agreement by the Company, on the one hand, or Parent, on the other hand; and (B)
the specific performance of the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance
with, the covenants, obligations and agreements of the Buyer Parties pursuant to this Agreement. Each of the Parties hereto agrees that
it will not oppose the granting of an injunction, specific performance or any other equitable relief on the basis that any other Party
has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.
Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement will not be required to provide any bond or other security in connection with such injunction or enforcement, and each
Party irrevocably waives any right that it may have to require the obtaining, furnishing or posting of any such bond or other security.
9.9
Governing Law. This Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware.
Any and all claims, controversies, and causes of action arising out of or relating to this Agreement, whether sounding in contract, tort,
or statute, shall be governed by the internal laws of the State of Delaware, including its statutes of limitations, without giving effect
to any conflict-of-laws or other rules that would result in the application of the laws or statutes of limitations of a different jurisdiction.
9.10
Consent to Jurisdiction. Each of the Parties (i) irrevocably consents to the service of the summons and complaint and any other
process (whether inside or outside the territorial jurisdiction of the Chosen Courts) in any Legal Proceeding relating to the Merger,
for and on behalf of itself or any of its properties or assets, in accordance with Section 9.2 or in such other manner as may be permitted
by applicable law, and nothing in this Section 9.10 will affect the right of any Party to serve legal process in any other manner permitted
by applicable law; (ii) irrevocably and unconditionally consents and submits itself and its properties and assets in any Legal Proceeding
to the exclusive general jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom within
the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter,
any federal court within the State of Delaware (and any appellate court therefrom) or, if any federal court within the State of Delaware
declines to accept jurisdiction over a particular matter, any state court within the State of Delaware (and any appellate court therefrom))
(the “Chosen Courts”) in the event that any dispute or controversy arises out of this Agreement or the transactions
contemplated hereby; (iii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court; (iv) agrees that any Legal Proceeding arising in connection with this Agreement or the transactions contemplated
hereby will be brought, tried and determined only in the Chosen Courts; (v) waives any objection that it may now or hereafter have to
the venue of any such Legal Proceeding in the Chosen Courts or that such Legal Proceeding was brought in an inconvenient court and agrees
not to plead or claim the same; and (vi) agrees that it will not bring any Legal Proceeding relating to this Agreement or the transactions
contemplated hereby in any court other than the Chosen Courts. Each of the Buyer Parties and the Company agrees that a final judgment
in any Legal Proceeding in the Chosen Courts will be conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by applicable law.
9.11 WAIVER
OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE PURSUANT TO THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING (WHETHER FOR BREACH OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE)
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE MERGER, OR ANY TRANSACTION CONEMPLATED HEREBY (INCLUDING
ANY FINANCING OBTAINED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT). EACH PARTY ACKNOWLEDGES AND AGREES THAT
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER; (iii) IT MAKES THIS WAIVER VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Company Disclosure Letter References. The Parties agree that the disclosure set forth in any particular section or subsection
of the Company Disclosure Letter will be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (a) the representations
and warranties (or covenants, as applicable) of the Company that are set forth in the corresponding Section or subsection of this Agreement;
and (b) any other representations and warranties (or covenants, as applicable) of the Company that are set forth in this Agreement, but
in the case of this clause (b) only if the relevance of that disclosure as an exception to (or a disclosure for purposes of) such other
representations and warranties (or covenants, as applicable) is reasonably apparent on the face of such disclosure.
9.13 Counterparts.
This Agreement and any amendments hereto may be executed in one or more counterparts, all of which will be considered one and the
same agreement and will become effective when one or more counterparts have been signed (including by electronic signature) by each
of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart. Any such
counterpart, to the extent delivered by fax or .pdf, .tif, .gif, .jpg or similar attachment to electronic mail (any such delivery,
an “Electronic Delivery”), will be treated in all manner and respects as an original executed counterpart and
will be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No
Party may raise the use of an Electronic Delivery to deliver a signature, or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of an Electronic Delivery, as a defense to the formation of a contract, and each
Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
9.14
No Limitation. It is the intention of the Parties that, to the extent possible, unless provisions are mutually exclusive and effect
cannot be given to both or all such provisions, the representations, warranties, covenants and closing conditions in this Agreement will
be construed to be cumulative and that each representation, warranty, covenant and closing condition in this Agreement will be given
full, separate and independent effect and nothing set forth in any provision herein will in any way be deemed to limit the scope, applicability
or effect of any other provision hereof.
9.15 Non-Recourse.
Each of the Company, its Subsidiaries, and the Affiliates, shareholders and representatives of the foregoing acknowledge and agree
that (i) no financing institution providing Debt Financing (“Debt Financing Sources”) shall have any liability or
obligations to the Company, its Subsidiaries or the Affiliates or representatives of the foregoing arising out of or relating to (A)
this Agreement or any other agreement referenced herein or the transactions contemplated hereunder (including any Debt Financing),
(B) the negotiation, execution or performance this Agreement or any other agreement referenced herein (including any representation
or warranty made in, in connection with, or as an inducement to, this Agreement or such other agreement), (C) any breach or
violation of this Agreement or any other agreement referenced herein and (D) any failure of the transactions contemplated hereunder
or any other agreement referenced herein (including any agreement in respect of any Debt Financing); (ii) no recourse under this
Agreement or any other agreement referenced herein or in connection with any transactions contemplated hereby (including any Debt
Financing) shall be sought or had against any Debt Financing Sources for any claims, causes of action, obligations or liabilities
arising under, out of, in connection with or related to the items in the clauses (A) through (D) of the immediately preceding clause
(i), it being expressly agreed and acknowledged that no personal liability or losses whatsoever shall attach to, be imposed on or
otherwise be incurred by any of the aforementioned, as such, arising under, out of, in connection with or related to the items in
clauses (A) through (D) of the immediately preceding clause (i).
[Signature
page follows.]
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers as
of the date first written above.
|
RESTAURANT
BRANDS INTERNATIONAL INC. |
|
|
|
|
|
By: |
/s/
Joshua Kobza |
|
|
Name: |
Joshua
Kobza |
|
|
Title: |
Chief
Executive Officer |
|
|
|
|
|
BK
CHESHIRE CORP |
|
|
|
|
|
By: |
/s/
Thomas B. Curtis IV |
|
|
Name: |
Thomas
B. Curtis IV |
|
|
Title: |
President |
[Signature
Page to Agreement and Plan of Merger]
|
CARROLS
RESTAURANT GROUP, INC. |
|
|
|
|
|
By: |
/s/
Deborah M. Derby |
|
|
Name: |
Deborah
M. Derby |
|
|
Title: |
President
and Chief Executive Officer |
[Signature
Page to Agreement and Plan of Merger]
Exhibit 2.2
VOTING AGREEMENT
This Voting Agreement (“Agreement”),
dated as of January 16, 2024, is by and among Restaurant Brands International Inc., a corporation existing under the laws of Canada (“Parent”)
and the persons listed on the attached Schedule A who are signatories to this Agreement (each, a “Stockholder”
and collectively, the “Stockholders”).
RECITALS
WHEREAS, concurrently herewith,
Carrols Restaurant Group, Inc., a Delaware corporation (the “Company”), Parent and BK Cheshire Corp, a Delaware corporation
and a subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of Merger (the “Merger
Agreement”);
WHEREAS, the Company has informed
Parent and each Stockholder that the Company Board has, prior to the execution and delivery of this Agreement, taken all actions so that
the restrictions applicable to business combinations contained in Section 203 of the General Corporation Law of the State of Delaware
and any other “takeover” Law are, and will be, inapplicable to the execution, delivery and performance of this Agreement and
the transactions contemplated hereby (the “203 Approval”);
WHEREAS, as of the date of
this Agreement, each Stockholder is the record or “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange
Act) of the number of shares of Company Common Stock set forth next to such Stockholder’s name on Schedule A hereto, being
all of the shares of the Company Common Stock owned of record or beneficially by such Stockholder as of the date of this Agreement (collectively
with respect to each Stockholder, the “Owned Shares” and, together with any additional Shares or other voting securities
of the Company of which such Stockholder acquires record or beneficial ownership after the date of this Agreement, including by purchase,
as a result of a stock dividend, stock split, recapitalization, combination, consolidation, reclassification, exchange or change of such
shares, or other similar transaction, or upon exercise or conversion of any securities (including any Company Options, Company RSUs, Company
PSUs, Company RSAs, Company PSAs or any other equity awards), such Stockholder’s “Covered Shares”);
WHEREAS, as a condition and
inducement to the willingness of Parent and Merger Sub to enter into the Merger Agreement and to proceed with the transactions contemplated
thereby, including the Merger, Parent and the Stockholders are entering into this Agreement; and WHEREAS, the Stockholders acknowledge
that each of Parent and Merger Sub is entering into the Merger Agreement in reliance on the representations, warranties, covenants and
other agreements of the Stockholders set forth in this Agreement and would not enter into the Merger Agreement if the Stockholders did
not enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration
of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. Certain
Definitions. All capitalized terms that are used but not defined herein have the respective meanings ascribed to them in the Merger
Agreement. For all purposes of and under this Agreement, the following terms have the following respective meanings:
(a) Constructive
Disposition” means, with respect to a security, a short sale with respect to such security, entering into or acquiring a derivative
contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security or entering
into any other hedging or other derivative, swap, “put-call”, margin, securities lending or other transaction that has or
reasonably would be expected to have the effect of changing, limiting, arbitraging or reallocating the economic benefits and risks of
ownership of such security.
(b) Termination
Date” means the earlier to occur of (i) the Effective Time, (ii) the termination of the Merger Agreement in accordance
with its terms, and (iii) the date on which any amendment to the Merger Agreement is effected, or any waiver of the Company’s rights
under the Merger Agreement is granted, in each case, without the Stockholders’ prior written consent, that (A) diminishes the Per
Share Price to be received by the stockholders of the Company, (B) changes the form in which the Per Share Price is payable to the stockholders
of the Company, (C) extends the Termination Date (as defined in the Merger Agreement) or (D) imposes any additional conditions on the
Stockholder’s right to receive the Per Share Price.
(c) A
person shall be deemed to have effected a “Transfer” of a security if such person, whether voluntarily or involuntarily,
directly or indirectly (i) offers, sells, leases, assigns, gifts, grants an option with respect to, transfers, exchanges, tenders or disposes
(by merger, by testamentary disposition, by operation of law or otherwise, including by way of Constructive Disposition) of such security
or any interest in such security, (ii) creates or permits to exist any pledge, lien, charge, mortgage, encumbrance, hypothecation or security
interest of any kind or nature whatsoever on such security, except, in the case of each item described in clause (ii), that would not
reasonably be expected to, individually or in the aggregate, materially prevent, delay or impair or otherwise adversely impact the Stockholders’
ability to perform its obligations hereunder, (iii) deposits such security into a voting trust or enters into a voting agreement or arrangement
or grants any proxy, power of attorney or other authorization with respect thereto that is inconsistent with this Agreement, or (iv) agrees
or commits (whether or not in writing) to take any of the actions referred to in the foregoing clauses (i) through (iii). For the avoidance
of doubt, any direct or indirect transfer of equity or other interests in the Stockholder by its equityholders shall not constitute a
Transfer.
2. Transfer
Restrictions. From the date of this Agreement until the Termination Date, each Stockholder agrees not to Transfer (or cause or permit
the Transfer of) any of the Covered Shares, or enter into any agreement relating thereto, except with Parent’s prior written consent;
provided, however, that any Stockholder may Transfer any such Covered Shares to (a) any other Stockholder or any Affiliate of any such
Stockholder or (b) any beneficial owner of the Stockholder, in each case only if the transferee of such Covered Shares evidences in writing
reasonably satisfactory to Parent such transferee’s agreement to be bound by and subject to the terms and provisions of this Agreement
to the same effect as such transferring Stockholder. Any Transfer or attempted Transfer of any Covered Shares in violation of this Section 2
shall be null and void and of no effect whatsoever. In furtherance and not in limitation of the foregoing, from the date of this Agreement
until the Termination Date, no Stockholder shall make any demands to register any of its Covered Shares pursuant to the terms of that
certain Registration Rights and Stockholders’ Agreement, dated as of April 30, 2019, by and between the Company and the persons
listed on Schedule A attached thereto, as amended.
3. Agreement
to Vote.
(a) From
the date of this Agreement until the Termination Date, subject to the terms of this Agreement and the 203 Approval, at every meeting of
the stockholders of the Company (and at every adjournment or postponement thereof) to vote on any matter contemplated by this Agreement
or the Merger Agreement, each Stockholder shall vote, and shall cause or direct to be voted, all of such Stockholder’s Covered Shares:
(i) in
favor of the adoption of the Merger Agreement and the Merger;
(ii) in
favor of the approval of any proposal to adjourn the meeting to a later date, if there are not sufficient affirmative votes (in person
or by proxy) to obtain the Stockholder Approval on the date on which such meeting is held and Parent proposes or requests such postponement
or adjournment in accordance with the Merger Agreement;
(iii) against
(A) any action or agreement that would reasonably be expected to result in a breach of any covenant, representation or warranty or
other obligation or agreement of the Company contained in the Merger Agreement or result in any condition set forth in Article VII of
the Merger Agreement not being satisfied prior to the Termination Date, (B) any Acquisition Proposal or (C) approval of any other
proposal, transaction, agreement or action that would reasonably be expected to prevent, materially delay or materially impede the consummation
of the Merger or any other transactions contemplated by the Merger Agreement; and
(iv) in
favor of any other matter or action necessary for the consummation of the transactions contemplated by the Merger Agreement.
(b) From
the date of this Agreement until the Termination Date, if requested by Parent, each Stockholder shall execute and deliver to Parent a
written consent with respect to the Covered Shares approving any matter referenced in sub-clause (i), (ii), or (iv) of Section 3(a)
and against the approval of any matter referenced in sub-clause (iii) of Section 3(a).
Unless requested by Parent to execute and deliver a written consent in accordance with the first sentence of this Section 3(b),
each Stockholder agrees not to execute or deliver a written consent with respect to any matter referenced in sub-clause (i), (ii) or (iii)
of Section 3(a).
(c) Each
Stockholder shall appear, in person or by proxy, at each meeting of the stockholders of the Company or adjournment or postponement thereof
(or otherwise cause its Covered Shares to be counted as present thereat) for purposes of calculating a quorum and to vote on any matter
contemplated by this Agreement. Each Stockholder shall vote all of its Covered Shares in accordance with this Section 3.
(d) Notwithstanding
anything in this Agreement to the contrary, each Stockholder shall remain free to vote (or execute proxies with respect to) the Covered
Shares with respect to any matter not covered by Section 3(a) in any manner the Stockholder deems appropriate.
(e) Nothing
in this Agreement, including this Section 3, shall limit or restrict any
Stockholder, Affiliate or designee of any Stockholder who serves as a member of the Company Board in acting in his or her capacity as
a director of the Company and exercising his or her fiduciary duties and responsibilities, it being understood that this Agreement applies
to each Stockholder solely in its capacity as a stockholder of the Company and does not apply to, and shall not limit or affect in any
manner, any such Stockholder, Affiliate or designee’s actions, judgments or decisions as a director of the Company.
4. Termination
of Sales Plans. Upon public disclosure of the material terms of the transactions contemplated hereby and by the Merger Agreement,
each Stockholder shall (a) terminate any trading plan established in accordance with Rule 10b5-1 under the Exchange Act, in respect of
Company Common Stock, to which such Stockholder is a party (any such plan, a “Sales Plan”), (b) take all actions necessary
to ensure the continued effectiveness of the termination of any Sales Plan and (c) not Transfer (or cause or permit the Transfer of) Company
Common Stock pursuant to any Sales Plan at any time upon or after the execution of this Agreement.
5. Representations
and Warranties of the Stockholders. Each Stockholder, solely with respect to such Stockholder and severally and not jointly, hereby
represents and warrants to Parent as follows:
(a) Power;
Organization; Binding Agreement. Such Stockholder has full power and authority (in the case of each Stockholder that is not a natural
person) or capacity (in the case of each Stockholder that is a natural person) to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. With respect to each Stockholder that is not a natural person, (i) the
execution, delivery and performance by such Stockholder of this Agreement, and the consummation by such Stockholder of the transactions
contemplated hereby, have been duly authorized by all necessary corporate, limited liability company, limited liability partnership or
similar equivalent action on the part of such Stockholder and (ii) such Stockholder is duly organized, validly existing and in good standing
under the applicable law of its jurisdiction of formation. This Agreement has been duly executed and delivered by such Stockholder, and,
assuming due authorization, execution and delivery by Parent, this Agreement is enforceable against such Stockholder in accordance with
its terms, except that such enforceability may be limited by Enforceability Limitations.
(b) No
Conflicts. None of the execution and delivery by such Stockholder of this Agreement, the performance by such Stockholder of its obligations
hereunder or the consummation by such Stockholder of the transactions contemplated hereby will (i) require any consent or approval under,
or result in a violation or breach of, any agreement to which such Stockholder is a party or by which such Stockholder may be bound, including
any voting agreement or voting trust, (ii) result in the creation of any pledge, lien, charge, mortgage, encumbrance or security interest
of any kind or nature whatsoever (other than Permitted Liens or those created by this Agreement) on any of the assets or properties of
such Stockholder, (iii) violate any applicable law or order or (iv) with respect to each Stockholder that is not a natural person, violate
the organizational documents of such Stockholder.
(c) Ownership
of Covered Shares. Such Stockholder is, as of the date hereof, the record or beneficial owner of such Stockholder’s Covered
Shares. All such Stockholder’s Covered Shares are free and clear of any pledges, liens, charges, mortgages, encumbrances or security
interests of any kind or nature whatsoever (other than Permitted Liens or those created by this Agreement) and no person has a right to
acquire any of such securities. As of the date of this Agreement, other than the Owned Shares, such Stockholder does not own beneficially
or of record any (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company or (iii) options or other rights to acquire from the Company any capital
stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company.
(d) Voting
Power. Such Stockholder has the requisite voting power, power of disposition, power to issue instructions with respect to the matters
set forth herein, and power to agree to all of the matters set forth in this Agreement necessary to take all actions required under this
Agreement, in each case with respect to all of the securities subject to this Agreement owned by such Stockholder, with no limitations,
qualifications or restrictions on such rights, subject to applicable federal securities laws and those arising under the terms of this
Agreement.
(e) Reliance
by Parent and Merger Sub. Such Stockholder understands and acknowledges that each of Parent and Merger Sub is entering into the Merger
Agreement in reliance on such Stockholder’s execution and delivery of this Agreement.
(f) Consents
and Approvals. The execution and delivery of this Agreement by such Stockholder does not, and the performance by such Stockholder
of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not, require such Stockholder
to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority,
except in each case for filings with the SEC or where the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings and notifications, would not, either individually or in the aggregate, prevent or delay the performance by such Stockholder
of any of its obligations hereunder.
(g) No
Inconsistent Agreements. Except as contemplated by this Agreement, such Stockholder (i) has not entered into any voting agreement
or voting trust with respect to any of its Covered Shares and (ii) has not granted a proxy or power of attorney or entered into any other
arrangement with respect to any of its Covered Shares, in each case, that is inconsistent with such Stockholder’s obligations pursuant
to this Agreement.
(h) Absence
of Litigation. As of the date hereof, there is no action, suit, investigation or proceeding pending against or, to the knowledge of
the applicable Stockholder, threatened against or otherwise affecting, such Stockholder or any of its or his or her properties or assets
(including the Covered Shares) that would reasonably be expected to materially impair or materially delay the ability of such Stockholder
to perform its or his or her obligations hereunder.
6. Representations
and Warranties of Parent.
(a) The
execution, delivery and performance by Parent of this Agreement and the consummation by Parent of the transactions contemplated hereby
are within the corporate powers of Parent and have been duly authorized by all necessary corporate action. This Agreement constitutes
a valid and binding agreement of Parent, enforceable against Parent in accordance with its terms, excepts as such enforceability may be
limited by Enforceability Limitations.
(b) Parent
acknowledges and agrees that other than the representations expressly set forth in this Agreement, the Stockholder has not made, and is
not making, any representations or warranties to Parent with respect to the Stockholder, the Merger Agreement or any other matter. Parent
hereby specifically disclaims reliance upon any representations or warranties (other than the representations expressly set forth in this
Agreement).
7. Certain
Restrictions.
(a) From
the date of this Agreement until the Termination Date, each Stockholder hereby agrees that such Stockholder shall not, shall cause its
Subsidiaries (if any) and its and their respective directors, officers and employees not to, and shall not instruct, authorize or knowingly
permit any of its other Representatives to, directly or indirectly: (i) solicit, initiate, propose or induce the making, submission or
announcement of, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or could reasonably be expected
to lead to, an Acquisition Proposal, (ii) furnish to any Person (other than to Parent or any designees or Representatives of Parent) any
non-public information relating to the Company Group or afford to any Person access to the business, properties, assets, books, records
or other non-public information, or to any personnel, of the Company Group (other than Parent or any designees or Representatives of Parent),
in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist,
any proposal or inquiry that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal or any inquiries or the
making of any proposal that could reasonably be expected to lead to an Acquisition Proposal, (iii) participate or engage in discussions
or negotiations with any Person with respect to an Acquisition Proposal, (iv) approve, endorse or recommend any proposal that constitutes,
or could reasonably be expected to lead to, an Acquisition Proposal, or (v) enter into any agreement with respect to any Acquisition
Proposal; provided, that this Section 7(a) shall not restrict a Stockholder
from taking any action or doing anything that the Company is permitted to do in accordance with the terms of Section 5.3 of the Merger
Agreement.
(b) Each
Stockholder hereby agrees to notify Parent promptly (and, in any event, within 24 hours) of any inquiries, offers or proposals that constitute
an Acquisition Proposal or any non-public information is requested from, or any discussions or negotiations are sought to be initiated
or continued with, the Stockholder or any of its Representatives with respect to an Acquisition Proposal. Such notice must include (i) the
identity of the Person or “group” of Persons making such offers or proposals (unless, in each case, such disclosure is prohibited
pursuant to the terms of any confidentiality agreement with such Person or “group” of Persons that is in effect on the date
of this Agreement) and (ii) a summary of the material terms and conditions of such offers or proposals. Thereafter, the Stockholder
must keep Parent reasonably informed, on a prompt basis (and, in any event, within 24 hours) of any modification of the terms of any inquiry,
offer or proposal (including any amendments thereto) and any changes and developments in the status of any discussions or negotiations.
No Stockholder shall, directly or indirectly, take any action that would make any of its representations or warranties contained herein
untrue or incorrect in any respect.
(c) From
the date of this Agreement until the Termination Date, in the event that any Stockholder acquires record or beneficial ownership of, or
the power to vote or direct the voting of, any additional Shares or other voting interests with respect to the Company, such Shares or
voting interests shall, without further action of the parties, be deemed Covered Shares and subject to the provisions of this Agreement,
the number of Shares held by such Stockholders shall be deemed amended accordingly, and such Shares or voting interests shall automatically
become subject to the terms of this Agreement. Each Stockholder shall notify the Company of any such event.
(d) From
the date of this Agreement until the Termination Date, no Stockholder shall enter into any voting agreement or voting trust with respect
to any of its Covered Shares or grant a proxy or power of attorney with respect to any of its Covered Shares, in either case, that is
inconsistent with such Stockholder’s obligations pursuant to this Agreement.
(e) Each
Stockholder hereby agrees not to commence or voluntarily participate in, and to take all actions necessary to opt out of any class in
any class action with respect to, any claim, derivative or otherwise, against Parent, the Company, the Merger Sub or any of their respective
successors (i) challenging the validity of, or seeking to enjoin or delay the operation of, any provision of this Agreement or the Merger
Agreement (including any claim seeking to enjoin or delay the consummation of the Merger) or (ii) alleging a breach of any fiduciary duty
of the Company’s Board in connection with the Merger Agreement, this Agreement or the transactions contemplated thereby or hereby;
provided, that the foregoing shall not limit any actions taken by the Stockholder in response to any claims commenced against the
Stockholder or its Representatives; provided, further that this Section 7(e)
shall not be deemed a waiver of any rights of the Stockholder or its Affiliates for any breach of (a) this Agreement, (b) the Merger Agreement
or (c) any other Contract by and between such Stockholder or any of its Affiliates, on the one hand, and the Company or its Subsidiaries
or Affiliates, on the other hand.
(f) Each
Stockholder shall permit Parent to publish and disclose in all documents and schedules filed with the SEC, and any press release or other
disclosure document that Parent determines to be necessary or desirable in connection with the Merger Agreement, such Stockholder’s
identity and ownership of Covered Shares and the nature of such Stockholder’s commitments, arrangements and understandings under
this Agreement.
8. Waiver
of Appraisal Rights. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger that such Stockholder
may have under applicable law.
9. Stop
Transfer Instructions. At all times commencing with the execution and delivery of this Agreement and continuing until the Termination
Date, in furtherance of this Agreement, each Stockholder hereby authorizes the Company or its counsel to impose stop orders to prevent
the Transfer of any of the Covered Shares in violation of this Agreement.
10. Termination.
This Agreement and all rights and obligations of the parties hereunder and thereunder, shall automatically terminate without further action
and shall have no further force or effect as of the Termination Date; provided, that this Section 10
and Section 11 shall survive the termination of this Agreement. Notwithstanding
the foregoing, nothing set forth in this Section 10 or elsewhere in this Agreement
relieves either party hereto from liability, or otherwise limits the liability of either party hereto, for any willful and material breach
of this Agreement that occurred prior to such termination. For the avoidance of doubt, this Agreement shall not terminate upon a Company
Board Recommendation Change unless the Merger Agreement is terminated in accordance with its terms.
11. Miscellaneous.
(a) Severability.
If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal
or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision hereof, and the invalidity of a particular provision in a particular jurisdiction
shall not invalidate such provision in any other jurisdiction.
(b) Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation
of law or otherwise by any of the parties without the prior written consent of the other parties and any purported assignment in violation
hereof shall be null and void ab initio, except that Parent may assign, in its sole discretion, any or all of its rights, interests
and obligations under this Agreement to any affiliate of Parent, but no such assignment shall relieve Parent of its obligations under
this Agreement if such assignee does not perform such obligations. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by, the parties hereto and their respective successors and assigns.
(c) Amendment
and Modification; Waiver. This Agreement may be amended or waived by any party hereto only if such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the
waiver is to be effective. Any failure of any of the parties to comply with any obligation, covenant, agreement or condition in this Agreement
may be waived by any of the parties entitled to the benefit thereof only by a written instrument signed by each such party granting such
waiver. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law or
in equity.
(d) Specific
Performance. The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy
would occur in the event that the parties do not perform the provisions of this Agreement in accordance with its specified terms or otherwise
breach such provisions. The parties acknowledge and agree that, (i) the parties will be entitled, in addition to any other remedy to which
they are entitled at law or in equity, to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof, and (ii) the right of specific enforcement is an integral part of this Agreement
and the transactions contemplated hereby and without that right, neither the Stockholder nor Parent would have entered into this Agreement
or the Merger Agreement. It is explicitly agreed that Parent shall have the right to an injunction, specific performance or other equitable
remedies in connection with enforcing each Stockholder’s obligations hereunder.
(e) Non-Recourse.
This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this
Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified
as parties hereto and no former, current or future equity holders, controlling Persons, directors, officers, employees, agents or Affiliates
of any party hereto or any former, current or future stockholder, controlling Person, director, officer, employee, general or limited
partner, member, manager, agent or Affiliate of any of the foregoing (each, a “Non-Recourse Party”) shall have any
liability for any obligations or liabilities of the parties to this agreement or for any claim (whether in tort, contract or otherwise)
based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations made or alleged to
be made in connection herewith. Without limitation the rights of any party against the other parties hereto, in no event shall any party
or any of its Affiliates seek to enforce this Agreement against, make any claims for beach of this Agreement against, or seek to recover
monetary damages for breach of this Agreement from, any Non-Recourse Party.
(f) Notices.
All notices and other communications hereunder must be in writing and will be deemed to have been duly delivered and received hereunder
(i) four Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one
Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service or (iii) immediately
upon delivery by hand or by email transmission, in each case to the intended recipient as set forth below:
If to the Stockholders, to the address
for notice set forth on Schedule A hereto, with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
Three Brickell City Centre
98 S.E. 7th Street, Suite 700
Miami, FL 33131
|
Attention: |
Matthew Arenson, P.C. |
|
Email: |
matthew.arenson@kirkland.com |
and
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
|
Attention: |
Willard S. Boothby, P.C. |
|
Email: |
willard.boothby@kirkland.com |
if to Parent, to:
Restaurant Brands International Inc.
130 King Street West, Suite 300
Toronto, ON M5X 1E1
|
Attention: |
General Counsel |
|
Email: |
jgranat@rbi.com |
and with a copy (which shall not constitute
notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
|
Email: |
sbarshay@paulweiss.com |
|
|
lturano@paulweiss.com |
|
Attention: |
Scott A. Barshay |
|
|
Laura C. Turano |
if to the Company, to:
Carrols Restaurant Group, Inc.
968 James Street
Syracuse, NY 13203
|
Email: |
jlandaw@carrols.com |
|
Attention: |
General Counsel |
with a copy (which shall not constitute
notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10001-2163
|
Attention: |
Derek Winokur |
|
|
Iliana Ongun |
|
Email: |
dwinokur@milbank.com |
|
|
IOngun@milbank.com |
Any notice received by email
at the addressee’s email address or otherwise at the addressee’s location on any Business Day after 5:00 p.m., addressee’s
local time, or on any day that is not a Business Day will be deemed to have been received at 9:00 a.m., addressee’s local time,
on the next Business Day. From time to time, any party may provide notice to the other parties of a change in its address or email address
through a notice given in accordance with this Section 11(f), except that notice of any change to the address, email address
or any of the other details specified in or pursuant to this Section 11(f) will not be deemed to have been received until,
and will be deemed to have been received upon, the later of the date (A) specified in such notice; or (B) that is five Business
Days after such notice would otherwise be deemed to have been received pursuant to this Section 11(f).
(g) No
Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence
of ownership of or with respect to the Covered Shares. All rights, ownership and economic benefits of and relating to the Covered Shares
shall remain vested in and belong to the Stockholder, and Parent shall have no authority to exercise any power or authority to direct
the Stockholder in the voting or disposition of any of the Covered Shares, except as otherwise provided herein.
(h) No
Third Party Beneficiaries. This Agreement is not intended to confer upon any person other than the parties hereto (and their respective
successors and permitted assigns) any rights (legal, equitable or otherwise) or remedies, whether as third-party beneficiaries or otherwise.
(i) Governing
Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws thereof.
(j) Submission
to Jurisdiction; Service of Process; Venue. Each of the parties (i) irrevocably consents to the service of the summons and complaint
and any other process (whether inside or outside the territorial jurisdiction of the Chosen Courts) in any Legal Proceeding relating to
this Agreement, for and on behalf of itself or any of its properties or assets, in accordance with Section 11(f)
or in such other manner as may be permitted by applicable law, and nothing in this Section 11(j)
will affect the right of any party to serve legal process in any other manner permitted by applicable law; (ii) irrevocably and unconditionally
consents and submits itself and its properties and assets in any Legal Proceeding to the exclusive general jurisdiction of the Court of
Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of
the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware (and any
appellate court therefrom) or, if any federal court within the State of Delaware declines to accept jurisdiction over a particular matter,
any state court within the State of Delaware (and any appellate court therefrom)) (the “Chosen Courts”) in the event
that any dispute or controversy arises out of this Agreement or the transactions contemplated hereby; (iii) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; (iv) agrees that any Legal Proceeding
arising in connection with this Agreement or the transactions contemplated hereby will be brought, tried and determined only in the Chosen
Courts; (v) waives any objection that it may now or hereafter have to the venue of any such Legal Proceeding in the Chosen Courts or that
such Legal Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (vi) agrees that it will not
bring any Legal Proceeding relating to this Agreement or the transactions contemplated hereby in any court other than the Chosen Courts.
Each of Parent and each Stockholder agrees that a final judgment in any Legal Proceeding in the Chosen Courts will be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.
(k) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE PURSUANT TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LEGAL PROCEEDING (WHETHER FOR BREACH OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY ACKNOWLEDGES AND AGREES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) IT MAKES THIS WAIVER
VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS Section 11(k).
(l) Rules
of Construction. Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations
that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent counsel. Each
party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to in this
Agreement, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties
and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision
that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application
and is hereby expressly waived by each of the parties hereto.
(m) Entire
Agreement. This Agreement, together with any schedule hereto, the Merger Agreement and any exhibit and schedule thereto, constitutes
the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to
the subject matter of this Agreement.
(n) Interpretation.
Section 1.3 of the Merger Agreement shall apply to this Agreement, mutatis mutandis.
(o) Expenses.
Except as otherwise expressly provided in this Agreement or the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.
12. Counterparts.
This Agreement and any amendments hereto may be executed in one or more counterparts, all of which will be considered one and the same
agreement and will become effective when one or more counterparts have been signed (including by electronic signature) by each of the
parties hereto and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. Any
such counterpart, to the extent delivered by fax or .pdf, .tif, .gif, .jpg or similar attachment to electronic mail (any such delivery,
an “Electronic Delivery”), will be treated in all manner and respects as
an original executed counterpart and will be considered to have the same binding legal effect as if it were the original signed version
thereof delivered in person. No party hereto may raise the use of an Electronic Delivery to deliver a signature, or the fact that any
signature or agreement or instrument was transmitted or communicated through the use of an Electronic Delivery, as a defense to the formation
of a contract, and each party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first written above.
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RESTAURANT BRANDS INTERNATIONAL INC. |
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/s/ Joshua Kobza |
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Name: |
Joshua Kobza |
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Title: |
Chief Executive Officer |
[Signature Page to Voting Agreement]
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CAMBRIDGE FRANCHISE HOLDINGS, LLC |
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/s/ Matthew Perelman |
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Name: |
Matthew Perelman |
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Title: |
Co-President |
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ALEXANDER SLOANE |
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/s/ Alexander Sloane |
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MATTHEW PERELMAN |
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/s/ Matthew Perelman |
[Signature Page to Voting Agreement]
Schedule A
Stockholder Name | |
Owned Shares | |
Address |
Cambridge Franchise Holdings, LLC | |
10,442,310 | |
853 Broadway, Suite 1605 New York, NY 10003 |
Matthew Perelman | |
283,234 | |
853 Broadway, Suite 1605 New York, NY 10003 |
Alexander Sloane | |
152,284 | |
853 Broadway, Suite 1605 New York, NY 10003 |
Exhibit 99.1
Burger King®
Company to Acquire Carrols Restaurant Group
Burger King to remodel
acquired restaurants over the next 5 years, accelerating Burger King’s path to modern image
Over time, Burger
King to refranchise large majority of newly remodeled restaurants to smaller franchisee groups
TORONTO, January 16, 2024 – Restaurant Brands International
Inc. (“RBI” or the “Company”) (TSX: QSR) (NYSE: QSR) (TSX: QSP) and Carrols Restaurant Group, Inc. (“Carrols”)
(NASDAQ: TAST) today announced that they have reached an agreement for RBI to acquire all of Carrols issued and outstanding shares that
are not already held by RBI or its affiliates for $9.55 per share in an all cash transaction, or an aggregate total enterprise value of
approximately $1.0 billion, representing a 23.1% premium to Carrols 30-day volume-weighted average price as of January 12, 2024 and a
13.4% premium to the January 12, 2024 closing price.
Carrols is the largest Burger King® franchisee in the United States
today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the twelve-months
ended September 30, 2023. Carrols also owns and operates 60 Popeyes® restaurants in six states.
Tom Curtis, President of Burger King U.S. and Canada commented, “Carrols
has demonstrated strong and improving restaurant operations over the years. This acquisition is an exciting accelerator to our Reclaim
the Flame plan that is focused on relentlessly pursuing a better experience for our Guests. We are going to rapidly remodel these
restaurants over the next five years or so and put them back into the hands of motivated, local franchisees to create amazing experiences
for our Guests.”
Deborah Derby, President and CEO of Carrols said, “Today’s
announcement is a testament to our more than 24,000 Carrols team members who have helped drive the company to record levels of profitability
over the past 12 months. These results have allowed us, through this transaction, to deliver immediate and certain value to Carrols shareholders
at an attractive premium to the Company’s current and historical share prices. Additionally, we believe our team members will now
have additional opportunities as part of the greater RBI family – in our office, in the field and especially in our restaurants,
including for long-time managers who may want to become franchisees themselves. We look forward to working closely with Tom and the rest
of the Burger King team in the months and years ahead.”
Josh Kobza, CEO of RBI added, “This is a terrific example of our
commitment to put our capital to work to accelerate growth and support Tom and his team in their broader efforts to have a more competitive
Burger King restaurant base. The strategic merits of this acquisition are very compelling and consistent with our objective to invest
our capital in long-term, high-return opportunities.”
Strategic Rationale and Future Plans for Portfolio
The transaction is part of Burger King’s Reclaim the Flame
plan to accelerate sales growth and drive franchisee profitability. The transaction follows the brand’s initial $400 million investment
announced in September 2022 to drive high quality remodels, improve operations, enhance marketing, and support ongoing technology and
digital priorities.
Burger King expects to significantly accelerate Carrols’ current
rate of remodels to bring the acquired portfolio to modern image over the next five years. To accomplish this, the team plans to invest
approximately $500 million of capital, funded by Carrols’ operating cash flow, to remodel approximately 600 acquired restaurants
that are not currently considered modern image.
Carrols has a team of strong, experienced operators who, in partnership
with Burger King’s operations teams, will operate the acquired restaurants. Burger King ultimately plans to refranchise the vast
majority of the portfolio to new or existing smaller franchise operators who live in their local communities. Following refranchising
the acquired restaurants, which we expect will be completed in five to seven years, Burger King will maintain a company restaurant portfolio
of a couple of hundred restaurants for strategic innovation, training, and operator development purposes.
Transaction Details
Under the terms of the merger agreement, RBI will acquire all of Carrols
issued and outstanding shares that are not already held by RBI or its affiliates for $9.55 per share in an all-cash transaction. This
represents a premium of 23% to Carrols’ 30 trading-day volume-weighted average price as of January 12, 2024, and implies a total
enterprise value of approximately $1.0 billion. RBI and its affiliates currently hold approximately 15% of Carrols outstanding equity.
A special transaction committee of Carrols’ Board of Directors comprised
of independent directors unaffiliated with RBI (the “Special Committee”), advised by independent legal and financial advisors,
was formed to conduct a deliberate and thoughtful process to evaluate this proposal. Transaction negotiations were led by the Special
Committee and following its unanimous recommendation, the Carrols Board of Directors (other than directors affiliated with RBI) unanimously
approved the merger agreement with RBI and agreed to recommend that Carrols stockholders vote to adopt the merger agreement. The definitive
merger agreement includes a 30-day “go shop” period that will allow the Company to affirmatively solicit alternative proposals
from interested parties.
The transaction is expected to be completed in the second quarter of 2024
and is subject to expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as well as other customary closing conditions, including approval by the holders of a majority of common stock held by Carrols stockholders
excluding shares held by RBI and its affiliates and officers of Carrols in addition to approval by holders of a majority of outstanding
common stock of Carrols.
The transaction is not subject to a financing contingency and is expected
to be financed with cash on hand and term loan debt for which RBI has received a financing commitment.
RBI expects the transaction to be approximately neutral to Adjusted Earnings
per Share. Net leverage giving effect to the transaction will increase minimally and the Company will remain on track to reach its previously
stated net leverage target of mid-four times by the end of 2024.
Affiliates of Cambridge Franchise Holdings, LLC, who in aggregate own
or control approximately 17% of outstanding Carrols shares and approximately 20% of outstanding Carrols shares held by stockholders unaffiliated
with RBI, have entered into a voting agreement pursuant to which they have agreed, among other things, to vote their shares of common
stock of Carrols in favor of the transaction.
Advisors
J.P. Morgan acted as financial advisor and Paul, Weiss, Rifkind, Wharton
& Garrison acted as legal advisors to RBI. Jefferies LLC acted as financial advisor and Milbank LLP acted as legal advisor to the
Special Committee of the Carrols Board of Directors.
Investor Conference Call
RBI will host an investor conference call and
webcast at 8:30 a.m. Eastern Time on Tuesday, January 16, 2024. The call will be broadcast live via RBI's investor relations website
at http://investor.rbi.com and a replay will be available for 30 days following the
release. The dial-in number is 1 (833)-470-1428 for U.S. callers, 1 (833)-950-0062 for Canadian callers, and 1 (929)-526-1599 for callers
from other countries. For all dial-in numbers please use the following access code: 075361.
About Carrols Restaurant Group, Inc.
Carrols is one of the largest restaurant franchisees in North America.
It is the largest Burger King® franchisee in the United States, currently operating 1,022 Burger King® restaurants in 23 states
as well as 60 Popeyes® restaurants in six states. Carrols has operated Burger King® restaurants since 1976 and Popeyes® restaurants
since 2019. For more information, please visit the Company's website at www.carrols.com.
About Burger King®
Founded in 1954, the Burger King® brand is the second largest
fast food hamburger chain in the world. The original Home of the Whopper®, the Burger King® system operates more than 19,000 locations
in more than 100 countries and U.S. territories. Almost 100 percent of Burger King® restaurants are owned and operated by independent
franchisees, many of them family-owned operations that have been in business for decades. To learn more about the Burger King® brand,
please visit the Burger King® brand website at www.bk.com or follow us on Facebook, X and Instagram.
About Restaurant Brands International Inc.
Restaurant Brands International Inc. is one of the world's largest quick
service restaurant companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than 100 countries.
RBI owns four of the world’s most prominent and iconic quick service restaurant brands – Tim Hortons®, Burger King®,
Popeyes®, and Firehouse Subs®. These independently operated brands have been serving their respective guests, franchisees and
communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its
food, the planet, and people and communities. To learn more about RBI, please visit the company’s website at www.rbi.com.
Contacts RBI |
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Contacts Carrols |
Investors: investor@rbi.com |
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Investors: investorrelations@carrols.com |
Media: media@rbi.com |
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Special Note Regarding Forward-Looking
Statements
This communication includes certain disclosures which contain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the
meaning of the Canadian securities laws, including but not limited to those statements related to the Merger, including financial estimates
and statements as to the expected timing, completion and effects of the Merger. We refer to all of these as forward-looking statements.
Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking
statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”,
“intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”,
“would”, “target”, “potential” and other similar expressions. Forward-looking statements, including
statements regarding the Merger, are based on RBI’s current expectations and assumptions, including RBI’s beliefs and expectations
about the benefits sought to be achieved in RBI’s proposed acquisition of Carrols and the potential effects of the acquisition on
both RBI and Carrols. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and uncertainties.
Important factors, risks and uncertainties that could cause actual results
to differ materially from such plans, estimates or expectations include but are not limited to: (i) the completion of the Merger
on the anticipated terms and timing, including obtaining required stockholder approval by Carrols’ stockholders, required regulatory
approvals, and the satisfaction of other conditions to the completion of the Merger; (ii) the risk that competing offers or acquisition
proposals will be made; (iii) potential litigation relating to the Merger that could be instituted against RBI, Carrols or Carrols’
directors, managers or officers, including the effects of any outcomes related thereto; (iv) the ability of Carrols to retain and
hire key personnel; (v) potential adverse reactions or changes to Carrols’ business relationships resulting from the announcement
or completion of the Merger; (vi) legislative, regulatory and economic developments; (vii) potential business uncertainty, including
changes to existing business relationships, during the pendency of the Merger that could affect Carrols’ financial performance;
(viii) negative effects from the pendency of the Merger; (ix) the risk that synergies and other
benefits from the Merger may not be fully realized or may take longer to realize than expected, (x) the possibility that the
Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xi) the occurrence
of any event, change or other circumstance that could give rise to the termination of the Merger; and (xii) the
effects and continued impact of the COVID-19 pandemic, the war in Ukraine, conflict in the Middle East and related macro-economic pressures,
such as inflation, rising interest rates and currency fluctuations on our results of operations, business, liquidity, prospects and restaurant
operations and those of our franchisees and other risks and uncertainties set forth under the headings “Special Note Regarding
Forward Looking Statements” and “Risk Factors” in RBI’s and Carrols’ most recent Annual
Reports on Form 10-K for the fiscal year ended December 31, 2022
and January 1, 2023, respectively, and other materials that we from time to time file with, or furnish to, the Securities and Exchange
Commission (the “SEC”) or file with Canadian securities regulatory authorities.
There can be no assurance that the Merger will
be completed, or if it is completed, that it will close within the anticipated time period. These factors should not be construed as exhaustive
and should be read in conjunction with the other forward-looking statements. The forward-looking statements relate only to events as of
the date on which the statements are made. RBI does not undertake any obligation to publicly update or review any forward-looking statement
except as required by law, whether as a result of new information, future developments or otherwise. If one or more of these or other
risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from
what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any
of our forward-looking statements. You should specifically consider the factors identified in this communication that could cause actual
results to differ. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events
or how they may affect RBI.
Important Additional Information and Where
to Find It
This communication does not constitute an offer to sell or the solicitation
of an offer to buy any securities. This communication is being made in connection with the Merger. In connection with the Merger, certain
participants in the Merger will prepare and file with the SEC a Schedule 13E-3 Transaction Statement and certain other documents regarding
the Merger. We make available free of charge on or through the Investor Relations section of our internet website at www.rbi.com,
all materials that we file electronically with the SEC, including the Schedule 13E-3 Transaction Statement and any amendments thereto,
as reasonably practicable after electronically filing or furnishing such material with the SEC and with the Canadian Securities Administrators.
This information is also available at www.sec.gov, an internet site maintained by the SEC that contains reports, proxy and information
statements and other information regarding issuers that file electronically with the SEC, and on the System for Electronic Document Analysis
and Retrieval at www.sedar.com, a website maintained by the Canadian Securities Administrators. The references to our website address,
the SEC’s website address and the website maintained by the Canadian Securities Administrators do not constitute incorporation by
reference of the information contained in these websites and should be not considered part of this document.
Participants
in the Solicitation
Carrols,
its respective directors and certain of its respective executive officers may be deemed to be “participants” (as defined
under Section 14(a) of the Securities Exchange Act of 1934) in the solicitation of proxies from shareholders of Carrols with respect
to the potential transaction.
Information
about the identity of Carrols’ (i) directors is set forth in the sections entitled “Director Nominees’ Principal Occupation,
Business Experience, Qualifications and Directorships” and “Principal Occupation, Business Experience, Qualifications and
Directorships of Other Members of the Board of Directors” starting on pages 15 and 17 of Carrols’ proxy statement on Schedule
14A filed with the SEC on April 27, 2023 (and available here
and here),
the Current Report on Form 8-K filed with the SEC on April 28, 2023 (and available here)
and the Current Report on Form 8-K filed with the SEC on June 22, 2023 (and available here)
and (ii) executive officers is set forth in the section entitled “Information Regarding Executive Officers” on page 20 of
Carrols’ proxy statement on Schedule 14A filed with the SEC on April 27, 2023 (and available here)
and the Current Report on Form 8-K filed with the SEC on April 28, 2023 (and available here).
Information about the compensation of Carrols’ non-employee directors is set forth in the section entitled “Director Compensation”
on page 65 of Carrols’ proxy statement on Schedule 14A filed with the SEC on April 27, 2023 (and available here).
Information about the compensation of Carrols’ named executive officers is set forth in the section entitled “Executive Compensation”
starting on page 42 of Carrols’ proxy statement on Schedule 14A filed with the SEC on April 27, 2023 (and available here),
the Current Report on Form 8-K filed with the SEC on April 28, 2023 (and available here)
and the Current Report on Form 8-K filed with the SEC on June 22, 2023 (and available here).
Transactions with related persons (as defined in Item 404 of Regulation S-K promulgated under the Securities Act of 1933) are disclosed
in the section entitled “Certain Relationships and Related Transactions” on page 37 of Carrols’ proxy statement on
Schedule 14A filed with the SEC on April 27, 2023 (and available here).
As of January 15, 2024, each of the “participants” other than Anthony Hull, Matthew Perelman and Alexander Sloane “beneficially
owned” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) less than 1% of Carrols common stock. As of
January 15, 2024, and by way of their position as managing principals of Cambridge Franchise Partners, LLC, Messrs. Perelman and Sloane
may be deemed to beneficially own 19.7% of Carrols common stock. As of January 15, 2024, Mr. Hull beneficially owns 1.1% of Carrols common
stock.
Carrols Restaurant (NASDAQ:TAST)
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