Stock Purchase Agreement dated March 26, 2024 between Safflower Holdings LLC, Safflower Holdings Corp., TOG Kaizen Acquisition, LLC and The ONE Group Hospitality, Inc
Exhibit 10.1
STOCK PURCHASE AGREEMENT
by and among
SAFFLOWER HOLDINGS LLC, as Seller
SAFFLOWER HOLDINGS CORP., as the Company
TOG KAIZEN ACQUISITION, LLC, as Buyer
and
THE ONE GROUP HOSPITALITY, INC., as Parent
Dated as of March 26, 2024
NOTE TO EXHIBIT: The schedules and exhibits to this Stock Purchase Agreement, including the Disclosure Schedules, are not filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.
Explanatory Note: The Stock Purchase Agreement (the “Agreement”) contains representations and warranties by the parties thereto made only for the purposes of the Agreement. The Agreement is filed with this report only to provide investors with information regarding its terms and conditions, and not to provide any other factual information regarding the Company or its business. A party’s representations and warranties were made solely for the benefit of the other party or parties and (i) were not intended to be treated as categorical statements of fact, but rather as a way to allocate risk if a representation and warranty proves to be inaccurate; (ii) may have been qualified in the Agreement by disclosures that were made to the other party or parties in connection with the negotiation of the Agreement (provided that any specific facts that contradict the representations and warranties in the Agreement in any material respect have been disclosed); (iii) may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and (iv) were made only as of the date of the Agreement or such other date or dates as may be specified in the Agreement. Accordingly, they should not be relied upon by investors as statements of factual information.
TABLE OF CONTENTS
Page
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ii
SCHEDULES
Schedule 1.1(c)-Permitted Liens
Schedule 6.12-Consents
iii
EXHIBITS
Exhibit A-Statement of Net Working Capital
Exhibit B-1-Form of Primary Policy
Exhibit B-2-Form of Excess Policy
Exhibit C-Form of Escrow Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of March 26, 2024, is made by and among Safflower Holdings LLC, a Delaware limited liability company (“Seller”); Safflower Holdings Corp., a Delaware corporation (the “Company”); TOG Kaizen Acquisition, LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“Buyer”); and The ONE Group Hospitality, Inc., a Delaware corporation (“Parent”). Seller, the Company, Parent and Buyer shall be referred to herein, from time to time, collectively as the “Parties.” Capitalized terms used, but not otherwise defined herein have the meanings ascribed to such terms in Article 1.
WHEREAS, as of the date hereof, Seller owns two hundred (200) shares of the Company’s common stock, par value $0.01 per share (the “Shares”), which constitute 100% of the issued and outstanding equity interests of the Company;
WHEREAS, the board of directors (or equivalent managing body) of each of Parent and Buyer has unanimously approved the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, and determined it advisable and in the best interests of Parent and Buyer and each of their respective stockholders; and
WHEREAS, the Parties desire that, upon the terms and subject to the conditions hereof, Buyer will purchase from Seller, and Seller will sell, assign, transfer and deliver to Buyer, all of the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, the Company, Parent and Buyer hereby agree as set forth below.
CERTAIN DEFINITIONS
“2022 Audited Financial Statements” has the meaning set forth in Section 3.4(a).
“2023 Audited Financial Statements” has the meaning set forth in Section 3.4(a).
“401(k) Plans” has the meaning set forth in Section 6.9(d).
“Accounting Firm” has the meaning set forth in Section 2.3(b)(ii).
“Accounting Principles” means U.S. GAAP, applied on a basis consistent with the periods presented in the Audited Financial Statements, using the same accounting principles, practices, methodologies and procedures as were used by the Company in the preparation of the 2023 Audited Financial Statements; provided, that if the accounting principles, practices, methodologies and procedures used in the preparation of the 2023 Audited Financial Statements are inconsistent with U.S. GAAP in effect as of the Closing Date, then the accounting principles, practices,
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methodologies and procedures used in the preparation of the 2023 Audited Financial Statements shall control; provided, further, that if the accounting principles, practices, methodologies and procedures used in the preparation of the 2023 Audited Financial Statements are inconsistent with the following defined terms contained in this Agreement, then such defined terms shall control: “Cash and Cash Equivalents,” “Indebtedness,” “Net Working Capital,” “Seller Expenses,” “Transfer Taxes” and “Transaction Tax Deductions”.
“Action” has the meaning set forth in Section 3.8.
“Actual Adjustment” means (x) the Cash Purchase Price as finally determined pursuant to Section 2.3(b) minus (y) the Estimated Cash Purchase Price.
“Adjustment Escrow Account” has the meaning set forth in Section 2.3(a)(i).
“Adjustment Escrow Amount” has the meaning set forth in Section 2.3(a)(i).
“Adjustment Escrow Funds” means, at any time, the portion of the Adjustment Escrow Amount then remaining in the Adjustment Escrow Account plus all interest and income then held in the Adjustment Escrow Account.
“Affiliate” means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person, and the term “Affiliated” shall have a meaning that is correlative thereto. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto. For the avoidance of doubt, (i) employees of any Group Company are not Affiliates of any Group Company and (ii) in no event shall Seller or any Group Company be considered an Affiliate of any portfolio company or investment fund affiliated with Angelo, Gordon & Co., L.P.
“Affiliate Agreement” has the meaning set forth in Section 3.6(a)(xi).
“Agreement” has the meaning set forth in the introductory paragraph to this Agreement.
“Alternate Financing” has the meaning set forth in Section 6.15.
“Ancillary Documents” means, collectively, the Escrow Agreement and each other certificate or instrument delivered pursuant to Section 7.2 and Section 7.3 hereof.
“Antitrust Laws” means the HSR Act, the Sherman Act, the Clayton Act, the Federal Trade Commission Act and any other United States federal or state or foreign Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, restraint of trade or lessening of competition through merger or acquisition.
“ASC 842” means the Accounting Standards Update No. 2016-02 Leases.
“Assets” has the meaning set forth in Section 3.17(d).
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“Audited Financial Statements” has the meaning set forth in Section 3.4(a).
“Balance Sheet” has the meaning set forth in Section 3.4(a).
“Base Cash Consideration” means $365,000,000.
“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York, New York, are open for the general transaction of business.
“Buyer” has the meaning set forth in the introductory paragraph to this Agreement.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act, as amended, and the rules, regulations and other guidance promulgated thereunder.
“Cash and Cash Equivalents” means all cash and cash equivalents (including bank account balances, security deposits, utility deposits, credit card receivables, restricted cash and any cash held at any Leased Real Property) of the Group Companies as of the Measuring Time, determined on a consolidated basis, in each case, including cash resulting from checks, wires, drafts and credit card receivables, deposited, initiated or charged, as applicable, prior to the Measuring Time that clear thereafter (but only to the extent that such amounts are not included in the calculation of the Net Working Capital Adjustment), less the amounts of any issued but uncleared checks, drafts, overdrafts and wires issued prior to the Measuring Time that clear thereafter (but only to the extent that such amounts are not included in the calculation of the Net Working Capital Adjustment), in each case, without giving effect to the transactions contemplated hereby.
“Cash Purchase Price” means (i) the Base Cash Consideration; plus (ii) the Net Working Capital Adjustment (which may be a negative number); plus (iii) Cash and Cash Equivalents; minus (iv) Closing Date Indebtedness; minus (v) Unpaid Seller Expenses.
“Cash Purchase Price Dispute Notice” has the meaning set forth in Section 2.3(b)(ii).
“Closing” has the meaning set forth in Section 2.1.
“Closing Date” has the meaning set forth in Section 2.1.
“Closing Date Indebtedness” means the Indebtedness as of the Measuring Time.
“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Law.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Commitment Letters” has the meaning set forth in Section 5.11.
“Company” has the meaning set forth in the introductory paragraph to this Agreement.
“Company Material Adverse Effect” means any event, fact, condition, occurrence, effect, development, circumstance, matter or change (each, an “Effect”) that, individually or in the
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aggregate, together with all other Effects, (a) has had, or would reasonably be expected to have, a material adverse effect upon the financial condition, business, results of operations or assets or liabilities of the Group Companies, taken as a whole, or (b) would reasonably be expected to prevent, materially delay or materially impede the performance by Seller or the Company of their respective obligations under this Agreement or the consummation of the transactions contemplated herein; provided, however, that “Company Material Adverse Effect” shall not include in the case of clause (a) any Effect to the extent resulting from any of the following that occurs on or after the date of this Agreement: (i) conditions affecting the United States economy or any foreign economy generally, or any regulatory environment in the United States and elsewhere in the world; (ii) any national, international or supranational political, geopolitical or social conditions, including any civil commotion, civil disorder, or any other type of civil unrest (including riots, public demonstrations, protests, looting, and revolutions), the threat, engagement, cessation or escalation by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military, cyber or terrorist attack upon the United States or any other country, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country; (iii) changes to financial, banking, credit, currency, commodity (including food), capital or securities markets (including any disruption thereof and any increase or decrease therein), changes to the price of any market index or changes in interest rates or exchange rates; (iv) changes or prospective changes in U.S. GAAP, accounting standards or the interpretation or enforcement thereof; (v) changes or prospective changes after the date hereof in any Law or any action required to be taken under any Laws by which any Group Company (or any of their respective assets or properties) is bound; (vi) any change that is generally applicable to the industries or markets in which the Group Companies operate; (vii) any national or international calamities, crises or natural disasters (including those arising from storms, hurricanes, tornados, flooding, earthquakes, volcanic eruptions, epidemics or pandemics (including COVID-19) or other similar events or force majeure events, together with any restrictions, sanctions, other limitations or policies enacted or applied by a Governmental Entity in response to any of the foregoing (including any COVID-19 Measures)); (viii) any changes to the credit rating of any Group Company (although any facts and circumstances that may have given rise or contributed to any such changes that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether there has been a Company Material Adverse Effect); (ix) the negotiation, execution, announcement or existence of this Agreement or the transactions contemplated hereby, the identity of Buyer, its Affiliates or their respective financing sources or any communication by Buyer or any of its Affiliates of its plans or intentions (including in respect of officers or employees) with respect to any of the business of the Group Companies (including any impact on relationships, contractual or otherwise, with clients, vendors, partners, employees, regulators or others having relationships with any Group Company); (x) any action taken by Seller, any Group Company or their respective Affiliates contemplated, permitted or required by this Agreement or the Ancillary Documents (including the obtaining of approval or consent from any Governmental Entity or other third-party in connection with the consummation of the transactions contemplated hereby and thereby) or at Buyer’s request or with Buyer’s consent; (xi) the failure to take any action by Seller, any Group Company or their respective Affiliates if that action is prohibited by this Agreement or the Ancillary Documents and Buyer either did not consent to such action or withheld, delayed or conditioned its consent; (xii) any act or omission by Buyer or its Affiliates occurring from and after the date hereof; (xiii) any Effect
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that is cured by Seller or any Group Company; or (xiv) any failure by the Group Companies to meet any internal or published projections, forecasts, estimates or predictions of revenue, earnings, cash flow or cash position and any seasonal changes in the results of operations of the Group Companies for any period ending prior to, on or after the date of this Agreement (although any facts and circumstances that may have given rise or contributed to any such failure that are not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether there has been a Company Material Adverse Effect); provided, however, that Effects set forth in the foregoing clauses (i) through (vii) may be taken into account in determining whether there has been or is a Company Material Adverse Effect, to the extent that such Effects have a disproportionate adverse effect on the financial condition, business, results of operations, assets or liabilities of the Group Companies, taken as a whole, compared to other companies of similar size operating in the same industry as the Group Companies.
“Competing Transaction” has the meaning set forth in Section 6.5.
“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of June 15, 2023, by and between the Seller and Buyer.
“Continuing Employees” has the meaning set forth in Section 6.9(a).
“COVID-19” means the COVID-19 pandemic, including any evolutions or mutations of the COVID-19 disease, and any further epidemics or pandemics arising therefrom.
“COVID-19 Measures” means any impact of COVID-19, including any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar Law, directive or guidelines promulgated by any Governmental Entity, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19.
“Credit Agreement” means that certain Credit Agreement, dated June 28, 2018, by and among Ally Bank, Seller, the Company, Benihana Inc., and the lenders identified on the signature pages thereto.
“Data Protection Requirements” means (i) all applicable laws, rules, regulations and orders of any Governmental Entity in any jurisdiction worldwide governing data privacy, data protection, or information security in the Processing of Personal Information, including (but solely to the extent applicable) the CAN-SPAM Act, the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Children’s Online Privacy Protection Act, the Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act, the Gramm Leach Bliley Act, the California Consumer Privacy Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Virginia Consumer Data Protection Act, the General Data Protection Regulation (EU) 2016/679 (“GDPR”), or any national laws or regulations implementing GDPR, and any security breach notification or disclosure laws; (ii) the Payment Card Industry Data Security Standard, as applicable; (iii) any provisions of contracts or agreements, to which any Group Company is party governing data privacy, data protection, or information security; and (iv) any statement in any advertisements, promotions, publications, or other documents or materials that a Group Company
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provides or makes available to any of the Group Company’s customers in any form or medium relating to data privacy, data protection, or information security.
“D&O Claim” has the meaning set forth in Section 6.7(a).
“D&O Costs” has the meaning set forth in Section 6.7(a).
“D&O Expenses” has the meaning set forth in Section 6.7(a).
“D&O Indemnifying Party” has the meaning set forth in Section 6.7(a).
“D&O Indemnitees” has the meaning set forth in Section 6.7(a).
“Data Room” has the meaning set forth in Section 10.5.
“Debt Commitment Letter” has the meaning set forth in Section 5.11.
“Debt Financing” has the meaning set forth in Section 5.11.
“Debt Financing Sources” means the collective reference to each lender and each other Person (including each agent and each arranger) that have committed to provide or arrange or otherwise entered into agreements in connection with the Debt Financing and the other transactions contemplated hereby (including any commitment letters, engagement letters, credit agreements, loan agreements or indentures relating thereto (and any joinders or amendments thereof)), together with each former, current and future Affiliate thereof and each former, current and future officer, director, employee, member, manager, partner, attorney, agent, representative and permitted successor and assign of each of such lender, other Person or Affiliate.
“Deferred Compensation Plan” means the Nonqualified Deferred Compensation Plan of Benihana, Inc., adopted April 27, 2010.
“Employee Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA, whether or not subject to ERISA) and each other pension, profit-sharing or other retirement, bonus, deferred compensation, incentive compensation, stock bonus, stock appreciation, stock purchase, stock ownership, restricted stock, restricted stock unit, stock option or other equity-based (whether real or phantom), employment, consulting, vacation, holiday, sick leave, welfare benefit, paid time off, leave of absence, tax gross up, disability, death benefit, cafeteria, hospitalization, material fringe benefit, medical, dental, vision, life or other insurance, termination, retention, change in control or severance plan, program, policy or contract) and other material benefit or compensation plans, agreements or commitments, in each case, whether or not subject to ERISA, (i) under which any current or former director, officer, employee or consultant of any Group Company has any right to benefits from any Group Company, (ii) to which any Group Company makes or is required to make contributions with respect to such directors, officers, employees or consultants, (iii) which are maintained, sponsored, contributed to, or required to be contributed to by any Group Company or any trade or business (whether or not incorporated) which would be treated at any relevant time as a single employer with any Group Company under Section 414 of the Code or Section 4001 of ERISA (an “ERISA Affiliate”), or (iv) in respect of which any Group Company or ERISA Affiliate has or may have any obligation to contribute or
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other liability; other than any benefit or compensation plan or arrangement maintained by a Governmental Entity. The term “Employee Benefit Plan” shall also include any plan, program, policy, arrangement or contract with respect to which any Group Company or any ERISA Affiliate may have liability (including potential, secondary or contingent liability) under Title IV of ERISA or otherwise to any Person and including any liability by reason of any Person’s being or having been an ERISA Affiliate.
“Environmental Laws” means all Laws in effect concerning (i) pollution or protection of the environment; (ii) the use, generation, handling, transportation, treatment, storage, disposal, discharge, release, control or cleanup of, or exposure of any person to, any pollutant, contaminant, toxic or otherwise hazardous materials, substances or wastes; or (iii) remediation or restoration of the environment.
“Environmental Permits” has the meaning set forth in Section 3.10(b).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” has the meaning set forth in Section 2.3(a)(i).
“Escrow Agreement” has the meaning set forth in Section 2.3(a)(i).
“Estimated Closing Statement” has the meaning set forth in Section 2.3(a).
“Estimated Cash Purchase Price” has the meaning set forth in Section 2.3(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Fee Letter” has the meaning set forth in Section 5.11.
“Financial Statements” has the meaning set forth in Section 3.4(a).
“Fraud” means a false statement of a material fact with respect to the making of any of the representations and warranties by a Party as set forth in this Agreement or in any other Ancillary Document (a) where the Party making such false statement (i) has actual knowledge (as opposed to constructive knowledge) of the falsity of such statement and that such falsity would constitute a breach of any of the representations and warranties made by the Party as set forth in this Agreement or in any other Ancillary Documents, (ii) makes such false statement with the intent to deceive the Party to whom such false statement is made and (iii) makes such false statement with the intent to induce reliance in the Party to whom such false statement is made, and (b) where the Party to whom such false statement is made (i) justifiably relies on such false statement and (ii) suffers actual damages as a result of such reliance.
“Fundamental Representations” means the representations and warranties contained in Section 3.1(a) (Organization and Qualification), Section 3.2 (Capitalization), Section 3.3 (Authority), Section 4.1 (Authority) and Section 4.3 (Title to Shares).
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“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or that govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.
“Governmental Entity” means any United States or foreign (i) federal, state, local, municipal or other government; (ii) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal); or (iii) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.
“Group Companies” means, collectively, the Company and each of its Subsidiaries and each of them, individually, a “Group Company”.
“Group Company Intellectual Property” means any and all Intellectual Property Rights that are owned, purported to be owned, used, held for use or practiced by any Group Company, including all Group Company IP Registrations.
“Group Company Owned Intellectual Property” means any and all Intellectual Property Rights that are owned or purported to be owned by any Group Company.
“Group Company IP Registrations” has the meaning set forth in Section 3.12(a)(ii).
“Guaranteed Obligations” has the meaning set forth in Section 10.20(a).
“Harmful Code” means any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the Software industry) or any other code designed or intended to have, or capable of performing, any of the following functions: disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed; or damaging or destroying any data or file without the user’s consent.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Income Tax” means any Tax imposed on or determined with reference to gross or net income or profits or other similar Tax (including any franchise Taxes imposed in lieu of any income Tax).
“Indebtedness” means, as of any specific time, without duplication, with respect to the Group Companies: (i) indebtedness for borrowed money (including amounts due and owing under (x) the Credit Agreement and (y) the Premium Financing Arrangements; provided, that for purposes of calculating the Cash Purchase Price with respect to this clause (y), such amount shall be calculated net of the premiums paid with respect to such agreement, but in no event, shall such amount be less than zero); (ii) obligations for the deferred purchase price of assets, property,
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services or securities (excluding any trade payables and accrued expenses arising in the ordinary course of business of the Group Companies); (iii) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security; (iv) leases treated as finance leases under the Accounting Principles; (v) all reimbursement or other obligations with respect to the letters of credit, bank guarantees, bankers’ acceptances or other similar instruments, in each case, solely to the extent drawn; (vi) all breakage costs or fees with respect to any interest rate, currency swap, cap, forward or other similar arrangements designed to provide protection against fluctuations in any price or rate that are terminated at or prior to the Closing; (vii) all obligations and liabilities secured by any Lien (other than Permitted Liens) upon any property or assets of any Group Company; (viii) the aggregate amount (but not less than zero) of the accrued but unpaid Income Taxes of the Group Companies taking into account any applicable Transaction Tax Deduction to the extent not otherwise applied in calculating such accrual; (ix) earned and unpaid corporate executive bonus in an aggregate amount; (x) amounts accrued in respect of settlement obligations for any Actions net of offsetting recoveries reasonably expected to be received in connection with the settlement of such Actions in an amount not to exceed $1,000,000; (xi) amounts required to be contributed by Benihana, Inc., under the Rabbi Trust following Closing pursuant to Section 1(e) of the Rabbi Trust; (xii) all obligations of the type described in clauses (i) through (xi) above of any third-party, in each case, for which any Group Company is responsible or liable as obligor, guarantor or surety; and (xiii) for clauses (i) through (xii) above, all accrued interest, fees, costs, prepayment and other premiums, expenses, reimbursements, indemnities, breakage costs or penalties, if any, in connection with any of the foregoing. Notwithstanding the foregoing, “Indebtedness” shall not include any (1) intercompany obligations; (2) obligations under operating leases that are not required to be treated as finance leases under U.S. GAAP; (3) build to suit lease obligations, (4) unamortized deferred financing costs; (5) undrawn amounts under letters of credit or continuous or delayed draw instruments of credit; (6) obligations under any interest rate, currency or other hedging agreements (other than the breakage costs or fees described in clause (vi)); (7) amounts included as Seller Expenses; (8) amounts otherwise taken into account in the calculation of Net Working Capital; (9) obligations under surety bonds or similar instruments; (10) any gift card liability or other deferred revenue; (11) any obligations or liabilities for or related to Taxes (other than accrued and unpaid Income Taxes); (12) obligations or liabilities pursuant to the Credit Agreement for performance (rather than payment) or other contingent or conditional obligations (e.g., indemnification) not currently due; (13) obligations arising out of or related to items 3, 7 and 8 set forth on Section 3.17(b) of the Disclosure Schedules; (14) Losses, liabilities or obligations arising out of the W-2 Matter; and (15) any current or future (including both anticipated and unanticipated) obligations, liabilities or accruals for or related to capital expenditures, whether in respect of the Group Companies’ restaurants in Conroe, TX, Temecula, CA, San Mateo, CA and Plantation, FL (such restaurants, the “Development Locations”) or otherwise.
“IT Systems” means all computer systems, servers, network equipment and other computer hardware owned, leased or licensed by any Group Company.
“Intellectual Property Rights” means all right, title, and interests in and to the following: (i) trade names, corporate names, trademarks and service marks, domain names, social media handles, logos, slogans, trade dress, and other source identifiers, and registrations or applications to register any of the foregoing, together with the goodwill symbolized by any of the foregoing (collectively, “Trademarks”); (ii) patents, utility models and other statutory rights with respect to
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the protection of inventions, and all applications, divisionals, continuations, continuations-in-part, and reissues for any of the foregoing (collectively, “Patents”); (iii) copyrights and other rights in works of authorship (whether registered or unregistered) and registrations and applications for registration of copyrights (collectively, “Copyrights”); (iv) trade secrets, including know-how, recipes, methods, processes, proprietary systems and methodologies, technical data, customer lists and any other information, in each case, to the extent any of the foregoing derives economic value from not being generally known to other Persons who can obtain economic value from its disclosure or use, excluding any Copyrights or Patents that may cover or protect any of the foregoing (collectively, “Trade Secrets”); (v) rights of attribution and integrity and other moral rights of an author; and (vi) rights in, arising out of, or associated with a person’s name, voice, signature, photograph, or likeness, including rights of personality, privacy, and publicity and similar rights, in each case whether currently existing or hereafter developed or acquired, arising under statutory law, common law, or by contract, and whether or not perfected, registered or issued, including all applications, disclosures, registrations, issuances, renewals and extensions with respect thereto.
“Latest Balance Sheet” has the meaning set forth in Section 3.4(a).
“Law” means applicable laws, rules, regulations, codes, ordinances and orders of all Governmental Entities.
“Lease Guarantees” has the meaning set forth in Section 3.17(b).
“Leasehold Improvements” means all buildings, structures and similar improvements located on any Leased Real Property which are owned by any of the Group Companies, regardless of whether title to such buildings, structures or similar improvements are subject to reversion to the landlord or other third-party upon the expiration or termination of the Real Property Lease for such Leased Real Property.
“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by any Group Company.
“Lien” means any mortgage, deed of trust, pledge, security interest, lien, charge, hypothecation, option to purchase or lease or otherwise acquire any interest, conditional sales agreement, restriction, covenant, right of way, title defect, adverse claim of ownership or use, easement, encroachment or other similar encumbrance of any kind; provided, however, that (a) no license or other rights grant with respect to any Intellectual Property Rights shall, in and of itself, be deemed a “Lien” hereunder and (b) Liens securing the obligations of the Group Companies under the Credit Agreement and related agreements shall not be deemed a “Lien” hereunder.
“Losses” means any and all losses, liabilities, costs, expenses, claims, suits, Actions, damages, deficiencies, Taxes, interest, awards, judgments, penalties or fines.
“Material Contracts” has the meaning set forth in Section 3.6(a).
“Material Supplier” has the meaning set forth in Section 3.19.
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“Measuring Time” means 12:01 a.m., New York City time, on the Closing Date.
“Net Working Capital” means (i) the aggregate value of those current assets of the Group Companies, on a consolidated basis, as of the Measuring Time that are included in the line item categories of current assets specifically identified in the Statement of Net Working Capital, less (ii) the aggregate value of (A) those current liabilities of the Group Companies, on a consolidated basis, as of the Measuring Time that are included in the line item categories of current liabilities specifically identified in the Statement of Net Working Capital and (B) all self-insurance claim liabilities, including current and non-current incurred but not reported claims, net of recoveries from third-party insurers, as determined by the Company’s actuarial service provided as of the Closing Date, in each case, determined on a consolidated basis without duplication as of the Measuring Time and calculated in accordance with the Accounting Principles (including with respect to establishing levels of reserves). Notwithstanding the foregoing, “Net Working Capital” shall exclude any amounts related to (1) any and all Income Tax assets and liabilities and any and all deferred tax assets and liabilities established for financial accounting purposes to reflect timing differences between book and tax income and loss; (2) Cash and Cash Equivalents; (3) any intercompany payables or receivables, (4) Indebtedness (including accrued interest); (5) Seller Expenses; (6) RESERVED; (7) any and all current assets and current liabilities associated with the adoption of ASC 842; (8) earned and unpaid corporate executive bonus; (9) amounts accrued for potential or actual settlements or judgments in respect of any Actions; (10) any amounts related to insurance premium finance arrangements; or (11) Losses, liabilities or obligations arising out of the W-2 Matter. In determining whether any specific account or sub-account on the balance sheet is included or excluded from Net Working Capital, treatment will be consistent with the Statement of Net Working Capital.
“Net Working Capital Adjustment” means the amount equal to (i) the Net Working Capital; minus (ii) the Target Net Working Capital.
“New Plans” has the meaning set forth in Section 6.9(b).
“Non-Party Affiliates” has the meaning set forth in Section 10.18.
“Outside Date” has the meaning set forth in Section 9.1(d).
“Parent” has the meaning set forth in the introductory paragraph to this Agreement.
“Parent and Buyer Fundamental Representations” means the representations and warranties contained in Section 5.1(a) (Organization), and Section 5.3 (Authority).
“Parent Group Companies” means, collectively, Parent and each of its Subsidiaries and each of them, individually, a “Parent Group Company”.
“Parent Preferred Stock” means the preferred stock, par value $0.0001, of Parent.
“Parties” has the meaning set forth in the introductory paragraph to this Agreement.
“Payoff Letters” means customary payoff letters from the Persons to whom any indebtedness for borrowed money with respect to the Group Companies is owed, signed by such
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Persons, setting forth, among other things, (i) the amount required to pay off in full at the Closing all indebtedness for borrowed money owed to such Person, (ii) wire transfer instructions for the payment of such amount, (iii) a release of all Liens, if any, which such Person may hold on any member of the Group Companies or any of the assets of such parties, effective upon receipt of the payoff amount set forth therein (for purposes of this clause (iii), “Liens” shall include liens and encumbrances securing the Credit Agreement) and (iv) if applicable, provisions allowing Buyer to (x) backstop or cash collateralize any letters of credit provided in connection with such indebtedness at Closing or (y) otherwise make arrangements at Closing satisfactory to Buyer with respect to any such letters of credit.
“Permits” has the meaning set forth in Section 3.11.
“Permitted Liens” means (i) mechanic’s, materialmen’s, carriers’, repairers’ and other Liens arising or incurred in the ordinary course of business of the Group Companies for amounts that are not yet delinquent or are being contested in good faith by appropriate proceedings that are reflected as a liability in the Financial Statements; (ii) Liens for Taxes (A) not delinquent as of the Closing Date or (B) that are being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established and are reflected as a liability in the Financial Statements for periods ending on or before the date of the Latest Balance Sheet and in the Group Companies’ financial statements consistent with past practice since the date of the Latest Balance Sheet Date; (iii) Liens on real property (including easements, covenants, conditions, rights of way and similar restrictions) that do not materially interfere with Group Companies’ present uses or occupancy of such real property; (iv) Liens granted to any lender at the Closing in connection with any financing by Buyer or its Affiliates of the transactions contemplated hereby; (v) zoning, building codes and other land use regulations imposed by Governmental Entities having jurisdiction over the real property regulating the use or occupancy of real property or the activities conducted thereon; (vi) Liens described in Schedule 1.1(c) attached hereto; (vii) any right, interest, Lien or title of a licensor, sublicensor, lessor or sublessor under any license, sublicense, lease, sublease or other similar agreement or in the property being leased or licensed not created or granted by any of the Group Companies; (viii) purchase money Liens and Liens securing rental payments under lease arrangements; (ix) other Liens which do not materially impair the use, value or marketability of the underlying asset; (x) with respect to the Leased Real Property, (1) the terms, conditions, and provisions of the Real Property Leases; (2) any Lien or other matter affecting title to the fee estate underlying such Leased Real Property; (3) Liens in favor of lessors, sublessors or licensors under the Real Property Leases or encumbering the interests of such lessors, sublessors or licensors (or holder of superior interests); (4) any right, title or interest of a lessor, sublessor or licensor under any of the Real Property Leases; and (5) all matters that may be shown on any title commitments and title policies, and any matter that would be reflected on a current, accurate ALTA/NSPS survey or physical inspection of any parcel of Leased Real Property; (xi) those Liens reflected in, reserved against or otherwise disclosed on the Financial Statements; (xii) all Liens created by, arising under, or existing as a result of, any Law; (xiii) all rights reserved to or vested in any Governmental Entity to control or regulate any asset or property in any manner and all Laws applicable to assets or properties; (xiv) easements, covenants, conditions, restrictions, charges, claims, rights of way, encroachments, defects or other minor imperfections of title and other similar restrictions whether or not of record; (xv) nonexclusive licenses of Intellectual Property Rights in the ordinary course of business; and (xvi) Liens that
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have been placed by any developer, landlord or other third-party on property over which a Group Company has an easement, lease or license rights.
“Personal Information” means, in addition to any definition provided by a Group Company for any similar term (e.g., “personally identifiable information,” “personal data” or “PII”) in any Group Company privacy policy or other internal or public-facing statement, all information regarding or capable of being associated with any individual or device, including: (i) information that identifies, could be used to identify or is otherwise identifiable with an individual, including name, physical address, telephone number, email address, financial account number, government-issued identifier (including Social Security number and driver’s license number), medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations, and marital or other status, photograph, face geometry, or biometric information, and any other data used or intended to be used to identify, contact or precisely locate any individual or device; (ii) any data regarding an individual’s activities online or on a mobile or other application (e.g., searches conducted, web pages or content visited or viewed); and (iii) Internet Protocol addresses or other persistent identifiers. Personal Information may relate to any individual, including a current, prospective or former customer or employee of any Person. Personal Information includes information in any form, including paper, electronic and other forms.
“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.
“Pre-Closing Tax Period” means a taxable period ending on or before the Closing Date.
“Preferred Stock Commitment Letter” has the meaning set forth in Section 5.11.
“Preferred Stock Financing” has the meaning set forth in Section 5.11.
“Preferred Stock Financing Sources” means the Persons that have committed to provide or arrange the Preferred Stock Financing in connection with the transactions contemplated hereby, together with their respective Affiliates and the respective officers, directors, employees, attorneys, agents, representatives and permitted successors and assigns of each of such Person or Affiliate.
“Premium Financing Arrangements” means (a) that certain Premium Finance Agreement Promissory Note, dated as of September 1, 2023, made by Benihana, Inc. for the benefit of AFCO Credit Corporation, (b) that certain Premium Finance Agreement Promissory Note, dated as of October 9, 2023, made by Benihana, Inc. for the benefit of AFCO Credit Corporation, and (c) that certain Premium Finance Agreement, dated as of August 14, 2023, made by Benihana, Inc. for the benefit of AFCO Credit Corporation.
“Privacy Policies” has the meaning set forth in Section 3.12(b)(iii).
“Process” or “Processing” means, with respect to Personal Information, the use, collection, access, storage, recording, organization, adaption, alteration, transfer, retrieval, disclosure, dissemination or combination of such Personal Information.
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“Proposed Closing Date Calculations” has the meaning set forth in Section 2.3(b)(i).
“Protected Communications” has the meaning set forth in Section 10.17(b).
“R&W Insurance Costs” has the meaning set forth in Section 10.4.
“R&W Insurance Policy” means collectively (i) the buyer-side representations and warranties insurance policy issued by Liberty Surplus Insurance Corporation to Buyer and (ii) the excess liability insurance policy issued by Arch Reinsurance Ltd. to Buyer, attached hereto as Exhibit B-1 and Exhibit B-2, respectively.
“Rabbi Trust” means the Benihana, Inc. Executive Retirement Savings Plan Trust Agreement, dated April 27, 2010.
“Real Property Lease” means all leases, subleases, licenses, concessions and other agreements pursuant to which any Group Company holds any Leased Real Property.
“Regulatory Approvals” has the meaning set forth in Section 6.4(a).
“Related Party” has the meaning set forth in Section 3.18.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security Breach” means any actual: (a) unauthorized or unlawful access to, or unauthorized alteration, destruction, disclosure, loss, Processing, or use of, Personal Information and any Group Company’s confidential information; (b) unauthorized use of, or unauthorized access to IT Systems; or (c) inability to Process Personal Information and Group Company’s confidential information, or access or use IT Systems due to Harmful Code, ransomware, or any malicious attack, exfiltration, or exploit of such Personal Information and any Group Company’s confidential information, or IT Systems.
“Seller” has the meaning set forth in the introductory paragraph to this Agreement.
“Seller Counsel” has the meaning set forth in Section 10.17.
“Seller Expenses” means, without duplication, the collective amount payable by the Group Companies for all out-of-pocket costs and expenses that are incurred in connection with the transactions contemplated by this Agreement, in each case, solely to the extent required to be paid or reimbursed by any of the Group Companies, including (i) the amount of any investment banking, accounting, attorney or other professional fees, including the fees and expenses of Seller Counsel (as defined in Section 10.17) and Piper Sandler & Co.; (ii) the amount of any “single-trigger” change of control payments or similar amounts payable by the Group Companies that are not paid by a Group Company at or prior to Closing or included as an accrual in the computation of Net Working Capital or Indebtedness and payable solely as a result of the consummation of the transactions contemplated herein (but excluding any “double trigger” payments or any amount payable as a result of any actions taken by Parent, Buyer or a Group Company on or after the Closing); (iii) the amount of all sale, “stay-around,” retention, change of control or similar bonuses
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or payments payable to current or former employees, directors or consultants of any Group Company that are not paid by a Group Company at or prior to Closing or included as an accrual in the computation of Net Working Capital or Indebtedness and payable solely as a result of the consummation of the transactions contemplated herein (but excluding any “double trigger” payments or any amount payable as a result of any actions taken by Parent, Buyer or a Group Company on or after the Closing); and (iv) the employer portion of any payroll taxes due in connection with the payments described in clauses (ii) and (iii); provided, that “Seller Expenses” shall not include (1) any amount that is included in the calculation of Indebtedness, Cash and Cash Equivalents or Net Working Capital; (2) 50% of any filing fees (if any) under the HSR Act and all non-U.S. Laws similar to the HSR Act; (3) 50% of Transfer Taxes and fees referenced in Section 6.13; (4) 50% of the policy premium with respect to the Tail Policy referenced in Section 6.7(b); (5) 50% of any fees or expenses of the Escrow Agent in connection with the Escrow Agreement; or (6) Losses, liabilities or obligations arising out of the W-2 Matter.
“Seller Released Claims” has the meaning set forth in Section 6.17.
“Seller Released Parties” has the meaning set forth in Section 6.17.
“Seller Tax Refund” has the meaning set forth in Section 6.11(b).
“Shares” has the meaning set forth in the recitals to this Agreement.
“SNDAs” means all subordination, nondisturbance, and/or attornment agreements for each Real Property Lease, to the extent in existence (including all amendments and modifications with respect thereto).
“Software” means all (i) computer programs, including all software implementations of algorithms, models and methodologies, whether in source code or object code; (ii) databases and compilations of data, including all data and collections of data, whether machine readable or otherwise; and (iii) documentation, including user manuals and other training documentation, descriptions, flow-charts, specifications, schema, and architecture related to any of the foregoing.
“Statement of Net Working Capital” means the statement of Net Working Capital determined as of January 28, 2024, and attached as Exhibit A hereto.
“Straddle Period” means a taxable period that includes (but does not end on) the Closing Date.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation)
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if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
“Tail Policy” has the meaning set forth in Section 6.7(b).
“Target Net Working Capital” means negative $30,821,000.
“Tax” means any federal, state, local or foreign income gross receipts, sales, use, ad valorem, transfer, franchise, profits, registration, license, lease, service, service use, withholding, payroll, employment, social security, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other tax, fee, assessment or charge of any kind whatsoever in the nature of a tax, including escheat and unclaimed property (including any amounts resulting from the failure to file any Tax Return), including any interest, penalties or additions to tax in respect of the foregoing.
“Tax Claim” has the meaning set forth in Section 6.11(d)(i).
“Tax Return” means any return, declaration, report, election, disclosure, claim for refund or information return or statement relating to Taxes filed or required to be filed with any Governmental Entity, including any schedule or attachment thereto, and including any amendment or supplement thereof.
“Transaction Financing” has the meaning set forth in Section 5.11.
“Transaction Financing Sources” has the meaning set forth in Section 6.16(a).
“Transaction Tax Deductions” means, to the extent deductible by the Group Companies as determined pursuant to Section 6.11, for Income Tax purposes, without duplication, the aggregate amount of: (i) the Seller Expenses; (ii) all success-based fees of professionals (including investment bankers and other consultants and advisors) paid by or on behalf of any Group Company in connection with this Agreement to the extent that such amounts are paid prior to Closing or otherwise are taken into account in the computation of Net Working Capital or Indebtedness; (iii) the capitalized financing costs and expenses and any prepayment premium resulting from the satisfaction at the Closing of Closing Date Indebtedness; and (iv) all sale, “stay-around,” retention, change of control or similar bonuses or payments payable to current or former employees, directors or consultants of any Group Company contingent upon the Closing, together with the employer portion of any payroll taxes imposed with respect to the foregoing, in each case either paid by a Group Company at or prior to Closing or included as an accrual in the computation of Net Working Capital, Indebtedness or Unpaid Seller Expenses.
“Transfer Agent” means Continental Stock Transfer & Trust Company.
“Transfer Taxes” means all sales (including bulk sales), use, value added, transfer, conveyance, stamp, registration, documentary, excise, real property transfer, recording, license or similar Taxes and fees imposed by any Governmental Entity arising out of or in connection with the transactions contemplated by this Agreement.
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“Treasury Regulations” means the regulations promulgated under the Code by the United States Department of the Treasury.
“Unpaid Seller Expenses” means the amount of Seller Expenses incurred and unpaid as of immediately prior to the Closing.
“U.S. GAAP” means accounting principles generally accepted in the United States of America; provided, that in the case of the 2022 Audited Financial Statements, “U.S. GAAP” shall disregard the adoption of ASC 842.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state or local Law.
“Willful Breach” means, with respect to a Party, a material breach by such Party that is a consequence of an act or omission knowingly undertaken or knowingly omitted by such Party with the actual knowledge that such act or omission would cause a material breach of this Agreement.
“W-2 Indemnity Escrow Account” has the meaning set forth in Section 2.3(a)(ii).
“W-2 Indemnity Escrow Amount” has the meaning set forth in Section 2.3(a)(ii).
“W-2 Indemnity Escrow Funds” means, at any time, the portion of the W-2 Indemnity Escrow Amount then remaining in the W-2 Indemnity Escrow Account plus all interest and income then held in the W-2 Indemnity Escrow Account.
“W-2 Matter” means the facts and circumstances underlying the civil penalty notice from IRS, dated February 12, 2024, addressed to Benihana National Corp. and Benihana of Tokyo.
CLOSING; PURCHASE
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having been paid to the Person in respect of which Buyer or the Company, as the case may be, made such deduction or withholding.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules accompanying this Agreement (the “Disclosure Schedules”), the Company and Seller represent and warrant to Buyer as of the date hereof and as of the Closing as follows:
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contemplated hereby and thereby. The execution and delivery of this Agreement and each of the Ancillary Documents to which the Company is or will be a party and the performance by the Company of its obligations hereunder and thereunder have been (and the Ancillary Documents to which the Company is or will be a party will be at or prior to the Closing) duly authorized by all necessary corporate action on the part of the Company and no other proceeding (including by its equityholders) on the part of the Company is necessary to authorize the execution, delivery or performance of this Agreement and each of the Ancillary Documents to which the Company is or will be a party or to consummate the transactions contemplated hereby or thereby. No vote of the Company’s equityholders is required to approve this Agreement (and the Ancillary Documents to which the Company is or will be a party) or for the Company to consummate the transactions contemplated hereby or thereby. This Agreement has been (and the Ancillary Documents to which the Company is or will be a party will be at or prior to the Closing) duly executed and delivered by the Company and constitutes (or will constitute when executed) a valid, legal and binding agreement of the Company (assuming that this Agreement has been, and the Ancillary Documents to which the Company is or will be a party will be, duly and validly authorized, executed and delivered by the other Persons party thereto at or prior to the Closing), enforceable against the Company in accordance with their respective terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought (clauses (i) and (ii), collectively, the “Enforceability Exception”).
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Any contract that is required (or, if entered into after the date hereof, would have been required) to be listed pursuant to Section 3.6(a) is a “Material Contract.”
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purchase, sale, and service of liquor, including the names of the Permits and their respective dates of expiration.
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REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedules, Seller hereby represents and warrants to Buyer (and, with respect to Section 4.6, Parent) as of the date hereof and as of the Closing as follows:
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executed and delivered by the other Persons party thereto at or prior to the Closing), enforceable against Seller in accordance with their respective terms, subject to applicable Enforceability Exception.
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any Shares. Assuming Buyer has the requisite power and authority to be the lawful owner of the Shares, upon delivery to Buyer at the Closing of certificates representing the Shares, duly endorsed by Seller for transfer to Buyer, good, valid and marketable title to the Shares will pass to Buyer, free and clear of all Liens, other than Liens arising under applicable state and federal securities Laws, and any transfer restrictions as may be set forth in the Company’s Governing Documents.
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Except as set forth in the Disclosure Schedules, each of Parent and Buyer hereby represents and warrants , on a joint and several basis, to Seller as of the date hereof and as of the Closing as follows:
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to: (A) reduce the total amount of the Preferred Stock Financing; (B) impose any additional conditions precedent to the availability of the Preferred Stock Financing; (C) otherwise restrict or limit the availability of all or any portion of the Preferred Stock Financing; or (D) otherwise adversely affect the ability of Buyer to consummate the Transaction Financing on a timely basis (taking into account the anticipated timing of Closing). As of the date hereof, (1) none of the Commitment Letters, the Investment Agreement or the Fee Letters has been amended or modified, (2) to the Buyer’s knowledge, no such amendment or modification is contemplated, and (3) the respective commitments set forth in the Commitment Letters have not been withdrawn or rescinded in any respect. Buyer has fully paid, or caused to be fully paid, any and all commitment or other fees which are due and payable on or prior to the date hereof pursuant to the terms of the Commitment Letters, the Investment Agreement and any related Fee Letter. At the Closing, Buyer will have sufficient funds available to pay all obligations of Buyer under this Agreement including pursuant to Section 2.3(a) and all out-of-pocket costs and expenses of Buyer arising from the Transaction Financing. As of the date hereof, to the extent this Agreement must be in a form acceptable to any party to a Commitment Letter, such party has approved this Agreement. For the avoidance of doubt, the each of Parent and Buyer affirms and agrees that obtaining of the Transaction Financing is not a condition to the Closing and that the Buyer has sufficient cash on hand, binding commitments or other sources of immediately available funds to enable it to make payment of all obligations of Buyer under this Agreement including pursuant to Section 2.3(a) and all out-of-pocket costs and expenses of Buyer arising from the Transaction Financing.
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manner, any Person or portion thereof, or otherwise acquire or agree to acquire any assets, where the entering into of a definitive agreement relating to or the consummation of such acquisition, merger or consolidation would reasonably be expected to (a) impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any authorizations, consents, orders, declarations or approvals of any Governmental Entity necessary to consummate the transactions contemplated hereby or in any Ancillary Document or the expiration or termination of any applicable waiting period; (b) materially increase the risk of any Governmental Entity entering a writ, decree, judgment, injunction or other order prohibiting the consummation of the transactions contemplated hereby or in any Ancillary Document; or (c) materially delay the consummation of the transactions contemplated hereby or in any Ancillary Document.
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COVENANTS
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Company or any of its Affiliates, on the one hand, and Buyer or any of its Affiliates, on the other hand, are adverse parties in any Action and such information is reasonably pertinent thereto; or (b) information relating to Taxes or Tax Returns other than information relating to the Group Companies. All of such information shall be treated as “Confidential Information” pursuant to the terms of the Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein. Parent agrees that it shall be bound by the Confidentiality Agreement to the same extent as Buyer.
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information related to the Group Companies and has afforded access to, and engaged in discussions with, other Persons in connection with a proposed Competing Transaction and that such information, access and discussions could reasonably enable another Person to form a basis for Competing Transaction without any breach of this Section 6.5 and (ii) Seller and the Company may respond to any unsolicited proposal regarding a Competing Transaction by indicating, without identifying Parent, Buyer or any of their respective Affiliates by name or otherwise, that each of Seller and the Company is subject to an exclusivity agreement and is unable to provide any information related to the Group Companies or entertain any proposals or offers or engage in any negotiations or discussions concerning a Competing Transaction for as long as this Agreement remains in effect.
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records and other documents pertaining to the business of the Group Companies in existence on the Closing Date and make the same available for inspection and copying by Seller during normal business hours of the Group Companies, as applicable, upon reasonable request and upon reasonable notice.
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Gordon & Co., L.P. and its Affiliates a royalty-free, non-exclusive right and license to use each Group Company’s names and the associated marks and logos for such purpose.
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other document with respect to such Transfer Taxes as may be required to comply with the provisions of applicable Laws relating to Transfer Taxes.
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Section 6.18Section 280G Parachute Payments. Seller shall use reasonable best efforts to (a) calculate the amount of any potential “parachute payment” (as defined in Section 280G(b)(2) of the Code) that is or might be payable or provided to any “disqualified individual” (as defined in Section 280G(c) of the Code) with respect to the change in ownership or effective control of the Company arising from the purchase and sale of the Shares pursuant to this Agreement; (b) to the extent necessary, obtain from each such disqualified individual a waiver of payments or benefits such that, after giving effect to all waivers, neither any Group Company nor Buyer will have made or provided, nor will be required to make or provide, any payment or benefit that would be nondeductible under Section 280G(a) of the Code or that would be subject to excise tax under Section 4999 of the Code (such waived payments with respect to any individual, the “Section 280G Waived Payments”); (c) prepare adequate disclosure for stockholder approval (the “Section 280G Disclosure”) of all Section 280G Waived Payments in accordance with the terms of Section 280G(b)(5)(B) of the Code; (d) solicit the approval of the appropriate stockholders in accordance with the terms of Section 280G(b)(5)(B) of the Code; and (e) take all other reasonable actions necessary or appropriate in support of the foregoing. Seller shall provide to Buyer in advance (i) documentation regarding the determination of the amount of Section 280G Waived Payments and (ii) drafts of all waivers, disclosure documents, stockholder consent forms and other relevant documents relating to the waiver and stockholder approval. The Company shall consider in good faith any comments made by Buyer in connection with the foregoing, including with respect to such calculations and documents prior to obtaining the waivers and soliciting the vote.
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CONDITIONS TO CLOSING
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NO SURVIVAL
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each of Parent and Buyer further acknowledges that its only recourse in the event of any breach or inaccuracy of any representation or warranty under this Agreement and in any Ancillary Document shall be pursuant to the R&W Insurance Policy. Nothing in this Agreement shall limit the liability of any Party for Fraud or Willful Breach committed by such Party.
TERMINATION
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MISCELLANEOUS
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To Buyer, Parent or to the Company (after the Closing):
The ONE Group Hospitality, Inc.
1624 Market Street, Suite 311
Denver, Colorado 80202
Attention:Chief Executive Officer and Chief Financial Officer
E-mail ***@***
with a copy (which shall not constitute notice) to:
Stoel Rives LLP
760 SW Ninth Avenue, Suite 3000
Portland, Oregon 97205
Attention:Steven H. Hull
E-mail ***@***
To Seller or to the Company (prior to the Closing):
Safflower Holdings LLC
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue
New York, NY 10167
Attention:Syed Alam
E-mail ***@***
with a copy (which shall not constitute notice) to:
Sidley Austin LLP
787 7th Ave
New York, NY 10019
Attention: David D’Urso
Telephone ###-###-####
Facsimile No: 212 ###-###-####
Email: ***@***
or to such other address as the Person to whom notice is given may have previously furnished to the other in writing in the manner set forth above.
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(including if based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.
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with respect to any Person, “ordinary course of business consistent with past practice of such Person and its Subsidiaries (taking into account any and all actions taken or omitted from being taken by such Person and its Subsidiaries in response to COVID-19 or any COVID-19 Measures)”.
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any such claim, controversy, dispute, cause of action, litigation or other proceeding shall be decided by court trial without a jury.
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No amendment or waiver of this Section 10.19 (or the definitions used herein) shall be effective to the extent such amendment is materially adverse to the Debt Financing Sources or the Preferred Stock Financing Sources, as applicable, without the prior written consent of the Debt Financing Sources or the Preferred Stock Financing Sources, as applicable. If, notwithstanding the foregoing waivers, any claim is brought against the Debt Financing Sources or the Preferred Stock Financing Sources, such claim will be governed by New York law (without giving effect to any conflicts of law principles that would result in the application of the laws of another state) and subject to the jurisdiction limitations and waiver of jury trial provisions set forth in the Debt Commitment Letter or the Preferred Stock Commitment Letter as if fully set forth herein. The Debt Financing Sources and the Preferred Stock Financing Sources are intended third party beneficiaries of this Section 10.19. This Section 10.19 shall, with respect to the matters referenced herein, supersede any provision of this Agreement to the contrary.
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Notwithstanding any other provision of this Agreement, Buyer and Seller hereby agree that Parent may assert, as a defense to any payment by Parent under this guarantee, any defense to such payment that Buyer may have under the terms of this Agreement, other than defenses arising from bankruptcy, insolvency, reorganization or other similar proceedings affecting Parent or Buyer and other defenses expressly waived hereby.
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IN WITNESS WHEREOF, each of the Parties has caused this Stock Purchase Agreement to be duly executed on its behalf as of the day and year first written above.
SELLER:
SAFFLOWER HOLDINGS LLC
By:/s/Thomas J. Baldwin
Name:Thomas J. Baldwin
Title:Authorized Person
COMPANY:
SAFFLOWER HOLDINGS CORP.
By:/s/Thomas J. Baldwin
Name:Thomas J. Baldwin
Title:President and Chief Executive Officer
BUYER:
TOG KAIZEN ACQUISTION, LLC
By:The ONE Group, LLC, its Manager
By: | The ONE Group Hospitality, Inc., its Manager |
By:/s/ Emanuel Hilario
Name:Emanuel Hilario
Title:President and Chief Executive Officer
PARENT:
THE ONE GROUP HOSPITALITY, INC.
By:/s/ Emanuel Hilario
Name:Emanuel Hilario
Title:President and Chief Executive Officer
[Signature Page to Stock Purchase Agreement]
SCHEDULE 1.1(c)
PERMITTED LIENS
| 1. | Liens pursuant to that certain Master Services Agreement, dated as of October 18, 2016, by and between First Data Merchant Services LLC and Benihana National Corp., as supplemented by the following: |
| a. | Bankcard Addendum to Master Services Agreement, dated as of October 18, 2016, by and among First Data Merchant Services LLC, Benihana National Corp., Wells Fargo Bank, N.A. and Citicorp Payment Services Inc. |
| b. | Amendment No. 1 to Master Services Agreement, dated as of November 18, 2019, by and among First Data Merchant Services LLC, Benihana National Corp., Wells Fargo Bank, N.A. and Citicorp Payment Services Inc. |
| c. | Clover Service Addendum, dated as of April 3, 2020, by and between Benihana National Corp. and First Data Merchant Services LLC |
| 2. | Liens pursuant to the Premium Financing Arrangements |
EXHIBIT A
Statement of Net Working Capital
EXHIBIT B-1
Form of Primary Policy
EXHIBIT B-2
Form of Excess Policy
EXHIBIT C
Form of Escrow Agreement
