Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
by and among
FELDENKREIS HOLDINGS LLC,
GF MERGER SUB, INC.
and
PERRY ELLIS INTERNATIONAL, INC.
_________________________
Dated as of June 15, 2018
|
TABLE OF CONTENTS
Page
Article I THE MERGER |
2 |
Section 1.1 The Merger |
2 |
Section 1.2 Closing |
2 |
Section 1.3 Effective Time |
2 |
Section 1.4 Effects of the Merger |
3 |
Section 1.5 Certificate of Incorporation |
3 |
Section 1.6 Bylaws |
3 |
Section 1.7 Directors |
3 |
Section 1.8 Officers |
3 |
Article II EFFECT OF THE MERGER ON CAPITAL STOCK |
3 |
Section 2.1 Conversion of Capital Stock |
3 |
Section 2.2 Surrender of Certificates and Book-Entry Shares |
4 |
Section 2.3 Company Options, Company SARs and Company Stock Awards |
8 |
Section 2.4 Dissenting Shares |
10 |
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
11 |
Section 3.1 Organization and Power |
11 |
Section 3.2 Foreign Qualifications |
12 |
Section 3.3 Corporate Authorization |
12 |
Section 3.4 Enforceability |
12 |
Section 3.5 Subsidiaries |
12 |
Section 3.6 Governmental Authorizations |
12 |
Section 3.7 Non-Contravention |
13 |
Section 3.8 Capitalization |
14 |
Section 3.9 Voting |
15 |
Section 3.10 SEC Reports; Company Proxy Statement; Schedule 13E-3 |
16 |
Section 3.11 Financial Statements; Internal Controls |
16 |
Section 3.12 Liabilities |
18 |
Section 3.13 Absence of Certain Changes |
18 |
Section 3.14 Litigation |
18 |
Section 3.15 Material Contracts |
19 |
Section 3.16 Benefit Plans |
21 |
Section 3.17 Labor Relations |
23 |
Section 3.18 Taxes |
24 |
Section 3.19 Environmental Matters |
25 |
Section 3.20 Intellectual Property |
26 |
Section 3.21 Real Property |
27 |
Section 3.22 Permits; Compliance with Law |
27 |
Section 3.23 Insurance |
28 |
Section 3.24 Affiliated Transactions |
28 |
Section 3.25 Opinions of Financial Advisor |
28 |
Section 3.26 Brokers |
29 |
Section 3.27 State Takeover Laws |
29 |
Section 3.28 Certain Business Practices |
29 |
Section 3.29 No Other Representations or Warranties |
30 |
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
30 |
Section 4.1 Organization and Power |
30 |
Section 4.2 Corporate Authorization |
30 |
Section 4.3 Governmental Authorizations |
31 |
Section 4.4 Non-Contravention |
31 |
Section 4.5 Capitalization; Interim Operations of Merger Sub; Ownership of Common Stock |
32 |
Section 4.6 Financing |
33 |
Section 4.7 Solvency |
34 |
Section 4.8 Litigation |
34 |
Section 4.9 No Regulatory Impediment |
34 |
Section 4.10 Absence of Certain Arrangements |
34 |
Section 4.11 Brokers |
35 |
Section 4.12 Limited Guarantee and Pledge and Security Agreement |
35 |
Section 4.13 Proxy Statement; Schedule 13E-3 |
35 |
Section 4.14 Independent Investigation |
35 |
Article V COVENANTS |
36 |
Section 5.1 Conduct of Business of the Company |
36 |
Section 5.2 Conduct of Business of Parent |
40 |
Section 5.3 Access to Information; Confidentiality |
40 |
Section 5.4 No Solicitation |
41 |
Section 5.5 Company Proxy Statement; Schedule 13E-3; Company Stockholders Meeting |
45 |
Section 5.6 Employees; Benefit Plans. |
46 |
Section 5.7 Directors’ and Officers’ Indemnification and Insurance |
48 |
Section 5.8 Reasonable Best Efforts |
50 |
Section 5.9 Consents; Filings; Further Action; Notices |
50 |
Section 5.10 Public Announcements |
52 |
Section 5.11 Fees, Expenses and Conveyance Taxes |
52 |
Section 5.12 Financing Efforts |
53 |
Section 5.13 Section 16b-3 |
57 |
Section 5.14 Agreements with Principal Stockholders |
57 |
Section 5.15 Transaction Litigation |
57 |
Section 5.16 Applicable Exchange De-listing |
57 |
Article VI CONDITIONS |
58 |
Section 6.1 Conditions to Each Party’s Obligation to Effect the Merger |
58 |
Section 6.2 Conditions to Obligations of Parent and Merger Sub |
58 |
Section 6.3 Conditions to Obligation of the Company |
59 |
Section 6.4 Frustration of Closing Conditions |
59 |
Article VII TERMINATION; TERMINATION FEES AND EXPENSES |
60 |
Section 7.1 Termination by Mutual Consent |
60 |
Section 7.2 Termination by Either Parent or the Company |
60 |
Section 7.3 Termination by Parent |
60 |
Section 7.4 Termination by the Company |
61 |
Section 7.5 Manner and Effect of Termination |
61 |
Section 7.6 Fees and Expenses Following Termination |
62 |
Article VIII MISCELLANEOUS |
64 |
Section 8.1 Certain Definitions |
64 |
Section 8.2 Interpretation |
70 |
Section 8.3 No Survival |
72 |
Section 8.4 Governing Law |
72 |
Section 8.5 Submission to Jurisdiction; Service |
72 |
Section 8.6 WAIVER OF JURY TRIAL |
73 |
Section 8.7 Notices |
73 |
Section 8.8 Amendment |
75 |
Section 8.9 Extension; Waiver |
75 |
Section 8.10 Entire Agreement |
75 |
Section 8.11 No Third-Party Beneficiaries |
76 |
Section 8.12 Severability |
76 |
Section 8.13 Rules of Construction |
76 |
Section 8.14 Assignment |
77 |
Section 8.15 Specific Performance |
77 |
Section 8.16 Counterparts; Effectiveness |
78 |
Section 8.17 Special Committee Approval |
78 |
Section 8.18 No Recourse to Financing Sources |
78 |
Section 8.19 Breach of Rollover Investors Disregarded |
79 |
Exhibits
ACertificate of
Incorporation
BBylaws
Disclosure Letters
Company Disclosure Letter
Parent Disclosure Letter
INDEX OF DEFINED TERMS
Term |
Section |
Acceptable Confidentiality Agreement |
8.1(a) |
Affiliate |
8.1(b) |
Affiliate Transactions |
3.24 |
Agreement |
Preamble |
Alternate Terms and Conditions |
5.12(a) |
Anticorruption Laws |
8.1(c) |
Applicable Exchange |
8.1(d) |
Articles of Merger |
1.3 |
Balance Sheet Date |
3.12(a) |
Book-Entry Shares |
2.1(c)(ii) |
Business Day |
8.1(e) |
Certificates |
2.1(c)(ii) |
Chosen Courts |
8.5(a) |
Closing |
1.2 |
Closing Date |
1.2 |
Code |
8.1(f) |
Common Stock |
8.1(g) |
Company |
Preamble |
Company Assets |
3.7 |
Company Board |
Recitals |
Company Board Recommendation |
Recitals |
Company Disclosure Letter |
III |
Company Employee Benefits |
3.16(a) |
Company Equity Plan |
8.1(h) |
Company Financial Advisor |
3.25 |
Company Material Adverse Effect |
3.7 |
Company Option |
2.3(a) |
Company Performance Stock Award |
2.3(d) |
Company Permits |
3.22(a) |
Company Proxy Statement |
3.6(b) |
Company Related Parties |
8.1(j) |
Company Restricted Stock Award |
2.3(c) |
Company RSUs |
2.3(e) |
Company SAR |
2.3(b) |
Company SEC Reports |
3.10(a) |
Company Severance Plan |
5.6(b) |
Company Stock Award |
2.3(d) |
Company Stockholders Meeting |
3.6(b) |
Company Termination Fee |
7.6(c) |
Confidentiality Agreements |
5.3(b) |
Continuation Period |
5.6(a) |
Contract |
8.1(k) |
Conveyance Taxes |
5.11 |
Damages |
5.7(b) |
Debt Commitment Letters |
4.6(a) |
Debt Financing |
4.6(a) |
Dissenting Shares |
2.4(a) |
Divestiture Action |
5.9(d) |
Dollars |
8.2(c) |
Effective Time |
1.3 |
Employee |
5.6(a) |
Enforceability Exceptions |
8.1(l) |
Environmental Law |
3.19 |
ERISA |
3.16(a) |
ERISA Affiliate |
3.16(a) |
Exchange Act |
3.6(b) |
Excluded Shares |
2.1(b) |
Expenses |
5.11 |
FBCA |
Recitals |
Financing |
4.6(a) |
Financing Commitments |
4.6(a) |
Financing Contingencies |
8.1(m) |
Financing Sources |
8.1(n) |
Foreign Competition Law |
3.6(f) |
Forward-Looking Information |
III |
FS Provisions |
8.11 |
GAAP |
3.11(a)(ii) |
Governmental Authority |
8.1(o) |
Governmental Authorizations |
3.6 |
Guarantor |
4.12 |
Hazardous Substances |
8.1(p) |
HSR Act |
3.6(e) |
Indemnified Parties |
5.7(a) |
Intellectual Property |
8.1(q) |
Intervening Event |
5.4(f) |
IRS |
3.16(b) |
Knowledge |
8.1(r) |
Law |
8.1(s) |
Legal Actions |
3.14 |
Lenders |
4.6(a) |
Liabilities |
3.12 |
Liens |
8.1(t) |
Limited Guarantee |
4.12 |
Material Contracts |
3.15 |
Maximum Premium |
5.7(c) |
Merger |
Recitals |
Merger Consideration |
2.1(c)(i) |
Merger Sub |
Preamble |
Non-U.S. Employee Benefit |
3.16(a) |
Option Consideration |
2.3(a) |
Orders |
8.1(u) |
Organizational Documents |
8.1(v) |
Owned Intellectual Property |
8.1(w) |
Parent |
Preamble |
Parent Assets |
4.4(b) |
Parent Contracts |
4.4(c) |
Parent Disclosure Letter |
IV |
Parent Material Adverse Effect |
8.1(x) |
Parent Plan |
5.6(c) |
Parent Related Parties |
8.1(y) |
Parent Termination Fee |
7.6(d) |
Paying Agent |
2.2(a) |
Payment Fund |
2.2(b) |
Permits |
3.22(a) |
Permitted Lien |
8.1(z) |
Person |
8.1(aa) |
Pledgor |
4.12 |
Preferred Stock |
3.8(a) |
Principal Stockholders |
Recitals |
Prior Service |
5.6(c) |
Real Property Leases |
3.21(b) |
Representatives |
8.1(bb) |
Requisite Company Vote |
8.1(cc) |
Rights |
8.1(dd) |
Rollover Investment |
4.6(a) |
Rollover Investors |
4.6(a) |
Rollover Letters |
4.6(a) |
SAR Consideration |
2.3(b) |
Schedule 13E-3 |
3.6(b) |
SEC |
3.6(b) |
Securities Act |
3.10(a) |
Pledge and Security Agreement |
4.12 |
Solvent |
8.1(ee) |
Special Committee |
Recitals |
Subsidiary |
8.1(ff) |
Superior Proposal |
8.1(gg) |
Surviving Bylaws |
1.6 |
Surviving Charter |
1.5 |
Surviving Corporation |
1.1 |
Takeover Proposal |
8.1(hh) |
Tax Returns |
8.1(ii) |
Taxes |
8.1(jj) |
Termination Date |
7.2(a) |
Transaction Litigation |
5.15 |
Voting Agreement |
Recitals |
Willful and Material Breach |
8.1(kk) |
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as
of June 15, 2018 (this “Agreement”), by and among Feldenkreis Holdings LLC, a Delaware limited liability company
(“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly-owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”).
RECITALS
WHEREAS, the Board of Directors of the
Company (the “Company Board”) established a Special Committee (the “Special Committee”),
consisting solely of independent and disinterested directors, to, among other things, consider and negotiate strategic transactions
involving the Company, including the merger of Merger Sub with and into the Company on the terms and subject to the conditions
of this Agreement (the “Merger”) and the other transactions contemplated by this Agreement, and to make a recommendation
to the Company Board with respect thereto;
WHEREAS, the Special Committee has determined
that it is fair to, advisable and in the best interests of the Company and the holders of Common Stock to enter into this Agreement
with Parent and Merger Sub, providing for the Merger and the other transactions contemplated hereby, in each case in accordance
with the Florida Business Corporation Act (the “FBCA”);
WHEREAS, the Company Board, based on
the recommendation of the Special Committee, at a meeting thereof duly called and held, has (a) approved and declared advisable
this Agreement, the Merger and the other transactions contemplated by this Agreement, (b) declared that it is fair to, advisable
and in the best interests of the Company and the stockholders of the Company that the Company enter into this Agreement and consummate
the Merger on the terms and subject to the conditions set forth in this Agreement, (c) directed that the adoption of this
Agreement be submitted to a vote at a meeting of the stockholders of the Company, and (d) recommended to the stockholders
of the Company that they adopt this Agreement (the “Company Board Recommendation”);
WHEREAS, the board of directors of Merger
Sub, at a meeting thereof duly called and held, has approved and declared advisable, and the managing member of Parent has approved,
this Agreement, the Merger and the transactions contemplated by this Agreement, on the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, concurrently with the execution
of this Agreement, and as a condition and inducement to the willingness of the Company to enter into this Agreement, (i) the Guarantor
is entering into a Limited Guarantee and (ii) the Pledgor is entering into a Pledge and Security Agreement, in each case in favor
of the Company with respect to certain of Parent’s and Merger Sub’s obligations under this Agreement;
WHEREAS, concurrently with the execution
of this Agreement, and as a condition and inducement to the willingness of Parent and Merger Sub to enter into this Agreement,
each Rollover Investor has entered into a Rollover Letter with Parent pursuant to which, among other things, the Rollover Investors
have agreed, on the terms and subject to the conditions set forth in their respective Rollover Letters, to make the Rollover Investment;
WHEREAS, concurrently with the execution
of this Agreement, and as a condition and inducement to the willingness of Parent and the Company to enter into this Agreement, certain
stockholders of the Company (the “Principal Stockholders”) are entering into a voting agreement (the “Voting
Agreement”) with Parent and the Company pursuant to which, among other things, the Principal Stockholders have agreed,
on the terms and subject to the conditions set forth in the Voting Agreement, to (a) vote their shares of Common Stock in
favor of adoption of this Agreement (and have delivered to the Company’s Board of Directors an irrevocable proxy to so vote
with respect to this Agreement to the extent provided therein) and (b) take certain other actions in furtherance of the transactions
contemplated by this Agreement.
Accordingly, in consideration of the
mutual representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as
follows:
Article
I
THE MERGER
Section 1.1
The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the
FBCA, at the Effective Time, (a) Merger Sub shall be merged with and into the Company, (b) the separate corporate existence
of Merger Sub shall cease and the Company shall continue its corporate existence under the FBCA as the surviving corporation in
the Merger (the “Surviving Corporation”) and (c) the Surviving Corporation shall become a wholly-owned
Subsidiary of Parent.
Section 1.2
Closing. Subject to the satisfaction or waiver of all of the conditions to closing contained in Article VI,
the closing of the Merger (the “Closing”) shall take place (a) at the offices of Paul, Weiss, Rifkind, Wharton
& Garrison LLP, 1285 Avenue of the Americas, New York, New York, at 10:00 a.m. (local time) on the second Business Day after
the day on which the conditions set forth in Article VI (other than those conditions that by their terms are to be satisfied
by actions taken at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived in accordance
with this Agreement, or (b) at such other place and time as Parent and the Company may agree in writing. The date on which the
Closing occurs is referred to as the “Closing Date.”
Section 1.3
Effective Time. At the Closing, Parent and the Company shall cause an articles of merger (the “Articles
of Merger”) to be executed, signed, acknowledged and filed with the Secretary of State of the State of Florida in such
form as is required by the relevant provisions of the FBCA, and shall make all other deliveries, filings or recordings required
by the FBCA in connection with the Merger. The Merger shall become effective when the Articles of Merger has been duly filed with
the Secretary of State of the State of Florida or at such other subsequent date or time as Parent and the Company may agree and
specify in the Articles of Merger in accordance with the FBCA (the “Effective Time”).
Section 1.4
Effects of the Merger. The Merger shall have the effects set forth in the FBCA, this Agreement and the Articles of
Merger. From and after the Effective Time, the Surviving Corporation shall possess all of the rights, powers, privileges, franchises
and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company, all as provided in the FBCA.
Section 1.5
Certificate of Incorporation. The certificate of incorporation of the Company shall, at the Effective Time and without
any further action on the party of any party hereto, be amended and restated to read in its entirety as set forth on Exhibit
A and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation (the “Surviving
Charter”), until amended as provided therein and by applicable Law.
Section 1.6
Bylaws. The bylaws of the Company shall, at the Effective Time and without any further action on the party of any
party hereto, be amended and restated to read in its entirety as set forth on Exhibit B and, as so amended and restated,
shall be the bylaws of the Surviving Corporation (the “Surviving Bylaws”), until amended as provided in the
Surviving Charter and the Surviving Bylaws and by applicable Law.
Section 1.7
Directors. The parties shall take all requisite action so that the directors of Merger Sub immediately before the
Effective Time shall be, from and after the Effective Time, the directors of the Surviving Corporation until their successors are
duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Charter, the Surviving
Bylaws and applicable Law.
Section 1.8
Officers. The officers of the Company immediately before the Effective Time shall be, from and after the Effective
Time, the officers of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving Charter, the Surviving Bylaws and applicable Law.
Article
II
EFFECT OF THE MERGER ON CAPITAL STOCK
Section 2.1
Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holder of any shares of capital stock of Merger Sub or the Company:
(a)
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately before the Effective Time shall be converted into and become one fully paid and non-assessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(b)
Cancellation of Treasury Stock and Parent-Owned Stock. Each share of Common Stock owned by the Company or any of
its wholly-owned Subsidiaries or by Parent or any of its Subsidiaries immediately before the Effective Time, including, for the
avoidance of doubt, each share of Common Stock contributed to Parent by the Rollover Investors in accordance with the Rollover
Letters (collectively, the “Excluded Shares”), shall be canceled automatically and shall cease to exist, and
no consideration shall be paid for those Excluded Shares.
(c)
Conversion of Common Stock.
| (i) | Each share of Common Stock issued and outstanding immediately before the Effective Time (other than Excluded Shares and Dissenting
Shares) shall be converted into the right to receive $27.50 in cash, without interest (the “Merger Consideration”). |
| (ii) | All shares of Common Stock that have been converted pursuant to Section 2.1(c)(i) shall be canceled automatically and
shall cease to exist, and the holders of (A) certificates which immediately before the Effective Time represented such shares (the
“Certificates”) or (B) shares represented by book-entry (the “Book-Entry Shares”) shall cease
to have any rights with respect to those shares, other than the right to receive the Merger Consideration in accordance with Section
2.2 and any dividends or other distributions with a record date prior to the Effective Time which may have been authorized
by the Company and which remain unpaid at the Effective Time. |
(d)
Equitable Adjustment. If at any time during the period between the date of this Agreement and the Effective Time,
any change in the number of outstanding shares of Common Stock shall occur by reason of any reclassification, recapitalization,
reorganization, stock split (including a reverse stock split), combination, exchange or readjustment of shares, or any stock dividend
or stock distribution (including any dividend or distribution of securities convertible into or exchangeable for shares of Common
Stock) is declared with a record date during such period, then the Merger Consideration shall be proportionately and equitably
adjusted, without duplication, to reflect such change.
Section 2.2
Surrender of Certificates and Book-Entry Shares.
(a)
Paying Agent. Not less than three Business Days before the Effective Time, Parent shall (i) select a bank or trust
company, satisfactory to the Company in its reasonable discretion, to act as the paying agent in the Merger (the “Paying
Agent”) and (ii) enter into a paying agent agreement with the Paying Agent, the terms and conditions of which are satisfactory
to the Company in its reasonable discretion. Parent shall be responsible for all fees and expenses of the Paying Agent.
(b)
Payment Fund. Immediately prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying
Agent, for the benefit of the holders of Certificates and Book-Entry Shares, Company Options and Company Restricted Stock Awards,
for payment in accordance with this Article II through the Paying Agent, sufficient funds for the payment of the aggregate
Merger Consideration for all issued and outstanding shares of Common Stock (other than Excluded Shares) and other amounts payable
under this Article II (including with respect to Company Options, Company SARs and Company Restricted Stock Awards). Such
funds provided to the Paying Agent are referred to as the “Payment Fund.”
(c)
Payment Procedures.
| (i) | Letter of Transmittal. As soon as reasonably practicable, and in any event within
three (3) Business Days, after the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record
of a share of Common Stock converted pursuant to Section 2.1(c)(i), (A) a letter of transmittal in the Paying Agent’s
standard form (and reasonably satisfactory to Parent and the Company), specifying that delivery shall be effected, and risk of
loss and title to such holder’s shares shall pass, only upon proper delivery of Certificates (or affidavit of loss in lieu
thereof) to the Paying Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of
transmittal and (B) instructions for surrendering such Certificates (or affidavit of loss in lieu thereof) or Book-Entry Shares
in exchange for the Merger Consideration multiplied by the number of shares evidenced by such Certificates (or affidavit of loss
in lieu thereof) or Book-Entry Shares. Such instructions shall provide that: (1) at the election of the surrendering holder, Certificates
(or affidavit of loss in lieu thereof) may be surrendered by hand delivery or otherwise and (2) the Merger Consideration payable
in exchange for Certificates (or affidavit of loss in lieu thereof) and/or Book-Entry Shares will be payable by wire transfer to
the surrendering holder. |
| (ii) | Surrender of Shares. Upon surrender of a Certificate (or affidavit of loss in lieu thereof) or of a Book-Entry Share
for cancellation to the Paying Agent, together with a duly executed letter of transmittal and any other documents reasonably required
by the Paying Agent, the holder of that Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share shall be entitled
to receive, and the Paying Agent shall promptly pay in exchange therefor, the Merger Consideration payable in respect of the number
of shares formerly evidenced by that Certificate (or affidavit of loss in lieu thereof) or such Book-Entry Share less any required
withholding of Taxes. Any Certificates (or affidavit of loss in lieu thereof) and Book-Entry Shares so surrendered shall be canceled
immediately. No interest shall accrue or be paid on any amount payable upon surrender of Certificates (or affidavit of loss in
lieu thereof) or Book-Entry Shares. |
| (iii) | Unregistered Transferees. If any Merger Consideration is to be paid to a Person other than the Person in whose name
the surrendered Certificate is registered, then the Merger Consideration may be paid to such a transferee so long as (A) the surrendered
Certificate is accompanied by all documents reasonably required by Parent to evidence and effect that transfer and (B) the Person
requesting such payment (x) pays any applicable transfer Taxes or other Taxes required by reason of payment of the Merger Consideration
to a Person other than the registered holder of the Certificate or (y) establishes to the reasonable satisfaction of Parent and
the Paying Agent that all such transfer Taxes have already been paid or are not applicable. |
| (iv) | No Other Rights. Until surrendered in accordance with this Section 2.2(c), each Certificate and each Book-Entry
Share shall be deemed, from and after the Effective Time, to represent only the right to receive the applicable Merger Consideration,
subject to the Surviving Corporation’s obligation to pay any dividends or other distributions with a record date prior to
the Effective Time which may have been authorized by the Company and which remain unpaid at the Effective Time. Any Merger Consideration
paid upon the surrender of any Certificate or Book-Entry Share shall be deemed to have been paid in full satisfaction of all rights
pertaining to such Certificate or Book-Entry Share and, in the case of a Certificate, the shares of Common Stock formerly represented
by it. |
(d)
Lost, Stolen or Destroyed Certificates. If any Certificate is lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by the Surviving
Corporation, the execution and delivery by such Person of a customary indemnity agreement to provide indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent shall pay the applicable Merger Consideration to
such Person in respect of the shares of Common Stock represented by such Certificate.
(e)
No Further Transfers. At the Effective Time, the stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of the shares of Common Stock that were outstanding immediately before the Effective Time.
If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation for transfer, they shall
be cancelled and exchanged for the applicable Merger Consideration as provided in this Article II.
(f)
Required Withholding. Parent, Merger Sub, the Surviving Corporation and the Paying Agent shall be entitled to deduct
and withhold from any consideration otherwise payable under this Agreement such amounts as they are required to deduct or withhold
therefrom under the Code, or any applicable state, local or foreign Tax Law. To the extent that any amounts are so deducted and
withheld and paid to the appropriate taxing authorities, those amounts shall be treated as having been paid to the Person in respect
of whom such deduction or withholding was made for all purposes under this Agreement.
(g)
No Liability. None of Parent, the Surviving Corporation or the Paying Agent shall be liable to any holder of Certificates
or Book-Entry Shares for any amount properly paid to a public official under any applicable abandoned property, escheat or similar
Law.
(h)
Investment of Payment Fund. The Paying Agent shall invest the Payment Fund as directed by Parent; provided, that
such investment shall be in obligations of, or guaranteed by, the United States of America, in commercial paper obligations of
issuers organized under the Law of a state of the United States of America, rated A-1 or P-1 or better by Moody’s Investors
Service, Inc. or Standard & Poor’s Ratings Service, respectively, or in certificates of deposit, bank repurchase agreements
or bankers’ acceptances of commercial banks with capital exceeding $10 billion, or in mutual funds investing solely in such
assets and, in any such case, no such instrument shall have a maturity exceeding three (3) months. Any such investment shall be
for the benefit, and at the risk, of Parent, and any interest or other income resulting from such investment shall be for the benefit
of Parent; provided, that no such investment or losses thereon shall affect the Merger Consideration payable hereunder and
Parent shall promptly provide, or shall cause the Surviving Corporation to promptly provide, additional funds to the Paying Agent
for the benefit of the holders of Common Stock, Company Options and Company Stock Awards immediately prior to the Effective Time
in the amount of any such losses to the extent necessary to satisfy the obligations of Parent and the Surviving Corporation under
this Article II.
(i)
Termination of Payment Fund. Any portion of the Payment Fund that remains unclaimed by the holders of Certificates
or Book-Entry Shares one year after the Effective Time shall be delivered by the Paying Agent to Parent upon demand. Thereafter,
any holder of Certificates or Book-Entry Shares who has not complied with this Article II shall look only to Parent and/or
the Surviving Corporation, which shall remain responsible for payment of the applicable Merger Consideration.
Section 2.3
Company Options, Company SARs and Company Stock Awards.
(a)
Except as otherwise agreed in writing after the date hereof by Parent and the applicable holder thereof, the Company shall
take all necessary and appropriate actions so that, at the Effective Time, each option to acquire shares of Common Stock under
the Company’s Equity Plan (each, a “Company Option”) outstanding immediately prior to the Effective Time,
whether or not then vested or exercisable, by virtue of the Merger and without any further action by Parent, Merger Sub, the Company
or the holder of that Company Option, shall be canceled and each Company Option shall be converted into the right to receive from
Parent or the Surviving Corporation promptly following the Effective Time an amount in cash, without interest, equal to the Option
Consideration (as defined below) multiplied by the aggregate number of shares of Common Stock that may be acquired upon exercise
of such Company Option. The Company Board or the compensation committee thereof shall take all necessary and appropriate actions
so that all Company Options shall be vested in full as of immediately prior to the Effective Time. “Option Consideration”
means the excess, if any, of the Merger Consideration over the per share exercise or purchase price of the applicable Company Option
at the time of calculation. Notwithstanding the foregoing, if the exercise or purchase price of the applicable Company Option is
equal to or greater than the Merger Consideration, such Company Option shall be cancelled without any payment being made in respect
thereof.
(b)
Except as otherwise agreed in writing after the date hereof by Parent and the applicable holder thereof, the Company shall
take all necessary and appropriate actions so that, at the Effective Time, each stock appreciation right with respect to shares
of Common Stock granted under the Company’s Equity Plan (each, a “Company SAR”) outstanding immediately
prior to the Effective Time, whether or not then vested or exercisable, by virtue of the Merger and without any further action
by Parent, Merger Sub, the Company or the holder of that Company SAR, shall be canceled and each Company SAR shall be converted
into the right to receive from Parent or the Surviving Corporation promptly following the Effective Time an amount in cash, without
interest, equal to the SAR Consideration (as defined below) multiplied by the aggregate number of shares of Common Stock underlying
such Company SARs. The Company Board or the compensation committee thereof shall take all necessary and appropriate actions so
that all Company SAR shall be vested in full as of immediately prior to the Effective Time. “SAR Consideration”
means the excess, if any, of the Merger Consideration over the exercise price per share of Common Stock subject to such Company
SAR at the time of calculation. Notwithstanding the foregoing, if the exercise or purchase price with respect to the applicable
Company SAR is equal to or greater than the Merger Consideration, such Company SAR shall be cancelled without any payment being
made in respect thereof.
(c)
Except as otherwise agreed in writing after the date hereof by Parent and the applicable holder thereof or as otherwise
provided below, each share of restricted Common Stock that vests solely based on continued service (each, a “Company Restricted
Stock Award”) outstanding immediately prior to the Effective Time, by virtue of the Merger and without any action by
Parent, Merger Sub, the Company or the holder of that Company Restricted Stock Award, shall be, at the Effective Time, converted
into the right to receive from Parent or the Surviving Corporation the Merger Consideration per share in accordance with Section
2.1(c); provided, however, that any Company Restricted Stock Award held by a non-employee member of the Company Board shall,
prior to such conversion, be prorated by multiplying the number of shares of Common Stock subject to such Company Restricted Stock
Award by a fraction, the numerator of which is the number of days that have elapsed since the grant date of such award and the
denominator of which is 365, with any fractional share rounded up to the nearest whole share. The Company Board or the compensation
committee thereof shall take all necessary and appropriate actions so that all Company Restricted Stock Awards shall be vested
and all restricted periods shall lapse thereon in full as of immediately prior to the Effective Time.
(d)
Except as otherwise agreed in writing after the date hereof by Parent and the applicable holder thereof or as otherwise
provided below or on Section 2.3(d) of the Company Disclosure Letter, each share of restricted Common Stock that vests based on
the achievement of performance goals (each, a “Company Performance Stock Award”, and together with the Company
Restricted Stock Awards, the “Company Stock Awards”) outstanding immediately prior to the Effective Time, by
virtue of the Merger and without any action by Parent, Merger Sub, the Company or the holder of that Company Performance Stock
Award, shall be, at the Effective Time, converted into the right to receive a restricted cash award on the same terms and conditions
(including applicable time and/or service vesting conditions but excluding performance goals) applicable to such Company Performance
Stock Award under the applicable Company Equity Plan and award agreement in effect immediately prior to the Effective Time, with
respect to an amount of cash determined by multiplying the Merger Consideration by the number of shares of Common Stock that would
vest based on the achievement of any applicable performance goals at the target level. For the avoidance of doubt, any provisions
relating to the forfeiture, acceleration of vesting or payment of any award contained in a Company Performance Stock Award shall
apply to the restricted cash award described in this Section 2.3(d); provided that, in the event any such Company
Performance Stock Award does not contain such an acceleration provision, such restricted cash award shall vest and be paid upon
the termination of the holder’s employment by the Company without Cause or by the holder for Good Reason (each, as defined
in the most recent Company Equity Plan), in each case, subject to the execution and delivery (without revocation) of a release
of claims in favor of the Company in the form provided by the Company; provided, further, that any Company Performance Stock
Award that vests by its terms upon the occurrence of the Effective Time, if any, shall be, at the Effective Time, converted into
the right to receive from Parent or the Surviving Corporation the Merger Consideration per share in accordance with Section
2.1(c). The Company Board or the compensation committee thereof shall take all necessary and appropriate actions so that all
Company Performance Stock Awards shall be treated in accordance with this Section 2.3(d). Parent shall, or shall cause the
Surviving Corporation and its Subsidiaries to, as applicable, make all the payments pursuant to the restricted cash awards described
in this Section 2.3(d) in accordance with their terms.
(e)
Subject to the provisions of this Section 2.3, the Company shall take all necessary and appropriate actions so that
all Company Options and Company SARs, as well as all restricted stock units payable in shares of Common Stock or whose value is
determined with reference to the value of shares of Common Stock (“Company RSUs”), shall be canceled and the
Company Equity Plans shall terminate at the Effective Time.
(f)
Not later than 10 days prior to the Effective Time, the Company shall mail to each holder of Company Options, Company SARs
and Company Stock Awards a letter describing the treatment of and payment for such Company Options, Company SARs or Company Stock
Awards pursuant to this Section 2.3 and providing instructions for use in obtaining payment for such Company Options, Company
SARs or Company Restricted Stock Awards (which instructions shall provide that the cash payable to such holder of Company Options
and Company SARs pursuant to this Section 2.3 will be made by check or wire transfer in accordance with the holder’s
instructions on file with the Company in respect of payroll and, if no such instructions are applicable to such holder, may be,
at the election of such holder, mailed to such holder or transferred to such holder by wire transfer).
(g)
As promptly as practicable following the Effective Time and in any event not later than the fifth Business Day thereafter,
Parent or the Surviving Corporation shall cause the Paying Agent to mail a check (or transfer by wire transfer) (i) to each applicable
holder of a Company Option, in such amount due and payable to such holder pursuant to Section 2.3(a) in respect of such
Company Option and (ii) to each applicable holder of a Company SAR, in such amount due and payable to such holder pursuant to Section
2.3(b) in respect of such Company SAR. Notwithstanding the foregoing, in lieu of the payments contemplated by the immediately
preceding sentence, Parent and the Surviving Corporation may direct the Paying Agent to pay the Surviving Corporation (or its designees)
for (but only to the extent of) any amounts the Surviving Corporation elects to pay to each holder of a Company Option or Company
SAR in respect of the consideration payable therefor plus any amounts deducted and withheld with respect to any such amounts.
Section 2.4
Dissenting Shares.
(a)
Notwithstanding any provision of this Agreement to the contrary (but subject to the other provisions of this Section
2.4), any shares of Common Stock for which the holder thereof (i) has not voted in favor of the Merger or consented to it in
writing and (ii) has demanded the appraisal of such shares in accordance with, and has complied in all respects with, the
FBCA (collectively, the “Dissenting Shares”), shall not be converted into the right to receive the Merger Consideration
in accordance with Section 2.1(c). At the Effective Time, (A) all Dissenting Shares shall be canceled and cease to exist
and (B) the holders of Dissenting Shares shall be entitled only to such rights as may be granted to them under the FBCA.
(b)
Notwithstanding the provisions of Section 2.4(a), if any holder of Dissenting Shares effectively withdraws or loses
such appraisal rights (through failure to perfect such appraisal rights or otherwise), then that holder’s shares (i) shall
be deemed no longer to be Dissenting Shares and (ii) shall be treated as if they had been converted automatically at the Effective
Time into the right to receive the Merger Consideration upon surrender of the Certificate (or affidavit of loss in lieu thereof)
formerly representing such shares or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter
of transmittal, in each case in accordance with Section 2.2.
(c)
The Company shall give Parent (i) notice of any written demands for appraisal of any shares of Common Stock, any withdrawals
of such demands and any other instrument served on the Company under the FBCA and (ii) the right to direct all negotiations and
proceedings with respect to such demands for appraisal. Except to the extent required by applicable Law, the Company shall not
offer to make or make any payment with respect to any such demands for appraisal or otherwise settle any such demands without the
prior written consent of Parent, which consent shall not be unreasonably withheld, delayed or conditioned.
Article
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in (x) the confidential
disclosure letter delivered by the Company to Parent before or in connection with the execution of this Agreement (the “Company
Disclosure Letter”), it being agreed that disclosure of any item in any section of the Company Disclosure Letter (whether
or not an explicit cross reference appears) shall be deemed to be disclosure with respect to any other section of the Company Disclosure
Letter and any other representation or warranty made elsewhere in Article III, in either case, to which the relevance of
such item is reasonably apparent on the face of such disclosure or (y) the Company SEC Reports filed with, or furnished to, the
SEC on or after January 1, 2017 and prior to the date of this Agreement (other than disclosures contained under the captions “Risk
Factors” or “Forward-Looking Statements” to the extent that such disclosures are general in nature or cautionary,
predictive or forward-looking in nature (or any other disclosures contained in the Company SEC Reports that are similarly predictive
or forward-looking in nature) (collectively, “Forward-Looking Information”)), the Company represents and warrants
to Parent and Merger Sub that:
Section 3.1
Organization and Power. The Company is duly organized, validly existing and in good standing under the laws of the
State of Florida and has the requisite power and authority to own, lease and operate its assets and properties and to carry on
its business as now conducted. Except as has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, each of the Company’s Subsidiaries is duly organized, validly existing and in good standing
under the laws of the relevant jurisdiction of organization and has the requisite power and authority to own, lease and operate
its assets and properties and to carry on its business as now conducted.
Section 3.2
Foreign Qualifications. Each of the Company and its Subsidiaries is duly qualified or licensed to do business as
a foreign corporation, limited liability company or other legal entity and is in good standing in each jurisdiction where the nature
of its business or ownership, leasing or operation of its properties requires such qualification, except where failure to be so
qualified, licensed or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 3.3
Corporate Authorization. Assuming that the representations and warranties of Parent and Merger Sub contained in Section
4.5(c) are true and correct, the Company has all necessary corporate power and authority to enter into, deliver, and perform
its obligations under, this Agreement and, subject to the receipt of the Requisite Company Vote with respect to the Merger, to
consummate the transactions contemplated by this Agreement. Each of the Company Board and the Special Committee at a meeting duly
called and held has duly adopted resolutions: (a) authorizing and approving the execution, delivery and performance of this Agreement
and the transactions contemplated hereby, (b) approving and declaring advisable this Agreement, the Merger and the transactions
contemplated by this Agreement, (c) declaring that it is in the best interests of the stockholders of the Company that the Company
enter into this Agreement and consummate the Merger on the terms and subject to the conditions set forth in this Agreement, (d)
directing that the adoption of this Agreement be submitted to a vote at a meeting of the stockholders of the Company and (e) recommending
to the stockholders of the Company that they adopt this Agreement. Assuming that the representations and warranties of Parent and
Merger Sub contained in Section 4.5(c) are true and correct and that the Requisite Company Vote is received, the execution,
delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary corporate action on the part of the Company.
Section 3.4
Enforceability. This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability
Exceptions.
Section 3.5
Subsidiaries. Except as disclosed in Section 3.8(c) of the Company Disclosure Letter, each of the Subsidiaries of
the Company is wholly-owned by the Company, directly or indirectly, free and clear of any Liens (other than Permitted Liens). Section
3.5 of the Company Disclosure Letter sets forth a true and complete list of all of the Subsidiaries of the Company, including the
jurisdiction of organization of each such Subsidiary.
Section 3.6
Governmental Authorizations. Assuming that the representations and warranties of Parent and Merger Sub contained
in Section 4.3 are true and correct, the execution, delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated by this Agreement do not and will not require any consent, approval, order, waiver
or other authorization of, or, registration, declaration or filing with or notification to (collectively, “Governmental
Authorizations”), any Governmental Authority, other than:
(a)
the filing of the Articles of Merger with the Secretary of State of the State of Florida;
(b)
the filing with the Securities and Exchange Commission (the “SEC”) of (i) a proxy statement (the
“Company Proxy Statement”) relating to the special meeting of the stockholders of the Company to be held to
consider the adoption of this Agreement (the “Company Stockholders Meeting”), (ii) a Rule 13E-3 transaction
statement on Schedule 13E-3 (the “Schedule 13E-3”) relating to the adoption of this Agreement by the stockholders
of the Company and (iii) any other filings and reports that may be required in connection with this Agreement and the transactions
contemplated by this Agreement under the Securities Exchange Act of 1934 (the “Exchange Act”) and the FBCA;
(c)
any filings and reports that may be required in connection with this Agreement and the transactions contemplated by this
Agreement under state securities Laws or “blue sky” Laws;
(d)
compliance with the Applicable Exchange rules and regulations;
(e)
the filing of a pre-merger notification and report form by the Company required under the Hart Scott Rodino Antitrust Improvements
Act of 1976 (the “HSR Act”);
(f)
compliance with and the filing and receipt, termination or expiration as applicable, of such other approvals or waiting
periods as may be required under any (i) applicable foreign competition Law and (ii) applicable foreign investment Law (clauses
(i) and (ii) collectively, “Foreign Competition Law”); and
(g)
any such Governmental Authorizations, the failure of which to make or obtain, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7
Non-Contravention. The execution, delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated by this Agreement do not and will not (a) contravene or conflict with, or result
in any violation or breach of, any provision of the Organizational Documents of the Company, (b) contravene or conflict with, or
result in any violation or breach of, any Law applicable to the Company or any of its Subsidiaries or by which any assets of the
Company or any of its Subsidiaries (“Company Assets”) are bound, assuming that all Governmental Authorizations
described in Section 3.6 have been obtained or made, (c) conflict with or result in any violation or breach of, or constitute
a default (with or without notice or lapse of time or both) under, or give rise to, or to a right of, termination, modification
or cancellation under, any Material Contracts, (d) result in the creation of any Lien upon any of the properties, assets or rights
of the Company or any of its Subsidiaries (other than any Lien created as a result of any action taken by Parent or Merger Sub)
or (e) require any consent, approval or other authorization of, or filing with or notification to, any Person under any Material
Contracts, other than in the case of clauses (b), (c), (d) and (e) of this Section 3.7, as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect (without regarding to the exclusions set forth in
clause (ix) and (xiii) of the definition of “Company Material Adverse Effect”).
Section 3.8
Capitalization.
(a)
Except as set forth on Section 3.8(a) of the Company Disclosure Letter, the Company’s authorized capital stock consists
solely of (i) 100,000,000 shares of Common Stock and, (ii) 5,000,000 shares of preferred stock, par value $0.01 per share (the
“Preferred Stock”). As of June 14, 2018, (A) 15,890,868 shares of Common Stock were issued and outstanding (which
number of shares includes the Company Stock Awards enumerated in clause (B) hereafter), (B) 637,321 Company Stock Awards were outstanding,
(C) no shares of Common Stock were held in treasury by the Company or any of its Subsidiaries, (D) 5,001 shares of Common Stock
were subject to issued and outstanding Company Options, (E) 37,336 shares of Common Stock were subject to outstanding Company SARs;
(F) 7,301 Company RSUs payable in shares of Common Stock were outstanding; and (G) no shares of Preferred Stock were issued and
outstanding. Except as set forth above, as of the date hereof, there are no shares of capital stock or securities convertible into,
or exchangeable or exercisable for, shares of capital stock of the Company.
(b)
Section 3.8(b) of the Company Disclosure Letter sets forth a true and complete list, as of June 14, 2018, of all Company
Options, Company SARs, Company Stock Awards and any other awards issued under the Company’s Equity Plan then outstanding,
specifying on a holder-by-holder basis (i) the name of such holder, (ii) the number of Shares subject to each such award, (iii)
the grant date of each such award, (iv) the vesting schedule of each such award, and (v) the exercise price for each such Company
Option and Company SAR.
(c)
All issued and outstanding shares of Common Stock and all shares of Common Stock that are subject to issuance, upon issuance
prior to the Effective Time in accordance with the terms and subject to the conditions specified in the instruments under which
they are issuable (i) are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable and (ii) are
not, or upon issuance will not be, subject to any pre-emptive or similar rights.
(d)
Each outstanding share of capital stock of each Subsidiary of the Company that is a corporation is duly authorized, validly
issued, fully paid and non-assessable and not subject to any pre-emptive or similar rights. All equity interests of each Subsidiary
that is not a corporation are duly created pursuant to the Laws of such Subsidiary’s jurisdiction of organization or formation,
are issued and paid for in accordance with the Organizational Documents of such Subsidiary and are fully paid and non-assessable.
Except as disclosed in Section 3.8(d) of the Company Disclosure Letter, each of the outstanding shares of capital stock, or other
equity or voting interest, in each Subsidiary is owned by the Company free and clear of any Lien (other than Permitted Liens).
(e)
Except for the capital stock and other equity interests of the Company’s Subsidiaries or as disclosed in Section 3.8(e)
of the Company Disclosure Letter, the Company does not own, directly or indirectly, any capital stock or other voting or equity
securities or interests in any Person. There are no outstanding contractual obligations of the Company or any of its Subsidiaries
(i) to repurchase, redeem or otherwise acquire any shares of Common Stock or capital stock of any Subsidiary of the Company or
(ii) to provide any funds to or make any investment (including in respect of any unsatisfied subscription obligation or capital
contribution or capital account funding obligation) in (A) any Subsidiary of the Company that is not wholly-owned by the Company
or (B) any other Person.
(f)
There are no voting trusts, proxies, stockholder agreements, registration rights agreements or similar Contracts to which
the Company or any of its Subsidiaries is a party with respect to the voting or registration of any shares of capital stock or
other voting or equity interests of the Company or any of its Subsidiaries or any preemptive rights with respect thereto, other
than the Voting Agreement. There are no bonds, debentures, notes or other indebtedness the Company or any of its Subsidiaries that
entitle the holder thereof to vote (or which are convertible into or exchangeable or exercisable for securities having the right
to vote) together with stockholders of the Company or its Subsidiaries on any matters with respect to the Company or its Subsidiaries.
(g)
Except as set forth above in this Section 3.8, there are no preemptive or other outstanding rights, options, warrants,
conversion rights, “phantom” stock rights, stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound that obligate the Company or any of its Subsidiaries to issue or sell any shares of
capital stock or other equity interests of the Company or any of its Subsidiaries or any securities or obligations convertible
or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any shares of capital stock
or other equity interests of the Company or any of its Subsidiaries or outstanding bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) with the
Company’s stockholders on any matter, and no securities or obligations evidencing such rights are authorized, issued or outstanding.
Section 3.9
Voting. Assuming that the representations and warranties of Parent and Merger Sub contained in Section 4.5(c)
are true and correct, the Requisite Company Vote is the only vote of the holders of any class or series of the capital stock of
the Company necessary to approve and adopt this Agreement, the Merger and the transactions contemplated by this Agreement.
Section 3.10
SEC Reports; Company Proxy Statement; Schedule 13E-3.
(a)
The Company and its Subsidiaries have timely filed with the SEC (including following any extensions of time for filing provided
by Rule 12b-25 promulgated under the Exchange Act) all forms, reports, schedules, statements and other documents required to be
filed by the Company or its Subsidiaries with the SEC (collectively, together with any exhibits and schedules thereto and other
information incorporated therein, the “Company SEC Reports”) since January 1, 2017. Except to the extent corrected
by subsequent Company SEC Reports filed prior to the date hereof, such Company SEC Reports (a) complied, and each of the Company
SEC Reports filed subsequent to the date of this Agreement will comply, in all material respects with the applicable requirements
of the Securities Act of 1933 (the “Securities Act”), the Exchange Act and other applicable Laws, including
the applicable rules and regulations promulgated thereunder and (b) did not, and each of the Company SEC Reports filed subsequent
to the date of this Agreement and prior to the Effective Time (other than the Company Proxy Statement and the Schedule 13E-3) will
not, at the time of filing, or if amended or restated, at the time of such later amendment or restatement, contain any untrue statement
of any material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which such statements were or are made, not misleading in any material respect. No
Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act or is otherwise required to file
any periodic forms, reports, schedules, statements or other documents with the SEC.
(b)
None of the information to be supplied by or on behalf of the Company for inclusion in the Company Proxy Statement or the
Schedule 13E-3 will (i) in the case of the Schedule 13E-3 (or any amendment thereof or supplement thereto), as of the date of filing
and as of the date of the Company Stockholders Meeting, and (ii) in the case of the Company Proxy Statement (or any amendment thereof
or supplement thereto), as of the date of filing or mailing to the Company’s stockholders and as of the date of the Company
Stockholders 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.
Section 3.11
Financial Statements; Internal Controls.
(a)
Each of the consolidated financial statements (including, in each case, the related notes thereto) of the Company and its
consolidated Subsidiaries, for the fiscal years ended February 3, 2018 and January 28, 2017, included in the Company SEC Reports:
| (i) | when filed complied as to form in all material respects with applicable accounting requirements and the rules and regulations
of the SEC; |
| (ii) | were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied
on a consistent basis (except as may be indicated in the notes to the audited financial statements and subject, in the case of
unaudited financial statements, to the absence of footnotes and normal year-end adjustments); and |
| (iii) | fairly presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries,
as of the date thereof, and the consolidated results of operations and cash flows for the period then ended (subject, in the case
of unaudited financial statements, to normal year-end adjustments). |
(b)
Neither the Company nor any of its Subsidiaries has outstanding (nor has arranged or modified since the enactment of the
Sarbanes-Oxley Act) any “extensions of credit” (within the meaning of Section 402 of the Sarbanes-Oxley Act) to any
director or executive officer (as defined in Rule 3b-7 under the Exchange Act) of the Company. The Company has been and is in compliance
in all material respects with the applicable listing and corporate governance rules and regulations of the Applicable Exchange.
(c)
The Company and its Subsidiaries have established and maintain disclosure controls and procedures as defined in and required
by Rule 13a-15 or Rule 15d-15 under the Exchange Act. Such disclosure controls and procedures are reasonably effective to ensure
that all material information relating to the Company and its Subsidiaries required to be disclosed in the Company’s periodic
reports under the Exchange Act is made known on a timely basis to the Company’s principal executive officer and its principal
financial officer by others within the Company or any of its Subsidiaries, and such disclosure controls and procedures are reasonably
effective in timely alerting the Company’s principal executive officer and its principal financial officer to such information
required to be included in the Company’s periodic reports required under the Exchange Act. The Company has disclosed, based
on the most recent evaluation of its principal executive officer and its principal financial officer prior to the date of this
Agreement, to the Company’s auditors and the audit committee of the Company Board (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect
the Company’s or any of its Subsidiaries’ ability to record, process, summarize and report financial information in
any material respect and (ii) any fraud, whether or not material, that involves management or other employees who have a significant
role in the Company’s internal controls. The Company and its Subsidiaries have established and maintain internal control
over financial reporting (as defined in and in accordance with the requirements of Rule 13a-15(f) of the Exchange Act) effective
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with GAAP.
Section 3.12
Liabilities. There are no liabilities or obligations of any kind, whether accrued, contingent, absolute, inchoate
or otherwise (collectively, “Liabilities”), of the Company or any of its Subsidiaries which are required to
be reflected or reserved against on a consolidated balance sheet of the Company and its Subsidiaries in accordance with GAAP, other
than:
(a)
Liabilities disclosed in the consolidated balance sheet of the Company and its consolidated Subsidiaries as of February
3, 2018 (the “Balance Sheet Date”) or the footnotes thereto set forth in the Company SEC Reports;
(b)
Liabilities incurred since the Balance Sheet Date in the ordinary course of business;
(c)
Liabilities incurred in connection with the transactions contemplated by this Agreement or as permitted or contemplated
by this Agreement;
(d)
Liabilities disclosed in Section 3.12 of the Company Disclosure Letter; and
(e)
other Liabilities that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Neither the Company nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any off balance sheet partnership, joint venture or any similar arrangement (including
any Contract relating to any transaction or relationship between or among the Company and/or any of its Subsidiaries, on the one
hand, and any other Person, including any structured finance, special purpose or limited purpose Person, on the other hand), or
any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated under the Securities Act).
Section 3.13
Absence of Certain Changes. Except as otherwise contemplated, required or permitted by this Agreement, since the
Balance Sheet Date (a) through the date hereof, the Company and each of its Subsidiaries have conducted their respective business,
in all material respects, in the ordinary course of such businesses consistent with past practice and (b) there has not been
any Company Material Adverse Effect.
Section 3.14
Litigation. As of the date hereof, there are no legal actions, arbitrations, litigations, suits or other civil or
criminal proceedings (collectively, “Legal Actions”) pending or, to the Knowledge of the Company, threatened
in writing against the Company or any of its Subsidiaries or to which any of their respective properties or assets is subject that
have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and as of
the date of this Agreement there is no Legal Action pending or, to the Knowledge of the Company, threatened in writing against
the Company or any of its Subsidiaries that would or seeks to materially delay or prevent the consummation of the Merger or the
transactions contemplated by this Agreement. As of the date hereof, there are no Orders outstanding to which the Company or any
of its Subsidiaries is subject or bound that have had or would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect nor are there any Orders outstanding as of the date of this Agreement that would or seek to materially
delay or prevent the consummation of any of the transactions contemplated by this Agreement.
Section 3.15
Material Contracts. Except for Contracts filed as exhibits to the Company SEC Reports or as disclosed in Section
3.15 of the Company Disclosure Letter, as of the date of this Agreement, (i) neither the Company nor any of its Subsidiaries is
a party to, and (ii) none of the Company, any of its Subsidiaries or any of their respective properties or assets are bound by
(in each case, other than any Company Employee Benefit) (collectively, the Contracts of the type described in clauses (a) through
(j) below are referred to herein as, the “Material Contracts”):
(a)
any Contract that is or would be required to be filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant
to Item 601(b)(10)(i) of Regulation S-K under the Securities Act or disclosed by the Company in a Current Report on Form 8-K since
the Balance Sheet Date and before the date hereof;
(b)
any Contract (excluding any Contract under which the Company or any of its Subsidiaries grant a license with respect to
any Owned Intellectual Property) containing a covenant limiting the freedom of the Company or any of its Subsidiaries to engage
in any line of business, to carry on business in any geographic region, to offer any product or service or operate within any industry
or commercial field, or to compete with any Person to the extent such limitation is material to the conduct of the business of
the Company and its Subsidiaries, taken as a whole, as presently conducted;
(c)
any Contract under which the Company or the applicable Subsidiary has granted to a third party any exclusive license with
respect to any Owned Intellectual Property that contains a minimum guaranteed royalty obligation (or other comparable payment guarantee)
of more than $250,000 in royalties or other fees for the calendar year ended December 31, 2017;
(d)
any limited liability company agreement, joint venture or other similar agreement or arrangement relating to the formation,
creation, operation, management or control of any partnership or joint venture that is material to the business of the Company
or any of its Subsidiaries, other than any such limited liability company, partnership or joint venture that is a Subsidiary of
the Company;
(e)
any Contract under which (i) any Person (other than the Company or any of its Subsidiaries) has directly or indirectly guaranteed
Liabilities of the Company or any of its Subsidiaries or (ii) the Company or any Subsidiary has directly or indirectly guaranteed
Liabilities of any Person (other than the Company or any Subsidiary) (in each case of (i) and (ii), which guarantee obligation
exceeds $250,000, other than, in each case, endorsements for the purpose of collection in the ordinary course of business);
(f)
any Contract under which the Company or the applicable Subsidiary has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any Person (other than the Company or any of its Subsidiaries), in any such case
which the outstanding balance, individually, is in excess of $250,000;
(g)
any Contract (other than among consolidated Subsidiaries of the Company) relating to any interest rate, currency or commodity
derivatives or hedging transactions involving an amount in excess of $250,000;
(h)
any Contract under which the Company or the applicable Subsidiary, directly or indirectly, has agreed to make any advance,
loan, extension of credit or capital contribution to, or other investment in, any Person that will be outstanding after the date
hereof (other than the Company or any of its Subsidiaries and other than extensions of trade credit in the ordinary course of business),
in any such case which, individually, is in excess of $250,000;
(i)
any Contract that prohibits the pledging of capital stock of the Company or any Subsidiary of the Company or prohibits the
issuance of guarantees by any Subsidiary of the Company, in each case, other than pursuant to any joint venture;
(j)
any Contract that requires the future acquisition from another Person or future disposition to another Person of assets
or capital stock or other equity interest of another Person and any other Contract that relates to an acquisition or similar transaction
which contain indemnities or “earn-out” obligations with respect to the Company or any of its Subsidiaries, in any
such case, that remain in effect and have a value in excess of $250,000; and
(k)
any Contract for indemnification, advancement of expenses and or exculpation of liability with any current or former director
or executive officer of the Company or any of its Subsidiaries.
Except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect: (i) each Material Contract is, subject to the Enforceability
Exceptions, a valid and binding agreement of the Company or its applicable Subsidiary and, to the Knowledge of the Company, each
other party thereto, and is in full force and effect and enforceable against the Company or its Subsidiary and, to the Knowledge
of the Company, each other party thereto, in accordance with its terms, (ii) none of the Company, its applicable Subsidiary or,
to the Knowledge of the Company, any other party thereto, is in breach of or default under any such Material Contract, (iii) to
the Knowledge of the Company, no party to any Material Contract has committed or failed to perform any act under and no event has
occurred which, with or without notice, lapse of time or both, would constitute a default, require consent or result in the loss
of a material benefit or give rise to any right of termination, amendment, acceleration or cancellation, under the provisions of
such Material Contract, and (iv) neither the Company nor any of its Subsidiaries has received written notice from any other party
to a Material Contract of the existence of any event, or condition which constitutes, or, after notice or lapse of time or both,
will constitute, a default on the part of the Company or any of its Subsidiaries under any Material Contract. The Company has made
available to Parent true and complete copies of all Material Contracts in effect as of the date hereof, including any material
amendments thereto.
Section 3.16
Benefit Plans.
(a)
Section 3.16(a) of the Company Disclosure Letter lists, as of the date hereof, all material “employee benefit plans”
within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”) (whether
or not such “employee benefit plan” is subject to ERISA), and all material stock purchase, stock option, severance,
offer letter, employment, consulting, change-of-control, retention, collective bargaining, bonus, incentive compensation, profit
sharing, savings, retirement, retiree medical or life, disability, insurance, vacation, incentive, deferred compensation, supplemental
retirement and other material benefit plans (including the Company Equity Plan), agreements, programs, policies or commitments,
whether or not subject to ERISA, (i) under which any current or former director, officer, employee or consultant of the Company
or any of its Subsidiaries has any right to benefits and (ii) to which the Company or any of its Subsidiaries makes or is required
to make contributions with respect to such directors, officers, employees or consultants or which are maintained, sponsored or
contributed to by the Company or any of its Subsidiaries or any trade or business (whether or not incorporated) which would be
treated at any relevant time as a single employer with the Company or any of its Subsidiaries under Section 414 of the Code or
Section 4001 of ERISA (an “ERISA Affiliate”), excluding plans, agreements, programs, policies or commitments
under which neither the Company nor any Subsidiary of the Company has any remaining obligations. All such plans, agreements, programs,
policies and commitments, without regard to materiality, are collectively referred to as the “Company Employee Benefits.”
Each Company Employee Benefit that is maintained primarily for the benefit of an employee, officer, director or other service provider
who is primarily located outside of the United States shall be identified on Section 3.16(a) of the Company Disclosure Letter (each
a “Non-U.S. Employee Benefit”).
(b)
With respect to each of the material Company Employee Benefits, if applicable, the Company has made available to Parent
true and complete copies of (i) the plan document or a written description thereof, (ii) the most recent summary plan description,
(iii) the most recent annual report on Form 5500 (including all schedules), (iv) the most recent annual audited financial statements
and opinion, (v) if the Company Employee Benefits are intended to qualify under Section 401(a) of the Code, the most recent determination
letter received from the Internal Revenue Service (the “IRS”), (vi) any related trust or funding agreements
or insurance policies, and (vii) any material correspondence between the Company and the Department of Labor or the IRS relating
to any Company Employee Benefit.
(c)
No Company Employee Benefit is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) and neither
the Company nor any of its Subsidiaries has any material liability in respect of any multiemployer plan. The Company does not maintain,
sponsor or contribute to, and has not within the preceding six years maintained, sponsored or contributed to, any employee benefit
plan subject to Section 412 of the Code or Title IV of ERISA and no liability under Title IV of ERISA, Section 412 of the Code
or Section 302 of ERISA has been incurred by any ERISA Affiliate which, in each case, has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(d)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, each of the Company Employee Benefits is in compliance with ERISA, the Code and other applicable Law. Except as
has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect,
there has not occurred any “reportable event” (as such term is defined in Section 4043 of ERISA), other than those
events as to which the thirty-day notice period is waived. With respect to each of the Company Employee Benefits that is intended
to qualify under Section 401(a) of the Code (i) a favorable determination or opinion letter has been issued by the IRS with respect
to such Company Employee Benefit and (ii) to the Knowledge of the Company, no event has occurred since the date of such qualification
or exemption that would materially and adversely affect such qualification.
(e)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, none of the Company Employee Benefits provides health, medical, life insurance or death benefits to current or
former employees of the Company or any of its Subsidiaries beyond their retirement or other termination of service, other than
coverage mandated by COBRA or Section 4980B of the Code, or any similar state group health plan continuation Law.
(f)
Except as set forth on Section 3.16(f) of the Company Disclosure Letter or in this Agreement (including Section 2.3), the
execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement (whether alone
or in connection with any subsequent event(s)) will not (i) entitle any Company officer to severance pay or any increase in severance
pay upon any termination of employment after the date of this Agreement, (ii) result in any payment from the Company or any of
its Subsidiaries becoming due, or increase the amount of any compensation due, to any current or former officer of the Company,
(iii) increase any material benefits otherwise payable under any of the Company Employee Benefits, (iv) result in the acceleration
of the time of payment or vesting of any material compensation or benefits from the Company or any of its Subsidiaries to any current
or former officer of the Company or (v) limit or restrict the right of Parent or the Surviving Corporation to merge, amend or terminate
any of the Company Employee Benefits.
(g)
No Company Employee Benefit provides for and none of the Company or any of its Subsidiaries is otherwise obligated to provide
any gross-up or reimbursement of Taxes under Section 4999 of the Code or Section 409A of the Code. The Company will have provided
to Parent, prior to the Closing, good faith estimates of the amount of any “excess parachute payments” within the meaning
of Section 280G of the Code that could reasonably be expected to become payable to any employee, director, officer or other service
provider in connection with the transactions contemplated by this Agreement, whether contingent or otherwise.
(h)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, each Contract, whether or not a Company Employee Benefit, to which the Company or any of its Subsidiaries is a
party that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code, has been maintained
in compliance with Section 409A of the Code.
(i)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, all Non-U.S. Employee Benefits (i) have been maintained in accordance with all applicable requirements (including
applicable Law), (ii) that are intended to qualify for special Tax treatment meet all requirements for such treatment, and (iii)
that are required to be funded and/or book reserved are funded and/or book reserved, as appropriate, based upon reasonable actuarial
assumptions.
(j)
There are no pending, or, to the Knowledge of the Company, threatened in writing, Legal Actions against any of the Company
Employee Benefits, other than ordinary claims for benefits by participants and beneficiaries or as has not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.17
Labor Relations.
(a)
No employee of the Company or any of its Subsidiaries is represented by a union and, to the Knowledge of the Company, no
union organizing efforts have been conducted within the last three years or are now being conducted. Neither the Company nor any
of its Subsidiaries is a party to any material collective bargaining agreement or other labor contract. Except as has not had and
would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company
nor any of its Subsidiaries as of the date hereof has, or, to the Knowledge of the Company, is there now threatened, a strike,
picket, work stoppage, work slowdown or other organized labor dispute. Except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect, (i) there is no pending charge or complaint against
the Company or any of its Subsidiaries by the National Labor Relations Board or any comparable U.S. or foreign Governmental Authority
and (ii) none of the Company and its Subsidiaries is a party, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices.
(b)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) each of the Company and its Subsidiaries is in compliance with all applicable Laws relating to the employment
of labor, hiring and termination of employees, the proper classification of employees and/or independent contractors, wages, hours,
collective bargaining, employment discrimination, civil rights, safety and health, workers’ compensation, pay equity, wrongful
discharge or violation of rights of employees, former employees or prospective employees and the collection and payment of withholding
or social security taxes and (ii) neither the Company nor any of its Subsidiaries has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act or any similar state or local Law within the six months prior to the date
of this Agreement that remains unsatisfied.
(c)
Section 3.16 and this Section 3.17 constitute the exclusive representations and warranties of the Company
with respect to the subject matters set forth in Section 3.16 and this Section 3.17.
Section 3.18
Taxes. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect:
(a)
All Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed
(taking into account any extension of time within which to file), and all such Tax Returns are true, complete and correct. The
Company has made available to Parent prior to the date of this Agreement accurate copies of the U.S. federal income Tax Returns
filed by the Company and its Subsidiaries for each of the Tax years ended December 31, 2016, 2015 and 2014.
(b)
The Company and its Subsidiaries have fully and timely paid all Taxes that are required to be paid and withheld all amounts
that the Company or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor, stockholder,
Affiliate or third party, except with respect to matters being contested in good faith as to which adequate reserves have been
established in the most recent financial statements in accordance with GAAP for such Taxes.
(c)
There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for,
or the period for the collection, assessment or reassessment of, Taxes due from the Company or any of its Subsidiaries for any
taxable period and no request for any such waiver or extension is currently pending.
(d)
No audit or other proceeding by any Governmental Authority is pending or, to the Knowledge of the Company, threatened with
respect to any Tax matter with respect to, or Taxes due from or with respect to the Company or any of its Subsidiaries.
(e)
All deficiencies for Taxes asserted or assessed in writing against the Company or any of its Subsidiaries have been fully
and timely paid, settled or properly reflected in the most recent financial statements contained in the Company SEC Reports in
accordance with GAAP.
(f)
During the two year period ending on the date of this Agreement, neither the Company nor any of its Subsidiaries was a “distributing
corporation” or a “controlled corporation” in a transaction intended to be governed by Section 355 of the Code.
(g)
There are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries other than Permitted Liens.
(h)
No claim (which remains unresolved) has been made in writing by any taxing authority in a jurisdiction where the Company
and its Subsidiaries do not file income, sales or franchise Tax Returns that the Company or any of its Subsidiaries is or may be
subject to income, sales or franchise Tax in that jurisdiction.
(i)
Neither Company nor any of its Subsidiaries (i) has any liability for Taxes of any Person (other than the Company or any
of its Subsidiaries) under Treasury Regulation Section 1.1502 6 (or any comparable provision of local, state or foreign Law), as
transferee or successor, or (ii) is a party to, bound by or has any liability under any Tax sharing, allocation or indemnification
agreement or arrangement (other than (x) an agreement or arrangement solely among the Company and/or its Subsidiaries or (y) customary
Tax indemnifications contained in commercial agreements the primary purpose of which agreements does not relate to Taxes).
(j)
To the Knowledge of the Company, the Company is not and has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(k)
Neither the Company nor any of its Subsidiaries will be bound after the Closing by any written determination from the IRS
(or any comparable ruling or other determination from any Governmental Authority with respect to Taxes).
(l)
Neither the Company nor any its Subsidiaries will be required to include any item of income in, or exclude any deduction
from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in
method of accounting, or the use of an improper method of accounting, for a taxable period ending on or prior to or including the
Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or non-U.S. Tax Law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition
made on or prior to the Closing Date; (iv) prepaid or deposit amount received on or prior to the Closing Date; (v) election described
in Section 108(i) of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) made on or before
the Closing Date; or (vi) debt instrument held on or before the Closing Date that was acquired with “original issue discount”
as defined in Section 1273(a) of the Code or is subject to the rules set forth in Section 1276 of the Code.
Section 3.19
Environmental Matters. Except as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect: (a) since January 1, 2015, the operations of the Company and each of its Subsidiaries
have complied with applicable Law relating to (i) pollution, contamination, protection of the environment, and human health and
safety to the extent relating to exposure to Hazardous Substances, (ii) emissions, discharges, disseminations, releases or threatened
releases of Hazardous Substances into the air (indoor or outdoor), surface water, groundwater, soil, land surface or subsurface,
or (iii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances
(collectively, “Environmental Law”), (b) the Company and its Subsidiaries possess and maintain in good standing
all Permits required under Environmental Law necessary for their respective operations, and such operations are in compliance with
applicable Permits, (c) no Legal Action or written notice of violation or potential liability arising under or pursuant to Environmental
Law is pending, or to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries, (d) there
are no Orders arising under or pursuant to Environmental Law outstanding to which the Company or any of its Subsidiaries is subject
or bound, and (e) to the Knowledge of the Company, there has been no release of Hazardous Substances on, at, above, under or from
any facility or real property currently or formerly owned, leased or operated by the Company or any of its Subsidiaries. This Section
3.19 constitutes the exclusive representations and warranties of the Company with respect to the subject matters set forth
in this Section 3.19.
Section 3.20
Intellectual Property.
(a)
Section 3.20(a) of the Company Disclosure Letter sets forth a list of all Owned Intellectual Property that is registered,
issued or the subject of a pending application for registration that is material to the conduct of the business of the Company
and its Subsidiaries, taken as a whole, as presently conducted.
(b)
To the Knowledge of the Company, the Company or one of its Subsidiaries, as applicable, owns, is licensed to use or otherwise
has the right to use all Intellectual Property that is material to the conduct of the business of the Company and its Subsidiaries,
taken as a whole, as presently conducted, free and clear of all Liens (other than Permitted Liens), except as has not had and would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(c)
Except as set forth on Section 3.20(c) of the Company Disclosure Letter, to the Knowledge of the Company, (i) the conduct
of the business of the Company and its Subsidiaries, as presently conducted, does not infringe upon or misappropriate the Intellectual
Property rights of any third party and no claim is pending or asserted in writing since January 1, 2017 against the Company or
any of its Subsidiaries that the conduct of the business of the Company and its Subsidiaries, as presently conducted, infringes
upon or misappropriates any material Intellectual Property rights of a third party and (ii) no third party is infringing or violating
any of the Owned Intellectual Property in any material respect.
(d)
The Company and its Subsidiaries take commercially reasonable steps consistent with industry practice to protect and preserve
the Owned Intellectual Property.
(e)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, the Company and its Subsidiaries have taken commercially reasonable actions consistent with industry practice to
protect the confidentiality, integrity and security of their software, databases, systems, computer and telecommunications equipment,
information technology, networks and Internet sites and all information stored or contained therein or transmitted thereby from
any unauthorized use, access, or modification.
Section 3.21
Real Property.
(a)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, the Company or a Subsidiary of the Company, as applicable, has good, valid and marketable title to, or has a valid
and enforceable right to use or a valid and enforceable leasehold interest in, all real property (including all buildings, fixtures
and other improvements thereto) used by the Company and each Subsidiary of the Company. As of the date of this Agreement, none
of the Company’s or any of its Subsidiaries’ ownership of or leasehold interest in the real property is subject to
any Lien, except for Permitted Liens and other such Liens as have not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. The use and operation of the owned and leased real property used by the
Company and its Subsidiaries do not violate any Law, covenant, condition, restriction, easement, license, permit or agreement,
except for such violations as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b)
Each of the material leases and subleases, together with the amendments, modifications and other agreements related thereto,
to which the Company or any of its Subsidiaries is a party pursuant to which the Company or any of its Subsidiaries, as applicable,
uses or occupies any leased real property (the “Real Property Leases”) is, subject to the Enforceability Exceptions,
valid binding and in full force and effect, except where the failure to be valid, binding or in full force and effect has not had
and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. No breach or
default on the part of the Company or any such Subsidiary exists under any Real Property Lease, except as has not had and would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor
any of its Subsidiaries has received any notice of termination from any lessor under any Real Property Lease.
Section 3.22
Permits; Compliance with Law.
(a)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) each of the Company and its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
easements, variances, exceptions, consents, certificates, approvals, registrations and other permits of any Governmental Authority
(“Permits”) necessary for it to own, lease and operate its properties and assets or to carry on its business
as it is now being conducted (collectively, the “Company Permits”) and (ii) all such Company Permits are in
full force and effect. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, as of the date of this Agreement, no suspension or cancellation of any of the Company Permits
is pending or threatened in writing.
(b)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, since January 1, 2016, the Company and its Subsidiaries have been in compliance with all Laws applicable to their
business or operations and have not received any written notice of any violations of such Laws. Since January 1, 2016 until the
date hereof, neither the Company nor any of its Subsidiaries has received written notice from any Governmental Authority that any
Permit will be terminated or materially modified or, to the Knowledge of the Company, is threatened with suspension or will not
be renewed in the ordinary course of business consistent with past practice, except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(c)
No representation is made under this Section 3.22 with respect to SEC reports, financial statements and internal
controls, employee benefits, labor, Tax, environmental or intellectual property matters, which matters are addressed in Section
3.10, Section 3.11, Section 3.16, Section 3.17, Section 3.18, Section 3.19 and Section
3.20, respectively.
Section 3.23
Insurance. Except as has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, (a) the Company and/or its Subsidiaries maintain insurance policies in such amounts and against
such risks as are customary in the industry in which the Company and its Subsidiaries operate, (b) to the Knowledge of the Company,
each such insurance policy is legal, valid, binding and enforceable subject to the Enforceability Exceptions, (c) neither the Company
nor any of its Subsidiaries is in breach of, or default under, any such insurance policy and (d) as of the date hereof, no written
notice of cancellation or termination has been received with respect to any such insurance policy, other than in connection with
ordinary renewals.
Section 3.24
Affiliated Transactions. No director, officer or Affiliate (other than Subsidiaries of the Company) of the Company
is, or since January 1, 2017 has been, a party to any transaction, Contract, agreement, arrangement or understanding with the Company
or its Subsidiaries, nor are there any of the foregoing currently proposed to the Company’s audit committee, or has any material
interest in any property used by the Company or its Subsidiaries, in each case that would be required to be disclosed under Item
404 of Regulation S-K under the Securities Act (collectively, “Affiliate Transactions”). The Company maintains
and enforces a policy requiring that all Affiliate Transactions be presented to the Company’s audit committee for prior authorization
and approval or ratification.
Section 3.25
Opinions of Financial Advisor. PJ SOLOMON, L.P. (the “Company Financial Advisor”) has delivered
to the Special Committee its written opinion to the effect that, as of the date of this Agreement, and subject to the various limitations,
assumptions, factors and matters set forth therein, the Merger Consideration is fair to the stockholders of the Company (other
than Parent, Merger Sub and their Affiliates), from a financial point of view.
Section 3.26
Brokers. No broker, finder or investment banker other than the Company Financial Advisor is entitled to any brokerage,
finder’s or other similar fee or commission in connection with the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries. The Company has made available
to Parent true and complete copies of all Contracts under which any such fees or expenses are payable and all indemnification and
other Contracts related to the engagement of the Person to whom such fees are payable.
Section 3.27
State Takeover Laws. Assuming the representations and warranties of Parent and Merger Sub contained in Section
4.5(c) are true and correct, the Board of Directors of Company has approved this Agreement and the transactions contemplated
hereby as required to render inapplicable to this Agreement and such transactions the restrictions on “business combinations”,
“affiliated transactions” and “control share acquisitions” set forth in Section 607.0901 and Section 607.0902
of the FBCA or any other “moratorium,” “control share,” “fair price,” “takeover”
or “interested stockholder” law.
Section 3.28
Certain Business Practices.
(a)
Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries (nor, to the Knowledge of the Company, any of their respective
directors or executive officers) has made or agreed to make any contribution, payment, gift or entertainment to, or accepted or
received any contributions, payments, gifts or entertainment from, any government official, employee, political party or agent
or any candidate for any federal, state, local or foreign public office, where either the contribution, payment or gift or the
purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction, including any Anticorruption Laws.
(b)
The Company and its Subsidiaries and, to the Knowledge of the Company, their directors, officers, employees and agents acting
on their behalf, are, and have for the past three years been, in compliance in all material respects with U.S. and any applicable
foreign Laws related to trade and economic sanctions and import and export controls.
(c)
None of the Company, its Subsidiaries or, to the Knowledge of the Company, their directors, officers, employees, or agents
acting on their behalf, is or has been (i) identified on any sanctions-related list of restricted or blocked persons; (ii) organized,
resident, or located in any country or territory that is itself the subject of comprehensive economic sanctions; or (iii) owned
or controlled by any Person or Persons described in clause (i) or (ii), in each case in the U.S. and any other jurisdiction in
which the Company or any of its Subsidiaries has material operations. For the purposes of this Section 3.28(c), the term
“control” (including, with correlative meanings, the terms “controlling,” “controlled by” and
“under common control with”), when used with respect to any Person, means the power to direct or cause the direction
of the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
Section 3.29
No Other Representations or Warranties. Except for the representations and warranties contained in this Article
III, neither the Company nor any other Person on behalf of the Company makes any express or implied representation or warranty
with respect to the Company or with respect to any other information provided to Parent or Merger Sub in connection with the Merger
and the other transactions contemplated hereby.
Article
IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the corresponding
sections of the confidential disclosure letter delivered by Parent to the Company before or in connection with the execution of
this Agreement (the “Parent Disclosure Letter”), it being agreed that disclosure of any item in any section
of the Parent Disclosure Letter (whether or not an explicit cross reference appears) shall be deemed to be disclosure with respect
to any other section of the Parent Disclosure Letter and any other representation and warranty made elsewhere in Article IV,
in either case, to which the relevance of such item is reasonably apparent on the face of such disclosure, Parent and Merger Sub,
jointly and severally, represent and warrant to the Company that:
Section 4.1
Organization and Power. Each of Parent and Merger Sub is duly organized, validly existing and in good standing under
the Law of its jurisdiction of organization. Each of Parent and Merger Sub has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as now conducted.
Section 4.2
Corporate Authorization. Each of Parent and Merger Sub has all necessary power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. The board of directors or equivalent governing body of each
of Parent and Merger Sub has adopted resolutions approving this Agreement and the transactions contemplated by this Agreement.
The board of directors or equivalent governing body of each of Parent and Merger Sub have (a) approved and declared advisable this
Agreement, the Merger and the transactions contemplated by this Agreement and (b) declared that it is in the best interests of
the securityholders of Parent or Merger Sub that Parent or Merger Sub, as applicable, enter into this Agreement and consummate
the Merger on the terms and subject to the conditions set forth in this Agreement. The execution, delivery and performance of this
Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary action on the part of Parent and Merger Sub. This Agreement
constitutes a legal, valid and binding agreement of Parent and Merger Sub, enforceable against each of them in accordance with
its terms, subject to the Enforceability Exceptions. No vote or consent of the members of Parent is required by applicable Law
or the Organizational Documents of Parent in connection with the Merger or the other transactions contemplated by this Agreement.
Section 4.3
Governmental Authorizations. The execution, delivery and performance of this Agreement by Parent and Merger Sub and
the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement do not and will not require any Governmental
Authorization, other than:
(a)
the filing of the Articles of Merger with the Secretary of State of the State of Florida;
(b)
the filing with the SEC of any filings or reports that may be required in connection with this Agreement and the transactions
contemplated by this Agreement under the Exchange Act and the FBCA;
(c)
the filing of a pre-merger notification and report form by Parent required under the HSR Act;
(d)
compliance with and the filings and receipt, termination or expiration as applicable, of such other approvals or waiting
periods as may be required under any Foreign Competition Law; and
(e)
any such Governmental Authorizations, the failure of which to make or obtain would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
Section 4.4
Non-Contravention. The execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation
by Parent and Merger Sub of the transactions contemplated by this Agreement do not and will not:
(a)
contravene or conflict with, or result in any violation or breach of, any provision of the Organizational Documents of Parent
or Merger Sub;
(b)
contravene or conflict with, or result in any violation or breach of, any Law applicable to Parent or any of its Subsidiaries
or by which any assets of Parent or any of its Subsidiaries (“Parent Assets”) are bound, assuming that all Governmental
Authorizations described in Section 4.3 have been obtained or made;
(c)
result in any violation or breach of, or constitute a default (with or without notice or lapse of time or both) under any
Contracts to which Parent or any of its Subsidiaries is a party or by which any Parent Assets are bound (collectively, “Parent
Contracts”), other than as would not reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect; or
(d)
require any consent, approval or other authorization of, or filing with or notification to, any Person under any Parent
Contracts, other than as, if not obtained, would not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.5
Capitalization; Interim Operations of Merger Sub; Ownership of Common Stock.
(a)
As of the date of this Agreement, the authorized capital stock of Merger Sub consists solely of 100 shares of common stock,
par value $0.01 per share. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent. Merger Sub has no outstanding option, warrant, right or any other agreement pursuant to which any Person other
than Parent may acquire any equity security of Merger Sub.
(b)
Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in connection with the transactions contemplated by this
Agreement. No shares of Common Stock or securities that are convertible, exchangeable or exercisable into Common Stock are beneficially
owned (as defined by Rule 13d-3 under the Exchange Act) by Parent or Merger Sub, or any direct or indirect wholly-owned Subsidiary
of Parent or Merger Sub. Merger Sub has no Subsidiaries.
(c)
As of the date hereof, Parent and Affiliates collectively own beneficially and of record 100 shares of Common Stock. Except
as set forth herein, none of Parent, Merger Sub or their respective Affiliates own, directly or indirectly, beneficially or of
record, any other shares of Common Stock, and none of Parent, Merger Sub or their respective Affiliates holds any rights to acquire
or vote any shares of Common Stock except pursuant to this Agreement.
(d)
Except for the Voting Agreement, the Pledge and Security Agreement, the Limited Guarantee, the Financing Commitments and
the Rollover Letters, true and complete copies of which have been made available to the Company before the date of this Agreement,
none of Parent, Merger Sub and their respective Affiliates has any agreement, arrangement or understanding concerning (x) the transactions
contemplated by this Agreement or (y) any material assets of the Company from or after the Closing, in each case with any Principal
Stockholder, Rollover Investor, director or officer of the Company or any other Person.
Section 4.6
Financing.
(a)
Section 4.6 of the Parent Disclosure Letter sets forth true and complete copies of (i) (x) executed rollover commitment
letters (the “Rollover Letters”) from parties (the “Rollover Investors”) that collectively
have sole voting and dispositive power with respect to 3,139,975 shares of the Company, which number of shares, when contributed
to Parent under the Rollover Letters, will satisfy all minimum requirements for equity contributions to Parent under the Debt Financing
(whether expressed in terms of minimum value or percentage of shares), pursuant to which, and subject to the terms and conditions
of which, the Rollover Investors have committed to contribute to Parent the amount of shares of Common Stock set forth therein
(the “Rollover Investment”), and (y) a schedule setting forth each Rollover Investor, the number of shares of
the Company beneficially owned by and over which such Rollover Investor holds sole voting and dispositive power, and an indication
of whether such shares of the Company are held directly or indirectly by such Rollover Investor, and (ii) executed debt commitment
letters and related term sheets from Wells Fargo Bank, National Association (the “Wells Commitment Letter”)
and Fortress Credit Advisors LLC (the “Fortress Commitment Letter” and together with the Wells Commitment Letter,
the “Debt Commitment Letters” or the “Financing Commitments”) (Wells Fargo Bank, National
Association and Fortress Credit Advisors LLC, the “Lenders”) pursuant to which, and subject to the terms and
conditions of which, the Lenders have committed to provide Parent and/or Merger Sub with financing in the amounts described therein,
the proceeds of which may be used to consummate the Merger and the other transactions contemplated by this Agreement (the “Debt
Financing” or the “Financing”). As of the date hereof, each of the Financing Commitments and the Rollover
Letters is a legal, valid and binding obligation of Parent or Merger Sub and, to the Knowledge of the Parent, the other parties
thereto, enforceable in accordance with its terms, subject to the Enforceability Exceptions. As of the date hereof, each of the
Financing Commitments and the Rollover Letters is in full force and effect, and none of the Financing Commitments or the Rollover
Letters has been withdrawn, rescinded or terminated or otherwise amended or modified in any respect. As of the date hereof, to
the Knowledge of the Parent, neither Parent nor Merger Sub is in breach of any of the material terms or conditions set forth in
any of the Financing Commitments or the Rollover Letters. As of the date hereof, to the Knowledge of Parent with respect to the
Company and its Subsidiaries, there is no fact or occurrence existing on the date hereof that, with or without notice, lapse of
time or both, would reasonably be expected to (A) make any of the assumptions or any of the statements set forth in the Financing
Commitments or the Rollover Letters inaccurate, (B) result in any of the conditions in the Financing Commitments or the Rollover
Letters not being satisfied, (C) cause any of the Financing Commitments or the Rollover Letters to be ineffective or (D) otherwise
result in the Financing not being available, or the Rollover Investment not being made, in each case, on a timely basis in order
to consummate the transactions contemplated by this Agreement. As of the date hereof, neither the Rollover Investors nor any Lender
has notified Parent or Merger Sub of its intention to terminate any Financing Commitment or not to provide the Financing, and none
of the Rollover Investors has notified Parent or Merger Sub of its intention to terminate any Rollover Letter or not to make the
Rollover Investment. Parent has not, without the prior written consent of the Company, amended, modified, supplemented or waived
any of the conditions or contingencies to funding contained in any Financing Commitment (including definitive agreements related
thereto) or to the Rollover Investment contained in any Rollover Letter, or any other provision of, or remedies under, any Financing
Commitment (including definitive agreements related thereto) or any Rollover Letter (except for any increases in the amount of
funds available thereunder or the addition of Financing Sources in accordance with the terms thereof, or other relevant entities
who did not execute a Financing Commitment or a Rollover Letter as of the date of this Agreement or as otherwise expressly permitted
by Section 5.12(a)). Assuming (1) the Financing is funded in accordance with its terms and conditions, (2) the Rollover
Investment is made in accordance with the terms and conditions of the Rollover Letters and (3) the satisfaction of the conditions
to the Company’s obligation to consummate the Merger set forth in Section 6.3(a), the net proceeds from the Financing
will, together with the Rollover Investment and other funds available to Parent, be sufficient to consummate the Merger and the
other transactions contemplated by this Agreement, including the payment by Parent and Merger Sub of the Merger Consideration,
any fees and expenses of or payable by Parent, Merger Sub or the Surviving Corporation, and any related repayment or refinancing
of any indebtedness of the Company or any of its Subsidiaries, and any other amounts required to be paid in connection with the
consummation of the transactions contemplated by this Agreement. Parent or Merger Sub has paid in full any and all commitment or
other fees required by any Financing Commitment that are due as of the date hereof, and will pay, after the date hereof, all such
commitments and fees as they become due. There are no side letters, understandings or other agreements or arrangements relating
to the Financing (except for customary fee letters and engagement letters which do not contain any additional conditions to closing
or other agreements relating to the availability of the full amount of the Financing, and a complete copy of the fee letter has
been made available to the Company with customary redactions of fee amounts, pricing caps, “market flex”, other economic
terms and certain other terms, none of which redacted provisions would adversely affect the conditionality or aggregate principal
amount of the Financing) or the Rollover Investment to which Parent, Merger Sub or any of their respective Affiliates are a party
that relate to the amount, availability or conditions of the Financing or the Rollover Investment, other than the Financing Commitments
and the Rollover Letters. There are no conditions precedent related to the funding of the full amount of the Financing, other than
as explicitly set forth in the Financing Commitments, and there are no conditions precedent related to the contribution of the
full amount of the Rollover Investment, other than as explicitly set forth in the Rollover Letters. Assuming the satisfaction of
the conditions to the Company’s obligation to consummate the Merger set forth in Section 6.3(a), neither Parent nor
Merger Sub has any reason to believe that it will be unable to satisfy on a timely basis any conditions to the funding of the full
amount of the Financing or the contribution of the full amount of the Rollover Investment, or that the Financing will not be available
to, or that the Rollover Investment will not be contributed to, Parent or Merger Sub on the Closing Date. For the avoidance of
doubt, it is not a condition to Closing under this Agreement, nor to the consummation of the Merger, for Parent or Merger Sub to
obtain the Financing, the Rollover Investment or any alternative financing.
(b)
Neither Parent, Merger Sub nor any of their Affiliates has (i) retained any financial advisor on a basis exclusive
to Parent and/or Merger Sub and/or any such Affiliate or (ii) entered into an exclusivity, lock-up or other similar agreement,
arrangement or understanding with any bank or investment bank or other potential provider of debt or equity financing that would
prevent or hinder such provider from providing or seeking to provide such financing to any third party in connection with a transaction
relating to the Company or its Subsidiaries (including in connection with the making of any Takeover Proposal), in the case of
clauses (i) and (ii), in connection with the Merger or the other transactions contemplated by this Agreement. Neither
Parent, Merger Sub nor any of their Affiliates has caused or induced any Person to take any action that, if taken by Parent and/or
Merger Sub, would be a breach of, or would cause to be untrue, any of the representations in this Section 4.6(b).
Section 4.7
Solvency. On and as of the Closing Date, and after giving effect to the transactions contemplated by this Agreement,
including the Financing and any alternative financing (including any financing to be issued or incurred in lieu of any bridge facility
in any Debt Commitment Letter) permitted by this Agreement, the payment of the Merger Consideration, the incurrence of indebtedness
in connection with the Debt Financing, and the repayment or refinancing of debt as contemplated herein and in the Financing Commitments,
and assuming (i) the Company is Solvent immediately prior to the Effective Time, (ii) the satisfaction of the conditions to Parent’s
and Merger Sub’s obligations to consummate the Merger as set forth herein, or the waiver of such conditions and (iii) the
satisfaction of the conditions to the Company’s obligation to consummate the Merger set forth in Section 6.3(a), Parent,
the Surviving Corporation and the Surviving Corporation’s Subsidiaries, taken as a whole, will be Solvent.
Section 4.8
Litigation. As of the date of this Agreement, there is no Legal Action pending or, to the Knowledge of Parent, threatened
in writing against Parent or any of its Affiliates before any Governmental Authority that would or seeks to materially delay or
prevent the consummation of the Merger or the transactions contemplated by this Agreement. As of the date of this Agreement, neither
Parent nor any of its Affiliates is subject to any Order of, or, to the Knowledge of Parent, continuing investigation by, any Governmental
Authority, or any Order of any Governmental Authority that would or seeks to materially delay or prevent the consummation of any
of the transactions contemplated by this Agreement.
Section 4.9
No Regulatory Impediment. There is no material fact relating to Parent or any of its Affiliates’ respective
businesses, operations, financial condition or legal status, including any officer’s, director’s or current employee’s
status, that would reasonably be expected to impair the ability of the parties to this Agreement to obtain, on a timely basis,
any authorization, consent, Order, declaration or approval of, or ability to contract with, any Governmental Authority or third
party necessary for the consummation of the transactions contemplated by this Agreement.
Section 4.10
Absence of Certain Arrangements. Other than this Agreement, the Voting Agreement, the Rollover Letters and those
other agreements contemplated hereby, there are no contracts, undertakings, commitments, agreements or obligations or understandings
between Parent or Merger Sub or any of their respective Affiliates, on the one hand, and any member of the Company’s management
or the Company Board or any of their respective Affiliates (including any of the Principal Stockholders), on the other hand, relating
to the transactions contemplated by this Agreement or the operations of the Company after the Effective Time.
Section 4.11
Brokers. The Company will not be responsible for any brokerage, finder’s or other fee or commission to any
broker, finder or investment banker in connection with the transactions contemplated by this Agreement based on arrangements made
by or on behalf of Parent or Merger Sub, other than any such fee that is conditioned upon consummation of the Merger.
Section 4.12
Limited Guarantee and Pledge and Security Agreement. Concurrently with the execution of this Agreement, Parent and
Merger Sub have delivered to the Company (a) a limited guarantee of George Feldenkreis (the “Guarantor”) in
favor of the Company, dated the date hereof (as amended, modified or supplemented from time to time in accordance with its terms,
the “Limited Guarantee”) and (b) a pledge and security agreement of George Feldenkreis (the “Pledgor”)
in favor of the Company, dated the date hereof (as amended, modified or supplemented from time to time in accordance with its terms,
the “Pledge and Security Agreement”). Each of the Limited Guarantee and the Pledge and Security Agreement is
in full force and effect and constitutes the legal, valid and binding obligation of the Guarantor and Pledgor, respectively, enforceable
against the Guarantor and Pledgor, respectively, in accordance with its terms, subject to the Enforceability Exceptions, and has
not been amended, withdrawn or rescinded in any respect. As of the date hereof, no event has occurred which, with or without notice,
lapse of time or both, would constitute a default on the part of the Guarantor or Pledgor under either the Limited Guarantee or
the Pledge and Security Agreement, respectively.
Section 4.13
Proxy Statement; Schedule 13E-3. None of the information to be supplied by Parent or Merger Sub for inclusion in
the Company Proxy Statement or the Schedule 13E-3 will (i) in the case of the Schedule 13E-3 (or any amendment thereof or supplement
thereto), as of the date of filing and as of the date of the Company Stockholders Meeting and (ii) in the case of the Company Proxy
Statement (or any amendment thereof or supplement thereto), as of the date of filing or mailing to the Company’s stockholders
and as of the date of the Company Stockholders 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, with respect to information provided by
Parent or Merger Sub, in light of the circumstances under which they are made, not misleading.
Section 4.14
Independent Investigation. In entering into this Agreement and each of the other documents and instruments relating
to the Merger and the other transactions contemplated by this Agreement, Parent and Merger Sub have each relied solely upon its
own investigation and analysis, and Parent and Merger Sub acknowledge and agree (a) that, except for the specific representations
and warranties of the Company contained in this Agreement (including the Company Disclosure Letter and the Company SEC Reports),
none of the Company, its Affiliates or any of its or their respective stockholders, controlling persons or Representatives makes
or has made any representation or warranty, either express or implied, with respect to the Company or its Subsidiaries or Affiliates
or their business, operations, technology, assets, Liabilities, results of operations, financial condition, prospects, projections,
budgets, estimates or operational metrics, or as to the accuracy or completeness of any of the information (including any statement,
document or agreement delivered pursuant to this Agreement and any financial statements and any projections, estimates or other
forward-looking information) provided (including in any management presentations, information or descriptive memorandum, certain
“data rooms” maintained by the Company, supplemental information or other materials or information with respect to
any of the above) or otherwise made available to Parent and Merger Sub or any of their respective stockholders or Representatives
and (b) that, to the fullest extent permitted by applicable Law, none of the Company, its Affiliates or any of its or their respective
stockholders, controlling persons or Representatives shall have any liability or responsibility whatsoever to Parent or Merger
Sub, their respective Affiliates, stockholders, controlling persons or Representatives on any basis (including in contract or tort,
at law or in equity, under federal or state securities Laws or otherwise) based upon any information provided or made available,
or statements made (or any omissions therefrom), to Parent or Merger Sub, their respective Affiliates, stockholders, controlling
persons or Representatives, except as and only to the extent expressly set forth in this Agreement. Each of Parent and Merger Sub
acknowledges and agrees that it has been furnished with, or given adequate access to, all information and materials relating to
the Company and its Subsidiaries that it has requested and Representatives of the Company have answered all inquiries that Parent
or Merger Sub has made of them concerning the Company and its Subsidiaries.
Article
V
COVENANTS
Section 5.1
Conduct of Business of the Company. From and after the date of this Agreement and prior to the earlier of the Effective
Time or the termination of this Agreement pursuant to Article VII, except as provided in this Agreement, as set forth in
Section 5.1 of the Company Disclosure Letter, as disclosed in the Company SEC Reports (other than in any Forward-Looking Information),
or as required by applicable Law, Order or to comply with any notice from a Governmental Authority, without the prior written consent
of Parent, such consent not to be unreasonably withheld, delayed or conditioned, the Company shall, and shall cause each of its
Subsidiaries to, (a) conduct its operations only in the ordinary course of business consistent with past practice and (b) use its
reasonable best efforts to preserve substantially intact the business organization of the Company and its Subsidiaries, to keep
available the services of the current officers, employees and consultants of the Company and its Subsidiaries, and to preserve,
in all material respects, the current relationships of the Company and its Subsidiaries with customers, licensees, suppliers and
other Persons with which the Company and its Subsidiaries have material business relations. Without limiting the generality of
the foregoing, and except as otherwise provided in this Agreement, as set forth in Section 5.1 of the Company Disclosure Letter,
as disclosed in the Company SEC Reports (other than in any Forward-Looking Information) or as otherwise required by applicable
Law, from and after the date of this Agreement and prior to the earlier of the Effective Time or the termination of this Agreement
pursuant to Article VII, the Company shall not, and shall cause its Subsidiaries not to, take any of the following actions,
without the prior written consent of Parent, such consent not to be unreasonably withheld, delayed or conditioned:
(a)
Organizational Documents. Amend or modify any of the Organizational Documents of the Company or any of its Subsidiaries;
(b)
Dividends. Make, declare, set aside or pay any dividend or distribution on any shares of its capital stock or set
any record date therefor, other than cash dividends and cash distributions by wholly-owned Subsidiaries of the Company;
(c)
Capital Stock. (i) Adjust, split, combine or reclassify its capital stock, (ii) redeem, purchase or otherwise acquire,
or offer to redeem, purchase or otherwise acquire, directly or indirectly, any shares of its capital stock or any securities convertible
or exchangeable into or exercisable for any shares of its capital stock, (iii) grant any Person any right or option to acquire
any shares of its capital stock or (iv) issue, deliver or sell any additional shares of its capital stock or any securities convertible
or exchangeable into or exercisable for any shares of its capital stock (other than pursuant to (w) the exercise of the Company
Options and Company SARs in accordance with the terms in effect on the date of this Agreement or the vesting of Company Options
and Company SARs as provided in Section 2.3(a) and Section 2.3(b), (x) the vesting or forfeiture of Company Stock
Awards in accordance with the terms in effect on the date of this Agreement or as provided in Section 2.3(b), (y) the purchase,
redemption or other acquisition of Common Stock or equity interests of the Company or its Subsidiaries from former employees, directors
and consultants in accordance with any Contract or Company Employee Benefit providing for the repurchase of Common Stock or such
other equity interests in connection with any termination of services to the Company or any of its Subsidiaries) or (z) as permitted
by Section 5.1(d);
(d)
Compensation and Benefits. (i) Increase the compensation, bonus opportunity or benefits payable or to become payable
to any of its current or former directors, officers, employees or independent contractor (other than increases in the base salaries
or wages of employees other than officers in the ordinary course of business consistent with past practice); (ii) grant or
increase any severance, change of control, retention or termination pay to any current or former director, officer, employee or
independent contractor; (iii) renew, enter into or amend in any material respect any Contract providing for the employment or consultancy
of any director, officer or employee with a title of Vice President or above or otherwise providing material compensation or other
material benefits to any director, officer or employee with a title of Vice President or above; (iv) establish, adopt, enter into,
amend, renew, alter the prior interpretation of or terminate any material Company Employee Benefit or any other employee benefit
plan, incentive plan, agreement, policy, program or commitment that, if in effect on the date of this Agreement, would be a material
Company Employee Benefit; (v) enter into any collective bargaining agreement or other agreement with any labor organization, works
council, trade union, labor association or other employee representative; (vi) implement any facility closings or employee layoffs
or reductions in force that would trigger the notice requirements under the WARN Act; (vii) take any action to accelerate the vesting,
payment or funding of any compensation or benefits to any current or former employee or any directors or officers; or (viii) hire
or terminate any employee with a title of Vice President or above, other than a termination for “cause”, except, in
the case of each of clauses (i) through (iv), (A) to the extent required by applicable Law, this Agreement or any Company Employee
Benefit or other agreement in effect on the date of this Agreement, (B) in conjunction with new hires, promotions or other changes
in job status, in each case, for employees with a title of Vice President or above, as approved by the Chief Executive Officer
of the Company, and for employees with a title below Vice President, or (C) to comply with Section 409A of the Code and guidance
applicable thereunder;
(e)
Acquisitions. Other than in the ordinary course of business, acquire (by merger, consolidation, acquisition of equity
interests or assets, or otherwise) any interest in any business or any corporation, partnership, limited liability company, joint
venture or other business organization or division or assets, securities or property thereof, except for any such transaction (i)
which is between the Company and any of its wholly-owned Subsidiaries or between any such wholly-owned Subsidiaries of the Company,
or (ii) pursuant to any Contract existing and in effect as of the date hereof;
(f)
Dispositions. Sell, lease, license, transfer, pledge, mortgage, encumber, grant or dispose of or enter into negotiations
to with respect to the disposition of any real property or any other material Company Assets, including the capital stock of Subsidiaries
of the Company, other than (i) the sale of inventory in the ordinary course of business, (ii) the disposition of used, obsolete
or excess equipment in the ordinary course of business, (iii) other dispositions (other than real property) in the ordinary course
of business, (iv) any Permitted Liens or (v) pursuant to any Contract existing and in effect as of the date hereof;
(g)
Loans. Make any loans, advances or capital contributions to or investments in any Person (other than (i) to wholly-owned
Subsidiaries of the Company, (ii) to employees for advancement of related business expenses in the ordinary course of business,
or (iii) to any joint venture in which the Company or any of its Subsidiaries has any equity interest;
(h)
Indebtedness; Guarantees. Incur, assume or guarantee any new indebtedness for borrowed money or issue or sell any
debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or assume, guarantee
or endorse, or otherwise become responsible for, the obligations of any Person (other than the Company or any of its Subsidiaries)
with respect to any indebtedness for borrowed money (including any debt securities but excluding for the avoidance of doubt ordinary
course equipment leasing or purchase money debt for equipment), in excess of $500,000 in the aggregate, which indebtedness shall
be prepayable in full without premium or penalty (other than ordinary course breakage costs), other than (i) revolving loans under
any existing Company revolving credit facilities; or (ii) performance bonds, letters of credit or hedging arrangements entered
into in the ordinary course of business;
(i)
Capital Expenditures. Make capital expenditures that exceed, individually or in the aggregate, (x) the amount of
capital expenditures contemplated by the capital expenditure information previously made available to Parent as set forth in Section
5.1 of the Company Disclosure Letter, plus (y) $500,000;
(j)
Material Contracts. (i) Enter into any Material Contract (including by amendment of any Contract that is not a Material
Contract such that such Contract becomes a Material Contract), other than in the ordinary course of business, (ii) terminate, renew,
extend or amend in any material respect any Material Contract or waive any material right thereunder, other than in the ordinary
course of business, or (iii) enter into any Contract under which the Company or the applicable Subsidiary grants to a third party
any exclusive license with respect to any Owned Intellectual Property that contains a minimum guaranteed royalty obligation (or
other comparable payment guarantee) of more than $250,000 in royalties or other fees for any fiscal year subsequent to the fiscal
year ended February 3, 2018;
(k)
Dissolution. Adopt or enter into a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation
or other reorganization;
(l)
Accounting. Change its material accounting policies or procedures, other than as required by GAAP or applicable Law;
(m)
Legal Actions. Subject to Section 5.15, waive, release, assign, settle or compromise any material Legal Action,
other than (i) in the ordinary course of business in an amount not to exceed $250,000 (net of any amount covered by insurance)
and/or (ii) if the loss resulting from such waiver, release, assignment settlement or compromise is reasonably expected to be reimbursed
to the Company or any of its Subsidiaries by an insurance policy (subject to any deductible or retention);
(n)
Taxes. Except as otherwise required by applicable Law, make, revoke or change any material Tax election other than
consistent with past practice, file any material amended Tax Return, adopt or change any material method of Tax accounting, change
any Tax accounting period, settle or surrender any material Tax claim relating to the Company or any of its Subsidiaries or surrender
a right to a material Tax refund, or, except in connection with the matter set forth, and to the extent provided, in Section 3.18(d)
of the Company Disclosure Letter, enter into any closing agreement or similar agreement with any Governmental Authority in respect
of Taxes;
(o)
Intellectual Property. Sell, assign, license, sublicense, abandon, allow to lapse, transfer or otherwise dispose
of, or create or incur any Lien (other than a Permitted Lien) on, any material Intellectual Property, other than in the ordinary
course of business pursuant to non-exclusive licenses; or
(p)
Related Actions. Authorize, commit or agree to do any of the foregoing.
Any action expressly permitted under any one clause of this
Section 5.1 shall be permitted under all other clauses of this Section 5.1. Notwithstanding anything to the contrary
herein, (x) any or all actions taken by, or omissions of, the Company, in an effort to satisfy or facilitate the Financing Contingencies
will not constitute a breach of the Company’s obligations under this Section 5.1 (including for purposes of Section
6.2(b) and Section 5.12(b)), and (y) any or all action taken by, or omission of, the Company in breach of this Section
5.1 at the direction of or with the consent of Oscar Feldenkreis, in his capacity as Chief Executive Officer of the Company,
or which Oscar Feldenkreis, in his capacity as Chief Executive Officer of the Company, had prior or contemporaneous knowledge of
or reasonably should have had prior or contemporaneous knowledge of, shall in each case be disregarded and not deemed to be a breach
of Section 5.1 (including for purposes of Section 6.2(b) and Section 5.12(b)).
Nothing contained in this Agreement gives,
or is intended to give, Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its
Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement gives, or is intended to give,
the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior
to the Effective Time, each of Parent, Merger Sub and the Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
Section 5.2
Conduct of Business of Parent. Parent shall not, and shall not permit any of its Affiliates to, without the prior
written consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned) take or agree to take any
action that would reasonably be expected to (a) delay or prevent the consummation of the transactions contemplated by this Agreement,
(b) impose or cause any delay in the obtaining of, or increase the risk of not obtaining, any Governmental Authorization necessary
to consummate the transactions contemplated by this Agreement or the expiration or termination of any waiting period under applicable
Law, (c) result in any Governmental Authority entering an Order prohibiting the consummation of the transactions contemplated
by this Agreement or (d) materially interfere with Parent’s ability to make available to the Paying Agent immediately prior
to the Effective Time funds sufficient for the satisfaction of all of Parent’s and Merger Sub’s obligations under this
Agreement, including the payment by Parent and Merger Sub of the Merger Consideration, any fees and expenses of or payable by Parent,
Merger Sub or the Surviving Corporation, and any related repayment or refinancing of any indebtedness of the Company or any of
its Subsidiaries, and any other amounts required to be paid in connection with the consummation of the transactions contemplated
by this Agreement.
Section 5.3
Access to Information; Confidentiality.
(a)
The Company shall, and shall cause its Subsidiaries to, (i) provide to Parent and its Representatives access at reasonable
times upon prior notice to the officers, employees, properties, auditors, authorized representatives, books and records of the
Company and its Subsidiaries and (ii) furnish promptly such information concerning the Company and its Subsidiaries as Parent and
its Representatives may reasonably request. Nothing herein shall require the Company or any of its Subsidiaries to (A) grant access
if the Company determines that such access would reasonably be expected to disrupt or impair the business or operations of the
Company or any of its Subsidiaries or (B) disclose information to the extent such disclosure would, in the Company’s good
faith opinion after consultation with legal counsel, (x) result in a waiver of attorney-client privilege, work product doctrine
or similar privilege or (y) violate any applicable Law or any confidentiality obligation of such party. In the event that the Company
does not provide access or information in reliance on the preceding sentence, it shall provide notice to Parent that it is withholding
such access or information and the Company shall use its reasonable best efforts to communicate, to the extent feasible, the applicable
information in a way that would not violate the applicable Law, Contract or obligation or risk waiver of such privilege.
(b)
Parent and the Company shall comply with, and shall cause their respective Representatives to comply with, all of their
respective obligations under the separate Confidentiality Agreements, dated March 15, 2018 (the “Confidentiality Agreements”),
between each of George Feldenkreis and Fortress Investment Group, LLC, on the one hand, and the Company, on the other hand, with
respect to the information disclosed under this Section 5.3; provided, that notwithstanding the terms of the Confidentiality
Agreements, Parent may provide such information to potential sources of capital, including the Financing Sources, and to rating
agencies and prospective lenders and investors during syndication of the Debt Financing (including any alternative financing) subject
to customary confidentiality arrangements that have been approved in advance by the Company (such approval not to be unreasonably
withheld, conditioned or delayed).
(c)
Nothing contained in this Agreement shall give Parent or its Affiliates, directly or indirectly, rights to conduct or cause
to be conducted any environmental investigation of the current or former operations or facilities of the Company or any of its
Subsidiaries without the prior written consent of the Company in its sole discretion.
Section 5.4
No Solicitation.
(a)
From the date of this Agreement until the earlier of the date the Requisite Company Vote has been obtained or the termination
of this Agreement pursuant to Article VII hereof, and except as expressly permitted by the other provisions of this Section
5.4, the Company shall not, and the Company shall cause any of its Subsidiaries not to, and the Company shall use its reasonable
best efforts to cause its Representatives acting on its behalf not to, directly or indirectly, (i) solicit, initiate, knowingly
facilitate or knowingly encourage (including by way of providing material non-public information) any inquiries regarding, or the
making of any proposal or offer that constitutes or would reasonably be expected to lead to, a Takeover Proposal, (ii) enter
into or participate in any discussions or negotiations with any Person regarding a Takeover Proposal (other than to state that
the Company is not permitted to have discussions or negotiations) or (iii) approve or recommend, or propose to approve or recommend,
or execute or enter into any Contract with respect to, a Takeover Proposal (other than an Acceptable Confidentiality Agreement).
The Company shall immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with
any Person conducted prior to the date of this Agreement by the Company or any of its Subsidiaries or any of their respective Representatives
with respect to any Takeover Proposal. Without limiting the foregoing, it is agreed that if any Representative of the Company or
any of its Subsidiaries, acting on their behalf, takes any action that would constitute a breach of this Section 5.4, such
action shall constitute a breach of this Section 5.4 by the Company.
(b)
Notwithstanding Section 5.4(a), following the receipt by the Company of a Takeover Proposal until the date the Requisite
Company Vote has been obtained, (i) the Special Committee and the Company Board shall be permitted to participate in discussions
regarding such Takeover Proposal solely to clarify the terms of such Takeover Proposal and (ii) with respect to a written, bona
fide Takeover Proposal that did not result from any breach in any material respect of any of the provisions set forth in this Section
5.4, if the Special Committee or the Company Board determines in good faith, (A) after consultation with the Company’s
outside legal and financial advisors, that such Takeover Proposal constitutes or would reasonably be expected to lead to a Superior
Proposal and (B) after consultation with outside legal counsel, that the failure to take the actions set forth in clauses
(x) and (y) below with respect to such Takeover Proposal would reasonably be expected to be inconsistent with its fiduciary
duties, then the Company may, in response to such Takeover Proposal, (x) furnish access and non-public information with respect
to the Company and any of its Subsidiaries to the Person who has made such Takeover Proposal pursuant to an Acceptable Confidentiality
Agreement, so long as any written material non-public information provided under this clause (x) has previously been provided
to Parent or is provided to Parent promptly after being provided to such Person, and (y) participate in discussions and negotiations
regarding such Takeover Proposal. Notwithstanding anything to the contrary in this Agreement, the Special Committee and the Company
Board shall be permitted, to the extent it determines in good faith, after consultation with outside legal counsel, that failure
to take such action would reasonably be expected to be inconsistent with its fiduciary duties, to modify, waive, amend or release
any existing standstill obligations owed by any Person to the Company or any of its Subsidiaries.
(c)
From and after the date of this Agreement, (i) the Company shall advise Parent orally and in writing of the receipt of any
Takeover Proposal, specifying the material terms and conditions thereof and the identity of the party making such Takeover Proposal,
and (ii) the Company shall keep Parent reasonably informed on a current basis with respect to the status and material terms of
any such Takeover Proposal and shall promptly notify the Company of any material modifications to the financial or other material
terms and conditions of such Takeover Proposal, in each case within one Business Day after (but not including) the date of the
Company’s receipt thereof.
(d)
Except as set forth in Section 5.4(e) and Section 5.4(f), the Company Board and the Special Committee shall
not (i) withdraw, modify or amend the Company Board Recommendation in any manner adverse to Parent, or publicly propose to
do so, (ii) approve, endorse or recommend a Takeover Proposal or publicly propose to do so or (iii) approve, recommend
or allow the Company to enter into a Contract relating to a Takeover Proposal (other than an Acceptable Confidentiality Agreement).
(e)
Notwithstanding Section 5.4(d), the Special Committee or the Company Board may, at any time before obtaining the
Requisite Company Vote and in response to a Superior Proposal received by the Special Committee or the Company Board after the
date of this Agreement, if the Special Committee or the Company Board has concluded in good faith, following consultation with
its outside legal counsel, that its failure to withdraw, modify or amend the Company Board Recommendation would reasonably be expected
to be inconsistent with its fiduciary duties to stockholders under applicable Law, withdraw, modify or amend the Company Board
Recommendation in a manner adverse to Parent or terminate this Agreement to enter into a Contract with respect to such Superior
Proposal, but only if:
| (i) | the Company shall have complied in all material respects with its obligations under this Section 5.4; |
| (ii) | the Company shall have first provided prior written notice to Parent that it is prepared to terminate this Agreement to enter
into a Contract with respect to such Superior Proposal, which notice shall include the material terms and conditions of the transaction
that constitutes such Superior Proposal and the identity of the party making such Superior Proposal, and to the extent provided
to the Company, a copy of any material Contract evidencing or relating to the Superior Proposal; and |
| (iii) | Parent does not make, within four Business Days after the receipt of such notice (it being understood and agreed that any material
change to the financial or other terms and conditions of such Superior Proposal shall require an additional notice to Parent and
a new two Business Day period), a proposal that the Special Committee or the Company Board determines in good faith, after consultation
with its financial advisor, causes the Takeover Proposal that constituted a Superior Proposal to no longer constitute a Superior
Proposal; provided, that the Company (acting through the Special Committee) shall, and shall cause its Representatives to,
negotiate with Parent in good faith (to the extent Parent desires to negotiate) during such period with respect to such proposal
to make such adjustments in the terms and conditions of this Agreement so that the Superior Proposal described in such notice ceases
to constitute a Superior Proposal. |
(f)
Notwithstanding anything to the contrary in this Agreement, at any time before obtaining the Requisite Company Vote, if
any event, fact, development, circumstance or occurrence (but specifically excluding any Takeover Proposal or Superior Proposal)
that improves the business, assets, operations or prospects of the Company or its Subsidiaries (or that fundamentally impairs Parent’s
ability to consummate the Merger on the terms set forth herein) that was not known (and, other than with respect to Parent, should
not reasonably have been known) to the Special Committee and the Company Board (other than George Feldenkreis and Oscar Feldenkreis)
as of the date hereof, becomes known to the Special Committee and the Company Board (other than George Feldenkreis and Oscar Feldenkreis)
after the date of this Agreement (an “Intervening Event”) and the Special Committee or the Company Board has
concluded in good faith, following consultation with its outside legal counsel, that its failure to withdraw, modify or amend the
Company Board Recommendation would reasonably be expected to be inconsistent with its fiduciary duties to stockholders under applicable
Law, then the Company Board may withdraw, modify or amend the Company Board Recommendation in a manner adverse to Parent but only
if:
| (i) | the Company shall have first provided prior written notice to Parent that the Special Committee or the Company Board intends
to withdraw, modify or amend the Company Board Recommendation in a manner adverse to Parent, which notice shall include a description
in reasonable detail of the Intervening Event and the Company Board’s reasons for taking such action; and |
| (ii) | Parent does not, within four Business Days after the receipt of such notice, propose revisions to the terms and conditions
of this Agreement in response to such Intervening Event that the Special Committee or the Company Board determines, after consultation
with its outside legal counsel and financial advisors, obviate the need for the Special Committee or the Company Board to withdraw,
modify or amend the Company Board Recommendation, and the Company (acting through the Special Committee) shall, and shall cause
its Representatives to, negotiate with Parent in good faith (to the extent Parent desires to negotiate) during such period with
respect to such proposed revisions. |
(g)
Nothing contained in this Agreement shall prohibit the Company from complying with Rules 14a-9, 14d-9, 14e-2 and Item 1012(a)
of Regulation M-A promulgated under the Exchange Act, or from issuing a “stop, look and listen” statement pending disclosure
of its position thereunder or making any required disclosure to the Company’s stockholders if, in the good faith judgment
of the Special Committee or the Company Board, after consultation with its outside legal counsel, the failure to do so would be
inconsistent with its fiduciary duties under applicable Law or such disclosure is otherwise required under applicable Law; provided,
that this Section 5.4(g) shall not be deemed to permit the Company Board to (or the Special Committee to recommend that
the Company Board) change, withdraw, modify or amend the Company Board Recommendation except to the extent permitted by Sections
5.4(e) – (f). For the avoidance of doubt, in no event shall the issuance of a “stop, look and listen”
statement (or other similar statement pursuant to any requirement of applicable Law) constitute a change, withdrawal, modification
or amendment of the Company Board Recommendation under this Agreement.
Section 5.5
Company Proxy Statement; Schedule 13E-3; Company Stockholders Meeting.
(a)
As promptly as reasonably practicable following the date of this Agreement, the Company shall prepare and file with the
SEC the Company Proxy Statement and the Company and Parent shall jointly prepare and file with the SEC the Schedule 13E-3. The
Company shall use reasonable best efforts as promptly as reasonably practicable (and after consultation with Parent) to respond
to any comments or requests for additional information made by the SEC with respect to the Company Proxy Statement and the Company
and Parent shall use reasonable best efforts as promptly as reasonably practicable to jointly respond to any comments or requests
for additional information made by the SEC with respect to the Schedule 13E-3. The Company will use reasonable best efforts to
cause the Company Proxy Statement to be mailed to the Company’s stockholders as promptly as reasonably practicable after
confirmation from the SEC that it has no further comments on the Company Proxy Statement and the Schedule 13E-3 (or that the Company
Proxy Statement and Schedule 13E-3 is otherwise not to be reviewed by the SEC). Parent and Merger Sub shall cooperate with the
Company in the preparation of the Company Proxy Statement and the Schedule 13E-3. Without limiting the generality of the foregoing,
(i) each of Parent and Merger Sub will furnish to the Company the information relating to it and its Affiliates required by the
Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Company Proxy Statement, that is customarily
included in proxy statements or Rule 13E-3 transaction statements on Schedule 13E-3 prepared in connection with transactions of
the type contemplated by this Agreement or that is reasonably requested by the Company, and (ii) prior to the filing with the SEC
or the mailing to the Company’s stockholders of the Company Proxy Statement or the filing with the SEC of the Schedule 13E-3,
the Company shall provide Parent with a reasonable opportunity to review and comment on, and the Company shall reasonably consider
all comments reasonably proposed by Parent with respect to, the Company Proxy Statement and the Schedule 13E-3. The Company shall
promptly (A) notify Parent upon the receipt of any such comments or requests and (B) provide Parent with copies of all correspondence
between the Company and its Representatives, on the one hand, and the SEC and its staff, on the other hand, to the extent such
correspondence relates to the Company Proxy Statement or the Schedule 13E-3.
(b)
The Company agrees that none of the information included or incorporated by reference in the Company Proxy Statement or
the Schedule 13E-3 will, at the date it is first mailed to the stockholders of the Company or filed with the SEC, as applicable,
or at the time of any amendment or supplement thereof, 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; provided, that no representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein to the extent based on information supplied by or on behalf of Parent or Merger Sub or
any Affiliate of Parent or Merger Sub in connection with the preparation of the Company Proxy Statement or the Schedule 13E-3 for
inclusion or incorporation by reference therein. The Company agrees that the Company Proxy Statement and the Schedule 13E-3 will
comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder.
(c)
Parent and Merger Sub hereby covenant and agree that none of the information supplied by or on behalf of Parent or Merger
Sub or any Affiliate of Parent or Merger Sub for inclusion or incorporation by reference in the Company Proxy Statement or the
Schedule 13E-3 shall, at the date it is first mailed to the stockholders of the Company or filed with the SEC, as applicable, or
at the time of the Company Stockholders Meeting or at the time of any amendment or supplement thereof, 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; provided, that no representation or warranty
is made by either Parent or Merger Sub with respect to statements made or incorporated by reference therein to the extent based
on information supplied by the Company or any Affiliate of the Company in connection with the preparation of the Company Proxy
Statement or the Schedule 13E-3 for inclusion or incorporation by reference therein.
(d)
The Company Proxy Statement shall include the Company Board Recommendation unless the Company Board has withdrawn, modified
or amended the Company Board Recommendation in accordance with Section 5.4.
(e)
Following the clearance of the Company Proxy Statement and Schedule 13E-3 by the SEC, the Company shall call and hold the
Company Stockholders Meeting as promptly as reasonably practicable following the date of this Agreement for the purpose of obtaining
the Requisite Company Vote. Subject to Section 5.4, the Company shall use its reasonable best efforts to solicit or cause
to be solicited from its stockholders proxies in favor of adoption of this Agreement; provided, that the Company may postpone,
recess or adjourn the Company Stockholders Meeting: (i) with the consent of Parent, (ii) for the absence of a quorum, (iii) to
allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure which the Company Board
has determined in good faith (after consultation with its outside legal counsel) is necessary or advisable under applicable Laws
and for such supplemental or amended disclosure to be disseminated to and reviewed by the Company’s stockholders prior to
the Company Stockholders Meeting (iv) to allow additional solicitation of votes in order to obtain the Requisite Company Vote,
or (v) if the Company has provided a written notice to Parent pursuant to Section 5.4(e)(ii) or Section 5.4(f)(i)
and the latest deadline contemplated by Section 5.4(e) or 5.4(f) with respect to such notice, as the case may be,
has not been reached.
Section 5.6
Employees; Benefit Plans.
(a)
For a period of one year following the Closing Date (the “Continuation Period”), Parent shall, or shall
cause the Surviving Corporation or any of their respective Affiliates to, provide to individuals who, immediately prior to the
Effective Time, were employees of the Company or any of its Subsidiaries (each, an “Employee”) (i) a salary
or hourly wage rate and short-term (annual or more frequent) bonus or commission opportunity no less favorable than that provided
to such Employee immediately prior to the Effective Time and (ii) other compensation and benefits (but not including equity and
equity-based awards) that for such individual are substantially comparable in the aggregate to such compensation and benefits being
provided to Employees immediately prior to the Effective Time.
(b)
Parent shall, or shall cause the Surviving Corporation or any of their respective Affiliates to, honor all Company Employee
Benefits (including all severance and similar plans and agreements) in accordance with their terms as in effect immediately prior
to the Effective Time, subject to any amendment or termination thereof that may be permitted by such Company Employee Benefits
and except as provided herein; provided, that nothing herein shall prevent the amendment or termination of any specific
plan, program policy, agreement or arrangement, or interfere with Parent’s, the Surviving Corporation’s or any of their
respective Affiliates’ rights or obligations to make such changes, in each case as are necessary to comply with applicable
Law. Notwithstanding the foregoing, for the later of the duration of the Continuation Period or the remaining term of any individual
employment, severance or separation agreement in effect immediately prior to the Effective Time, Parent shall provide each Employee
who suffers a termination of employment under circumstances that would have given the Employee a right to severance payments and
benefits under the Company’s severance policy or individual employment, severance or separation agreement or other arrangement
in effect immediately prior to the Effective Time (each, a “Company Severance Plan”) with severance payments
and benefits no less favorable than those that would have been provided to such Employee under any Company Severance Plan. Following
the end of the Continuation Period, Parent shall be permitted to alter the duties and employment terms applicable to a given Employee
solely to the extent permitted under the terms of any employment agreement with such Employee, as in effect immediately prior to
the Effective Time.
(c)
As of and after the Effective Time, Parent shall, or shall cause the Surviving Corporation or any of their respective Affiliates
to, recognize, without duplication, credit for purposes or vesting, eligibility to participate and for calculating severance and
vacation entitlements (which shall, for the avoidance of doubt, exclude benefit accruals under any qualified or non-qualified defined
benefit pension plan) for each such Employee’s years of service with the Company and its Subsidiaries (and their predecessor
entities) prior to the Effective Time (“Prior Service”) (to the extent the Company recognized such service for
corresponding benefits) under any employee compensation, incentive and benefit (including vacation and severance) plans, programs,
policies and arrangements maintained for the benefit of Employees as of and after the Effective Time by Parent, its Subsidiaries
or the Surviving Corporation (each, a “Parent Plan”). With respect to each Parent Plan that is a “welfare
benefit plan” (as defined in Section 3(1) of ERISA), Parent and its Subsidiaries shall use reasonable best efforts to (i)
cause there to be waived any pre-existing condition or eligibility limitations (to the extent waived, satisfied or inapplicable
under the corresponding plan maintained by the Company and its Subsidiaries immediately prior to the Effective Time) and (ii) give
effect, in determining any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to, Employees under similar plans maintained by the Company and its Subsidiaries immediately prior to the Effective
Time.
(d)
With respect to any accrued but unused vacation time to which any Employee is entitled pursuant to the vacation policy or
individual agreement or other arrangement applicable to such Employee immediately prior to the Effective Time, Parent shall, or
shall cause the Surviving Corporation or any of their respective Affiliates to, (i) allow such Employee to use such accrued
vacation pursuant to the terms of Parent’s or the Surviving Corporation’s vacation policy, as in effect from time to
time, and (ii) if any Employee’s employment terminates during the Continuation Period under circumstances entitling
the Employee to severance pay under the Company Severance Plan, pay the Employee, in cash, an amount equal to the value of the
accrued vacation time.
(e)
Without limiting Section 8.11, nothing in this Section 5.6, whether express or implied, shall: (i) confer
upon any current or former employee of the Company, Parent, the Surviving Corporation or any of their respective Affiliates (including
any Employee), any rights or remedies including any right to employment or continued employment for any specified period, of any
nature or kind whatsoever under or by reason of this Section 5.6, or restrict the ability of Parent, Surviving Corporation
or any of their respective Subsidiaries or Affiliates to terminate the employment or service of any Person; (ii) be construed to
modify, amend or create any employee benefit plan of the Company, Parent, Surviving Corporation or any of their respective Affiliates,
(iii) limit the ability of Parent, the Surviving Corporation or any of their respective Subsidiaries or Affiliates to amend, modify
or terminate any benefit or compensation plan, program, agreement, Contract, policy or arrangement at any time assumed, established,
sponsored or maintained by any of them; or (iv) create any third-party beneficiary rights or obligations in any Person (including
any Employee) other than the parties to this Agreement.
Section 5.7
Directors’ and Officers’ Indemnification and Insurance.
(a)
For a period of six years following the Effective Time (provided, that such period shall be extended with respect
to all unresolved claims for indemnification by any Indemnified Party as of the sixth anniversary of the Effective Time until such
claims are finally resolved), Parent and the Surviving Corporation shall cause all rights to indemnification, advancement of expenses
and exculpation now existing in favor of any present or former director, officer or employee of the Company or any of its Subsidiaries
and the fiduciaries of any Company Employee Benefits (the “Indemnified Parties”) as provided in (i) the Organizational
Documents of the Company, or (ii) agreements between an Indemnified Party and the Company or one of its Subsidiaries to survive
the Merger and to continue in full force and effect for a period of not less than six years after the Effective Time or, if longer,
for such period as is set forth in any applicable agreement with an Indemnified Party in effect on the date of this Agreement.
(b)
For a period of six years following the Effective Time (provided, that such period shall be extended with respect
to all unresolved claims for indemnification by any Indemnified Party as of the sixth anniversary of the Effective Time until such
claims are finally resolved), Parent and the Surviving Corporation shall, jointly and severally, indemnify and hold harmless all
Indemnified Parties to the fullest extent permitted by applicable Law with respect to all acts and omissions arising out of or
relating to their services as directors, officers or employees of the Company, its Subsidiaries or another Person, if such Indemnified
Party is or was serving as a director, officer or employee of such other Person at the request of the Company, or fiduciaries of
Company Employee Benefits, whether asserted or claimed at, after or before the Effective Time (including in connection with the
negotiation and execution of this Agreement and the consummation of the transactions contemplated by this Agreement or otherwise).
If any Indemnified Party is or becomes involved in any Legal Action in connection with any matter subject to indemnification hereunder,
then Parent and the Surviving Corporation shall, jointly and severally, advance as incurred any costs or expenses (including reasonable
legal fees and disbursements), judgments, fines, losses, claims, damages or Liabilities (“Damages”) arising
out of or incurred in connection with such Legal Action, subject to Parent’s or the Surviving Corporation’s, as applicable,
receipt of an undertaking by or on behalf of such Indemnified Party, if required by the FBCA, to repay such Damages if it is ultimately
determined under applicable Law that such Indemnified Party is not entitled to be indemnified. In the event of any such Legal Action,
(i) each of Parent and the Surviving Corporation shall cooperate with the Indemnified Party in the defense of any such Legal Action
and (ii) neither Parent nor the Surviving Corporation shall settle, compromise or consent to the entry of any judgment in any Legal
Action pending or threatened in writing to which an Indemnified Party is a party (and in respect of which indemnification could
be sought by such Indemnified Party hereunder), unless such settlement, compromise or consent includes an unconditional release
of such Indemnified Party from all liability arising out of such Legal Action.
(c)
Parent and the Surviving Corporation shall, jointly and severally, maintain in effect for at least six years after the Effective
Time the current policies of directors’ and officers’ liability insurance maintained by the Company or policies of
at least the same coverage and amounts containing terms and conditions which are no less advantageous with respect to claims arising
out of or relating to events which occurred before or at the Effective Time (including in connection with the negotiation and execution
of this Agreement and the consummation of the transactions contemplated by this Agreement) so long as Parent and the Surviving
Corporation are not required to pay an annual premium in excess of 250% of the renewal premium paid or payable by the Company in
connection with its June 2018 renewal (such 250% amount being the “Maximum Premium”). If Parent and the Surviving
Corporation are unable to obtain the insurance described in the prior sentence for an amount less than or equal to the Maximum
Premium, then Parent and the Surviving Corporation shall, jointly and severally, instead obtain as much comparable insurance as
possible for an annual premium equal to the Maximum Premium. Notwithstanding the foregoing, in lieu of the arrangements contemplated
by this Section 5.7(c), before the Effective Time, the Company shall be entitled to purchase, and at the written request
of Parent shall purchase, a “tail” directors’ and officers’ liability insurance policy covering the matters
described in this Section 5.7(c) and, if the Company purchases such a policy before the Effective Time, then Parent and
the Surviving Corporation’s obligations under this Section 5.7(c) shall be satisfied so long as Parent and the Surviving
Corporation cause such policy to be maintained in effect for a period of six years following the Effective Time.
(d)
The covenants contained in this Section 5.7 are intended to be for the benefit of, and shall be enforceable by, each
of the Indemnified Parties and their respective heirs and legal representatives and shall not be deemed exclusive of any other
rights to which an Indemnified Party is entitled, whether pursuant to Law, Contract or otherwise.
(e)
In the event that Parent or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, Parent and
the Surviving Corporation shall take all necessary action so that the successors or assigns of Parent or the Surviving Corporation,
as the case may be, shall succeed to the obligations set forth in this Section 5.7.
Section 5.8
Reasonable Best Efforts. Upon the terms and subject to the conditions set forth in this Agreement and in accordance
with applicable Law, each of the parties to this Agreement shall, and shall cause its Affiliates to, use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to ensure
that the conditions set forth in Article VI are satisfied and to consummate the transactions contemplated by this Agreement
as promptly as reasonably practicable; provided, that, prior to the Effective Time, in no event shall the Company or its
Subsidiaries be required to pay, or otherwise incur any Liability with respect to, any fees (except for customary fees to Governmental
Authorities), penalties or other consideration to obtain any consent or approval required for the consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the terms of this Section 5.8 shall not limit the rights
of the Company set forth in Section 5.4.
Section 5.9
Consents; Filings; Further Action; Notices.
(a)
Upon the terms and subject to the conditions of this Agreement and in accordance with applicable Law, each of Parent and
the Company shall, and Parent shall cause each of its Affiliates to, use its reasonable best efforts to promptly (i) obtain
any consents, approvals or other authorizations, and make any filings and notifications, required in connection with the transactions
contemplated by this Agreement, (ii) make any other submissions either required or deemed appropriate by either Parent or
the Company in connection with the transactions contemplated by this Agreement under the Securities Act, the Exchange Act, the
HSR Act, any Foreign Competition Law, the FBCA, the Applicable Exchange rules and regulations and any other applicable Law and
(iii) take or cause to be taken all other actions necessary, proper or advisable consistent with this Section 5.9 to
cause the expiration of the applicable waiting periods, or receipt of required consents, approvals or authorizations, as applicable,
under such Laws as soon as reasonably practicable. Parent and the Company shall cooperate and consult with each other in connection
with the making of all such filings and notifications, including by providing copies of all relevant documents to the non-filing
party and its advisors before filing. No party shall consent to any voluntary extension of any statutory deadline or waiting period
or to any voluntary delay of the consummation of the transactions contemplated by this Agreement at the behest of any Governmental
Authority without the consent of the other parties to this Agreement, which consent shall not be unreasonably withheld, delayed
or conditioned.
(b)
As promptly as practicable after the date of this Agreement (and in any event within ten (10) Business Days) after the date
of this Agreement, each of Parent and the Company shall file, and shall cause their respective Affiliates to file, and, unless
so requested by the applicable Governmental Authority, not withdraw any notification and report forms and related material required
to be filed by it with the Federal Trade Commission and the United States Department of Justice, as applicable, and shall, and
shall cause their Affiliates to, promptly make any further filings pursuant thereto that may be necessary, proper or advisable.
(c)
Each of Parent and the Company shall, and shall cause their Affiliates to, promptly inform the other party upon receipt
of any material or substantive communication from any Governmental Authority regarding any of the transactions contemplated by
this Agreement. If Parent or the Company (or any of their respective Affiliates) receives a request for additional information
from any Governmental Authority that is related to the transactions contemplated by this Agreement, then such party shall endeavor
in good faith to make, or cause to be made, to the extent practicable and after consultation with the other party, an appropriate
response to such request. No party shall, or shall permit any of its Affiliates to, participate in any meeting or engage in any
material or substantive conversation with any Governmental Authority without giving the other party prior notice of the meeting
or conversation and, unless prohibited by such Governmental Authority, the opportunity to attend or participate. Parent shall advise
the Company promptly of any understandings, undertakings or agreements (oral or written) which Parent or any of its Affiliates
proposes to make or enter into with any Governmental Authority in connection with the transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, Parent shall, and shall cause its Affiliates to, use its reasonable best
efforts to resolve any objections that may be asserted with respect to the transactions contemplated by this Agreement under any
antitrust, competition or trade regulatory Law as promptly as practicable.
(d)
Notwithstanding anything to the contrary in this Agreement, Parent shall take, and shall cause its Affiliates to take (and,
notwithstanding anything to the contrary in this Agreement, including Section 5.1 and Section 5.4, the Company and
its Affiliates shall be permitted to take, without affecting any representation, warranty, covenant or condition in this Agreement),
all action necessary to avoid the entry or to effect the dissolution of, or vacate or lift, any Order which would otherwise have
the effect of preventing impairing or delaying the Closing, including (i) selling, licensing, divesting or disposing of or holding
separate any entities, assets, Intellectual Property or businesses (including, after the Effective Time, the Surviving Corporation
or any of its Subsidiaries), (ii) terminating, amending or assigning existing relationships or contractual rights and obligations,
(iii) changing or modifying any course of conduct regarding future operations, (iv) otherwise taking actions that would limit its
freedom of action with respect to, or its ability to retain, one or more of their respective businesses, assets or rights or interests
therein and (v) committing to take any such actions in the foregoing clauses (i), (ii), (iii) or (iv) (all of the foregoing a “Divestiture
Action”). Notwithstanding the foregoing, neither Parent nor its Affiliates shall be required to, and the Company and
its Subsidiaries shall not, without the prior written consent of Parent, take or agree to take or commit to take any Divestiture
Action with respect to any assets (whether tangible or intangible) that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect (with references to the Company in the definition thereof also being deemed
to be references to Parent for purposes of this Section). For the avoidance of doubt, Parent shall not require the Company or its
Subsidiaries to, and the Company and its Subsidiaries shall not be required to, take any action with respect to any Order or any
applicable Law which would bind the Company or its Subsidiaries prior to the Effective Time or in the event the Merger does not
occur.
Section 5.10
Public Announcements. The initial press release concerning this Agreement and the transactions contemplated hereby
shall be a joint press release to be reasonably agreed upon by the Company and Parent. Following such initial press release, except
as provided for in this Agreement, Parent and the Company shall consult with each other before issuing any press release or otherwise
making any public statements about this Agreement or any of the transactions contemplated by this Agreement. Neither Parent nor
the Company shall issue any such press release or make any such public statement prior to such consultation, except to the extent
required by applicable Law or the Applicable Exchange requirements, in which case that party shall use its reasonable best efforts
to consult with the other party before issuing any such release or making any such public statement; provided, that each
party may, without complying with the foregoing obligations, make any public statement regarding the transactions contemplated
by this Agreement in response to questions from the press, analysts, investors or those attending industry conferences, and may
make internal announcements to employees, to the extent that such statements are not inconsistent with previous press releases,
public disclosures or public statements made jointly by the parties and otherwise in compliance with this Section 5.10 and
do not reveal material non-public information regarding this Agreement or the transactions contemplated by this Agreement; provided,
further, that Parent’s consent shall not be required, and the Company shall not be required to consult with Parent
in connection with, or provide Parent an opportunity to review or comment upon, any press release or other public statement or
comment to be issued or made with respect to any Takeover Proposal or with respect to any actions contemplated by Section
5.4(e), Section 5.4(f) or Section 5.4(g). Notwithstanding the foregoing, without the prior consent of the other
parties, (a) the Company may communicate with customers, vendors, suppliers, financial analysts, investors and media representatives
in a manner consistent with its past practice in compliance with applicable Law, (b) may disseminate the information included
in a press release or other document previously approved for external distribution by Parent and (c) this Section 5.10 shall
not apply to any disclosure of information concerning this Agreement in connection with any dispute between the parties regarding
this Agreement.
Section 5.11
Fees, Expenses and Conveyance Taxes. Except as explicitly provided otherwise in this Agreement, whether or not the
Merger is consummated, all fees, costs and expenses (including those payable to Representatives) incurred by any party to this
Agreement or on its behalf in connection with this Agreement and the transactions contemplated by this Agreement (“Expenses”)
shall be paid by the party incurring those Expenses; except that (i) the filing fees for any filings made under the HSR Act or
any Foreign Competition Law shall be paid by Parent, and (ii) all documentary, sales, use, real property transfer, real property
gains, registration, value added, transfer, stamp, recording and similar Taxes, fees, and costs together with any interest thereon,
penalties, fines, costs, fees, additions to Tax or additional amounts with respect thereto incurred in connection with this Agreement
and the transactions contemplated hereby (“Conveyance Taxes”), shall be paid by Parent, and Parent shall file
all Tax Returns related thereto, regardless of who may be liable therefor under applicable Law.
Section 5.12
Financing Efforts.
(a)
Each of Parent and Merger Sub shall, and shall cause each of its Affiliates to, use its reasonable best efforts to obtain
the Financing as soon as reasonably practicable on the terms and conditions contained in the Financing Commitments (reflecting
flex provisions to the extent exercised) and to consummate the Rollover Investment pursuant to the Rollover Letters in accordance
with the terms thereof, including using its reasonable best efforts to (i) comply with its obligations under the Financing Commitments
and the Rollover Letters, (ii) negotiate and enter into definitive agreements with respect to the Financing Commitments on terms
and conditions (reflecting flex provisions to the extent exercised) no less favorable to Parent and Merger Sub than those contained
in the respective Financing Commitments or on terms and conditions otherwise acceptable to Parent that would not (A) reduce the
aggregate amount of the Financing unless the Rollover Investment is increased by a corresponding amount or (B) impose new or additional
conditions precedent to, or delay, the receipt of the Financing, (iii) satisfy on a timely basis all conditions applicable to Parent
and Merger Sub contained in the Financing Commitments (including definitive agreements related thereto) and the Rollover Letters,
including the payment of any commitment, engagement or placement fees required as a condition to the Financing, and (iv) consummate
the Financing and the Rollover Investment at or prior to the Closing Date (it being understood that it is not a condition to Closing
under this Agreement, nor to the consummation of the Merger, for Parent or Merger Sub to obtain the Financing, the Rollover Investment
or any alternative financing). Notwithstanding anything to the contrary in the immediately preceding sentence, each of Parent and
Merger Sub shall, and shall cause each of its Affiliates to, take all actions reasonably necessary to (i) maintain in effect each
Financing Commitment and each Rollover Letter (it being understood that the Financing Commitments and the Rollover Letters may
be replaced or amended as provided below) and (ii) enforce all of its rights under each Financing Commitment (or any definitive
agreements relating thereto) and each Rollover Letter. Parent shall keep the Company reasonably informed of the status of its efforts
to arrange the Financing (including providing the Company with copies of material draft and definitive agreements and other material
documents related to the Financing) and the Rollover Investment. Parent and Merger Sub shall give the Company notice as promptly
as reasonably practicable after obtaining Knowledge thereof (x) of any material breach or default by any party to any of the Financing
Commitments, any Rollover Letter or definitive agreements related to the Financing of which Parent or Merger Sub becomes aware,
(y) of the receipt of any (A) written notice or (B) other communication, in each case from any Person with respect to (1) any actual
or potential breach, default, termination or repudiation by any party to any of the Financing Commitments, any Rollover Letter
or definitive agreements related to the Financing of any provisions of any Financing Commitment, any Rollover Letter or definitive
agreements related to the Financing or (2) material dispute or disagreement between or among the parties to any of the Financing
Commitments, any Rollover Letter or definitive agreements related to the Financing with respect to the obligation to fund the Financing
or the amount of the Financing to be funded at the Closing or to consummate the Rollover Investment or the amount of shares of
Common Stock to be contributed prior to Closing, and (z) if at any time for any reason Parent or Merger Sub believes in good faith
that it will not be able to obtain all or any portion of the Financing or the Rollover Investment on the terms and conditions,
in the manner or from the sources contemplated by any of the Financing Commitments, any Rollover Letter or definitive agreements
related the Financing. As soon as reasonably practicable and in any event within three Business Days, Parent and Merger Sub shall
provide any information reasonably requested by the Company relating to any circumstance referred to in clause (x), (y) or (z)
of the immediately preceding sentence. Parent shall not, without the prior written consent of the Company, amend, modify, supplement
or waive any of the conditions or contingencies to funding contained in any Financing Commitment (including definitive agreements
related thereto) or to the making of the Rollover Investment contained in any Rollover Letter, or any other provision of, or remedies
under, any Financing Commitment (including definitive agreements related thereto) or any Rollover Letter, the effect of which (I)
reduces (or could have the effect of reducing) the amount of aggregate cash proceeds available from the Financing (including by
increasing the amount of fees to be paid or original issue discount other than as a result of the exercise of any related “market
flex” provisions set forth in a fee letter) unless there is a corresponding increase in the Rollover Investment, (II) imposes,
or could reasonably be expected to impose, new or additional conditions or contingencies to the receipt of the Financing or otherwise
expands, amends or modifies any other material provision of any Financing Commitment, (III) would delay, prevent or adversely impact,
or, individually or in the aggregate, would reasonably be expected to have the effect of delaying, preventing or adversely impacting,
in each case, in any material respect, the funding of the Financing (or satisfaction of the conditions to the Financing) on the
Closing Date, or (IV) would prevent or adversely impact or delay, or, individually or in the aggregate, would reasonably be expected
to have the effect of preventing, adversely impacting, or delaying, in each case, in any material respect the ability of Parent
to timely consummate the transactions contemplated by this Agreement on the Closing Date; provided, however, that, notwithstanding
the foregoing, Parent may modify, supplement or amend the Financing Commitments to add lenders, lead arrangers, bookrunners, syndication
agents, other agents or similar entities that have not executed the Financing Commitments as of the date hereof or to increase
the amount of funds available thereunder, and Parent or Merger Sub shall promptly deliver to the Company copies of any such amendment,
modification, supplement, restatement or replacement. In the event all conditions applicable to a Financing Commitment and/or a
Rollover Letter have been satisfied, Parent shall use its reasonable best efforts to cause the Lenders and the Rollover Investors
to fund the Financing and make the Rollover Investment, as applicable, required to consummate the transactions contemplated by
this Agreement as soon as reasonably practicable. In the event that any portion of the Financing becomes unavailable and such portion
is not otherwise available under the Debt Financing or Rollover Investment, as applicable, Parent shall notify the Company and
use its reasonable best efforts to arrange alternative financing from the same or other sources of financing on terms and conditions
(including the economic terms, covenants, flex provisions and funding conditions) not less favorable to Parent and Merger Sub,
taken as a whole, than those contained in the Financing Commitments as of the date hereof (taking into account the flex provisions)
(the “Alternate Terms and Conditions”), in an amount sufficient to enable Parent to consummate the transactions
contemplated by this Agreement on the Alternate Terms and Conditions.
(b)
The Company shall, and shall cause its Subsidiaries to, and shall use reasonable best efforts to cause their respective
Representatives to, at Parent’s sole cost and expense, use reasonable best efforts to provide all reasonable cooperation
requested by Parent, Merger Sub, any Financing Sources and their respective authorized Representatives in connection with the Financing
(which, for purposes of this Section 5.12(b) shall include any alternative financing), including:
| (i) | using reasonable best efforts to participate in, and causing the Company’s management team, with appropriate seniority
and expertise, including senior officers, to participate in, including the preparation for, a reasonable number of meetings, conference
calls, road show, investor and similar presentations, lender presentations, drafting sessions, due diligence sessions and sessions
with rating agencies in connection with the Financing on reasonable advance notice, including direct contact between such management
and representatives of the Company and its Subsidiaries, on the one hand, and the Financing Sources, potential lenders and investors
for the Financing, on the other hand; |
| (ii) | using reasonable best efforts to provide to Parent, Merger Sub and the Financing Sources from time to time all information
and disclosures regarding the Company and its Subsidiaries reasonably requested by the Financing Sources; |
| (iii) | using reasonable best efforts to execute and deliver customary authorization letters to the Financing Sources authorizing the
distribution of information to prospective lenders (including customary 10b-5 and material non-public information representations); |
| (iv) | using reasonable best efforts to assist with the preparation of appropriate and customary materials for rating agency presentations,
bank information memoranda, offering and syndication documents, business projections and other marketing documents customarily
required or reasonably requested by the Financing Sources in connection with the Financing; |
| (v) | furnishing no later than fifteen (15) Business Days prior to Closing all documentation and other information that is reasonably
requested no later than twenty (20) Business Days prior to Closing and required by regulatory authorities in connection with applicable
“know your customer” and anti-money laundering rules and regulations, including U.S.A. Patriot Act of 2001, relating
to the Company and its Subsidiaries; |
| (vi) | using reasonable best efforts to assist Parent in obtaining corporate, credit, facility and securities ratings from rating
agencies; |
| (vii) | using reasonable best efforts to facilitate the pledging of collateral; |
| (viii) | using reasonable best efforts to take corporate actions reasonably necessary or advisable to permit the consummation of the
Debt Financing and to permit the proceeds thereof to be made available to the Company by the Company and its Subsidiaries immediately
following the Effective Time; |
| (ix) | using reasonable best efforts to cooperate reasonably with the Financing Sources’ due diligence, to the extent customary
and reasonable and not unreasonably interfering with the business of the Company, including by granting the Financing Sources access
as provided in Section 5.3(a), subject to the limitations on, and requirements with respect to, disclosure and access set
forth in the second sentence of Section 5.3(a), Section 5.3(b) and Section 5.3(c); |
| (x) | using reasonable best efforts to arrange for customary payoff instruction letters, lien terminations and instruments of discharge
(including UCC termination statements, releases of security interests in intellectual property and mortgage releases) to be delivered
at or prior to Closing relating to all indebtedness to be paid off, discharged and terminated on the Closing Date; |
| (xi) | using reasonable best efforts to ensure that any syndication efforts with respect to the Financing benefit from the existing
lending and investment banking relationships of the Company; |
| (xii) | using reasonable best efforts to cooperate with consultants or other suitable professional advisors engaged to undertake field
examinations and appraisals for purposes of the Financing, including furnishing information to such Persons in respect of accounts
receivable, inventory and other applicable assets and providing customary consent and release letters in respect of the resulting
reports or in respect of field examinations and appraisals done in connection with the Company’s existing ABL credit agreement;
and |
| (xiii) | using reasonable best efforts to assist in the preparation and negotiation of, and executing and delivering, one or more credit
agreements, pledge and security documents and other definitive financing documents as may be reasonably requested by Parent or
the Financing Sources (including landlord waivers, and other third party agreements, hedging arrangements, customary officer’s
and other closing certificates and back-up therefor and a solvency certificate of the chief financial officer of the Company in
the form contemplated by the Financing Commitments); provided, that (A) the Company shall not be required to become subject
to any obligations or Liabilities with respect to any agreements or documents under this clause (xii) prior to the Closing and
(B) nothing shall obligate the Company to provide a solvency certificate or the like, any legal opinion or other opinion of counsel,
or any information that would, after consultation with legal counsel, reasonably be expected to violate any obligations of confidentiality
or result in a violation of Law or loss of any privilege; provided, further, the Company and its Subsidiaries shall
not be required under this Section 5.12 to deliver any corporate (or similar) authorization or approval of the execution
of the Financing (or any alternative financing), in each case, that would be effective prior to the Effective Time and no officers
or directors of the Company that will not be continuing following the Merger (including for the avoidance of doubt any non-employee
directors of the Company who tender resignations effective as of the Effective Time) shall be required to execute or enter into
or perform any agreement with respect to the Financing (including providing any corporate (or similar) authorization or approval
in connection therewith). |
Any information provided to Parent or Merger Sub pursuant
to this Section 5.12(b) shall be subject to the Confidentiality Agreements. Parent shall, on demand, reimburse the Company
for all reasonable and documented out-of-pocket costs incurred by the Company and its Subsidiaries in connection with such cooperation.
The Company and its Representatives shall be given a reasonable opportunity to review and comment on any materials that are to
be presented during any meetings conducted in connection with the Financing, and Parent shall give due consideration to any such
comments proposed by the Company and its Representatives. The Company hereby consents to the reasonable use of its and its Subsidiaries’
logos in connection with the Financing; provided, that such logos are used solely in a manner that is not intended to, and
is not reasonably likely to, harm or disparage the Company or any of its Subsidiaries or the reputation or goodwill of the Company,
its Subsidiaries and its or their respective marks. Notwithstanding anything to the contrary, the condition set forth in Section
6.2(b) of this Agreement, as it applies to the Company’s obligations under this Section 5.12(b), shall be deemed
satisfied if the Company’s material breach hereof was not the primary cause of the failure of funding under the Financing
Commitments (provided that any or all action taken by, or omission of, the Company in breach of this Section 5.12(b) at
the direction of or with the consent of Oscar Feldenkreis, in his capacity as Chief Executive Officer of the Company, or which
Oscar Feldenkreis, in his capacity as Chief Executive Officer of the Company, had prior or contemporaneous knowledge of or reasonably
should have had prior or contemporaneous knowledge of, shall in each case be disregarded and not deemed to be a breach of this
Section 5.12(b) (including for purposes of Section 6.2(b))). Parent and Merger Sub acknowledge and agree that the
Company and its Affiliates and their respective Representatives shall not have any responsibility for, or incur any Liability to
any Person under or in connection with, the arrangement of the Financing or any alternative financing that Parent or Merger Sub
may raise in connection with the transactions contemplated by this Agreement except arising from the actual and intentional fraud,
willful misconduct or intentional misrepresentation of the Company, any of its Subsidiaries or any of their respective Representatives,
and Parent and Merger Sub shall, on a joint and several basis, indemnify and hold harmless the Company, its Affiliates and its
and their respective Representatives from and against any and all Damages suffered or incurred by any of them in connection with
the arrangement of the Financing or any alternative financing, except to the extent such Damages arose out of or resulted from
the actual and intentional fraud, willful misconduct or intentional misrepresentation of the Company, any of its Subsidiaries or
any of their respective Representatives.
(c)
In no event shall Parent or Merger Sub enter into any exclusivity, lock-up or other similar agreement, arrangement or understanding
with any bank or investment bank or other potential provider of debt or equity financing that could reasonably be expected to prevent
such provider from providing or seeking to provide such financing to any third party in connection with a transaction relating
to the Company or its Subsidiaries (including a Takeover Proposal), in connection with the Merger or the other transactions contemplated
by this Agreement.
Section 5.13
Section 16b-3. Prior to the Effective Time, the Company shall (and shall be permitted to) take such steps as may
be reasonably required to cause dispositions of the Company’s equity securities (including derivative securities) pursuant
to the transactions contemplated by this Agreement by each individual who is a director or officer of the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
Section 5.14
Agreements with Principal Stockholders. From and after the date hereof until the Requisite Company Vote is obtained,
in no event shall Parent or Merger Sub or any of their respective Affiliates, on the one hand, enter into any Contract with any
of the Principal Stockholders or any of their respective Affiliates, on the other hand, relating to the transactions contemplated
by this Agreement or the business, operations or other interests of the Company and its Subsidiaries after the Effective Time,
unless such Contract shall terminate, by its terms, upon the termination of this Agreement without payment or penalty or any further
obligations. In addition, from and after the date hereof until the Requisite Company Vote is obtained, in no event shall Parent
amend, or waive any requirement under, the Voting Agreement or any Rollover Letter, in each case, without the prior written consent
of the Company.
Section 5.15
Transaction Litigation. Prior to the earlier of the Effective Time or the termination of this Agreement pursuant
to Article VII, the Company shall control the defense of any Legal Action (including any class action or derivative litigation)
relating directly or indirectly to this Agreement or transactions contemplated by this Agreement, including disclosures made under
securities laws and regulations related thereto (“Transaction Litigation”); provided, however,
that the Company shall, as promptly as reasonably practicable after obtaining Knowledge thereof, notify Parent in writing of, and
shall (i) give Parent the right to review and comment on all material filings or responses to be made by the Company in connection
with any Transaction Litigation (and the Company shall in good faith take such comments into account), and the opportunity to participate
in the defense and settlement of, any Transaction Litigation and (ii) if Parent does not exercise such right to participate
(subject to the Company’s control right), keep Parent reasonably and promptly informed with respect to the status of such
Transaction Litigation. Except as permitted on Section 5.15 of the Company Disclosure Letter, no compromise or settlement of any
Transaction Litigation shall be agreed to by the Company without Parent’s prior written consent (such consent not to be unreasonably
withheld, conditioned or delayed).
Section 5.16
Applicable Exchange De-listing. The Surviving Corporation shall cause the Common Stock to be de-listed from the Applicable
Exchange and de-registered under the Exchange Act at or as soon as practicable following the Effective Time.
Article
VI
CONDITIONS
Section 6.1
Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each party to this
Agreement to effect the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver on or before
the Closing Date of each of the following conditions:
(a)
Company Stockholder Approval. This Agreement shall have been duly adopted by the Requisite Company Vote in accordance
with the FBCA and the Organizational Documents of the Company at a duly called Company Stockholders Meeting.
(b)
Antitrust. The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or
been terminated.
(c)
No Orders. No Governmental Authority shall have issued any Order that enjoins or otherwise prohibits consummation
of the Merger.
Section 6.2
Conditions to Obligations of Parent and Merger Sub. The obligations of each of Parent and Merger Sub to effect the
Merger and the other transactions contemplated hereby are also subject to the satisfaction or waiver by Parent on or before the
Closing Date of the following conditions:
(a)
Representations and Warranties. The representations and warranties of the Company set forth in (i) Article III
of this Agreement (other than those contained in Section 3.1 (the first sentence thereof), Section 3.3, Section 3.4,
Section 3.7(a), Section 3.8(a), Section 3.9, Section 3.25 and Section 3.26) shall be true and
correct in all respects, without regard to any “materiality” or “Company Material Adverse Effect” qualifications
contained in them, at and as of the Effective Time, as though made at and as of the Effective Time (except for representations
and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), with only such
exceptions as do not have and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect; (ii) Section 3.1 (the first sentence thereof), Section 3.3, Section 3.4, Section 3.7(a), Section
3.9, Section 3.25 and Section 3.26 shall be true and correct in all material respects at and as of the Effective
Time, as though made at and as of the Effective Time (except for representations and warranties made as of a specified date, the
accuracy of which shall be determined as of that specified date); and (iii) Section 3.8(a) shall be true and correct in
all but de minimis respects, other than as resulting from permitted exercises of existing outstanding equity awards set forth in
Section 3.8(a) following the date of this Agreement, in each case, at and as of the Effective Time, as though made at and
as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be
determined as of that specified date).
(b)
Performance of Obligations. The Company shall have, in all material respects, performed or complied with all obligations
required to be performed or complied with by it under this Agreement at or before the Closing Date.
(c)
No Company Material Adverse Effect. Since the date of this Agreement, there shall not have occurred a Company Material
Adverse Effect.
(d)
Officer’s Certificate. Parent shall have received a certificate, signed by either the Chief Executive Officer
or Chief Financial Officer of the Company, certifying as to the matters set forth in Section 6.2(a), Section 6.2(b)
and Section 6.2(c).
Section 6.3
Conditions to Obligation of the Company. The obligation of the Company to effect the Merger and the other transactions
contemplated hereby is also subject to the satisfaction or waiver by the Company on or before the Closing Date of the following
conditions:
(a)
Representations and Warranties. The representations and warranties of each of Parent and Merger Sub set forth in
this Agreement shall be true and correct in all respects, without regard to any “materiality” or “Parent Material
Adverse Effect” qualifications contained in them, at and as of the Effective Time as though made at and as of the Effective
Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that
specified date), unless the failure or failures of representations and warranties to be true and correct in all respects would
not individually or in the aggregate have a Parent Material Adverse Effect.
(b)
Performance of Obligations. Each of Parent and Merger Sub shall have, in all material respects, performed or complied
with all obligations required to be performed or complied with by it under this Agreement at or before the Closing Date.
(c)
Officer’s Certificate. The Company shall have received a certificate, signed by an executive officer of Parent,
certifying as to the matters set forth in Section 6.2(a) and Section 6.2(b).
Section 6.4
Frustration of Closing Conditions. Neither the Company, on the one hand, nor Parent or Merger Sub, on the other hand,
may rely, either as a basis for not consummating the Merger or for terminating this Agreement and abandoning the Merger and the
other transactions contemplated hereby, on the failure of any condition set forth in Section 6.1, Section 6.2 or
Section 6.3, as the case may be, to be satisfied if such party’s breach of any provision of this Agreement or failure
to use its reasonable best efforts to consummate the Merger and the other transactions contemplated by this Agreement, as required
by and subject to Section 5.8, Section 5.9 and Section 5.12, materially contributed to the failure of such
condition to be satisfied.
Article
VII
TERMINATION; TERMINATION FEES AND EXPENSES
Section 7.1
Termination by Mutual Consent. This Agreement may be terminated at any time before the Effective Time by mutual written
consent of Parent and the Company (but with respect to the Company, only pursuant to a resolution adopted by the Special Committee).
Section 7.2
Termination by Either Parent or the Company. This Agreement may be terminated by either Parent or the Company (only
pursuant to a resolution adopted by the Special Committee) at any time before the Effective Time:
(a)
whether before or after obtaining the Requisite Company Vote, if the Merger has not been consummated by December 14, 2018
(the “Termination Date”). Notwithstanding the foregoing, the right to terminate this Agreement under this Section
7.2(a) shall not be available to any party to this Agreement whose breach of any representation, warranty, covenant or agreement
of this Agreement has materially contributed to, or resulted in, the failure to consummate the Merger by such date;
(b)
if this Agreement has been submitted to the stockholders of the Company for adoption at a duly convened Company Stockholders
Meeting and the Requisite Company Vote is not obtained upon a vote taken thereof (or adjournment, postponement or recess thereof);
or
(c)
whether before or after obtaining the Requisite Company Vote, if any Governmental Authority having jurisdiction over any
party hereto shall have issued any Order that permanently enjoins or otherwise permanently prohibits consummation of the Merger
and such Order is or shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement
pursuant to this Section 7.2(c) shall have used reasonable best efforts to challenge such Order and cause such Order to
be withdrawn, rescinded, terminated, cancelled or otherwise nullified.
Section 7.3
Termination by Parent. This Agreement may be terminated by Parent at any time before the Effective Time:
(a)
prior to the Requisite Company Vote, if the Company Board or the Special Committee withdraws, modifies or amends the Company
Board Recommendation (or the Special Committee recommends that the Company Board take any such action) in any manner adverse to
Parent or the Company Board or the Special Committee publicly proposes to do so;
(b)
prior to the Requisite Company Vote, if (i) the Company Board or the Special Committee approves, endorses or recommends
a Takeover Proposal or publicly proposes to do so or (ii) a tender offer or exchange offer that if consummated would result
in any Person(s) beneficially owning 20% or more of any class of equity securities of the Company then outstanding is commenced
and the Company Board or Special Committee recommends in favor of, or within ten (10) Business Days after the commencement thereof
the Company Board fails to recommend against, such tender offer or exchange offer by its stockholders or the Company Board or the
Special Committee publicly proposes to do so; or
(c)
if the Company breaches any of its representations, warranties, covenants or agreements contained in this Agreement, which
breach (i) would give rise to the failure of a condition to Closing set forth in Section 6.2(a) or Section 6.2(b)
and (ii) (A) is not capable of being cured prior to the Termination Date or (B) has not been cured by the Company within twenty
(20) Business Days after the Company’s receipt of written notice of such breach from Parent, but only so long as neither
Parent nor Merger Sub are then in breach of their respective representations, warranties, covenants or agreements contained in
this Agreement, which breach would give rise to the failure of a condition to Closing set forth in Section 6.3(a) or Section
6.3(b).
Section 7.4
Termination by the Company. This Agreement may be terminated by the Company (only pursuant to a resolution adopted
by the Special Committee) at any time before the Effective Time:
(a)
pursuant to and in accordance with the terms and conditions of Section 5.4(e);
(b)
if Parent or Merger Sub breaches any of their respective representations, warranties, covenants or agreements contained
in this Agreement, which breach (i) would give rise to the failure of a condition to Closing set forth in Section 6.3(a)
or Section 6.3(b) and (ii) (A) is not capable of being cured prior to the Termination Date or (B) has not been cured
by Parent within twenty (20) Business Days after Parent’s receipt of written notice of such breach from the Company,
but only so long as the Company is not then in breach of its representations, warranties, covenants or agreements contained in
this Agreement, which breach would give rise to the failure of a condition to Closing set forth in Section 6.2(a) or Section
6.2(b); or
(c)
if (i) all of the conditions to the Closing set forth in Section 6.1 and Section 6.2 have been satisfied
or waived (other than any condition the failure of which to be satisfied is attributable to a breach by Parent or Merger Sub of
their respective representations, warranties, covenants or agreements contained in this Agreement and other than conditions that,
by their nature, are to be satisfied at the Closing and which were, at the time of termination, capable of being satisfied), (ii)
the Company confirmed to Parent in writing that all conditions set forth in Section 6.3 have been satisfied (or that it
is willing to waive (to the extent permitted by Law) any unsatisfied conditions set forth in Section 6.3) and that it stands
and will stand ready, willing and able to consummate the Merger and (iii) Parent and Merger Sub have failed to consummate the Closing
by the earlier of (x) the date that is five Business Days after receipt of such confirmation by the Company and (y) the Termination
Date.
Section 7.5
Manner and Effect of Termination. Any party terminating this Agreement pursuant to any of Section 7.2, Section
7.3 or Section 7.4 shall give written notice of such termination to the other party in accordance with this Agreement,
which written notice shall specify the provision or provisions hereof pursuant to which such termination is being effected. If
this Agreement is terminated pursuant to this Article VII, it shall become void and of no further force and effect, with
no Liability on the part of any party to this Agreement (or any Parent Related Party or Company Related Party) other than as provided
in Section 7.6; provided, that notwithstanding anything to the contrary contained in this Agreement, the provisions
of Section 5.3(b), Section 5.10, Section 5.11, the final sentence of Section 5.12(b), this Section
7.5, Section 7.6, Article VIII, the Limited Guarantee, the Pledge and Security Agreement and the Confidentiality
Agreements shall survive any termination of this Agreement.
Section 7.6
Fees and Expenses Following Termination.
(a)
Except as set forth in Section 5.12(b) or this Section 7.6, all Expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid in accordance with the provisions of Section 5.11.
(b)
The Company shall pay, or cause to be paid, to Parent by wire transfer of immediately available funds an amount equal to
the Company Termination Fee:
| (i) | if this Agreement is terminated by the Company pursuant to Section 7.4(a), in which case payment shall be made concurrently
with such termination; |
| (ii) | if this Agreement is terminated by Parent pursuant to Section 7.3(a) or Section 7.3(b) in which case payment
shall be made within five Business Days following such termination; or |
| (iii) | if (A) a Takeover Proposal shall have been publicly made or publicly proposed to the Company or otherwise publicly announced
(or, in the case of a termination pursuant to (x) Section 7.2(a) and Parent would have been entitled to terminate the Agreement
pursuant to Section 7.3(a) or Section 7.3(b) or (y) Section 7.3(c), in each case, otherwise communicated to
the Company), in each case following the date hereof and, (I) prior to the date of the Company Stockholders Meeting (in the case
of a termination under Section 7.2(b)) and not subsequently withdrawn or (II) prior to the action or event giving rise to
the termination of this Agreement (in the case of a termination under (x) Section 7.2(a) and Parent would have been entitled
to terminate the Agreement pursuant to Section 7.3(a) or Section 7.3(b) or (y) Section 7.3(c)) and not subsequently
withdrawn, (B) this Agreement is terminated by the Company or Parent pursuant to Section 7.2(b), Section 7.3(c),
or Section 7.2(a) and Parent would have been entitled to terminate the Agreement pursuant to Section 7.3(a) or Section
7.3(b), in each case as applicable, and (C) (x) within twelve months following the date of such termination, the Company
or any of its Subsidiaries consummates a Takeover Proposal referred to in the foregoing clause (A) or enters into a Contract providing
for the implementation of such Takeover Proposal or (y) within nine months following the date of such termination, the Company
or any of its Subsidiaries consummates any Takeover Proposal or enters into a Contract providing for the implementation of any
Takeover Proposal, in which case payment shall be made within five Business Days following the earlier of the date on which the
Company or any of its Subsidiaries consummates such Takeover Proposal and the date on which the Company or any of its Subsidiaries
enters into a Contract therefor. For purposes of the foregoing clause (C) only, references in the definition of the term “Takeover
Proposal” to the figure “20%” shall be deemed to be replaced by “more than 50%”. |
(c)
For purposes of this Agreement, the “Company Termination Fee” means an amount in cash equal to $8,736,000.
(d)
Parent shall pay to the Company by wire transfer of immediately available funds an amount equal to $17,472,000 (such amount,
the “Parent Termination Fee”) within five Business Days after termination if this Agreement is terminated by
the Company pursuant to Section 7.4(b) or Section 7.4(c) or if this Agreement is terminated by the Company or Parent
pursuant to Section 7.2(a) and the Company would have been entitled to terminate this Agreement pursuant to Section 7.4(b)
or Section 7.4(c) but for (A) such termination pursuant to Section 7.2(a) or (B) the fact that the expiration of
the two-Business Day period described in Section 1.2 occurs after the Termination Date.
(e)
If the Company fails to pay the Company Termination Fee, or Parent fails to pay the Parent Termination Fee, as applicable,
in each case as required pursuant to this Section 7.6 when due, such fee shall accrue interest for the period commencing
on the date such fee became past due, at a rate equal to the rate of interest publicly announced by JPMorgan Chase Bank, N.A.,
in the City of New York from time to time during such period, as such bank’s Prime Lending Rate. In addition, if the Company
or Parent, as applicable, fails to pay such fee when due, the Company or Parent, as applicable, shall also pay to the other party
all of such party’s costs and expenses (including reasonable attorneys’ fees) in connection with all actions to collect
such fee.
(f)
Parent and the Company acknowledge that (i) the fees and other provisions of this Section 7.6 are an integral
part of the transactions contemplated by this Agreement, (ii) without these agreements, Parent and the Company would not enter
into this Agreement and (iii) any amount payable pursuant to this Section 7.6 does not constitute a penalty. Notwithstanding
anything to the contrary in this Agreement, (A) Parent’s right to receive the Company Termination Fee pursuant to this
Section 7.6 shall be the sole and exclusive remedy (whether at law, in equity, in contract, tort or otherwise) of Parent
and its Affiliates, as applicable, against the Company Related Parties for (x) any Damages suffered as a result of the failure
of the Merger to be consummated and (y) any other Damages suffered as a result of or under this Agreement and the transactions
contemplated by this Agreement, and upon payment of the Company Termination Fee in accordance with this Section 7.6, none
of the Company Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the
transactions contemplated by this Agreement; provided, that the foregoing shall not impair the rights of Parent, if any,
to obtain injunctive relief pursuant to Section 8.15 prior to any termination of this Agreement and (B) the Company’s
right to receive the Parent Termination Fee pursuant to this Section 7.6 shall be the sole and exclusive remedy (whether
at law, in equity, in contract, tort or otherwise) of the Company and its Affiliates, as applicable, against the Parent Related
Parties for (i) any Damages suffered as a result of the failure of the Merger to be consummated and (ii) any other Damages
suffered as a result of or under this Agreement and the transactions contemplated hereby, and upon payment of the Parent Termination
Fee in accordance with this Section 7.6, none of the Parent Related Parties shall have any further liability or obligation
relating to or arising out of this Agreement or the transactions contemplated hereby; provided, that (1) the foregoing shall
not impair the rights of the Company, if any, to obtain injunctive relief pursuant to Section 8.15 prior to any termination
of this Agreement and (2) Parent and Merger Sub shall remain liable hereunder and the Guarantor and Pledgor shall remain liable
under the Limited Guarantee and the Pledge and Security Agreement, respectively, for any expense reimbursement or indemnification
obligations of Parent or Merger Sub pursuant to Section 5.11 and Section 5.12(b) and the applicable parties to the
Confidentiality Agreements shall remain liable thereunder. Notwithstanding anything in this Agreement or the Financing Commitments
to the contrary, the Financing Sources shall have no liability or obligation to the Company or any of its Subsidiaries, Affiliates
or Representatives relating to or arising out of this Agreement, the Financing Commitments or the Financing.
Article
VIII
MISCELLANEOUS
Section 8.1
Certain Definitions. For purposes of this Agreement:
(a)
“Acceptable Confidentiality Agreement” means a confidentiality agreement between the Company and a Person
making a Takeover Proposal entered into prior to the date hereof, or if entered into on or after the date hereof, on terms no less
favorable (except with respect to standstill provisions) in the aggregate to the Company than those contained in the Confidentiality
Agreements.
(b)
“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 first Person; provided, that, (i) neither any Person that owns equity
securities of the Company nor any Affiliate or portfolio company of such Person shall be deemed to be an Affiliate of the Company
solely by virtue of such Person’s ownership of equity securities of the Company and (ii) for purposes of this Agreement,
the Company and its Subsidiaries shall not be deemed to be Affiliates of Parent and Merger Sub prior to the Closing. For the purposes
of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled
by” and “under common control with”), when used with respect to any Person, means the power to direct or cause
the direction of the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise.
(c)
“Anticorruption Laws” means any and all applicable Laws, including, without limitation, the U.S. Foreign
Corrupt Practices Act of 1977, as amended, the U.S. Currency and Foreign Transaction Reporting Act of 1970, as amended, and Executive
Orders imposing or regulations implementing economic sanctions administered by the U.S. Department of Treasury’s Office of
Foreign Assets Control.
(d)
“Applicable Exchange” means the NASDAQ Global Select Market.
(e)
“Business Day” means any day other than Saturday, Sunday or a day on which commercial banks in New York,
New York are authorized or required by Law to close, and shall consist of the time period from 12:01 a.m. through 12:00 midnight
New York time.
(f)
“Code” means the Internal Revenue Code of 1986.
(g)
“Common Stock” means the common stock, par value $0.01 per share, of the Company.
(h)
“Company Equity Plan” means, collectively, the 2005 Long-Term Incentive Compensation Plan and the 2015
Long Term Incentive Compensation Plan.
(i)
“Company Material Adverse Effect” means any fact, circumstance, change, event, development, occurrence
or effect that has, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the
business, properties, assets or results of operations or financial condition of the Company and its Subsidiaries, taken as a whole;
provided, that the term “Company Material Adverse Effect” shall not include any such effect relating to or arising
from (i) any national, international or any foreign or domestic regional economic, financial, social or political conditions (including
changes therein), including the results of any primary or general elections, (ii) changes in any financial, debt, credit, capital
or banking markets or conditions (including any disruption thereof), (iii) changes in interest, currency or exchange rates
or the price of any commodity, security or market index, (iv) changes in legal or regulatory conditions, including changes or proposed
changes in Law, GAAP or other accounting principles or requirements, or standards, interpretations or enforcement thereof, (v)
changes in the Company’s and its Subsidiaries’ industries in general or seasonal fluctuations in the business of the
Company or any of its Subsidiaries, (vi) any change in the market price or trading volume of any securities or indebtedness of
the Company or any of its Subsidiaries, any decrease of the ratings or the ratings outlook for the Company or any of its Subsidiaries
by any applicable rating agency, or the change in, or failure of the Company to meet, or the publication of any report regarding,
any internal or public projections, forecasts, budgets or estimates of or relating to the Company or any of its Subsidiaries for
any period, including with respect to revenue, earnings, cash flow or cash position (it being understood that the underlying causes
of any of the foregoing may, if they are not otherwise excluded from the definition of Company Material Adverse Effect, be taken
into account in determining whether a Company Material Adverse Effect has occurred), (vii) the occurrence, escalation, outbreak
or worsening of any hostilities, war, police action, acts of terrorism or military conflicts, whether or not pursuant to the declaration
of an emergency or war, (viii) the existence, occurrence or continuation of any force majeure events, including any earthquakes,
floods, hurricanes, tropical storms, fires or other natural disasters or any national, international or regional calamity, (ix) compliance
by the Company and its Subsidiaries with the terms of this Agreement, including the failure to take any action restricted by this
Agreement, or any actions taken to the extent required by this Agreement (other than the conduct of the operations of the Company
and its Subsidiaries in the ordinary course consistent with past practice pursuant to the first sentence of Section 5.1),
(x) any actions taken, or not taken, with the written consent, waiver or at the written request of Parent, (xi) any matters solely
to the extent of the facts, circumstances, changes, events, developments, occurrences or effects disclosed in Section 3.14 or item
(c)(i) under Section 3.20 of the Company Disclosure Letter, (xii) the public announcement of this Agreement, the transactions contemplated
by this Agreement and the identities of Parent, Merger Sub and their respective Affiliates, (xiii) the execution, announcement,
performance or existence of this Agreement and the Voting Agreement and (xiv) any Legal Actions involving stockholders of
the Company arising from or relating to this Agreement, the Voting Agreement or the transactions contemplated by this Agreement
or the Voting Agreement, except, in the case of clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii), to the extent any
such effect has a disproportionate adverse impact on the Company and its Subsidiaries, taken as a whole, relative to other similarly
situated companies in the principal industries in which the Company and its Subsidiaries operate.
(j)
“Company Related Parties” means (i) the Company and its Subsidiaries, (ii) the former, current and future
holders of any equity, partnership or limited liability company interest, controlling persons, directors, officers, employees,
agents, attorneys, Affiliates, members, managers, general or limited partners, stockholders or assignees of the Company or its
Subsidiaries or (iii) any future holders of any equity, partnership or limited liability company interest, controlling persons,
directors, officers, employees, agents, attorneys, Affiliates, members, managers, general or limited partners, stockholders, assignees
of any of the foregoing.
(k)
“Contract” means any contract, agreement, indenture, note, bond, loan, lease, sublease, conditional sales
contract, mortgage, license, sublicense, obligation, promise, undertaking, commitment or other binding arrangement (in each case,
whether written or oral).
(l)
“Enforceability Exceptions” means (i) any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws of general applicability affecting creditors’ rights generally and (ii) general principles of
equity.
(m)
“Financing Contingencies” means (i) the “Excess Availability” requirement described in clause
(d) of Exhibit C of the Wells Commitment Letter; (ii) (x) the “Reorganization” as defined in the Wells Commitment Letter,
and (y) the “Reorganization” as defined in the Fortress Commitment Letter; and (iii) the approval of the “Agent”
and initial “Lenders” (in each case as defined in the Wells Commitment Letter or Fortress Commitment Letter, as applicable)
under each of the Wells Commitment Letter and the Fortress Commitment Letter of the form and substance of (x) the intercompany
license agreement relating to the intellectual property, and (y) the intercompany lease agreement relating to the leasing of property
of the Company.
(n)
“Financing Sources” means any Person, other than Parent, Rollover Investors or any of their respective
Affiliates, that commits to provide or otherwise enter into agreements in connection with the Debt Financing proposed to be provided
to Parent or any of its Subsidiaries (including Merger Sub) in connection with the transactions contemplated hereby, including
the Lenders, agents, bookrunners and arrangers of any Financing, together with their respective former, current and future holders
of any equity, partnership or limited liability company interests, officers, employees, directors, consultants, Affiliates (including
underwriters, placement agents and initial purchasers), affiliated (or commonly advised) funds, partners (general or limited),
stockholders, managers, members, controlling parties, attorneys, agents advisors, accountants, agents and representatives and any
successors or assigns of the foregoing, including any successors or assigns via joinder agreements or credit agreements relating
thereto.
(o)
“Governmental Authority” means: (i) any federal, state, local, municipal, foreign or international government
or governmental authority, quasi-governmental entity of any kind, regulatory or administrative agency, governmental commission,
department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body (public or private) or any body
exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature, (ii) any self-regulatory organization (including any stock exchange) or (iii) any political subdivision
of any of the foregoing.
(p)
“Hazardous Substances” means: (i) any substance that is listed, classified or regulated as hazardous,
toxic or a pollutant or contaminant under any Environmental Law or (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material or radon.
(q)
“Intellectual Property” means all rights in and to intellectual property of any type or nature throughout
the world, including: (i) trademarks, service marks, brand names, Internet domain names, logos, trade dress, trade names, and other
indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby;
(ii) proprietary works of authorship, including works protected by copyright and proprietary industrial designs; (iii) patents
and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals,
extensions, reexaminations and reissues; (iv) proprietary data, confidential information, trade secrets and know-how; and (v) copyrights,
whether registered or unregistered.
(r)
“Knowledge” means, when used with respect to Parent or the Company, the actual knowledge of the Persons
set forth in Section 8.1(r) of the Parent Disclosure Letter or Company Disclosure Letter, respectively.
(s)
“Law” means any law, statute, ordinance, code, regulation, rule, treaty, convention or other requirement
of, or promulgated or enacted by, any Governmental Authority, and any Orders.
(t)
“Liens” means any mortgages, liens, pledges, security interests, claims, options, rights of first offer
or refusal, charges or other encumbrances in respect of any property or asset.
(u)
“Orders” means any orders, decisions, judgments, writs, injunctions, decrees, awards or other determination
of any Governmental Authority.
(v)
“Organizational Documents” means the certificate of incorporation and bylaws (or the equivalent organizational
documents) executed, adopted or filed in connection with the creation, formation or organization of a Person, including any amendments
thereto.
(w)
“Owned Intellectual Property” means all Intellectual Property owned by either the Company or any of its
Subsidiaries that is registered or subject to a pending application for registration or issuance.
(x)
“Parent Material Adverse Effect” means any event, circumstance, development, change or effect that, individually
or in the aggregate with all other events, circumstances, developments, changes and effects, would prevent or materially impair
or delay the consummation of the Merger and the other transactions contemplated hereby or prevent or materially impair or delay
the ability of Parent or Merger Sub to perform its obligations hereunder.
(y)
“Parent Related Parties” means (i) Parent, Merger Sub, the Guarantor, the Pledgor, the Rollover Investors
and the Financing Sources, (ii) the former, current and future holders of any equity, partnership or limited liability company
interest, controlling persons, directors, officers, employees, agents, attorneys, Affiliates, members, managers, general or limited
partners, stockholders or assignees of Parent, Merger Sub, the Guarantor, the Pledgor, the Rollover Investors or the Financing
Sources or (iii) any future holders of any equity, partnership or limited liability company interest, controlling persons, directors,
officers, employees, agents, attorneys, Affiliates, members, managers, general or limited partners, stockholders, assignees of
any of the foregoing.
(z)
“Permitted Lien” shall mean (i) any Lien for Taxes or other governmental charges which are not yet due
or which are being contested in good faith by appropriate proceedings for which appropriate reserves have been established in accordance
with GAAP, (ii) Liens securing indebtedness or Liabilities that are reflected in the Company SEC Reports filed on or prior to the
date hereof, (iii) such non-monetary Liens or other imperfections of title, if any, that are not materially adverse to the Company
and its Subsidiaries, including (A) easements whether or not shown by the public records, overlaps, encroachments and any matters
not of record which would be disclosed by an accurate survey or a personal inspection of the property, (B) any supplemental Taxes
or assessments not shown by the public records and (C) title to any portion of the premises lying within the right of way or boundary
of any public road or private road, (iv) rights of parties in possession, (v) Liens imposed or promulgated by Laws with respect
to real property and improvements, including zoning regulations, (vi) Liens disclosed on existing title insurance policies, title
reports or existing surveys which have (together with all title exception documents) been delivered to Parent, (vii) materialmans’,
mechanics’, carriers’, workmen’s, repairmen’s and similar Liens incurred in the ordinary course of business
for amounts not yet due or which are being contested in good faith and for which adequate accruals or reserves have been established,
in each case, to the extent required by GAAP, (viii) in the case of leased or licensed real property, any Lien to which the fee
or any other superior interest in the leased or licensed premises is subject, and any rights
contained in the applicable lease, license or other occupancy agreement, (ix) licenses or other grants of rights to use
of Intellectual Property and (x) other Liens that are not material to the Company or any of its Subsidiaries.
(aa)
“Person” means any natural person, corporation, company, partnership, association, limited liability
company, limited partnership, limited liability partnership, trust or other legal entity or organization, including a Governmental
Authority.
(bb)
“Representatives” means, when used with respect to Parent or the Company, the directors, officers, employees,
consultants, accountants, legal counsel, investment bankers or other financial advisors, agents and other representatives of Parent
or the Company, as applicable, and their respective Affiliates; provided, however, that, for purposes of this Agreement, neither
George Feldenkreis, Oscar Feldenkreis nor their family members or Affiliates will be deemed Representatives of the Company or any
its Subsidiaries; provided, further, that, for purposes of this Agreement, no Representative of Parent or any of its Affiliates
shall be deemed to be a Representative of the Company prior to the Closing.
(cc)
“Requisite Company Vote” means adoption of this Agreement by the affirmative vote of holders of (i) a
majority of the outstanding shares of Common Stock entitled to vote thereon as of the record date for the Company Stockholders
Meeting and (ii) a majority of the outstanding shares of Common Stock entitled to vote thereon that are not owned directly or indirectly
by the Rollover Investors, any other officers or directors of the Company or any other Person having any equity interest in, or
right to acquire any equity interest in, Merger Sub or any Person of which Merger Sub is a direct or indirect Subsidiary.
(dd)
“Rights” means any rights, title, interest or benefit of whatever kind or nature.
(ee)
“Solvent” means, when used with respect to any Person, that, on a consolidated basis as of any date of
determination, (i) the amount of the present fair saleable value of the assets of such Person will, as of such date, exceed the
amount of all Liabilities of such Person, as of such date, as such amounts are determined in accordance with applicable Law governing
determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the Liabilities of such Person on its debts as such debts become
absolute and matured, (iii) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct
its business and (iv) such Person will be able to pay its debts as they mature. For purposes of this definition, (A) “debt”
means liability on a “claim” and (B) “claim” means any (x) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured. The amount of Liabilities at any time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured Liability.
(ff)
“Subsidiary” means, when used with respect to any Person, any other Person that such Person directly
or indirectly owns or has the power to vote or control more than 50% of the voting stock or other interests the holders of which
are generally entitled to vote for the election of the board of directors or other applicable governing body of such other Person.
(gg)
“Superior Proposal” means a bona fide written Takeover Proposal (with all percentages in the definition
of Takeover Proposal changed to 50%), not obtained in violation in any material respect of Section 5.4, which the Special
Committee determines in good faith, after consultation with the Company’s outside legal counsel and financial advisors, (i)
is on terms and conditions more favorable, from a financial point of view, to the stockholders of the Company (excluding the Rollover
Investors) than those contemplated by this Agreement and (ii) is reasonably capable of being completed, taking into account all
material financial, regulatory, legal and other aspects of such proposal.
(hh)
“Takeover Proposal” means, other than the transactions contemplated by this Agreement, any bona fide
written proposal or offer relating to (i) a merger, consolidation, spin-off, share exchange (including a split-off) or business
combination involving the Company or any of its Subsidiaries representing 20% or more of the assets of the Company and its Subsidiaries,
taken as a whole, (ii) a sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related
transactions, of 20% or more of the assets of the Company and its Subsidiaries, taken as a whole, (iii) a purchase or sale of shares
of capital stock or other securities, in a single transaction or series of related transactions, representing 20% or more of the
voting power of the capital stock of the Company, including by way of a tender offer or exchange offer, (iv) a reorganization,
recapitalization, liquidation or dissolution involving 20% or more of the assets of the Company and its Subsidiaries, take as a
whole or (v) any other transaction having a similar effect to those described in clauses (i) through (iv).
(ii)
“Tax Returns” means any and all reports, returns, declarations, claims for refund, elections, disclosures,
estimates, information reports or returns or statements required to be supplied to a taxing authority in connection with Taxes,
including any schedule or attachment thereto or amendment thereof.
(jj)
“Taxes” means all federal, state, provincial, county, local, municipal, foreign and other taxes, assessments,
duties or similar charges, including all interest, penalties and additions imposed with respect to such amounts, imposed by any
Governmental Authority.
(kk)
“Willful and Material Breach” means a willful and deliberate act or a willful and deliberate failure
to act (including a failure to cure), in each case that is the consequence of an act or omission by a party that knows that the
taking of such act or failure to take such act would or would reasonably be expected to cause a material breach of this Agreement
(regardless of whether breaching was the object of the act or failure to act), it being understood that such term shall include,
in any event, the failure to consummate the Merger when required to do so by this Agreement.
Section 8.2
Interpretation. Unless the express context otherwise requires:
(a)
the words “hereof,” “herein” and “hereunder” and words of similar import, when used
in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(b)
terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa;
(c)
the terms “Dollars” and “$” mean U.S. dollars;
(d)
references herein to a specific Section, Subsection, Recital, Schedule or Exhibit shall refer, respectively, to Sections,
Subsections, Recitals, Schedules or Exhibits of this Agreement;
(e)
wherever the word “include,” “includes” or “including” is used in this Agreement, it
shall be deemed to be followed by the words “without limitation”;
(f)
references herein to any gender shall include each other gender;
(g)
references herein to any Person shall include such Person’s heirs, executors, personal representatives, administrators,
successors and assigns; provided, that nothing contained in this Section 8.2 is intended to authorize any assignment or
transfer not otherwise permitted by this Agreement;
(h)
references herein to a Person in a particular capacity or capacities shall exclude such Person in any other capacity;
(i)
with respect to the determination of any period of time, the word “from” means “from and including”
and the words “to” and “until” each means “to but excluding”;
(j)
the word “or” shall be disjunctive but not exclusive;
(k)
references herein to any Law shall be deemed to refer to such Law as amended, modified, codified, reenacted, supplemented
or superseded in whole or in part and in effect from time to time, and also to all rules and regulations promulgated thereunder;
(l)
references herein to any Contract mean such Contract as amended, supplemented or modified (including any waiver thereto)
in accordance with the terms thereof;
(m)
the headings contained in this Agreement are intended solely for convenience and shall not affect the rights of the parties
to this Agreement;
(n)
with regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence;
(o)
if the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is
a day that is not a Business Day, then the time for the giving of such notice or the performance of such action shall be extended
to the next succeeding Business Day;
(p)
references herein to “as of the date hereof,” “as of the date of this Agreement” or words of similar
import shall be deemed to mean “as of immediately prior to the execution and delivery of this Agreement”; and
(q)
The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for
the sole benefit of such parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties
hereto in accordance with Section 8.9 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 hereto of risks associated with particular matters
regardless of the knowledge of any of the parties. Consequently, Persons other than the parties hereto may not rely on the representations
and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of
any other date.
Section 8.3
No Survival. None of the representations and warranties contained in this Agreement or in any instrument delivered
under this Agreement (other than the Limited Guarantee and the Pledge and Security Agreement in accordance with their terms) shall
survive the Effective Time. This Section 8.3 shall not limit any covenant or agreement of the parties to this Agreement
which, by its terms, contemplates performance after the Effective Time, which, in each case,
shall survive in accordance with its terms and conditions.
Section 8.4
Governing Law.
(a)
This Agreement, and any dispute, claim, legal action, suit, proceeding or controversy arising out of or relating hereto,
shall be governed by, and construed in accordance with, the Laws of the State of Florida, without regard to conflict of law principles
thereof.
(b)
Notwithstanding anything herein to the contrary, the parties hereto agree that any dispute, claim, cross-claim, third-party
claim, legal action, suit, proceeding or controversy of any kind or description, whether in law or in equity, whether in contract
or in tort or otherwise, involving or against a Financing Source arising out of or relating hereto, including but not limited to
any dispute arising out of or relating in any way to the Financing or the Financing Commitments or the performance thereof, or
any of the transactions contemplated by this Agreement, shall be governed by, and construed in accordance with, the Laws of the
State of New York, without regard to conflict of law principles thereof.
Section 8.5
Submission to Jurisdiction; Service.
(a)
Each party to this Agreement (i) irrevocably and unconditionally submits to the personal jurisdiction of the federal and
state courts of the United States of America located in the State of Florida, (ii) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that any actions or proceedings
arising in connection with this Agreement or the transactions contemplated by this Agreement against any Company Related Party
or any Parent Related Party shall be brought, tried and determined only in the state and federal courts in Miami-Date Country,
State of Florida (or, only if the state and federal courts in Miami-Dade County, State of Florida decline to accept jurisdiction
over a particular matter, any state or federal court within the State of Florida) (the “Chosen Courts”), (iv)
waives any claim of improper venue or any claim that those courts are an inconvenient forum and (v) agrees that it will not bring
any action relating to this Agreement or the transactions contemplated by this Agreement against any Company Related Party or any
Parent Related Party in any court other than the Chosen Courts, except to the extent that all such courts shall lawfully decline
to exercise such jurisdiction and except that any party may seek to enforce or implement any Order obtained in any such courts
or in any other court of competent jurisdiction. The parties to this Agreement agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section 8.7 or in such other manner as may be permitted
by applicable Law, shall be valid and sufficient service thereof.
(b)
Notwithstanding anything to the contrary contained herein, each party to this Agreement acknowledges and irrevocably agrees
(i) that any action, suit, claim or proceeding, cause of action, cross-claim or third-party claim of any kind of description, whether
in law or in equity, whether in contract or in tort or otherwise, involving or against any of the Lenders or other Financing Sources
or any Affiliate thereof arising out of or relating to this Agreement or the Debt Commitment Letters or the performance thereunder
shall be subject to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan in the City and
State of New York, and any appellate court from any thereof (it being understood and agreed that, notwithstanding the selection
of such exclusive jurisdiction, any interpretation of “Company Material Adverse Effect” or any similar term shall be
solely governed by the Laws of the State of Florida), (ii) not to bring or permit any of their Affiliates to bring or support anyone
else in bringing any such action or proceeding in any other court, (iii) to waive any right to trial by jury in respect of any
such action or proceeding and (iv) that the Lenders and other Financing Sources and their respective Affiliates are express
third-party beneficiaries of this Section 8.5(b). For clarity, in no event shall the provisions of this Section 8.5(b)
apply to Parent, Rollover Investors or any of their respective Affiliates, regardless of whether any such Person is a Lender, Financing
Source or an Affiliate thereof.
Section 8.6
WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE FINANCING COMMITMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY LITIGATION AGAINST ANY FINANCING SOURCES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE FINANCING COMMITMENTS. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES
THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF
THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 8.6.
Section 8.7
Notices. All notices and other communications hereunder shall be in writing and shall be addressed as follows (or
at such other address for a party as shall be specified by like notice):
If to Parent or Merger Sub, to:
4810 NW 74 Ave
Miami, FL 33166
Attention: George Feldenkreis
Facsimile: 305-864-1813
with a copy (which shall not constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
Attention: Steve Wolosky, Esq.
Elizabeth R. Gonzalez-Sussman, Esq.
Michael R. Neidell, Esq.
Facsimile: (212) 451-2222
If to the Company, to:
Perry Ellis International, Inc.
3000 N.W. 107th Avenue
Miami, Florida 33172
Attention: Tricia Thompkins, General Counsel
J. David Scheiner, Chairman of the Special Committee
Facsimile: (786) 221-8735
with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Kelley D. Parker, Esq.
Robert B. Schumer, Esq.
Facsimile: (212) 757-3900
and
Akerman LLP
98 Southeast Seventh Street, Suite 1100
Miami, FL 33131
Attention: Stephen Roddenberry, Esq.
Carl D. Roston, Esq.
Facsimile: (305) 374-5095
All such notices or communications shall
be deemed to have been delivered and received (a) if delivered in person, on the day of such delivery, (b) if by facsimile or electronic
mail, on the day on which such facsimile or electronic mail was sent; provided, that receipt is personally confirmed by
telephone, (c) if by certified or registered mail (return receipt requested), on the seventh Business Day after the mailing thereof
or (d) if by reputable overnight delivery service, on the second Business Day after the sending thereof.
Section 8.8
Amendment. This Agreement may be amended by the parties to this Agreement at any time before the Effective Time,
whether before or after obtaining the Requisite Company Vote, so long as (a) no amendment that requires further stockholder approval
under applicable Law after stockholder approval hereof shall be made without such required further approval and (b) such amendment
has been duly approved by the board of directors or manager, as applicable, of each of Merger Sub, Parent and the Company (only
pursuant to a resolution adopted by the Special Committee). This Agreement may not be amended except by an instrument in writing
signed by each of the parties to this Agreement. Notwithstanding anything to the contrary in this Section 8.8, any amendments,
modifications supplements to or waivers of any FS Provisions (or any other provision of this Agreement to the extent an amendment
or waiver of such provision would modify the substance of any FS Provision) in a manner adverse to the Financing Sources shall
require the prior written consent of the Financing Sources.
Section 8.9
Extension; Waiver. At any time before the Effective Time, Parent and Merger Sub, on the one hand, and the Company
(only pursuant to a resolution adopted by the Special Committee), on the other hand, may (a) extend the time for the performance
of any of the obligations of the other party, (b) waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered under this Agreement or (c) subject to applicable Law, waive compliance
with any of the covenants or conditions contained in this Agreement; provided that, notwithstanding anything to the contrary in
this Section 8.9, any waivers of any FS Provisions (or any other provision of this agreement to the extent a waiver of such
provision would modify the substance of any FS Provision) in a manner adverse to the Financing Sources shall require the prior
written consent of the Financing Sources. Any agreement on the part of a party to any extension or waiver shall be valid only if
set forth in an instrument in writing signed by such party. The failure of any party to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any right, power or privilege under this Agreement.
Section 8.10
Entire Agreement. This Agreement (including the exhibits and schedules hereto), the Company Disclosure Letter, the
Parent Disclosure Letter, the Limited Guarantee, the Pledge and Security Agreement, the Rollover Letters, the Voting Agreement
and the Confidentiality Agreements contain all of the terms, conditions and representations and warranties agreed to by the parties
relating to the subject matter of this Agreement and supersede all prior or contemporaneous agreements, negotiations, correspondence,
undertakings, understandings, representations and warranties, both written and oral, among the parties to this Agreement with respect
to the subject matter of this Agreement. Without limiting the generality of Section 4.14, no representation, warranty, inducement,
promise, understanding or condition not set forth in this Agreement (including the exhibits and schedules hereto), the Company
Disclosure Letter, the Parent Disclosure Letter, the Limited Guarantee, the Pledge and Security Agreement, the Rollover Letters,
the Voting Agreement and the Confidentiality Agreements has been made or relied upon by any of the parties to this Agreement.
Section 8.11
No Third-Party Beneficiaries. Except (a) as provided in Section 5.7, (b) for the provisions of Article
II (which, from and after the Effective Time, shall be for the benefit of holders of Common Stock, Company Options and Company
Stock Awards as of the Effective Time) and (c) for the provisions of the last sentence of Section 5.12(b), which shall be
for the benefit of the Company, its Affiliates and their respective Representatives, Parent and the Company hereby agree that their
respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the other party
hereto, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer
upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations
and warranties set forth herein, except that the Financing Sources are made express third party beneficiaries to Section 7.6(f),
Section 8.4(b), Section 8.5(b), Section 8.6, Section 8.8, Section 8.9, this Section 8.11,
Section 8.14 and Section 8.18 (collectively, the “FS Provisions”). The representations and warranties
in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto.
Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance with Section
8.9 without notice or liability to any other Person. The representations and warranties in this Agreement may represent an
allocation among the parties hereto of risks associated with particular matters regardless of the Knowledge of any of the parties
hereto. Accordingly, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement
as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 8.12
Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of the other provisions of this Agreement. If any provision of this
Agreement, or the application of that provision to any Person or any circumstance, is invalid or unenforceable, then (a) a suitable
and equitable provision shall be substituted for that provision in order to carry out, so far as may be valid and enforceable,
the intent and purpose of the invalid or unenforceable provision and (b) the remainder of this Agreement and the application of
that provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity
or unenforceability affect the validity or enforceability of that provision, or the application of that provision, in any other
jurisdiction. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a reasonably acceptable manner so that the transactions contemplated hereby
may be consummated as originally contemplated to the fullest extent possible.
Section 8.13
Rules of Construction. The parties have participated jointly in negotiating and drafting this Agreement. If an ambiguity
or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this
Agreement. Subject to and without limiting the introductory language to Article III and Article IV, each party to
this Agreement has or may have set forth information in its respective disclosure letter in a section of such disclosure letter
that corresponds to the section of this Agreement to which it relates. The fact that any item of information is disclosed in a
disclosure letter to this Agreement shall not constitute an admission by such party that such item is material, that such item
has had or would have a Company Material Adverse Effect or Parent Material Adverse Effect, as the case may be, or that the disclosure
of such be construed to mean that such information is required to be disclosed by this Agreement.
Section 8.14
Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted
successors and assigns. No party to this Agreement may assign or delegate, by operation of law or otherwise, all or any portion
of its rights or liabilities under this Agreement without the prior written consent of the other parties to this Agreement, which
any such party may withhold in its absolute discretion; and any purported assignment without such prior written consents shall
be void; provided that, notwithstanding anything contained in this Agreement to the contrary, Parent and Merger Sub may assign
this Agreement to any Financing Source (so long as any such assignment does not relieve Parent or Merger Sub of its respective
obligations hereunder) under terms of the Financing solely for the purpose of creating a security interest herein or otherwise
assigning collateral with respect to the Financing.
Section 8.15
Specific Performance.
(a)
The parties to this Agreement agree that irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties to
this Agreement shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in the Chosen Courts, this being in addition to any other remedy
at law or in equity, and the parties to this Agreement hereby waive any requirement for the posting of any bond or similar collateral
in connection therewith. The parties acknowledge and agree that each party hereto shall be entitled to an injunction, specific
performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which they are entitled at law or in equity. Each party hereto agrees that
it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (a) the
other party has an adequate remedy at law or (b) an award of specific performance is not an appropriate remedy for any reason
at law or equity.
(b)
Notwithstanding anything to the contrary set forth in this Agreement, the parties hereto agree that the right of the Company
to obtain an injunction, specific performance or other equitable relief in each case to cause Parent and Merger Sub to close the
Merger shall be subject to the requirements that:
| (i) | all of the conditions set forth in Section 6.1 and Section 6.2 would have been satisfied if the Closing were
to have occurred at such time (other than those conditions that by their terms are to be satisfied by actions taken at the Closing,
each of which shall be capable of being satisfied at the Closing, or the failure of which to be satisfied is attributable primarily
to a breach by Parent or Merger Sub of their respective representations, warranties, covenants or agreements contained in this
Agreement); |
| (ii) | the Debt Financing has been funded or will be funded at the date the Closing is required to have occurred pursuant to Section
1.2 upon delivery of a drawdown notice by Parent and/or notice from Parent that the Rollover Investment will be funded at such
date; |
| (iii) | Parent fails to complete the Closing in accordance with Section 1.2; and |
| (iv) | the Company has irrevocably confirmed to Parent in writing that (A) all of the conditions in Section 6.1 and Section
6.3 have been satisfied or that it is willing to waive any such open conditions, and (B) if specific performance is granted
and if the Financing and the Rollover Investment were funded, the Closing would occur. |
(c)
Notwithstanding anything in this Agreement to the contrary, while the Company may be entitled to (i) specific performance,
subject in all respects to this Section 8.15, and (ii) payment of the Parent Termination Fee, if, as and when payable
pursuant to Section 7.6(d), under no circumstances shall the Company, directly or indirectly, be permitted or entitled to
receive (A) both a grant of specific performance or other equitable relief pursuant to which the Merger is actually consummated
and the aggregate Merger Consideration is actually received, on the one hand, and payment of all or a portion of the Parent Termination
Fee or other monetary damages hereunder, on the other hand, or (B) both payment of the Parent Termination Fee, on the one hand,
and payment of other monetary damages, on the other hand.
(d)
Notwithstanding anything in this Agreement to the contrary, the maximum aggregate liability of Parent and Merger Sub for
monetary damages or other monetary remedies in connection with this Agreement and the transactions contemplated hereby shall be
limited to an amount equal to the Parent Termination Fee, and in no event shall any Company Related Party seek or obtain, nor shall
it permit any of its Representatives or any other Persons on its or their behalf to seek or obtain, any monetary recovery or monetary
award or any monetary damages of any kind against Parent and Merger Sub in excess of the Parent Termination Fee.
Section 8.16
Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, as if the signatures to
each counterpart were upon a single instrument, and all such counterparts together shall be deemed an original of this Agreement.
Facsimile signatures or signatures received as a pdf attachment to electronic mail shall be treated as original signatures for
all purposes of this Agreement. This Agreement shall become effective when, and only when, each party hereto shall have received
a counterpart signed by all of the other parties hereto.
Section 8.17
Special Committee Approval. Notwithstanding anything to the contrary herein, no amendment or waiver of any provision
of this Agreement and no decision or determination shall be made, or action taken, by or on behalf of the Company under or with
respect to this Agreement without first obtaining the approval of the Special Committee.
Section 8.18
No Recourse to Financing Sources. Notwithstanding anything herein or in the Financing Commitments to the contrary,
(i) no Financing Source shall have any liability for any obligations or liabilities of the parties hereto, or any of their respective
Subsidiaries, Affiliates or Representatives, or for any claim (whether in tort, contract or otherwise), based on, in respect of,
or by reason of this Agreement, the Financing, the Financing Commitments or the transactions contemplated hereby or thereby or
in respect of any oral representations made or alleged to be made in connection herewith or therewith and (ii) neither the Company
nor its Subsidiaries, Affiliates or Representatives shall have any rights or claims (whether in tort, contract or otherwise) against
any Financing Source based on, in respect of, by reason of, or in any way relating to this Agreement, the Financing, the Financing
Commitments or the transactions contemplated hereby or thereby or in respect of any oral representations made or alleged to be
made in connection herewith or therewith. Notwithstanding anything herein to the contrary, other than pursuant to the Financing
Commitments with respect to Parent and/or Merger Sub, (i) in no event shall any party hereto, nor any of its Affiliates, and each
of the parties hereto hereby agrees not to and to cause its Affiliates not to, (a) seek to enforce this Agreement against, make
any claims for breach of this Agreement against, or seek to recover monetary damages from, any Financing Source or (b) seek to
enforce the commitments against, make any claims for breach of the Debt Commitment Letters against, or seek to obtain any other
damages of any kind from, or otherwise sue, the Financing Sources for any reason, including in connection with the Debt Commitment
Letters. Nothing in this Section 8.18 shall in any way limit or qualify the liabilities of the Financing Sources and the
other parties to the Financing (or the definitive documents entered into pursuant thereto) to each other thereunder or in connection
therewith. No Financing Source shall be subject to any special, consequential, punitive or indirect damages or damages or a tortious
nature.
Section 8.19
Breach of Rollover Investors Disregarded. Any breach or assertion of any breach of this Agreement by the Company
or any of its Representatives that is attributable to or caused by the actions of or failure to act by George Feldenkreis or Oscar
Feldenkreis, including in connection with any representations or warranties made hereunder or any actions taken or failure to act,
in each case in contravention hereof, shall be disregarded for all purposes under this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, this Agreement has
been duly executed and delivered by the duly authorized officers of the parties to this Agreement as of the date first written
above.
|
FELDENKREIS HOLDINGS LLC |
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|
|
By: |
|
|
|
Name: |
George
Feldenkreis |
|
|
Title: |
Sole Member |
|
GF MERGER SUB, INC. |
|
|
|
By: |
|
|
|
Name: |
George
Feldenkreis |
|
|
Title: |
Chief Executive Officer & President |
|
PERRY ELLIS INTERNATIONAL, INC. |
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|
|
By: |
|
|
|
Name: |
Oscar Feldenkreis |
|
|
Title: |
Chief Executive Officer |
Exhibit 99.2
VOTING AGREEMENT
This VOTING AGREEMENT
(this “Agreement”), is dated as of June 15, 2018, by and among FELDENKREIS HOLDINGS LLC, a Delaware
limited liability company (“Parent”), PERRY ELLIS INTERNATIONAL, INC., a Florida corporation (the “Company”),
and the individuals and entities listed on Annex A (collectively, “Shareholder”).
WHEREAS, in connection
with Parent and GF MERGER SUB, INC., a Florida corporation (“Merger Sub”), entering into an Agreement
and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), with the Company, Parent and the Company
have requested Shareholder, and Shareholder has agreed, to enter into this Agreement with respect to all shares of Common Stock,
par value $0.01 per share, of the Company (the “Common Stock”) that Shareholder beneficially owns (such shares,
together with all other shares of Common Stock acquired (whether beneficially or of record) by Shareholder after the date hereof
and prior to the termination of this Agreement, the “Shares”);
WHEREAS, capitalized
terms used but not otherwise defined herein shall have the respective meanings set forth in the Merger Agreement; and
WHEREAS, Shareholder
acknowledges that Parent and Company are entering into the Merger Agreement in reliance on the representations, warranties, covenants
and other agreements of Shareholder set forth in this Agreement.
NOW, THEREFORE,
in consideration of the representations, warranties, covenants and other agreements contained in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby,
the parties agree as follows:
Article
I
Voting Agreement
Section 1.01
Voting Agreement. During the term of this Agreement, Shareholder hereby agrees (subject in all respects to the Pledge
and Security Agreement) to vote or, as applicable, cause or direct to be voted, all Shares at the time of any vote (A) to approve
and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, at the Company Stockholders Meeting,
and at any adjournment or postponement thereof, at which such Merger Agreement is submitted for the consideration and vote of the
shareholders of the Company, (B) against (i) any Takeover Proposal and (ii) any other action, agreement or transaction that would
reasonably be expected to materially impede, interfere with, delay or postpone the Merger or the other transactions contemplated
by the Merger Agreement, and (C) in favor of any other matter necessary to the consummation of the transactions contemplated by
the Merger Agreement and considered and voted upon by the shareholders of the Company. Shareholder hereby acknowledges receipt
and review of the Merger Agreement.
Section 1.02
Grant of Proxy. In furtherance of the agreements contained in Section 1.01 of this Agreement and as security for
such agreement, but subject in all respects to the Pledge and Security Agreement, Shareholder hereby irrevocably appoints Company,
each member of the Special Committee, and any other designee of Company or the Special Committee, as applicable, and each of them
individually, as the sole and exclusive attorneys-in-fact and proxies of Shareholder, for and in the name, place and stead of Shareholder,
with full power of substitution and resubstitution, to vote, grant a consent or approval in respect of, or execute and deliver
a proxy to vote, solely to the extent Shareholder fails to comply with the agreements contained in Section 1.01 of this Agreement,
the Shares, (A) in favor of the approval of the Merger Agreement and the transactions contemplated thereby, including the Merger;
(B) against (i) any Takeover Proposal and (ii) any other action, agreement or transaction that would reasonably be expected to
materially impede, interfere with, delay or postpone the Merger or the other transactions contemplated by the Merger Agreement,
and (C) in favor of any other matter necessary to the consummation of the transactions contemplated by the Merger Agreement and
considered and voted upon by the shareholders of the Company. THIS PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
Article
II
Representations and Warranties of Shareholder
Shareholder represents
and warrants to Parent and the Company that:
Section 2.01
Authorization. Shareholder has all requisite right, capacity, power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated by this Agreement and to comply with the provisions of this Agreement. The execution
and delivery of this Agreement by Shareholder, the consummation by Shareholder of the transactions contemplated by this Agreement
and the compliance by Shareholder with the provisions of this Agreement have been duly authorized by all necessary action on the
part of Shareholder. This Agreement has been duly executed and delivered by Shareholder and constitutes a valid and binding obligation
of Shareholder, enforceable against Shareholder in accordance with its terms, subject to the Enforceability Exceptions.
Section 2.02
No Conflicts.
(a)
No authorization, consent or approval of any other Person is necessary for the execution, delivery and performance of this
Agreement by Shareholder.
(b)
None of the execution and delivery of this Agreement by Shareholder, the consummation by Shareholder of the transactions
contemplated hereby or compliance by Shareholder with any of the provisions hereof shall (i) result in, or give rise to, a violation
or breach of or a default under any of the terms of any material contract, agreement or other instrument or obligation to which
Shareholder is a party or by which Shareholder or any of the Shares is bound or (ii) violate any applicable order, writ, injunction,
decree, judgment, statute, rule or regulation, except for any of the foregoing as would not reasonably be expected to impair Shareholder’s
ability to perform its obligations under this Agreement. There is no legal or administrative proceeding, claim, suit or action
pending against Shareholder or, to the knowledge of Shareholder, threatened against Shareholder that impairs or would reasonably
be expected to impair Shareholder’s ability to perform its obligations under this Agreement.
Section 2.03
Ownership of Shares. Shareholder has (except as otherwise permitted by this Agreement, including in connection with
the Permitted Transfer of any Shares) sole voting power and sole dispositive power with respect to the Shares, free and clear of
any Lien (other than the Pledge and Security Agreement with respect to Shares owned by George Feldenkreis), except pursuant to
applicable federal securities laws. None of the Shares is subject to any voting trust or other agreement or arrangement with respect
to the voting of such Shares (other than the Pledge and Security Agreement with respect to Shares owned by George Feldenkreis).
Section 2.04
Total Shares. Except for the Shares set forth on Annex A hereto and except for any Company Options, Company SARs
and Company Stock Awards held by Shareholder, as of the date hereof, Shareholder does not beneficially own 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) 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.
Article
III
Representations and Warranties of Parent
Parent represents
and warrants to Shareholder:
Section 3.01
Authority; Execution and Delivery; Enforceability. Parent has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated by this Agreement and to comply with the provisions of this Agreement.
The execution and delivery of this Agreement by Parent, the consummation by Parent of the transactions contemplated by this Agreement
and the compliance by Parent with the provisions of this Agreement have been duly authorized by all necessary action on the part
of Parent. This Agreement has been duly executed and delivered by Parent and constitutes a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, subject to the Enforceability Exceptions.
Section 3.02
No Conflicts.
(a)
No authorization, consent or approval of any other Person is necessary for the execution, delivery and performance of this
Agreement by Parent.
(b)
None of the execution and delivery of this Agreement by Parent, the consummation by Parent of the transactions contemplated
hereby or compliance by Parent with any of the provisions hereof shall (i) result in, or give rise to, a violation or breach of
or a default under any of the terms of any material contract, agreement or other instrument or obligation to which Parent is a
party or by which Parent is bound or (ii) violate any applicable order, writ, injunction, decree, judgment, statute, rule or regulation,
except for any of the foregoing as would not reasonably be expected to impair Parent’s ability to perform its obligations
under this Agreement.
Article
IV
Representations and Warranties of THE COMPANY
The Company represents
and warrants to Shareholder:
Section 4.01
Authority; Execution and Delivery; Enforceability. The Company has all requisite power and authority to execute
and deliver this Agreement, to consummate the transactions contemplated by this Agreement and to comply with the provisions of
this Agreement. The execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions
contemplated by this Agreement and the compliance by the Company with the provisions of this Agreement have been duly authorized
by all necessary action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes
a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability
Exceptions.
Section 4.02
No Conflicts.
(a)
No authorization, consent or approval of any other Person is necessary for the execution, delivery and performance of this
Agreement by the Company.
(b)
None of the execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions hereof shall (i) result in, or give rise to, a violation
or breach of or a default under any of the terms of any material contract, agreement or other instrument or obligation to which
the Company is a party or by which the Company is bound or (ii) violate any applicable order, writ, injunction, decree, judgment,
statute, rule or regulation, except for any of the foregoing as would not reasonably be expected to impair the Company’s
ability to perform its obligations under this Agreement.
Article
V
Covenants
of Shareholder
During the term
of this Agreement, Shareholder hereby covenants and agrees that:
Section 5.01
No Proxies for or Encumbrances on Shares.
(a)
Except as permitted by terms of this Agreement (including Section 5.01(b)), Shareholder shall not during the term
of this Agreement, directly or indirectly, without the prior written consent of Parent and the Company, (i) grant any proxies or
enter into any voting trust or other agreement or arrangement with respect to the voting of any Shares, (ii) other than pursuant
to the Pledge and Security Agreement, offer for sale, sell (constructively or otherwise), transfer, assign, tender in any tender
or exchange offer, pledge, grant, encumber, hypothecate or similarly dispose of (by testamentary disposition, operation of Law
or otherwise) (collectively, “Transfer”), or enter into any contract, option or other arrangement with respect
to the Transfer of, any Shares, or any interest therein, including, without limitation, any swap transaction, option, warrant,
forward purchase or sale transaction, futures transaction, cap transaction, floor transaction, collar transaction or any other
similar transaction (including any option with respect to any such transaction) or combination of any such transactions, in each
case, involving any Shares, or (iii) knowingly take any action that would have the effect of preventing or delaying Shareholder
from performing any of its obligations under this Agreement. For the avoidance of doubt, the fact that any Shares are held in a
margin account shall not be deemed a violation of this Section 5.01 or Article II so long as Shareholder is able
to perform its obligations under this Agreement.
(b)
Any Shareholder may effect a Transfer of any Shares to a Permitted Transferee of such Shareholder, provided that
such Shareholder, prior to and as a condition to the effectiveness of such Transfer, causes each such Permitted Transferee to execute
a counterpart signature page to this Agreement and deliver the same to the Parent and the Company, pursuant to which such Permitted
Transferee agrees to be a “Shareholder” pursuant to, and to be bound by, this Agreement with respect to such Shares
that are the subject of such Transfer (such Transfer, a “Permitted Transfer”). “Permitted Transferee”
means, with respect to any Shareholder, (A) any other Shareholder, (B) a spouse, lineal descendant or antecedent, brother or sister,
adopted child or grandchild or the spouse of any child, adopted child, grandchild or adopted grandchild of such Shareholder, (C)
any trust, the trustees of which include only the persons named in clauses (A) and/or (B) and the beneficiaries of which include
only the persons named in clauses (A) and/or (B), (D) any corporation, limited liability company or partnership, the shareholders,
members or general or limited partners of which include only the persons named in clauses (A) and/or (B), (E) if such Shareholder
is a trust, the beneficiary or beneficiaries authorized or entitled to receive distributions from such trust, or (F) to any Person
by will, for estate or tax planning purposes, for charitable purposes or as charitable gifts or donations. Transfers of Shares
to Permitted Transferees made pursuant to this Section 5.01(b) shall not be a breach of this Agreement.
(c)
Any Transfer not effected in accordance with the terms and conditions of this Section 5.01 shall be null and void ab
initio.
Section 5.02
Appraisal Rights. Subject to the terms of this Agreement, Shareholder irrevocably waives and agrees not to exercise
any rights to demand appraisal of any Shares which may arise with respect to the Merger or dissent from the Merger.
Section 5.03
Company Proxy Statement. Shareholder hereby agrees to permit the Company to publish and disclose in the Company Proxy
Statement Shareholder’s identity and beneficial ownership of the Shares and the nature of Shareholder’s commitments
under this Agreement to the extent required by applicable Law.
Section 5.04
Acquisition of Additional Shares. During the term of this Agreement, Shareholder shall notify Company and Parent
promptly in writing of the direct or indirect acquisition of record or beneficial ownership of additional shares of Common Stock
after the date hereof, if any, all of which shall be considered Shares and be subject to the terms of this Agreement as though
owned by Shareholder on the date hereof.
Article
VI
Miscellaneous
Section 6.01
Further Assurances. Parent, the Company and Shareholder shall each execute and deliver, or cause to be executed and
delivered, all further documents and instruments and use commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under applicable Law, to perform their respective obligations
under this Agreement.
Section 6.02
Amendments and Waivers; Termination.
(a)Any
provision of this Agreement may be amended or waived if, but 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 the party against whom the waiver is to
be effective. No waiver by any party hereto of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or failure on
the part of any party hereto in exercising any right, power or privilege under this Agreement shall impair any such right, power
or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right,
power or privilege.
(b)This
Agreement, and all rights and obligations of the parties contained herein, shall automatically terminate without any further action
required by any Person upon the earliest to occur of (i) the mutual agreement of the parties hereto to terminate this Agreement,
(ii) the termination of the Merger Agreement in accordance with its terms, and (iii) the Effective Time. Upon termination of this
Agreement, no party shall have any further obligations or liabilities under this Agreement.
Section 6.03
Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses.
Section 6.04
Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, heirs, legal representatives, beneficiaries, executors and permitted assigns; provided
that, other than as permitted by Section 5.01(b), no party may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of the other parties hereto.
Section 6.05
Governing Law; Jurisdiction; WAIVER OF JURY TRIAL.
(a)This
Agreement, and any dispute, claim, legal action, suit, proceeding or controversy arising out of or relating hereto, shall be governed
by, and construed in accordance with, the Laws of the State of Florida, without regard to conflict of law principles thereof.
Each of the parties hereto (i) irrevocably and unconditionally submits to the personal jurisdiction of the federal and state courts
of the United States of America located in the State of Florida, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii) agrees that any actions or proceedings arising in
connection with this Agreement or the transactions contemplated by this Agreement shall be brought, tried and determined only in
the state and federal courts in Miami-Date Country, State of Florida (or, only if the state and federal courts in Miami-Dade County,
State of Florida decline to accept jurisdiction over a particular matter, any state or federal court within the State of Florida)
(the “Chosen Courts”), (iv) waives any claim of improper venue or any claim that those courts are an inconvenient
forum and (v) agrees that it will not bring any action relating to this Agreement or the transactions contemplated by this Agreement
in any court other than the Chosen Courts, except to the extent that all such courts shall lawfully decline to exercise such jurisdiction
and except that any party may seek to enforce or implement any Order obtained in any such courts or in any other court of competent
jurisdiction.
(b)EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (II)
SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV)
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
Section 6.06
Specific Performance. The parties hereto acknowledge and agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached and
further agree that each party hereto shall be entitled to an injunction, specific performance and other equitable relief against
any other party to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which it is entitled at law or in equity, and shall not be required to provide any bond
or other security in connection with any such order or injunction. Each party hereto further agrees that it will not oppose the
granting of any such injunction, specific performance and other equitable relief on the basis that (a) any other party has an adequate
remedy at law or (b) an award of an injunction, specific performance or other equitable relief is not an appropriate remedy for
any reason at law or equity.
Section 6.07
Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 6.08
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.
Section 6.09
Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other jurisdiction.
Section 6.10
Capacity. Shareholder is signing this Agreement solely in Shareholder’s capacity as a shareholder of the Company
and not in any other capacity, and this Agreement shall not limit or otherwise affect any actions taken, or required or permitted
to be taken, by Shareholder or any Affiliate or Representative of Shareholder or any of its Affiliates in any other capacity, including,
if applicable, as an officer or director of the Company or any of the Company’s Subsidiaries, and any actions taken (whatsoever),
or failure to take any actions (whatsoever), by any of the foregoing Persons in such capacity as a director or officer of the Company
or any of the Company’s Subsidiaries shall not be deemed to constitute a breach of this Agreement.
Section 6.11
Non-Recourse. Each party to this Agreement enters into this Agreement solely on its own behalf, the obligations of
each Shareholder under this Agreement are several (with respect to itself) and not joint with the obligations of any other Shareholder
and each such party shall be liable, severally and not jointly, solely for any breaches of this Agreement by such party and in
no event shall any party be liable for breaches of this Agreement by any other party hereto. Nothing contained herein, and no action
taken by any Shareholder pursuant hereto, shall be deemed to constitute the parties as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the parties are in any way acting in concert or as a group with respect
to the obligations or the transactions contemplated by this Agreement. Nothing contained in this Agreement shall be deemed to vest
in the Company or Parent any direct or indirect ownership or incident of ownership of or with respect to any Shares.
Section 6.12
Entire Agreement. This Agreement (together with the Merger Agreement and the Pledge and Security Agreement) constitutes
the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes all other prior agreements
and understandings, both written and oral, among the parties, with respect to the subject matter hereof. For the avoidance of doubt,
this Agreement is subject in all cases to Company’s rights pursuant to the Pledge and Security Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the
parties hereto have caused this Voting Agreement to be duly executed as of the day and year first above written.
|
FELDENKREIS HOLDINGS LLC |
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|
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By: |
/s/ George Feldenkreis |
|
|
Name: |
George Feldenkreis |
|
|
Title: |
Sole Member |
|
PERRY ELLIS INTERNATIONAL, INC. |
|
|
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By: |
/s/ Jorge Narino
|
|
|
Name: |
Jorge Narino |
|
|
Title: |
Interim Chief Financial Officer (Principal Financial Officer and Duly
Authorized Officer) |
|
SHAREHOLDERS |
|
|
|
|
|
/s/ George Feldenkreis |
|
George Feldenkreis |
|
GEORGE FELDENKREIS REVOCABLE TRUST UAD 12/23/13 |
|
|
|
By: |
/s/ George Feldenkreis |
|
|
Name: |
George Feldenkreis |
|
|
Title: |
Sole Trustee |
|
/s/ Fanny Hanono
|
|
Fanny Hanono |
|
|
|
|
FANNY HANONO REVOCABLE TRUST UAD 07/06/11 |
|
|
|
By: |
/s/ Fanny Hanono |
|
|
Name: |
Fanny Hanono |
|
|
Title: |
Sole Trustee |
|
|
|
|
|
/s/ Oscar Feldenkreis
|
|
Oscar Feldenkreis |
|
|
|
|
OSCAR FELDENKREIS REVOCABLE TRUST UAD 5/6/11 |
|
|
|
By: |
/s/ Oscar Feldenkreis |
|
|
Name: |
Oscar Feldenkreis |
|
|
Title: |
Sole Trustee |
|
ERICA FELDENKREIS 2012 IRREVOCABLE TRUST UAD 10/17/12 |
|
|
|
By: |
/s/ Elena Feldenkreis |
|
|
Name: |
Elena Feldenkreis |
|
|
Title: |
Sole Trustee |
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JENNIFER FELDENKREIS 2012 IRREVOCABLE TRUST UAD 10/17/12 |
|
|
|
By: |
/s/ Elena Feldenkreis |
|
|
Name: |
Elena Feldenkreis |
|
|
Title: |
Sole Trustee |
|
STEPHANIE FELDENKREIS 2012 IRREVOCABLE TRUST UAD 10/17/12 |
|
|
|
By: |
/s/ Elena Feldenkreis |
|
|
Name: |
Elena Feldenkreis |
|
|
Title: |
Sole Trustee |
Annex A
Name of Shareholder |
Shares |
George Feldenkreis |
1,502,384 |
George Feldenkreis as Trustee for George Feldenkreis Revocable Trust UAD 12/23/13 |
88,189 |
Fanny Hanono |
37,892 |
Fanny Hanono as Trustee for Fanny Hanono Revocable Trust UAD 07/06/11 |
288,181 |
Oscar Feldenkreis |
151,831 |
Oscar Feldenkreis as Trustee for Oscar Feldenkreis Revocable Trust UAD 5/6/11 |
921,498 |
Elena Feldenkreis as Trustee for Erica Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
50,000 |
Elena Feldenkreis as Trustee for Jennifer Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
50,000 |
Elena Feldenkreis as Trustee for Stephanie Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
50,000 |
Total: |
3,139,975 |
Exhibit 99.3
LIMITED
GUARANTEE
THIS
LIMITED GUARANTEE (“Guarantee”) made as of June 15, 2018, by George Feldenkreis, individually (“Guarantor”),
in favor of Perry Ellis International, Inc., a Florida corporation (the “Company”).
Recitals
Whereas,
the Company, Feldenkreis Holdings LLC, a Delaware limited liability company (“Parent”), and GF Merger Sub, Inc.,
a Florida corporation and a wholly-owned subsidiary of Parent (“Merger Sub”) have entered into an Agreement
and Plan of Merger, dated as of the date hereof (as it may be amended from time to time in accordance with its terms, the “Merger
Agreement”), which provides for the merger of Merger Sub with and into the Company on the terms and subject to the conditions
of the Merger Agreement (the “Merger”);
WHEREAS,
Guarantor owns, beneficially and of record, all of the outstanding equity interests of Parent;
WHEREAS,
pursuant to the Merger Agreement, Guarantor has executed and delivered a Pledge and Security Agreement by and between the Company
and Guarantor, dated as of the date hereof (as it may be amended from time to time in accordance with its terms, the “Pledge
Agreement”), to pledge and grant a continuing security interest in the Collateral (as defined in the Pledge Agreement)
as additional security for the Secured Obligations (as defined Pledge Agreement);
WHEREAS,
pursuant to the Merger Agreement, Guarantor is required to execute and deliver this Guarantee to guarantee the full and prompt
payment of the Secured Obligations; and
WHEREAS,
all capitalized terms used herein which are not herein defined shall have the meanings ascribed to them in the Merger Agreement.
Agreement
NOW,
THEREFORE, in consideration of the foregoing Recitals, Guarantor agrees and covenants with the Company as follows:
1.
Guarantor, intending to be legally bound, hereby absolutely, unconditionally and irrevocably guarantees as a primary obligor
and not merely as surety to the Company, the full and prompt payment of One Hundred Percent (100%) of the Secured Obligations as
and when due and payable in accordance with the Merger Agreement (such Guarantee obligations hereinafter may be referred to as
the “Guaranteed Obligations”) subject to the terms and conditions herein. Notwithstanding anything contained
herein to the contrary, (a) recourse on this Guarantee in respect of the Guaranteed Obligations is limited to the Collateral (as
defined in the Pledge Agreement) pledged by Guarantor pursuant to the Pledge Agreement, and (b) the Company acknowledges and agrees
that its sole recourse against Guarantor under this Guarantee in respect of the Guaranteed Obligations shall be the Collateral
and that the Company shall not have any other recourse against Guarantor or any of his other assets or properties whatsoever.
2.
Guarantor agrees that nothing contained in this Guarantee will prevent the Company from foreclosing on the security
interest securing the Guaranteed Obligations or from exercising any rights available to the Company thereunder. Guarantor hereby
authorizes and empowers the Company to exercise, in its sole discretion, any rights and remedies, or any combination thereof, which
may then be available, since it is the intent and purpose of Guarantor that the obligations under this Guarantee will be absolute,
independent and unconditional under any and all circumstances. Guarantor hereby waives (a) promptness,
diligence, notice of the acceptance of this Guarantee and of the Guaranteed Obligations,
presentment for payment or performance, notice of non-payment or non-performance, default,
demand, protest, acceleration or dishonor, and (b) to the fullest extent permitted by law, any notice not provided for herein,
as well as any requirement that at any time any action be taken by any person or entity against Parent. Guarantor
agrees that this Guarantee shall remain in full force and effect without regard to, and shall not be affected or impaired by, any
invalidity, irregularity or unenforceability in whole or in part of the Merger Agreement. Guarantor waives any and all rights
of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available
to Guarantor by reason of any Law or otherwise. To
the fullest extent permitted by applicable law, Guarantor hereby expressly and irrevocably waives any and all rights or defenses
arising by reason of any applicable law which would otherwise require any election of remedies by the Company. Guarantor acknowledges
that it will receive substantial direct and indirect benefits from the transactions contemplated by the Merger Agreement and that
the waivers set forth in this Guarantee are knowingly made in contemplation of such benefits.
3.
Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification,
amendment or waiver of or any consent to departure from the Merger Agreement, the Pledge Agreement or that certain letter agreement
dated as of even date herewith from Guarantor to Feldenkreis Holdings LLC (the “Equity Commitment Letter”).
This Guarantee is a guarantee of payment and not of collection, and a separate action or actions may be brought and prosecuted
by the Company against Guarantor to enforce this Guarantee, irrespective of whether any action is brought against Parent or Merger
Sub or whether Parent or Merger Sub are joined in any such action or actions. To the extent that any payment to the Company in
respect of the Guaranteed Obligations is rescinded or must otherwise be, and is, returned to Guarantor for any reason whatsoever,
Guarantor shall remain liable hereunder on the terms and subject to the conditions hereof as if such payment had not been made.
4.
Guarantor agrees that the Company may, in its sole discretion, at any time and from time to time, without notice to or further
consent of Guarantor, extend the time of payment of any of the Guaranteed Obligations, and may also make any agreement with Parent
or Merger Sub for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification
of the terms thereof or of any agreement between the Company and Parent or Merger Sub without in any way impairing or affecting
Guarantor’s obligations under this Guarantee or affecting the validity or enforceability of this Guarantee. Guarantor agrees
that, subject to the terms and provisions hereof, the obligations of Guarantor hereunder shall not be released or discharged, in
whole or in part, and shall not be conditioned upon or otherwise affected by (whether or not Guarantor has any knowledge or notice
thereof and without further consent of Guarantor): (a) the failure or delay on the part of the Company to assert any claim or demand
or to enforce any right or remedy against Parent, Merger Sub or Guarantor; (b) any change in the time, place, manner or terms of
payment of any of the Guaranteed Obligations, or any extension of the time of payment of, renewal, rescission, waiver, compromise
or alteration of, any Guaranteed Obligation, any escrow arrangement or other security therefor, any liability incurred directly
or indirectly in respect thereof, or any agreement entered into by the Company and Parent and/or Merger Sub in connection therewith;
(c) any renewal, rescission, waiver, compromise or other amendment or modification of any terms or provisions of the Merger Agreement,
the Equity Commitment Letter or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed
Obligations; (d) the addition, substitution or release of any Person now or hereafter liable with respect to the Guaranteed Obligations;
(e) any change in the corporate existence, structure or ownership of Parent, Merger Sub or any other Person now or hereafter liable
with respect to the Guaranteed Obligations; (f) any insolvency, bankruptcy, reorganization or other similar proceeding affecting
Parent, Merger Sub or any other Person now or hereafter liable with respect to the Guaranteed Obligations; (g) the existence of
any claim, set-off or other right which Guarantor may have at any time against Parent, Merger Sub or the Company, whether in connection
with the Guaranteed Obligations or otherwise; (h) the adequacy of any other means the Company may have of obtaining payment related
to the Guaranteed Obligations; (i) any lack or limitation of status or power, incapacity, disability or other legal limitation
of Parent or Merger Sub in respect of any Guaranteed Obligations or the lack of validity or enforceability of the Merger Agreement,
the Equity Commitment Letter or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed
Obligations; (j) any breach of the Merger Agreement; or (k) any other act or omission that may in any manner or to any extent vary
the risk of Guarantor or otherwise operate as a discharge of Guarantor as a matter of law or equity (other than payment of the
Guaranteed Obligations).
5.
The Company shall not be obligated to file any claim relating to any Guaranteed Obligation in the event that Parent or Merger
Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Company to so file shall not
affect Guarantor’s obligations hereunder.
6.
Guarantor hereby represents and warrants as follows:
- he has the legal capacity and authority to execute, deliver and perform
this Guarantee and the execution, delivery and performance of this Guarantee have been duly authorized by all necessary action
and do not and will not conflict with or result in any violation of or contravene any applicable law, governmental order or contractual
restriction binding on Guarantor or any of his assets;
- except as provided in this Guarantee and the Pledge Agreement, the
execution, delivery or performance by Guarantor of this Guarantee will not result in the creation or imposition of (or the obligation
to create or impose) any lien upon any of the property or assets of Guarantor pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement, credit agreement, or any other material agreement, contract or instrument to which Guarantor is
a party or by which he or any of his property or assets is bound or to which he may be subject;
- (i) all consents, approvals, authorizations, permits of, filings with
and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Guarantee by
Guarantor have been obtained or made and all conditions thereof have been duly complied with, and (ii) no other action by, and
no notice to or filing with, any governmental authority is required in connection with the execution, delivery or performance of
this Guarantee by such Guarantor; and
- this Guarantee has been duly and validly executed and delivered by
Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its
terms, subject to the Enforceability Exceptions.
7.
Unless the Merger Agreement is terminated in accordance with Section 7.2 or 7.3 thereof, Guarantor, on behalf of himself
and his Affiliates, Representatives, family members and financing sources of Parent (the “GF Group”), hereby
agrees (a) not to request or seek to compel the Company to call the 2018 Annual Meeting of Shareholders of the Company and (b)
not to directly or indirectly solicit, and to cause his and their respective Representatives not to directly or indirectly solicit,
proxies or take any other similar action in opposition of the Company’s nominations for directors of the Company at the 2018
Annual Meeting of the Shareholders of the Company (including any adjournments or postponements thereof, the “2018 Annual
Meeting”); provided, that the Company hereby agrees while the Merger Agreement is still in effect not to hold
the 2018 Annual Meeting unless compelled by a court of competent jurisdiction pursuant to applicable law, and in furtherance of
the foregoing the Company shall, upon the request of a shareholder seeking to compel the 2018 Annual Meeting, use its commercially
reasonable efforts to resist any such motion by a shareholder and also to use its commercially reasonable efforts to try and persuade
a court from issuing an order compelling the Company to hold the 2018 Annual Meeting and Guarantor hereby agrees to cooperate with
the Company in good faith in connection with such commercially reasonable efforts; it being acknowledged and agreed that upon the
issuance of any such order of a court of competent jurisdiction pursuant to applicable law compelling the 2018 Annual Meeting,
the Company will comply therewith. Notwithstanding the generality of the foregoing, (i) if so compelled to hold the 2018 Annual
Meeting by a court of competent jurisdiction pursuant to applicable law and (ii) at such time (x) Guarantor and the GF Group have
complied with their obligations set forth in the first sentence of this Section 7 above, (y) Parent has a right to terminate the
Merger Agreement pursuant to Section 7.3(a) or Section 7.3(c) of the Merger Agreement and (z) any solicitation of proxies or similar
action by Guarantor or the GF Group in connection with the 2018 Annual Meeting is limited to the nominees for director identified
by Guarantor in his May 18, 2018 nomination notice submitted to the Company in connection with the 2018 Annual Meeting, then clause
(b) of the first sentence of this Section 7 above shall immediately terminate upon the Company’s receipt of a written notice
of Parent notifying the Company of Parent’s intent to solicit proxies in opposition of the Company’s nominations for
directors of the Company at the 2018 Annual Meeting; provided, that, in order for Guarantor and the GF Group to exercise
such rights, if Parent has a right to terminate the Merger Agreement pursuant to Section 7.3(c) of the Merger Agreement, Guarantor
shall continue to use its reasonable best efforts to consummate the Merger in accordance with the terms of the Merger Agreement.
8.
No failure on the part of the Company to exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver hereof, nor shall any single or partial exercise by the Company of any right, remedy or power hereunder preclude
any other or future exercise of any right, remedy or power. Each and every right, remedy and power hereby granted to the Company,
or allowed to it by law, in equity or by other agreement shall be cumulative and not exclusive of any other, and may be exercised
by the Company at any time or from time to time.
9.
This Guarantee shall be binding upon, and inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors, and permitted assigns. This Guarantee shall not be assigned, in whole or in part, by operation of
law or otherwise by Guarantor without the express written consent of the Company and any attempted assignment without such consent
shall be null and void. This Guarantee will terminate and cease to be of force and effect upon the earlier to occur of (a) the
Effective Time, and (b) 75 days following the termination of the Merger Agreement in accordance with its terms, unless one or more
claims with respect to one or more Guaranteed Obligations has been asserted by the Company in writing against Guarantor prior to
the end of such 75-day period, in which case this Guarantee will continue in effect until the resolution of such claims and satisfaction,
to the extent required, of such Guaranteed Obligations, whereupon this Guarantee will terminate.
10.
This Guarantee may not be amended except in writing signed by Guarantor and the Company.
11.
In the event that any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Guarantee shall be construed as not containing such provisions, and the invalidity
of such provisions shall not affect other provisions hereof which are otherwise lawful and valid and shall remain in full force
and effect.
12.
This Guarantee, together with the Merger Agreement and the Pledge Agreement, constitutes the entire agreement with respect
to the Guaranteed Obligations and supersedes all prior agreements and understandings both oral and written, between the parties
with respect to such subject matter. This Guarantee may be executed in counterparts which together shall constitute one instrument.
It shall not be necessary for all parties to sign the same counterpart.
13.
Each party acknowledges that such party and its counsel have reviewed this Guarantee and that any rule of construction
to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of
this Guarantee.
14.
The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions
of this Guarantee were not performed in accordance with its specific terms or were otherwise breached and further agree that each
party hereto shall be entitled to an injunction, specific performance and other equitable relief against any other party to prevent
breaches or threatened breaches of this Guarantee and to enforce specifically the terms and provisions hereof, in addition to any
other remedy to which it is entitled at law or in equity, and shall not be required to provide any bond or other security in connection
with any such order or injunction. Each party hereto further agrees that it will not oppose the granting of any such injunction,
specific performance and other equitable relief on the basis that (a) any other party has an adequate remedy at law or (b) an award
of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at law or equity.
15.
All notices and other communications hereunder shall be in writing and shall be addressed as follows (or at such
other address for a party as shall be specified by like notice):
If to Guarantor,
to:
George Feldenkreis
4810 NW 74 Ave
Miami, FL 33166
| Facsimile: | (305) 864-1813 |
with a copy (which shall not
constitute notice) to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
| Attention: | Steve Wolosky, Esq.
Elizabeth R. Gonzalez-Sussman, Esq.
Michael R. Neidell, Esq. |
| Facsimile: | (212) 451-2222 |
If to the Company,
to:
Perry Ellis International, Inc.
3000 N.W. 107th Avenue
Miami, Florida 33172
| Attention: | Tricia Thompkins, General Counsel
J. David Scheiner, Chairman of the Special Committee |
| Facsimile: | (786) 221-8735 |
with a copy (which shall not constitute
notice) to:
Paul, Weiss, Rifkind, Wharton &
Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
| Attention: | Kelley D. Parker, Esq.
Robert B. Schumer, Esq. |
| Facsimile: | (212) 757-3900 |
and
Akerman LLP
98 Southeast Seventh Street, Suite 1100
Miami, FL 33131
| Attention: | Stephen Roddenberry, Esq.
Carl D. Roston, Esq. |
| Facsimile: | (305) 374-5095 |
All such notices
or communications shall be deemed to have been delivered and received (a) if delivered in person, on the day of such delivery,
(b) if by facsimile or electronic mail, on the day on which such facsimile or electronic mail was sent; provided, that receipt
is personally confirmed by telephone, (c) if by certified or registered mail (return receipt requested), on the seventh Business
Day after the mailing thereof or (d) if by reputable overnight delivery service, on the second Business Day after the sending thereof.
16.
This Guarantee and any claim or controversy hereunder shall be governed by and construed in accordance with the Laws of
the State of Delaware without regard to the conflict or choice of laws provisions thereof that would give rise to the application
of the domestic substantive law of any other jurisdiction. Each of the parties hereto (a) irrevocably agrees that all actions
or proceedings (whether in contract or tort, at law or in equity or otherwise) that may be based upon, arise out of or relate to
this Guarantee, or the negotiation, execution or performance of this Guarantee (including any claim or cause of action based upon,
arising out of or related to any representation or warranty made in or in connection with this Guarantee or as an inducement to
enter into this Guarantee) shall be exclusively resolved in the Court of Chancery of the State of Delaware and, if the Court of
Chancery of the State of Delaware denies jurisdiction, then the state courts or the Federal courts located in New York County,
in the State of New York, (b) irrevocably agrees service of process, summons, notice or document by registered mail addressed
to them at their respective addresses provided in Section 15 shall be effective service of process against it for any such action,
suit or proceeding brought in any such court, and (c) waives, to the fullest extent permitted by applicable Law, any objection
which it may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any
such action, suit or proceeding in any such court. Each of the parties hereto hereby agrees that a final judgment in any action,
suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable Law.
17.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTEE IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED
BY THIS GUARANTEE. EACH PARTY TO THIS GUARANTEE CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A
LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 17.
[Signature page follows]
IN
WITNESS WHEREOF, Guarantor has executed this Guarantee effective as of the day and year first above written.
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/s/ George
Feldenkreis |
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George Feldenkreis |
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Accepted and Agreed: |
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PERRY ELLIS INTERNATIONAL, INC. |
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By: |
/s/ Oscar Feldenkreis
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Name: |
Oscar Feldenkreis |
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Title: |
Chief Executive Officer |
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[Signature Page to Limited Guarantee]
Exhibit 99.4
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND
SECURITY AGREEMENT (this “Agreement”) is effective as of June 15, 2018 and is by and between Perry Ellis International,
Inc., a Florida corporation (the “Company”) and George Feldenkreis, individually (the “Pledgor”).
WHEREAS, the Company,
Feldenkreis Holdings LLC, a Delaware limited liability company (“Parent”), and GF Merger Sub, Inc., a Florida
corporation and a wholly-owned subsidiary of Parent (“Merger Sub”) have entered into an Agreement and Plan of
Merger dated June 15, 2018 (as it may be amended from time to time in accordance with its terms, the “Merger Agreement”)
which, provides for the merger of Merger Sub with and into the Company on the terms and subject to the conditions of the Merger
Agreement (the “Merger”);
WHEREAS, pursuant
to the Merger Agreement, Pledgor is required to execute and deliver this Agreement and to pledge and grant a continuing security
interest in the Collateral (as defined herein) as additional security for the Secured Obligations (as defined herein);
WHEREAS, Pledgor
owns, beneficially and of record, all of the outstanding equity interests of Parent; and
WHEREAS, all capitalized
terms used herein which are not herein defined shall have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE,
in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
For the purposes
of this Agreement:
(a)
“Collateral” means (i) an aggregate of 647,451 shares of Common Stock owned by Pledgor (“Stock”),
(ii) any dividends or distributions, distributions in property, returns of capital or other distributions made on or with respect
to any of the foregoing shares of Stock, and (iii) all proceeds of the foregoing.
(b)
“Event of Default” means the failure by the Parent to pay and perform as and when due any of the Secured Obligations
in accordance with the terms of the Merger Agreement.
(c)
“Secured Obligations” means Parent’s obligation to (i) pay the Parent Termination Fee in accordance with
Section 7.6(d) of the Merger Agreement, (ii) reimburse and indemnify the Company under the second and last sentences of the last
paragraph of Section 5.12(b) of the Merger Agreement, (iii) pay accrued interest and any cost of enforcement pursuant to Section
7.6(e) of the Merger Agreement, and (iv) pay expenses as required under Section 5.11 of the Merger Agreement.
(a)
As security for the payment and performance by Parent of all of the Secured Obligations, the Pledgor hereby pledges, assigns and
grants to the Company a first priority security interest in all of his right, title and interest in and to the Collateral (the
“Pledge”).
(b)
In the event the shares of Stock included in the Collateral are certificated: (i) simultaneously with the execution and delivery
of this Agreement, the Pledgor is delivering to the Company certificates representing the shares of Stock described in clause (i)
of Section 1(a) and will deliver to the Company all certificates relating to the Collateral described in clause (ii) of Section
1(a) within two (2) business days after the Pledgor’s acquisition thereof, all of which certificates shall be registered
in the name of the Pledgor, duly endorsed in blank or accompanied by stock powers duly executed by the Pledgor in blank, together
with any documentary tax stamps and any other documents necessary to cause the Company to have a good, valid and perfected first
pledge of, lien on and security interest in the Collateral, free and clear of any mortgage, pledge, lien, security interest, hypothecation,
assignment, charge, right, encumbrance or restriction (individually, “Encumbrance,” and collectively, “Encumbrances”),
but subject to restrictions set forth in state and federal securities laws and restrictions set forth in the Voting Agreement executed
in connection with the signing of the Merger Agreement. At any time following an Event of Default, any or all of the shares of
Stock held by the Company hereunder may, at the option of the Company exercised in accordance with Sections 3(b), be registered
in the name of the Company or in the name of its nominee; and (ii) the Company hereby confirms receipt of the certificates representing
the Collateral described in clause (i) of Section 1(a) and agrees to hold such certificates in accordance with the terms of this
Agreement.
(c)
In the event the shares of Stock included in the Collateral are uncertificated, simultaneously with the execution and delivery
of this Agreement, the Pledgor, the Company and the applicable securities intermediary are entering into Securities Account Control
Agreements with respect to such shares and the Pledgor agrees to take such further actions and execute, deliver and file such instruments
and documents, including without limitation, one or more financing statements, as the Company may request to perfect the Company’s
interest in the Collateral pursuant to this Agreement.
| 3. | RIGHTS OF PLEDGOR WITH RESPECT TO THE COLLATERAL |
(a)
So long as no Event of Default shall have occurred and be continuing:
(i)
The Pledgor shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to the
Collateral, subject to the terms hereof and of the Voting Agreement.
(ii)
All dividends or distributions (including, without limitation, cash, stock and liquidating dividends or distributions), distributions
in property, returns of capital and other distributions made on or in respect of the Collateral shall be retained by the Company,
or, if delivered to Pledgor, shall be held in trust for the benefit of the Company and forthwith delivered to the Company within
two (2) business days of the acquisition thereof and shall be considered as part of the Collateral for all purposes of this Agreement.
(iii)
The Company shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, powers of attorney,
dividend or distribution orders, and other instruments as Pledgor may reasonably request for the purpose of enabling the Pledgor
to exercise his voting and/or consensual rights and powers which Pledgor is entitled to exercise pursuant to Section 3(a)(i) above
and the Pledgor shall execute and deliver to the Company such instruments as may be required or may be requested by the Company
to enable the Company to receive and retain the dividends or distributions, distributions in property, returns of capital and other
distributions it is authorized to receive and retain pursuant to Section 3(a)(ii).
(b)
Upon the occurrence and during the continuance of an Event of Default, all rights of the Pledgor to exercise the voting and/or
consensual rights and powers which Pledgor is entitled to exercise pursuant to Section 3(a)(i) shall cease and all such rights
shall thereupon become vested in the Company, who shall have the sole and exclusive right and authority to exercise such voting
and/or consensual rights and powers and/or to receive and retain such dividends or distributions during the continuation of an
Event of Default. In such case, the Pledgor shall execute and deliver such documents as the Company may request to enable the Company
to exercise such rights and receive such dividends or distributions. In addition, the Company and each member of the Special Committee
is hereby (i) granted an irrevocable proxy to exercise any and all voting and/or consensual rights and powers relating or pertaining
to the Collateral and (ii) appointed the attorney-in-fact of the Pledgor, with full power of substitution, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, to take all such actions after the occurrence and during the continuance
of an Event of Default, whether in the name of the Company or the Pledgor, as the Company may consider necessary or desirable for
the purpose of exercising such rights and receiving such dividends or distributions. Any and all money and other property paid
over to or received by the Company pursuant to the provisions of this Section 3(b) shall be retained by the Company as part of
the Collateral and shall be applied in accordance with the provisions hereof.
| 4. | SUBSTITUTION OF COLLATERAL |
Provided that no
Event of Default shall then have occurred and be continuing, the Pledgor shall have the right to substitute collateral with an
irrevocable standby letter of credit in form and substance and from an issuer and in an amount satisfactory to the Company in lieu
of the Collateral as may be specified in writing by Pledgor; provided that such proposed substitute collateral (hereinafter referred
to as “Replacement Assurances”) affords the Company protection at least equivalent to the protection afforded
by the Collateral. The Pledgor and the Company shall cooperate to effect the substitution of such Replacement Assurances for the
Collateral, including (i) the preparation, execution, delivery and filing of such agreements and other documents as may be requested
by the Company in order to create and perfect in favor of the Company a perfected first-priority security interest in the proposed
substitute collateral and/or to establish the Company’s recourse to the proposed credit support, and (ii) execution and delivery
of such documents as may be necessary to release the Company’s security interest in the Collateral.
(a)
If at any time an Event of Default shall have occurred and be continuing, then, in addition to having the right to exercise any
right or remedy of the Company hereunder or under the Merger Agreement or any other document relating to the Secured Obligations,
the Company shall, to the extent permitted by law, without being required to give any notice to Pledgor except, as provided below:
(i)
Apply any cash held by it hereunder;
(ii)
Have the right generally to exercise any and all rights afforded to a secured party under the applicable Uniform Commercial Code
or other applicable law or in equity; and
(iii)
Sell or otherwise dispose of or realize upon the Collateral, or any part thereof, in one or more parcels, at public or private
sale, at any exchange or broker’s board or elsewhere, at such price or prices and on such other terms as the Company may
deem commercially reasonable, for cash, credit or for future delivery or otherwise in accordance with applicable law. To the extent
permitted by applicable law, the Pledgor may, in such event, bid for the purchase of such Collateral. The Pledgor agrees that,
to the extent notice of sale shall be required by applicable law and has not been waived by such Pledgor, any requirement of reasonable
notice shall be met if notice, specifying the place of any public sale or the time after which any private sale is to be made,
is personally served on or mailed, postage prepaid, to such Pledgor, in accordance with the notice provisions of Section 12 of
this Agreement at least ten (10) days before the time of such sale. The Company shall not be obligated to make any sale of Collateral
to the Pledgor regardless of notice of sale having been given. The Company may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned.
(b)
The Pledgor recognizes that the Company may be unable to effect a public sale of any Collateral by reason of certain prohibitions
contained in applicable federal, state or foreign securities laws or otherwise or may determine that a public sale is impracticable,
not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted
group of purchasers that shall be obliged to agree, among other things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that any such private sale may result
in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially reasonable manner. The Company shall be under no obligation
to delay a sale of any Collateral for the period of time necessary to permit the issuer thereof to register such securities for
public sale under the applicable federal, state or foreign securities laws even if such issuer would agree to do so.
(c)
Each of the rights, powers, and remedies provided herein or now or hereafter existing at law or in equity or by statute or otherwise
shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for herein or therein
or now or hereafter existing at law or in equity or by statute or otherwise. The exercise of any such right, power or remedy shall
not preclude the simultaneous or later exercise of any or all other such rights, powers or remedies, including under the Merger
Agreement and Limited Guarantee, except there shall be no duplication of recovery. No notice to or demand on Pledgor in any case
shall entitle Pledgor to any other notice or demand in similar or other circumstances.
(d)
Notwithstanding anything to the contrary contained herein, the Company hereby agrees that, in connection with any Event of Default
that occurs prior to the termination of the Merger Agreement (and is not in respect of any claim to pay the Secured Obligation
referred to in clause (i) of the definition thereof), the Company will use commercially reasonable efforts to exercise its remedies
hereunder in respect of such Event of Default against the minimum amount of Collateral reasonably needed (as determined by the
Company) to satisfy the Secured Obligation(s) that are the subject of such Event of Default.
| 6. | REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR |
(a)
The Pledgor represents, warrants and covenants that:
(i)
The Pledgor has all requisite capacity, power and authority, and is under no legal restriction, limitation or disability, to own
and pledge the Collateral.
(ii)
The Pledgor has full capacity, power and authority to execute and deliver this Agreement and to perform his obligations hereunder.
No other proceedings on the part of the Pledgor are necessary to authorize the consummation of the transactions contemplated hereby
on behalf of the Pledgor. This Agreement has been duly and validly executed and delivered by the Pledgor and constitutes the valid
and legally binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms and conditions. No
consents, approvals, orders or authorizations of, or registration, declaration or filing with (other than as expressly contemplated
hereunder), any government or governmental agency is required by or with respect to the Pledgor in connection with the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(iii)
The Pledgor is or, with respect to the Collateral described in clause (ii) of Section 1(a), not later than the time of the Pledgor’s
acquisition thereof will be, the direct record and/or beneficial owner of the Stock. The Pledgor has and will have good, valid
and marketable title thereto, free and clear of all Encumbrances other than the security interest created by this Agreement and
subject to the Voting Agreement and the Rollover Letter.
(iv)
The Collateral is and will be duly and validly pledged to the Company in accordance with law, and the Company has a good, valid,
and perfected first lien on and security interest in the Collateral and the proceeds thereof.
(v)
Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, by Pledgor,
will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Pledgor is subject, or (B) result in a breach of, constitute a default
under, result in the acceleration of, create in any person the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Pledgor is a party or by which
he is bound.
(vi)
There is no action, claim, suit, proceeding or investigation pending, or to the knowledge of Pledgor, threatened against or affecting
the Pledgor, this Agreement, or the transactions contemplated hereby, before or by any court, arbitrator or governmental authority
which would reasonably be expected to adversely affect the Pledgor’s ability to perform its obligations under this Agreement
or would reasonably be expected to adversely affect the value of the Collateral.
(vii)
His full legal name used herein is the same as set forth on his driver license and his address used herein is his primary residency.
(b)
Until all Secured Obligations have been paid and performed in full or until this Agreement is terminated pursuant to Section 8
hereof, Pledgor hereby covenants that, unless the Company otherwise consents in advance in writing:
(i)
The Pledgor authorizes the Company to file one or more financing statements perfecting the Company’s security interest in
the Collateral and shall (A) at the request of the Company, execute, deliver and file any and all financing statements, continuation
statements, stock powers, instruments, and other documents necessary or desirable, in the Company’s reasonable judgment,
to create, perfect, preserve, validate or otherwise protect the pledge of the Collateral to the Company and the Company’s
lien on and security interest in the Collateral and the first priority thereof, (B) maintain or cause to be maintained at all times
the pledge of the Collateral to the Company and the Company’s lien on and security interest in the Collateral and the first
priority thereof, and (C) defend the Collateral and the Company’s lien on and security interest therein and the first priority
thereof against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Company,
and pay pro rata all costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) in connection
with such defense.
(ii)
The Pledgor shall not sell, transfer, pledge, assign or otherwise dispose of any of the Collateral or any interest therein, and
shall not create, incur, assume or suffer to exist any Encumbrance with respect to the Collateral or any interest therein (except
pursuant hereto or pursuant to the Voting Agreement and the Rollover Letter).
| 7. | RESPONSIBILITIES OF COMPANY IN POSSESSION OF THE COLLATERAL |
(a)
The Company shall have the duty to use reasonable care in the custody and preservation of the Collateral.
(b)
The Company shall be protected in acting upon any written notice, request, waiver, consent, certificate, receipt, authorization,
power of attorney or other paper or document which the Company in good faith believe to be genuine.
Upon the later of
(i) immediately prior to the Effective Time (but subject to the occurrence of the Effective Time) or (ii) the termination of the
Limited Guarantee, this Agreement shall terminate and the Collateral then held by the Company shall promptly be returned to Pledgor
at the address of Pledgor set forth herein or at such other address as Pledgor may direct in writing, and Company shall execute
and deliver such documents as may be reasonably necessary to release the Company’s security interest in the Collateral. The
Company shall not be deemed to have made any representation or warranty with respect to any Collateral so returned, except that
such Collateral is free and clear, on the date of such return, of any and all Encumbrances arising from the Company’s own
acts.
| 9. | ADDITIONAL ACTIONS AND DOCUMENTS |
The Pledgor hereby
agrees to take or cause to be taken such further actions (including, without limitation, the delivery of certificates for all of
the Company’s shares hereafter acquired by such Pledgor), to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments, and to obtain such consents as may be necessary or desirable, in the reasonable
judgment of the Company, in order to fully effectuate the purposes, terms and conditions of this Agreement, whether before, at
or after the occurrence of an Event of Default.
It is the express
intention and agreement of the parties hereto that all covenants, agreements, statements, representations, warranties and indemnities
made by Pledgor herein shall survive the execution and delivery of this Agreement.
This Agreement,
the Merger Agreement and the Limited Guarantee constitute the entire agreement between the parties hereto and supersede all prior
understandings, agreements, or representations by or between the parties hereto, written or oral, with respect to the subject matter
hereof.
All notices, demands,
requests, claims and other communications hereunder will be in writing. Any notice, demand, request, claim or other communication
hereunder shall be deemed duly given if (and then effective three business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:
If to the Pledgor:
4810 NW 74 Ave
Miami, FL 33166
| Attention: | George Feldenkreis |
With copy to:
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
| Attention: | Steve Wolosky, Esq.
Elizabeth R. Gonzalez-Sussman, Esq.
Michael R. Neidell, Esq. |
If to the Company:
Perry Ellis International, Inc.
3000 N.W. 107th Avenue
Miami, Florida 33172
| Attention: | Tricia Thompkins, General Counsel
J. David Scheiner, Chairman of the Special Committee |
with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
| Attention: | Kelley D. Parker, Esq.
Robert B. Schumer, Esq. |
and
Akerman LLP
98 Southeast Seventh Street, Suite 1100
Miami, FL 33131
| Attention: | Stephen Roddenberry, Esq.
Carl D. Roston, Esq. |
Any party hereto
may send any notice, demand, request, claim, or other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier, messenger service, telecopy, ordinary mail, or electronic
mail), but no such notice, demand, request, claim, or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party hereto may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the other parties hereto notice in the manner herein set
forth.
This Agreement
may not be amended except by an instrument in writing signed by the parties hereto. No waiver by any party hereto of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence. No delay or failure on the part of the Company in exercising any right,
power or privilege under this Agreement or under any other instruments given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single
or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing
and signed by such party, as the case may be, and then only to the extent expressly specified therein.
| 14. | SUCCESSION AND ASSIGNMENT |
This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by either party without the prior written consent of the other party.
Any term or provision
of this Agreement or any other agreement, document or writing given pursuant to or in connection with this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
| 16. | GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL |
(a)
This Agreement and any claim or controversy hereunder shall be governed by and construed in accordance with the Laws of the State
of Delaware without regard to the conflict or choice of laws provisions thereof that would give rise to the application of the
domestic substantive law of any other jurisdiction. Each of the parties hereto (a) irrevocably agrees that all actions or proceedings
(whether in contract or tort, at law or in equity or otherwise) that may be based upon, arise out of or relate to this Agreement,
or the negotiation, execution or performance of this Agreement (including any claim or cause of action 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 exclusively resolved in the Court of Chancery of the State of Delaware and, if the Court of Chancery of
the State of Delaware denies jurisdiction, then the state courts or the Federal courts located in New York County, in the State
of New York, (b) irrevocably agrees service of process, summons, notice or document by registered mail addressed to them at their
respective addresses provided in Section 12 shall be effective service of process against it for any such action, suit or proceeding
brought in any such court, and (c) waives, to the fullest extent permitted by applicable Law, any objection which it may now or
hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such action, suit
or proceeding in any such court. Each of the parties hereto hereby agrees that a final judgment in any action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable
Law.
(b)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A
LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 16.
All pronouns and
any variations thereof in this Agreement shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
The section headings
contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of
this Agreement.
This Agreement may
be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one
and the same instrument.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF,
each of the parties hereto has duly executed and delivered this Pledge and Security Agreement, or has caused this Pledge and Security
Agreement to be duly executed and delivered on its behalf, as of the day and year first above written.
|
/s/ George
Feldenkreis |
|
George Feldenkreis |
STATE OF NEW YORK
|
) |
|
|
) |
COUNTY OF NEW YORK
|
) |
On this
7th day of June, 2018, before me personally appeared George Feldenkreis to me known and known to me to be the individual who
executed the foregoing signature page to the Pledge and Security Agreement in the capacity therein indicated, who
acknowledged that he or she, being authorized to do so, executed the foregoing instrument for the purposes therein contained
and in the capacity therein indicated as his or her own free act and deed.
My/ Commission Expires: |
|
|
|
5/13/2021 |
|
COMPANY: |
|
|
|
|
PERRY ELLIS INTERNATIONAL, INC. |
|
|
|
By: |
/s/ Oscar Feldenkreis |
|
|
Name: |
Oscar Feldenkreis |
|
|
Title: |
Chief Executive Officer |
Exhibit 99.5
Joinder
to
JOINT FILING AND SOLICITATION AGREEMENT
This JOINDER (the “Joinder”) is
dated as of June 19, 2018 by and among George Feldenkreis, Feldenkreis Family Foundation, Inc., Mary Ellen Kanoff, Scott A. LaPorta
and Matthew McEvoy (collectively, the “Existing Members”) and Oscar Feldenkreis, Fanny Hanono, Feldenkreis Holdings
LLC and GF Merger Sub, Inc. (collectively, the “New Members”).
WHEREAS, certain of the undersigned are
shareholders, direct or beneficial, of Perry Ellis International, Inc., a Florida corporation (the “Company”);
WHEREAS, the Existing Members (the “Group”)
are parties to that certain Joint Filing and Solicitation Agreement, dated as of May 17, 2018 (the “Agreement”), pursuant
to which the Existing Members agreed, in accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments
thereto, with respect to the securities of the Company, among other specified purposes set forth therein.
WHEREAS, the New Members desire to join
the Group formed by the Existing Members for the sole purpose of filing jointly with the Existing Members a statement on Schedule
13D, and any amendments thereto, with respect to the securities of the Company.
NOW, THEREFORE,
in consideration of the premises and of the mutual covenants and agreements of the parties herein contained, the parties hereby
agree as follows:
| 1. | Effective immediately, the New Members are joined as parties to the Agreement solely with respect
to paragraphs 1 and 12 therein. |
2. This
Joinder may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute
but one and the same instrument, which may be sufficiently evidenced by one counterpart.
[Signatures appear on next page]
IN WITNESS WHEREOF, the
parties hereto have caused this Joinder to be executed as of the day and year first above written.
Dated: June 19, 2018
|
|
|
|
|
/s/ George
Feldenkreis |
|
GEORGE FELDENKREIS
Individually and as attorney-in-fact for Mary Ellen Kanoff, Scott
A. LaPorta and Matthew McEvoy |
|
FELDENKREIS FAMILY FOUNDATION, INC. |
|
|
|
By: |
/s/ George
Feldenkreis |
|
|
Name: |
George Feldenkreis |
|
|
Title: |
President and Director |
|
/s/ Oscar
Feldenkreis |
|
OSCAR FELDENKREIS |
|
/s/ Fanny
Hanono |
|
FANNY HANONO |
|
Feldenkreis Holdings LLC |
|
|
|
By: |
/s/ George
Feldenkreis |
|
|
Name: |
George Feldenkreis |
|
|
Title: |
Sole Member |
|
GF MERGER SUB, INC. |
|
|
|
By: |
/s/ George
Feldenkreis |
|
|
Name: |
George Feldenkreis |
|
|
Title: |
Chief Executive Officer & President |
Exhibit 99.6
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 1,506,358 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $41,424,845, (y) additional cash in immediately available funds, not to exceed in the aggregate $5,000,000, solely to the extent
as is necessary so that, when taken together with amounts available for borrowing under the Debt Financing and any cash on hand
at the Company as of the Effective Time, Parent and Merger Sub will be able to consummate the transactions contemplated by the
Agreement at the Effective Time, and to pay at the Closing (or cause the Company to pay at the Closing) any and all unpaid transaction
fees and expenses incurred by Parent, Merger Sub and the Company in connection with the transactions contemplated by the Agreement
and (z) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant to the vesting
of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover Stock”)
(such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ George Feldenkreis |
|
|
|
George Feldenkreis |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
7,301 unvested restricted stock units of the Company
Exhibit 99.7
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 88,189 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $2,425,197.50 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ George Feldenkreis |
|
|
|
George Feldenkreis, as Trustee of the George Feldenkreis Revocable Trust UAD 12/23/13, as amended on 11/2/17 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.8
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 151,831 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $4,175,352.50 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Oscar Feldenkreis |
|
|
|
Oscar Feldenkreis |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.9
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 921,498 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $25,341,195 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Oscar Feldenkreis |
|
|
|
Oscar Feldenkreis, as Trustee of the OSCAR FELDENKREIS REVOCABLE TRUST UAD 5/6/11 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.10
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 50,000 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $1,375,000 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Elena Feldenkreis |
|
|
|
Elena Feldenkreis, as Trustee of the Stephanie Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.11
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 50,000 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $1,375,000 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Elena Feldenkreis |
|
|
|
Elena Feldenkreis, as Trustee of the Jennifer Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.12
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 50,000 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $1,375,000 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Elena Feldenkreis |
|
|
|
Elena Feldenkreis, as Trustee of the Erica Feldenkreis 2012 Irrevocable Trust UAD 10/17/12 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.13
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 37,892 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $1,042,030 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Fanny Hanono |
|
|
|
Fanny Hanono |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.14
June 15, 2018
To: Feldenkreis Holdings
LLC
Gentlemen:
Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Agreement”), among Feldenkreis Holdings LLC, a Delaware limited liability
company (“Parent”), GF Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Parent (“Merger
Sub”), and Perry Ellis International, Inc., a Florida corporation (the “Company”). Capitalized terms used and
not otherwise defined herein have the meanings ascribed to them in the Agreement.
Subject to the satisfaction or waiver,
where permissible, of the conditions set forth in Article VI of the Agreement (other than any conditions that either (A) by their
nature are to be satisfied at the Closing, but subject to the prior or substantially concurrent satisfaction or written waiver
of such conditions (it being agreed for purposes of this letter agreement that any condition precedent the satisfaction of which
is dependent upon the contributions contemplated by this paragraph and which would be fully satisfied upon the making of such contributions
shall be deemed to have been satisfied) or (B) the failure of which to be satisfied is attributable to a breach by the Parent or
Merger Sub of any of their representations, warranties, covenants or agreements contained in the Agreement) and the terms and conditions
set forth herein, the undersigned hereby agrees and covenants that, in exchange for equity interests in Parent, immediately prior
to the Effective Time:
(1) the
undersigned will contribute or cause to be contributed to Parent (x) 288,181 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”), the aggregate amount of which, based on a value of $27.50 per share, will be equal
to $7,924,977.50 and (y) any additional shares that the undersigned may hereafter acquire prior to the Effective Time whether pursuant
to the vesting of restricted stock units of the Company outstanding as of the date of the Agreement or otherwise (the “Rollover
Stock”) (such amount, the “Commitment Amount”); and
(2) all
unvested restricted stock units of the Company (a schedule of which is set forth on Exhibit A attached to this letter agreement)
(the “Cancelled Awards”) that the undersigned holds immediately prior to the Effective Time will be cancelled.
The undersigned understands that he will
not be under any obligation under any circumstances to contribute or cause to be contributed to Parent more than the Commitment
Amount or to cancel more than the Cancelled Awards.
Notwithstanding anything that may be
expressed or implied in this letter agreement, Parent, by its acceptance of the benefits hereof, covenants, agrees and acknowledges
that no person other than the undersigned shall have any obligation hereunder.
The undersigned hereby represents and
warrants as follows:
(a) The
undersigned has the legal capacity and authority to execute, deliver and perform this letter agreement, and this letter agreement
has been duly and validly executed and delivered by the undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against the undersigned in accordance with its terms, subject to the Enforceability Exceptions.
(b) Other
than the filing by the undersigned of any statements or reports with the SEC required by Section 13(d) or 16(a) of the Exchange
Act, the execution, delivery and performance by the undersigned of this letter agreement do not and will not (i) require any consent
or Permit of, or filing with or notification to, any Governmental Authority, (ii) result in a breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a default) under, or give rise to any right of termination,
cancellation, material amendment or acceleration of, any contract to which the undersigned is a party or by which the undersigned
or the Rollover Stock is bound, (iii) violate any Law or Order of any Governmental Authority applicable to the undersigned or the
Rollover Stock or (iv) result in the creation of any Lien on the Rollover Stock, except for such consents, Permits, filings, notifications,
breaches, defaults, rights or Liens which would not adversely affect the undersigned’s ability to perform his obligations
hereunder.
(c) The
undersigned is the record and/or beneficial owner of the Rollover Stock outstanding as of the date hereof, free and clear of all
Liens (other than those arising under this letter agreement and the Pledge and Security Agreement).
This letter agreement, and the undersigned’s
obligations hereunder, will terminate automatically and immediately upon the earliest to occur of (a) the Effective Time (at which
time the obligations shall be discharged) and (b) the termination of the Agreement in accordance with its terms.
Prior to the termination of this letter
agreement, the undersigned agrees that he will not, directly or indirectly, sell, lease, assign, convey, license, pledge, transfer
or otherwise dispose of or encumber or suffer the occurrence of any Lien (other than those arising pursuant to the terms of this
letter agreement and the Pledge and Security Agreement) on beneficial or record ownership of the Rollover Stock without the prior
written consent of Parent and the Company.
The undersigned understands that he may
not assign this letter agreement without the prior written consent of Parent and the Company. This letter agreement shall not be
assignable by Parent without the undersigned’s prior written consent, except that Parent may assign this letter agreement,
without the undersigned’s prior written consent, to any person to which Parent may assign any of its rights and obligations
under the Agreement.
Notwithstanding any other term or condition
of this letter agreement, the undersigned’s liability under this letter agreement shall be limited to the contribution of
the Commitment Amount and the undersigned’s cancellation of the Cancelled Awards immediately prior to the Effective Time,
as provided herein.
This letter agreement constitutes the
sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Parent and the undersigned
with respect to the subject matter hereof.
This letter agreement is not intended
to, and does not, confer upon any Person, other than Parent and the undersigned, any rights or remedies hereunder or in connection
herewith; provided, however, that the Company shall be an express third party beneficiary hereunder and the Special
Committee, if then in existence or otherwise the independent and disinterested directors of the Company (by resolution of a majority
of the independent and disinterested directors of the Company), shall be entitled to the enforce the terms hereof.
This letter agreement may not be amended,
and no provision waived or modified, except by an instrument in writing signed by Parent, the undersigned and the Company.
Nothing in this letter agreement shall
modify or limit the rights of the Company against the undersigned under the Limited Guarantee.
This letter agreement, and any disputes
hereunder, shall be governed by and construed in accordance with the internal laws of the State of Florida, without regard the
conflict of laws principles thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED
AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
This letter agreement may be executed
in counterparts and by facsimile or .pdf, each of which, when so executed, shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
|
Very truly yours, |
|
|
|
/s/ Fanny Hanono |
|
|
|
Fanny Hanono, as Trustee of the Fanny Hanono Revocable Trust UAD 07/06/11 |
Accepted and Agreed to
as of the date written above |
|
Feldenkreis Holdings LLC |
|
|
By: |
|
|
Name: |
George Feldenkreis |
|
Title: |
Sole Member |
[Rollover Letter]
EXHIBIT A
Restricted Stock Units
0 unvested restricted stock units of the Company
Exhibit 99.16
CONFIDENTIAL
WELLS FARGO BANK, NATIONAL ASSOCIATION
2450 Colorado Avenue, Suite 3000 West
Santa Monica, California 90404
June 15, 2018
Feldenkreis Holdings LLC
5700 North Bay Road
Miami Beach, FL 33140
Attention: George Feldenkreis
$275,000,000 Senior Secured Revolving
Loan Facility
Commitment Letter
Ladies and Gentlemen:
Feldenkreis Holdings LLC (“Holdings”),
which is newly formed, created and controlled, directly or indirectly, by George Feldenkreis (“Sponsor”) has advised
Wells Fargo Bank, National Association (“Wells Fargo”) that Holdings intends to acquire (the “Acquisition”),
directly or indirectly, all of the equity interests of Perry Ellis International, Inc. (the “Target”) and consummate
the other transactions described in the Transaction Description attached hereto as Exhibit A (the “Transaction Description”).
Capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Transaction Description
and in the Summary of Principal Terms and Conditions attached hereto as Exhibit B (the “Term Sheet” and together with
this commitment letter, the Transaction Description, and the annexes, exhibits and schedules to this commitment letter, collectively,
the “Commitment Letter”). The date on which the Acquisition is consummated and the initial funding of the Credit Facility
occurs is referred to as the “Closing Date.”
1.
Commitments. In connection with the Transactions contemplated hereby, Wells Fargo is pleased to advise Holdings of
its fully-underwritten commitment to provide one hundred percent (100%) of the Credit Facility, subject only to the conditions
set forth in Section 5 of this Commitment Letter and in Exhibit C hereto on the terms set forth in this Commitment Letter and the
fee letter of even date herewith (the “Fee Letter”).
2.
Titles and Roles; Syndication. Holdings hereby appoints Wells Fargo (in such capacity, “Lead Arranger”),
and Lead Arranger hereby agrees, acting alone or through or with affiliates selected by it, to act as the lead arranger and bookrunner
for the Credit Facility and Wells Fargo will act as sole and exclusive administrative and collateral agent for the Credit Facility
(in such capacity, “Agent”) for the parties to the Credit Facility as lenders (individually a “Lender”
and collectively “Lenders”). Lead Arranger and Agent will perform the duties and exercise the authority customarily
performed and exercised by it in such role. Wells Fargo will have “left” and highest placement in the information memoranda
and all marketing materials and other documentation used in connection with the Credit Facility.
Holdings agrees that no other agents, co-agents,
arrangers or bookrunners will be appointed, no other titles will be awarded and no compensation (other than compensation expressly
contemplated by this Commitment Letter and the Fee Letter) will be paid to any Lender in connection with the Credit Facility unless
Lead Arranger and Holdings shall so agree. Lead Arranger intends and reserves the right, both prior to and after the Closing Date,
to syndicate all or a portion of its commitment hereunder to Lenders. The parties agree that syndication shall be as set forth
in Annex A to this Commitment Letter. The syndication of the Credit Facility is not a condition to the closing of the Credit Facility.
No syndication of the Credit Facility by Lead Arranger shall release Wells Fargo from the portion of its commitment hereunder so
syndicated prior to the funding on the Closing Date, unless Holdings agrees in writing.
3.
Expenses and Indemnification. Holdings agrees (a) to pay or reimburse all reasonable and documented out-of-pocket
fees, costs and expenses incurred by Wells Fargo and its affiliates in connection with their due diligence, approval, documentation,
syndication and closing of the Credit Facility, whether incurred before or after the date hereof (collectively, the “Expenses”),
including the preparation and negotiation of this Commitment Letter (including any amendment or modification hereto), and including
reasonable attorneys’ fees and legal expenses (provided, that, legal fees shall be limited to the reasonable fees and disbursements
of one counsel for Wells Fargo and in addition, one local counsel for Wells Fargo in any other appropriate jurisdiction), appraisal
fees, expenses related to Patriot Act compliance and background checks, ERS set-up fees, filing and search charges, recording taxes
and field examination expenses (and including, in addition, a per diem charge per person per day not to exceed $1,000 per person
per day for examinations, plus reasonable and documented out-of-pocket expenses for the field examiners of Wells Fargo in the field
and in the office, including travel, hotel and all other reasonable and documented out-of-pocket expenses) and the enforcement
of any of the rights and remedies of Wells Fargo under this Commitment Letter, in each case regardless of whether the Credit Facility
is closed and (b) to indemnify, defend, and hold harmless Wells Fargo, each of its affiliates, and each of their officers, directors,
employees, agents, advisors and other representatives (each, an “Indemnified Person”) as set forth on Annex B hereto.
All Expenses are to be paid to Wells Fargo on the Closing Date or otherwise upon demand.
4.
Fees. As consideration for the commitments and agreements of Wells Fargo hereunder, if the Closing Date occurs Holdings
agrees to pay the fees described in the Term Sheet and the Fee Letter on the Closing Date on the terms and subject to the conditions
set forth therein. The terms of the Fee Letter are an integral part of Wells Fargo’s commitment and other obligations hereunder.
Each of the fees described herein and in the Fee Letter shall be nonrefundable when paid except as expressly set forth therein.
5.
Conditions. The commitment of Wells Fargo under this Commitment Letter to enter into the Credit Facility and make
the initial Revolving Loans and provide Letters of Credit contemplated thereunder is subject solely to the satisfaction of each
condition set forth in this Section 5 and in Exhibit C to this Commitment Letter.
Notwithstanding anything in this Commitment
Letter, the Fee Letter, the Loan Documents or any other letter agreement or other undertaking concerning the financing of the transactions
contemplated hereby to the contrary, (a) the only representations and warranties the accuracy of which shall be a condition to
the availability and initial funding of the Credit Facility on the Closing Date shall be (i) such of the representations made by
or on behalf of the Target, its subsidiaries or their respective businesses in the Acquisition Agreement as are material to the
interests of the Lenders, but only to the extent that Holdings or its applicable affiliates have the right, pursuant to the Acquisition
Agreement, to terminate its (or their) obligations under the Acquisition Agreement or to decline to consummate the Acquisition
as a result of a breach of such representations and warranties in the Acquisition Agreement (to such extent, the “Acquisition
Agreement Representations”) and (ii) the Specified Representations (as defined below), (b) the terms of the Loan Documents
shall be in a form such that they do not impair the availability of the Credit Facility on the Closing Date if the conditions set
forth on Exhibit C hereto are satisfied; provided that, to the extent any security interest in any Collateral is not or cannot
be provided and/or perfected on the Closing Date (other than the pledge (and delivery in the case of the immediately following
clause (1)) and perfection of the security interests (1) in the certificated equity securities of OpCo and the direct and indirect
subsidiaries of OpoCo Holdco (to the extent constituting Collateral (provided that in the case of such certificated equity securities
of Target and its subsidiaries, such certificated equity securities will be required to be delivered on the Closing Date only to
the extent received from the Target after Holdings’ use of commercially reasonable efforts to do so)) and (2) in other assets
with respect to which a lien may be perfected solely by the filing of a financing statement under the Uniform Commercial Code or
the Personal Property Security Act or filings under other applicable non-US law) after Holdings’ use of commercially reasonable
efforts to do so, then the provision and/or perfection of a security interest in such Collateral shall not constitute a condition
precedent to the availability of the Credit Facility on the Closing Date, but instead shall be required to be delivered, or a security
interest therein perfected, after the Closing Date pursuant to arrangements and timing to be mutually agreed by Agent and Holdings
acting reasonably but in any event not more than 90 days after the Closing Date (as such period may be extended by the Agent in
its sole discretion)) and (c) the only conditions (express or implied) to the availability of the Credit Facility on the Closing
Date are those expressly set forth under the caption “Conditions Precedent” in the Term Sheet and on Exhibit C hereto.
For purposes hereof, “Specified Representations” means the representations and warranties set forth in the Loan Documents
relating to: organizational existence of the Loan Parties; corporate organizational power and authority (as it relates to due authorization,
execution, delivery and performance of the Loan Documents) of the Loan Parties; due authorization, execution and delivery of the
relevant Loan Documents by the Loan Parties, and enforceability, in each case, as it relates to the entering into and performance
of the relevant Loan Documents against the Loan Parties; solvency as of the Closing Date (after giving effect to the Transactions)
of Holdings and its subsidiaries taken as a whole (in form and scope consistent with the solvency certificate to be delivered pursuant
to Annex I of Exhibit C hereto); no conflicts of the Loan Documents with the charter documents of the Loan Parties; no material
violation of or conflict with laws; Federal Reserve margin regulations; the Investment Company Act; the PATRIOT Act; compliance
with anti-terrorism, no violation of anti-bribery and anti-money-laundering laws and regulations; the use of proceeds of the Credit
Facility not violating laws applicable to sanctioned persons and not violating laws and regulations promulgated by OFAC and FCPA;
and the creation, validity, perfection and priority (subject to customary permitted liens) of security interests (subject to the
foregoing provisions of this paragraph). This paragraph, and the provisions contained herein, shall be referred to as the “Certain
Funds Provision”.
6.
Confidentiality. Holdings agrees that this Commitment Letter (including the Term Sheet) and the Fee Letter is for
its confidential use only and that neither its existence, nor the terms hereof, will be disclosed by it to any person without the
prior consent of Lead Arranger, other than (a) to its attorneys, financial advisors and accountants, (b) to Sponsor and its attorneys,
financial advisors and accountants, and (c) with respect to the Commitment Letter (and the Fee Letter, to the extent portions thereof
have been redacted in a manner satisfactory to the Lead Arranger in its sole discretion), the Sellers and Target and their respective
board of directors and their attorneys, financial advisors and accountants in connection with the Acquisition, in each case who
need to know the terms hereof, and as to the Sellers and Target and their respective attorneys, financial advisors and accountants
subject to confidentiality provisions similar to those provided for herein. In addition, following the acceptance by Holdings of
this Commitment Letter in accordance herewith and the return of an executed counterpart of this Commitment Letter by Holdings to
Wells Fargo, Holdings may file or make such other public disclosures of the terms and conditions hereof as it is required by law,
in the opinion of its counsel, to make. After prior written notice to the Lead Arranger with such information with respect thereto
as the Lead Arranger may request, Holdings may also disclose the aggregate amount of fees payable under the Fee Letter and the
Term Sheet as part of projections, pro forma information or a generic disclosure regarding sources and uses (but without disclosing
any specific fees set forth therein) in connection with any public filing relating to the Transactions.
Wells Fargo agrees that material, non-public
information regarding the Target, its operations, assets, and existing and contemplated business plans shall be treated by Wells
Fargo in a confidential manner, and shall not be disclosed by it to persons who are not parties to this Commitment Letter, except:
(i) to its officers, directors, employees, attorneys, advisors, accountants, auditors, and consultants to Wells Fargo on a “need
to know” basis in connection with the Transactions and on a confidential basis, (ii) to subsidiaries and affiliates of Wells
Fargo, provided that any such subsidiary or affiliate shall have agreed to receive such information hereunder subject to the terms
of this paragraph, (iii) to regulatory authorities with jurisdiction over Wells Fargo and its affiliates, (iv) as may be required
by statute, decision, or judicial or administrative order, rule, or regulation, provided that prior to any disclosure under this
clause (iv), the disclosing party agrees to provide Holdings with prior notice thereof, to the extent that it is reasonably practicable
to do so and to the extent that the disclosing party is permitted to provide such prior notice to Holdings pursuant to the terms
of the applicable statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to by Holdings,
(vi) as requested or required by any governmental authority pursuant to any subpoena or other legal process, provided that prior
to any disclosure under this clause (vi) the disclosing party agrees to provide Holdings with prior notice thereof, to the extent,
and for such period of time, that it is reasonably practicable to do so and to the extent that the disclosing party is permitted
to provide such prior notice to Holdings pursuant to the terms of the subpoena or other legal process, (vii) as to any such information
that is or becomes generally available to the public (other than as a result of prohibited disclosure by Wells Fargo), (viii) in
connection with any proposed assignment or participation of Wells Fargo’s interest in the Credit Facility, provided that
any such proposed assignee or participant shall have agreed to receive such information subject to the terms of this Section 6,
(ix) to the extent that such information was already in the possession of Wells Fargo or its affiliates or is independently developed
by it or them, (x) to the extent that such information was received by Wells Fargo from a third party, that is not, to its knowledge,
subject to confidentiality obligations owing to Holdings or its subsidiaries and (xi) in connection with any litigation or other
adverse proceeding involving parties to this Commitment Letter or the Fee Letter. Wells Fargo’s obligations under this paragraph
shall automatically terminate and be superseded by the confidentiality provisions in the Loan Documents upon the execution and
delivery thereof and in any event shall terminate on the date that is the second anniversary of the date of this Commitment Letter.
Nothing in this Section 6 shall apply to any information received by Wells Fargo or its affiliates pursuant to its relationship
as an agent, lender or issuing bank, as the case may be, under the existing credit agreement of Wells Fargo with the Target (which
information will be subject to the applicable terms of such agreement).
Notwithstanding anything to the contrary
in this Commitment Letter, (i) Holdings agrees that the Projections and all other information provided by or on behalf of Holdings
or Sponsor and its affiliates (including the Target and its subsidiaries) to Wells Fargo regarding Holdings, Sponsor or their respective
affiliates (including the Target and its subsidiaries), and the Transactions may be disseminated by or on behalf of Wells Fargo
to prospective Lenders and other persons, who have agreed to be bound by customary confidentiality undertakings (including, “click-through”
agreements), all in accordance with Wells Fargo’s standard loan syndication practices (whether transmitted electronically
by means of a website, e-mail or otherwise, or made available orally or in writing, including at potential lender or other meetings)
and (ii) Holdings agrees that Wells Fargo may share with its affiliates any information relating to the Credit Facility or Holdings,
Sponsor, or their affiliates (including the Target and its subsidiaries) and may disclose information relating to the Credit Facility
to Gold Sheets and other publications or for its marketing materials, with such information to consist of deal terms and other
information customarily found in such publications or marketing materials and otherwise use the corporate name and logo of Holdings,
Sponsor or the Target or its subsidiaries in “tombstones” or other advertisements, marketing materials or public statements.
7.
Information. Holdings hereby represents and warrants that (to its knowledge with respect to the Target and its subsidiaries),
but the accuracy of such representation shall not be a condition to the commitments hereunder or the funding of the Credit Facility
on the Closing Date unless the inaccuracy results in a condition set forth in the Section 5 of this Commitment Letter otherwise
not having been satisfied, (a) all written information concerning Holdings and its subsidiaries and the Target and its subsidiaries,
other than financial estimates, forecasts and other forward looking information (the “Projections”) and information
of a general economic or industry-specific nature, that has been or will be made available to Wells Fargo or any prospective Lender
by Holdings, the Sponsor, the Target or any of their respective representatives on Holdings’ behalf in connection with the
transactions contemplated hereby (the “Information”), when taken as a whole, does not or will not, when furnished,
contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all
written supplements and updates thereto from time to time), and (b) the Projections have been or will be prepared in good faith
based upon assumptions believed by Holdings to be reasonable at the time delivered by Holdings to Wells Fargo or such prospective
Lender (it being recognized by Wells Fargo that such Projections are not to be viewed as facts and are subject to significant uncertainties
and contingencies many of which are beyond Holdings’ control, that no assurance can be given that any particular financial
projections will be realized, that actual results may differ from projected results, and that such differences may be material).
Holdings agrees that if, at any time prior to the later of (i) the Closing Date or (ii) completion of a Successful Syndication
(as defined in the Fee Letter), it becomes aware that any of the representations in the preceding sentence would be incorrect in
any material respect if the Information or the Projections were being furnished and such representations were being made at such
time, Holdings will (or with respect to Information and Projections concerning the Target and its subsidiaries, Holdings will,
subject to the limitations set forth in the Acquisition Agreement, use commercially reasonable efforts to) promptly supplement
the Information and the Projections so that (to Holdings’ knowledge with respect to the Target and its subsidiaries) the
representations in the preceding sentence remain true in all material respects. Holdings agrees to furnish (using commercially
reasonable efforts with respect to the Target and its subsidiaries) to Wells Fargo such Information and Projections as it may reasonably
request and to supplement the Information and the Projections from time to time. In arranging and syndicating the Credit Facility,
the Lead Arranger and Lenders will be using and relying on the Information and the Projections without independent verification
thereof; provided, that, the accuracy of any of the foregoing representations, whether or not cured, shall not be a condition to
the obligation of Wells Fargo or the funding of the Credit Facilities hereunder unless the inaccuracy results in an express condition
hereunder otherwise not having been satisfied.
8.
Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities, Etc. Holdings acknowledges that Wells
Fargo or one or more of its affiliates may be providing debt financing, equity capital or other services (including financial advisory
services) to other companies in respect of which Holdings, Sponsor or their respective affiliates (including the Target and its
subsidiaries) may have conflicting interests regarding the transactions described herein or otherwise. Holdings also acknowledges
that Wells Fargo does not have any obligation to use, or to furnish to Holdings or Sponsor, confidential information obtained by
it from other companies in connection with the transactions contemplated by this Commitment Letter, including the Target.
Holdings further acknowledges and agrees
that (a) no fiduciary, advisory or agency relationship between Holdings or Sponsor, on the one hand, and Wells Fargo or any of
its affiliates, on the other hand, is intended to be or has been created in respect of any of the transactions contemplated by
this Commitment Letter, irrespective of whether Wells Fargo or one or more of its affiliates has advised or is advising Sponsor
on other matters, (b) Wells Fargo and its affiliates, on the one hand, and Holdings or Sponsor, on the other hand, have an arms-length
business relationship that does not directly or indirectly give rise to, nor does Holdings or Sponsor rely on, any fiduciary duty
on the part of Wells Fargo or its affiliates, (c) Holdings is capable of evaluating and understanding, and Holdings understands
and accepts, the terms, risks and conditions of the transactions contemplated by this Commitment Letter, (d) Holdings has been
advised that Wells Fargo or one or more of its affiliates is engaged in a broad range of transactions that may involve interests
that differ from its interests and that Wells Fargo and such affiliates do not have any obligation to disclose such interests and
transactions to it by virtue of any fiduciary, advisory or agency relationship, and (e) Holdings, for itself and Sponsor, waives,
to the fullest extent permitted by law, any claims it may have against Wells Fargo or its affiliates for breach of fiduciary duty
or alleged breach of fiduciary duty and agrees that Wells Fargo and its affiliates shall not have any liability (whether direct
or indirect) to it in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or
in right of Holdings, including its shareholders, employees or creditors.
Holdings further acknowledges that one or
more of the affiliates of Wells Fargo are full service securities firm engaged in securities trading and brokerage activities as
well as providing investment banking and other financial services. In the ordinary course of business, Wells Fargo or one or more
of its affiliates may provide investment banking and other financial services to, and/or acquire, hold or sell, for their respective
own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and
other obligations) of, Holdings or Sponsor, and other companies with which Holdings or Sponsor may have commercial or other relationships.
With respect to any debt or other securities and/or financial instruments so held by Wells Fargo or one or more of its affiliates
or any of their respective customers, all rights in respect of such securities and financial instruments, including any voting
rights, will be exercised by the holder of the rights, in its sole discretion.
Each of the parties hereto agrees that (i)
this Commitment Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity
(whether considered in a proceeding in equity or law)) with respect to the subject matter contained herein, including an agreement
to negotiate in good faith the Loan Documents by the parties hereto in a manner consistent with this Commitment Letter, and (ii)
the Fee Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity
(whether considered in a proceeding in equity or law)) of the parties thereto with respect to the subject matter set forth therein.
9.
Acceptance and Termination. This Commitment Letter will be of no force and effect unless executed by Wells Fargo
and a counterpart hereof is accepted and agreed to by Holdings and, as so accepted and agreed to, received by Wells Fargo by 11:59
p.m. (Eastern time) on June 15, 2018, together with the Fee Letter as duly authorized, executed and delivered by Holdings. The
commitment of Wells Fargo under this Commitment Letter, if timely accepted and agreed to by Holdings, will terminate upon the earliest
of (i) as of the close of business on December 15, 2018 unless the Closing Date occurs on or prior thereto, (ii) the closing of
the Acquisition without the closing of the Credit Facility, or (iii) the termination of the Acquisition Agreement.
10.
Patriot Act. Wells Fargo hereby notifies notify Holdings that pursuant to the requirements of the USA PATRIOT Act,
Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “USA Patriot Act”), Wells Fargo may be required
to obtain, verify and record information that identifies the Loan Parties (as defined in the Term Sheet), which information includes
the name, address, tax identification number and other information regarding the Loan Parties that will allow Wells Fargo and other
Lenders to identify the Loan Parties in accordance with the USA Patriot Act. This notice is given in accordance with the requirements
of the USA Patriot Act and is effective as to each Lender.
11.
Entire Agreement. This Commitment Letter contains the entire commitment of the Wells Fargo for this transaction and,
upon acceptance by Holdings, supersedes all prior proposals, commitment letter, negotiations, discussions and correspondence. This
Commitment Letter may not be contradicted by evidence of any alleged oral agreement. No party has been authorized by Wells Fargo
to make any oral or written statements inconsistent with this Commitment Letter. This Commitment Letter is addressed solely to
Holdings and is not intended to confer any obligations to or on, or benefits to or on, any third party (other than the Indemnified
Persons).
12.
Surviving Provisions. The expense and indemnification, sharing information; absence of fiduciary relationship; affiliate
transactions, confidentiality, jurisdiction, governing law and waiver of jury trial provisions contained herein shall remain in
full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding
the termination or expiration of this Commitment Letter or termination of the commitments of Wells Fargo described herein; provided,
that, upon the execution and effectiveness of such definitive financing documentation, to the extent subject to provisions of such
financing documentation, the provisions hereof with respect to expense, indemnification and confidentiality shall be superseded
thereby.
13.
Counterparts. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original,
and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment
Letter by facsimile transmission or other electronic means (including an email with a “pdf”) shall be effective as
delivery of a manually executed counterpart hereof.
14.
Assignment; Governing Law. This Commitment Letter may not be assigned by Holdings without the prior written consent
of Wells Fargo and may not be amended, waived or modified, except in writing signed by Wells Fargo and Holdings. This Commitment
Letter is governed by and construed in accordance with the laws of the State of New York, but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any jurisdiction other than the State of New York.
15.
JURY TRIAL WAIVER. WELLS FARGO AND HOLDINGS EACH WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR IN ANY WAY RELATING TO THIS COMMITMENT LETTER OR THE TRANSACTIONS REFERRED TO IN THIS COMMITMENT LETTER.
Signature Page to Follow
If Holdings accepts and agrees to the foregoing,
please so indicate by executing and returning the enclosed copy of this letter to Wells Fargo, together with the Fee Letter. We
look forward to continuing to work with you to complete this transaction.
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Very truly yours, |
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WELLS FARGO BANK, NATIONAL ASSOCIATION |
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By: |
/s/ Peter Shin |
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Name: |
Peter Shin |
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Title: |
Authorized Signatory |
Signatures Continue on Next Page
[signature page for commitment letter]
Accepted on this 15th day
of June, 2018: |
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FELDENKREIS HOLDINGS LLC |
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By: |
/s/ George Feldenkreis |
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Name: |
George Feldenkreis |
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Title: |
Owner |
[signature page for commitment letter]
ANNEX A
Syndication Provisions
While Wells Fargo has provided a commitment
for the entire amount of the Credit Facility, subject to the terms and conditions of this Commitment Letter (including the Term
Sheet) and the Fee Letter, it is understood and agreed that prior to and/or after the execution of the Loan Documents, the Lead
Arranger may syndicate all or a portion of Wells Fargo’s commitments with respect to the Credit Facility to other Lenders;
provided, that, any assignment made prior to the Closing Date shall not relieve Wells Fargo of its obligations hereunder
to the extent that an assignee breaches its obligation to fund its ratable share of the drawings under the Credit Facility on the
Closing Date, provided, further, that the syndication of all or part of the commitments is not a condition to the obligations of
Wells Fargo or the funding of the Credit Facility hereunder. Notwithstanding the foregoing, the Lead Arranger will not syndicate
to (i) those banks, financial institutions and other institutional lenders and investors that have been separately identified in
writing by Holdings (or Sponsor) to Lead Arranger prior to the date of the Commitment Letter, (ii) those operating companies that
are competitors of the Target that are separately identified in writing by Holdings (or Sponsor) to Lead Arranger prior to the
date of the Commitment Letter or, with reasonable consent of Agent, by a Borrower from time to time after the Closing Date, and
(iii) in the case of each of clauses (i) and (ii), any of their affiliates that are identified in writing by Holdings to Lead Arranger
prior to the date of any commitment letter (such parties described in clauses (i), (ii) or (iii) being “Disqualified Lenders”).
Lead Arranger will be entitled to manage
all aspects of any syndication of the Credit Facility, including decisions as to the selection of prospective lenders to be approached
and included, the timing of all offers to prospective lenders, the amount offered, the allocation and acceptance of prospective
commitments, the amount of compensation payable to prospective lenders, and any titles to be awarded to such prospective lenders,
subject to the terms of Section 2 of the Commitment Letter. Holdings agrees that no Lender will receive any compensation for its
participation in the Credit Facility except as expressly agreed to and offered by the Lead Arranger.
Until the earlier of 30 days after the Closing
Date and a Successful Syndication (as defined in the Fee Letter), Holdings agrees to cooperate, and to cause Sponsor to cooperate,
in such syndication process and use commercially reasonable efforts to assist the Lead Arranger in completing a Successful Syndication.
To assist the Lead Arranger in its syndication efforts, without limiting the foregoing, Holdings and Sponsor agree, upon the reasonable
request of the Lead Arranger, to:
(a) make senior management and representatives
of Holdings and Sponsor, and using commercially reasonable efforts, management and representatives of Target and its subsidiaries,
if requested, available to participate in meetings and to provide information to prospective lenders in a timely manner at such
times and places as Lead Arranger may reasonably request,
(b) use commercially reasonable efforts
to ensure that the syndication efforts of the Lead Arranger benefits from the existing lending relationships of Holdings, Sponsor
and the Target,
(c) at the expense of Holdings, host, with
the Lead Arranger, one meeting of prospective lenders, and, in connection with any such lender meeting (a “Lender Meeting”),
consulting with the Lead Arranger with respect to the presentations to be made at any such Lender Meeting, and making available
appropriate officers and other representatives of Holdings and Sponsor (and using commercially reasonable efforts, senior management
and representatives of the Target and its subsidiaries) to attend and participate, and rehearsing such presentations prior to such
Lender Meetings, as reasonably requested by Lead Arranger, and
(d) promptly prepare and provide (and to
use its commercially reasonable efforts to cause Target to assist in the preparing and providing) to Lead Arranger such information
with respect to Holdings and its subsidiaries (including Target and its subsidiaries) and the Transactions as Lead Arranger may
reasonably request in connection with the preparation of a customary confidential information memorandum and lender presentation
that includes information with respect to Holdings and its subsidiaries (including Target and its subsidiaries)and the Transactions
as Lead Arranger may reasonably request, including the Projections (the “Marketing Materials”), and a version of the
Marketing Materials (the “Public Information Materials”) that does not contain Projections or other material non-public
information concerning the Target and its subsidiaries or its securities for purposes of the United States federal and state securities
laws (“Material Non-Public Information”).
Holdings understands that in arranging and
syndicating the Credit Facility, Lead Arranger may use and rely on the Marketing Materials without independent verification thereof.
Until the earlier of 30 days after the Closing Date and a Successful Syndication, Holdings and Sponsor will promptly notify the
Lead Arranger of any changes in circumstances that could be expected to call into question the continued reasonableness of any
assumption underlying the Projections and agrees to update the Marketing Materials as may be reasonably requested by Lead Arranger.
Before distribution of any Marketing Materials
(a) to prospective lenders that do not wish to receive Material Non-Public Information concerning Holdings and its subsidiaries
(including the Target and its subsidiaries) or their securities (such lenders, “Public Lenders;” all other lenders,
“Private Lenders”), Holdings agrees to provide the Lead Arranger with a customary letter authorizing the dissemination
of the Public Information Materials and confirming the absence of Material Non-Public Information therein and (b) to prospective
Private Lenders, Holdings agrees to provide Lead Arranger with a customary letter authorizing the dissemination of those materials.
In addition, at the request of Lead Arranger, Holdings will identify Public Information Materials by clearly and conspicuously
marking the same as “PUBLIC.” Holdings agrees that the Lead Arranger may distribute the following documents to all
prospective lenders, unless Holdings advises the Lead Arranger in writing (including by email) within a reasonable time prior to
their intended distributions that such material should only be distributed to prospective Private Lenders: (i) administrative materials
for prospective lenders such as lender meeting invitations and funding and closing memoranda, and (ii) other materials intended
for prospective lenders after the initial distribution of the Marketing Materials, including drafts and final versions of the definitive
documentation for the Credit Facility. If Holdings advises the Lead Arranger that any of the foregoing items should be distributed
only to Private Lenders, then the Lead Arranger agrees not to distribute such materials to Public Lenders without Holdings prior
written consent (including by email), not to be unreasonably withheld.
To ensure an orderly and effective syndication
of the Credit Facility, Holdings agrees that:
(a) from the date hereof until the earlier
of the completion of a Successful Syndication and 30 days following the Closing Date, Holdings will not, and will not permit any
of its affiliates to, and will use commercially reasonable efforts to cause the Target and its subsidiaries agree not to, syndicate
or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in
discussions concerning the syndication or issuance of, any debt facility, or debt or preferred equity security of Holdings or any
of its subsidiaries, including the Target and its subsidiaries (other than the syndication of the Credit Facility, the IPCo First
Lien Facility, the IPCo Second Lien Facility or the Mortgage Facility), including any renewals or refinancings of any existing
debt facility, without the prior written consent of the Lead Arranger, provided, that, the foregoing shall not apply to (i) purchase
money financing of equipment, (ii) borrowings under existing credit facilities, and (iii) other immaterial ordinary course indebtedness,
and
(b) The Lead Arranger shall have a period
(the “Marketing Period”) of at least 20 consecutive business days following Lead Arranger’s receipt from the
Sponsor of its final approval of the Marketing Materials (which date shall be deemed to be the earlier of July 9, 2018 or the date
Lead Arranger receives such approval from the Sponsor) to syndicate the Credit Facility, provided, that, for purposes of determining
the Marketing Period, such 20 consecutive business day period shall not be required to be consecutive to the extent it would include
July 3, 2018 through and including July 8, 2018 , or August 27, 2018 through and including September 4, 2018, or November 21, 2018
through and including November 26, 2018, in each case which dates shall not count for purposes of satisfying the 20 consecutive
business day requirement.
ANNEX B
Indemnification Provisions
To the fullest extent permitted by applicable
law, Holdings (the “Indemnifying Person”) agrees that it will indemnify, defend, and hold harmless each of the Indemnified
Persons from and against (i) any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements and (ii) any and all actions, suits, proceedings and investigations in respect thereof, and (iii) any
and all legal costs (provided, that, the obligations to reimburse any Indemnified Person for legal fees and expenses shall be limited
to reasonable legal fees and expenses of one firm of counsel for all such Indemnified Persons and if necessary, of one local counsel
in each appropriate jurisdiction (and, to the extent required by the subject matter, one specialist counsel for each such specialized
area of law in each appropriate jurisdiction) and in the case of an actual or perceived conflict of interest, one counsel for such
affected Indemnified Person) or other costs, expenses or disbursements in giving testimony or furnishing documents in response
to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating,
preparing or defending any such action, proceeding or investigation (whether or not in connection with litigation in which any
of the Indemnified Persons is a party) and including, without limitation, any and all losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements, resulting from any act or omission of any of the Indemnified
Persons), directly or indirectly, caused by, relating to, based upon, arising out of or in connection with (a) the Transactions
or (b) the Commitment Letter or the Fee Letter; provided, that, such indemnity agreement shall not apply to any portion
of any such loss, claim, damage, obligation, penalty, judgment, award, liability, cost, expense or disbursement of an Indemnified
Person to the extent it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have
resulted directly from (i) the bad faith, gross negligence or willful misconduct of such Indemnified Person or (ii) a breach in
any material respect of material obligations of such Indemnified Person hereunder. These Indemnification Provisions shall be in
addition to any liability which the Indemnifying Person may have to the Indemnified Persons.
If any action, suit, proceeding or investigation
is commenced, as to which any of the Indemnified Persons proposes to demand indemnification, it shall notify the Indemnifying Person
with reasonable promptness; provided, that, any failure by any of the Indemnified Persons to so notify the Indemnifying
Person shall not relieve the Indemnifying Person from its obligations hereunder. Wells Fargo, on behalf of the Indemnified Persons,
shall have the right to retain counsel of its choice to represent the Indemnified Persons, and the Indemnifying Person shall pay
the fees, expenses, and disbursement of such counsel, and such counsel shall, to the extent consistent with its professional responsibilities,
cooperate with the Indemnifying Person and any counsel designated by the Indemnifying Person. The Indemnifying Person shall be
liable for any settlement of any claim against any of the Indemnified Persons made with its written consent, which consent shall
not be unreasonably withheld. Without the prior written consent of the applicable Indemnified Person, the Indemnifying Person shall
not settle or compromise any claim, unless (i) such Indemnified Person and each other Indemnified Person from which such Indemnified
Person could have sought indemnification or contribution has given his, her or its prior written consent or (ii) the settlement,
compromise, consent or termination (A) includes an express unconditional release of all Indemnified Persons and their respective
affiliates from all losses, claims, damages, expenses and liabilities, directly or indirectly, arising out of, relating to, resulting
from or otherwise in connection with such claim, (B) does not include any statements as to or any findings of fault, culpability
or failure to act by or on behalf of any Indemnified Person and (C) is paid by the Indemnifying Person in cash.
In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to these Indemnification Provisions is made but is found by a judgment of
a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case, then the Indemnifying Person, on the one hand, and
the Indemnified Persons, on the other hand, shall contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the Indemnified Persons may be subject in accordance with the relative
benefits received by the Indemnifying Person, on the one hand, and the Indemnified Persons, on the other hand, and also the relative
fault of the Indemnifying Person, on the one hand, and the Indemnified Persons collectively and in the aggregate, on the other
hand, in connection with the statements, acts or omissions which resulted in such losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements and the relevant equitable considerations shall also be considered.
No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any other person who is not also
found liable for such fraudulent misrepresentation. Notwithstanding the foregoing, none of the Indemnified Persons shall be obligated
to contribute any amount hereunder that exceeds the amount of fees previously received by such Indemnified Person pursuant to the
Commitment Letter.
Neither expiration nor termination of the
commitment of Well Fargo under the Commitment Letter or funding or repayment of the loans under the Credit Facility shall affect
these Indemnification Provisions which shall remain operative and continue in full force and effect.
No Indemnified Person shall be liable for
any damages arising from the use by others of Information or other materials obtained through internet, Intralinks, SyndTrak or
other similar transmission systems in connection with the Credit Facility, unless to the extent it is found in a final non-appeable
judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the
gross negligence or willful misconduct of such Indemnified Person. In addition, no Indemnified Person shall be responsible or liable
for special, indirect, consequential, exemplary, incidental or punitive damages which may be alleged as a result of this Commitment
Letter or the Fee Letter and Holdings, on behalf of itself and each of its affiliates, irrevocably and unconditionally waives any
right to seek any equitable remedies (including, without limitation, specific performance) for any damages that may be alleged
as a result of any breach, or as a result, of this Commitment Letter or any element of the transactions contemplated hereby.
CONFIDENTIAL
EXHIBIT A
Wells Fargo Bank,
National Association
FELDENKREIS HOLDINGS
LLC
Transaction
Description
June 15, 2018
Capitalized terms used but not defined in
this Exhibit A shall have the meanings set forth in the Commitment Letter or the other Exhibits and Annexes thereto.
George Feldenkreis (the “Sponsor”)
together with certain existing shareholders of the Target and members of management of the Target (as defined below) and its subsidiaries,
including the Family (as defined in clause (i) below), Oscar Feldenkreis, Feldenkreis Family Foundation, Inc. and any other trust
exclusively for members of the Family (the entities described in such inclusion clause, together with Sponsor, collectively, the
“Sponsor-Related Investors,” and together with any other such shareholders of the Target or members of management of
the Target and its subsidiaries, collectively, the “Investors”) intend, directly or indirectly, to acquire (the “Acquisition”)
Perry Ellis International, Inc. (the “Target”), all as set forth in the Agreement and Plan of Merger, dated as of June
15, 2018 by and among Holdings, Merger Sub and Target (together with the exhibits and disclosure schedules, the “Acquisition
Agreement”). In connection therewith:
(a) Feldenkreis Holdings LLC (“Holdings”),
a newly formed Delaware limited liability company subsidiary controlled by the Sponsor, and GF Merger Sub, Inc. (“Merger
Sub”), a newly formed Florida corporation that is a direct subsidiary of Holdings, will enter into the Acquisition Agreement
with the Target, pursuant to which Holdings will acquire, directly or indirectly, 100% of the outstanding capital stock of the
Target by way of the merger of Merger Sub with and into Target with the Target surviving such merger (the “Merger”)
and public shareholders of the Target will receive cash consideration;
(b) prior to the consummation of the Merger,
the Sponsor will contribute all of its equity interests in the Target to Holdings such that Holdings shall hold 100% of the equity
interests in Target following the consummation of the Merger and contribution of Sponsor’s equity interests to Holdings;
(c) the Investors (or in the case of the
Sponsor, the Merger Sub) will retain, roll over or convert their existing shares of Target (and in the case of the Sponsor-Related
Investors, all of their existing shares of Target other than any shares valued as of the Closing Date to be an equivalent amount
equal to approximately $3,500,000 held by Feldenkreis Family Foundation, Inc.) such that such shares will constitute an aggregate
amount of not less than 15.5% of the total consolidated pro forma debt and equity of Holdings and its subsidiaries on the Closing
Date after giving effect to the Transactions (the “Rolled Equity Contribution”); provided, that, on the Closing Date,
after giving effect to the Transactions, no shareholder (or affiliated group of shareholders) shall own a greater percentage of
the equity of Target and its subsidiaries than the percentage directly or indirectly owned by the Sponsor;
(d) (i)
the Borrowers (as defined below) will obtain a $275 million senior secured revolving credit facility (the “Credit Facility”)
on the terms set forth in Exhibit B,
(ii) IPCo (as defined below) will obtain (A)
a senior secured first lien term loan facility in the amount of not less than $140,000,000 and on terms and pursuant to agreements
consistent with the term sheet issued by Fortress Credit Advisors dated June 15, 2018 with respect thereto and received by Lead
Arranger on the date of the Commitment Letter (the “IPCo First Lien Facility”) and (B) a senior secured second lien
term loan facility in the amount of not less than $95,000,000 and on terms and pursuant to agreements consistent with the term
sheet issued by Fortress Credit Advisors dated June 15, 2018 with respect thereto and received by Lead Arranger on the date of
the Commitment Letter (the “IPCo Second Lien Facility”); and
(iii) Real Estate Co (as defined below) will
obtain a senior secured bridge term loan facility or other mortgage financing in an amount of not less than $47,000,000 (the “Mortgage
Facility” and together with the IPCo First Lien Facility and the IPCo Second Lien Facility, collectively, the “IPCo
Credit Facilities”) and;
(e) substantially concurrently with
the consummation of the Acquisition, all existing third party debt for borrowed money of the Target and its subsidiaries under
(i) that certain Amended and Restated Loan and Security Agreement, dated as of December 2, 2011 (the “Existing ABL Credit
Agreement”), by and among the Target, Wells Fargo Bank, National Association, Bank of America, N.A., the lenders from time
to time party thereto, and the other borrowers and guarantors party thereto, as amended from time to time, and (ii) (A) that certain
Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement, Notice of Future Advance and Extension Agreement,
dated as of November 22, 2016, by Supreme Realty, LLC, in favor of Mercantil Commercebank, N.A., recorded November 29, 2016 in
Miami-Dade County as CFN 20160682044 and (B) that certain Amended and Restated Mortgage and Security Agreement, Assignment of Rents
and Leases, Notice of Future Advance and Extension Agreement, dated as of November 22, 2016, by Tampa DC, LLC, in favor of Mercantil
Commercebank, N.A., recorded November 30, 2016 in Hillsborough County as Instrument No. 2016466596, in each case, will be repaid,
redeemed, defeased, discharged, refinanced or terminated (the “Refinancing”); it being understood and agreed that the
following indebtedness shall be permitted to remain outstanding: (i) indebtedness permitted to be incurred under the Acquisition
Agreement prior to the Closing Date (other than in respect of the loan facilities that are required to be terminated), (ii) ordinary
course capital leases, purchase money indebtedness, equipment financings, letters of credit, and surety bonds, and (iii) certain
other indebtedness that Holdings and the Lead Arranger reasonably agree may remain outstanding after the Closing Date;
(f) prior to the consummation of the Acquisition,
(i)
Merger Sub shall form a new Delaware limited liability company that is a passive holding company (“Super HoldCo”)
that will be the direct parent company of the IPCo Silo (as defined below), the OpCo Silo (as defined below) and the Real Estate
Co Silo (as defined below), the sole business of which is to hold all of the equity interests of IPCo Holdco (as defined below),
OpCo Holdco (as defined below) and Real Estate Holdco (as defined below).
(ii)
Super Holdco shall form a new Delaware limited liability company that is a passive holding company (“IPCo HoldCo”)
that will be the direct parent company of IPCo (as defined below), the sole business of which is to hold all of the equity interests
of IPCo,
(iii)
Super Holdco shall form a new Delaware limited liability company that is a passive holding company (“OPCo HoldCo”)
that will be the direct parent company of OpCo (as defined below), the sole business of which is to hold all of the equity interests
of OpCo,
(iv)
Super Holdco shall form a new Delaware limited liability company that is a passive holding company (“Real Estate HoldCo”)
that will be the direct parent company of Real Estate Co (as defined below), the sole business of which is to hold all of the equity
interests of Real Estate Co,
(v)
IPCo HoldCo shall form a new Delaware limited liability company that is an intellectual property holding company (“IPCo”),
the sole business of which will be to, directly or indirectly, hold all of the owned or registered (or applications for registration
of) of intellectual property assets and rights (and any rights related thereto) of Target and its subsidiaries (including equity
of entities that hold any such owned or registered (or applications for registration of) intellectual property assets and rights
(and any rights related thereto)), but excluding any rights under inbound licenses) (collectively, the “IP Assets”),
(vi)
OpCo HoldCo shall form a new Delaware limited liability company (“OpCo”), the sole business of which will be
to, directly or directly, hold all of the operating assets and operating business of Target and its subsidiaries (including equity
of entities that hold any such operating assets or operating business), but excluding the IP Assets or any Real Estate Assets (as
defined below) of Target and its subsidiaries described in the immediately succeeding clause (f)(vii) (collectively, the “Operating
Assets”), and
(vii)
Real Estate Holdco shall form a new Delaware limited liability company that is a real estate holding company (“Real
Estate Co”), the sole business of which will be to hold, directly or indirectly, all of the owned real property assets and
rights (and any rights related thereto), of Target and its subsidiaries (including equity of entities that hold any such real estate
assets or rights (and any rights related thereto)) (collectively, the “Real Estate Assets”),
(g) substantially concurrently with, but
immediately following the consummation of the Acquisition, the initial funding under the Credit Facilities described in clause
(d) above:
(i)
the Sponsor shall cause IPCo HoldCo and IPCo to sit in one (1) silo (together with its subsidiaries, the “IPCo Silo”),
OpCo HoldCo and OpCo to sit in a separate and distinct silo (together with its subsidiaries, the “OpCo Silo”) and Real
Estate HoldCo and Real Estate Co to sit in a separate and distinct silo (together with its subsidiaries, the “Real Estate
Co Silo”, each, a “Silo” and collectively, the “Silos”), each of which will be directly wholly-owned
by Super HoldCo and such Super HoldCo shall be a passive holding company following the consummation of the Merger, the Acquisition
and the Reorganization,
(ii)
(A) the Target shall transfer to the IPCo Silo the IP Assets (which transfer may occur by the contribution of Target’s
subsidiaries that hold such IP Assets, including the contribution of PEI Licensing Inc., a Delaware corporation, Perry Ellis International
Group Holdings Limited, a company organized under the laws of Ireland and registered in The Bahamas, and Perry Ellis International
Europe Limited, a company organized under the laws of Ireland), but excluding any liabilities that are not exclusively related
to such IP Assets, provided, that, any such entity that is to be held by the IPCo Silo shall, prior to such transfer, elect to
be (or convert to a form of entity that is) treated as a disregarded entity for U.S. federal income tax purposes and (B) Target
shall transfer to the Real Estate Co Silo the Real Estate Assets (which transfer may occur by the contribution of Target’s
subsidiaries that hold such Real Estate Assets, including the contribution of Perry Ellis Real Estate LLC , a Delaware limited
liability company, Tampa DC, LLC, a Delaware limited liability company, and Supreme Realty LLC, a Florida limited liability company),
but excluding any liabilities that are not exclusively related to such Real Estate Assets,
(iii)
after giving effect to such transfers and any related contributions, the IP Assets (but excluding any liabilities that are
not exclusively related to such IP Assets) shall be held, directly or indirectly by IPCo, and the Real Estate Assets (but excluding
any liabilities that are not exclusively related to such Real Estate Assets) shall be held directly or indirectly by Real Estate
Co,
(iv)
the Target shall transfer the Operating Assets to the OpCo Silo, and after giving effect to such transfers and related contributions,
the Operating Assets shall be held, directly or indirectly, by OpCo,
(v)
the IPCo or its direct or indirect wholly-owned intellectual property subsidiaries shall license any IP Assets to OpCo and
its subsidiaries, which intercompany license shall reflect the terms set forth on Annex 1 to Exhibit B under the section titled
“Specified Terms of IPCO License Agreements” subsection 1 and IPCo shall enter into the license agreement with Agent,
containing the terms set forth on Annex 1 to Exhibit B under the section titled “Specified Terms of IPCO License Agreements”
subsection 2 (all of the transactions described in clause (f) and this clause (g) (including any series of transactions to effectuate
the foregoing transactions described in clause (f) and this clause (g), all of which shall be consummated in a manner and on terms
and conditions reasonably satisfactory to the Agent, the “Reorganization”), provided, however, that Agent’s satisfaction
with any of the foregoing transactions in this clause (g) other than as set forth in section (b) of Exhibit C, shall not be a condition
to the closing of the Credit Facility, and
(vi)
the organizational structure of Super HoldCo and its subsidiaries including the OpCo Silo, the IPCo Silo and the Real Estate
Co Silo after giving pro forma effect to the Reorganization shall be substantially in the form attached hereto as Annex I of Exhibit
A;
(h) substantially concurrently with the
consummation of the Acquisition and the closing of the Credit Facilities, the fees, premiums, expenses and other transaction costs
incurred in connection with the Transactions (the “Transaction Costs”), will be paid; and
(i) the proceeds of the Credit Facility
and the IPCo Credit Facilities will be used to pay the consideration and other amounts owing in connection with the Acquisition
under the Acquisition Agreement, to effect the Refinancing, to pay up to $5,000,000 in aggregate principal amount to the Sponsor
(and members of his family who constitute Investors and their respective affiliates) (collectively, with Sponsor, “Family”
and such $5,000,000 payment, the “Family Distribution”)) on the Closing Date (or, in the case of the Family Distribution,
within two (2) business days thereafter), and to pay all or a portion of the Transaction Costs.
The transactions described above are collectively
referred to as the “Transactions”. For purposes of the Commitment Letter and the Fee Letter, “Closing Date”
shall mean the date of the consummation of the Acquisition and the satisfaction (or waiver by the Lead Arranger) of the relevant
conditions set forth in Section 5 of the Commitment Letter and on Exhibit C and the initial funding of the Credit Facility.
Annex 1
to
EXHIBIT A
Post-Restructuring
Corporate Organization
See next page
![](http://www.sec.gov/Archives/edgar/data/900349/000092189518001968/image_001.jpg)
EXHIBIT B
Wells Fargo Bank, National Association
[OPCO HOLDCO]
$275,000,000 Senior Secured Revolving
Loan Facility
(“Credit Facility”)
Summary of Principal Terms and Conditions
June 15, 2018
This Summary of Principal Terms and Conditions (the “Term
Sheet”) is part of, and subject to the terms and conditions of, the Commitment Letter, dated of even date herewith, by and
among Wells Fargo Bank, National Association (“Wells Fargo”) and Feldenkreis Holdings LLC (“Holdings”).
Capitalized terms used herein and the accompanying annexes shall have the meanings set forth in such Commitment Letter unless otherwise
defined herein.
Borrowers: |
The wholly-owned operating subsidiaries of OpCo Holdco organized under the laws of a jurisdiction in the United States with assets to be included in the Borrowing Base (individually, a “US Borrower” and collectively, “US Borrowers”), the wholly-owned operating subsidiaries of OpCo Holdco organized under the laws of a jurisdiction in Canada with assets to be included in the Borrowing Base (individually, a “Canadian Borrower” and collectively, “Canadian Borrowers”), and the wholly-owned operating subsidiaries of OpCo Holdco organized under the laws of England and Wales with assets to be included in the Borrowing Base (individually, a “UK Borrower” and collectively, “UK Borrowers,” and together with the US Borrowers and Canadian Borrowers, individually, a “Borrower” and collectively, “Borrowers”). All references to Borrowers shall mean such subsidiaries of OpCo Holdco after giving effect to the Acquisition. |
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Guarantors: |
OpCo Holdco and each of OpCo Holdco’s existing and subsequently acquired or organized direct or indirect subsidiaries that are not Borrowers (collectively, the “Guarantors”, and together with Borrowers, individually a “Loan Party” and collectively, “Loan Parties”); provided, that, any subsidiary of OpCo Holdco that is a “controlled foreign corporation” and any operating subsidiary of OpCo Holdco existing or organized or acquired under the laws of a jurisdiction in the United States that has no material assets or material operations other than the equity interests of a “controlled foreign corporation” will not guarantee the obligations of US Borrowers if such guarantee would result in material adverse tax consequences to Target, OpCo Holdco or any other US Loan Party. The Guarantors organized under the laws of a jurisdiction in the United States are referred to individually, as a “US Guarantor” and collectively, “US Guarantors”, and together with US Borrowers, individually, a “US Loan Party” and collectively, “US Loan Parties”. The Guarantors organized under the laws of a jurisdiction in Canada are referred to individually, as a “Canadian Guarantor” and collectively, “Canadian Guarantors”, and together with Canadian Borrowers, individually, a “Canadian Loan Party” and collectively, “Canadian Loan Parties”. The Guarantors organized under the laws of a jurisdiction in the United Kingdom are referred to individually, as a “UK Guarantor” and collectively, “UK Guarantors”, and together with UK Borrowers, individually, a “UK Loan Party” and collectively, “UK Loan Parties”. |
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Lead Arranger and Bookrunner: |
Wells Fargo Bank, National Association (in such capacity, “Lead Arranger”). |
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Administrative and Collateral Agent: |
Wells Fargo Bank, National Association (in such capacity, “Agent”). |
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Lenders: |
Wells Fargo Bank, National Association and such other institutions as may become parties to the Credit Facility as lenders (collectively, “Lenders”), but not including any Disqualified Lenders. |
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Swing Line Lender: |
Wells Fargo Bank, National Association (in such capacity, “Swing Line Lender”). |
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Letter of Credit Issuer: |
Wells Fargo and any other Lender so designated by OpCo Holdco from time to time and reasonably acceptable to Agent that agrees to issue Letters of Credit (in such capacity, each an “Issuing Bank”). In the case of the Canadian Facility, the Issuing Bank may be such bank as Wells Fargo may specify pursuant to its arrangements with such bank. |
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Credit Facility: |
The Credit Facility will consist of:
(a)
a senior secured revolving loan and letter of credit facility provided to US Borrowers of up to the US Loan Limit as defined
below (the “US Facility”); and
(b) a senior secured revolving loan and letter of credit facility provided to Canadian Borrowers of up to the Canadian Loan
Limit as defined below (the “Canadian Facility”); and
(c)
a senior secured revolving loan facility provided to UK Borrowers of up to the UK Loan Limit as defined below (the “UK
Facility”).
The US Facility, the Canadian Facility and the UK Facility are
referred to herein as the “Credit Facility”.
The term “US Loan Limit” as used herein
means $275,000,000 less the then outstanding amounts under the UK Facility and the Canadian Facility the term “Canadian
Loan Limit” as used herein means $12,000,000 and the term “UK Loan Limit” as used herein mean $35,000,000. The
term “Maximum Credit” means the aggregate amount of the commitments of the Lenders in the US Facility, the Canadian
Facility and the UK Facility which will be $275,000,000 as of the Closing Date.
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The revolving loans under the US Facility (“US Loans”)
will be available up to the lesser of the US Borrowing Base or the US Loan Limit (the lesser of such amounts being the “US
Loan Cap”). The revolving loans under the Canadian Facility (“Canadian Loans”) will be available up to the lesser
of the Canadian Borrowing Base or the Canadian Loan Limit (the lesser of such amounts being the “Canadian Loan Cap”).
The revolving loans under the UK Facility (“UK Loans” and together with the US Loans and the Canadian Loans, the “Revolving
Loans”) will be available up to the lesser of the UK Loan Limit or the UK Borrowing Base (the lesser of such amounts, being
the “UK Loan Cap”.) The term “Loan Cap” means the lesser of the aggregate amount of the Borrowing Bases
and the Maximum Credit.
The US Facility will be available in US Dollars. The Canadian
Facility will be available in US Dollars or Canadian Dollars. The UK Facility will be available in US Dollars, Pounds Sterling
and Euros.
“US Dollar Equivalent” shall mean at any time (i)
as to any amount denominated in US Dollars, the amount thereof at such time, and (ii) as to any amount denominated in any currency
other than US Dollars, the equivalent amount in US Dollars calculated by Agent at such time using the Exchange Rate in effect on
the Business Day of determination.
“Exchange Rate” shall mean on any date, as determined
by Agent, the spot selling rate posted by Reuters on its website for the sale of the applicable currency for US Dollars at approximately
11:00 a.m., local time, on such date; provided, that if, for any reason, no such spot rate is being quoted, the spot selling rate
shall be determined by reference to such publicly available service for displaying exchange rates as may be reasonably selected
by Agent, or, in the event no such service is available, such spot selling rate shall instead be the rate reasonably determined
by Agent as the spot rate of exchange in the market where its foreign currency exchange operations in respect of the applicable
currency are then being conducted, at or about 11:00 a.m., local time, on the applicable date for the purchase of the relevant
currency for delivery two business days later.
OpCo will be appointed to act as the agent for Loan Parties
for all purposes of dealing with Agent, Issuing Bank, and Lenders, including requesting Revolving Loans and Letters of Credit
(in such capacity, the “Borrower Representative”).
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Letters of Credit: |
A portion of the Credit Facility will be available for letters
of credit arranged by Agent and issued by Issuing Bank (“Letters of Credit”) in an aggregate amount at any time outstanding
not to exceed $50,000,000. Letters of Credit will reduce the amount of the Revolving Loans available under the applicable Borrowing
Base and the applicable Loan Limit.
Letters of Credit will be issued by the Issuing Bank and each
Lender will purchase an irrevocable and unconditional participation in each Letter of Credit.
If any Lender becomes a “Defaulting Lender”, then
the Letter of Credit exposure of such Defaulting Lender will automatically be reallocated among the non-defaulting Lenders pro
rata in accordance with their commitments under the Credit Facility up to an amount such that the revolving credit exposure of
each such non-defaulting Lender does not exceed its commitments. In the event such reallocation does not fully cover the exposure
of such Defaulting Lender, the Issuing Bank may require the Borrowers to repay (or provide cash collateral for) such “uncovered”
exposure in respect of the Letters of Credit and will have no obligation to provide Letters of Credit to the extent such Letters
of Credit would result in the exposure of the non-defaulting Lenders exceeding their commitments.
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Swing Line Loans: |
A portion of the Credit Facility will be available as swing
line loans (“Swing Line Loans”) with a sublimit on Swing Line Loans to Borrowers outstanding at any time of $25,000,000
(to be allocated to the US Facility, Canadian Facility and UK Facility). Swing Line Loans will reduce the amount of the Revolving
Loans available under the applicable Borrowing Base and the applicable Loan Limit. The term “Revolving Loans” as used
herein includes Swing Line Loans, except as otherwise provided herein.
Swing Line Loans will be made available by Swing Line Lender
and each Lender will purchase an irrevocable and unconditional participation in each Swing Line Loan.
If any Lender becomes a “Defaulting Lender”, then
the swing line exposure of such Defaulting Lender will automatically be reallocated among the non-defaulting Lenders pro rata in
accordance with their commitments under the Credit Facility up to an amount such that the revolving credit exposure of each such
non-defaulting Lender does not exceed its commitments. In the event such reallocation does not fully cover the exposure of such
Defaulting Lender, the Swing Line Lender may require the Borrowers to repay such “uncovered” exposure in respect of
the Swing Line Loans and will have no obligation to make Swing Line Loans to the extent such Swing Line Loans would result in the
non-defaulting Lenders exceeding their commitments.
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Facility Increase: |
After the Closing Date, Borrowers will have the option
to increase the Maximum Credit (each, a “Facility Increase”) so that after giving effect to any such increase the
Maximum Credit will not exceed $350,000,000, provided, that, as to each Facility Increase, each of the following conditions is
satisfied: (a) Borrowers shall deliver to Agent a certificate of each Loan Party dated as of the effective date of such Facility
Increase (the “Increase Effective Date”) signed by a responsible officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to such increase, and (ii) certifying that, before and after
giving effect to such increase, the representations and warranties contained in the Loan Documents are true and correct on and
as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date; (b) Borrowers shall have paid such fees and other compensation
to Lead Arranger as may be agreed; (c) Borrowers shall deliver to Agent and Lenders an opinion or opinions, in form and substance
reasonably satisfactory to Agent, from counsel to Borrowers reasonably satisfactory to Agent and dated the Increase Effective
Date; (d) Borrowers shall have delivered such other instruments, documents and agreements as Agent may have reasonably requested;
(e) as of the Increase Effective Date and after giving effect thereto, no default or event of default exists, (f) each such Facility
Increase shall be in minimum increments of $2,500,000 and shall be allocated to the US Loan Limit, the Canadian Loan Limit or
the UK Loan Limit, (g) there shall be no more than 4 of such increases, (h) no Lender shall be required to provide additional
commitments for such Facility Increase, (i) such Facility Increase shall be subject to obtaining additional commitments of Lenders
(whether existing Lenders or new Lenders), (j) the terms of such Facility Increase shall, at the option of OpCo, either be (i)
the same as for all other Revolving Loans (other than as to fees payable for such additional commitments), or in the form of a
FILO tranche or a term loan based on a borrowing base formula, and (k) Agent shall have received not less than 5 business days
prior written notice of the request prior to the effectiveness of any Facility Increase. |
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In no event shall the fees, interest rate and other
compensation offered or paid in respect of additional commitments or increase in commitments have higher rates than the amounts
paid and payable to the then existing Lenders in respect of their commitments, unless the fees, interest rate and other compensation
payable to the then existing Lenders are increased to the same as those paid in connection with the new or additional commitments,
except for the initial fee payable in respect of the new or additional commitment of a Lender.
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Borrowing Base: |
The Revolving Loans and Letters of Credit shall be provided to the US Borrowers, the Canadian Borrowers and the UK Borrowers subject
to the terms and conditions of the Loan Documents and as to the US Borrowers, availability under the Borrowing Base for the US
Borrowers (the “US Borrowing Base”), as to the Canadian Borrowers, the Borrowing Base for the Canadian Borrowers (the
“Canadian Borrowing Base”) and as to the UK Borrowers, the Borrowing Base for the UK Borrowers (the “UK Borrowing
Base”), which in each case will be calculated as follows:
(a)
87.5% multiplied by the net amount of the eligible accounts of such Borrower, subject to sublimits to be determined for
Accounts owing by Tier 1 Account Debtors and Tier 2 Account Debtors, provided, that, such percentage shall be increased to 90%
during the Seasonal Advance Period, plus
(b)
the amount equal to 90% of the Net Recovery Percentage of such eligible inventory multiplied by the value of such eligible
inventory of such Borrower, provided, that, such percentage shall be increased to 95% during any Seasonal Advance Period as to
eligible inventory, other than eligible in-transit inventory, with sublimits on eligible in-transit inventory to be determined
and a sublimit on inventory in Mexico that may be included as eligible inventory of $5,000,000; minus
(c)
applicable reserves, subject to the terms provided below.
The US Borrowing Base, the Canadian Borrowing Base
and the UK Borrowing Base are referred to herein individually, as a “Borrowing Base” and collectively, as the “Borrowing
Bases.” |
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The amount of the “Net Recovery Percentage” means
the fraction, expressed as a percentage (a) the numerator of which is the amount equal to the recovery on the aggregate amount
of eligible inventory at such time on a “net orderly liquidation value” basis as set forth in the most recent acceptable
inventory appraisal received by Agent in accordance with the requirements of the Loan Documents, net of operating expenses, liquidation
expenses and commissions reasonably anticipated in the disposition of such assets and (b) the denominator of which is the original
cost of the aggregate amount of the eligible inventory subject to such appraisal.
“Seasonal Advance Period” means a period of up to
four (4) consecutive months in any calendar year, as designated by the Borrower Representative to Agent not less than 30 days prior
to the commencement of such period (or such shorter notice period as to which Agent may agree) up to one (1) time in any calendar
year, provided, that, the Seasonal Advance Period for 2018 shall include September, October, November and December of such year.
“Permitted Discretion” as used in this Term Sheet
with reference to Agent, shall mean a determination made in good faith in the exercise of its reasonable business judgment based
on how an asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar
circumstances at the time with the information then available to it.
“Tier 1 Account Debtors” means account debtors that
have their chief executive office in Tier 1 Jurisdictions and are organized under the laws of a Tier 1 Jurisdiction.
“Tier 2 Account Debtors” means account debtors that
have their chief executive office in Tier 2 Jurisdictions and are organized under the laws of a Tier 2 Jurisdiction.
“Tier 1 Jurisdictions” means certain member states
of the European Union prior to 2004 and other jurisdictions subject to update and revision from time to time and “Tier 2
Jurisdictions” are to be determined.
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Alternative Closing
Borrowing Base: |
In the event that as of the Closing Date, Agent has not received a current third party appraisal of the inventory or a final report
from the field examinations of the business and collateral of a Borrower, the applicable Borrowing Base as to such Borrower for
which such current third party appraisal of the inventory or a final report from the field examinations has not been received by
Agent, shall be deemed to be, for purposes of the initial Revolving Loans and Letters of Credit made or issued for the account
of such Borrower on the Closing Date, as follows (each an “Alternative Closing Borrowing Base”):
(a)
in the case of the US Borrowers, the US Borrowing Base for purposes of the initial US Loans and Letters of Credit for the
account of US Borrowers made or issued on the Closing Date (the “US Alternative Closing Borrowing Base”) shall be
deemed to be the greater of (i) 100% of the “Borrowing Base” as determined under the Existing ABL Credit Agreement
and reflected in the most recently delivered “Borrowing Base Certificate” delivered under the Existing ABL Credit
Agreement as of the Closing Date (provided, that, such information shall be provided by Borrowers to Agent and subject to adjustment
to reflect new licensing arrangements) and (ii) an amount equal to 70% of the net book value of the US Borrowers’ accounts
receivable plus 50% of the net book value of the US Borrowers’ inventory as determined based on the most recently ended
fiscal month]; |
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(b) in the
case of the UK Borrowers, the UK Borrowing Base for purposes of the initial UK Loans and Letters of Credit for the account of UK
Borrowers made or issued on the Closing Date (the “UK Alternative Closing Borrowing Base”) shall be deemed to be $18,000,000
or such other amount as Agent and Borrowers may agree.
The applicable Alternative Closing Borrowing Base for a Borrower
shall only be in effect until the earlier of 60 days after the Closing Date (or such later date as may be agreed by Agent) or the
date Agent has received the current third party appraisals and an acceptable draft report or the final report from a current field
examination with respect to such Borrower, provided, that, Agent may adjust, in its Permitted Discretion, the applicable Alternative
Closing Borrowing Base as to reserves and including only eligible accounts and eligible inventory based on any field examination
results at the time that it receives such results and as to the inventory at the time that it receives any appraisal with respect
thereto, provided, that, for purposes of the Closing Date, reserves and eligibility of accounts and inventory shall be determined
in a manner substantially consistent with the Target’s most recently delivered “Borrowing Base Certificate” under
the Existing ABL Credit Agreement, including the application of such reserves and eligibility provided for therein based on the
transactions contemplated by the terms of the Commitment Letter.
On and after the receipt by Agent of the field examination results
and appraisals as to a Borrower, Revolving Loans and Letters of Credit shall be provided to such Borrower subject to the terms
and conditions of the Loan Documents and availability under the applicable Borrowing Base, which will be calculated in a manner
consistent with the definition of the terms of the applicable Borrowing Base as set forth above.
There will be no Alternative Closing Borrowing Base for Canadian
Borrowers. In the event that Agent has not received a current third party appraisal of the inventory or a final report from the
field examinations of the business and collateral of Canadian Borrowers as of the Closing Date, no Revolving Loans or Letters of
Credit will be available for Canadian Borrowers until satisfactory appraisals and field examinations with respect to Canadian Borrowers
are received.
In the event that Agent has not received a current third party
appraisal of the inventory and a final report from the field examinations of the business and collateral of a Borrower prior to
the Closing Date, Borrowers shall use commercially reasonable efforts to provide Agent and the field examiners and appraisers
sufficient access and information to complete such field examinations and appraisal on or before the 60th day after the Closing
Date (or such later date as may be agreed by Agent) and the Lead Arranger and OpCo Holdco each agree to cooperate in good faith
to cause such field examinations and appraisals to be completed as soon as practicable. If the Agent has not received such appraisals
and final report from the field examinations as to a Borrower on or prior to the 60th day after the Closing Date (or such later
date as may be agreed by Agent), availability for such Borrower shall be zero on and after such 60th day (or such later date as
may be agreed by Agent) until Agent’s receipt and reasonable opportunity to review the results of such appraisal and final
report from the field examination.
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The “Existing ABL Credit Agreement” means
the Amended and Restated Loan and Security Agreement dated as of December 2, 2011, by and among the Target, certain of its affiliates,
Wells Fargo as administrative and collateral agent and the lenders party thereto.
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Eligibility and Reserves: |
Criteria for determining eligible accounts and eligible inventory will be in accordance with Agent’s customary practices
and as appropriate under the circumstances as reasonably determined by Agent pursuant to field examinations and other due diligence.
The criteria for eligible accounts and eligible inventory as of the Closing Date for purposes of the US Borrowing Base shall in
any event be no more restrictive than the criteria set forth in the Existing ABL Credit Agreement.
Eligible accounts will exclude accounts with respect to which
the account debtor either (a) does not have its chief executive office in the United States, Canada, the United Kingdom, Ireland,
Mexico or in a Tier 1 Jurisdiction or a Tier 2 Jurisdiction, or (b) is not organized under (i) the laws of the United States or
any state thereof, (ii) the laws of Canada or any province thereof, (iii) the laws of England and Wales, Scotland and Northern
Ireland, (iv) the laws of Ireland, (v) the laws of Mexico or any state thereof or (vi) the laws of a Tier 1 Jurisdiction or a Tier
2 Jurisdiction, provided, that, in the case of clauses (a) and (b) hereof:
(i) the aggregate amount of all accounts owing by Tier 1 Account Debtors and Tier 2 Account Debtors that may be included as
Eligible Accounts shall not exceed an amount to be determined,
(ii)
the aggregate amount of all accounts owing by Tier 2 Account Debtors that may be included as Eligible Accounts shall not
exceed an amount to be determined.
Eligible inventory will include inventory in-transit from outside
of the United States to the United States subject to the satisfaction of all other criteria for eligible inventory and a sublimit
to be determined.
The criteria for eligible accounts and eligible inventory
set forth above does not constitute all of the criteria that will apply to the determination of whether accounts or inventory
are eligible. |
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The right of Agent to establish
reserves will be in accordance with its customary practices in the exercise of its Permitted Discretion and as may be applicable
under the circumstances based on its field examination and other due diligence to be conducted and for matters that adversely
affect the Collateral, its value or the amount that Agent might receive from the sale or other disposition thereof or the ability
of Agent to realize thereon, defaults and other matters. The amount of any reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such reserve as determined by Agent in good faith
and to the extent that such reserve is in respect of amounts that may be payable to third parties Agent may deduct such reserve
from the Maximum Credit at any time that such limit is less than the amount of the Borrowing Base. Agent will provide 3 business
days’ prior written notice to Borrower Representative of any new categories of reserves that may be established after the
closing or changes in methodology for an existing reserve (except after a Default or Event of Default or other events or conditions)
and will be available to consult with Borrower Representative in connection with the basis for such new categories of reserves
or change in methodology.
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Optional Prepayments: |
The Revolving Loans may be prepaid in whole or in part from time to time without penalty or premium, but including all breakage or similar costs actually incurred by a Lender. |
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Mandatory Prepayments: |
Borrowers will be required to repay Revolving Loans and provide cash collateral to the extent that Revolving Loans and Letters
of Credit exceed the Loan Cap, in each case, in cash without any prepayment premium or penalty (but including all breakage or similar
costs) and in the case of US Borrowers, to the extent that the US Loans and Letters of Credit issued for the accounts of US Borrowers
exceed the US Loan Cap, in the case of the Canadian Borrowers, to the extent that the Canadian Loans and Letters of Credit issued
for the account of Canadian Borrowers exceed the Canadian Loan Cap, and in the case of the UK Borrowers, to the extent that the
UK Loans and Letters of Credit issued for the account of UK Borrowers exceed the UK Loan Cap.
At any time there is a Cash Dominion Event, all proceeds of
Collateral shall be applied to the obligations under the Credit Facility.
If a Cash Dominion Event exists, Borrowers will be required
to repay obligations under the Credit Facility in amounts equal to 100% of the net proceeds of any issuance of equity securities
or from any capital contribution, and 100% of the net proceeds of the issuance or incurrence of debt.
Such mandatory prepayments will not result in a permanent
reduction in commitments. |
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Interest and Fees: |
See Schedules 1 and 2 to this Exhibit B and the Fee Letter. |
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Collateral: |
Subject to the Funds Certain Provisions and the limitations
set forth below, to secure all obligations of each Loan Party, first priority (subject to certain specified permitted liens),
perfected security interests in and liens on, and in the case of UK Borrowers, first ranking fixed and floating charges on, all
of such Loan Party’s present and future assets and properties (collectively, the “Collateral”), including the
following: (i) all accounts and payment intangibles, (ii) all chattel paper, (iii) all securities accounts and deposit accounts
(and all cash, checks and other negotiable instruments, funds and other evidences of payment held therein), (iv) all inventory,
(v) to the extent evidencing, governing, securing or otherwise related to any of the foregoing and any other Collateral, all documents,
general intangibles (including all loans payable by a Loan Party to any other Loan Party), instruments, investment property, (vi)
commercial tort claims, letters of credit, supporting obligations and letter of credit rights, in each case relating to any of
the foregoing or other Collateral, (vii) all books, records and documents related to the foregoing (including databases, customer
lists and other records, whether tangible or electronic, which contain any information relating to any of the foregoing) and (viii)
all proceeds and products of any or all of the foregoing in whatever form received, including proceeds of business interruption
and other insurance and claims against third parties, provided, that, the Collateral shall not include the Excluded Assets (as
defined below). |
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Extraordinary receipts constituting proceeds of judgments relating
to any of the Collateral, insurance proceeds and condemnation awards in respect of any such property, indemnity payments in respect
of any such property and purchase price adjustments in connection with any such property shall also constitute Collateral.
Notwithstanding anything to the contrary contained herein,
the Collateral of US Loan Parties shall not include the following (the “Excluded Assets”): (a) shares of any subsidiary
that is a “controlled foreign corporation” in excess of sixty-five percent of all of the issued and outstanding shares
of capital stock of such subsidiary entitled to vote (within the meaning of Treasury Regulation Section 1.956-2) to secure the
obligations of Borrowers, if a pledge of a greater percentage would result in material adverse tax consequences to the Company,
(b) motor vehicles or other equipment subject to a certificate of title statute, (c) leasehold interests in real property, (d)
deposit accounts exclusively used for trust, payroll, payroll taxes and other employee wage and benefit payments to or for the
benefit of any Loan Party’s employees, (e) any rights or interests in any contract, agreement, lease, permit, license, charter
or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement
covering real or personal property, or applicable law with respect thereto, the valid grant of a security interest or lien therein
to Agent would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license,
charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other
party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained
or under applicable law such prohibition cannot be waived; provided, that, the foregoing exclusion shall in no way be construed
(i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the Uniform Commercial Code or other
applicable law or (ii) so as to limit, impair or otherwise affect Agent’s unconditional continuing security interests in
and liens upon any rights or interests of a Loan Party in or to monies due or to become due under any such contract, lease, permit,
license, charter or license agreement, (f) any United States intent-to-use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use
trademark applications under applicable federal law; provided, that, upon submission and acceptance by the U.S. Patent and Trademark
Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a), such intent-to-use trademark application shall be
considered Collateral. Proceeds of Excluded Assets shall be deemed Collateral.
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As to specific items of Collateral, Agent may determine not
to perfect its security interest therein based on the de minimis value thereof relative to the costs of such perfection. The obligations
secured may include hedging and bank product obligations of any Loan Party where a Lender or an affiliate of a Lender is a counterparty.
In addition, to the other Collateral described above, the Collateral
will include the grant of a security interest in, and the pledge of, all of the equity interests of Super Holdco by its immediate
parent company to secure the obligations under the Credit Facility.
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Use of Proceeds: |
The proceeds of the Revolving Loans under the Credit Facility will be used by Borrowers (a) on the Closing Date, for the Refinancing and after the application of the proceeds of the IPCo First Lien Facility, the IPCo Second Lien Facility, the Mortgage Facility and the Rolled Equity Contribution thereto, for the payment of a portion of the consideration for the Acquisition, (b) to pay costs, expenses and fees in connection with the Credit Facility, the Acquisition and the other Transactions, and (c) on and after the Closing Date, for working capital of Borrowers and their subsidiaries and other general corporate purposes including funding permitted acquisitions and capital expenditures. |
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Closing Date: |
The date on or before December 15, 2018 and on which the conditions set forth in Section 5 of the Commitment Letter and Exhibit C are satisfied or waived (the “Closing Date”). |
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Term: |
The earlier of 5 years from the Closing Date or the date 90 days prior to the maturity date of any other material debt of Loan Parties (the “Maturity Date”). |
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Documentation: |
Definitive loan documentation (collectively, the “Loan
Documents”), including, without limitation, a credit agreement, security agreements, pledge agreements, guarantees, control
agreements, an agreement with the owners and licensors of intellectual property (and binding on any secured lenders to such owners)
allowing an irrevocable, worldwide, non-exclusive license to use, license or sublicense intellectual property without any royalty
or other payments (whether or not any license agreement between the owner and licensor and any other person is in default or has
been terminated) after default or otherwise in connection with the exercise of the remedies of Agent with respect to the Collateral,
lien search results, customary opinion letters of counsel to the Loan Parties, collateral access agreements (Borrowers shall use
commercially reasonable efforts to obtain collateral access agreements and agreement with the owners and licensors of intellectual
property (and binding on any secured lenders to such owners) but delivery shall not be a condition of closing except in the case
of the intercompany license agreement and the license agreement between IPCo and Agent referred to in subsection (b) of Exhibit
C it being understood that the Agent shall retain its rights to establish and maintain reserves in respect of amounts which may
be due or which may become due and payable under the applicable lease or with respect to the applicable third party arrangement),
payoff letters, borrowing base certificate and documents and agreements related to all of the foregoing, each in form and substance
reasonably satisfactory to OpCo Holdco, Agent and the initial Lenders, consistent with Documentation Principles. |
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The Loan Documents will be substantially consistent
with (and as to the US Borrowers, in any event no less favorable to the US Borrowers than) the Existing ABL Credit Agreement and
other Financing Agreements (as such term is defined in the Existing ABL Credit Agreement), with changes and modifications to reflect
and give effect to the Transactions, the security over the Collateral and the arrangements contemplated by any intercreditor agreements,
the developments in the business and circumstances of the Loan Parties, the asset-based lending market and documentation to the
extent applicable, the terms and conditions set forth in this Term Sheet, changes in law or accounting standards, the changes
to the operational practices and procedures of Agent, the results of updated field examinations and other due diligence and subject
to other changes as may be agreed by the parties (the “Documentation Principles”).
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Representations and
Warranties: |
Subject to the Certain Funds Provisions, limited to the following, and subject to materiality and other negotiated limitations, in each case as agreed by the parties, the following representations and warranties in respect of OpCo Holdco and its subsidiaries concerning: corporate existence and good standing, power and authority; accuracy of financial information; no material adverse effect; no default; enforceability; necessary consents; insurance; solvency (as of the Closing Date and thereafter); senior debt status; collateral matters (including without limitation, locations of jurisdiction of organization, chief executive office and Collateral, and perfection and priority of Agent’s security interests); ownership of properties and absence of liens other than permitted liens; security documents; filing of tax returns and payment of taxes; absence of material litigation or investigations; compliance with applicable law, regulation, etc. (including without limitation Regulations T, U and X, Investment Company Act, the Patriot Act, environmental laws, FCPA, OFAC and other laws of Canada and the UK and any other applicable jurisdiction); bank and securities accounts; environmental matters; employee and labor matters; material contracts; no restrictions on subsidiaries; intellectual property (including license agreements); OpCo Holdco as holding company; the Acquisition and Acquisition Agreement and related documents; centre of main interests; matters related to Canada and the UK and other applicable non-US law; accuracy of information furnished to Agent; survival and continuing nature of representations and warranties. |
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Affirmative Covenants: |
Limited to the following in respect of OpCo Holdco and its subsidiaries, subject to materiality and other negotiated exceptions, baskets and limitations, affirmative covenants concerning: maintenance of books and records; maintenance of existence; use of proceeds; material contracts, necessary consents, approvals, license and permits; requirements for new locations; compliance with laws; performance of obligations; maintenance of properties in good repair; insurance; Agent’s rights to inspect books and properties (subject to the limitations on field examinations and appraisals at Borrowers’ expense provided below); payment of taxes and claims; delivery of financial statements, financial projections, management letters and other information; notices of defaults, litigation, amendments or waivers to intellectual property licenses and other material events; collateral matters (including without limitation, reporting, notices and appraisal requirements); cash management; lender meetings; additional loan parties; senior debt status; physical inventories; bank products; formation of subsidiaries; material contracts (and including intellectual property licenses); matters related to Canada, UK and other applicable non-US law; and further assurances. |
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Collateral and Financial
Reporting: |
The following collateral and financial reporting:
(a)
monthly borrowing base certificates, provided, that, borrowing base certificates shall be delivered weekly at any time an
event of default exists, or at any time that Excess Availability is less than the greater of 12.5% of the Loan Cap or $18,750,000
for 5 consecutive days (and in any event, whether as a result of an event of default or the amount of Excess Availability, the
delivery of borrowing base certificates on a weekly basis shall continue for not less than four consecutive weeks);
(b)
field examinations and appraisals as Agent may from time to time require, but no more than:
(i) 1 field examination and 1 appraisal in any 12 month period at the expense of Borrowers so long as no Reporting Event has
occurred,
(ii) 2 field examinations and 2 appraisals in any 12 month period at the expense of Borrowers at any time on and after a Reporting
Event occurs,
(iii)
such other field examinations and appraisals as Agent may request at any time upon the occurrence and during the continuance
of an event of default at the expense of Borrowers or at any time at the expense of Agent;
(c) quarterly
financial statements and annual audited financial statements and projections, provided, that Borrowers shall deliver monthly
financial statements on and after a Reporting Event;
(d) other financial and collateral reports to be agreed.
“Reporting Event” means at any time that Excess
Availability is less than the greater of 15.0% of the Loan Cap or $22,500,000 for 5 consecutive days.
“Excess Availability” means the amount
equal to (a) the Loan Cap plus Qualified Cash, minus (b) Revolving Loans and Letters of Credit under the Loan Documents. |
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“Qualified Cash” shall mean unrestricted
cash of US Borrowers, Canadian Borrowers and UK Borrowers of up to $10,000,000 that is subject to the valid, enforceable and perfected
security interest of Agent in investment accounts or deposit accounts at Agent or another institution reasonably satisfactory
to Agent subject to a customary control agreement(s) (which will limit the terms of withdrawal of such funds by Borrowers subject
to conditions to be determined) and free and clear of any pledge, security interest, lien, claim or other encumbrance (other than
in favor of Agent and the depository bank or securities intermediary where the deposit accounts or investment accounts are maintained
for its reasonable and customary fees and charges related to such account), are available for use by Borrower, without condition
or restriction (other than in favor of Agent), and for which Agent shall have received evidence, in form and substance reasonably
satisfactory to Agent, of the amount of such cash or cash equivalents held in such deposit accounts or investment accounts as
of the applicable date of the calculation of the Borrowing Base and the satisfaction of the other conditions herein.
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Cash Management: |
US Loan Parties shall have establish their cash management
system with Wells Fargo (and for certain local deposit accounts, with such other institutions as are reasonably acceptable to
Agent) in form and substance reasonably satisfactory to Agent, or to the extent currently established at Wells Fargo shall maintain
such cash management system at Wells Fargo, including blocked accounts for collections and the transfer thereof to Agent. Canadian
Loan Parties shall establish their cash management system with institutions reasonably acceptable to Agent and in form and substance
reasonably satisfactory to Agent. Deposit accounts (other than deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of any US Loan Party’s employees) will be subject to control
agreements in the case of US Loan Parties and blocked account agreements in the case of Canadian Loan Parties, in each case with
the banks at which such accounts are maintained, which shall be in form and substance reasonably acceptable to Agent, provided,
that, so long as there is no Cash Dominion Event, amounts deposited in the blocked accounts of US Loan Parties shall be remitted
to the operating accounts of US Borrowers and amounts deposited in the blocked accounts of Canadian Loan Parties shall be remitted
to the operating accounts of Canadian Borrowers. Funds of US Loan Parties shall be remitted to Agent for application to the obligations
of US Loan Parties under the Credit Facility upon a Cash Dominion Event (and thereafter Canadian Loan Parties and UK Loan Parties)
and funds of Canadian Loan Parties shall be remitted to Agent for application to the obligations of Canadian Loan Parties under
the Credit Facility (and thereafter of UK Loan Parties) upon a Cash Dominion Event. Loan Parties will direct all of their customers
and other obligors in respect of Collateral to remit all payments to deposit accounts that, in the case of US Loan Parties, are
the subject of control agreements among them, Agent, and the depository bank, in the case of Canadian Loan Parties are subject
to blocked account agreements among them, Agent and the depository bank, and in the case of UK Loan Parties are subject to a first
ranking pledge, charge and security assignment in favor of Agent, at banks that are reasonably satisfactory to Agent, where the
pledge, charge and security assignment has been acknowledged and accepted by such depository bank in an agreement in form and
substance reasonably satisfactory to Agent. Amounts deposited in such accounts of the UK Borrowers shall be remitted daily (or
with such other frequency as the parties may agree) to such account of Agent as Agent may specify for such purpose. |
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“Cash Dominion Event” means either (a) Excess Availability
is less than the greater of (i) 10.0% of the Loan Cap at any time or (ii) $15,000,000 for 5 consecutive days, or (b) an event of
default exists or has occurred and is continuing; provided, that,
(i)
to the extent that the Cash Dominion Event has occurred due to clause (a) of this definition, if Excess Availability shall be equal
to or greater than the applicable amount for at least 30 consecutive days, the Cash Dominion Event shall no longer be deemed to
exist or be continuing until such time as Excess Availability may again be less than the amount in clause (a) of this definition,
and
(ii) to the extent that the Cash Dominion Event
has occurred due to clause (b) of this definition, if such event of default is cured or waived or otherwise no longer exists for
a period of at least 30 consecutive days, the Cash Dominion Event shall no longer be deemed to exist or be continuing.
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Financial Covenants: |
Minimum Fixed Charge Coverage Ratio of OpCo Holdco and its subsidiaries
of 1.00 to 1.00 as of the end of each fiscal month, based on the 12 immediately preceding months for which Agent has received financial
statements (or such other period or periods as Agent and OpCo Holdco may agree) provided, that, compliance with such financial
covenant shall only be required during a Compliance Period, in which case such financial covenant shall be tested as of the last
day of the then most recently completed fiscal month for which financial statements have been delivered and for each month end
thereafter until the Compliance Period ends. The definitions used for purposes of the Fixed Charge Coverage Ratio are to be agreed
by the parties, provided, that, the Fixed Charge Coverage Ratio shall be defined as the ratio of (A) Consolidated Adjusted EBITDA
of OpCo Holdco and its subsidiaries less capital expenditures and less taxes paid in cash to (B) fixed charges comprised of interest
expense, required principal repayment of indebtedness and restricted payments.
“Compliance Period” means at any time Excess Availability
is less than the greater of (a) 10.0% of the Loan Cap or (b) $15,000,000 and shall continue for the period until Excess Availability
has been greater than such amount for a period of at least 30 consecutive days.
For purposes of determining compliance with the Fixed
Charge Coverage Ratio, any cash equity contribution (which shall be for common equity or other equity reasonably acceptable to
Agent) made to OpCo after the beginning of any fiscal month and prior to the day that is ten business days after the day on which
financial statements are required to be delivered for such fiscal month will, at the election of OpCo Holdco upon written notice
to Agent, be included in the calculation of EBITDA (any such equity contribution so included in the calculation of EBITDA, a “Specified
Equity Contribution”), provided that, (i) no Lender shall be required to make any extension of credit during the ten business
day period referred to above unless a Borrower has received the proceeds of such Specified Equity Contribution, (ii) in each four
fiscal quarter period, there shall be a period of two fiscal quarters in which no Specified Equity Contribution is made and only
four Specified Equity Contributions may be made during the term of the Credit Facility, (iii) the amount of any Specified Equity
Contribution shall be no greater than 100% of the amount required to cause Borrowers to be in pro forma compliance with the Fixed
Charge Coverage Ratio specified above, (iv) all Specified Equity Contributions shall be disregarded for purposes of determining
any pricing, financial ratio-based conditions or any baskets with respect to the covenants contained in the Credit Facility, and
(v) no Specified Equity Contribution shall result in any reduction in indebtedness for purposes of calculating compliance with
any financial covenant (except that to the extent that the proceeds of a Specified Equity Contribution are applied to repay indebtedness,
such indebtedness shall be reduced for periods subsequent to the initial period in respect of which the Specified Equity Contribution
was made). |
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Negative Covenants: |
Limited to the following in respect of OpCo Holdco and its subsidiaries,
subject to materiality and other negotiated exceptions and limitations, in each case as agreed by the parties, the following: limitations
on: dividends, distributions, redemptions and repurchases of capital stock; incurrence of debt (including capital leases) and guarantees;
repurchases or prepayment of subordinated debt or junior lien debt or optional repurchases, prepayments or other optional payments
in respect of other debt; creation or suffering of liens; loans, investments and acquisitions; affiliate transactions; changes
in the conduct of business from the business as conducted at closing, fiscal year or accounting practices; asset sales, mergers,
consolidations and other fundamental changes; restrictions affecting subsidiaries; limitation on amendment of organizational documents
and certain material agreements; Holdings as holding company; centre of main interests; matters related to Canadian, UK, German,
Australian and other applicable non-US law.
The negative covenant on (i) restricted payments will expressly
allow cash distributions in respect of equity interests of OpCo Holdco, so long as on the date of any such distributions and after
giving effect thereto, each of the Payment Conditions is satisfied and (ii) indebtedness will expressly allow indebtedness between
the OpCo Silo and IPCo Silo on terms and conditions to be agreed and (iii) investments will expressly allow cash investments between
OpCo Silo and IPCo Silo, so long as to any such investments and after giving effect thereto, each of the Payment Conditions is
satisfied.
For avoidance of doubt, the negative covenants will
permit the payment of employee cash retention awards (whether directly by OpCo or by way of restricted payments to a parent entity
or otherwise) in accordance with the terms thereof that were converted from performance-based restricted stock awards in effect
immediately prior to the Closing Date.
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The negative covenant governing acquisitions will expressly
allow an acquisition, provided, that, (i) except as the parties may otherwise agree, as to any such acquisition, and after giving
effect thereto, each of the Payment Conditions is satisfied, (ii) the acquisition shall be with respect to an operating company
or division or line of business that engages in a line of business substantially similar, reasonably related or incidental to the
business that Borrowers are engaged in, (iii) the board of directors (or other comparable governing body) of the person to be acquired
shall have duly approved such acquisition and such person shall not have announced that it will oppose such acquisition or shall
not have commenced any action which alleges that such acquisition will violate applicable law, (iv) Agent shall have received prior
notice and other information related to such transactions in a manner and on terms to be mutually agreed and (v) the consideration
for acquisitions of persons that are not required to be Loan Parties shall be subject to a limit to be agreed.
The negative covenant governing investments, other than permitted
acquisitions, will expressly allow an investment using cash or cash equivalents, so long as, with respect to any such investment,
and after giving effect thereto, each of the Payment Conditions is satisfied.
“Payment Conditions” means, at the time of determination
with respect to any specified transaction or payment the following:
(a) as of the
date of any such transaction or payment, and after giving effect thereto, no default or event of default shall exist or have occurred
and be continuing,
(b) either:
(i)
(A) the Excess Availability for the immediately preceding 30 consecutive day period shall have been not less than the greater of
15.0% of the Loan Cap or $22,500,000, or in the case of a permitted acquisition or investment, not less than the greater of 12.5%
of the Loan Cap or $18,750,000, (B) after giving effect to any such transaction or payment, on a pro forma basis using the Excess
Availability as of the date of the most recent calculation of the Borrowing Bases, in each case immediately prior to any such transaction
or payment, the Excess Availability shall be not less than the greater of such amounts, as applicable, and (C) the Fixed Charge
Coverage Ratio, on a pro forma basis, after giving effect to the transaction or payment based on the most recent financial statement
received by Agent prior to the date thereof for the 12 month period prior thereto, shall be not less than 1.00 to 1.00; or
(ii)
(A) the Excess Availability for the immediately preceding 30 consecutive day period shall have been not less than the greater of
17.5% of the Loan Cap or $26,250,000, or in the case of a permitted acquisition or investment, not less than the greater of 15.0%
of the Loan Cap or $22,500,000, and (B) after giving effect to any such transaction or payment, on a pro forma basis using the
Excess Availability as of the date of the most recent calculation of the Borrowing Bases immediately prior to any such transaction
or payment, the Excess Availability shall be not less than the greater of such amounts,
provided, that, notwithstanding anything to the contrary
contained herein, for purposes of this clause (b), the calculation of Excess Availability shall be without regard to the increase
in the applicable advances rates during a Seasonal Advance Period.
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(c) either:
(i)
the ratio of total consolidated indebtedness (defined to include debt for borrowed money, capitalized lease obligations and drawn
but unreimbursed letters of credit) to Consolidated Adjusted EBITDA (as defined in Annex 2 hereto) of OpCo Holdco and its subsidiaries,
shall be, on a pro forma basis, after giving effect to the transaction or payment based on the most recent financial statement
received by Agent prior to the date thereof for the 12 month period prior thereto, shall not be greater than 4.00 to 1.00;
(ii)
(A) the Excess Availability for the immediately preceding 180 consecutive day period shall have been not less than the greater
of 25.0% of the Loan Cap or $37,500,000, or in the case of a permitted acquisition or investment, not less than the greater of
22.5% of the Loan Cap or $33,750,000, and (B) after giving effect to any such transaction or payment, on a pro forma basis using
the Excess Availability as of the date of the most recent calculation of the Borrowing Bases, in each case immediately prior to
any such transaction or payment, the Excess Availability shall be not less than the greater of such amounts, as applicable; or
(iii) for
any such transaction consummated or payment made on or after the third anniversary of the Closing Date, the Fixed Charge Coverage
Ratio, on a pro forma basis, after giving effect to the transaction or payment based on the most recent financial statement received
by Agent prior to the date thereof for the 12 month period prior thereto, shall be not less than 2.00 to 1.00;
(d) Agent shall have received prior notice
and other information related to such transactions in a manner and on terms to be agreed, including a certificate of an authorized
officer of Borrowers certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) the calculations
required thereby.
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Events of Default: |
Limited to the following, subject to cure periods to be agreed, materiality and other negotiated limitations, in each case as agreed by the parties: payment and performance defaults under any of the Loan Documents, cross-defaults to other material indebtedness, cross-defaults to the IPCo First Lien Facility and the IPCo Second Lien Facility, Mortgage Facility, breach or defaults under intellectual property licenses or other material contracts, breach of representations and warranties, insolvency, voluntary and involuntary bankruptcy, judgments and attachments in excess of an amount to be agreed (or not subject to stay), revocation of any guaranty, dissolution, change in control, impairment of a material portion of the security, ERISA, actual or asserted invalidity or unenforceability of any Loan Documents or liens securing obligations under the Loan Documents, invalidity of subordination or intercreditor provisions, material uninsured loss, injunction or court or other governmental order preventing continuing conduct of all or any material part of the business affairs of the Loan Parties, or suspension or termination of all or a substantial portion of its business. |
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Conditions Precedent to
All Borrowings: |
Subject, on the Closing Date, to the Certain Funds Provision, the conditions to all Revolving Loans and Letters of Credit will consist of (a) prior written notice of the request for the Loan or Letter of Credit in accordance with the procedures set out in the Loan Documents, (b) the accuracy of representations and warranties in the Loan Documents in all material respects (except where qualified by materiality, then just the accuracy thereof), (c) the absence of any default or event of default at the time of, and after giving effect to the making of the Loan or the issuance (or amendment or extension) of the Letter of Credit, (d) after giving effect to the requested Loan or Letter of Credit, (i) the outstanding US Loans and Letters of Credit issued for the account of US Borrowers will not exceed the US Loan Cap, (ii) the outstanding Canadian Loans and Letters of Credit issued for the account of Canadian Borrowers will not exceed the Canadian Loan Cap, (iii) the outstanding UK Loans will not exceed the UK Loan Cap and (iv) the outstanding Loans and Letters of Credit will not exceed the lesser of the Borrowing Bases or the Maximum Credit. |
Conditions Precedent to
Initial Borrowings: |
The conditions precedent to the initial borrowings under the Credit Facility will consist solely of those conditions precedent set forth in Section 5 of the Commitment Letter and Exhibit C to the Commitment Letter. |
Assignments and
Participations: |
Each Lender will be permitted to make assignments of its interest in the Credit Facility in a minimum amount equal to $5,000,000 to other financial institutions (other than Disqualified Lenders) approved by Agent, Swing Line Lender, Issuing Banks, and OpCo Holdco, which approval of OpCo Holdco shall not be unreasonably withheld, conditioned or delayed; provided, that, (a) the approval of OpCo Holdco shall not be required at any time that an event of default exists or has occurred and is continuing, and (b) the approval of OpCo Holdco shall not be required in connection with assignments to other Lenders, to any affiliate of a Lender, to any Approved Fund (as such term will be defined in the Loan Documents), or for any participation. No assignment or participation may be made to natural persons, any Loan Party or any of their affiliates or subsidiaries, or any holder of any subordinated debt of a Loan Party. |
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Amendments and Waivers: |
Amendments, waivers and consents with respect to the
provisions of the Loan Documents will require the approval of Agent and the Required Lenders, provided that, in addition to the
approval of Required Lenders, (a) the consent of each Lender directly and adversely affected thereby will be required with respect
to matters relating to (i) increases in the commitment of such Lender, (ii) reductions of principal, interest or fees (provided
that a waiver of default interest, default or event of default shall not constitute a reduction of interest for this purpose),
(iii) extensions of final maturity or the due date of any interest, fee or other payments, and (iv) changes to the order of application
of funds and (b) the consent of all Lenders will be required with respect to: (i) modifications of the pro rata sharing requirements
of the Loan Documents, (ii) modification of the voting percentage or change in the definition of “Required Lenders”,
“Supermajority Lenders” or any other provisions specifying the number of Lenders or portion of the Revolving Loans
or commitments required to take any action under the Loan Documents, (iii) permitting any Borrower to assign its rights under
the Loan Documents, (iv) releases of all or substantially all of the value of the Collateral or guarantees (other than in connection
with transactions permitted pursuant to the Loan Documents), (v) subordination of the lien on Collateral in favor of Agent (other
than with respect to certain permitted liens to be agreed) or subordination of the payment of the obligations in respect of the
Credit Facility and (vi) increases in the percentages applied to eligible assets in the Borrowing Base. Modifications to the Borrowing
Base or any components thereof which would result in an increase in the amount of the Borrowing Base (but exclusive of the right
of the Agent to add, increase, eliminate or reduce the amount of reserves or to exercise other discretion it may have pursuant
to such provisions) may be subject to the approval of the Supermajority Lenders. Matters affecting Agent, the Swing Line Lender,
or an Issuing Bank will require the approval of such party. |
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“Required Lenders” means those non-defaulting Lenders
who collectively hold more than 50% of the total commitments or exposure under the Credit Facility, provided, that, at any time
that there are 2 or more unaffiliated Lenders, “Required Lenders” must include at least 2 unaffiliated Lenders.
“Supermajority Lenders” means those non-defaulting
Lenders holding more than 66 2/3% of total commitments or exposure under the Credit Facility provided, that, at any time that there
are two (2) or more unaffiliated Lenders, “Supermajority Lenders” must include at least two (2) unaffiliated Lenders.
The Loan Documents shall contain customary provisions for replacing
defaulting Lenders, replacing Lenders claiming increased costs, tax gross ups and similar required indemnity payments and replacing
non-consenting Lenders in connection with amendments and waivers requiring the consent of all Lenders or of all Lenders adversely
affected thereby so long as Lenders holding at least 50% of the aggregate amount of the loans and commitments under the Credit
Facility shall have consented thereto.
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Cost and Yield
Protections: |
Customary for facilities and transactions of this type, including customary tax gross-up provisions and including provisions relating to Dodd-Frank, Basel III and FATCA. |
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Governing Law: |
New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the State of New York (other than certain security documents that will be governed by local law as applicable or as the parties may otherwise agree); provided that the interpretation of the term “Target Material Adverse Effect” shall be governed by the laws that govern the terms of the Acquisition Agreement. |
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Expenses, Waivers and
Indemnity: |
The Loan Parties will pay all of the reasonable and documented out-of-pocket costs and expenses and customary administrative charges
incurred by Agent and Wells Fargo (in its capacity as Lead Arranger, Swing Line Lender and Issuing Bank), including, without limitation,
reasonable legal costs and expenses, filing and search charges, recording taxes, appraisals, and field examination charges and
expenses, provided, that, legal fees shall be limited to the reasonable fees of one counsel for Agent and, in addition, one local
counsel in each appropriate jurisdiction and, to the extent required by the subject matter, one specialist counsel for each such
specialized area of law in each appropriate jurisdiction, and in the case of the enforcement, collection or protection of the rights
of Lenders, in addition, one counsel for Lenders, and in addition, Loan Parties will pay a charge at the then standard rate of
Agent per person per day for the examiners of Agent in the field and in the office, which as of the date hereof is $1,000 per person
per day, plus other out-of-pocket expenses.
Waivers to include, but not be limited to a waiver by Agent,
Lenders and each Loan Party of its rights to jury trial; waiver by each Loan Party of claims for special, punitive, exemplary,
indirect or consequential damages in respect any breach or alleged breach by Agent, Arranger, Issuing Bank or any Lender of any
of the Loan Documents.
Loan Parties shall indemnify and hold harmless Agent,
Lead Arranger, Lenders and Issuing Bank and their respective directors, officers, agent, representatives and employees from and
against all losses, claims, damages, expenses, or liabilities including, but not limited to, reasonable and documented legal or
other expenses incurred in connection with investigating, preparing to defend, or defending any such loss, claim, damage, expenses
or liability, incurred in respect of the Credit Facility or the relationship between Agent, Lead Arranger, any Lender or Issuing
Bank and any Loan Party (provided, that, the obligation to reimburse any indemnified person for legal fees and expenses shall
be limited to legal fees and expenses of one firm of counsel for all such indemnified persons and one local counsel in each appropriate
jurisdiction (and, to the extent required by the subject matter, one specialist counsel for each such specialized area of law
in each appropriate jurisdiction) and in the case of an actual or perceived conflict of interest as determined by the affected
indemnified person, one counsel for such affected indemnified person), except that the foregoing indemnity will not, as to any
Indemnified Person, apply to costs, expenses or liabilities to the extent they (a) are found in a final, non-appealable judgment
of a court of competent jurisdiction to have resulted from (i) the willful misconduct, bad faith or gross negligence of such indemnified
person or (ii) a breach in any material respect of the material obligations of such indemnified person under the Commitment Letter,
the Fee Letter or the Loan Documents or (b) relate to any claim, litigation, investigation or proceeding between or among indemnified
persons other than claims against Agent, Lead Arranger or Lenders or their respective affiliates, in each case in their respective
capacities or in fulfilling their respective roles as the agent or arranger or any other similar role under the Credit Facility
as the case may be (excluding their role as a Lender) to the extent such persons are otherwise entitled to indemnification. |
Each term used but not defined in this Exhibit B shall have
the meaning assigned to such term in the Commitment Letter, dated of even date herewith, from Wells Fargo to Holdings to which
this Exhibit B is attached.
This Summary of Principal Terms and Conditions for the Credit
Facility is not meant to be, nor shall it be construed as an attempt to describe all of the terms of the documentation, or the
specific phrasing for, the provisions of the documentation. Rather, it is intended only to outline certain material terms to be
included in the Loan Documents, provided, that the Loan Documents will not contain any conditions precedent to the initial borrowings
under the Credit Facility other than those set forth in Section 5 of the Commitment Letter and in Exhibit C to the Commitment Letter.
All references to Wells Fargo in this Term Sheet include its successors and assigns and Wells Fargo may designate one of its affiliates
or branches to act in its place in any of the roles for which Wells Fargo is specified in the Term Sheet.
SCHEDULE 1
TO
EXHIBIT B TO COMMITMENT LETTER
Interest and Certain Fees
Interest Rate Options: |
Borrowers may elect that
(a)
US Loans shall bear interest at (i) the US Base Rate plus the Applicable Margin or (ii) the LIBOR Rate plus the Applicable
Margin;
(b) Canadian Loans (i) denominated in Canadian Dollars shall bear interest at (A) the Canadian Base Rate plus the Applicable
Margin or (B) the Canadian BA Rate plus the Applicable Margin and (ii) denominated in US Dollars shall bear interest at (A) the
US Base Rate plus the Applicable Margin or (B) the LIBOR Rate plus the Applicable Margin;
(c)
UK Loans shall bear interest at (i) the UK Base Rate plus the Applicable Margin or (ii) the LIBOR Rate plus the Applicable
Margin.
As used herein:
“Applicable Margin” means with respect to Revolving
Loans a percentage determined in accordance with the pricing grid attached hereto as Schedule 2 to Exhibit B to the Commitment
Letter.
“Canadian BA Rate” means the CDOR Rate.
“Canadian Base Rate” means, for any day, a rate
per annum equal to the greater of (a) the CDOR Rate existing on such day (which rate shall be calculated based upon an Interest
Period of one (1) month), plus one (1) percentage point, and (b) the “prime rate” for Canadian Dollar commercial loans
made in Canada as reported by Thomson Reuters under Reuters Instrument Code <CAPRIME=> on the “CA Prime Rate (Domestic
Interest Rate) – Composite Display” page (or any successor page or such other commercially available service or source
(including the Canadian Dollar “prime rate” announced by a Schedule I bank under the Bank Act (Canada)) as Agent may
designate from time to time). Each determination of the Canadian Base Rate shall be made by Agent and shall be conclusive in the
absence of manifest error.
“CDOR Rate” means the average rate per
annum as reported on the Reuters Screen CDOR Page (or any successor page or such other page or commercially available service
displaying Canadian interbank bid rates for Canadian Dollar bankers’ acceptances as Agent may designate from time to time,
or if no such substitute service is available, the rate quoted by a Schedule I bank under the Bank Act (Canada) selected by Agent
at which such bank is offering to purchase Canadian Dollar bankers’ acceptances) as of 10:00 a.m. Eastern (Toronto) time
on the date of commencement of the requested interest period, for a term, and in an amount, comparable to the interest period
and the amount of the Canadian BA Rate Loan requested (whether as an initial Canadian BA Rate Loan or as a continuation of a Canadian
BA Rate Loan or as a conversion of a Canadian Base Rate Loan to a Canadian BA Rate Loan) by a Borrower (and, if any such reported
rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero). Each determination of the
CDOR Rate shall be made by Agent and shall be conclusive in the absence of manifest error. |
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“LIBOR Rate” means the rate per annum as published
by ICE Benchmark Administration Limited (or in any case, any successor page or other commercially available source as the Agent
may designate from time to time) as of 11:00 a.m., London time, two Business Days prior to the commencement of the requested interest
period (or in the case of UK Loans denominated in Pounds Sterling, the Business Day of the commencement), for a term, and in an
amount, and in the currency, comparable to the interest period and the amount and currency of the LIBOR Rate Loan requested (whether
as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a US Base Rate Loan or UK Base Rate
Loan, as applicable, to a LIBOR Rate Loan) by Borrowers in accordance with this Agreement (and, if any such published rate is below
zero, then the rate determined pursuant to this clause shall be deemed to be zero). Each determination of the LIBOR Rate shall
be made by Agent and shall be conclusive in the absence of manifest error. The LIBOR Rate shall be available for interest periods
of one, two, three or six months.
“UK Base Rate” means, as to any day, the rate per
annum as published by ICE Benchmark Administration Limited (or in any case, any successor page or other commercially available
source as the Agent may designate from time to time) as of 11:00 a.m., London time for 30 day LIBOR for the relevant currency on
such day, and, in any such case, if the applicable rate is less than zero, such rate shall be deemed to be zero.
“US Base Rate” means the greatest of (a) the Federal
Funds Rate plus ½%, (b) the LIBOR Rate (which rate shall be calculated based upon an interest period of one month and shall
be determined on a daily basis), plus one percentage point, and (c) the rate of interest announced, from time to time, within
Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime
rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof
after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero,
then the rate determined pursuant to this clause (c) shall be deemed to be zero).
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Interest rate reference terms will
be subject to customary provisions, including applicable reserve requirements, limits on the number of outstanding LIBOR Rate
Loans and Canadian BA Rate Loans and minimum amounts of each LIBOR Rate Loan and Canadian BA Rate Loan.
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Unused Line Fee: |
US Borrowers shall pay to Agent an unused line fee calculated at 0.250% per annum multiplied by the difference between the US Loan Limit and the average daily outstanding US Loans and Letters of Credit issued for the account of US Borrowers, Canadian Borrowers shall pay to Agent an unused line fee calculated at 0.250% per annum multiplied by the difference between the Canadian Loan Limit and the average daily outstanding Canadian Loans and Letters of Credit issued for the account of Canadian Borrowers, and UK Borrowers shall pay to Agent an unused line fee calculated at 0.250% per annum multiplied by the difference between the UK Loan Limit and the average daily outstanding UK Loans and Letters of Credit issued for the account of UK Borrowers, in each case during the immediately preceding month and payable monthly in arrears. Swing Line Loans will not be considered in the calculation of the unused line fee. |
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Letter of Credit Fees: |
Borrowers shall pay to Agent, for the account of Lenders (to the extent and in accordance with the arrangements by and among Lenders), on the daily outstanding balance of Letters of Credit, a letter of credit fee which shall accrue at a per annum rate equal to the Applicable Margin for LIBOR Rate Loans in the case of letters of credit denominated in US Dollars, the Applicable Margin for Canadian BA Rate Loans in the case of letters of credit denominated in Canadian Dollars, and the Applicable Margin for LIBOR Rate Loans for letters of credit denominated in Pounds Sterling or Euros, in each case, times the daily outstanding balance of the undrawn amount of all outstanding Letters of Credit, payable monthly in arrears. In addition, Borrowers shall pay customary issuance, arranging and other fees of the Issuing Bank. |
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Default Rate: |
Following the occurrence and during the continuance of an event of default, at the election of the Required Lenders, the applicable rates of interest and rate for letter of credit fees shall be increased by 2% per annum above the otherwise then applicable rates. At the election of the Required Lenders, such increased rate shall also be applicable to Revolving Loans and Letters of Credit outstanding in excess of the Borrowing Base, whether or not such excess(es) are permitted by Agent or any Lender at any time. |
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Rate and Fee Basis; Payment
Dates: |
All per annum rates and fees will be computed on basis of actual days elapsed over a 360 day year (or 365 or 366 days, as the case may be, in the case of Revolving Loans for which the US Base Rate is used or in the case of Revolving Loans denominated in Pounds Sterling or Euros). In the case of Revolving Loans for which the LIBOR Rate or the Canadian BA Rate is used, interest is payable on the last day of each relevant interest period or in the case of an interest period longer than 3 months, then within 3 months, in arrears, and in the case of Revolving Loans for which the US Base Rate, UK Base Rate or Canadian Base Rate is used, interest is payable monthly in arrears. |
SCHEDULE 2
TO
EXHIBIT B TO COMMITMENT LETTER
Tier
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Quarterly Average Excess Availability
|
Applicable LIBOR Rate and UK Base Rate
Margin |
Applicable
Base Rate Margin |
Applicable Canadian BA Rate |
1 |
Greater than 65% of the Maximum Credit |
1.25% |
0.25% |
1.25% |
2 |
Less than or equal to 65% of the Maximum Credit and
greater than 35% of the Maximum Credit |
1.50% |
0.50% |
1.50% |
3 |
Less than or equal to 35% of the Maximum Credit |
1.75% |
0.75% |
1.75% |
The Applicable Margin for the interest rates for the Credit
Facility shall be the applicable percentage calculated based on the percentage set forth in Tier 3 of the chart above until the
last day of the third full month after the Closing Date. The interest rates will be adjusted every three months thereafter based
on the chart above.
The Applicable Margin shall be calculated and established once
every three months, effective as of the first day of such three month period and shall remain in effect until adjusted thereafter
at the end of the such three month period.
“Applicable Margin” means (a) as to Revolving Loans
for which interest is calculated based on the US Base Rate, the UK Base Rate or the Canadian Base Rate, the Applicable Base Rate
Margin set forth above, (b) as to Revolving Loans for which interest is calculated based on LIBOR, the Applicable LIBOR Margin
set forth above, (c) as to Revolving Loans for which interest is calculated based on the Canadian BA Rate, the Applicable Canadian
BA Rate Margin set forth above, in each case determined if the Quarterly Average Excess Availability for the immediately preceding
three month period is at or within the amounts indicated for such percentage as of the last day of the immediately preceding three
month period, provided, that, the Applicable Margin shall be increased by 25 basis points for each level in the chart
above and for each category of loan during the Seasonal Advance Period.
The term “Quarterly Average Excess Availability”
shall mean, at any time, the average of the aggregate amount of the Excess Availability for the immediately preceding three month
period as calculated by Agent.
Annex 1
to
Exhibit B
to
Commitment Letter
Specified Terms of IPCo License Agreements
1.
Intercompany License. The terms of the intercompany license agreement between OpCo and its subsidiaries, as licensees
and IPCo and the IPCo subsidiaries as licensors (the “Intercompany License”) shall include:
| (a) | Grant. IPCo and IPCo subsidiaries will grant OpCo and its subsidiaries the exclusive right to use the IP Assets owned
or licensed (other than (i) rights under inbound licenses which are currently licensed to Target or its subsidiaries and which
shall be licensed directly to OpCo and its subsidiaries by the applicable third party owner and licensor and in which IPCo and
IPCo Subsidiaries shall have no interest or (ii) to the extent that the exclusivity of the license granted by IPCo and its subsidiaries
to OpCo and its subsidiaries as to any specific intellectual property would prevent the use of such intellectual property by an
existing licensee of it in breach of the existing license agreement of such licensee with Target or its subsidiaries, in which
case the license from IPCo and its subsidiaries to OpCo and its subsidiaries shall be non-exclusive to the extent it would not
result in such breach) by IPCo and IPCo Subsidiaries (“IPCo IP”) as such IPCo IP was used by the Target or its subsidiaries
in the operation of its wholesale and retail businesses immediately prior to date of the Commitment Letter (including with respect
to categories, channels, and geographies). |
| (b) | Term. The Intercompany License will have a duration of six (6) years. |
| (c) | Royalty. OpCo will pay IPCo an annual license fee of $20,000,000 unless OpCo has not undergone a “change of control”
(as defined at the end of this clause (c)), in which case the annual license fee shall be $10,000,000. The annual license fee will
be paid by OpCo in quarterly installments in advance. For purposes of the Intercompany License, a “change of control”
shall mean an event or series of events by which (i) Sponsor and Sponsor-Related Investors, shall collectively cease to own and
control legally and beneficially, either directly or indirectly, more than 50% (on a fully diluted basis) of the issued and outstanding
equity interests of OpCo HoldCo with ordinary voting power entitled to vote for members of the board of directors or equivalent
governing body of OpCo HoldCo; (ii) during any period of 12 consecutive months, a majority of the members of the board of directors
or other equivalent governing body of OpCo Holdco cease to be composed of individuals (A) who were members of that board or equivalent
governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was
approved by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority
of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body
was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body; (iii) either (A) (1) Super HoldCo fails at any time to own directly
100% of the equity interests of OpCo HoldCo and (2) (x) Super HoldCo owns directly less than 100% but more than 50% of the equity
interests of OpCo HoldCo or (y) Super HoldCo owns and controls legally and beneficially directly less than 100% but more than 50%
(on a fully diluted basis) of the issued and outstanding equity interests of OpCo HoldCo with ordinary voting power entitled to
vote for members of the board of directors or equivalent governing body of OpCo HoldCo, and, in each case, at such time, OpCo HoldCo
has not provided a Guaranty of the obligations under the IPCo First Lien Facility and IPCo Second Lien Facility on the same terms
and conditions as the Guaranty provided by the other Guarantors of the obligations under such credit facilities, or (B) Super HoldCo
owns directly less than 50.1% of the equity interests of OpCo HoldCo or Super HoldCo owns and controls legally and beneficially
directly less than 50.1% of the issued and outstanding equity interests of OpCo HoldCo with ordinary voting power entitled to vote
for members of the board of directors or equivalent governing body of OpCo HoldCo; or (iv) any “change in control”
or similar event as defined in any document governing material indebtedness (to be defined in the Credit Facility (and reasonably
agreed to by the agent under the IPCo First Lien Facility) of OpCo HoldCo or any of its subsidiaries; or (v) OpCo HoldCo fails
at any time to own directly 100% of the equity interests of OpCo. |
| (d) | Sell-off rights. The Intercompany License will provide for sell-off rights on default or termination in a manner and
on terms reasonably satisfactory to Agent. |
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| (e) | Termination. The Intercompany License will (x) provide IPCo and IPCo Subsidiaries with customary
termination rights (including for a sale of all or substantially all of OpCo’s assets or a breach
of the Intercompany License by OpCo), and (y) provide for the right by OpCo and its subsidiaries to
assume and use the intellectual property subject to such Intercompany License in the event of a bankruptcy
of OPCo or its subsidiaries without the consent of the licensors but only to the extent any existing
defaults thereunder are cured. |
| (f) | Other Material Terms. With respect to terms of the Intercompany License not specifically addressed in items (a) through
(e) above, the Intercompany License shall contain such other terms as are reasonably acceptable to the Agent and the agent under
the IPCo First Lien Facility (including with respect to breach, cure periods for certain events of default (to be mutually agreed
by the Agent and the agent under the IPCo First Lien Facility0, renewal, amendment, assignment, reporting, advertising approval,
and indemnities). |
2.
Non-Exclusive License Granted by IPCo to Agent. A license agreement by and among Agent, IPCo, IPCo subsidiaries and
the agents under the IPCo First Lien Facility and IPCo Second Lien Facility shall provide that IPCo and IPCO Subsidiaries each
grants to Agent an irrevocable, worldwide, non-exclusive license to use, license or sublicense intellectual property without any
royalty or other payments (whether or not the Intercompany License is in default or has been terminated) after default under the
Credit Facility or otherwise in connection with the enforcement and exercise of the remedies of Agent with respect to the Collateral
in each case, until the obligations under the ABL Facility (other than contingent indemnification obligations and unasserted expense
reimbursement obligations that expressly survive the termination or repayment in full of the Credit Facility) have been in paid
in full in cash.
3.
Existing Outbound Licenses. Separate and apart from the Intercompany License, if (a) an outbound license agreement
(an “Existing Outbound License”) between a third party licensee, on the one hand, and PEI Licensing, Inc., Perry Ellis
International Group Holdings Limited, or any of their subsidiaries (“IP Subs”), on the other hand, existing as of the
date of the Commitment Letter is amended or terminated following the date of the Commitment Letter and (b) following such amendment
or termination OpCo or any of its subsidiaries performs any of the activities that were performed by such third party licensee
of such Existing Outbound License in respect of such Existing Outbound License prior to such amendment or termination, then to
the extent OpCo or its subsidiaries obtains the same or similar rights and benefits of such third party licensee under such Existing
Outbound License, OpCo or such subsidiaries shall, in addition to the annual license fee set forth in clause (c) above, pay IPCo
a license fee equal to the license fee (as such license fee may be adjusted to reflect the proportional rights and benefits obtained
by OpCo or its subsidiaries under such Existing Outbound License, as reasonably determined by IPCo and the First Lien Agent) that
the IP Sub would have received from such third party licensee with respect to such Existing Outbound License, if such Existing
Outbound License Agreement was not amended or terminated.
Annex 2
to
Exhibit B
to
Commitment Letter
Consolidated EBITDA
“Consolidated EBITDA” shall mean, as to any
person, with respect to any applicable measurement period, an amount equal to the following items of such person (together with
its subsidiaries):
| (a) | consolidated net income (or loss) in accordance with GAAP for such period, plus (in each case, without duplication, the following
to the extent deducted in calculated consolidated net income for such period), plus |
| (b) | depreciation and amortization expense for such period, all in accordance with GAAP, plus |
| (c) | any cash or non-cash interest expense for such period, to the extent treated as interest in accordance with GAAP, plus |
| (d) | provision for taxes based on income, profits or capital, including for federal, state, franchise, local and foreign and similar
taxes, in each case, for such period, plus |
| (e) | extraordinary or non-recurring charges, expenses or losses in an aggregate amount not to exceed, together with any amounts
added back pursuant to clause (h) below, 10% of Consolidated EBITDA for the applicable measurement period (calculated prior to
giving effect to such addbacks described in this clause (e) and clause (h) below for such period), plus |
| (f) | (i) fees, costs and expenses in connection with the Transactions and (ii) transaction fees, costs and expenses incurred in
connection with any acquisitions, dispositions and other non-recurring transactions (whether or not consummated) permitted under
the definitive Credit Documentation in an aggregate amount not to exceed an amount to be agreed for such period, plus |
| (g) | non-cash charges, expenses or losses (including, without limitation, any non-cash stock based compensation expense for such
period and the effects of purchase accounting related to the Transactions) which do not represent a cash item in such period or
any future period, plus |
| (h) | expenses, costs and charges related to personnel relocation, restructuring, redundancy, severance, termination, settlement
or judgment and one-time compensation charges, including charges and expenses attributable to abandoned, closed, disposed or discontinued
operations or related to the disposal of disposed, abandoned, closed or discontinued operations in an aggregate amount not to exceed,
together with any amounts added back pursuant to clause (e) above, 10% of Consolidated EBITDA for the applicable measurement period
(calculated prior to giving effect to such addbacks described in this clause (h) and clause (e) above for such period), minus |
| (i) | customary income, credit and gain items corresponding to those referred to in clauses (d), (e) and (g) above and any other
customary items, minus |
| (j) | all non-cash income or gains for such period, minus |
| (k) | federal, state, local and foreign income tax credits during such period, minus |
| (l) | all extraordinary or non-recurring gains during such period, excluding any non-cash gain to the extent that it represents the
reversal of an accrual or reserve for a potential cash item that reduces Consolidated EBITDA in any prior period, minus |
| (m) | the net income of any subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions
by such subsidiary of such income is not permitted by operation of the terms of its organization documents or any agreement, instrument
or law applicable to such subsidiary during such measurement period, minus |
| (n) | any income (or loss) for such measurement period of any person if such person is not a subsidiary. |
EXHIBIT C
TO
COMMITMENT LETTER
Conditions Precedent to Initial Borrowings
under Credit Facility
The conditions precedent to the initial
borrowings under the Credit Facility will consist of the conditions precedent set forth in Section 5 of the Commitment Letter,
the Conditions Precedent to All Borrowings and the following conditions precedent:
(a) |
The Acquisition shall have been, or, substantially concurrently with the initial borrowing under the Credit Facility, shall be consummated in accordance with the terms of the Acquisition Agreement (as amended or otherwise modified from time to time, to the extent such amendments or modifications are not materially adverse to the interests of the Lenders (it being understood that (i) any decrease in the purchase price by not more than 10% of the aggregate purchase price shall not be materially adverse to the interests of the Lenders so long as, such decrease is allocated to reduce the IPCo First Lien Facility, the IPCo Second Lien Facility and the Mortgage Facility on a pro rata, dollar-for-dollar basis, (ii) any increase in the purchase price shall not be materially adverse to the Lenders so long as such increase is funded by amounts permitted to be drawn under the Credit Facility or other sources of funds available to the Sponsor, and (iii) any change to the definition of “Material Adverse Effect” contained in the Acquisition Agreement or any waiver of the conditions precedent set forth in the Acquisition Agreement regarding the absence of a “Material Adverse Effect”, without the consent of Lead Arranger, shall be deemed to be material and adverse to the interests of the Lenders), except as consented to by Lead Arranger and otherwise in compliance with material applicable law. |
|
|
(b) |
The Rolled Equity Contribution shall have been or, substantially concurrently with the initial borrowing under the Credit Facility, shall be consummated and the IPCo First Lien Facility, the IPCo Second Lien Facility and the Mortgage Facility shall each have been or, substantially concurrently with the initial borrowing under the Credit Facility, shall each be, consummated, and the proceeds shall have been used to pay all or a portion of the cash consideration for the Acquisition and related fees, costs and expenses and OpCo shall have entered into an intercompany licensing agreement with IPCo and IPCo subsidiaries and IPCo, IPCo subsidiaries and the agent under the IPCo Credit Facilities shall have entered into a license agreement with Agent, in each case with respect to the IPCo IP, on the terms and conditions as provided on Annex 1 to Exhibit B hereto. The Refinancing shall have been, or, substantially concurrently with the initial borrowing under the Credit Facility, shall be consummated. |
|
|
(c) |
Subject in all cases to the Certain Funds Provisions, execution and delivery of all Loan Documents by the Loan Parties and other parties thereto, as applicable, and including: (i) customary legal opinions, (ii) customary evidence of authority from each Loan Party, (iii) customary officer’s certificates from each Loan Party, (iv) good standing certificates (to the extent applicable) in the respective jurisdictions of organization of each Loan Party, (v) UCC financing statements for each Loan Party, (vi) evidence of insurance coverage and lender’s loss payable endorsements as to casualty and business interruption insurance, and (vii) security and pledge agreements consistent with the Term Sheet. Subject in all cases to the Certain Funds Provision, Agent, for the benefit of itself, Lenders, Issuing Bank and bank product providers, shall hold perfected, first priority security interests in and liens upon, the Collateral (subject to certain specified permitted liens), and none of the Collateral shall be subject to any other pledges, security interests, mortgages or assignments as security, except for liens permitted under the Loan Documents. |
|
|
(d) |
In the event that the Alternative
Borrowing Base is in effect, the maximum amount of the Loans made on the Closing Date shall not exceed $145,000,000 (which amount
excludes up to $10.2 million of letters of credit deemed issued and outstanding under the Credit Facility) and opening Excess
Availability at closing (after the application of proceeds of the initial funding under the Credit Facility and/or issuance of
initial Letters of Credit under the Credit Facility and after payment of all fees and expenses of the Transactions payable on
the Closing Date), shall be not less than 17.5% of the Loan Cap. In the event that the Borrowing Base is in effect, opening Excess
Availability at closing (after the application of proceeds of the initial funding under the Credit Facility and/or issuance of
initial Letters of Credit under the Credit Facility and after payment of all fees and expenses of the Transactions payable on
the Closing Date), shall be not less than the amount determined by the applicable percentage of the Loan Cap set forth below based
on the month in which the Closing Date occurs:
|
|
|
Month in which Closing Date Occurs |
Excess Availability equal to Percentage of Loan Cap Required |
|
|
|
July 2018 |
26.2% |
|
|
|
August 2018 |
28.0% |
|
|
|
September 2018 |
21.8% |
|
|
|
October 2018 |
21.8% |
|
|
|
November 2018 |
17.5% |
|
|
|
December 2018 |
20.7% |
|
|
In the case of the US Borrowing Base, the calculation shall be based substantially on the method of calculation
under the Existing ABL Credit Agreement. Agent shall have received an update of the Borrowing Base consistent with Agent’s
customary procedures and practices so as to obtain current results which shall reflect the Borrowing Bases or alternatively, the
Alternative Closing Borrowing Base, as the case may be.
|
(e) |
Lead Arranger shall have received at least 15 business days prior to the Closing Date all documentation and information as is reasonably requested by an Arranger or Agent that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act, and including satisfactory internal regulatory compliance review for FDPA in each case to the extent requested in writing at least 20 business days prior to the Closing Date. |
|
|
(f) |
Lead Arranger shall have received (i) projected balance sheets, income statements, statements of cash flows and availability of OpCo Holdco and its subsidiaries giving effect to the Transactions and covering the term of the Credit Facility, which projections shall be on a monthly basis for the twelve-month period following the Closing Date, a quarterly basis for the twelve-month period thereafter and on an annual basis thereafter for the term of the Credit Facility, and an opening pro forma balance sheet for Borrowers as of and for the twelve-month period ending on the last day of the most recently completed twelve-month period ended at least 45 calendar days prior to the Closing Date and a pro forma consolidated balance sheet and related pro forma consolidated statements, prepared after giving effect to the Transactions as if the Transactions had occurred as of such date, and (ii) interim unaudited financial statements for the year to date period through the most recent quarter ended at least 45 days prior to the Closing Date with prior year comparison since the last audited financial statements for which financial statements are available. |
|
|
(g) |
Reserved. |
|
|
(h) |
Since the date of the Acquisition Agreement, there shall not
have occurred a “Company Material Adverse Effect.”
The term “Company Material Adverse Effect”
shall mean any fact, circumstance, change, event, development, occurrence or effect that has, or would reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the business, properties, assets or results of operations
or financial condition of the Target and its Subsidiaries, taken as a whole; provided, that the term “Company Material Adverse
Effect” shall not include any such effect relating to or arising from (i) any national, international or any foreign or
domestic regional economic, financial, social or political conditions (including changes therein), including the results of any
primary or general elections, (ii) changes in any financial, debt, credit, capital or banking markets or conditions (including
any disruption thereof), (iii) changes in interest, currency or exchange rates or the price of any commodity, security or market
index, (iv) changes in legal or regulatory conditions, including changes or proposed changes in Law, GAAP or other accounting
principles or requirements, or standards, interpretations or enforcement thereof, (v) changes in the Target’s and its Subsidiaries’
industries in general or seasonal fluctuations in the business of the Target or any of its Subsidiaries, (vi) any change in the
market price or trading volume of any securities or indebtedness of the Target or any of its Subsidiaries, any decrease of the
ratings or the ratings outlook for the Target or any of its Subsidiaries by any applicable rating agency, or the change in, or
failure of the Target to meet, or the publication of any report regarding, any internal or public projections, forecasts, budgets
or estimates of or relating to the Target or any of its Subsidiaries for any period, including with respect to revenue, earnings,
cash flow or cash position (it being understood that the underlying causes of any of the foregoing may, if they are not otherwise
excluded from the definition of Company Material Adverse Effect, be taken into account in determining whether a Company Material
Adverse Effect has occurred), (vii) the occurrence, escalation, outbreak or worsening of any hostilities, war, police action,
acts of terrorism or military conflicts, whether or not pursuant to the declaration of an emergency or war, (viii) the existence,
occurrence or continuation of any force majeure events, including any earthquakes, floods, hurricanes, tropical storms, fires
or other natural disasters or any national, international or regional calamity, (ix) compliance by the Target and its Subsidiaries
with the terms of the Acquisition Agreement, including the failure to take any action restricted by the Acquisition Agreement,
or any actions taken to the extent required by the Acquisition Agreement (other than the conduct of the operations of the Target
and its Subsidiaries in the ordinary course consistent with past practice pursuant to the first sentence of Section 5.1 of the
Acquisition Agreement), (x) any actions taken, or not taken, with the written consent, waiver or at the written request of Holdings,
(xi) any matters solely to the extent of the facts, circumstances, changes, events, developments, occurrences or effects disclosed
in Section 3.14 or item (c)(i) under Section 3.20 of the Company Disclosure Letter, (xii) the public announcement of the Acquisition
Agreement, the transactions contemplated by the Acquisition Agreement and the identities of Holdings, Merger Sub and their respective
Affiliates, (xiii) the execution, announcement, performance or existence of the Acquisition Agreement and the Voting Agreement
and (xiv) any Legal Actions involving stockholders of the Target arising from or relating to the Acquisition Agreement, the Voting
Agreement or the transactions contemplated by the Acquisition Agreement or the Voting Agreement, except, in the case of clauses
(i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above, to the extent any such effect has a disproportionate adverse impact
on the Target and its Subsidiaries, taken as a whole, relative to other similarly situated companies in the principal industries
in which the Target and its Subsidiaries operate. All capitalized terms used in this definition and not otherwise defined in this
Term Sheet shall have their meanings as set forth in the Acquisition Agreement. |
|
|
(i) |
Lead Arranger shall have received a solvency certificate from the chief financial officer (or other officer with reasonably equivalent knowledge or responsibilities, including, without limitation, the chief executive officer) of OpCo Holdco substantially in the form attached hereto as Annex I. |
|
|
(j) |
All costs, fees and expenses contemplated hereby or in the Fee Letter due and payable on the Closing Date to Agent, Arrangers and Lenders in respect of the Transactions shall have been paid, as to costs and expenses to the extent invoiced at least one business day prior to the Closing Date. |
|
|
(k) |
The Specified Representations shall be true and correct in all materials respects on the Closing Date where not already qualified by materiality or “material adverse effect”, otherwise in all respects. The Acquisition Agreement Representations shall be true and correct to the extent required by the Certain Funds Provision. |
|
|
(l) |
The Lead Arranger shall have a period (the “Marketing Period”) of at least 20 consecutive business days following Lead Arranger’s receipt from the Sponsor of its final approval of the Marketing Materials (which date shall be deemed to be the earlier of July 9, 2018 or the date Lead Arranger receives such approval from the Sponsor) to syndicate the Credit Facility, provided that, for purposes of determining the Marketing Period, such 20 consecutive business day period shall not be required to be consecutive to the extent it would include July 3, 2018 through and including July 8, 2018 , or August 27, 2018 through and including September 4, 2018, or November 21, 2018 through and including November 26, 2018, in each case which dates shall not count for purposes of satisfying the 20 consecutive business day requirement. |
.
ANNEX I
TO
TO EXHIBIT C TO COMMITMENT LETTER
SOLVENCY CERTIFICATE
of
OPCO HOLDCO AND ITS SUBSIDIARIES
[Pursuant to the [Credit Agreement], the undersigned hereby
certifies, solely in such undersigned’s capacity as chief financial officer of OpCo Holdco, and not individually, as follows:
As of the date hereof, after giving effect to the consummation
of the Transactions, including the making of any Revolving Loans and the issuance of any Letters of Credit under the Credit Agreement
on the date hereof, and after giving effect to the application of the proceeds of such Revolving Loans:
| (a) | The fair value of the assets of OpCo Holdco and its Subsidiaries, on a consolidated basis, exceeds, on a consolidated basis,
their debts and liabilities, subordinated, contingent or otherwise; |
| (b) | The present fair saleable value of the property of OpCo Holdco and its Subsidiaries, on a consolidated basis, is greater than
the amount that will be required to pay the probable liability, on a consolidated basis, of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; |
| (c) | OpCo Holdco and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such liabilities become absolute and matured; and |
| (d) | OpCo Holdco and its Subsidiaries, on a consolidated basis, are not engaged in, and are not about to engage in, business for
which they have unreasonably small capital. |
For purposes of this Certificate, the amount of any contingent
liability at any time shall be computed as the amount that would reasonably be expected to become an actual and matured liability.
Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
The undersigned is familiar with the business and financial
position of OpCo Holdco and its Subsidiaries. In reaching the conclusions set forth in this Certificate, the undersigned has made
such other investigations and inquiries as the undersigned has deemed appropriate, having taken into account the nature of the
particular business anticipated to be conducted by OpCo Holdco and its Subsidiaries after consummation of the transactions contemplated
by the Commitment Letter.]
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has
executed this Certificate in such undersigned’s capacity as chief financial officer of OpCo Holdco, on behalf of OpCo Holdco,
and not individually, as of the date first stated above.
|
[OPCO HOLDCO] |
|
|
|
By: _____________________________ |
|
Name: |
|
Title: |
C-6
This regulatory filing also includes additional resources:
ex9915to13da711576002_061818.pdf
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