Notes
to Consolidated Financial Statements
(in
thousands, except share and per share data)
Note
1
—
Nature of Operations
Nature
of Operations—
Rack Holdings Inc. (the “Company”) is a Delaware holding company
with no operations, which owns 100% of Ranpak Corp. and its wholly owned subsidiaries (“Ranpak”). The Company is a
leading provider of environmentally sustainable, systems-based, product protection solutions for e-commerce and industrial supply
chains. Through proprietary protective packaging systems and paper consumables, the Company offers a suite of protective packaging
solutions. The Company’s business is global, with a strong presence in the United States and Europe.
Note
2
—
Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation and Principles of Consolidation—
The consolidated financial statements include the accounts the Company
and its wholly owned subsidiaries prepared in conformity with accounting principles generally accepted in the United States of
America (“U.S. GAAP”). All intercompany accounts and transactions are eliminated upon consolidation.
Use
of Estimates
—
The preparation of consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could
be material.
Emerging
Growth Company
—Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have
a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period
and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Cash
and Cash Equivalents
—Cash and cash equivalents include securities with original maturities of three months or less
and cash in bank.
Accounts
Receivable
—The Company provides credit in the normal course of business to its customers and does not require collateral.
Trade receivables, less allowance for doubtful accounts, reflect the net realizable value of receivables and approximate fair
value. The Company maintains an allowance against accounts receivable for the estimated probable losses on uncollectible accounts
and sales returns and allowances. The valuation reserve is based upon historical loss experience, current economic conditions
within the industries the Company serves as well as determination of the specific risk related to certain customers. Accounts
receivable are charged off against the reserve when, in management’s estimation, further collection efforts would not result
in a reasonable likelihood of receipt, or, if later, as proscribed by statutory regulations. The allowance for doubtful accounts
was $172 and $147 at December 31, 2018 and 2017, respectively.
Inventories
—Inventories
consist of unprocessed and finished paper and are stated at the lower of cost or net realizable value. Cost for all inventories
is determined using the first-in, first-out method applied on a consistent basis. An allowance for excess or inactive inventory
is recorded based upon an analysis that considers current inventory levels, historical usage patterns, estimates of future sales
expectations and salvage value.
Property,
Plant and Equipment
—Property, plant, and equipment, including amounts under capital lease, are stated at cost less
accumulated depreciation. Renewals and betterments that substantially extend the useful life of an asset are capitalized and depreciated.
Leasehold improvements are depreciated over the lesser of the useful life of the asset or the applicable lease term.
Depreciation
and amortization are computed using the straight-line method over the estimated useful lives as follows:
|
|
Estimated
Useful
Lives
|
|
|
|
Buildings
and improvements
|
|
20
to 40 years
|
Machinery
and equipment
|
|
5
to 10 years
|
Converting
machines
|
|
3
to 5 years
|
Computer
and office equipment
|
|
3
to 7 years
|
Assets
under capital leases
|
|
3
to 7 years
|
Acquisitions
—
The Company accounts for acquisitions in accordance with Accounting Standards Codification (“ASC”) Topic 805,
Business Combinations
(“ASC 805”). ASC 805 provides guidance on the accounting and reporting for transactions
that represent business combinations to be accounted for under the acquisition method.
Goodwill
—Goodwill
is not subject to any amortization but is tested for impairment annually as of December 31 and when events or circumstances indicate
that the estimated fair value of a reporting unit may no longer exceed its carrying value. If the carrying value of the reporting
unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that reporting unit.
The
Company uses the discounted cash flow method of the income approach and market approach to determine the fair value of reporting
units and test for impairment as Management believes this is the most direct approach to incorporate the specific economic attributes
and risk profiles of our reporting units into our valuation model. This is consistent with the methodology used to determine the
fair value of reporting units in previous years.
Intangible
Assets
—Finite-lived intangible assets consist of patented and unpatented technology and customer/distributor relationships.
|
●
|
Patented
and Unpatented Technology
|
The
Company is a provider of protective paper packaging systems. The patented and unpatented technology enables the Company to provide
products and systems, including cushioning, void-fill and wrapping, to its customers worldwide.
Historically,
patented and unpatented technology intangible assets have estimated economic lives ranging from 10 to 17 years. Patented and unpatented
technology intangible assets are amortized on a straight-line basis.
|
●
|
Customer/Distributor
Relationships
|
The
Company maintains relationships with a network of distributors worldwide. The distributors agree to exclusively supply the Company’s
paper systems as their only paper-based solution, and in turn, benefit from training, sales support and custom-engineered solutions.
Historically,
customer/distributor relationships intangible assets have estimated economic lives approximating 10 years. Customer/distributor
relationships intangible assets are amortized on a straight-line basis.
Indefinite-lived
intangible assets consist of trademarks.
Trademarks
are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. The Company performs
an annual impairment test of trademarks as of December 31, or more frequently if impairment indicators arise. The impairment reviews
performed during the years ended December 31, 2018, 2017 and 2016, confirmed that the fair value of the Company’s trademark
portfolio exceeded the carrying value, and accordingly, there was no impairment of such indefinite-lived intangible asset for
that period. The Company’s estimated fair value of trademarks as of its impairment testing date are based on various assumptions
and estimates, including an estimated weighted-average cost of capital, royalty rate, residual growth rate and forecasted operating
results. If the Company is not able to achieve forecasted operating results in future periods, its estimate of fair values for
trademarks could be adversely impacted.
Impairment
of Long-lived Assets
—The Company reviews its long-lived assets, including finite-lived intangible assets and property,
plant, and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may
not be recoverable. For long-lived assets, except goodwill, an impairment loss is indicated when the undiscounted future cash
flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If
indicators exist, the loss is measured as the excess of carrying value over the asset groups’ fair value, as determined
based on discounted future cash flows, asset appraisals or market values of similar assets.
Fair
Value Measurements
—Financial instruments are required to be categorized within a valuation hierarchy based upon
the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are
measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available
in the market used to measure fair value:
|
●
|
Level
1
— Observable inputs that reflect quoted prices (unadjusted) for identical
assets or liabilities in active markets.
|
|
●
|
Level
2
— Inputs that are based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant inputs are observable
in the market or can be derived from observable market data. Where applicable, these
models project future cash flows and discount the future amounts to a present value using
market-based observable inputs including interest rate curves, foreign exchange rates,
and credit ratings.
|
|
●
|
Level
3
— Unobservable inputs that are supported by little or no market activities.
|
Derivative
Financial Instruments
—The Company accounts for derivative financial instruments in accordance with ASC Topic
815,
Derivatives and Hedging
(“ASC 815”). ASC 815 requires that all derivative financial instruments,
such as interest rate swap and interest rate cap agreements, be recognized in the consolidated financial statements and measured
at fair value, regardless of the purpose or intent in holding them. The Company does not currently account for its derivative
financial instruments as hedges. The Company recognizes and measures all derivative instruments in the consolidated financial
statements at fair value to the extent derivative instruments are in place. In the normal course of business, the Company is exposed
to changes in foreign currencies and fluctuations of interest rates. The Company has established policies and procedures that
govern the management of these exposures through the use of derivative financial instruments. The Company does not enter into
such instruments for trading purposes or speculation.
The
Company may, from time to time, use interest rate cap contracts to reduce its exposure to market risks resulting from fluctuations
in interest rates. The fair value of the interest rate cap contracts, which do not qualify for special hedge accounting treatment,
are included in current liabilities on the Consolidated Balance Sheets with changes in the fair value reflected as a component
of interest expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).
The
interest rate cap contracts are over-the-counter contracts and the inputs utilized to determine their respective fair values are
obtained in quoted public markets for similar instruments and received from financial institutions, including consideration of
the credit worthiness of the counterparties related to the instruments. Therefore, the Company has categorized these interest
rate cap agreements as Level 2 within the fair value hierarchy. The Company’s disclosure of the fair value of its lending
arrangements is considered to be Level 2 within the fair value hierarchy.
In
2014, the Company entered into two deferred premium interest rate cap contracts to provide protection against the fluctuation
of interest rates through September 30, 2018. Premiums on both contracts are paid quarterly and commenced on December 31,
2015. The two deferred premium interest rate cap contracts expired without renewal on September 30, 2018. At December 31, 2017,
the Company recognized a current derivative liability of $581 representing the fair value of the deferred premium interest rate
cap contracts, and the notional amounts and estimated fair values of those contracts outstanding at December 31, 2017, are presented
in the following table.
|
|
December 31, 2017
|
|
Non-hedging interest rate derivatives:
|
|
Amount
|
|
|
Estimated
Fair Value
|
|
Interest rate swaps - liabilities
|
|
$
|
275,000
|
|
|
$
|
2,012
|
|
Interest rate swaps - liabilities
|
|
|
132,000
|
|
|
|
75
|
|
Interest rate caps - assets
|
|
|
275,000
|
|
|
|
(1,506
|
)
|
Interest rate caps - liabilities
|
|
|
132,000
|
|
|
|
-
|
|
Employee
Benefit Plans
—The Company’s U.S. employees participate in a defined contribution plan and health and life
insurance plans sponsored by the Company. A Company subsidiary, Ranpak B.V., participates in a multiemployer benefit plan, Corporate
Pension Fund for Cardboard and Flexible Packaging Business (“the B.V. Plan”), in the Netherlands, which provides retirement
benefits to all Ranpak B.V. employees. As a participant in the multi-employer benefit plan, the Company recognizes as expense
in each period for the required contributions to the multi-employer benefit plans.
Foreign
Currency
—The nature of business activities involves the management of various financial and market risks, including
those related to changes in foreign currency exchange rates. The functional currency of the Company’s operating subsidiaries
outside the U.S. is the applicable local currency. For those operations, assets and liabilities are translated into U.S. dollars
at period-end exchange rates and revenues and expenses are translated into U.S. dollars using average monthly exchange rates.
Foreign
currency gains and losses from transactions and conversion of Euro-based term notes are included in the Consolidated Statements
of Operations and Comprehensive Income (Loss). Net foreign currency transaction (gains) losses were $(4,235), $14,188 and $(3,081)
for the years ended December 31, 2018, 2017 and 2016, respectively. Translation adjustments recorded are the only component
of accumulated other comprehensive loss in shareholders’ equity and were $(7,358), $21,536 and $(4,680) for the years ended
December 31, 2018, 2017 and 2016, respectively. The effects of translating financial statements of foreign operations into
the Company’s reporting currency are recognized as a cumulative translation adjustment in accumulated other comprehensive
income (loss) which is net of tax, where applicable.
Revenue
Recognition
—The Company sells its products to end users primarily through an established distributor network and
direct sales to select end users. The Company’s protective packaging solutions fall into four broad categories: Void-Fill,
Cushioning, Wrapping, and End of Line Automation. The Void-Fill protective systems convert paper to fill empty spaces in
secondary packages and protect objects. The Cushioning protective systems convert paper into cushioning pads. The Wrapping protective
systems create pads or paper mesh to securely wrap and protect fragile items as well as to line boxes and provide separation when
shipping multiple objects. Through the acquisition of e3neo in 2017 and other initiatives, the End of Line Automation product
line was created and is focused on highly automated, integrated box-sizing systems for high-volume end-users.
The
Company derives substantially all of its revenue through the sale of paper consumables that work exclusively with the protective
systems under the Void-Fill, Wrapping, and Cushioning product lines. The Company also provides proprietary protective systems
to distributors and end users for a user fee, which is charged on a per unit basis, under the Void-Fill, Cushioning, and Wrapping
product lines. The Company retains ownership of such protective systems during the term of the arrangement. The Company’s revenue
is generated from arrangements with distributors and end users involving combinations of product and user fees. The deliverables
within these arrangements are evaluated at inception to determine whether they represent one or separate units of accounting.
In accordance with ASC 605-25, the Company’s arrangements are initially evaluated under ASC 840 –
Leases
, as
the arrangements involve the use of property, plant or equipment. As the separate recognition of a lease that is embedded in a
multiple-element arrangement is required, the Company separates the portion of the total payments that are attributable to the
lease from the payments that are attributable to the non-lease elements based on relative selling price. The relative selling
price of each deliverable within these arrangements is determined using vendor specific objective evidence (“VSOE”)
of fair value, third-party evidence or best estimate of selling price. Revenue is then recognized in accordance with the appropriate
revenue recognition guidance applicable to the respective elements.
The
Company recognizes revenue when it is realized or realizable and earned, (1) there is persuasive evidence of an arrangement, (2)
delivery and performance has occurred, (3) there is a fixed or determinable sales price and (4) collection is reasonably assured.
The Company recognizes revenue when products
are shipped and the customer takes ownership and assumes risk of loss, which is primarily on the date of shipment, collection
of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed and determinable.
However, certain customers may have other terms such as “FOB destination” in which case revenue is recognized upon
receipt by the customer. Costs and related expenses of the paper consumables are recorded as cost of sales when the related revenue
is recognized. Revenues from user fees are recognized on a straight-line basis when earned over the period of use.
Shipping
and Handling Costs
—Shipping and handling fees billed to customers are recognized as revenue and were approximately
$211, $22 and $31 for the years ended December 31, 2018, 2017 and 2016, respectively, and related costs are included in cost
of sales and were approximately $4,625, $3,330 and $2,683 for the years ended December 31, 2018, 2017 and 2016, respectively.
Advertising
Costs
—Advertising costs, which the Company expenses when incurred, were approximately $582, $207 and $137 for the
years ended December 31, 2018, 2017 and 2016, respectively. These amounts include costs associated with trade shows.
Research
and Development Costs
—Research and development costs, which were $2,355, $2,233 and $2,265 for the years ended December 31,
2018, 2017 and 2016, respectively, are charged to expense when incurred and included in other operating expenses.
Income
Taxes
—The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred
income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts
and the tax basis of the assets and liabilities. The determination of the provision for income taxes requires significant judgment,
the use of estimates and the interpretation and application of complex tax laws. The provision for income taxes reflects a combination
of income earned and taxed in the various U.S. federal and state, international and other jurisdictions. Jurisdictional tax law
changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for tax
contingencies or valuation allowances, and the change in the mix of earnings from these taxing jurisdictions all affect the overall
effective tax rate.
In
assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion,
or all, of the deferred tax assets will not be realized. Management considers all available evidence, both positive and negative,
in determining whether a valuation allowance is required. Such evidence includes prior earnings history, the scheduled reversal
of deferred tax liabilities, projected future taxable income, carryback and carryforward periods of tax attributes, and tax planning
strategies that could potentially enhance the likelihood of realization of a deferred tax asset in making this assessment. The
weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified.
The
Company evaluates for uncertain tax positions at each balance sheet date. When it is more likely than not that a position will
be sustained upon examination by a tax authority that has full knowledge of all relevant information, the Company measures the
amount of tax benefit from the position and records the largest amount of tax benefit that is greater than 50% likely of being
realized after settlement with a tax authority. The Company’s policy for interest and/or penalties related to underpayments
of income taxes is to include interest and penalties in income tax expense.
Comprehensive
Income (Loss)
—Comprehensive income (loss) includes net income (loss) and other comprehensive income (loss) amounts
attributable to foreign currency translation adjustments, net of tax, as applicable.
Net
Income (Loss) Per Share
—The Company accounts for net income per share in accordance with ASC Topic 260,
Earnings
per Share
. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of common
shares outstanding during the period. Diluted income (loss) per share is computed using the weighted-average number of common
and potential dilutive common shares outstanding during the period. The Company had no potential dilutive common shares during
the years ended December 31, 2018, 2017 and 2016.
Recently
Adopted Accounting Standards
—In January 2017, the FASB issued ASU No. 2017-01,
Business Combinations (Topic 805):
Clarifying the Definition of a Business
(“ASU 2017-01”). The ASU clarifies the definition of a business and provides
guidance on evaluating as to whether transactions should be accounted for as acquisitions (or disposals) of assets or business
combinations. ASU 2017-01 provides a screen to determine when a set of assets is a business. This screen states that when substantially
all of the fair value of a group of assets acquired (or disposed of) is concentrated in a single identifiable asset or group of
similar identifiable assets, the set is not a business. The amendments in ASU 2017-01 are effective for annual periods beginning
after December 15, 2018, and interim periods with annual periods beginning after December 15, 2019. The Company early adopted
ASU 2017-01 effective January 1, 2018. The early adoption of the standard did not have an impact on the Company’s consolidated
financial statements.
In
January 2017, the FASB issued ASU No. 2017-04,
Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment
(“ASU 2017-04”), which eliminated the second step of the goodwill impairment test that required a hypothetical
purchase price allocation. The new standard requires that if a reporting unit’s carrying value exceeds its fair value, an
impairment charge would be recognized for the excess amount, not to exceed the carrying amount of goodwill. Entities will continue
to have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is
necessary. ASU 2017-04 will be effective prospectively for annual or interim goodwill impairment tests in fiscal years beginning
after December 15, 2021, or those beginning after January 1, 2017 if early adopted. The early adoption of the standard did not
have a material impact on the consolidated financial statements.
New
Accounting Standards Issued and Not Yet Adopted
—
In May 2014, the FASB issued
ASU No. 2014-09,
Revenue from Contracts with Customers
(“Topic 606”),
requiring an entity
to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.
The FASB has issued several additional ASUs since this time that add additional clarification to certain issues existing after
the original ASU was released. All the related ASUs are effective for the Company’s annual reporting period beginning January
1, 2019, and interim reporting periods within annual reporting periods beginning on January 1, 2020. The new standard could change
the amount and timing of revenue and costs for certain significant revenue streams, increase areas of judgment and related internal
controls requirements, change the presentation of revenue for certain contract arrangements and possibly require changes to the
Company’s software systems to assist in both internally capturing accounting differences and externally reporting such differences
through enhanced disclosure requirements.
The
standards permit the use of either the retrospective or cumulative effect transition method. The Company will adopt the
modified retrospective method where it will have to recognize the cumulative effect of initially applying the standard as an
adjustment to the opening balance of retained earnings while prior period amounts will not be adjusted and will continue to
be reported in accordance with the Company’s legacy accounting under ASC 605. The Company has assigned internal
resources to assist in its evaluation and is finalizing its evaluation of the impact of the standard. As part of its ongoing
evaluation, the Company is assessing the impact of the Company’s accounting for arrangements that include variable
consideration (i.e. discounts, credits, and milestone payments) and multiple performance obligations. Currently, the
Company’s revenue is generated from arrangements with distributors and end users involving combinations of product and
user fees that are evaluated under ASC 605-25 and ASC 840. The majority of the Company’s revenues is derived from the
sale of its product, paper consumables. The Company currently allocates revenue between the lease and non-lease component of
its arrangements which is consistent with the requirements under ASC 606. As such, the Company does not anticipate any impact
from the allocation of transaction price among the lease and non-lease components.
Within
its arrangements, the Company has variable consideration including but not limited to discounts and credits. Impacts
associated with variable consideration under its arrangements such as discounts and credits are not material as the Company
is currently accounting for this consideration consistent with the new standard. The Company preliminarily reviewed its sales
commission policies to determine impact under ASC 606 and does not anticipate a material impact to its financial statements
as the commissions currently being paid are immaterial to the Company’s financial statements. In addition, the Company
expects that the changes in accounting for contingent milestone payments will have an effect on the future accounting
treatment for the arrangements under the End of Line Automation Neopack Solutions S.A.S dba e3neo (“e3neo”)
product line. The previous accounting guidance contained specific guidance related to the accounting for milestone payments
including, if certain criteria were met, the ability to recognize all consideration related to the milestone once that
milestone was achieved. The revenue ASUs do not contain guidance specific to milestone payments, thereby requiring potential
milestone payments to be considered in accordance with the overall revenue recognition model. As a result, revenue from
contingent milestone payments may be recognized earlier under the revenue ASUs than under the existing guidance, based on an
assessment of the probability of achievement of the milestones and the likelihood of a significant reversal of such revenue
at each reporting date. Revenue from the end of line automation (e3neo) product line was less than 5% of total revenues in
2018 so the Company does not expect a material impact from any change in accounting for this product line. The Company is
also evaluating any changes in balance sheet classification under ASC 606 and has not currently identified any changes.
While the Company continues to assess the potential impacts of the new standard, including the areas described above, it
cannot reasonably estimate the total quantitative information related to the impact of the new standard on its
consolidated financial statements and related notes.
In
February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842)
(“ASU 2016-02”)
.
ASU 2016-02
increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance
sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after
December 15, 2019, and interim periods beginning after December 15, 2020. Early adoption is permitted. The Company is
currently in process of evaluating the impact of this new standard.
In
August 2016, the FASB issued ASU No. 2016-15,
Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts
and Cash Payments
(“ASU 2016-15”). ASU 2016-15 provides guidance on eight specific cash flow issues in regard
to how cash receipts and cash payments are presented and classified in the statements of cash flows
such
as debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination, insurance
settlement proceeds, and distributions from certain equity method investees, with the intent of reducing diversity in practice
.
The amendments in ASU 2016-15 are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal
years beginning after December 15, 2019, with early adoption permitted. Entities must apply the guidance retrospectively to all
periods presented unless retrospective application is impracticable. The Company is currently in the process of evaluating this
new standard and does not expect this standard to have a material impact on the Company’s consolidated financial statements.
In
August 2017, the FASB issued ASU No. 2017-12,
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities
(“ASU 2017-12”). This update is intended to align the financial statements with an entity’s risk
management activities. ASU 2017-12 allows for changes in the designation and measurement of hedges as well as expands the disclosures
of hedge results. The amendments in ASU 2017-12 are effective for annual periods beginning after December 15, 2019, and interim
periods beginning after December 15, 2020. The Company is currently in the process of evaluating this new standard and does not
expect this standard to have a material impact on the Company’s consolidated financial statements.
In
August 2018, the FASB issued ASU No. 2018-13,
Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement
(“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure
requirements on fair value measurements in ASC Topic 820,
Fair Value Measurement.
The amendments in ASU 2018-13 are effective
for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments
on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level
3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the
most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied
retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early
adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until
their effective date. The Company is assessing the potential impact of the new standard on the consolidated financial statements.
Note
3
—
Supplemental Balance Sheet Data
The
components of inventories and property, plant and equipment were as follows at:
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
4,123
|
|
|
$
|
7,473
|
|
Finished goods
|
|
|
8,000
|
|
|
|
5,116
|
|
Total inventories
|
|
|
12,123
|
|
|
|
12,589
|
|
Less reserve for obsolescence
|
|
|
(301
|
)
|
|
|
(211
|
)
|
Total inventories, net
|
|
$
|
11,822
|
|
|
$
|
12,378
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
3,890
|
|
|
$
|
3,971
|
|
Buildings and improvements
|
|
|
6,982
|
|
|
|
6,850
|
|
Assets under capital leases
|
|
|
1,104
|
|
|
|
894
|
|
Machinery and equipment
|
|
|
13,928
|
|
|
|
14,590
|
|
Computer and office equipment
|
|
|
8,756
|
|
|
|
5,955
|
|
Converting machines:
|
|
|
|
|
|
|
|
|
Provided to customers
|
|
|
100,833
|
|
|
|
89,469
|
|
Being assembled
|
|
|
11,535
|
|
|
|
10,833
|
|
Total property, plant and equipment
|
|
|
147,028
|
|
|
|
132,562
|
|
Less accumulated depreciation and amortization
|
|
|
(73,979
|
)
|
|
|
(58,029
|
)
|
Property, plant and equipment, net
|
|
$
|
73,049
|
|
|
$
|
74,533
|
|
Depreciation
expense related to property, plant and equipment was approximately $22,832, $20,223 and $18,621 for the years ended December 31,
2018, 2017 and 2016, respectively, and is recorded in cost of sales and depreciation and amortization in the Consolidated Statements
of Operations and Comprehensive Income (Loss). The amounts included in cost
of sales were $21,247, $19,160 and $17,545 for the years ended December 31, 2018, 2017 and 2016, respectively. Accumulated depreciation
for assets under capital leases was $761 and $661 at December 31, 2018 and 2017, respectively. The Company did not capitalize
any interest during the years ended December 31, 2018, 2017 and 2016, respectively.
There
were no material impairments of property, plant and equipment during the years ended December 31, 2018, 2017 and 2016.
The
components of accrued liabilities were as follows at:
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Accrued Liabilities
|
|
|
|
|
|
|
|
|
Payroll
|
|
$
|
4,808
|
|
|
$
|
5,757
|
|
Income taxes
|
|
|
59
|
|
|
|
3,571
|
|
Professional service fees
|
|
|
3,162
|
|
|
|
638
|
|
Bonus
|
|
|
820
|
|
|
|
-
|
|
Interest
|
|
|
281
|
|
|
|
395
|
|
Other
|
|
|
1,604
|
|
|
|
1,934
|
|
Accrued liabilities
|
|
$
|
10,734
|
|
|
$
|
12,295
|
|
Note
4
—
Acquisition
On
March 1, 2017, pursuant to the Share Purchase Agreement (“purchase agreement”) the Company acquired all of the capital
stock of Neopack Solutions S.A.S dba e3neo for total consideration of $3,265, consisting of cash paid of $2,131 and contingent
consideration of $1,134. The purchase price was in excess of the estimated fair value of net assets acquired by $3,368, which
is classified as goodwill. The acquisition was accounted for pursuant to ASC 805.
The
contingent consideration arrangement requires the Company to pay e3neo a “Next Generation Machine Payment” in two
installments, amounts which are computed by the Company based on certain criteria established in the e3neo purchase agreement.
The criteria include, but are not limited to, the design and development by e3neo of a prototype of the “Next Generation
Machine” which meets all of the requirements set forth in the definition of a “Next Generation Machine” pursuant
to the e3neo purchase agreement. The maximum amount payable did not exceed $1,134 and was paid in full in 2018.
Additionally,
the e3neo purchase agreement contains an earn-out provision whereby the seller may be entitled to receive an earn-out payment
in an amount up to the greater of (i) $2.6 million (the “Minimum Earn-Out Amount”), and (ii) the trailing twelve (12)
month earnings before income taxes, depreciation and amortization of the business calculated as of December 31, 2020 multiplied
by forty-eight percent (48%). The earn-out payment, if and to the extent earned, shall be paid in accordance with the terms of
the purchase agreement. In order to be eligible to receive the Minimum Earn-Out Amount pursuant the purchase agreement, e3neo
must have caused the business to receive purchase orders from customers and receive sign-off from such customers upon completion
of a successful factory acceptance test, for at least twenty (20) Next Generation Machines on or before December 31, 2019 subject
to the reasonable approval of the Company. Promptly following December 31, 2019, the Company will confirm in writing to the seller
whether or not the Minimum Earn-Out Amount has been earned pursuant to purchase agreement. At December 31, 2018, the Company determined
the seller will be entitled to receive the Minimum Earn-Out Amount of $2.6 million payable in 2020, and as a result, has included
the amount payable in other non-current liabilities on the consolidated balance sheet at December 31, 2018.
Pro
forma financial information for the e3neo acquisition has not been presented because the effect on the Company’s financial
results was not considered material. The financial results of e3neo have been included in consolidated financial results from
the date of acquisition, and were not material to the financial statements..
Note
5
—
Goodwill and Intangible Assets, Net
Goodwill
is the excess of the purchase price over the estimated fair value of the net assets acquired. As discussed further in Note 2,
goodwill is not subject to any amortization but is tested for impairment annually as of December 31 and when events or circumstances
indicate that the estimated fair value of a reporting unit may no longer exceed its carrying value. Management performs an annual
impairment assessment during the fourth quarter of each year based upon balances as of December 31.
The
Company has one reportable segment, Ranpak, therefore consolidated goodwill and goodwill by reportable segment are the same as
of December 31, 2018 and 2017, respectively. Changes in the carrying amount of goodwill by reportable segment for the years
ended December 31, 2018 and 2017, are as follows:
|
|
Total
Goodwill
(a)
|
|
|
|
|
|
Balance, January 1, 2017
|
|
$
|
344,564
|
|
|
|
|
|
|
Acquisition
(b)
|
|
|
3,368
|
|
Foreign currency translation
|
|
|
12,426
|
|
|
|
|
|
|
Balance, December 31, 2017
|
|
|
360,358
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
(4,632
|
)
|
|
|
|
|
|
Balance, December 31, 2018
|
|
$
|
355,726
|
|
|
(a)
|
The
carrying amount of goodwill for all periods presented is net of accumulated impairment losses of $39,095.
|
|
(b)
|
Related
to the acquisition of e3neo as discussed in Note 4.
|
The
Company has the following intangible assets, net at December 31, 2018:
|
|
Weighted-Average Amortization Period
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks (a)
|
|
Indefinite
|
|
|
$
|
56,142
|
|
|
$
|
-
|
|
|
$
|
56,142
|
|
Patented / Unpatented Technology
|
|
10.1 Years
|
|
|
|
153,013
|
|
|
|
(64,499
|
)
|
|
|
88,514
|
|
Distributor / Customer Relationships
|
|
10 Years
|
|
|
|
259,184
|
|
|
|
(110,120
|
)
|
|
|
149,064
|
|
|
|
|
|
|
$
|
468,339
|
|
|
$
|
(174,619
|
)
|
|
$
|
293,720
|
|
The
Company has the following intangible assets, net at December 31, 2017:
|
|
Weighted-Average Amortization Period
|
|
|
Gross Carrying Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks (a)
|
|
Indefinite
|
|
|
$
|
56,142
|
|
|
$
|
-
|
|
|
$
|
56,142
|
|
Patented / Unpatented Technology
|
|
10.1 Years
|
|
|
|
152,616
|
|
|
|
(49,282
|
)
|
|
|
103,334
|
|
Distributor / Customer Relationships
|
|
10 Years
|
|
|
|
266,689
|
|
|
|
(86,674
|
)
|
|
|
180,015
|
|
|
|
|
|
|
$
|
475,447
|
|
|
$
|
(135,956
|
)
|
|
$
|
339,491
|
|
(a)
|
The carrying amount of trademarks for all periods presented
is net of accumulated impairment losses of $14,658.
|
Amortization
expense related to the finite-lived intangible assets for the years ended December 31, 2018, 2017 and 2016 was $41,619, $40,850
and $40,506, respectively. Anticipated amortization expense is anticipated to be approximately $39,596 in each of the years from
2019 through 2023.
Note
6
—
Long-Term Debt
The
Company has two first lien credit facilities, a United States Dollar Tranche (“US$ Tranche”) and a Euro Tranche, a
revolving credit facility and a second lien credit facility. Each of these agreements are dated October 1, 2014. The first lien
credit facilities include: (1) a seven-year Term Loan (US$ Tranche) facility in the amount of $233,412, (2) a seven-year
Term Loan (Euro Tranche) facility in the amount of €157,000 ($180,418), and (3) a five-year $30,000 Revolving Credit
Facility, of which the equivalent of $13,000 may be denominated in Euros. In March of 2017, the Company raised $45,000 of incremental
First Lien (US$ Tranche) and used the proceeds to pay down a portion of the Second Lien (US$ Tranche), the results of which saved
the Company 400 basis points of interest on the $45,000. Borrowings under the US$ Tranche bear interest in an amount based on
either the Adjusted Eurodollar rate (the greater of 1.00% or LIBOR) plus 3.25% or a Base Rate plus 2.75% (the higher of the Federal
Funds effective rate plus ½ of 1%, prime, or the Adjusted Eurodollar rate plus 1%). Borrowings under the Euro Tranche bear
interest in an amount based on the Adjusted EURIBOR rate (the greater of 1.00% or EURIBOR) plus 3.25%. Interest on LIBOR and EURIBOR
rate loans are payable at the end of the applicable interest periods.
Borrowings under the Revolving Credit Facility bear interest
in an amount based on either the base rate or Adjusted Eurodollar rate plus a variable margin that is dependent on the First Lien
Net Leverage Ratio. The first lien credit facilities are secured by a first priority security interest in substantially all of
the Company’s assets and require the Company to pay commitment fees of 0.5% on the unused portion of the revolving line
of credit. The unused portion of the revolving line of credit was $30,000 at December 31, 2018 and 2017, respectively. Commitment
fees pertaining to the unused portion of the revolving line of credit were $150 for each the years ended December 31, 2018, 2017
and 2016, and are reported as interest expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).
The
first lien credit facilities contain a covenant related to the total leverage ratio and becomes a requirement only when borrowings
on the Revolving Credit Facility exceed 30% of the available total. Principal payments on the first lien term loan facilities
are due quarterly and are based on 1% of the annual outstanding balances. Additionally, per the credit agreement, the Company
is required to make additional annual payments, based on consolidated excess cash flow calculation results.
The
second lien credit facility is an eight-year US$ Tranche in the amount of $135,000. Borrowings under the US$ Tranche bear interest
in an amount based on either the Adjusted Eurodollar rate (the greater of 1.00% or LIBOR) plus 7.25% or a base rate plus 6.25%.
Interest on the second lien facility is payable in cash monthly in arrears at the end of the applicable interest periods. The
second lien credit agreement is secured by a second priority security interest in substantially all of the Company’s assets
and includes default provisions and contains a covenant similar to the first lien credit facility described above.
The
two first lien credit facilities and second lien credit facility contain normal and customary covenants, including the provision
of periodic financial information, financial covenants, and certain other limitations governing, among others, such matters as
the Company’s ability to incur additional debt, grant liens on assets, make investments, acquisitions or mergers, dispose
of assets and make capital expenditures. The Company was in compliance with the respective debt covenants at December 31, 2018.
Deferred
financing costs represent costs incurred in connection with the issuance or amendment of the Company’s debt agreements.
Deferred financing costs are amortized over the terms of the related debt, using the effective interest method, and recognized
as a component of interest expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company has
adopted FASB ASU No. 2015-03
, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs.
Deferred financing costs are initially capitalized and are subsequently offset against the respective debt
liability.
Amortization
of deferred financing costs approximated $2,645, $4,475 and $3,777 for the years ended December 31, 2018, 2017 and 2016, respectively.
Included in amortization expense during the year ended December 31, 2017, was the accelerated amortization of $1,516, representing
the pro-rata share of deferred financing costs associated with lenders exiting the facility as a result of the Second Lien pay
down during that period. Accumulated amortization approximated $15,465 and $12,821, at December 31, 2018 and 2017, respectively.
Amortization expense recognized as a component of interest expense is estimated to be $2,559 in 2019, $2,518 in 2020, $1,752 in
2021, and $322 in 2022, respectively.
At
December 31, 2018 and 2017, long-term debt consisted of the following:
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
First Lien Term Loan B - United States Dollar based facility with interest based on one month adjusted Eurodollar plus margin. Interest rate was 5.77% and 4.25% at December 31, 2018 and 2017, respectively.
|
|
$
|
253,548
|
|
|
$
|
256,182
|
|
First Lien Term Loan B - Euro based facility with interest based on one month adjusted EURIBOR plus margin. Interest rate was 4.25% at December 31, 2018 and 2017.
|
|
|
172,447
|
|
|
|
182,376
|
|
Second Lien US$ Tranche with interest based on one month adjusted Eurodollar plus margin. Interest rate was 9.71% and 8.25% at December 31, 2018 and 2017, respectively.
|
|
|
80,500
|
|
|
|
82,500
|
|
Total debt
|
|
|
506,495
|
|
|
|
521,058
|
|
Less deferred financing costs
|
|
|
(7,151
|
)
|
|
|
(9,795
|
)
|
Less current portion (First Lien)
|
|
|
(4,426
|
)
|
|
|
(4,510
|
)
|
Long-term debt
|
|
$
|
494,918
|
|
|
$
|
506,753
|
|
Maturities
of long-term debt at December 31, 2018, are as follows:
Year Ended December 31,
|
|
First Lien
Term Loans and
Revolving
Credit Facility
|
|
|
Second Lien
Term Loans
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
$
|
4,426
|
|
|
$
|
-
|
|
|
$
|
4,426
|
|
2020
|
|
|
4,426
|
|
|
|
-
|
|
|
|
4,426
|
|
2021
|
|
|
417,143
|
|
|
|
-
|
|
|
|
417,143
|
|
2022
|
|
|
-
|
|
|
|
80,500
|
|
|
|
80,500
|
|
|
|
$
|
425,995
|
|
|
$
|
80,500
|
|
|
$
|
506,495
|
|
Obligations
under capital leases were approximately $184 and $112 at December 31, 2018 and 2017, respectively.
Note
7
—
Income Taxes
On
December 22, 2017, the United States (“U.S.”) government enacted comprehensive tax legislation commonly referred to
as the Tax Cuts and Jobs Act (the “Act”). The Act made broad and complex changes to the U.S. tax code, including,
but not limited to: (1) reduced the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) required companies to pay
a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminates U.S. federal income
taxes on dividends from foreign subsidiaries; (4) required a current inclusion in U.S. federal taxable income of certain earnings
of controlled foreign corporations; (5) eliminated the corporate alternative minimum tax (“AMT”); (6) created a new
limitation on deductible interest expense; (7) allows immediate expensing of certain acquisitions of capital assets; and (8) changed
rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.
The
Securities & Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 118 (“SAB
No. 118”), which provided guidance on accounting for the tax effects of the Act. SAB No. 118 provided a measurement
period that does not extend beyond one year from the Act’s enactment date for companies to complete the accounting for the
Act under ASC Topic 740,
Income Taxes
(“ASC 740”).
As
of December 31, 2018, the Company has completed its accounting for the tax effects of the Act. In connection with management’s
initial analysis of the impact of the Act, the Company recorded a provisional net tax benefit of ($28,969) in the period ending
December 31, 2017. This provisional tax benefit included a tax benefit for the corporate income tax rate reduction on deferred
taxes of ($30,386) and tax expense related to the one-time transition tax of $1,417. During 2018, the Company recorded tax expense
of $84 to reflect the Company’s final accounting of the Act, resulting in a net tax benefit from the Act of ($28,885). The
net adjustment was related to an additional tax benefit of ($163) related to the remeasurement of the Company’s U.S. deferred
taxes as a result of the corporate income tax rate reduction and additional tax expense of $247 related to the one-time transition
tax. The final impact of the Act was comprised of a tax benefit for the corporate income tax rate reduction on deferred taxes
of ($30,549) and tax expense related to the one-time transition tax of $1,665.
On
January 15, 2019, the IRS finalized regulations that govern the one-time transition tax. The Company is in the process of analyzing
these regulations and does not expect any material impact to our financial statements as a consequence of the final regulations.
The
Act also included provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein minimum taxes are imposed on
foreign income in excess of a deemed return on the tangible assets of foreign corporations. This income will effectively be taxed
at a 10.5% tax rate. The provisions will be accounted for under the U.S. GAAP by making an accounting policy election to either
(i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period
cost method”), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”).
The Company has elected to account for GILTI as a component of tax expense in the period incurred.
Income
Tax Expense (Benefit)
—The following table presents the sources of income (loss) before income taxes and income tax
expense (benefit), by tax jurisdiction for the years ended December 31, 2018, 2017 and 2016:
|
|
Years Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Sources of (Loss) Income Before Taxes
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
(4,019
|
)
|
|
$
|
(17,988
|
)
|
|
$
|
(7,479
|
)
|
Non-U.S
|
|
|
(11,710
|
)
|
|
|
4,274
|
|
|
|
(6,766
|
)
|
Total
|
|
$
|
(15,729
|
)
|
|
$
|
(13,714
|
)
|
|
$
|
(14,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources of Income Tax Expense (Benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
2,761
|
|
|
$
|
4,269
|
|
|
$
|
4,485
|
|
U.S. State
|
|
|
1,116
|
|
|
|
534
|
|
|
|
23
|
|
Non-U.S
|
|
|
3,154
|
|
|
|
5,967
|
|
|
|
2,367
|
|
Total current income taxes
|
|
$
|
7,031
|
|
|
$
|
10,770
|
|
|
$
|
6,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
(4,844
|
)
|
|
$
|
(47,868
|
)
|
|
$
|
(5,719
|
)
|
U.S. State
|
|
|
(1,222
|
)
|
|
|
56
|
|
|
|
(184
|
)
|
Non-U.S
|
|
|
(8,039
|
)
|
|
|
(4,334
|
)
|
|
|
(4,455
|
)
|
Total deferred income taxes
|
|
$
|
(14,105
|
)
|
|
$
|
(52,146
|
)
|
|
$
|
(10,358
|
)
|
Total income tax benefit
|
|
$
|
(7,074
|
)
|
|
$
|
(41,376
|
)
|
|
$
|
(3,483
|
)
|
The
following is a reconciliation of income taxes at the United States statutory rate to income tax expense for the years ended December
31, 2018, 2017 and 2016:
|
|
Years Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Income tax benefit at statutory rate
|
|
$
|
(3,303
|
)
|
|
$
|
(4,800
|
)
|
|
$
|
(4,987
|
)
|
U.S. State income taxes
|
|
|
(106
|
)
|
|
|
(160
|
)
|
|
|
294
|
|
Tax related to foreign activities
|
|
|
(2,424
|
)
|
|
|
135
|
|
|
|
4,208
|
|
U.S. Federal tax credits
|
|
|
(375
|
)
|
|
|
(2,904
|
)
|
|
|
(2,223
|
)
|
Foreign currency gains/(losses)
|
|
|
821
|
|
|
|
(2,976
|
)
|
|
|
711
|
|
Domestic production activities deduction
|
|
|
-
|
|
|
|
(900
|
)
|
|
|
(620
|
)
|
Remeasurement of deferred taxes related to the Act
|
|
|
(163
|
)
|
|
|
(30,386
|
)
|
|
|
-
|
|
Transition tax related to the Act
|
|
|
247
|
|
|
|
4,261
|
|
|
|
-
|
|
U.S. Foreign income tax credits from amended tax returns
|
|
|
(1,787
|
)
|
|
|
(2,761
|
)
|
|
|
-
|
|
Global intangible low-taxed income
|
|
|
617
|
|
|
|
-
|
|
|
|
-
|
|
Foreign-derived intangible income deduction
|
|
|
(475
|
)
|
|
|
-
|
|
|
|
-
|
|
Other, net
|
|
|
(126
|
)
|
|
|
(885
|
)
|
|
|
(866
|
)
|
Income tax benefit
|
|
$
|
(7,074
|
)
|
|
$
|
(41,376
|
)
|
|
$
|
(3,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
45.0
|
%
|
|
|
301.7
|
%
|
|
|
24.5
|
%
|
Deferred
Taxes
—Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal temporary
differences included in deferred income taxes reported on the December 31, 2018 and 2017, Consolidated Balance Sheets were
as follows:
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Deferred Income Tax Assets
|
|
|
|
|
|
|
Unrealized foreign exchange
|
|
$
|
322
|
|
|
$
|
2,347
|
|
U.S. Federal operating losses and credits
|
|
|
532
|
|
|
|
822
|
|
U.S. State operating losses and credits
|
|
|
368
|
|
|
|
402
|
|
Non-U.S. operating losses
|
|
|
891
|
|
|
|
427
|
|
Non-deductible interest carryforward
|
|
|
2,525
|
|
|
|
-
|
|
Other
|
|
|
608
|
|
|
|
777
|
|
Total deferred income tax assets
|
|
|
5,246
|
|
|
|
4,775
|
|
Valuation allowance
|
|
|
(582
|
)
|
|
|
(427
|
)
|
Net deferred income tax assets
|
|
$
|
4,664
|
|
|
$
|
4,348
|
|
Deferred Income Tax Liabilities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
(74,291
|
)
|
|
|
(89,284
|
)
|
Total deferred tax liabilities
|
|
$
|
(74,291
|
)
|
|
$
|
(89,284
|
)
|
|
|
|
|
|
|
|
|
|
Net total deferred tax liabilities before unrecognized tax benefits
|
|
$
|
(69,627
|
)
|
|
$
|
(84,936
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax impact of unrecognized tax benefits
|
|
|
117
|
|
|
|
173
|
|
|
|
|
|
|
|
|
|
|
Net total deferred tax liabilities after unrecognized tax benefits
|
|
$
|
(69,510
|
)
|
|
$
|
(84,763
|
)
|
Management
assesses the available positive and negative evidence in determining whether it is more-likely-than-not that some portion, or
all, of its deferred tax assets will be realizable. A significant piece of objectively verifiable negative evidence evaluated
was cumulative losses incurred over the three-year period ended December 31, 2018 in certain non-U.S. jurisdictions. On the basis
of this evaluation, as of December 31, 2018, a valuation allowance of $582 has been recorded against certain non-U.S. operating
loss carryforward deferred tax assets that are not more-likely-than-not realizable. The amount of the deferred tax asset considered
realizable, however, could be adjusted if objectively verifiable negative evidence in the form of cumulative losses is no longer
present.
At
December 31, 2018 and 2017, the Company had $2,533 and $3,916, respectively, in federal net operating loss carryforwards
that will expire in 2029 through 2035; $7,329 and $8,742, respectively, in state net operating loss carryforwards that will expire
in 2019 through 2034; and $3,253 and $1,708, respectively, of foreign net operating loss carryforwards with a portion that will
expire in 2021 through 2023 and a portion that are subject to indefinite carryforward periods.
As
of December 31, 2018, the Company has undistributed earnings and profits of its foreign subsidiaries of approximately $42,728.
Due to the Act, the Company does not believe the incremental cost of remitting such earnings would be significant. It is the Company’s
intent to indefinitely reinvest these earnings outside the U.S.
The
Company files income tax returns in the United States and various foreign and state and local jurisdictions. With few exceptions,
the Company is no longer subject to federal, foreign and state and local income tax examinations by tax authorities for years
ended before 2013.
Unrecognized
Income Tax Benefits
—The following is a reconciliation of the Company’s unrecognized income tax benefits for
the years ended December 31, 2018 and 2017:
|
|
Years Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Unrecognized income tax benefits at the beginning of the period
|
|
$
|
1,752
|
|
|
$
|
191
|
|
|
$
|
-
|
|
Increases related to prior year tax positions
|
|
|
-
|
|
|
|
1,486
|
|
|
|
5
|
|
Decreases related to prior year tax positions
|
|
|
(1,240
|
)
|
|
|
(191
|
)
|
|
|
-
|
|
Increases related to current year tax positions
|
|
|
163
|
|
|
|
266
|
|
|
|
186
|
|
Foreign currency impact
|
|
|
(77
|
)
|
|
|
-
|
|
|
|
-
|
|
Unrecognized income tax benefits at the end of the period
|
|
$
|
598
|
|
|
$
|
1,752
|
|
|
$
|
191
|
|
At
December 31, 2018, 2017, and 2016 the Company had unrecognized income tax benefits of $155, $873, and $0, respectively, that,
if recognized, would impact the effective tax rate. The Company had accrued interest and penalty of $167, $402, and $3 in December
2018, 2017, and 2016, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income
tax benefits within the next twelve months.
Note
8
—
Employee Benefit Plans
Defined
Contribution Plan
—The Company maintains a 401(k) defined contribution savings and retirement plan (the “Plan”)
for substantially all of its U.S. employees. Subject to Internal Revenue Code limitations, an employee may elect to contribute
an amount up to 25% of compensation during each plan year. The Plan provides for matching contributions of 50% of each employee’s
voluntary contributions up to a maximum matching contribution of 3% of the employee’s compensation. The Plan also permits
unmatched employee after-tax contributions subject to certain limitations. Total employer contributions made under the Plan were
approximately $293, $316 and $307 for the years ended December 31, 2018, 2017 and 2016, respectively.
Multi-Employer
Benefit Plan
—A Company subsidiary, Ranpak B.V., participates in a multiemployer benefit plan, Corporate Pension
Fund for Cardboard and Flexible Packaging Business, in the Netherlands, which provides retirement benefits to all Ranpak B.V.
employees. In accordance with the collective labor agreements and Dutch laws, employee and employer retirement contributions are
paid to a third-party retirement fund administrator. Per Dutch laws, the retirement plans are required to be fully funded. Employer
contributions to the B.V. Plan were $3,333, $1,116 and $1,239 during the years ended December 31, 2018, 2017 and 2016, respectively.
Accrued liabilities related to the B.V. Plan were $252 and $149 at December 31, 2018 and 2017, respectively. The Company’s
contributions to the B.V. Plan during the years ended December 31, 2018, 2017 and 2016 did not represent more than 5% of
the total contributions to the B.V. Plan.
Note
9
—
Commitments and Contingencies
Litigation
—The
Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Management evaluates each
claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions
in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s
results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management
believes that any future accruals with respect to these currently known contingencies would not have a material effect on the
financial condition, liquidity or cash flows of the Company. There are no amounts required to be reflected in these consolidated
financial statements related to contingencies.
During
2017, the Company reached a negotiated settlement against a competing packaging provider related to a patent infringement dispute.
The settlement of $10.7 million is reflected in Other operating expense (income), net.
Profits
Interests
—Certain members of the Ranpak’s management team were granted profit interests in
certain affiliates of the Company’s parent company Rack Holdings L.P. that allow for them to share in the
eventual profits at a future date after giving preference to preferred and certain common equityholders upon a liquidity
event. The return on such profit interests is dependent upon the achievement of predefined internal rate of return targets,
and is also subject to time vesting based on years of service and accelerated vesting upon the occurrence of certain
liquidity events. In the case of management employees, vesting service is being performed at the Company level, thus the fair value
of such interests will be recorded as a liability in accordance with ASC 710,
Compensation
—
General
,
on the Company’s records. As of December 31, 2018, the Company has not recognized a liability on its Consolidated
Balance Sheet as a liquidity event has not yet occurred. Upon occurrence of a liquidity event, the Company expects the payout
to be approximately $2,000 to $2,700.
Leases
—Certain
office and warehouse facilities, transportation vehicles and data processing equipment are leased. Total rental expense relating
to these leases was approximately $1,639, $1,410 and $1,364 for the years ended December 31, 2018, 2017 and 2016, respectively.
Minimum lease payments required under non-cancelable operating leases at December 31, 2018, with terms in excess of one year
for the next five years and thereafter are as follows:
Year Ended December 31,
|
|
|
|
|
|
|
|
2019
|
|
$
|
1,534
|
|
2020
|
|
|
923
|
|
2021
|
|
|
516
|
|
2022
|
|
|
509
|
|
2023
|
|
|
509
|
|
Thereafter
|
|
|
1,187
|
|
|
|
|
|
|
|
|
$
|
5,178
|
|
Environmental
Matters
—The Company’s operations are subject to extensive and changing U.S. federal, state and local
laws and regulations, as well as the laws of other countries that establish health and environmental quality standards. These
standards, among others, relate to air and water pollutants and the management and disposal of hazardous substances and wastes.
The Company is exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or
other accident involving such pollutants, substances or wastes. There are no amounts required to be reflected in these consolidated
financial statements related to environmental contingencies.
Management
believes the Company is in compliance, in all material respects, with environmental laws and regulations and maintains insurance
coverage to mitigate exposure to environmental liabilities. Management does not believe any environmental matters will have a
material adverse effect on the Company’s future consolidated results of operations, financial position or cash flow.
Note
10
—
Fair Value Measurement
The
carrying values of cash and cash equivalents (primarily consisting of bank deposits), accounts receivable and accounts payable
approximate their fair values due to the short-term nature of these instruments as of December 31, 2018 and 2017. The carrying
value of borrowings under the credit facilities approximates fair value due to the variable interest rates associated with those
borrowings.
Derivative
positions are classified within level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets
and liabilities in active markets. These level 2 derivatives are valued utilizing an income approach, which discounts future cash
flow based upon current market expectations and adjusts for credit risk.
The
Company did not have any material level 3 classifications at December 31, 2017.
The
following table provides the carrying amounts, estimated fair values and the respective fair value measurements of the Company’s
financial instruments as of December 31, 2018 and December 31, 2017:
|
|
Carrying
|
|
|
Fair
|
|
|
Fair Value Measurements
|
|
As of December 31, 2018
|
|
Amount
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
499,344
|
|
|
$
|
499,344
|
|
|
|
|
|
|
$
|
499,344
|
|
|
|
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Earn-out contingent liability
|
|
|
2,600
|
|
|
|
2,600
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Fair Value Measurements
|
|
As of December 31, 2017
|
|
Amount
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
511,263
|
|
|
$
|
511,263
|
|
|
|
|
|
|
$
|
511,263
|
|
|
|
|
|
Derivative liability
|
|
|
581
|
|
|
|
581
|
|
|
|
|
|
|
|
581
|
|
|
|
|
|
Note
11
—
Segment and Geographic Information
In
accordance with ASC 280,
Segment Reporting
, the Company has determined it has two operating segments which are aggregated
into one reportable segment, Ranpak. The aggregation of the two operating segments is based on the Company’s determination
that per ASC 280 the operating segments have similar economic characteristics, and are similar in all of the following areas:
the nature of products and services, the nature of production processes, the type or class of customer for their products or provide
their services, and the methods used to distribute their products or provide their services. In addition, the operating segments
were aggregated for purposes of determining whether segments meet the quantitative threshold for separate reporting.
The
chief operating decision maker assesses the Company’s performance and allocates resources based on the Company’s consolidated
financial information.
The
Company attributes revenue to individual countries based on the Company’s selling location. The Company’s products
are primarily sold from the United States, Netherlands and Singapore. The following table presents a summary of total net sales
from external customers and long-lived assets by geographic location:
|
|
United
States
|
|
|
Netherlands
|
|
|
Singapore
|
|
|
Total
|
|
As of and for the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
131,371
|
|
|
$
|
122,694
|
|
|
$
|
13,795
|
|
|
$
|
267,860
|
|
Long-lived assets
|
|
|
34,044
|
|
|
|
39,005
|
|
|
|
-
|
|
|
|
73,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
130,394
|
|
|
$
|
102,318
|
|
|
$
|
11,380
|
|
|
$
|
244,092
|
|
Long-lived assets
|
|
|
36,438
|
|
|
|
38,095
|
|
|
|
-
|
|
|
|
74,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
125,692
|
|
|
$
|
90,030
|
|
|
$
|
8,986
|
|
|
$
|
224,708
|
|
Long-lived assets
|
|
|
35,215
|
|
|
|
29,160
|
|
|
|
-
|
|
|
|
64,375
|
|
As
of December 31, 2018, 53% of the Company’s long-lived assets were located outside of the U.S. The Company’s customers
are not concentrated in any specific geographic region. During the years ended December 31, 2018, 2017 and 2016, one customer
accounted for approximately 11%, 13%, and 14%, respectively, of total revenues.
Note
12
—
Shareholders’ Equity
The
Company was incorporated in the state of Delaware on August 8, 2014, and originally issued 1,000 shares of common stock at $0.01
par value. At December 31, 2018 and 2017, the Company had 995 shares of common stock outstanding. In 2017, the Company purchased
5 of its then outstanding 1,000 common shares of common stock for approximately $1,550. This transaction was accounted for as
an equity transaction, with the repurchased shares classified as treasury stock.
Note
13
—
Related Party
Ranpak
entered into a monitoring fee agreement, with an affiliate of its majority shareholder, a related party, which requires Ranpak
to pay 1% of projected annual earnings before interest, taxes and depreciation and amortization in advance of each
semi-annual period, adjusted retroactively up or down, plus reimbursement of other expenses. Monitoring fee expenses were
$1,010, $1,005 and $930 during the years ended December 31, 2018, 2017 and 2016, respectively. Reimbursement expenses were
$106, $362 and $257 during the years ended December 31, 2018, 2017 and 2016, respectively. Monitoring fee and reimbursement
expenses are included in selling, general and administrative expense in the Consolidated Statements of Operations and
Comprehensive Income (Loss) for all periods presented.
Note
14
—
Subsequent Events
Subsequent
events have been evaluated from the balance sheet date through March 1, 2019, the date on which the consolidated financial statements
were available to be issued or date the financial statements were available to be issued.
On
December 12, 2018, One Madison Corporation, a Cayman Islands exempted company (“One Madison”), entered into a Stock
Purchase Agreement (the “Stock Purchase Agreement”) with Rack Holdings L.P., a Delaware limited partnership (“Parent
of the Company”), and the Company pursuant to which One Madison will acquire all of the issued and outstanding equity interests
of the Company from its Parent for $950 million cash, on the terms and subject to the conditions set forth in the Stock Purchase
Agreement. The transaction is expected to close in 2019.
ANNEX A
EXECUTION
VERSION
STOCK
PURCHASE AGREEMENT
by
and among
ONE
MADISON CORPORATION,
RACK
HOLDINGS L.P.
and
RACK
HOLDINGS INC.
Dated
as of December 12, 2018
TABLE
OF CONTENTS
|
|
Page
|
Article I CERTAIN DEFINITIONS
|
A-6
|
|
|
1.1
|
Definitions
|
A-6
|
1.2
|
Construction
|
A-22
|
1.3
|
Knowledge
|
A-23
|
|
|
|
Article II PURCHASE AND SALE; CLOSING; CLOSING DELIVERABLES
|
A-23
|
|
|
2.1
|
Purchase and Sale of Shares
|
A-23
|
2.2
|
Time and Place of Closing
|
A-23
|
2.3
|
Deliveries at Closing
|
A-24
|
2.4
|
Estimated Closing Statement
|
A-24
|
2.5
|
Adjustment Amount
|
A-25
|
2.6
|
Outstanding Company Expenses
|
A-26
|
2.7
|
Repayment of Retired Funded Debt
|
A-27
|
2.8
|
Withholding
|
A-27
|
|
|
|
Article III representations and warranties regarding seller
|
A-27
|
|
|
3.1
|
Corporate Organization of Seller
|
A-27
|
3.2
|
Due Authorization
|
A-28
|
3.3
|
No Conflict
|
A-28
|
3.4
|
Governmental Authorities; Consents
|
A-28
|
3.5
|
Ownership of Shares
|
A-28
|
3.6
|
Litigation and Claims
|
A-29
|
|
|
|
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
A-29
|
|
|
4.1
|
Corporate Organization of the Company
|
A-29
|
4.2
|
Subsidiaries
|
A-29
|
4.3
|
Due Authorization
|
A-30
|
4.4
|
No Conflict
|
A-30
|
4.5
|
Governmental Authorities; Consents
|
A-30
|
4.6
|
Capitalization
|
A-31
|
4.7
|
Financial Statements
|
A-32
|
4.8
|
Internal Controls
|
A-33
|
4.9
|
Undisclosed Liabilities
|
A-33
|
4.10
|
Litigation and Proceedings
|
A-33
|
4.11
|
Compliance with Laws
|
A-33
|
4.12
|
Contracts; No Defaults
|
A-34
|
4.13
|
Company Benefit Plans
|
A-37
|
4.14
|
Labor Matters
|
A-39
|
4.15
|
Taxes
|
A-39
|
4.16
|
Brokers’ Fees
|
A-41
|
4.17
|
Insurance
|
A-42
|
4.18
|
Real Property; Assets
|
A-42
|
4.19
|
Environmental Matters
|
A-43
|
4.20
|
Absence of Changes
|
A-44
|
4.21
|
Affiliate Agreements
|
A-45
|
4.22
|
Intellectual Property
|
A-45
|
4.23
|
Permits
|
A-49
|
4.24
|
Customers and Vendors
|
A-49
|
4.25
|
Product Warranty and Product Liability
|
A-49
|
4.26
|
Economic Sanctions and Export Control
|
A-50
|
4.27
|
Solvency
|
A-50
|
4.28
|
Proxy Statement
|
A-50
|
4.29
|
No Additional Representations and Warranties
|
A-51
|
|
|
|
Article V REPRESENTATIONS AND WARRANTIES OF BUYER
|
A-51
|
|
|
5.1
|
Corporate Organization
|
A-51
|
5.2
|
Due Authorization
|
A-51
|
5.3
|
No Conflict
|
A-52
|
5.4
|
Litigation and Proceedings
|
A-52
|
5.5
|
SEC Filings
|
A-52
|
5.6
|
Governmental Authorities; Consents
|
A-52
|
5.7
|
Financial Ability
|
A-52
|
5.8
|
Debt Financing
|
A-53
|
5.9
|
Forward Purchase Agreements
|
A-54
|
5.10
|
Equity Financing
|
A-54
|
5.11
|
Trust Account
|
A-55
|
5.12
|
Brokers’ Fees
|
A-57
|
5.13
|
Solvency; Company After Transactions
|
A-57
|
5.14
|
Affiliates
|
A-57
|
5.15
|
No Outside Reliance
|
A-57
|
|
|
|
Article VI COVENANTS OF SELLER and the Company
|
A-58
|
|
|
6.1
|
Conduct of Business
|
A-58
|
6.2
|
Inspection
|
A-62
|
6.3
|
HSR Act, Regulatory Approvals and Third Party Consents
|
A-62
|
6.4
|
Termination of Certain Agreements
|
A-63
|
6.5
|
Company Real Property Certificate
|
A-63
|
6.6
|
Nonsolicitation
|
A-63
|
6.7
|
Cooperation with Proxy Statement and SEC Filings
|
A-64
|
6.8
|
Release
|
A-65
|
6.9
|
Financing Cooperation
|
A-66
|
6.10
|
R&W Insurance Cooperation
|
A-69
|
ARTICLE VII COVENANTS OF BUYER
|
A-70
|
|
|
7.1
|
HSR Act and Regulatory Approvals
|
A-70
|
7.2
|
Indemnification and Insurance
|
A-72
|
7.3
|
Employment Matters
|
A-73
|
7.4
|
Nonsolicitation
|
A-74
|
7.5
|
Proxy Statement
|
A-75
|
7.6
|
Buyer Shareholders Meeting
|
A-76
|
7.7
|
Debt Financing
|
A-76
|
7.8
|
Forward Purchase Agreements.
|
A-79
|
7.9
|
Equity Financing
|
A-79
|
7.10
|
Trust Account
|
A-80
|
7.11
|
Voting Agreement
|
A-80
|
|
|
|
Article VIII JOINT COVENANTS
|
A-80
|
|
|
8.1
|
Support of Transaction
|
A-80
|
8.2
|
Tax Matters
|
A-81
|
8.3
|
Notification
|
A-82
|
|
|
|
Article IX CONDITIONS TO OBLIGATIONS
|
A-82
|
|
|
9.1
|
Conditions to Obligations to Consummate Transactions
|
A-82
|
9.2
|
Conditions to Obligations of Buyer
|
A-83
|
9.3
|
Conditions to the Obligations of Seller
|
A-84
|
|
|
|
Article X TERMINATION/EFFECTIVENESS
|
A-84
|
|
|
10.1
|
Termination
|
A-84
|
10.2
|
Effect of Termination
|
A-85
|
|
|
|
Article XI MISCELLANEOUS
|
A-86
|
|
|
11.1
|
Survival
|
A-86
|
11.2
|
Waiver
|
A-86
|
11.3
|
Notices
|
A-86
|
11.4
|
Assignment
|
A-87
|
11.5
|
Rights of Third Parties
|
A-88
|
11.6
|
Expenses
|
A-88
|
11.7
|
Governing Law
|
A-88
|
11.8
|
Captions; Counterparts
|
A-89
|
11.9
|
Schedules and Annexes
|
A-89
|
11.10
|
Entire Agreement
|
A-89
|
11.11
|
Amendments
|
A-89
|
11.12
|
Publicity
|
A-90
|
11.13
|
Severability
|
A-90
|
11.14
|
Jurisdiction; WAIVER OF TRIAL BY JURY
|
A-90
|
11.15
|
Enforcement
|
A-91
|
11.16
|
Non-Recourse
|
A-92
|
11.17
|
Acknowledgement and Waiver
|
A-93
|
11.18
|
Trust Account Waiver
|
A-94
|
Schedules
|
|
Schedule 1.1(a)
|
Cash and Cash Equivalents
|
Schedule 1.1(b)
|
Leased Real Property
|
Schedule 1.1(c)
|
Net Working Capital
|
Schedule 1.1(d)
|
Permitted Liens
|
Schedule 4.1
|
Jurisdictions
|
Schedule 4.2(a)
|
Subsidiaries
|
Schedule 4.2(b)
|
Subsidiary Jurisdictions
|
Schedule 4.4
|
No Conflict
|
Schedule 4.5
|
Governmental Authorities; Consents
|
Schedule 4.6(a)
|
Capitalization
|
Schedule 4.6(b)
|
Other Equity or Equity-Linked Interests
|
Schedule 4.6(c)
|
Capital Stock of Subsidiaries
|
Schedule 4.7
|
Financial Statements
|
Schedule 4.7(a)
|
Off-Balance Sheet Arrangements
|
Schedule 4.9
|
Undisclosed Liabilities
|
Schedule 4.10
|
Litigation and Proceedings
|
Schedule 4.11(a)
|
Compliance with Laws
|
Schedule 4.12(a)
|
Contracts
|
Schedule 4.12(b)
|
No Contract Defaults
|
Schedule 4.12(c)
|
Deviations from the Company Exclusivity Provisions
|
Schedule 4.13(a)
|
Company Benefit Plans
|
Schedule 4.13(h)
|
Transaction Payments
|
Schedule 4.14(a)
|
Labor Matters
|
Schedule 4.15
|
Tax Matters
|
Schedule 4.16
|
Brokers’ Fees
|
Schedule 4.17(a)
|
Insurance
|
Schedule 4.17(b)
|
Loss Runs
|
Schedule 4.18
|
Owned Real Property
|
Schedule 4.19
|
Environmental Matters
|
Schedule 4.20
|
Absence of Changes
|
Schedule 4.21
|
Affiliate Agreements
|
Schedule 4.22(a)
|
Registered Intellectual Property
|
Schedule 4.22(b)
|
Assignments of Registered Intellectual Property
|
Schedule 4.22(e)
|
Offers to License Company under Third Party IP
|
Schedule 4.22(f)
|
Infringement by Third Parties
|
Schedule 4.24(a)
|
Customers and Vendors
|
Schedule 4.24(b)
|
Change in Customers and Vendors
|
Schedule 4.25
|
Product Warranty and Product Liability
|
Schedule 5.3
|
No Conflict
|
Schedule 5.6
|
Government Authorities; Consents
|
Schedule 5.10
|
Equity Financing
|
Schedule 5.11
|
Transaction Fees
|
Schedule 5.12
|
Brokers’ Fees
|
Schedule 6.1
|
Conduct of Business
|
Schedule 6.3(d)
|
Third Party Consents
|
Schedule 6.4
|
Continuing Affiliate Agreements
|
Schedule 6.7(e)
|
Required Financial Statements
|
Schedule 9.1
|
Consents and Approvals
|
Annexes
Annex
A – FIRPTA Certificate
STOCK
PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (including the exhibits and schedules hereto, each as amended or restated from time to time, this “
Agreement
”),
dated as of December 12, 2018, is entered into by and among One Madison Corporation, a Cayman Islands exempted company (“
Buyer
”),
Rack Holdings L.P., a Delaware limited partnership (“
Seller
”), and Rack Holdings Inc., a Delaware corporation
(“
Company
”). The signatories to this Agreement are collectively referred as the “
Parties
”
and individually as a “
Party
”.
RECITALS
WHEREAS,
Seller owns 995 shares of common stock, par value $0.01 per share (“
Common Stock
”), of the Company, which shares
constitute all of the issued and outstanding shares of Common Stock (collectively, the “
Shares
”); and
WHEREAS,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Shares, subject to the terms and conditions
of this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the Parties agree as follows:
Article
I
CERTAIN DEFINITIONS
1.1
Definitions
.
As used herein, the following terms shall have the following meanings:
“
2016
Tax Refund
” means any refund of U.S. federal Income Taxes for the Company’s or any of its Subsidiaries’
2016 taxable year (but excluding any refund arising as a result of a tax asset generated in a taxable year (or portion thereof)
ending after the Closing Date).
“
280G
Stockholder Vote
” has the meaning specified in
Section 7.3(d)
.
“
Action
”
means any claim, action, audit, litigation, suit, assessment, arbitration, mediation or inquiry, or any other proceeding or investigation,
in each case that is by or before any Governmental Authority.
“
Adjustment
Amount
” means the sum (which may be positive or negative) of (i) the sum of Closing Date Net Working Capital (as finally
determined in accordance with
Section 2.5(b)
)
minus
Estimated Closing Date Net Working Capital,
plus
(ii)
Estimated Closing Date Debt
minus
Closing Date Debt (as finally determined in accordance with
Section 2.5(b)
),
plus
(iii) Closing Date Cash (as finally determined in accordance with
Section 2.5(b)
),
minus
Estimated Closing Date
Cash.
“
Affiliate
”
means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more intermediaries or otherwise;
provided
,
however
,
that none of SFT (Delaware) Management, LLC, JS Capital, LLC, Soros Capital LP, Soros Capital LLC, BSOF Master Fund L.P. or BSOF
Master Fund II L.P. shall be deemed to be an Affiliate of Buyer. For purposes of this definition, “
control
“
when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by Contract or otherwise, and the terms “
controlling
” and
“
controlled
” have correlative meanings.
“
Affiliate
Agreement
” has the meaning specified in
Section 4.21
.
“
Agreement
”
has the meaning specified in the preamble hereto.
“
Anti-Corruption
Laws
” means any applicable Laws relating to anti-bribery or anti-corruption (governmental or commercial), including
Laws that prohibit the corrupt payment, offer, promise, or authorization of the payment or transfer of anything of value (including
gifts or entertainment), directly or indirectly, to any representative of a foreign Governmental Authority or commercial entity
to obtain a business advantage, including the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, and all
national and international Laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International
Business Transactions.
“
Associate
”
has the meaning specified in
Section 5.14
.
“
Audited
Financial Statements
” has the meaning specified in
Section 4.7
.
“
Base
Consideration
” means $950,000,000.
“
BSOF
Entities
” means BSOF Master Fund L.P., a Cayman Islands exempted limited partnership, and BSOF Master Fund II L.P.,
a Cayman Islands exempted limited partnership. “
Business Combination
” has the meaning specified in the Buyer
Articles of Association.
“
Business
Day
” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized
or required by Law to close.
“
Buyer
”
has the meaning specified in the preamble hereto.
“
Buyer
2017 Form 10-K
” means Buyer’s annual report on Form 10-K for the year ended December 31, 2017 filed with the SEC
on March 29, 2018.
“
Buyer
Articles of Association
” means Buyer’s amended and restated memorandum and articles of association, dated January
9, 2018.
“
Buyer
Class A Common Shares
” means the class A common shares, par value $0.0001 per share, of Buyer.
“
Buyer
Class A Redemption
” means the right of the holders of Buyer Class A Common Shares to redeem all or a portion of their
Buyer Class A Common Shares in connection with the initial Business Combination pursuant to the Buyer Articles of Association,
for a per share redemption price in cash equal to (i) the aggregate amount then on deposit in the Trust Account, including interest
and net of taxes payable,
divided
by (ii) the number of then-outstanding Buyer Class A Common Shares.
“
Buyer
Class B Common Shares”
means the class B common shares, par value $0.0001 per share, of Buyer.
“
Buyer
Cure Period
” has the meaning specified in
Section 10.1(c)
.
“
Buyer
Reports
” means each form, statement, registration statement, prospectus, report, schedule, proxy statement and other
document (including exhibits and schedules thereto and the other information incorporated therein) filed with or furnished to
the SEC by Buyer. All Buyer Reports shall be deemed to have been provided, furnished, delivered and made available to Seller and
the Company for all purposes hereunder.
“
Buyer
Shareholders Approval
” means the due approval of the Transaction Proposals by a majority of the votes cast by holders
of the outstanding Buyer Voting Shares at the Buyer Shareholders Meeting.
“
Buyer
Shareholders Meeting
” has the meaning specified in
Section 7.6
.
“
Buyer
Shares
” means the Buyer Class A Common Shares, the Buyer Class B Common Shares and each other class of shares of Buyer
that may be outstanding from time to time.
“
Buyer
Voting Shares
” means the Buyer Class A Common Shares, the Buyer Class B Common Shares and any other Buyer Shares that
are also generally entitled to vote on matters properly brought before the shareholders of Buyer.
“
Cash
and Cash Equivalents
” of the Company and its Subsidiaries as of any date of reference means the cash and cash equivalents
and marketable securities (to the extent constituting cash equivalents under GAAP) held by such Person, calculated in accordance
with GAAP (including adding outstanding inbound checks, drafts and wires and subtracting outstanding outbound checks, drafts and
wires)to the extent such amounts do not constitute Restricted Cash (
provided
,
however
, Cash and Cash Equivalents
shall (x) include refundable deposits made in connection with certain legal proceedings outside of the United States described
in
Schedule 1.1(a)
, (y) be reduced by an amount equal to any 2016 Tax Refund received by the Company or its Subsidiaries
prior to the Closing and (z) include the total amount of Loan Receivables specified, and defined, in
Schedule 6.1(4)(c)
);
taking into account, for any such Cash and Cash Equivalents not in U.S. dollars, the exchange rate, as reported in the Wall Street
Journal on the Business Day prior to such date of reference, to convert such cash and cash equivalents from such other currency
to U.S. dollars.
“
Closing
”
has the meaning specified in
Section 2.2
.
“
Closing
Cash Consideration
” means (i) Base Consideration,
plus
(ii) Estimated Net Working Capital Adjustment Amount,
less
(iii) Estimated Closing Date Debt,
plus
(iv) Estimated Closing Date Cash; such Closing Cash Consideration will
be subject to further adjustment after Closing pursuant to
Section 2.5
.
“
Closing
Date
” has the meaning specified in
Section 2.2
.
“
Closing
Date Amounts
” has the meaning specified in
Section 2.5(a)
.
“
Closing
Date Cash
” has the meaning specified in
Section 2.5(a)
.
“
Closing
Date Debt
” has the meaning specified in
Section 2.5(a)
.
“
Closing
Date Net Working Capital
” has the meaning specified in
Section 2.5(a)
.
“
Closing
Statement
” has the meaning specified in
Section 2.5(a)
.
“
Code
”
means the Internal Revenue Code of 1986, as amended.
“
Commitment
Letters
” means the Debt Commitment Letter and the Equity Commitment.
“
Common
Stock
” has the meaning specified in the recitals hereto.
“
Company
”
has the meaning specified in the preamble hereto.
“
Company
Benefit Plan
” has the meaning specified in
Section 4.13(a)
.
“
Company
Exclusivity Provision
” has the meaning specified in
Section 4.12(c)
.
“
Company
Intellectual Property
” means any and all Intellectual Property that is owned or purported to be owned by the Company
or any of its Subsidiaries.
“
Company
Labor Agreements
” has the meaning specified in
Section 4.14(a)
.
“
Company
Non-Union Employee
” has the meaning specified in
Section 7.3(a)
.
“
Confidentiality
Agreement
” has the meaning specified in
Section 11.10
.
“
Continuing
Employee
” has the meaning set forth in
Section 7.3(a)
.
“
Continuing
Obligations
” means contingent obligations that expressly survive the termination of the Credit Documents for which no
claim has been asserted or which is not then due and owing and which customarily survive the termination of similar indebtedness
arrangements.
“
Contracts
”
means any legally binding contracts, agreements, subcontracts, leases, licenses, sublicenses, subleases, conditional sales contracts,
commitments, arrangements, undertakings, understandings and sales or purchase orders.
“
Credit
Agreements
” means the First Lien Credit Agreement and the Second Lien Credit Agreement.
“
Credit
Documents
” means the First Lien Credit Documents and the Second Lien Credit Documents.
“
D&O
Tail
” has the meaning specified in
Section 7.2(b)
.
“
Damages
”
means all losses, damages and other reasonable and documented out-of-pocket costs and expenses.
“
Debt
”
of the Company and its Subsidiaries as of any date means all obligations and other Liabilities of the Company and its Subsidiaries
in respect of, without duplication, (i) borrowed money, including under the Credit Agreements, (ii) obligations evidenced
by any note, bond, debenture, mortgage or other similar Contract or instrument, (iii) leases that have been, or should be in accordance
with GAAP, recorded as capital leases (which, for the avoidance of doubt, shall not consider the impact of ASC 842), (iv) recourse
or non-recourse factoring or similar arrangements, (v) net obligations in respect of interest rate, currency exchange, commodities
or securities hedging arrangements or similar transactions (including in connection with terminating such arrangements or transactions),
(vi) letters of credit, bankers’ acceptances, surety bonds and similar instruments (to the extent drawn), (vii) conditional
sale or other title retention agreements, (viii) all indebtedness secured by a purchase money mortgage or other Lien to secure
all or part of the purchase price of the property subject to the Lien, (ix) the deferred purchase price of assets, property, goods
or services, including all “earn-out” obligations (excluding the “earn-out” obligation (whether contingent
or recorded on the balance sheet as a current or long-term liability) specified in Section 2.5 of the E3Neo Acquisition Agreement)
and purchase price adjustment obligations (but excluding trade payables arising in the ordinary course of business and reflected
in the calculation of Net Working Capital as of such date), (x) bonuses and deferred compensation, including any severance payments
or similar Liabilities (including the employer portion of any payroll, employment or similar Taxes related thereto), in each case
to the extent relating to the period prior to Closing and, for the avoidance of doubt, which are not included in Outstanding Company
Expenses, (xi) Specified Current Taxes, (xii) all obligations of the type referred to in clauses (i) through (xi) of any
Persons the payment of which the Company or any of its Subsidiaries is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, (xiii) all obligations of the type referred to in clauses (i) through (xii) of other
Persons secured by any Lien on any property or asset of the Company or any of its Subsidiaries (whether or not such obligation
is assumed by the Company or any of its Subsidiaries), (xiv) any Outstanding Company Expenses that are unpaid as of the Closing
Date and (xv) owner expense reimbursement accruals and other payment obligations pursuant to the Management Agreement to the extent
excluded from Net Working Capital; in each case, together with all accrued but unpaid interest thereon as of such date, and all
penalties, breakage fees, premiums (including make-whole premiums), and other amounts paid or payable in the event that such obligation
or other Liability is to be repaid or otherwise discharged as of such date of determination.
“
Debt
Commitment Letter
” has the meaning specified in
Section 5.8(a)
.
“
Debt
Financing
” has the meaning specified in
Section 5.8(a)
.
“
Debt
Financing Sources
” means the agents, arrangers, lenders and other entities that have committed to provide the Debt Financing,
and the parties to any Debt Commitment Letter, joinder agreements, credit agreements or indentures related to any Debt Financing,
together with their respective Affiliates and their and their respective Affiliates’ current or future general or limited
partners, stockholders, managers, members, agents, officers, directors, employees, advisors, partners, members, managers, controlling
persons and representatives and their respective successors and assigns.
“
Debt
Financing Subsidiary
” means any wholly-owned Subsidiary of Buyer that is or may become a borrower in connection with
the Debt Financing.
“
DFS
Provisions
” has the meaning specified in
Section 11.11
.
“
Determination
Date
” has the meaning specified in
Section 2.5(b)
.
“
E3Neo
Acquisition Agreement
” means the Share Purchase Agreement, by and among Ranpak BV, BOA Investissements SARL and the
other parties named therein, dated February 8, 2017.
“
Environmental
Laws
” means any and all applicable Laws, including common law, relating to pollution or the protection of the environment
or occupational health and safety, including the use, storage, emission, disposal or release of, or exposure to, Hazardous Materials.
“
Equity
Commitment Letters
” has the meaning specified in
Section 5.10(a)
.
“
Equity
Financing
” has the meaning specified in
Section 5.10(a)
.
“
Equity
Financing Sources
” means JS Capital, LLC, Soros Capital LP, SFT (Delaware) Management, LLC and each other party providing
Equity Financing pursuant to an Equity Commitment Letter dated as of the date hereof.
“
ERISA
”
has the meaning specified in
Section 4.13(a)
.
“
ERISA
Affiliate
” means any trade or business (whether or not incorporated) that would be treated together with the Company
or any of its Subsidiaries as a “single employer” within the meaning of Section 414 of the Code.
“
Estimated
Closing Date Cash
” has the meaning specified in
Section 2.4
.
“
Estimated
Closing Date Debt
” has the meaning specified in
Section 2.4
.
“
Estimated
Closing Date Net Working Capital
” has the meaning specified in
Section 2.4
.
“
Estimated
Closing Statement
” has the meaning specified in
Section 2.4
.
“
Estimated
Net Working Capital Adjustment Amount
” means the amount, which may be positive or negative, equal to (i) Estimated Closing
Date Net Working Capital, minus (ii) $22,000,000.
“
Exchange
Act
” means the Securities Exchange Act of 1934.
“
Financial
Statements
” has the meaning specified in
Section 4.7(a)
.
“
Financing
”
has the meaning specified in
Section 5.10(a)
.
“
First
Lien Credit Agreement
” means that certain First Lien Credit and Guaranty Agreement, dated as of October 1, 2014 (as
amended by that certain Amendment No. 1, dated as of May 15, 2015, and that certain Incremental Amendment No. 2, dated as of March
2, 2017, and as further amended, restated, amended and restated, supplemented or modified from time to time), among Ranpak Corp.,
Ranpak B.V., a private limited liability company incorporated under the laws of the Netherlands, the other persons from time to
time party thereto as guarantors, each agent and lender from time to time party thereto and Credit Suisse AG, Cayman Islands Branch,
as administrative agent and collateral agent.
“
First
Lien Credit Documents
” means the First Lien Credit Agreement together with all Credit Documents (as defined in the First
Lien Credit Agreement).
“
Forward
Purchase Agreements
” has the meaning specified in
Section 5.9(a)
.
“
Forward
Purchasers
” has the meaning specified in
Section 5.9(a)
.
“
FP
Financing
” has the meaning specified in
Section 5.9(a)
.
“
GAAP
”
means United States generally accepted accounting principles in effect from time to time, applied on a consistent basis.
“
Governmental
Authority
” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory
or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, arbitrator of
competent jurisdiction, tribunal.
“
Governmental
Order
” means any order, judgment, injunction, decree, writ, stipulation, ruling, decision, verdict, determination or
award, in each case, made, issued or entered by or with any Governmental Authority or arbitrator.
“
Hazardous
Material
” means material, substance or waste that is listed, classified, characterized, regulated or defined as “hazardous,”
“toxic,” or “radioactive,” (or words of similar intent or meaning) under applicable Environmental Law
including but not limited to petroleum, petroleum by-products, asbestos or asbestos-containing material, toxic mold, radioactive,
lead paint, polychlorinated biphenyls, corrosive, reactive, flammable, ignitable or explosive substances, or pesticides.
“
HSR
Act
” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
“
Income
Tax
” means any Tax (including any franchise tax) measured by reference to net income or profit.
“
Income
Tax Return
” means any Tax Return with respect to Income Taxes.
“
Independent
Accountant
” has the meaning specified in
Section 2.5(b)
.
“
Information
or Document Request
” means any request or demand for the production, delivery or disclosure of documents or other evidence,
or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by
any Regulatory Consent Authority or any other Governmental Authority relating to the transactions contemplated hereby or by any
third party challenging the transactions contemplated hereby, including any so called “second request” for additional
information or documentary material or any civil investigative demand made or issued by the Antitrust Division of the United States
Department of Justice or the United States Federal Trade Commission or any subpoena, interrogatory or deposition.
“
Insurance
Policies
” has the meaning specified in
Section 4.17
.
“
Intellectual
Property
” means all intellectual property rights or proprietary rights protected, created or arising under the Laws
of the United States or any other jurisdiction or under any international convention, including with respect to all: (i) inventions
and discoveries, whether patentable or not, and patents and patent applications, including continuations, continuations-in-part,
divisional, provisional and non-provisional applications and any patents issuing thereon and any reissues, reexaminations, revisions,
renewals, substitutes and extensions of any of the foregoing; (ii) trademarks, service marks, service names, brand names, certification
marks, collective marks, URLs, Internet domain names, social media identifiers or accounts, rights of publicity, logos, industrial
designs, symbols, trade dress, trade names, corporate names, d/b/a’s and all other indicia of origin, all registrations,
applications, renewals and extensions for the foregoing, and all adaptations, derivations and goodwill associated therewith and
symbolized thereby; (iii) published and unpublished works of authorship, whether copyrightable or not (including with respect
to Software, databases and other compilations of information), copyrights therein and thereto, and moral rights, registrations,
applications, renewals, extensions, restorations and reversions of any of the foregoing; (iv) trade secrets, know-how (including
rights in manufacturing and production processes and research and development information), confidential and proprietary information,
including financial and marketing plans, pricing and cost information, designs, compositions, processes, procedures, techniques,
ideas, research and development, data (including market data, reference data or identifiers), data collections, confidential source
code, specifications, schematics, business methods, formulae, algorithms, drawings, prototypes, models, customer lists and supplier
lists (collectively, “
Trade Secrets
”); (v) Software; (vi) registrations, applications for registration, renewals
and extensions of any of the foregoing; and (vii) rights to sue or recover and retain damages and costs and attorneys’ fees
for past, present and future infringement, misappropriation or other violation of any of the foregoing.
“
Intellectual
Property License
” means any license, sublicense, right, covenant, non-assertion, permission, consent, release, co-existence
or waiver under or with respect to any Intellectual Property.
“
Interim
Financial Statements
” has the meaning specified in
Section 4.7(a)
.
“
Interim
Period
” has the meaning specified in
Section 6.1
.
“
Investment
Company Act
” means the Investment Company Act of 1940.
“
IT
Assets
” means computers, computer Software, firmware, middleware, servers, workstations, routers, hubs, switches, data
communications lines and all other information technology equipment, and all associated documentation, owned or purported to be
owned by, licensed or leased, or purported to be licensed or leased, to, or used by or on behalf of the Company or any of its
Subsidiaries.
“
Law
”
means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.
“
Leased
Real Property
” means all real property, as set forth on
Schedule 1.1(b)
, leased by the Company or any of its
Subsidiaries.
“
Liability
”
has the meaning specified in
Section 4.9
.
“
Lien
”
means any mortgage, deed, charge, option, deed of trust, pledge, hypothecation, right of first offer or refusal, easement, servitude,
right-of-way, transfer restriction, encumbrance, security interest or other lien of any kind. For the purposes of this Agreement,
a Person shall be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such
property or asset.
“
Management
Agreement
” means the Monitoring Fee Agreement, dated as of October 1, 2014, by and between Ranpak Corp., a corporation
organized under the laws of Ohio, and Rhône Capital IV L.P., a Delaware limited partnership.
“
Material
Adverse Effect
” means, with respect to the Company, any event, change, development, circumstance, state of facts or
effect that has, or would reasonably be expected to have, a material adverse effect on (i) the business, results of operations,
condition (financial or otherwise) or assets of the Company and its Subsidiaries, taken as a whole;
provided
,
however
,
that in no event shall any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute,
or be taken into account in determining whether there has been or will be, a “Material Adverse Effect” on or in respect
of the Company and its Subsidiaries: (a) any change in applicable Laws or GAAP or any interpretation thereof to the extent that
such change does not have a disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other
industry participants, (b) any change in interest rates or economic, political, business, financial, commodity, currency or market
conditions generally to the extent that such change does not have a disproportionate impact on the Company and its Subsidiaries,
taken as a whole, as compared to other industry participants, (c) the announcement of the transactions contemplated by this Agreement
as a result of or relating to the identity of the Buyer or any communication by Buyer or any of its Affiliates regarding its plans
or intentions with respect to the Company and its Subsidiaries, including the impact thereof on relationships with customers,
suppliers, licensors, distributors, partners, providers or employees of the Company or any of its Subsidiaries, (d) any change
generally affecting any of the industries or markets in which the Company or any of its Subsidiaries operates or the economy as
a whole to the extent that such change does not have a disproportionate impact on the Company and its Subsidiaries, taken as a
whole, as compared to other industry participants, (e) the taking of any action required by Seller or the Company to be taken
under this Agreement or which is taken with the prior written consent of Buyer, (f) any earthquake, hurricane, tsunami, tornado,
flood, mudslide, wild fire or other natural disaster or act of God, (g) any national or international political or social conditions,
including the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration
of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States,
or any United States territories, possessions, or diplomatic or consular offices or upon any United States military installation,
equipment or personnel or (h) any failure of the Company and its Subsidiaries, taken as a whole, to meet any projections, forecasts
or budgets;
provided
that clause (h) shall not prevent a determination that any change or effect underlying such failure
to meet projections or forecasts has resulted in or contributed to a Material Adverse Effect (to the extent such change or effect
is not otherwise excluded from this definition of Material Adverse Effect) or (ii) the ability of the Company to consummate the
transactions contemplated by this Agreement and the other Transaction Documents.
“
Material
Contract
” has the meaning specified in
Section 4.12(a)
.
“
Material
Permits
” has the meaning specified in
Section 4.23
.
“
Multiemployer
Plan
” has the meaning specified in
Section 4.13(e)
.
“
Net
Working Capital
” means (without duplication), with respect to the Company and its Subsidiaries at any given time, the
aggregate value (expressed as a positive or negative number) of the current assets of the Company and its Subsidiaries at such
time minus the current liabilities of the Company and its Subsidiaries at such time, (x) in each case, determined on a consolidated
basis, taking into account, for any such current assets and current liabilities subject to the definition hereof that are
not denominated in U.S. dollars, the exchange rate, as reported in the Wall Street Journal on the Business Day prior to such date
of reference, to convert such current assets or current liabilities, as applicable, from such other currency to U.S. dollars and
(y) calculated in accordance with GAAP as reflected in the accounting practices, principles, policies, judgments and methodologies
used in the calculation of Net Working Capital for the twelve months ended September 30, 2018 set forth on
Schedule 1.1(c
),
which shall control in the event of any conflict;
provided
that Net Working Capital shall exclude (i) Cash and Cash Equivalents
(and any amounts expressly excluded therefrom pursuant to clause (x) or (y) thereof), Outstanding Company Expenses and Debt, (ii)
prepaid premiums made pursuant to the Seller’s RWI Policy, (iii) all Income Tax assets (whether current, deferred or otherwise),
and all Income Tax liabilities (whether current, deferred or otherwise) and (iv) the “earn-out” obligation (whether
contingent or recorded on the balance sheet as a current or long-term liability) specified in Section 2.5 of the E3Neo Acquisition
Agreement).
“
New
or Amended Debt Commitment Letters
” has the meaning specified in
Section 7.7(e)
.
“
Non-U.S.
Benefit Plan
” has the meaning specified in
Section 4.13(a)
.
“
NYSE
”
means the New York Stock Exchange.
“
Open
Source Software
” means any Software that is subject to or licensed, provided or distributed under any license meeting
the Open Source definition (as promulgated by the Open Source Initiative) or the Free Software definition (as promulgated by the
Free Software Foundation), in each case, as existing as of the date of this Agreement, or any substantially similar license, including
any license approved by the Open Source Initiative and any Creative Commons License.
“
Outstanding
Company Expenses
” means, in each case to the extent unpaid as of the close of business on the Business Day immediately
preceding the Closing Date, (i) all costs, fees and expenses incurred by the Company or any of its Subsidiaries at or prior to
the Closing, or in respect of any Contract or other arrangement entered into at or prior to the Closing, related to the transactions
contemplated by this Agreement or any of the other Transaction Documents (and any other transactions with any Person, other than
Buyer, involving a sale of the Company (whether by way of stock purchase, merger, asset sale or otherwise) that were considered
as alternatives to the transactions contemplated hereby), whether payable prior to, at or after the Closing, including (A) costs,
fees and expenses of investment bankers (including the brokers referred to in
Section 4.16
), attorneys, accountants
and other consultants and advisors, (B) all retention, change of control, transaction or similar bonuses, compensation, and/or
incentive payments incurred or payable by the Company or any of its Subsidiaries in connection with the transactions contemplated
hereby,
plus
the employer portion of any payroll, employment or similar Taxes related to the payments described in this
clause (i)(B), (C) all costs, fees and expenses incurred as a result of (or that would be incurred as a result of) the termination
of any Affiliate Agreement, including the Management Agreement, and (D) any assignment, change in control or similar fees payable
as a result of the execution of this Agreement or any of the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, (ii) the portion of any Transfer Taxes borne by Seller under
Section 8.2(a)
and (iii)
the D&O Tail premium. For the avoidance of doubt, Outstanding Company Expenses shall include any Outstanding Company Expenses
that arise as a result of the payment of any amounts following the Closing (including pursuant to
Section 2.5
), and
any such post-Closing payments shall be payable net of any such Outstanding Company Expenses.
“
Owned
Real Property
” has the meaning specified in
Section 4.18(a)
.
“
Party
”
or “
Parties
” has the meaning specified in the Preamble.
“
Permits
”
means all permits, licenses, certificates of authority, authorizations, approvals, filings, declarations, registrations and other
similar consents issued by or obtained from a Governmental Authority.
“
Permitted
Liens
” means (i) statutory or common law Liens of mechanics, materialmen, warehousemen, landlords, carriers, repairmen,
construction contractors and other similar Liens that arise in the ordinary course of business, that relate to amounts not yet
due and payable or that are being contested in good faith through appropriate Actions and for which reserves have been maintained
on the Financial Statements (or, in the case of such Liens arising after the date of the Interim Financial Statements, the Company’s
books) in accordance with GAAP, (ii) Liens incurred in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other social security legislation, (iii) Liens for Taxes not yet due and payable or which are being
contested in good faith through appropriate Actions if adequate reserves with respect thereto are maintained on the Financial
Statements (or, in the case of such Liens arising after the date of the Interim Financial Statements, the Company’s books)
in accordance with GAAP, (iv) Liens, encumbrances and restrictions on real property (including easements, covenants, rights of
way and similar restrictions of record) that (A) are matters of record, (B) would be disclosed by a current, accurate survey or
physical inspection of such real property and (C) do not, individually or in the aggregate, materially interfere with the present
uses of such real property, (v) other Liens arising in the ordinary course of business and not incurred in connection with the
borrowing of money (excluding any Liens with respect to Intellectual Property), including without limitation (A) the interest
of any lessor, sublessor, lessee or sublessee under any lease or sublease agreement in the ordinary course of business, (B) Liens
that are customary contractual rights of setoff relating to deposit accounts or relating to purchase orders and other agreements
entered into with customers in the ordinary course of business and (C) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods or equipment in the ordinary course of business, in each case of (A), (B)
and (C) of this subsection (v), the creation or existence of which would not reasonably be expected to be, individually or in
the aggregate, material to the Company and its Subsidiaries, taken as a whole, (vi) Liens arising under the Credit Documents,
and (vii) Liens securing payments under capital lease and purchase money obligations made in the ordinary course of business,
(viii) non-exclusive licenses, covenants not to sue, and other similar rights to Intellectual Property granted in the ordinary
course of business and (ix) Liens described on
Schedule 1.1(d)
.
“
Person
”
means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint
venture, estate, trust, joint stock company, Governmental Authority or other entity of any kind.
“
Post-Closing
Tax Period
” means any Tax period beginning after the Closing Date and, with respect to any Straddle Period, the portion
of the Straddle Period beginning on the day after the Closing Date.
“
Pre-Closing
Tax Period
” means any Tax period ending on or before the Closing Date and, with respect to any Straddle Period, the
portion of the Straddle Period ending on and including the Closing Date.
“
Proxy
Statement
” has the meaning specified in
Section 7.5(a)
.
“
Ranpak
Corp
” means Ranpak Corporation, an Ohio corporation.
“
Registered
Intellectual Property
” has the meaning specified in
Section 4.22(a)
.
“
Regulatory
Approvals
” has the meaning specified in
Section 6.3(a)
.
“
Regulatory
Consent Authorities
” means the Antitrust Division of the United States Department of Justice, the United States Federal
Trade Commission and each other Governmental Authority with authority over one or more other Regulatory Approval, as applicable.
“
Related
Party
” has the meaning specified in
Section 4.21
.
“
Related
Party Liabilities
” means all liabilities, debts or obligations owed by (a) a Related Party to the Company or any of
its Subsidiaries or (b) the Company or any of its Subsidiaries to a Related Party.
“
Representatives
”
means, with respect to any Person, such Person’s Affiliates and its and their respective directors, officers, employees,
counsel, financial advisors, auditors and other authorized representatives.
“
Required
Information
” shall mean, without duplication (a) the Audited Financial Statements, to the extent such Audited Financial
Statements are for the two most recently completed fiscal years ended at least 120 days prior to the Closing Date, (b) the Interim
Financial Statements, to the extent such Interim Financial Statements are for any fiscal quarter subsequent to the last fiscal
year for which financial statements described in clause (a) above were delivered to Buyer and ended at least 60 days before the
Closing Date, (c) to the extent applicable, an audited consolidated balance sheet of Ranpak Corp. and its Subsidiaries as at the
end of, and related statements of comprehensive loss, changes in shareholders’ equity and cash flows of Ranpak Corp. and
its Subsidiaries for any fiscal year subsequent to those covered by the Audited Financial Statements ended at least 120 days prior
to the Closing Date and (d) to the extent applicable, an unaudited consolidated balance sheet of Ranpak Corp. and its Subsidiaries
as at the end of, and related income statement and cash flow statement of Ranpak Corp. and its Subsidiaries for, each subsequent
fiscal quarter (other than the fourth fiscal quarter of any fiscal year) of Ranpak Corp. and its Subsidiaries subsequent to the
most recent fiscal year for which audited financial statements described in clause (a) or, to the extent applicable, clause (c),
above have been delivered and ended at least 60 days before the Closing Date. Buyer hereby acknowledges receipt of (i) the audited
financial statements referred to in clause (a) and, to the extent applicable, clause (c) above with respect to the fiscal years
ended December 31, 2016 and December 31, 2017 and (ii) the financial statements referred to in clause (b) and, to the extent applicable,
clause (d) above with respect to the fiscal quarters ended March 31, 2018, June 30, 2018 and September 30, 2018.
“
Restricted
Cash
” means any cash and cash equivalents and marketable securities (calculated in accordance with GAAP) which is not
freely usable and available to the Company or its Subsidiaries because it is subject to restrictions, limitations or penalties
on use or distribution by Law, Contract or otherwise, including restrictions on dividends, escrowed amounts, collateral for letters
of credit and security or similar deposits or any other form of restriction;
provided
,
however
, refundable deposits
made in connection with certain legal proceedings outside the United States described in
Schedule 1.1(a)
shall not constitute
Restricted Cash.
“
Retired
Funded Debt
” means all obligations under the Credit Documents as of the Closing Date (other than Continuing Obligations).
“
S&C
“
has the meaning specified in
Section 11.17(a)
.
“
Sanctions
“
has the meaning set forth in
Section 4.26(b)
.
“
Sarbanes-Oxley
Act
” means the Sarbanes-Oxley Act of 2002.
“
SEC
”
means the United States Securities and Exchange Commission.
“
Securities
Act
” means the Securities Act of 1933, as amended.
“
Second
Lien Credit Agreement
” means that certain Second Lien Credit and Guaranty Agreement, dated as of October 1, 2014 (as
amended, restated, amended and restated, supplemented or modified from time to time), among Ranpak Corp., an Ohio corporation,
the other persons from time to time party thereto as guarantors, each agent and lender from time to time party thereto and Credit
Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent.
“
Second
Lien Credit Documents
” means the Second Lien Credit Agreement together with all Credit Documents (as defined in the
Second Lien Credit Agreement).
“
Seller
”
has the meaning specified in the Preamble.
“
Seller
Cure Period
” has the meaning specified in
Section 10.1(b)
.
“
Seller’s
RWI Policy
” means the representation and warranty liability insurance policy that was entered into in connection with
Seller’s acquisition of the Company.
“
Shares
”
has the meaning specified in the Recitals.
“
Software
”
means all (a) computer programs, applications, databases, firmware, systems, specifications and software, including all software
implementations of algorithms, models and methodologies and any and all development and design tools, applets, compilers and assemblers,
whether in source code or object code, (b) descriptions, flow-charts and other work product used to design, plan, organize and
develop any of the foregoing, (c) documentation and media, including user manuals and other training documentation, related to
or embodying any of the foregoing or on which any of the foregoing is recorded.
“
Solvent
”
when used with respect to any Person, means that such Person (a) is solvent (in that both the fair value of their consolidated
assets of such Person are not less than the sum of their consolidated debts and that the present fair saleable value of their
consolidated assets is not less than the amount required to pay the probable liability on their consolidated recourse debts as
they mature or become due), (b) does not have an unreasonably small amount of capital with which to engage in their business and
(c) has not incurred debts beyond their ability to pay such debts as they mature and become due.
“
Specified
Current Taxes
” means the aggregate amount of any Income Tax Liabilities of the Company and its Subsidiaries for all
Pre-Closing Tax Periods, whether or not then due, including for this purpose all unpaid installment payments due under Section
965(h) of the Code (the intent being that Seller bears any Taxes arising by virtue of Section 965 of the Code) that were unpaid
as of the close of business on the Business Day immediately preceding the Closing Date; provided, that, such term shall exclude
any deferred Tax assets or liabilities and any reserves for unpaid Income Taxes in respect of Tax Returns filed prior to the Closing
Date or which will not in fact be filed, including with respect to uncertain tax positions as determined under US GAAP, ASC 740-10
(which exclusion, for the avoidance of any doubt, shall not operate to exclude unpaid installment payments due under Section 965(h)).
The amount of any Income Taxes for any Straddle Period that are included in Specified Current Taxes shall be determined by applying
the methodology set forth in Section 8.2(e) and shall take into account any Transaction Tax Deductions. For the avoidance
of doubt, (x) net operating losses and other Income Tax assets will be taken into account in the determination of Specified Current
Taxes only to the extent (if any) they would actually reduce (but not below zero) the amount of the Income Taxes owed with respect
to a Pre-Closing Tax Period, and (y) in no event shall Specified Current Taxes be a negative number.
“
Specified
Litigation
” means the Actions described on
Schedule 4.22(f)(I)
(and any related Actions subsequently commenced).
“
Sponsor
Director
” has the meaning specified in
Section 7.2(a)
.
“
Straddle
Period
” means any Tax period beginning on or before and ending after the Closing Date.
“
Subsidiary
”
means, with respect to a Person, a corporation or other entity (i) of which 50% or more of the voting power of the equity securities
or equity interests is owned, directly or indirectly, by such Person, (ii) of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors, managers, trustees or other Persons performing similar functions
are owned, directly or indirectly, by such Person (or such Person otherwise has the right, whether by ownership of securities,
Contract or otherwise, to do so) or (iii) for which such Person or one of its other Subsidiaries is the general partner, manager
or managing member.
“
Surviving
Provisions
” has the meaning specified in
Section 10.2
.
“
Tax
”
means all federal, state, local, or foreign taxes, charges, fees, levies or other assessments, however denominated, that are imposed
by any Governmental Authority, including, but not limited to, all income (whether gross or net), profits, windfall profits, franchise,
alternative minimum, gross receipts, sales, goods and services, use, customs duties, value added, ad valorem, transfer, real property,
personal property, inventory, stamp, capital stock, environmental, excise, escheat, premium, social security, payroll, occupation,
production, employment, unemployment, severance, disability, registration, license, withholding and estimated tax, and any interest,
penalty, or addition with respect thereto.
“
Tax
Return
” means any return, report, statement, declaration, or document (including any refund claim, information statement,
or amendment) with respect to Taxes and required to be filed by a taxing authority.
“
Terminating
Buyer Breach
” has the meaning specified in
Section 10.1(c)
.
“
Terminating
Seller Breach
” has the meaning specified in
Section 10.1(b)
.
“
Termination
Date
” has the meaning specified in
Section 10.1(b)
.
“
Transaction
Document
” means this Agreement, the Confidentiality Agreement, the Voting Agreement, the Forward Purchase Agreements,
the Equity Commitment Letters and the other Contracts, certificates and other writings executed (or to be executed) by a Party
and delivered (or to be delivered) in connection with this Agreement or another Transaction Document or the transactions contemplated
hereby or thereby.
“
Transaction
Proposals
” has the meaning specified in
Section 7.5(a)
.
“
Transaction
Tax Deduction
” means (without duplication) (I) any amount paid or payable to the extent it is (i) deductible for Income
Tax purposes (as determined in accordance with
Section 8.2(b)
) by the Company or any of its Subsidiaries in a Pre-Closing
Tax Period under applicable Law, (ii) incurred by the Company or any of its Subsidiaries in connection with or as a result of
the transactions contemplated herein (and any other transactions with any Person, other than Buyer, involving a sale of the Company
(whether by way of stock purchase, merger, asset sale or otherwise) that were considered as alternatives to the transactions contemplated
hereby) and (iii) is attributable to (A) compensation costs for directors, officers, employees and service providers arising from
any payments made with respect to any bonuses or retention payments (including payments caused solely by the change of control
of the Company and its Subsidiaries) payable on or prior to the Closing Date, (B) prepayment penalties and premiums and accelerated
deferred financing costs related to debt prepayment, (C) the fees and disbursements of outside counsel to the Company incurred
in connection with the transactions contemplated hereby and any such alternative transactions, (D) the fees and expenses of any
other agents, advisors, consultants, experts and financial advisors employed by the Company in connection with the transactions
contemplated by this Agreement and any such alternative transactions, (E) any payments made to Rhône Capital IV L.P. and
its Affiliates (other than the Company and its Subsidiaries) in connection with the termination of the Management Agreement and
any other Related Party agreement or arrangement between Rhône Capital IV L.P. or any such Affiliate, on the one hand, and
the Company or any of its Subsidiaries, on the other hand, or (F) to the extent not already described in this definition, any
Outstanding Company Expense, and (II) any “foreign currency loss” (within the meaning of Section 988 of the Code)
related to debt prepayment that occurs in connection with or as a result of the transactions contemplated herein (and any other
transactions with any Person, other than Buyer, involving a sale of the Company (whether by way of stock purchase, merger, asset
sale or otherwise) that were considered as alternatives to the transactions contemplated hereby) that is taken into account by
the Company or any of its Subsidiaries’ in a Pre-Closing Tax Period.
“
Transfer
Tax
” means any transfer, sales, use, stamp, documentary, registration, conveyance, recording, or other similar tax or
governmental fee (and any interest, penalty, or addition with respect thereto) payable as a result of the consummation of the
transactions contemplated hereby.
“
Treasury
Regulations
” means the regulations promulgated under the Code.
“
Trust
Account
” has the meaning specified in
Section 5.11(a)
.
“
Trust
Agreement
” has the meaning specified in
Section 5.11(a)
.
“
Trust
Amount
” has the meaning specified in
Section 5.11(a)
.
“
Trust
Financing
” has the meaning specified in
Section 5.11(d)
.
“
Trustee
”
has the meaning specified in
Section 5.11(a)
.
”
Voting
Agreement
” means the Voting Agreement, dated as of December 12, 2018, between the Company and the BSOF Entities.
”
WARN
”
means the Worker Adjustment and Retraining Notification Act and any comparable foreign, state or local law.
1.2
Construction
.
(a)
Unless
the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the
singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,”
“herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement,
(iv) the terms “Article”, “Section”, “Schedule”, “Exhibit” and “Annex”
refer to the specified Article, Section, Schedule, Exhibit or Annex of or to this Agreement unless otherwise specified, (v) the
word “including” shall mean “including without limitation” and (vi) the word “or” shall
be disjunctive but not exclusive.
(b)
Unless
the context of this Agreement otherwise requires, references to agreements and other documents shall be deemed to include all
subsequent amendments and other modifications thereto;
provided
,
that
, all such amendments and other modifications
will only be deemed to be disclosed pursuant to the Schedules hereto or pursuant to any Transaction Document if it is listed on
the appropriate Schedule or Transaction Document thereto.
(c)
Unless
the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder
and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d)
The
language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no
rule of strict construction shall be applied against any party.
(e)
Whenever
this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any
action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action
may be deferred until the next Business Day.
(f)
The
phrase “ordinary course of business” shall be construed to be followed by the phrase “consistent with past practice”
regardless of whether such phrase is expressed.
(g)
All
accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
(h)
Unless
the context otherwise requires, all amounts in this Agreement shall be in U.S. dollars and, to the extent any amounts are not
in U.S. dollars, such amounts shall be converted into U.S. dollars based on the exchange rate, as reported in the Wall Street
Journal on the Business Day prior to such date of reference, to convert such amounts from such other currency to U.S. dollars.
1.3
Knowledge
.
As used herein, the phrase “to the knowledge” of any Person shall mean the knowledge of, after due inquiry, (i) in
the case of the Company, Mark Borseth, President and Chief Executive Officer of Ranpak Corp, Jim English, Vice President and PMO
of Ranpak Corp, Jim Corbett, Vice President, Secretary and General Counsel of Ranpak Corp, Eric Laurensse, Managing Director Europe,
Larry Thomas, Managing Director Americas, Antonio Grassotti, Managing Director APAC, Bert Cals, Director of Business Development,
Europe, Greg Nemecek, Vice President North America Sales, and Bret Haldin, Vice President Global Marketing and Product Development,
(ii) in the case of Buyer, the officers and directors of Buyer specified in Item 10 of the Buyer 2017 Form 10-K, as supplemented
by the Reports on Form 8-K filed by Buyer on May 23, 2018 and September 13, 2018, and (iii) in the case of all other Persons,
such Person’s executive officers.
Article
II
PURCHASE AND SALE; CLOSING; CLOSING DELIVERABLES
2.1
Purchase
and Sale of Shares
. Subject to the terms and conditions of this Agreement, and in reliance on the representations, warranties
and covenants contained herein, at the Closing, Seller agrees to sell, assign, convey, transfer and deliver to Buyer, and Buyer
agrees to purchase and accept from Seller, all Shares (free and clear of all Liens) for a cash amount equal to the Closing Cash
Consideration, subject to adjustment pursuant to
Section
2.5
.
2.2
Time
and Place of Closing
. Subject to the terms and conditions of this Agreement, the closing of the purchase and sale of Shares
provided for in this Agreement (the “
Closing
”) will take place at 10:00 a.m., New York City time, at the offices
of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004, on the tenth (10
th
) Business Day following
the satisfaction or waiver of the last condition in
Article IX
to be satisfied or waived
(other than those conditions which, by their terms, are to be satisfied or waived at the Closing, but subject to the satisfaction
or waiver of such conditions at the Closing) or at such other time and place as Buyer and Seller mutually agree. The date on which
the Closing actually occurs is referred to herein as the “
Closing Date
”.
2.3
Deliveries
at Closing
.
(a)
By
Seller
. Subject to the terms and conditions of this Agreement, at the Closing (or such earlier date specified below), Seller
shall deliver (or cause to be delivered) to Buyer:
(i)
the
stock certificates representing ownership of the Shares, duly endorsed in blank or accompanied by duly executed stock powers in
proper form for transfer;
(ii)
a
certificate, signed by an executive officer of Seller, as contemplated by
Section 9.2(d)
;
(iii)
the
written resignations of each of the directors of the Company and/or its Subsidiaries as Buyer may request no later than three
(3) Business Days prior to the Closing Date, effective as of the Closing Date; and
(iv)
the
applicable payoff letters, terminations and releases described in
Section 2.7
at least three (3) Business Days prior to
the Closing Date.
(b)
By
Buyer
. Subject to the terms and conditions of this Agreement, at the Closing, Buyer shall deliver:
(i)
an
amount equal to the Closing Cash Consideration in immediately available funds, to an account specified by Seller, pursuant to
instructions given to Buyer by Seller no later than two (2) Business Days prior to the Closing Date; and
(ii)
a
certificate, signed by an executive officer of Buyer, as contemplated by
Section 9.3(c)
.
2.4
Estimated
Closing Statement
. Not less than five (5) Business Days prior to the Closing Date, the Company shall deliver to Buyer a written
statement, signed and certified to by an executive officer of the Company (“
Estimated Closing Statement
”),
setting forth (a) its good faith estimate of (i) Closing Date Net Working Capital (“
Estimated Closing Date Net Working
Capital
”), (ii) Closing Date Debt (“
Estimated Closing Date Debt
”) and (iii) Closing Date Cash (“
Estimated
Closing Date Cash
”), in each case of clauses (i) through (iii), calculated as of the close of business on the Business
Day immediately preceding the Closing Date, and (b) the Company’s calculation of the Estimated Net Working Capital Adjustment
Amount and the resulting Closing Cash Consideration. The Estimated Closing Date Net Working Capital shall be prepared in accordance
with the definition of Net Working Capital, the Estimated Closing Date Debt shall be prepared in accordance with the definition
of Debt and the Estimated Closing Date Cash shall be prepared in accordance with the definition of Cash and Cash Equivalents.
The Estimated Closing Statement shall (x) provide reasonable detail with respect to each item reflected therein (including, with
respect to Estimated Closing Date Debt, an estimate of, and reasonable detail with respect to, Outstanding Company Expenses),
(y) be accompanied by reasonable supporting documentation therefor and (z) be subject to Buyer’s review prior to the Closing
and the Company shall give reasonable consideration in good faith any comments thereto made by Buyer.
2.5
Adjustment
Amount
.
(a)
As
soon as reasonably practicable following the Closing Date, and in any event within sixty (60) calendar days thereof, Buyer shall
prepare and deliver to Seller a statement (the “
Closing Statement
”) setting forth (i) a calculation of Net
Working Capital (“
Closing Date Net Working Capital
”), (ii) a calculation of the aggregate amount of all
Debt of the Company (“
Closing Date Debt
”) and (iii) a calculation of Cash and Cash Equivalents (“
Closing
Date Cash
” and together with the Closing Date Net Working Capital and Closing Date Debt, the “
Closing Date
Amounts
”), in each case of clauses (i) through (iii), calculated as of the close of business on the Business Day immediately
preceding the Closing Date. The Closing Date Amounts shall be prepared in accordance with the applicable definitions relating
thereto. Following the delivery of the Closing Statement, Buyer shall provide Seller and its representatives reasonable access
upon reasonable advance notice to the records, properties and personnel of the Company and its Subsidiaries relating to the preparation
of the Closing Date Amounts (subject, in the case of work papers of independent accountants, to Seller signing a customary confidentiality
and hold harmless agreement relating to such access to work papers in form and substance reasonably acceptable to such independent
accountants) and shall cause the personnel of the Company and its Subsidiaries to reasonably cooperate with Seller in connection
with its review of the Closing Date Amounts;
provided
that such access and cooperation does not unreasonably interfere
with the operation of the Company or its Subsidiaries.
(b)
If
Seller shall disagree with the calculation of Closing Date Amounts, it shall notify Buyer of such disagreement in writing, setting
forth in reasonable detail the particulars of such disagreement, within thirty (30) days after its receipt of the Closing Date
Amounts. Any item or amount reflected on the Closing Statement that is not included in such notice of disagreement shall be deemed
final, binding and conclusive for all purposes hereunder. In the event that Seller does not provide such a notice of disagreement
within such 30-day period, Seller shall be deemed to have accepted the Closing Statement and the calculation of Closing Date Net
Working Capital, Closing Date Debt and Closing Date Cash delivered by Buyer, which shall be final, binding and conclusive for
all purposes hereunder. In the event any such notice of disagreement is timely provided, Buyer and Seller shall use reasonable
best efforts for a period of 30 days (or such longer period as they may mutually agree) to resolve any disagreements with respect
to the calculations of Closing Date Net Working Capital, Closing Date Debt and/or Closing Date Cash, as applicable. If, at the
end of such period, they are unable to resolve such disagreements, then KPMG US LLP (or such other independent accounting or financial
consulting firm of recognized national standing as may be mutually selected by Buyer and Seller) (the “
Independent Accountant
”)
shall resolve any remaining disagreements. Each of Buyer and Seller shall promptly provide their assertions regarding the remaining
disputed aspects of Closing Date Net Working Capital, Closing Date Debt and/or Closing Date Cash, as applicable, in writing to
the Independent Accountant and to each other. No Party shall have any ex parte communications with the Independent Accountant.
The Independent Accountant shall be instructed to render its determination with respect to such disagreements as soon as reasonably
practicable (which the parties hereto agree should not be later than forty-five (45) days following the day on which the disagreement
is referred to the Independent Accountant (but if it is later, that fact shall not be a basis for attempting to invalidate or
overturn any determination made by the Independent Accountant)). The Independent Accountant shall base its determination solely
on (i) the written submissions of the parties and shall not conduct an independent investigation and (ii) the extent (if any)
to which the Closing Date Net Working Capital, Closing Date Debt and/or Closing Date Cash require adjustment (only with respect
to the remaining disagreements submitted to the Independent Accountant) in order to be determined in accordance with
Section
2.5(a)
(including the definitions of the defined terms used in
Section 2.5(a)
) and, with respect to each disputed item,
the Independent Accountant’s determination, if not in accordance with the position of either Buyer or Seller, shall not
be in excess of the higher, nor less than the lower, of the amounts presented in Buyer’s calculation of the Adjustment Amount
pursuant to
Section 2.5(a)
or in Seller’s written disagreement of such calculation pursuant to this
Section 2.5(b)
.
The determination of the Independent Accountant shall be final, conclusive and binding on the parties (absent fraud or manifest
error). The date on which Closing Date Net Working Capital, Closing Date Debt and Closing Date Cash are finally determined in
accordance with this
Section 2.5(b)
is hereinafter referred to as the “
Determination Date
.” The costs
and expenses of the Independent Accountant shall be allocated between Buyer and Seller based upon a fraction, the numerator of
which is the portion of the aggregate contested amount not awarded to the applicable Party and the denominator of which is the
aggregate contested amount.
(c)
If
the Adjustment Amount is a positive number, then the Closing Cash Consideration shall be increased by the Adjustment Amount, and
if the Adjustment Amount is a negative number, the Closing Cash Consideration shall be decreased by the absolute value of the
Adjustment Amount. The Adjustment Amount shall be paid in accordance with
Section 2.5(d)
.
(d)
Promptly
following the Determination Date, and in any event within five (5) Business Days of the Determination Date:
(i)
if
the Adjustment Amount is a positive number or zero, Buyer shall pay (or cause to be paid) to Seller an amount equal to the Adjustment
Amount (if greater than zero); and
(ii)
if
the Adjustment Amount is a negative number, Seller shall pay (or cause to be paid) an amount to Buyer equal to the absolute value
of the Adjustment Amount.
Such
amounts shall be paid, in immediately available funds pursuant to the instructions previously delivered by Buyer or Seller, as
applicable. Any amounts payable to Seller pursuant to this
Section 2.5
shall be paid net of any fees, costs or expenses
that arise as a result of the payment of such amount and that would have been Outstanding Company Expenses if they were incurred
and unpaid prior to the Closing.
(e)
Each
of Buyer and Seller shall ensure that it reserves a reasonably sufficient amount of available funds in order to be able to discharge
any potential payment obligations that it may incur pursuant to this
Section 2.5
.
2.6
Outstanding
Company Expenses
. On or prior to the Closing Date, the Company shall provide to Buyer a written report setting forth a list
of all Outstanding Company Expenses, including the identity of each payee, dollar amounts owed, wire transfer instructions and
any other information necessary to effect the final payment in full thereof, and copies of final invoices executed by each such
payee acknowledging the invoiced amounts as full and final payment for all services rendered to the Company and its Subsidiaries.
2.7
Repayment
of Retired Funded Debt
. At and subject to the occurrence of the Closing, and subject to the other terms and conditions set
forth in this Agreement, (a) Buyer shall make available to the Company, or pay directly, an amount sufficient to pay all amounts
owing with respect to the Retired Funded Debt outstanding on the Closing Date immediately prior to the Closing and (b) the Company,
if such amount is not paid directly by Buyer, shall apply such cash to pay all amounts owing with respect to the Retired Funded
Debt outstanding on the Closing Date immediately prior to the Closing. The Company shall (x) arrange for the delivery of
customary payoff letters, UCC-3 termination statements and other terminations or releases necessary to terminate or release, as
the case may be, the Company and its Subsidiaries from any further obligations under, and all Liens on the Company and its Subsidiaries’
properties and assets pursuant to, the Credit Documents (subject to customary exceptions), to be delivered at least one Business
Day prior to the Closing Date providing for the payoff, discharge and termination on the Closing of the Retired Funded Debt outstanding
on the Closing Date immediately prior to the Closing (subject to receipt from Buyer of the funds necessary to effectuate the pay-off
contemplated by such payoff letters, terminations and releases) and (y) deliver a draft of such payoff letters and lien terminations
within a reasonable and customary time period prior to the Closing Date.
2.8
Withholding
.
Each of Buyer and its Affiliates shall be entitled to deduct and withhold from any cash amounts otherwise deliverable under this
Agreement, and from any other consideration otherwise paid or delivered in connection with the transactions contemplated by this
Agreement, such amounts that it is required to deduct and withhold with respect to any such deliveries and payments under the
Code or any other provision of applicable Law. To the extent that Buyer or any of its Affiliates withholds such amounts with respect
to any Person and properly remits such withheld amounts to the applicable Governmental Authority, such withheld amounts shall
be treated as having been paid to or on behalf of such Person. Each party hereto shall promptly notify the other party if it becomes
aware of any Tax that is or may be required to be withheld from the consideration payable under this Agreement (other than any
such Tax that is imposed (i) on consideration that is properly treated as compensation for U.S. federal Income Tax purposes, (ii)
as a result of failure to provide forms needed to avoid backup withholding or (iii) as a result of a failure to provide forms
required to avoid withholding under section 1445 of the Code) and the parties hereto will cooperate in good faith to minimize
the amount of the withholding.
Article
III
representations and warranties regarding seller
Except
as set forth in the corresponding Schedules to this Agreement (subject to
Section 11.9
), Seller represents and warrants
to Buyer as of the date of this Agreement and as of the Closing Date as follows (each reference in
Sections 3.2
,
3.3
,
3.4
and
3.6
to “this Agreement” being deemed to also refer to each other Transaction Document to which
Seller is or will be a party (upon execution and delivery thereof by Seller, as applicable)):
3.1
Corporate
Organization of Seller
. Seller is a limited liability partnership duly organized and validly existing under the Laws of the
State of Delaware.
3.2
Due
Authorization
. Seller has full power and authority to execute and deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized and approved by the general partner of the Seller,
and no other corporate proceeding or other action on the part of the Seller or any of its direct or indirect equityholders is
necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
3.3
No
Conflict
. The execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby
do not and will constitute or result in (a) the breach or violation of any provision of (i) any applicable Law or (ii) the organizational
documents of Seller, (b) with or without notice, lapse of time or both, a breach or violation of, a termination (or a right of
termination) or default under, the creation of or acceleration of any obligations under or the creation of Lien on any of the
properties or assets of Seller pursuant to, or require consent or approval under, any Contract to which Seller is a party or by
which Seller may be bound, (c) any change in the rights or obligations of any party under any Contract binding upon Seller, or
(d) with or without notice or lapse of time or both, a violation of or revocation of any required license, permit or approval
from any Governmental Authority or other Person, except to the extent that any of the foregoing would not, taken as a whole, prevent,
materially delay or materially impair the ability of Seller to consummate the transactions contemplated by this Agreement.
3.4
Governmental
Authorities; Consents
. Assuming the truth and completeness of the representations and warranties of Buyer contained in this
Agreement, no consent, clearance, approval or authorization of, or designation, declaration or filing with, any Governmental Authority
or other Person, or observation of any waiting period under applicable Law, is required on the part of Seller with respect to
Seller’s execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby,
except for (a) applicable requirements of the HSR Act, (b) as otherwise disclosed on
Schedule 4.5
, and (c) any immaterial
consents, approvals, authorizations, designations, declarations or filings.
3.5
Ownership
of Shares
. As of the date of this Agreement, Seller has good and valid title to all of the issued and outstanding shares of
Common Stock, and immediately prior to Closing, Seller will have good and valid title to the Common Stock, in each case free and
clear from all Liens (other than Liens that will be discharged at Closing, assuming due performance by Buyer of its obligations
under this Agreement, or arising pursuant to this Agreement or from any act of Buyer or its Affiliates) and, upon delivery of
the Common Stock and payment therefor pursuant to this Agreement, good and valid title to the Common Stock, free and clear of
all Liens, other than Liens arising from any act of Buyer and its Affiliates, will pass to Buyer.
3.6
Litigation
and Claims
. As of the date of this Agreement, there are no pending or, to the knowledge of Seller, threatened, Actions against
Seller, that question the validity of this Agreement or would, taken as a whole, reasonably be expected to prevent, materially
delay or materially impair the ability of Seller to consummate the transactions contemplated by this Agreement.
Article
IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as set forth in the corresponding section of the Schedules to this Agreement (subject to
Section 11.9
), the Company represents
and warrants to Buyer as of the date of this Agreement and as of the Closing Date as follows (each reference in
Sections 4.3
,
4.4
and
4.5
to “this Agreement” being deemed to also refer to each other Transaction Document to which
the Company is or will be a party (upon execution and delivery thereof by the Company, as applicable)):
4.1
Corporate
Organization of the Company
. (i) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the Laws of the State of Delaware and has the corporate power and authority to own or lease its properties and
to conduct its business as it is now being conducted. (ii) The copies of the certificate of incorporation and bylaws of the
Company made available by the Company to Buyer prior to the date hereof are true, correct and complete. (iii) The Company
is duly licensed or qualified and in good standing as a foreign corporation in each jurisdiction in which the ownership of its
property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, except
where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to be material
to the Company and its Subsidiaries, taken as a whole, or reasonably be expected to prevent, materially impair or materially delay
Seller’s or the Company’s ability to consummate the transactions contemplated hereby.
Schedule 4.1
contains
a correct and complete list of each jurisdiction where the Company is qualified to do business. The Company is not in material
breach of any provision of its certificate of incorporation or bylaws or other organizational documents.
4.2
Subsidiaries
.
Schedule 4.2(a)
sets forth each Subsidiary of the Company and the ownership interest of the Company in each such Subsidiary
as well as the ownership interest of any other Person or Persons in each such Subsidiary. Each Subsidiary of the Company is wholly
owned by the Company or by one or more wholly owned Subsidiaries of the Company. Each Subsidiary of the Company has been duly
formed or organized and is validly existing under the Laws of its jurisdiction of incorporation or organization and has the power
and authority to own or lease its properties and to conduct its businesses as they are now being conducted. Prior to the date
hereof, the Seller has made available to Buyer true, correct and complete copies of the organizational documents of each of the
Company’s Subsidiaries. Each Subsidiary of the Company is duly licensed or qualified and in good standing as a foreign corporation
(or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is
such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed
or qualified or in good standing would not, individually or in the aggregate, reasonably be expected to be material to the Company
and its Subsidiaries, taken as a whole, or reasonably be expected to prevent, materially impair or materially delay Seller’s
or the Company’s ability to consummate the transactions contemplated hereby.
Schedule 4.2(b)
contains a correct and
complete list of each jurisdiction, with respect to each Subsidiary of the Company, where such Subsidiary is qualified to do business.
Neither the Company nor any of its Subsidiaries owns any capital stock, equity interest, voting interest or other direct or indirect
ownership interest in any Person (other than a Subsidiary of the Company). No Subsidiary is in material breach of any provision
of its certificate of incorporation or bylaws or other organizational documents.
4.3
Due
Authorization
. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations
under this Agreement and (subject to the approvals described in
Section
4.5
) to consummate
the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the board of directors of the Company, and no other
corporate proceeding or other action on the part of the Company is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’
rights generally and subject, as to enforceability, to general principles of equity.
4.4
No
Conflict
. Except as set forth on
Schedule 4.4
or as set forth in the Credit Documents, subject to the receipt of the
consents, approvals, authorizations and other requirements set forth in
Section
4.5
or
on
Schedule 4.5
, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions
contemplated hereby do not and will constitute or result in (a) the breach or violation of any provision of, (i) any applicable
Law or (ii) the certificate of incorporation, bylaws or other organizational documents of the Company or any of its Subsidiaries,
or (b) with or without notice, lapse of time or both, a breach or violation of, a termination (or a right of termination) or default
under, the creation of or acceleration of any obligations under or the creation of Lien on any of the properties or assets of
the Company or any of its Subsidiaries pursuant to, require consent or approval under, any Contract to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its Subsidiaries may be bound, (c) any change in the rights or
obligations of any party under any Contract binding upon the Company or any of its Subsidiaries, or (d) with or without notice
or lapse of time or both, a violation of or revocation of any required license, permit or approval from any Governmental Authority
or other Person, except to the extent that the occurrence of any of the foregoing would not be material to the Company and its
Subsidiaries, taken as a whole, or materially impair or delay Seller’s or the Company’s ability to consummate the
transactions contemplated hereby.
4.5
Governmental
Authorities; Consents
. Assuming the truth and completeness of the representations and warranties of Buyer contained in this
Agreement, no consent, clearance, approval or authorization of, or designation, declaration or filing with, any Governmental Authority
or other Person, or observation of any waiting period under applicable Law, is required on the part of the Company or any of its
Subsidiaries with respect to the Company’s execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, except for (a) applicable requirements of the HSR Act, (b) as otherwise disclosed on
Schedule
4.5
, and (c) any immaterial consents, approvals, authorizations, designations, declarations or filings.
4.6
Capitalization
.
(a)
The
authorized capital stock of the Company consists of 1,000 shares of Common Stock, of which 995 shares of Common Stock are issued
and outstanding as of the date of this Agreement. All of the issued and outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable and free and clear of any Liens other than Liens pursuant to the Credit
Documents and Liens pursuant to securities Laws. The Seller is the sole shareholder of the Common Stock as of the date hereof.
(b)
Except
as set forth on
Schedule 4.6(b)
, there are (i) no authorized or outstanding subscriptions, puts, calls, commitments, options,
warrants, rights (including any preemptive rights) or other securities convertible into or exchangeable or exercisable for shares
of the Common Stock or the equity or voting interests of any Subsidiary of the Company, or any other Contracts to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating the Company or any
such Subsidiary to issue or sell any shares of capital stock of, other equity or voting interests in, or debt securities of, the
Company or any of its Subsidiaries, (ii) no authorized or outstanding equity equivalents, stock appreciation rights, phantom equity
ownership interests, restricted shares, restricted stock units, performance units, contingent values, profit participation or
similar rights with respect to the capital stock of, or other equity or voting interests in the Company or any of its Subsidiaries
and (iii) no authorized or outstanding similar securities or rights that are derivative of, or provide economic benefits based
directly or indirectly on the value or price of any shares of the capital stock of, or other equity or voting interest in, the
Company or any of its Subsidiaries. There are no authorized or outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any securities or other equity or voting interests of the Company or any
of its Subsidiaries. Except as set forth on
Schedule 4.6(b)
, there are no authorized or outstanding bonds, debentures,
notes or other indebtedness of the Company or any of its Subsidiaries having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matter for which the Company’s stockholders may vote. Except for the Management
Agreement and except as set forth on
Schedule 4.6(b)
, none of the Company or any of its Subsidiaries is a party to any
stockholders agreement, investors agreement, voting agreement, registration rights agreement or other similar agreement relating
to the Common Stock or any other equity or voting interests of the Company or any of its Subsidiaries.
(c)
The
outstanding shares of capital stock of each of the Company’s Subsidiaries have been duly authorized and validly issued and
are fully paid and nonassessable and were not issued in violation of any provision of the certificate of incorporation, bylaws
(or similar organizational documents) in effect when issued, any rights of first refusal, any preemptive rights or any similar
rights. Except as set forth on
Schedule 4.6(c)
, the Company or one or more of its wholly owned Subsidiaries own of record
and beneficially all the issued and outstanding shares of capital stock of such Subsidiaries free and clear of any Liens other
than Liens pursuant to the Credit Documents and Liens pursuant to securities Laws.
4.7
Financial
Statements
.
(a)
Attached
as
Schedule 4.7
are (i) the audited consolidated balance sheets of Ranpak Corp and its Subsidiaries as of December 31,
2017, December 31, 2016 and December 31, 2015 and the audited consolidated statements of comprehensive loss, cash flows and changes
in shareholders’ equity of Ranpak Corp and its Subsidiaries for the years ended December 31, 2017, December 31, 2016 and
December 31, 2015, together with the auditor’s reports thereon (the “
Audited Financial Statements
”) and
(ii) an unaudited consolidated balance sheet, income statement and cash flow statement of Ranpak Corp and its Subsidiaries as
of and for the nine months ended September 30, 2018 (the “
Interim Financial Statements
” and, together with
the Audited Financial Statements, the “
Financial Statements
”). The Financial Statements present fairly, in
all material respects, the consolidated financial position, results of operations, income and cash flows of Ranpak Corp and its
Subsidiaries as of the dates and for the periods indicated in such Financial Statements in conformity with GAAP consistently applied
throughout the periods presented (except, in the case of the Interim Financial Statements, for the absence of footnotes and other
presentation items and for normal year-end adjustments ), and the auditor’s reports in respect of the Audited Financial
Statements have not been withdrawn or amended. Except as expressly set forth in the Financial Statements, neither the Company
nor any of its Subsidiaries maintains any “off-balance-sheet arrangement” within the meaning of Item 303 of Regulation
S-K of the SEC.
(b)
The
inventories set forth in the balance sheets included in the Financial Statements were properly stated therein at the lesser of
cost or net realizable value determined in accordance with GAAP consistently maintained and applied by Ranpak Corp. and its Subsidiaries.
Since the date of the most recent balance sheet included in the Interim Financial Statements, the inventories of the Company and
its Subsidiaries have been maintained in the ordinary course of business.
(c)
Since
its formation and other than the payment of directors’ fees and incidental costs associated with corporate governance of
the Company, the Company has not engaged in any business activity other than acquiring and holding the issued and outstanding
equity interests in Ranpak Corp. Other than (a) intercompany Liabilities to Ranpak Corp relating to the payment of directors’
fees and to historical payments made in connection with certain employee severance-related arrangements and (b) the Company’s
obligations as a guarantor under the Credit Documents, the Company does not have any Liabilities or Debt.
(d)
All
accounts receivable reflected in the calculation of Closing Date Net Working Capital will be valid, genuine and fully collectible
in the aggregate amount thereof less any reserves for doubtful accounts reflected in the calculation of Closing Date Net Working
Capital. For the avoidance of doubt, this
Section 4.7(d)
is not a guarantee of collection of any such accounts receivable.
4.8
Internal
Controls
. The Company maintains a system of internal accounting controls sufficient, in all material respects, to provide
reasonable assurances (i) that transactions are recorded as necessary to permit preparation of financial statements in accordance
with GAAP, (ii) that receipts and expenditures of the Company and its Subsidiaries are being made in accordance with appropriate
authorizations of management and the Company’s board of directors and (iii) regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets of the Company and its Subsidiaries.
4.9
Undisclosed
Liabilities
. Except as set forth on
Schedule 4.9
, there is no liability, debt, or legally binding commitment or obligation
of any nature whatsoever, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable
or otherwise (any such liability, debt or legally binding commitment or obligation, a “
Liability
”), against
the Company or any of its Subsidiaries, and whether or not required to be disclosed, or any other fact or circumstance that would
reasonably be likely to result in any claims against, or any obligations or liabilities of, the Company or any of its Subsidiaries,
except for liabilities and obligations (a) reflected or reserved for on the Financial Statements or disclosed in the notes thereto,
(b) that have arisen since the date of the most recent balance sheet included in the Interim Financial Statements in the ordinary
course of the operation of business of the Company and its Subsidiaries, or (c) under any Contract set forth on
Schedule 4.12(a)
or not required to be disclosed in the Schedules (other than any such liability, debt or obligation resulting from a breach
or a default thereunder).
4.10
Litigation
and Proceedings
. Except as set forth on
Schedule 4.10
, there are no pending or, to the knowledge of the Company, threatened,
Actions or investigations before or by any Governmental Authority against the Company or any of its Subsidiaries, in each case
that would be material to the Company and its Subsidiaries, taken as a whole; nor has there been any such Action or investigation
since January 1, 2015. Neither the Company nor any of its Subsidiaries nor any property or asset of the Company or any such Subsidiary
is, or, since January 1, 2015, has been subject to any Governmental Order, or, to the knowledge of the Company, any investigation
by, any Governmental Authority, in each case except as would not be material to the Company and its Subsidiaries, taken as a whole.
4.11
Compliance
with Laws
.
(a)
Except
(i) with respect to matters set forth on
Schedule 4.11(a)
and (ii) where the failure to be, or to have been, in compliance
with such Laws would not be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are,
and since January 1, 2015 have been, in compliance with all applicable Laws. Since January 1, 2015 through the date hereof, none
of the Company or any of its Subsidiaries has received any written, or to the Company’s knowledge, oral, notice, request
or citation from any Governmental Authority relating to a material violation (whether actual or potential) of any applicable Law.
(b)
Since
January 1, 2015 and except where the failure to be, or to have been, in compliance with such Laws would not be material to the
Company and its Subsidiaries, taken as a whole, (i) there has been no action taken by the Company, any of its Subsidiaries, or
any officer, director, or employee of the Company or any of its Subsidiaries or, to the knowledge of the Company, any agent, representative,
distributor or other sales intermediary of the Company or any of its Subsidiaries, in each case, acting on behalf of the Company
or any of its Subsidiaries, in violation of any applicable Anti-Corruption Law, (ii) neither the Company nor any of its Subsidiaries
has been convicted of violating any Anti-Corruption Laws or subjected to any investigation by a Governmental Authority for violation
of any applicable Anti-Corruption Laws, (iii) neither the Company nor any of its Subsidiaries has conducted or initiated any internal
investigation or audit or made a voluntary, directed, or involuntary disclosure to any Governmental Authority regarding any alleged
act or omission arising under or relating to any noncompliance with any Anti-Corruption Law and (iv) neither the Company nor any
of its Subsidiaries has received any written, or to the Company’s knowledge, oral, notice, request or citation relating
to any actual or potential noncompliance with any of the foregoing.
4.12
Contracts;
No Defaults
.
(a)
Schedule
4.12(a)
sets forth a complete and accurate list of Contracts described in (i) through (xxv) below to which, as of the date
of this Agreement, the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any
of their respective assets is bound (collectively, the “
Material Contracts
”). True, correct and complete copies
of all Material Contracts, together with any amendments, waivers and other changes thereto entered into as of the date hereof,
have been delivered to or made available to Buyer or its agents or representatives prior to the date hereof (including, in the
case of any unwritten Material Contracts, true and complete descriptions of the terms thereof).
(i)
any
Contract expected to require a capital expenditure or known commitment by the Company or any of its Subsidiaries, in the aggregate,
in excess of $400,000 in 2018 or in any future calendar year or over the remaining term of the Contract;
(ii)
(A)
each employment Contract with any employee or individual independent contractor of the Company or one of its Subsidiaries that
provides for annual base compensation in excess of $150,000 and (B) each Contract that provides for retention, change in control,
or transaction bonuses or payments to any current or former employee or individual independent contractor of the Company or any
of its Subsidiaries;
(iii)
each
employee collective bargaining or similar labor Contract;
(iv)
any
Contract with a customer or vendor (other than purchase orders accepted, confirmed or entered into in the ordinary course of business)
listed on
Schedule 4.24
;
(v)
any
Contract pursuant to which the Company or any of its Subsidiaries has agreed to indemnify another Person, in each case, other
than in the ordinary course of business and other than as set forth in the Credit Documents;
(vi)
any
Contract (including covenants not to sue, non-assertion, settlement or similar agreements or consents) pursuant to which the Company
or any of its Subsidiaries licenses or sublicenses, to or from a third party, or relating to the assignment, creation, development,
distribution, disclosure or transfer of, any Intellectual Property, in each case, where such Contract is material to the conduct
of the business of the Company or any of its Subsidiaries, other than (A) click-wrap, shrink-wrap and off-the-shelf Software licenses
commercially available on, and actually licensed under, standard terms from third party vendors with annual payments of less than
$100,000 and (B) non-exclusive licenses of any Company Intellectual Property granted to customers and distributors and entered
into in the ordinary course of business;
(vii)
any
lease or similar Contract under which (A) the Company or any of its Subsidiaries is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by a third party or (B) the Company or any of its Subsidiaries is
a lessor or sublessor of, or makes available for use by any third party, any tangible personal property owned or leased by the
Company or any of its Subsidiaries, in each case, which has future required scheduled payments in excess of $150,000 in 2018 or
in any future calendar year, other than master leases of automobiles entered into in the ordinary course of business that have
future required scheduled payments of less than $250,000;
(viii)
any
Contract which limits the ability of the Company or any Subsidiary to compete in any line of business or with any Person or in
any geographic area or during any period of time;
(ix)
any
Contract which binds or purports to bind any Affiliate of the Company that is not a party to such Contract (other than Subsidiaries
of the Company and the employees of the Company or any of its Subsidiaries);
(x)
any
Contract under which the counterparty is a direct customer, reseller, distributor, agency or any similar agreement involving at
least $1,000,000 in payments during 2018 or in any future calendar year or over the remaining term of the Contract;
(xi)
any
Contract with any customer or reselling distributor or agent pursuant to which the Company or its Subsidiary provides any warranty
not provided in the ordinary course of business;
(xii)
other
than any Credit Document, any Contract under which the Company or any of its Subsidiaries has (A) created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) any indebtedness for borrowed money or (B) extended credit to any Person
(other than (1) intercompany loans and advances in the ordinary course of business and (2) customer payment terms in the ordinary
course of business);
(xiii)
any
Contracts involving interest rate or foreign currency swaps, commodity swaps, options, caps, collars, hedges or forward exchanges
or other similar agreements;
(xiv)
other
than pursuant to the security arrangements contemplated under the Credit Documents, any Contract that grants any Lien over any
material assets of the Company or any of its Subsidiaries;
(xv)
other
than the Management Agreement and any employment agreement set forth on
Schedule 4.13(a)
, any Contract between the Company
or any of its Subsidiaries, on the one hand, and any Related Party, on the other hand;
(xvi)
any
Contract relating to (A) any completed material business acquisition or disposition by the Company or any of its Subsidiaries
since January 1, 2015 or (B) any material business acquisition proposed to be made by the Company or any of its Subsidiaries since
January 1, 2015;
(xvii)
any
Contract for the sale, directly or indirectly (by merger or otherwise), of any of the material assets of the Company or any of
its Subsidiaries since January 1, 2015;
(xviii)
any
Contract establishing any partnership, joint venture, strategic alliance or similar Contract;
(xix)
any
Contract (other than purchase orders accepted, confirmed or entered into in the ordinary course of business) not disclosed pursuant
to any other clause under this
Section 4.12(a)
and requiring expenditures to or by the Company or any of its Subsidiaries
in excess of $500,000 in 2018 or over the remaining term of the Contract;
(xx)
any
Contract (other than the Credit Documents) that contain (A) a “most favored nation” or similar provision or (B) any
minimum purchase or sale “requirements” or “take or pay” obligations;
(xxi)
any
Contract granting any third party the exclusive right (in one or more jurisdictions) to develop, market, sell or distribute the
Company’s or any of its Subsidiaries’ products or services;
(xxii)
any
Contract that obligates the Company or any of its Subsidiaries to purchase material products or services from a supplier on an
exclusive basis;
(xxiii)
the
Credit Agreements;
(xxiv)
any
Contract providing for the deferred purchase price of property, goods or services, including all seller financing, earn-outs and
similar contingent consideration pursuant to which the Company or its Subsidiary has any outstanding obligations (other than trade
payables arising in the ordinary course of business); and
(xxv)
any
Contract with any Governmental Authority.
(b)
Except
as set forth on
Schedule 4.12(b)
and the Credit Agreements, (i) as of the date of this Agreement, all of the Contracts
listed or required to be listed pursuant to
Section 4.12(a)
are, and immediately after the Closing will be, in full force
and effect and represent the legal, valid and binding obligations of the Company or its respective Subsidiaries party thereto
and, to the knowledge of the Company, represent the legal, valid and binding obligations of the other parties thereto, (ii) none
of the Company, any of its Subsidiaries or, as of the date of this Agreement and to the knowledge of the Company, any other party
thereto is in material breach of or material default under any such Contract, (iii) neither the Company nor any of its Subsidiaries
has received any claim or notice of material breach of or material default under any such Contract, and (iv) to the knowledge
of the Company, no event has occurred which individually or together with other events, would reasonably be expected to result
in a material breach of or default under any such Contract by the Company or any Subsidiary of the Company party thereto (in each
case, with or without notice or lapse of time or both).
(c)
Except
as set forth on
Schedule 4.12(c)
, each Contract to which the Company or any of its Subsidiaries is a party with any reseller,
distributor or sales agent of the Company’s products or services include the Company’s standard exclusivity provision,
as in effect at the time such Contract was entered into, requiring that such reseller, distributor or sales agent exclusively
market, sell or the distribute the Company’s and its Subsidiaries’ products and related services (to the exclusion
of any competitive third party paper products and related services) (the “
Company Exclusivity Provision
”).
4.13
Company
Benefit Plans
.
(a)
Schedule
4.13(a)
sets forth a complete list of each material Company Benefit Plan. For the purposes of this Agreement, “Company
Benefit Plan” means each (i) “employee benefit plan” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“
ERISA
”) (whether or not subject to ERISA), (ii) employment, consulting,
severance termination protection, change in control, transaction bonus, retention or similar plan, agreement, arrangement program
or policy, and (iii) any other plan, policy or program providing compensation, termination, welfare, fringe or other benefits
or remuneration of any kind to any current or former director, officer, employee or independent contractor, in each case that
is maintained, sponsored or contributed to (or required to be contributed to) by the Company or any of its Subsidiaries, or under
which the Company or any of its Subsidiaries has any obligation or Liability, whether contingent or otherwise.
Schedule 4.13(a)
separately identifies each material Company Benefit Plan that is maintained primarily for the benefit of employees or independent
contractors outside of the United States (a “
Non-U.S. Benefit Plan
”).
(b)
With
respect to each Company Benefit Plan set forth on
Schedule 4.13(h)
and each other material Company Benefit Plan, the Company
has delivered or made available to Buyer correct and complete copies of, if applicable (i) such Company Benefit Plan and any trust
agreement and agreements related to any other funding vehicles, (ii) the most recent summary plan description, (iii) the most
recent annual report on Form 5500 and all attachments thereto filed with the Internal Revenue Service, (iv) the most recent actuarial
valuation, (v) the most recent determination or opinion letter issued by the Internal Revenue Service, and (vi) all material correspondence
to or from any Governmental Authority received in the last three years with respect to such Company Benefit Plan.
(c)
Each
Company Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and
all applicable Laws, including ERISA and the Code. All contributions or other amounts payable by the Company or any of its Subsidiaries
with respect to each Company Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with
generally accepted accounting principles. Neither the Company nor any of its Subsidiaries has engaged in a transaction in connection
with which the Company or one of its Subsidiaries reasonably could be subject to either a material civil penalty assessed pursuant
to Section 409 or 502(i) of ERISA or a material Tax imposed pursuant to Section 4975 or 4976 of the Code.
(d)
Each
Company Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code has been determined by
the Internal Revenue Service to be qualified under Section 401(a) of the Code, and, to the knowledge of the Company, nothing has
occurred that would adversely affect the qualification or tax exemption of any such Company Benefit Plan.
(e)
No
Company Benefit Plan is a multiemployer pension plan (as defined in Section 3(37) of ERISA) (a “
Multiemployer Plan
”)
or other pension plan, in each case, that is subject to Title IV of ERISA.
(f)
Neither
the Company nor any ERISA Affiliate has, in the last six (6) years, sponsored, maintained, contributed to or had any obligation
to contribute to, or has or is reasonably expected to have any direct or indirect Liability to, any plan that is subject to Section
412 of the Code or Section 302 or Title IV of ERISA.
(g)
With
respect to the Company Benefit Plans, (i) no actions, suits, claims (other than routine claims for benefits in the ordinary course),
audits or investigations by any Governmental Authority are pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, and (ii) to the knowledge of the Company, no facts or circumstances exist that would reasonably
be expected to give rise to any such actions, suits or claims.
(h)
Except
as disclosed on
Schedule 4.13(h)
, neither the execution and delivery of this Agreement by the Company nor the consummation
of the transactions contemplated by this Agreement could, either alone or in combination with another event, (i) result in the
acceleration or creation of any rights of any director, officer or employee of the Company or any of its Subsidiaries to payments
or benefits or increases in any payments or benefits or any loan forgiveness, in each case, from the Company or any of its Subsidiaries,
(ii) directly or indirectly cause the Company to transfer or set aside any assets to fund any material benefits under any Company
Benefit Plan, (iii) otherwise give rise to any material Liability under any Company Benefit Plan or (iv) result in the payment
of any amount that could, individually or in combination with any other payment, constitute an “excess parachute payment”
as defined in Section 280G(b)(1) of the Code.
(i)
All
Non-U.S. Benefit Plans (1) have been maintained and operated in accordance with, and are in compliance with, their terms, applicable
local Law, and with any agreement entered into with a union or labor organization, in each case, in all material respects, and
(2) to the extent intended to be funded and/or book reserved, are funded and/or book reserved, as appropriate, based on reasonable
actuarial assumptions.
(j)
No
Company Benefit Plan or other agreement provides any Person with any amount of additional compensation or gross-up if such individual
is provided with amounts subject to excise or additional Taxes imposed under Section 4999 or 409A of the Code.
4.14
Labor
Matters
.
(a)
Except
as disclosed on
Schedule 4.14(a)
, neither the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or other labor union agreement applicable to persons employed by the Company or any of its Subsidiaries, nor are there
any such employees represented by a works council or a labor organization nor, to knowledge of the Company as of the date hereof,
activities or proceedings of any labor union to organize any such employees. The Company has delivered or made available to Buyer
correct and complete copies of each agreement listed on
Schedule 4.14(a)
(collectively, the “
Company Labor Agreements
”).
Each of the Company and its Subsidiaries is in compliance in all material respects with the Company Labor Agreements. Except as
set forth in
Schedule 4.14(a)
, the consummation of the transactions contemplated by this Agreement will not entitle any
third party to any payments under any of the Company Labor Agreements, and the Company and its Subsidiaries are in compliance
in all material respects with their obligations pursuant to all notification and other obligations arising under any Company Labor
Agreements.
(b)
Each
of the Company and its Subsidiaries (i) is in compliance in all material respects with all applicable Laws regarding employment
and employment practices, terms and conditions of employment, and wages and hours, (ii) has not received written notice of any
unfair labor practice complaint against it pending before the National Labor Relations Board that remains unresolved, and (iii)
is not currently experiencing, and has received no current written threat of, any labor strike, slowdown, work stoppage, picketing
or interruption of work or lockout.
(c)
The
Company and its Subsidiaries have complied in all material respects with all consultation and other requirements in respect of
each labor or trade union, works council or other representative body required to be complied with prior to executing this Agreement.
No further consent or consultation of, or the rendering of formal advice by, any labor or trade union, works council or other
employee representative body is required for the Company to enter into this Agreement or consummate any of the transactions contemplated
hereby.
(d)
The
Company and each of its Subsidiaries is, and has been since January 1, 2015, in material compliance with WARN and has no material
Liabilities or other obligations thereunder. Neither the Company nor any of its Subsidiaries has taken any action that would reasonably
be expected to cause Buyer or any of its Affiliates to have any material Liability or other obligation following the Closing Date
under WARN.
4.15
Taxes
.
Except
as disclosed on
Schedule 4.15
:
(a)
All
material Tax Returns required by Law to be filed by the Company or any of its Subsidiaries have been timely filed, and all such
Tax Returns are true, correct and complete in all material respects.
(b)
All
material Taxes required by Law to be paid by the Company or any of its Subsidiaries have been paid.
(c)
The
Company and its Subsidiaries have complied in all material respects with applicable Law with respect to Tax withholding.
(d)
Neither
the Company nor any of its Subsidiaries is engaged in or subject to any audit, examination, investigation or proceeding by a taxing
authority or any judicial proceeding with respect to Taxes. Neither the Company nor any of its Subsidiaries has received any written
notice from a taxing authority of a pending material audit or has received any written notice from a taxing authority (including
in jurisdictions where the Company or any of its Subsidiaries does not file Tax Returns) of a dispute or claim with respect to
material Taxes, other than disputes or claims that have since been resolved or that are being contested in good faith through
appropriate Actions. No deficiency for any material amount of Tax has been asserted or assessed by any taxing authority in writing
against the Company or any of its Subsidiaries, which deficiency has not been satisfied by payment, settled or withdrawn. There
are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period
for the collection or assessment or reassessment of, material Taxes due from the Company or from any of its Subsidiaries for any
taxable period and no written request for any such wavier or extension is currently pending.
(e)
Neither
the Company nor any of its Subsidiaries has any Liability for the Taxes of any Person other than the Company and its Subsidiaries
(i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Tax Law), (ii) as a transferee
or successor, or (iii) under a Tax sharing, allocation, indemnification, reimbursement, receivables or similar agreement or other
Contract that provides for the allocation, apportionment, sharing or assignment of any Tax Liability or benefit (other than a
Contract entered into in the ordinary course of business and that is neither (i) primarily related to Taxes nor (ii) a Contract
that involves the sale of a material non-inventory asset or subsidiary).
(f)
Neither
the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled
corporation” in a distribution of stock qualifying for (or intended or purported to qualify for) tax-free treatment under
Section 355 of the Code or any similar provision of state, local or non-U.S. Tax Law since January 1, 2016.
(g)
Neither
the Company nor any of its Subsidiaries has been a party to any “listed transaction” or any “reportable transaction”
within the meaning of Section 6707A of the Code (or any similar provision of state, local or foreign Tax Law) that has not been
disclosed in the manner required by applicable Law in the relevant Tax Return of the Company or the relevant Subsidiary.
(h)
The
Company would not be required to include any amounts in gross income with respect to any non-U.S. Subsidiary pursuant to Section
951 of the Code if the taxable year of such non-U.S. Subsidiary were deemed to end on the day after the Closing Date, but not
taking into account any activities or income of such Non-U.S. Subsidiary on such day.
(i)
Neither
the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item
of 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 for a taxable period (or portion thereof) ending on or prior to the Closing Date and made prior
to the Closing Date; (ii) “closing agreement,” as described in Section 7121 of the Code (or any similar provision
of state, local or foreign Tax Law) entered into with any taxing authority prior to the Closing Date; (iii) prepaid amount received
on or prior to the Closing Date; (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or
(v) election by the Company or any of its Subsidiaries under Section 108(i) of the Code (or any similar provision of state, local
or foreign Tax Law).
(j)
Neither
the Company nor any of its Subsidiaries has participated in or is participating in an international boycott within the meaning
of Code Section 999.
(k)
None
of the non-U.S. Subsidiaries of the Company is treated as a U.S. corporation under Section 7874(b) of the Code.
(l)
There
are no Liens with respect to Taxes on any of the assets of the Company or the Subsidiaries, other than Permitted Liens.
(m)
Neither
the Company nor any of its Subsidiaries has made a “covered asset acquisition” within the meaning of Section 901(m)(2)
of the Code.
(n)
Schedule
4.15(n)
sets forth the current entity classification, for U.S. federal Income Tax purposes, of each of the Company’s
Subsidiaries that is not a U.S. person for U.S. federal Income Tax purposes and the date since which such classification has been
in effect.
(o)
The
Company has not been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of
the Code at any time during the five-year period ending on the Closing Date.
(p)
Neither
the Company nor any of its Subsidiaries has obtained any private letter ruling from the U.S. Internal Revenue Service or any similar
official written ruling from any other taxing authority with respect to material Taxes nor is any application for any private
letter ruling or any other such official written ruling now pending.
(q)
Neither
the Company nor any of its Subsidiaries is the beneficiary of any Tax exemption, Tax holiday or reduced Tax rate grated by a taxing
authority that is not generally available without specific application therefor.
(r)
No
written claim has been made within the previous three years by a taxing authority in a jurisdiction in which the Company or the
relevant Subsidiary, as applicable, does not file Tax Returns that the Company or such Subsidiary is or may be subject to Tax
by that jurisdiction.
(s)
The
aggregate amount of Tax payable by the Company and its Subsidiaries as a result of any inclusion under Section 965(a) of the Code,
including as a result of an election under Section 965(h) of the Code (or any similar or corresponding election under state or
local Tax Law) will not exceed the amount included therefor in Specified Current Taxes.
4.16
Brokers’
Fees
Except as set forth on
Schedule 4.16
, no broker, finder, financial advisor, investment banker, similar intermediary
or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by the Company, any of its Subsidiaries or any of their Affiliates, and no such
broker, finder, financial advisor, investment banker, similar intermediary or other Person is entitled to any fee or commission
or like payment from Buyer in respect thereof.
4.17
Insurance
Schedule
4.17(a)
contains a list of all material policies of property, fire and casualty, product liability, workers’ compensation,
and other forms of insurance and fidelity bonds (the “
Insurance Policies
”) held by, or for the benefit of,
the Company or any of its Subsidiaries as of the date of this Agreement. Such Insurance Policies are of the type and in amounts
customarily carried by Persons and businesses similar to those of the Company and its Subsidiaries. True, correct and complete
copies of such Insurance Policies have been made available to Buyer prior to the date hereof. With respect to each such Insurance
Policy listed on
Schedule 4.17(a)
, except as would not be material to the Company and its Subsidiaries, taken as a whole:
(i) the policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired
under their terms in the ordinary course, is in full force and effect, (ii) neither the Company nor any of its Subsidiaries is
in breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and,
to the Company’s knowledge, no event has occurred which, with notice or the lapse of time, will constitute such a breach
or default, or permit termination or modification, under the policy, (iii) to the knowledge of the Company, as of the date hereof,
no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation and (iv) as of
the date hereof, no notice of suspension, cancellation or termination has been received other than in connection with ordinary
renewals. All material claims under the Insurance Policies have been filed in a timely fashion and neither the Company nor any
of its Subsidiaries have made a claim under any such policy during the three-year period prior to the date of this Agreement with
respect to which an insurer or underwriter has questioned, denied or disputed coverage. Except as disclosed in
Schedule 4.17
,
the Company and its Subsidiaries shall after the Closing continue to have coverage under such Insurance Policies with respect
to events occurring prior to the Closing.
4.18
Real
Property; Assets
.
(a)
The
Company or one of its Subsidiaries owns and possesses good and marketable fee simple, or local equivalent, title in and to that
certain real property described on
Schedule 4.18
, in each case, free and clear of all Liens except Permitted Liens (the
“
Owned Real Property
”). None of the Owned Real Property is subject to or encumbered by any option, right of
first refusal or other contractual right or obligation to sell, lease, sublease, assign or otherwise dispose of such Owned Real
Property.
(b)
Each
lease related to the Leased Real Property to which the Company or any of its Subsidiaries is a party is a legal, valid, binding
and enforceable obligation of the Company or any such Subsidiary, as applicable, and, to the knowledge of the Company, a legal,
valid, binding and enforceable obligation of the other party thereto. Neither the Company nor any of its Subsidiaries is in breach
or default under any such lease, and no condition exists which (with notice or lapse of time or both) would constitute a default
by the Company or any of its Subsidiaries thereunder (or permit the termination, modification, or acceleration of rent under such
lease) or (to the knowledge of the Company) by the other parties thereto. Neither the Company nor any of its Subsidiaries have
subleased or otherwise granted any Person the right to use or occupy any Leased Real Property which is still in effect. Neither
the Company nor any of its Subsidiaries have collaterally assigned or granted any other security interest in the Leased Real Property
or any interest therein which is still in effect. Except for the Permitted Liens, there exist no Liens affecting the Leased Real
Property created by, through or under the Company or any of its Subsidiaries. The Owned Real Property and the Leased Real Property
constitute all real property used, owned, leased or occupied by the Company.
(c)
Except
for Permitted Liens, the Company and each of its Subsidiaries have good and valid title to the assets of the Company and such
Subsidiary set forth on the Financial Statements or acquired after the date of the balance sheet included in the Interim Financial
Statements, other than assets disposed of in the ordinary course of business since such date. The assets of the Company and its
Subsidiaries to be acquired by Buyer pursuant to this Agreement constitute all material assets used or held for use by the Company
and its Affiliates in, and necessary and sufficient for the operation of the businesses of the Company and its Subsidiaries as
presently operated, except as would not be material to the Company and its Subsidiaries, taken as a whole.
(d)
The
Company and its Subsidiaries (i) own, lease or license from third parties all material tangible personal property required to
conduct its and their respective businesses in the ordinary course of business, (ii) have good and valid title to all material
tangible personal property owned by it or them set forth on the Financial Statements or acquired after the date of the balance
sheet included in the Interim Financial Statements, other than assets disposed of in the ordinary course of business since such
date, free and clear of all Liens except for Permitted Liens and (iii) subject to the items disclosed on
Schedules 4.4
and
4.5
, upon consummation of the transactions contemplated by this Agreement, will be entitled to continue to use all
material tangible personal property which is currently employed by it or them in the conduct of their respective businesses as
presently conducted. Other than for any equipment of the Company and its Subsidiaries (i) used or intended for use by any distributor,
customer or other end user of the Company or any of its Subsidiaries, and (ii) that individually would not be material tangible
personal property, such tangible personal property is in good condition and repair and fit for the particular purposes for which
it is used (subject only to normal maintenance requirements and reasonable wear and tear with the age of such items expected).
4.19
Environmental
Matters
. Except as set forth on
Schedule 4.19
, and except as would not, individually or in the aggregate, reasonably
be expected to result in material Liability to the Company or any of its Subsidiaries:
(a)
the
Company and its Subsidiaries are and since January 1, 2013 have (i) been in compliance with all Environmental Laws (ii) operated
with all Permits, authorizations and approvals required under the applicable Environmental Laws;
(b)
there
has been no release, discharge, disposal, leaking or spilling of any Hazardous Materials at, in, on or under any Owned or Leased
Real Property or, at, in, on or under any formerly owned or leased real property during the time that the Company owned or leased
such property (or, to the knowledge of the Company, prior to such time) in violation of, or as would reasonably be expected to
result in Liability under, Environmental Laws;
(c)
neither
the Company nor any of its Subsidiaries has generated, treated, stored, released, transported or arranged for transportation or
disposal of any Hazardous Materials at, to or from any location except in compliance with Environmental Laws, in a manner and
quantity reasonably necessary for the conduct of their businesses and as would not reasonably be expected to result in the assertion
of a claim against either the Company or its Subsidiaries alleging Liability or obligation under any Environmental Law including
for the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of such Hazardous Materials;
(d)
neither
the Company nor any of its Subsidiaries is subject to any Governmental Order relating to any non-compliance with, or Liability
or obligations whatsoever under, Environmental Laws by the Company or its Subsidiaries or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials and neither the Company nor any of its Subsidiaries is subject
to an indemnity obligation relating to any such matter;
(e)
no
Action is pending or to the knowledge of the Company, threatened with respect to the Company’s or its Subsidiaries’
compliance with or Liability under Environmental Law;
(f)
the
Company and its Subsidiaries have provided or otherwise made available to Buyer all environmental investigations, audits, tests,
reports, assessments, studies, analyses and other material environmental documents prepared within the past five (5) years concerning
its businesses and the Owned and Leased Real Property that are (or have been in within the past five (5) years) in the possession,
custody or control of the Company or its respective Subsidiaries; and
(g)
neither
the Company nor any of its Subsidiaries owns, leases or operates or has owned, leased or operated any real property or facility,
or conducts or has conducted any manufacturing-related operations, in New Jersey or Connecticut. The consummation of the transactions
contemplated hereby require no filings to be made or actions to be taken pursuant to the New Jersey Industrial Site Recovery Act
or the “Connecticut Property Transfer Law” (Sections 22a-134 through 22-134e of the Connecticut General Statutes).
4.20
Absence
of Changes
.
(a)
Except
as set forth on
Schedule 4.20
, from the date of the most recent balance sheet included in the Audited Financial Statements
to the date of this Agreement, there has not been any event, change, occurrence, effect, development, condition or circumstance
that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.
(b)
Except
as set forth on
Schedule 4.20
, (i) from the date of the most recent balance sheet included in the Audited Financial Statements
to the date of this Agreement, the Company and its Subsidiaries have, in all material respects, conducted their business and operated
their properties in the ordinary course of business and (ii) from the date of the most recent balance sheet included in the Interim
Financial Statements through the date of this Agreement, the Company and its Subsidiaries have not taken any action that would
be prohibited from being freely taken by
Section 6.1
if such action had been taken after the date hereof.
4.21
Affiliate
Agreements
. Except as set forth on
Schedule 4.21
and other than any Company Benefit Plan (including any employment,
non-competition, severance or option agreements entered into with employees in the ordinary course of business by the Company
or any of its Subsidiaries), none of (x) Seller or its Affiliates (excluding the Company and its Subsidiaries), (y) the employees,
officers, directors, members or partners of the Persons described in clause (x) or of the Company or its Subsidiaries or (z) the
“associates” or any members of the “immediate family” (as such terms are respectively defined in Rule
12b-2 and Rule 16a-1 of the Exchange Act) of the Persons described in clauses (x) or (y) or of the Company or its Subsidiaries
(each a “
Related Party
”) is a party to any Contract or business arrangement with the Company or any of its
Subsidiaries (each such Contract or business arrangement (including, for the avoidance of doubt, the Management Agreement), an
“
Affiliate Agreement
”). No Related Party (i) owns any property or right, tangible or intangible, that is used
by the Company or any of its Subsidiaries, (ii) provides any services to, or is owed any material amount of money from, the Company
or any of its Subsidiaries, or (iii) has any claim or right against the Company or any of its Subsidiaries, other than pursuant
to a Company Benefit Plan.
4.22
Intellectual
Property
.
(a)
Schedule
4.22(a)(i)
sets forth a true and complete list of all (i) issued patents and patent applications, (ii) trademark and service
mark registrations and applications, (iii) Internet domain name registrations, and (iv) copyright registrations and applications,
in each case, that are owned by the Company or any of its Subsidiaries (collectively, the “
Registered Intellectual Property
”),
indicating for each item that is registered or the subject of an application for registration, except as set forth on
Schedule
4.22(a)(i)
, (1) the name of the record owner, and, if different, the legal and beneficial owner of such item; (2) the registration
or application number; (3) the applicable filing jurisdiction (or, for domain names, the applicable registrar) and (4) the date
of filing or issuance. All fees and filings with respect to any Registered Intellectual Property have been timely submitted to
the relevant Governmental Authorities and Internet domain name registrars as required to maintain such Registered Intellectual
Property in full force and effect. Except as set forth on
Schedule 4.22(a)(ii)
, there are no annuities, payments, fees,
responses to office actions or other filings required to be made and having a due date with respect to any Registered Intellectual
Property within ninety (90) days after the date of this Agreement. No issuance or registration obtained and no application filed
by the Company or any of its Subsidiaries for any Intellectual Property has been cancelled, abandoned, allowed to lapse or not
renewed within the past five (5) years, except where such registration or application is not material to the operation of the
businesses of the Company and its Subsidiaries as currently conducted. The Registered Intellectual Property is valid (solely with
respect to issued or granted Registered Intellectual Property) and, to the knowledge of the Company, enforceable. Except as set
forth on
Schedule 4.22(a)(iii)
, none of the Company Intellectual Property has been adjudged invalid or unenforceable in
whole or in part. Except as set forth on
Schedule 4.22(a)(iv)
, no Action is pending or, to the knowledge of the Company,
threatened, (i) in which the scope, validity, or enforceability of any Company Intellectual Property is being contested or challenged
or (ii) alleging that the operation of the businesses of the Company or any of its Subsidiaries infringes, misappropriates or
otherwise violates the Intellectual Property of any Person. Except as set forth on
Schedule 4.22(a)(v)
, no opposition or
nullification Actions or filings that are still pending have been initiated or filed with respect to any Company Intellectual
Property within the past five (5) years. The Company has made reasonable and good faith efforts to satisfy all obligations to
disclose prior art to avoid inequitable conduct before any Governmental Authority with respect to the Registered Intellectual
Property.
(b)
Either
the Company or one of its Subsidiaries is the sole and exclusive owner, and possesses all right, title, and interest in and to
each item, of the Company Intellectual Property, free and clear of any Liens (other than Permitted Liens). Except as set forth
on
Schedule 4.22(b)
, all assignments of the Registered Intellectual Property are complete and have been recorded with the
relevant Governmental Authorities in accordance with all local rules and requirements relating thereto such that such Registered
Intellectual Property is in the name of the Company or one of its Subsidiaries with no break in the chain of title.
(c)
The
Company and/or one or more of its Subsidiaries owns or has the valid right and license to use all Intellectual Property and IT
Assets used, held for use in or otherwise necessary for the operation of the businesses of the Company and its Subsidiaries as
currently conducted throughout the world. The Company and its Subsidiaries have taken commercially reasonable efforts to obtain,
maintain, protect and enforce its and their rights in and to the Company Intellectual Property and to protect and preserve the
confidentiality of any and all Trade Secrets of third Persons provided to the Company or any of its Subsidiaries under obligations
of confidentiality or included in the Company Intellectual Property (including all Software source code).
(d)
None
of the following infringes, constitutes or results from a misappropriation or misuse of, dilutes or violates, any Intellectual
Property of any Person, nor has any of the following infringed, constituted or resulted from a misappropriation or misuse of,
diluted or violated, any Intellectual Property of any Person: (i) any use, practice or other exploitation of any Company Intellectual
Property by the Company or any of its Subsidiaries, (ii) any products or services of the Company or any of its Subsidiaries (or
the making, having made, use, offer for sale, sale, import, export, lease, license, sublicense, distribution, provision, rendering,
or other disposal or exploitation of any of the foregoing by the Company or any of its Subsidiaries or any of their respective
customers, distributors or end-users) or (iii) any conduct, operations or practices of the business of the Company or any of its
Subsidiaries (including research and development) as currently conducted throughout the world.
(e)
Except
as set forth on
Schedule 4.22(e)
, neither the Company nor any of its Subsidiaries has received since January 1, 2015 any
written claim from any Person (i) alleging any infringement, misappropriation, misuse, dilution or violation of any Intellectual
Property, (ii) inviting the Company or any of its Subsidiaries to take a license under any Intellectual Property or consider the
applicability of any Intellectual Property to any products or services of, or the conduct of any business by, the Company or any
of its Subsidiaries, (iii) for indemnification with respect to any claim of infringement, misappropriation, misuse, dilution or
violation of any Intellectual Property, which notice or request has not been finally resolved or (iv) challenging the ownership,
use, validity, scope of right or enforceability of any Company Intellectual Property. Neither the Company nor any of its Subsidiaries
has, to the knowledge of the Company, received since January 1, 2015 any oral claim from any Person (A) alleging any infringement,
misappropriation, misuse, dilution or violation of any Intellectual Property, (B) inviting the Company or any of its Subsidiaries
to take a license under any Intellectual Property or consider the applicability of any Intellectual Property to any products or
services of, or the conduct of any business by, the Company or any of its Subsidiaries or (C) challenging the ownership, use,
validity, scope of right or enforceability of any Company Intellectual Property.
(f)
Except
as set forth on
Schedule 4.22(f)
, to the knowledge of the Company, no Person is infringing, misappropriating, misusing,
diluting or violating any Company Intellectual Property or any Intellectual Property exclusively licensed or purported to be exclusively
licensed to the Company or any of its Subsidiaries. Except as set forth on
Schedule 4.22(f)
, neither the Company nor any
of its Subsidiaries has made since January 1, 2012 any written or, to the knowledge of the Company, oral claim against any Person
alleging any infringement, misappropriation, misuse, dilution or violation of any Company Intellectual Property or any Intellectual
Property exclusively licensed to the Company or any of its Subsidiaries.
(g)
No
Open Source Software is or has been included, incorporated or embedded in, linked to or combined or distributed with any product
or service distributed by, or in any Software owned or distributed by, the Company or any of its Subsidiaries, in each case, in
a manner that subjects any source code for any proprietary Software to any requirement or obligation to be made available, disclosed,
contributed, distributed or licensed to any Person (including the Open Source community) at no fee or that would require the Company
or any of its Subsidiaries to limit its freedom to seek full compensation in connection with the distribution of its products
or services.
(h)
There
are no material defects in any of the Software owned, used, held for use in the operation of the businesses of the Company or
any of its Subsidiaries as conducted throughout the world that would prevent such Software from performing in accordance with
its user specifications and there are no viruses, worms, Trojan horses, bombs, backdoors, clocks, timers or similar harmful or
malicious programs in any such Software.
(i)
The
IT Assets owned, used or held for use by the Company or any of its Subsidiaries are fully functional and operate and perform in
all material respects in accordance with their documentation and functional specifications and otherwise as required by the Company
and its Subsidiaries in connection with the practices of their respective businesses as currently conducted throughout the world
and have not materially malfunctioned or failed. There has been no unauthorized use, unauthorized access, interruption, unauthorized
modification or corruption to any IT Assets (or any information or transactions store or contained therein or transmitted thereby).
The Company and its Subsidiaries take commercially reasonable measures to protect the confidentiality, integrity, operation and
security of their IT Assets, Software, databases, systems, networks and Internet sites and all information and transactions stored
or contained therein or transmitted thereby from any unauthorized use, access, interruption, modification or corruption by third
parties. The Company and its Subsidiaries have implemented and maintain backup, storage, security, encryption and disaster recovery
technology and procedures consistent with generally accepted industry standards.
(j)
The
consummation of the transactions contemplated hereby will not result in the loss or impairment of any right of the Company or
any of its Subsidiaries to own, use, practice or otherwise exploit any Company Intellectual Property. Neither this Agreement nor
any transaction contemplated by this Agreement will result in the grant by the Company or any of its Subsidiaries to any Person
(other than Buyer or any of its Affiliates) of any ownership interest or Intellectual Property License with respect to any Company
Intellectual Property or any Intellectual Property owned by Buyer or any of its Affiliates pursuant to any Contract in effect
immediately prior to the Closing to which the Company or any of its Subsidiaries is a party or by which any assets or properties
of the Company or any of its Subsidiaries is bound.
(k)
No
Trade Secret included in the Company Intellectual Property (including any Software source code) has been authorized to be disclosed
and, to the knowledge of the Company, no Trade Secret has been actually disclosed by the Company or any of its Subsidiaries to
any Person, in each case, other than to employees, consultants, contractors, representatives and agents of the Company and its
Subsidiaries pursuant to a written and enforceable confidentiality and/or non-disclosure Contract restricting the disclosure and
use thereof, and none of the Company or any of its Subsidiaries, or to the knowledge of the Company, any other party thereto,
has materially breached or violated any such Contract. The Company and each of its Subsidiaries have taken reasonable measures
to protect the confidentiality of all Trade Secrets included in the Company Intellectual Property and other confidential information
and technology of the Company or any of its Subsidiaries (and any confidential information owned by any Person to whom the Company
or any of its Subsidiaries has a confidentiality obligation). Each employee, consultant, contractor, representative and agent
of the Company or any of its Subsidiaries and any other Person, in each case, who is, or who was at any time, involved in the
creation or development of any Intellectual Property, technology products or services for or on behalf of the Company and/or such
Subsidiary has entered into a valid, binding, written and enforceable Contract with the Company and/or such Subsidiary (i) presently
assigning all right, title and interest in, to and under such Intellectual Property, including any and all Company Intellectual
Property, to the Company and/or any such Subsidiary and (ii) acknowledging the Company and/or such Subsidiary’s sole and
exclusive ownership of all such Intellectual Property.
(l)
To
the knowledge of the Company, the Company and its Subsidiaries have been and are compliant with all applicable Laws (including
Regulation (EU) 2016/679 (the General Data Protection Regulation)), rules, internal and external privacy policies, programs and
procedures of the Company and its Subsidiaries and contractual commitments to their respective customers, consumers and employees,
in each case to the extent relating to (i) the privacy of individuals and/or (ii) the collection, use, storage, destruction, processing,
transmission, transfer (including cross-border transfers), disclosure and protection of any personally-identifiable information
and other confidential data or information collected or stored by or on behalf of the Company or any of its Subsidiaries. No Actions,
notices, indemnification requests or claims are pending or threatened against the Company or any of its Subsidiaries by any Person
or Governmental Authority alleging a violation of any Person’s privacy, personal or confidentiality rights under any Laws,
rules, policies, programs or procedures.
(m)
No
Governmental Authority, university, college, other educational institution or research center has any claim, ownership right or
other right to any Company Intellectual Property.
4.23
Permits
.
Except where the failure to obtain any such Permit would not be material to the Company and its Subsidiaries, taken as a whole,
each of the Company and each of its Subsidiaries has all Permits (the “
Material Permits
”) that are required
to own, lease or operate its properties and assets and to lawfully conduct its business as currently conducted. (a) Each Material
Permit is in full force and effect in accordance with its terms, (b) no outstanding written, or to the knowledge of the Company,
oral, notice of revocation, suspension, cancellation or termination (or threat thereof) of any Material Permit has been received
by the Company or any of its Subsidiaries, (c) there are no Actions pending or, to the knowledge of the Company, threatened that
seek the revocation, cancellation or termination of any Material Permit, and (d) each of the Company and each of its Subsidiaries
is in compliance with all Material Permits applicable to the Company or such Subsidiary.
4.24
Customers
and Vendors
.
Schedule 4.24(a)
sets forth a complete and accurate list of the ten (10) largest accounts with direct
customers (based on approximate total revenues attributable to such account), ten (10) largest distributors (based on approximate
total revenues attributable to such distributors) and ten (10) largest vendors (based on the total amount purchased from such
vendor) of the Company and its Subsidiaries during the fiscal year ended December 31, 2017. Except as set forth on
Schedule
4.24(b)
, (a) since January 1, 2018 to the date of this Agreement, no such customer, distributor or vendor has (i) ceased doing
business with the Company and its Subsidiaries or (ii) been involved in a material dispute with the Company or any of its Subsidiaries,
and (b) since January 1, 2018 to November 30, 2018, no such customer or distributor has materially reduced, delayed or interrupted
its purchases from or provision of services to the Company or its Subsidiaries or, to the knowledge of the Company, threatened
to cease or materially reduce, delay or interrupt such purchases or provision of services, with the Company and its Subsidiaries.
There are no tender procurement processes for customer, reseller, distributor, agency or similar Contracts that are pending as
of the date of this Agreement with respect to which the Company or any of its Subsidiaries is involved.
4.25
Product
Warranty and Product Liability
.
(a)
Since
January 1, 2015, each product manufactured, sold, leased, distributed or delivered by the Company or any of the Subsidiaries in
conducting its business has been in conformity, in all material respects, with all product specifications, all express and implied
warranties, and all applicable Laws, and fit for the purposes for which it is intended to be used and conforms in all material
respects with any promises or affirmations of fact made in connection with its sale. Except as would not reasonably be expected
to be material to the Company and its Subsidiaries, taken as whole, there is no defect with respect to any of such products and
each of such products contains adequate warnings, presented in a reasonably prominent manner, in accordance with applicable Laws,
and current industry practice with respect to its contents and use.
(b)
To
knowledge of the Company, neither the Company nor any of the Subsidiaries has any material Liability arising out of any injury
to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased or delivered,
by the Company or any of the Subsidiaries. Except as set forth on
Schedule 4.25
, since January 1, 2015, neither the Company
nor any of the Subsidiaries has committed any act or failed to commit any act, which would result in, and there has been no occurrence
which would give rise to or form the basis of, any material product liability or Liability for breach of warrant (whether covered
by insurance or not) on the part of the Company or any of the Subsidiaries with respect to products manufactured, sold, leased
or delivered by the Company or any of the Subsidiaries.
(c)
Since
January 1, 2015, there have been no product recalls (whether compulsory or voluntarily) involving any products of the Company
or its Subsidiaries, and there are no plans to initiate any such voluntary recall or, the knowledge of the Company, any plan to
initiate any such compulsory recall.
(d)
All
of the inventories of the Company and its Subsidiaries as of the Closing Date will consist of items of a quality useable or saleable
in the normal course of business and will be in quantities sufficient for (but not materially excessive in light of) the normal
operation of the business of the Company and its Subsidiaries in accordance with past practice.
4.26
Economic
Sanctions and Export Control
.
(a)
The
Company and its Subsidiaries are currently, and have since January 1, 2015 been, in compliance with, all U.S. Law requirements
regarding its exports, including the restrictions contained in the Commerce Department’s Export Administration Regulations,
the Treasury Department’s Office of Foreign Asset Control regulations, and the State Department’s International Traffic
in Arms Regulations.
(b)
Neither
the Company nor any of its Subsidiaries, nor any of their directors or officers, is a Person that is, or is owned or controlled
by a Person that is: (i) the subject of any sanctions administered by the U.S. Department of Treasury’s Office of Foreign
Assets Control, the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury,
or other relevant sanctions authority (collectively, “
Sanctions
”), or (ii) located, organized or resident in
a country or territory that is the subject of Sanctions.
(c)
For
the past five years, neither the Company nor any of its Subsidiaries has engaged in, or is now engaged in, directly or indirectly,
any dealings or transactions with any Person, or in any country or territory, that, at the time of the dealing or transaction,
is or was the subject of Sanctions.
4.27
Solvency
.
As of immediately prior to the Closing, the Company and its Subsidiaries, when taken as a whole on a consolidated basis, will
be Solvent.
4.28
Proxy
Statement
. None of the information provided in writing by the Company to be included in the Proxy Statement at the date it
is first mailed to the Buyer’s shareholders, and at the time of the Buyer Shareholders Meeting, will contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
4.29
No
Additional Representations and Warranties
. Except as provided in this
Article IV
and in the other Transaction Documents, neither the Company nor any of its Affiliates, nor any of their respective directors,
officers, employees, stockholders, partners, members or representatives has made, or is making, any representation or warranty
whatsoever to Buyer or its Affiliates, and no such party shall be liable in respect of the accuracy or completeness of any information
provided to Buyer or its Affiliates, in respect of the transactions contemplated hereby. Notwithstanding the foregoing, nothing
herein shall limit Buyer’s recourse in respect of claims for fraud.
Article
V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except
as set forth in the corresponding section of the Schedules to this Agreement (subject to
Section 11.9
), Buyer represents
and warrants to Seller as of the date of this Agreement and as of the Closing Date as follows (each reference in
Sections 5.2
and
5.3
to “this Agreement” being deemed to also refer to each other Transaction Document to which Buyer
is or will be a party (upon execution and delivery thereof by Buyer, as applicable)):
5.1
Corporate
Organization
. Buyer (a) is a legal entity duly incorporated, validly existing and in good standing under the Laws of its jurisdiction
of incorporation, (b) has all requisite corporate or similar power and authority to own, lease and operate its properties and
assets and to carry on its business as presently conducted and is qualified to do business and (c) is in good standing as a foreign
corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or
conduct of its business requires such qualification, except in the case of clause (b) or (c), where the failure to be so qualified
or in good standing or to have such power or authority, would not, individually or in the aggregate, reasonably be likely to prevent,
materially delay or materially impair the consummation of this Agreement. Buyer has made available to Seller true, complete and
correct copies of Buyer’s constitutional documents, each as so delivered is in full force and effect as of the date hereof.
5.2
Due
Authorization
. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and, subject to
the Buyer Shareholders Approval, to perform all obligations to be performed by it hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the
board of directors of Buyer, and no other corporate proceeding on the part of Buyer is necessary to authorize this Agreement.
This Agreement has been duly and validly executed and delivered by Buyer and this Agreement constitutes a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability,
to general principles of equity.
5.3
No
Conflict
. Except as set forth on
Schedule 5.3
and subject to the Buyer Shareholders Approval, the execution, delivery
and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate
any provision of, or result in the breach of any applicable Law, the certificate of incorporation, bylaws or other organizational
documents of Buyer or any Subsidiary of Buyer, or any agreement, indenture or other instrument to which Buyer or any Subsidiary
of Buyer is a party or by which Buyer or any Subsidiary of Buyer may be bound, or terminate or result in the termination of any
such agreement, indenture or instrument, or result in the creation of any Lien upon any of the properties or assets of Buyer or
any Subsidiary of Buyer or constitute an event which, after notice or lapse of time or both, would reasonably be expected to result
in any such violation, breach, termination or creation of a Lien, except to the extent that the occurrence of the foregoing would
not reasonably be expected to have a material adverse effect on the ability of Buyer to enter into and perform its obligations
under this Agreement.
5.4
Litigation
and Proceedings
. There are no Actions, or, to the knowledge of Buyer, investigations, pending before or by any Governmental
Authority or, to the knowledge of Buyer, threatened, against Buyer which, if determined adversely, could reasonably be expected
to have a material adverse effect on the ability of Buyer to enter into and perform its obligations under this Agreement. There
is no unsatisfied judgment or any open injunction binding upon Buyer which could reasonably be expected to have a material adverse
effect on the ability of Buyer to enter into and perform its obligations under this Agreement.
5.5
SEC
Filings
. The Buyer has since January 22, 2018 timely filed or furnished all Buyer Reports, including, as they have been supplemented,
modified or amended since the time of filing, all statements, prospectuses, registration statements, forms, reports and documents
required to be filed by it with the SEC, pursuant to the Exchange Act or the Securities Act. Each of the Buyer Reports, as of
the respective date of its filing or, if amended, as of the date of the most recent amendment, complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and any rules and regulations
promulgated thereunder applicable to the Buyer Reports. As of the respective date of its filing or most recent amendment, no Buyer
Report contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the
date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Buyer
Reports.
5.6
Governmental
Authorities; Consents
. Assuming the truth and completeness of the representations and warranties of the Seller contained in
this Agreement, no consent, clearance, approval or authorization of, or designation, declaration or filing with, any Governmental
Authority or other Person, or observation of any waiting period under applicable Law, is required on the part of Buyer with respect
to Buyer’s execution, delivery or performance of this Agreement and the other Transaction Documents or the consummation
of the transactions contemplated hereby or thereby, except for (a) applicable requirements of the HSR Act; (b) as otherwise
disclosed on
Schedule 5.6
and (c) any immaterial consent, approvals, authorizations, designations, declarations or filings.
5.7
Financial
Ability
. Assuming the Financing is funded on the Closing Date in accordance with the Commitment Letters and Forward Purchase
Agreements, the aggregate net proceeds of the Financing and the funds to be contributed to Buyer from the Trust Account are in
an amount sufficient to fund the Closing Cash Consideration, to discharge the Credit Agreements in full and to satisfy all of
Buyer’s other obligations under this Agreement.
5.8
Debt
Financing
.
(a)
Buyer
has delivered to the Company a true, complete and fully executed copy of a commitment letter (including all related exhibits,
schedules, annexes, supplements and term sheets thereto, and as amended from time to time after the date hereof in compliance
with
Section 6.9
, the “
Debt Commitment Letter
”) from the Debt Financing Sources identified therein confirming
their respective commitments to provide Buyer or the Debt Financing Subsidiary with debt financing in connection with the transactions
contemplated hereby in the amount set forth therein (the “
Debt Financing
”).
(b)
The
Debt Commitment Letter is in full force and effect and is the legal, valid and binding obligation of Buyer or the Debt Financing
Subsidiary, as the case may be, and, to the knowledge of Buyer, the other parties thereto, enforceable against Buyer or the Debt
Financing Subsidiary, as the case may be, and, to the knowledge of Buyer, the other parties thereto in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’
rights generally and general principles of equity). As of the date hereof, the Debt Commitment Letter has not been amended, restated
or otherwise modified or waived in any respect, and the respective commitments contained in the Debt Commitment Letter have not
been withdrawn, rescinded or otherwise modified in any respect. All commitment fees and other fees required to be paid under the
Debt Commitment Letter on or prior to the date hereof have been paid in full. The Debt Financing Subsidiary is a wholly-owned
Subsidiary of Buyer.
(c)
As
of the date of this Agreement, neither Buyer nor, to the knowledge of Buyer, the other parties thereto have breached any of the
covenants or other obligations set forth in, or is in default under, the Debt Commitment Letter, and to the knowledge of Buyer
no event has occurred or circumstance exists that, with or without notice, lapse of time or both, would or would reasonably be
likely to (i) constitute or result in a breach or default on the part of Buyer or any other party to the Debt Commitment Letter
or (ii) constitute or result in a failure by Buyer or the other parties thereto to satisfy a condition precedent to or other contingency
to be satisfied by Buyer or the other parties thereto set forth in the Debt Commitment Letter.
(d)
There
are no conditions precedent or similar contingencies directly or indirectly related to the funding of the full amount of the Debt
Financing other than as expressly set forth in the Debt Commitment Letter. Other than the Debt Commitment Letter, there are no
other contracts, arrangements or understandings, whether oral or written, to which the Buyer or any Affiliate thereof is a party
directly or indirectly related to the Debt Financing (except for (i) a customary fee letter, a true, complete and fully executed
copy of which has been provided to the Company, with only the fee amounts, “market flex”, pricing terms and pricing
caps and other commercially sensitive terms redacted, which redacted terms do not impose any additional conditions or otherwise
impact the conditionality of the Debt Financing or (ii) those that would not be reasonably expected to adversely affect the availability
or amount of the Debt Financing and do not impose any additional conditions or otherwise impact the conditionality of the Debt
Financing). As of the date hereof, Buyer has no reason to believe that any of the conditions to the Debt Financing will not be
satisfied or that the full amount of the Debt Financing will not be available to Buyer (directly or through the Debt Financing
Subsidiary) on the Closing Date.
5.9
Forward
Purchase Agreements
.
(a)
Buyer
has delivered to the Company true, complete and fully executed copies of forward purchase agreements between Buyer, solely for
the purposes of Section 7 thereof, One Madison Group LLC, and each of the counterparties parties thereto (the “
Forward
Purchasers
”) (the “
Forward Purchase Agreements
”) pursuant to which each of the Forward Purchasers
has committed, subject to the terms and conditions therein, to provide equity financing to Buyer in the amounts set forth therein
for purpose of funding the transactions contemplated hereby (the “
FP Financing
”).
(b)
The
Forward Purchase Agreements are in full force and effect and are legal, valid and binding obligations of Buyer and, to the knowledge
of Buyer, the other parties thereto, enforceable against Buyer and, to the knowledge of Buyer, the other parties thereto in accordance
with their terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws
affecting creditors’ rights generally and general principles of equity). As of the date of this Agreement, none of the Forward
Purchase Agreements have been amended, restated or modified and no amendment, restatement or modification of the Forward Purchase
Agreements is contemplated, and the respective commitments contained in the Forward Purchase Agreements have not been withdrawn,
rescinded or otherwise modified.
(c)
As
of the date of this Agreement, neither Buyer nor, to the knowledge of Buyer, the other parties thereto have breached any of the
covenants or other obligations set forth in, or is in default under, the Forward Purchase Agreements, and to the knowledge of
Buyer, no event has occurred or circumstance exists that, with or without notice, lapse of time or both, would or would reasonably
be likely to (i) constitute or result in a breach or default on the part of any Person under the Forward Purchase Agreements or
(ii) constitute or result in a failure by Buyer or the other parties thereto to satisfy a condition precedent to or other contingency
to be satisfied by Buyer or the other parties thereto set forth in the Forward Purchase Agreements.
(d)
There
are no conditions precedent directly or indirectly related to the funding of the full amount of the FP Financing other than as
expressly set forth in the Forward Purchase Agreements. Other than the Forward Purchase Agreements, there are no other contracts,
arrangements or understandings entered into by Buyer or any Affiliate thereof directly or indirectly related to the FP Financing
(except for those that do not impact the availability, amount or conditionality of the FP Financing). As of the date hereof, Buyer
has no reason to believe that any of the conditions to the FP Financing will not be satisfied or that the full amount of the FP
Financing will not be available to Buyer on the Closing Date.
(e)
The
representations and warranties that Buyer has made in the Forward Purchase Agreements to the counterparties thereof are true and
accurate as of the date hereof.
5.10
Equity
Financing
.
(a)
Buyer
has delivered to the Company true, complete and fully executed copies of subscription agreements (the “
Equity Commitment
Letters
”) from the Equity Financing Sources, pursuant to which the Equity Financing Sources have committed to provide
Buyer or an Affiliate thereof with equity financing in connection with the transactions contemplated hereby in the respective
amounts set forth therein (the “
Equity Financing
” and, together with the Debt Financing and the FP Financing,
the “
Financing
”).
(b)
Each
Equity Commitment Letter is in full force and effect and is a legal, valid and binding obligation of Buyer and, to the knowledge
of Buyer, the other parties thereto, enforceable against Buyer and the other parties thereto in accordance with its terms (subject
to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’
rights generally and general principles of equity). As of the date of this Agreement, none of the Equity Commitment Letters have
been amended, restated or modified, and no amendment, restatement or modification of the Equity Commitment Letters is contemplated,
and the respective commitments contained in the Equity Commitment Letters have not been withdrawn, rescinded or otherwise modified.
(c)
As
of the date of this Agreement, neither Buyer nor, to the knowledge of Buyer, the other parties thereto have breached any of the
covenants or other obligations set forth in, or is in default under, the Equity Commitment Letters, and to the knowledge of Buyer,
no event has occurred or circumstance exists that, with or without notice, lapse of time or both, would or would reasonably be
likely to (i) constitute or result in a breach or default on the part of any Person under the Equity Commitment Letters or (ii)
constitute or result in a failure by Buyer or the other parties thereto to satisfy a condition precedent to or other contingency
to be satisfied by Buyer or the other parties thereto set forth in the Equity Commitment Letters.
(d)
There
are no conditions precedent directly or indirectly related to the funding of the full amount of the Equity Financing other than
as expressly set forth in the Equity Commitment Letters. Other than the Equity Commitment Letters, there are no other contracts,
arrangements or understandings entered into by Buyer or any Affiliate thereof directly or indirectly related to the Equity Financing
(except for those that do not impact the availability, amount or conditionality of the Equity Financing). As of the date hereof,
Buyer has no reason to believe that any of the conditions to the Equity Financing will not be satisfied or that the full amount
of the Equity Financing will not be available to Buyer on the Closing Date.
(e)
The
representations and warranties that Buyer has made in the Equity Commitment Letters to the counterparties thereof are true and
accurate as of the date hereof.
5.11
Trust
Account
.
(a)
As
of December 11, 2018, Buyer has at least $304,695,740.90 (the “
Trust Amount
”) in the account established by
Buyer for the benefit of its public shareholders (the “
Trust Account
”), with such funds invested in United
States Government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act and held in trust by Continental Stock Transfer & Trust Company (the “
Trustee
”) pursuant to
the Investment Management Trust Agreement, dated as of January 17, 2018, by and between Buyer and the Trustee (the “
Trust
Agreement
”). Buyer has delivered to the Company true, complete and fully executed copies of the Trust Agreement.
(b)
The
Trust Agreement is in full force and effect and is a valid and binding obligation of Buyer and, to the knowledge of Buyer, the
other parties thereto, enforceable against Buyer and the other parties thereto in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally
and general principles of equity). As of the date of this Agreement, the Trust Agreement has not been amended, restated or modified,
and no amendment, restatement or modification of the Trust Agreement is contemplated, and the respective rights and obligations
contained in the Trust Agreement have not been withdrawn, rescinded or otherwise modified.
(c)
As
of the date of this Agreement, neither Buyer nor, to the knowledge of Buyer, the other parties thereto have breached any of the
covenants or other obligations set forth in, or is in default under, the Trust Agreement, and to knowledge of Buyer, no event
has occurred or circumstance exists that, with or without notice, lapse of time or both, would or would reasonably be likely to
(i) constitute or result in a breach or default on the part of any Person under the Trust Agreement or (ii) constitute or result
in a failure by Buyer or the other parties thereto to satisfy a condition precedent to or other contingency to be satisfied by
Buyer or the other parties thereto set forth in the Trust Agreement.
(d)
There
are no conditions precedent directly or indirectly related to the funding of the full amount in the Trust Account (the “
Trust
Financing
”) other than as expressly set forth in the Trust Agreement or in another Buyer Report. Other than the Trust
Agreement, there are no other Contracts, side letters, arrangements or understandings (whether written or unwritten, express or
implied) (i) between Buyer and the Trustee that would cause the description of the Trust Agreement in the Buyer Reports to be
inaccurate in any material respect, (ii) to the knowledge of Buyer, that would entitle any Person (other than (x) shareholders
of Buyer holding Buyer Shares sold in Buyer’s initial public offering who shall have elected to redeem their Buyer Shares
pursuant to a Buyer Class A Redemption, (y) any underwriters in connection with Buyer’s initial public offering which may
be entitled to deferred underwriting discounts and commissions specified in the Buyer 2017 Form 10-K and (z) other advisors of
the Company which may be entitled to deferred fees for services provided in connection with the transactions contemplated by this
Agreement in an amount not to exceed the amount set forth on
Schedule 5.11
) to any portion of proceeds in the Trust Account
or (iii) entered into by Buyer or any Affiliate thereof directly or indirectly related to the Trust Financing. As of the date
hereof, assuming the satisfaction of the conditions to Buyer’s obligation to consummate the transactions contemplated hereby,
Buyer has no reason to believe that any of the conditions to the Trust Financing will not be satisfied or that, subject to the
Buyer Class A Redemptions, the full amount of the Trust Financing will not be available to Buyer or an Affiliate thereof on the
Closing Date.
(e)
Prior to the Closing, none of the funds held
in the Trust Account may be released except (i) to pay income and franchise taxes on any interest income earned in the Trust Account,
(ii) to pay working capital related costs, and (iii) to satisfy obligations in respect of the Buyer Class A Redemption.
(f)
As
of the date hereof, there are no Actions pending or, to the knowledge of the Buyer, threatened in writing with respect to the
Trust Account.
5.12
Brokers’
Fees
. Except fees described on
Schedule 5.12
(which fees shall be the sole responsibility of Buyer), no broker, finder,
financial advisor, investment banker, similar intermediary or other Person is entitled to any brokerage fee, finders’ fee
or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Buyer or
any of its Affiliates.
5.13
Solvency;
Company After Transactions
. Buyer is not entering into this Agreement or the transactions contemplated hereby with the actual
intent to hinder, delay or defraud either present or future creditors. Assuming that (i) the representations and warranties of
Seller and the Company contained in this Agreement and the Financial Statements are true and correct in all material respects
without giving effect to any materiality or Material Adverse Effect qualifiers contained therein, (ii) the projections for the
Company and its Subsidiaries provided to Buyer by Seller have been prepared based on assumptions that were commercially reasonable
at the time made, (iii) the performance in all material respects by Seller and its Subsidiaries of their respective obligations
hereunder and (iv) assuming the satisfaction of all of the conditions to the obligation of Buyer to consummate the transactions
contemplated by this Agreement, then after giving effect to the transactions contemplated hereby (including the Financing and
any alternative financing), at and immediately after the Closing, the Company and its Subsidiaries (on a consolidated basis) will
be Solvent.
5.14
Affiliates
.
None of Buyer or any Person or entity controlled by Buyer of any Affiliate or Associate of Buyer, owns any business that derives
a substantial portion of its revenues from a line of business within the principal lines of business of the Company and its Subsidiaries.
For purposes of this
Section 5.14
, the term “control” shall have the meaning provided in 16 CFR §801.1(b)
and the terms “Affiliate” and “Associate” shall have the meanings provided in 16 CFR §801.1(d).
5.15
No
Outside Reliance
. Notwithstanding anything contained in this
Article V
or any other
provision hereof, Buyer and any of its directors, officers, employees, stockholders, partners, members or representatives, acknowledge
and agree that Buyer has made its own investigation of the Company and that neither Seller nor any of its Affiliates, agents or
representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given in (i)
Article
III
and
Article IV
, (ii) any certificate delivered pursuant to
Section
9.2(d)
and (iii) any other Transaction Document, including any implied warranty or representation
as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company
or any of its Subsidiaries. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial
or other projections or other predictions that may be contained or referred to in the Schedules or elsewhere, as well as any information,
documents or other materials (including any such materials contained in any “data room” or reviewed by Buyer pursuant
to the Confidentiality Agreement) or management presentations that have been or shall hereafter be provided to Buyer or any of
its Affiliates, agents or representatives are not and will not be deemed to be representations or warranties of Seller, and no
representation or warranty is made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth
in this Agreement. Except as otherwise expressly set forth in (i) this Agreement, (ii) any certificate delivered pursuant
to
Section
9.2(d)
and (iii) any other Transaction Document, Buyer understands and agrees
that any inventory, equipment, assets, properties and business of the Company and its Subsidiaries are furnished “as is”,
“where is” and subject to the representations and warranties contained in
Article IV
,
with all faults and without any other representation or warranty of any nature whatsoever. Notwithstanding the foregoing, nothing
herein shall limit Buyer’s recourse in respect of claims for fraud.
Article
VI
COVENANTS OF SELLER and the Company
6.1
Conduct
of Business
. From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in
accordance with its terms (the “
Interim Period
”), the Company shall, and shall cause its Subsidiaries to, except
as contemplated by this Agreement or as consented to by Buyer in writing, operate the business of the Company, including with
respect to capital expenditures, in the ordinary course and use their respective commercially reasonable efforts to (A) preserve
the present business operations, organization and goodwill of the Company and its Subsidiaries and (B) preserve the present relationships
with customers, distributors, suppliers and employees of the Company and its Subsidiaries. Without limiting the generality of
the foregoing, except as set forth on
Schedule 6.1
or as consented to by Buyer in writing (such consent not to be unreasonably
withheld, conditioned or delayed with respect to the matters set forth in clauses 6.1(e), (f), (i), (l)(iii) or (q)(i)), the Company
shall not, and the Company shall cause its Subsidiaries not to, except as otherwise contemplated by this Agreement:
(a)
change
or amend the certificate of incorporation, bylaws or other organizational documents of the Company or any of its Subsidiaries,
except as otherwise required by Law (whether by merger, consolidation or otherwise);
(b)
make,
set aside or declare any non-cash dividend or non-cash distribution to the stockholders of the Company in their capacities as
stockholders (it being acknowledged and agreed that any cash dividends or distributions shall be accurately reflected in the Estimated
Closing Statement);
(c)
transfer,
issue, reissue, deliver sell or dispose of any shares of capital stock, securities, or other equity or voting interests of the
Company or any of its Subsidiaries or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of
the capital stock or other securities or equity or voting interests of the Company or any of its Subsidiaries;
(d)
(i)
effect any recapitalization, reclassification, or like change in the capitalization of the Company or any of its Subsidiaries
or (ii) amend the terms of, or adjust split, combine, subdivide or reclassify, any capital stock or other equity interests or
any class (including the Shares);
(e)
enter
into or otherwise become subject to (including by acquisition), renew, fail to exercise, waive or release any material right or
claim, modify or terminate (excluding any expiration or any renewal upon expiration, in accordance with its terms) any Material
Contract (other than any Credit Document) or any Contract that would have been a Material Contract had it been entered into prior
to the date of this Agreement other than, in each case, in the ordinary course of business;
(f)
except
(i) as otherwise required by Law or (ii) required pursuant to existing Company Benefit Plans that are listed on
Schedule 4.13(a)
as in effect on the date of this Agreement, (A) grant, increase, accelerate the vesting or time of payment of, or in any way
cause the funding of, any compensation, equity or equity-based awards, incentive opportunity, benefits or termination pay to any
current or former employee, director or independent contractor of the Company or any of its Subsidiaries, (B) adopt, enter into,
terminate or amend any Company Benefit Plan (or any plan that, had it been in existence on the date hereof, would be a Company
Benefit Plan), (C) forgive any loans, or issue any loans to any current or former employee, director or independent contractor,
or (D) hire any employee with an annual base salary in excess of $150,000 or terminate the employment of any employee with an
annual base salary in excess of $150,000 other than for cause;
(g)
except
as required by Law, enter into or amend any collective bargaining or other labor agreement;
(h)
acquire,
whether by merger or consolidation or otherwise, or merge or consolidate with, or purchase substantially all of the assets or
any equity interests directly or indirectly, of, any corporation, partnership, association, joint venture or other business organization
or division thereof;
(i)
enter
into any new commitments to make any capital expenditures not to exceed $500,000, in the aggregate, except acquisitions of equipment
to be supplied to customers in the ordinary course of business;
(j)
(i)
acquire any assets other than supplies, raw materials and equipment in the ordinary course of business or (ii) sell, lease (as
lessor), transfer, license, encumber, abandon, fail to maintain, assign or otherwise dispose of or create, incur, permit to exist
any Lien on or encumber any assets pertaining to the business of the Company and its Subsidiaries (except (x) with respect to
Intellectual Property, which shall be governed by
Sections 6.1(m)
and
6.1(n)
, (y) sales, transfers or dispositions
of obsolete equipment in the ordinary course of business and (z) sales of inventory in the ordinary course of business);
(k)
make
any material loans or material advances to, or capital contributions to or investments in, any Person, except for loans and advances
by and between the Company and its Subsidiaries and for advances to employees or officers of the Company or any of its Subsidiaries,
in each case, in the ordinary course of business and consistent with past practice;
(l)
except
as required by Law, (i) make or change any material Tax election, (ii) adopt or change any material Tax accounting method or change
any annual Tax accounting period, (iii) agree to extend or waive the statutory period of limitations applicable to any claim for,
or the period for the collection or assessment or reassessment of, any material Tax, (iv) file any amended Tax Return, (v) enter
into any closing agreement, (vi) settle any Tax claim or assessment, (vii) surrender any right to claim a Tax refund, offset or
other reduction in Tax Liability or (viii) take or omit to take any other material action with respect to Taxes that is outside
of the ordinary course of business;
(m)
pledge,
sell, assign, transfer, lease, sublease, license, sublicense, covenant not to sue, abandon, mortgage, encumber or otherwise dispose
of, modify, terminate or permit to lapse, place in the public domain, or otherwise fail to take any action to maintain, enforce
or protect, or create or incur any Lien (other than Permitted Liens) on, any Company Intellectual Property, except, in each case,
as required under the Credit Documents, the granting of non-exclusive licenses in the ordinary course of business, or in connection
with the abandonment of such Intellectual Property that the Company reasonably determines is no longer material to the Company
or its Subsidiaries;
(n)
fail
to (i) pay any annuity or prosecution, maintenance or other fee or file any document, response to office action or other filing,
in each case, in connection with any Registered Intellectual Property when due or (ii) diligently prosecute and maintain all Registered
Intellectual Property, except, in each case, in connection with the abandonment of such Registered Intellectual Property that
the Company reasonably determines is no longer material to the Company or its Subsidiaries;
(o)
enter
into any (i) agreement that restricts or purports to restrict the ability of the Company, any of its Subsidiaries or any of its
Affiliates (including, after the Closing, Buyer) to engage or compete in any line of business or with any Person or in any geographic
area or during any period of time, or enter into any agreement that restricts the ability of the Company, any of its Subsidiaries
or any of its Affiliates to enter a new line of business or (ii) agreement with a reseller, distributor or sales agent for the
Company’s products or services that does not contain the Company Exclusivity Provision;
(p)
enter
into, renew or amend in any material respect any Affiliate Agreement (other than the termination thereof permitted pursuant to
Section 6.4
);
(q)
(i)
waive, settle or satisfy any claim against the Company or any of its Subsidiaries (which shall include, but not be limited to,
any pending or threatened Action), other than settlements that contemplate solely monetary relief not in excess of $100,000 in
the aggregate (which amounts are paid prior to the Closing or fully accrued in the Estimated Closing Statement) and do not relate
to the transactions contemplated hereby or have any material reputational implications for the Company and/or its Subsidiaries
or (ii) waive, settle or satisfy any matters relating to the Specified Litigation (it being understood that the Specified Litigation
shall be for Buyer’s benefit and, in order to give effect to the foregoing, for purposes of the determination of Closing
Cash Consideration and any Adjustment Amount, (x) any amounts paid to the Company or any of its Subsidiaries prior to the Closing
in respect of the Specified Litigation (other than any refundable deposits referred to in the definition of “Cash and Cash
Equivalents”) shall be deducted from the determination of “Cash and Cash Equivalents” and (y) “Net Working
Capital” shall not include any accruals, receivables or other assets in respect of the Specified Litigation);
(r)
change
its working capital and/or cash management practices in any material respect, including its policies, practices and procedures
with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable,
prepayment of expenses, payment of accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer
deposits;
(s)
fail
to maintain in full force and effect any Insurance Policy (other than as a result of the termination of Insurance Policies in
accordance with their terms but only to the extent such policies are replaced with new Insurance Policies on substantially similar
terms without diminution of or gaps in coverage in any material respect), or materially reduce the amount of any insurance coverage
provided thereunder;
(t)
incur,
assume, guarantee or otherwise become liable for any indebtedness for borrowed money other than (i) in connection with borrowings
under the Company’s existing Credit Documents in the ordinary course of business, (ii) indebtedness owed to the Company
and its Subsidiaries or (iii) other indebtedness in an aggregate principal amount not to exceed $250,000;
(u)
subject
any material properties or assets of the Company and its Subsidiaries to any Lien, except for Permitted Liens;
(v)
adopt
or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the transactions contemplated by this Agreement);
(w)
make
any change in financial accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities
or results of operations of the Company and its Subsidiaries, except insofar as may have been required by a change in GAAP or
Law;
(x)
write
up, write down or write off the book value of any of its assets, other than (i) in the ordinary course of business or (ii) as
may be required by GAAP;
(y)
incur
any liabilities (other than any liabilities arising in the ordinary course and consistent with past practice owed (i) by the Company
or any Subsidiary of the Company to any Subsidiary of the Company that is organized outside of the United States or (ii) by any
Subsidiary of the Company that is organized outside of the United States to another Subsidiary of the Company that is organized
outside of the United States; or
(z)
agree,
authorize, resolve or commit to do any action prohibited under this
Section 6.1
.
Nothing
contained in this Agreement is intended to give Buyer, directly or indirectly, the right to control or direct the Company’s
operations prior to the Closing Date. Prior to the Closing Date, Buyer and Seller shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.2
Inspection
.
Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to the Company
or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from
time to time, and except for any information that is subject to attorney-client privilege, Seller shall, and shall cause its Subsidiaries
to, afford to Buyer and its accountants, counsel and other representatives reasonable access during the Interim Period, during
normal business hours, in such manner as to not interfere with the normal operation of the Company and its Subsidiaries, to all
of their respective properties, books, Contracts, commitments, Tax Returns, records and other documents of or pertaining to the
Company and appropriate officers and employees of the Company and its Subsidiaries, and shall furnish such representatives with
all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries as such representatives
may reasonably request;
provided
that in the event the Company does not provide information in reliance on confidentiality
obligations or privilege, the Company shall provide notice to the Buyer that such information is being withheld (but solely to
the extent both feasible and permitted under such confidentiality obligation, or without waiving such privilege, as applicable)
and the Company shall use commercially reasonable efforts to describe, to the extent both feasible and permitted under such confidentiality
obligation, or without waiving such privilege, as applicable, the applicable information; provided further,
however
, that
Buyer shall not be permitted as part of such access to perform any environmental sampling at any Leased Real Property, including
sampling of soil, groundwater, surface water, building materials, or air or wastewater emissions. In the event any of the restrictions
set forth in this
Section
6.2
apply, Seller and Buyer shall discuss in good faith arrangements
to provide for such access, including entry into a joint defense agreement with respect to information that is subject to attorney-client
privilege. All information obtained by Buyer and its representatives under this Agreement shall be subject to the Confidentiality
Agreement. No investigation by Buyer, any of its Affiliates or any of their respective Representatives or other information received
by, or knowledge of, Buyer, any of its Affiliates or any of their respective Representatives shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by Seller or the Company hereunder.
6.3
HSR
Act, Regulatory Approvals and Third Party Consents
.
(a)
In
connection with the transactions contemplated by this Agreement, Seller shall (and, to the extent required, shall cause its Affiliates
to) comply promptly but in no event later than ten (10) Business Days after the date hereof with the notification and reporting
requirements of the HSR Act and each of the other
permits, approvals, clearances, and consents
of or filings necessary or advisable to be obtained from the applicable Regulatory Consent Authority and any other Governmental
Authorities (“
Regulatory Approvals
”).
Seller shall (i) use commercially reasonable best efforts to substantially
comply with any Information or Document Requests and (ii) request early termination of any waiting period under the HSR Act.
(b)
Seller
and the Company shall, and shall cause their respective Affiliates to, cooperate reasonably and in good faith with Buyer and with
the Regulatory Consent Authorities and any other Governmental Authorities with respect to the Regulatory Approvals and use its
reasonable best efforts to promptly undertake all action required to complete lawfully the transactions contemplated by this Agreement
as soon as practicable (but in any event prior to the Termination Date) and all action necessary or advisable, if requested in
writing by Buyer, to avoid, prevent, eliminate or remove the actual or threatened commencement of any proceeding in any forum
by or on behalf of any Regulatory Consent Authority and any other Governmental Authorities with respect to the Regulatory Approvals,
or the issuance of any Governmental Order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of
the transactions contemplated hereby, but Seller and the Company shall have no obligation to take any action that would have a
material affect on the business of the Company and its Subsidiaries, taken as a whole, unless such action is conditional upon
and solely effective at or after Closing.
(c)
Seller
and the Company shall promptly furnish to Buyer copies of any notices or written communications received by Seller or any of its
Affiliates from any Governmental Authority with respect to the transactions contemplated by this Agreement and shall not respond
to any such notice or written consent without the prior written consent of Buyer. None of Seller, the Company or any of their
Affiliates shall extend any waiting period or comparable period under the HSR Act or in connection with any of the other Regulatory
Approvals or enter into any agreement with any Governmental Authority without the prior written consent of Buyer. None of Seller,
the Company or any of their Affiliates shall attend any substantive meetings or discussions, either in person or by telephone,
with any Governmental Authority concerning or in connection with the transactions contemplated hereby without the prior written
consent of Buyer.
(d)
Seller
and Buyer shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties specified
in
Schedule 6.3(d)
;
provided
,
however
, that the Seller shall not be obligated to, and, without the prior
written consent of Buyer, none of the Company or any of its Subsidiaries shall, pay any consideration therefor to any third party
from whom consent or approval is requested, grant any accommodations to such third party or accept any amendment, conditions or
obligations with respect to any Contract with such third party.
6.4
Termination
of Certain Agreements
. On and as of the Closing, Seller shall take all actions necessary to cause all Affiliate Agreements
(other than the Contracts listed on
Schedule 6.4)
and all Related Party Liabilities in connection therewith, to be terminated
without any further force and effect or continuing Liability of Buyer, the Company or any of their respective Affiliates, including
the Management Agreement. The Company shall deliver to Buyer written evidence reasonably satisfactory to Buyer of each such termination
prior to the Closing.
6.5
Company
Real Property Certificate
. At the Closing, Seller shall deliver to Buyer a statement, substantially in the form attached hereto
as
Annex A
, in accordance with Treasury Regulation Sections 1. 1445-2(b)(2) certifying that Seller is not a foreign person.
6.6
Nonsolicitation
.
From the date of this Agreement until the earlier of (x) the Closing or (y) the date on which this Agreement is terminated, other
than in connection with the transactions contemplated hereby, each of Seller and the Company agrees that it will not, and will
not authorize or permit any of its Affiliates or any of its or any of its Subsidiary’s Representatives (in their capacity
as such), to, directly or indirectly, (i) initiate, solicit, or knowingly facilitate, or make any offers or proposals related
to, an Acquisition Proposal, (ii) engage in any discussions or negotiations with respect to an Acquisition Proposal with, or provide
any non-public information or data to, any Person that has made, or informs Seller or the Company that it is considering making,
an Acquisition Proposal, or (iii) enter into any agreement relating to an Acquisition Proposal. The Company shall give notice
of any Acquisition Proposal to Buyer as soon as practicable following its or Seller’s awareness thereof. For purposes of
this Agreement, “
Acquisition Proposal
” means any contract, proposal, offer or indication of interest in any
form, written or oral, relating to any transaction or series of related transactions (other than transactions with Buyer) involving
any acquisition, merger, amalgamation, share exchange, recapitalization, consolidation, liquidation or dissolution involving the
acquisition of all or any material portion of the Company or its businesses or assets or any material portion of the Company’s
Shares or other equity interests. Promptly following execution of this Agreement, Seller and its Affiliates and Representatives
will terminate any existing discussions with any Person other than Buyer and its Affiliates and Representatives regarding any
Acquisition Proposal and request the return or destruction of any confidential information of the Company and its Subsidiaries
provided to any such Person in connection therewith. Effective as of the Closing, Seller shall cause to be assigned to the Company
all of Sellers’ and its Affiliates’ rights under any confidentiality agreement or non-solicitation agreement entered
into with any Person other than Buyer and its Affiliates regarding any Acquisition Proposal.
6.7
Cooperation
with Proxy Statement and SEC Filings
.
(a)
Prior
to the Closing and in connection with Buyer’s preparation of the Proxy Statement, any other filing required to be made by
Buyer with the SEC under the Exchange Act or any responses to any comments from the SEC relating to the Proxy Statement or other
required filings, Seller and the Company shall use their respective reasonable best efforts to provide to Buyer, and shall cause
each of the Company’s Subsidiaries to use its reasonable best efforts to provide, and shall use its reasonable best efforts
to cause its Representatives, including legal and accounting representatives, to provide all cooperation reasonably requested
by Buyer that is customary in connection with the preparation of the Proxy Statement and such other filings or responses to SEC
comments, which may include, among other things, obtaining the consents of any auditor to the inclusion of the financial statements
of the Company or any of its Subsidiaries in the Proxy Statement and other filings with the SEC. The Company hereby consents (on
behalf of itself and its Subsidiaries) to Buyer’s use of any audited or unaudited financial statements relating to the Company
or any of its Subsidiaries or entities or businesses acquired by the Company or any of its Subsidiaries to be used in the Proxy
Statement and any other filings that Buyer makes with the SEC.
(b)
Each
of Seller, the Company and Buyer shall ensure that none of the information supplied by or on its behalf for inclusion or incorporation
by reference in the Proxy Statement will, at the date it is first mailed to the shareholders of Buyer and at the time of the Buyer
Shareholders 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.
If at any time prior to the Closing any information relating to Seller, the Company, Buyer or any of their respective Subsidiaries,
Affiliates, directors or officers is discovered by the Seller or Buyer that is required to be set forth in an amendment or supplement
to the Proxy Statement so that such document would not include any misstatement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, the Party that discovers such information shall promptly notify the other Party and an appropriate
amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated
to the shareholders of Buyer.
(c)
Buyer
shall give Seller, the Company and their Representatives and counsel the opportunity to review and comment, prior to their being
filed with the SEC, (i) the Proxy Statement and (ii) all amendments and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments made by the SEC. Buyer shall consider such comments in good faith
and shall accept such reasonable additions, deletions or changes suggested by Seller, the Company and their Representatives and
counsel in connection therewith as Buyer deems appropriate, in its reasonable discretion.
(d)
Buyer
will advise Seller and the Company, promptly after Buyer receives notice thereof, of the time when the Proxy Statement has “cleared”
comments by the SEC or any supplement or amendment has been filed or of any request by the SEC for the amendment or supplement
of the Proxy Statement or for additional information. Buyer shall provide the Seller and its counsel with any written comments
or other communications that Buyer or its counsel may receive from time to time from the SEC or its staff with respect to the
Proxy Statement promptly after receipt of those comments or other communications.
(e)
Seller
and the Company shall cause to be prepared and delivered to Buyer (i)as soon as practicable following the date hereof, the financial
statements set forth on
Schedule 6.7(e)(i)
(the financial statements set forth on
Schedule 6.7(e)(i)
, the “
Required
Financial Statements
”) and
(ii)
in the event the Closing will occur after May 15, 2019, the financial statements
set forth on
Schedule 6.7(e)(ii)
.
6.8
Release
.
(a)
Except
as set forth in
Section 6.8(b)
, from and after the Closing, Seller agrees (on behalf of itself and its Affiliates) that
none of Buyer or any of its Affiliates including the Company and its Subsidiaries, including current or former officers and directors,
members, managers or Representatives of the Company or any of its Subsidiaries, shall have any Liability or responsibility to
Seller or any of its Affiliates for (and, from and after the Closing, Seller hereby unconditionally releases (and shall cause
its Affiliates to unconditionally release) such Persons from) any obligations or Liability (i) arising out of, or relating to,
the organization, management or operation of the businesses of the Company or any of its Subsidiaries relating to any matter,
occurrence, action or activity on or prior to the Closing or the direct or indirect ownership of any equity or other interests
in the Company or its Subsidiaries on or prior to the Closing or (ii) relating to or arising out of this Agreement, any other
Transaction Document (including due to any inaccuracy or breach of any representation or warranty or the breach of any covenant,
undertaking or other agreement contained herein or therein) and the transactions contemplated hereby or thereby.
(b)
Notwithstanding
anything herein to the contrary, nothing in this
Section 6.8
is intended to, nor does it, limit, impair or otherwise modify
or affect, and the release contemplated by this
Section 6.8
does not include, any rights of Seller or any of its Affiliates
or obligations of Buyer or any of its Affiliates including the Company and its Subsidiaries, including current or former officers
and directors, members, managers or Representatives of the Company or any of its Subsidiaries, (i) expressly set forth in this
Agreement or any other Transaction Document or arising out of, or relating to, the transactions contemplated thereby, (ii) under
any Affiliate Contract set forth on
Schedule 6.4
or (iii) to indemnification or advancement or reimbursement of expenses
as contemplated by
Section 7.2
. The Parties acknowledge and agree that the limits imposed pursuant to this
Section 6.8
were bargained for between sophisticated parties and were specifically taken into account in the determination of the amounts
to be paid hereunder.
6.9
Financing
Cooperation
.
(a)
The
Company shall use its reasonable best efforts to, and shall cause its Subsidiaries and its and their respective Representatives
to use their reasonable best efforts to, provide all cooperation in connection with the arrangement of the Debt Financing as may
be reasonably requested by Buyer, including using its reasonable best efforts with respect to the following:
(i)
participation
at reasonable times and locations in a reasonable number of meetings, due diligence sessions (including accounting due diligence
sessions), drafting sessions, presentations, “road shows” and sessions with prospective financing sources, investors
and ratings agencies, including direct contact between appropriate members of senior management of the Company, on the one hand,
and the actual and potential Debt Financing Sources, on the other hand;
(ii)
assisting
with the preparation of materials for rating agency presentations, bank information memoranda (including a bank information memorandum
that does not include information of the type that would constitute material non-public information of the Company or its Subsidiaries
if the Company was a publicly reporting company and the delivery of customary authorization letters with respect to the bank information
memoranda executed by a senior officer of the Company authorizing the distribution of information to prospective Debt Financing
Sources or investors and containing a representation to the Debt Financing Sources that the public side versions of such documents,
if any, do not include information of the type that would constitute material non-public information about the Company or its
Subsidiaries or securities if the Company was a publicly reporting company and containing a customary “10b-5” representation
by the Company consistent with the Debt Commitment Letter), in each case, to the extent reasonably necessary and customarily delivered
in connection with debt financings of the same type as the Debt Financing;
(iii)
causing the Company’s independent auditors
to provide reasonable and customary assistance and cooperation in connection with the Debt Financing;
(iv)
assisting
Buyer in obtaining any corporate ratings from any ratings agencies contemplated by the Debt Financing;
(v)
furnishing
(x) at least four (4) Business Days prior to the Closing, all documentation and other information required by any Governmental
Authority under applicable “know your customer” and anti-money laundering rules and regulations, including the USA
PATRIOT Act of 2001, that has been reasonably requested by Buyer at least ten (10) Business Days prior to the Closing and (y)
at least four (4) Business Days prior to the Closing, all documentation and other information relating to beneficial ownership
and other information required by the Customer Due Diligence Requirements for Financial Institutions issued by the U.S. Department
of Treasury Financial Crimes Enforcement Network under the Bank Secrecy Act (such rule published May 11, 2016 and effective May
11, 2018, as amended from time to time), to the extent such documentation or other information has been reasonably requested in
writing by Buyer at least ten (10) Business Days prior to the Closing, and in each case is necessary to satisfy the conditions
set forth in paragraph 8 of the Conditions Exhibit to the Debt Commitment Letter, but in each case, solely as relating to the
Company and its Subsidiaries to the extent reasonably requested by Buyer in advance thereof;
(vi)
executing
and delivering at Closing of any credit agreements, pledge and security documents, other definitive financing documents or other
requested certificates or documents, including a customary solvency certificate by the chief financial officer of the Company
in the form of Annex I to the Conditions Exhibit to the Debt Commitment Letter;
(vii)
cooperating
with, and taking actions reasonably requested by, Buyer in order to facilitate the termination and payoff of the commitments and
loans under the Credit Documents at Closing upon or simultaneously with the funding of the Debt Financing (including, upon such
funding, and subject to receipt of funds from the Buyer pursuant to
Section 2.7
, (w) the repayment in full of all obligations
then outstanding thereunder, (x) the release of all encumbrances, security interests and collateral (subject to customary exceptions),
(y) the termination of all guaranties and the agreements evidencing subordination in connection therewith and (z) the termination
or replacement of all letters of credit outstanding thereunder, in each case at the Closing
)
and facilitating the delivery to Buyer of payoff letters, lien terminations and other instruments of discharge with respect to
the Credit Documents in customary form and substance from the administrative agent or other similar agents under the Credit Documents;
(viii)
assisting
the Debt Financing Sources in benefiting from the existing material lending and investment banking relationships of the Company
and its Subsidiaries; and
(ix)
facilitating
the obtaining of guarantees and pledging of collateral as may be reasonably requested by Buyer, including executing and delivering
any customary guarantee, pledge and security documents, currency or interest hedging arrangements or other definitive financing
documents, or other customary certificates or documents as may be reasonably requested by Buyer to facilitate any guarantee, obtaining
and perfection of security interests in collateral from and after the Closing (provided that any obligations contained in such
documents shall be effective no earlier than as of the Closing) and delivery to the Debt Financing Sources at the Closing of all
certificates representing outstanding equity interests of the Company and each of its Subsidiaries.
(x)
updating
any Required Information provided to Buyer as may be necessary to ensure that (i) the financial statements comprising the Required
Information present fairly, in all material respects, the consolidated financial position, results of operations, income and cash
flows of Ranpak Corp. and its Subsidiaries as of the dates and for the periods indicated in such financial statements in conformity
with GAAP consistently applied throughout the periods presented (except, in the case of any interim unaudited financial statements,
for the absence of footnotes and other presentation items and for normal year-end adjustments (none of which will be material))
and (ii) no independent auditor has withdrawn, or has advised the Company or any of its Subsidiaries in writing that they intend
to withdraw, their audit opinion with respect to any financial statements contained in the Required Information.
(b)
Notwithstanding
the foregoing, nothing in
Section 6.9(a)
shall require the Company, its Subsidiaries or any of their Representatives to:
(i)
waive
or amend any term of this Agreement or any other contract to which it is a party or take any action in respect of the Debt Financing
to the extent that such action would cause any condition to Closing set forth in
Article IX
to fail to be satisfied by
the Termination Date or otherwise result in a breach of this Agreement by the Company;
(ii)
take
any action in respect of the Debt Financing that would conflict with or violate the Company’s or any if its Subsidiaries’
organizational documents or any applicable Law or result in a breach of or default under any Material Contract;
(iii)
execute
and deliver any letter, agreement, document or certificate in connection with the Debt Financing (except the authorization letters
contemplated by clause (a)(ii) above) or adopt any resolution, grant any approval or authorization or otherwise take any
action that is not contingent on, or that would be effective prior to, the occurrence of, the Closing;
(iv)
pay
any commitment fee or other fee or payment, reimburse any expenses, give any indemnities or otherwise incur any Liability or cause
or permit any Lien to be placed on any of their respective assets in connection with the Debt Financing prior to the Closing (except
with respect to the authorization letters contemplated by clause (a)(ii) above);
(v)
take
any action that, in the good faith determination of the Company, would unreasonably interfere with the conduct of the business
of the Company or its Subsidiaries or create an unreasonable risk of harm to any property or assets of the Company or its Subsidiaries;
(vi)
provide
any information the disclosure of which is subject to confidentiality obligations or is legally privileged; provided that in the
event the Company does not provide information in reliance on confidentiality obligations or privilege, the Company shall provide
notice to the Buyer that such information is being withheld (but solely to the extent both feasible and permitted under such confidentiality
obligation, or without waiving such privilege, as applicable) and the Company shall use commercially reasonable efforts to describe,
to the extent both feasible and permitted under such confidentiality obligation, or without waiving such privilege, as applicable,
the applicable information; and
(vii)
provide
any legal opinion or other opinion of counsel prior to the Closing Date in connection with the Debt Financing.
In
addition, no Representative of the Company or any of its Subsidiaries shall be required to deliver any certificate or take any
other action that could reasonably be expected to result in personal liability to such Representative.
(c)
Buyer
shall comply with
Section 11.6
with respect to the payment of all fees, costs and expenses (including reasonable attorneys’
and accountants’ fees) incurred by the Company or any of its Subsidiaries solely in connection with the cooperation of the
Company and its Subsidiaries contemplated by this
Section 6.9
and shall indemnify and hold harmless the Company, its Subsidiaries
and their respective representatives from and against any and all losses, damages, claims, costs or expenses actually suffered
or incurred by any of them of any type solely in connection with the arrangement of any Debt Financing and any information used
in connection therewith, except with respect to a material misstatement or material omission in any information prepared or provided
by the Company or any of its Subsidiaries or any of their respective representatives pursuant to this
Section 6.9
or to
the extent such losses, damages, claims, costs or expenses arise from the material breach of this Agreement by the Seller or the
Company or result from the gross negligence, bad faith or willful misconduct of Seller, the Company, any of its Subsidiaries or
their respective Representatives. This
Section 6.9(c)
shall survive the Closing and any termination of this Agreement.
(d)
All
non-public information provided by the Company or any of its Subsidiaries or any of their representatives pursuant to this
Section
6.9
shall be kept confidential in accordance with the Confidentiality Agreement, except that Buyer shall be permitted to disclose
such information to the financing sources (including the Debt Financing Sources) and other potential sources of capital, rating
agencies and prospective lenders during syndication of the Debt Financing or any permitted replacement, amended, modified or alternative
financing subject to such Persons entering into customary confidentiality undertakings with respect to such information (including
through a notice and undertaking in a form customarily used in confidential information memoranda for senior credit facilities).
(e)
The
Company hereby consents, on behalf of itself and its Subsidiaries, to the use of the Company’s and its Subsidiaries’
logos in connection with the Debt Financing and the Equity Financing;
provided
that such logos are used solely in a manner
that is not intended to or reasonably likely to harm or disparage the Company or its Subsidiaries or the reputation or goodwill
of the Company and its Subsidiaries.
(f)
The
Company shall provide to the Buyer, as promptly as reasonably practicable, the Required Information.
(g)
Notwithstanding
anything to the contrary in this Agreement, the condition set forth in Section 9.2(b) as it applies to the obligations of the
Company under this
Section 6.9
shall be deemed satisfied unless the Company has knowingly materially breached its obligations
under this
Section 6.9
and such breach has been the primary cause of the Debt Financing not being obtained.
6.10
R&W
Insurance Cooperation
. Seller and the Company shall provide to Buyer any assistance reasonably requested by Buyer in connection
with satisfying any conditions to the effectiveness of the representation and warranty liability insurance policy Buyer is obtaining
in connection with the transaction to the extent not satisfied following the date hereof, including by delivering to Buyer electronic
copies of the index and contents (as of the date hereof) of the virtual data room created and populated in connection with the
transactions contemplated hereby.
Article
VII
COVENANTS OF Buyer
7.1
HSR
Act and Regulatory Approvals
.
(a)
In
connection with the transactions contemplated by this Agreement, Buyer shall (and, to the extent required, shall cause its controlled
Affiliates to) comply promptly but in no event later than ten (10) Business Days after the date hereof with the notification and
reporting requirements of the HSR Act and in connection with the other
Regulatory Approvals.
Buyer shall substantially comply with any Information or Document Requests.
(b)
Buyer
shall request early termination of any waiting period under the HSR Act and exercise its reasonable best efforts to (i) obtain
termination or expiration of the waiting period under the HSR Act and each other relevant jurisdiction to obtain the Regulatory
Approvals, (ii) prevent the entry in any Action brought by a Regulatory Consent Authority or any other Governmental Authority
of any Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated by this
Agreement and (iii) if any such Governmental Order is issued in any such Action, cause such Governmental Order to be lifted.
(c)
Without
limiting the generality of
Section 7.1(b)
, Buyer shall cooperate reasonably and in good faith with the Regulatory Consent
Authorities and any other Governmental Authorities with respect to the Regulatory Approvals and use its reasonable best efforts
to promptly undertake all action required to complete lawfully the transactions contemplated by this Agreement as soon as practicable
(but in any event prior to the Termination Date) and all action necessary or advisable to avoid, prevent, eliminate or remove
the actual or threatened commencement of any proceeding in any forum by or on behalf of any Regulatory Consent Authority and any
other Governmental Authorities with respect to the Regulatory Approvals, or the issuance of any Governmental Order that would
delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the transactions contemplated hereby, including (i)
proffering and consenting and/or agreeing to a Governmental Order or other agreement providing for (A) the sale, licensing
or other disposition, or the holding separate, of particular assets, categories of assets or lines of business of the Company
or Buyer or (B)the termination, amendment or assignment of existing relationships and contractual rights and obligations of the
Company, Buyer or any of their respective Affiliates and (ii) promptly effecting the disposition, licensing or holding separate
of assets or lines of business or the termination, amendment or assignment of existing relationships and contractual rights, in
each case, at such time as may be necessary to permit the lawful consummation of the transactions contemplated hereby on or prior
to the Termination Date.
(d)
Buyer shall not, and shall cause its Affiliates
not to, acquire or agree to acquire, by merging with or into or consolidating with, or by purchasing a portion of the assets of
or equity in, or by any other manner, any business, or any corporation, partnership, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any assets (provided that in each of these circumstances, such business,
business organization or assets, in whole or in part, overlap and compete with the business of the Company and its Subsidiaries),
if the entering into of a definitive agreement relating to, or the consummation of such acquisition, merger or consolidation would
reasonably be expected to: (i) impose any delay in the obtaining of, or increase the risk of not obtaining, any consents, waivers,
approvals and waiting period expirations and terminations necessary to consummate the transactions contemplated by this Agreement;
(ii) increase the risk of any Governmental Authority entering any injunction or other order, decree or ruling that would adversely
affect the ability of the Parties hereto to consummate the transactions contemplated by this Agreement, (iii) require the transactions
contemplated under this Agreement to be subject to the approval of a Governmental Authority that, absent such action by Buyer
or its Affiliates, would not otherwise be required or (iv) increase the risk of not being able to adequately defend against or
overturn any regulatory action by any Governmental Authority to prevent or enjoin the consummation of the transactions contemplated
by this Agreement or any Action brought by any Governmental Authority in connection therewith.
(e)
Buyer
shall promptly furnish to Seller copies of any notices or written communications received by Buyer or any of its Affiliates from
any Governmental Authority with respect to the transactions contemplated by this Agreement, and Buyer shall permit counsel to
Seller an opportunity to review in advance, and Buyer shall consider in good faith the reasonable views of such counsel in connection
with, any proposed written communications by Buyer and/or its Affiliates to any Governmental Authority concerning the transactions
contemplated by this Agreement;
provided
, that Buyer shall not extend any waiting period or comparable period under the
HSR Act or in connection with any of the other
Regulatory Approvals
or enter into
any agreement with any Governmental Authority without the written consent of Seller, which shall not be unreasonably withheld,
conditioned or delayed). Buyer agrees to provide Seller and its counsel the opportunity, on reasonable advance notice, to attend
any substantive meetings or discussions, either in person or by telephone, between Buyer and/or any of its Affiliates, agents
or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions
contemplated hereby. Notwithstanding anything to the contrary, nothing in this clause (e) shall require Buyer to take any action
(or abstain from taking any action) the taking (or not taking) of which is prohibited by Law or Governmental Order.
(f)
Buyer
shall pay all filing fees payable to the Regulatory Consent Authorities and any other Governmental Authorities with respect to
the Regulatory Approvals in connection with the transactions contemplated by this Agreement.
7.2
Indemnification
and Insurance
.
(a)
From
and after the Closing, Buyer shall cause the Company to indemnify and hold harmless each present and former director and officer
of the Company and any of its Subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any Action, whether civil, criminal, administrative
or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Closing, whether asserted or
claimed prior to, at or after the Closing, to the fullest extent that the Company or any of its Subsidiaries, as the case may
be, would have been permitted under applicable Law and its respective certificate of incorporation, bylaws or other organizational
documents in effect on the date of this Agreement to indemnify such Person (including the advancing of expenses as incurred to
the fullest extent permitted under applicable Law, subject to Buyer’s receipt of an undertaking by or on behalf of such
person to repay such amounts if it is ultimately determined that such person is not entitled to be indemnified). Without limiting
the foregoing, (i) Buyer shall cause the Company and each of its Subsidiaries (A) to maintain for a period of not less than six
years from the Closing provisions in its certificate of incorporation, bylaws and other organizational documents concerning the
indemnification and exoneration (including provisions relating to expense advancement) of the Company’s and its Subsidiaries’
former and current officers, directors, employees, and agents that are no less favorable to those Persons than the provisions
of the certificates of incorporation, bylaws and other organizational documents of the Company or such Subsidiary, as applicable,
in each case, as of the date of this Agreement and (B) not to amend, repeal or otherwise modify such provisions in any respect
that would adversely affect the rights of those Persons thereunder, in each case, except as required by Law and (ii) Buyer and
the Company agree that any indemnification and advancement of expenses available to any current or former director of the Company
or its Subsidiaries by virtue of such current or former director’s service as a partner or employee of any investment fund
that is an Affiliate of the Company prior to the Closing (any such current or former director, a “
Sponsor Director
”)
shall be secondary to the indemnification and advancement of expenses to be provided by the Company and its Subsidiaries pursuant
to this
Section 7.2
and that the Company and its Subsidiaries (A) shall be the primary indemnitors of first resort for
Sponsor Directors pursuant to this
Section 7.2
, (B) shall be fully responsible for the advancement of all expenses and
the payment of all Damages with respect to Sponsor Directors which are addressed by, and to the extent provided in, this
Section
7.2
and (C) shall not make any claim for contribution, subrogation or any other recovery of any kind against such Sponsor
Director or its Affiliates in respect of any other indemnification available to any Sponsor Director with respect to any matter
addressed by this
Section 7.2
. Notwithstanding anything to the contrary, (x) no indemnification or advancement of funds
shall be available under this
Section 7.2
or otherwise by Buyer, the Company or any of their respective Affiliates in respect
of any Damages relating to the breach or inaccuracy of any representation, warranty, covenant or agreement hereunder or under
another Transaction Document of Seller, the Company or any of their respective Affiliates and (y) if any Damages that are indemnifiable
by Buyer, the Company or its Subsidiaries would reasonably be expected to be covered by the D&O Tail, then the person entitled
to such indemnification shall be obligated to seek recourse under the D&O Tail before pursuing any such claim for indemnification
(or expense advancement).
(b)
The
Company shall cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining
a six-year “tail” policy containing terms not materially less favorable than the terms of such current insurance coverage
with respect to claims existing or occurring at or prior to the Closing (the “
D&O Tail
”) and, if any claim
is asserted or made within such six-year period, any insurance required to be maintained under this
Section 7.2
shall be
continued in respect of such claim until the final disposition thereof.
(c)
Notwithstanding
anything contained in this Agreement to the contrary, this
Section 7.2
shall survive the consummation of the transactions
contemplated hereby indefinitely and shall be binding, jointly and severally, on all successors and assigns of Buyer and the Company.
In the event that Buyer or the Company or any of their respective successors or assigns 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 transfers or conveys
all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made
so that the successors and assigns of Buyer or the Company, as the case may be, shall succeed to the obligations set forth in
this
Section 7.2
.
7.3
Employment
Matters
.
(a)
For
a period of one (1) year following the Closing Date, Buyer shall provide each employee of the Company or any of its Subsidiaries
who continues in the employ of Buyer or any of its respective Affiliates following the Closing Date (each, a “
Continuing
Employee
”) and whose terms and conditions of employment are not subject to a collective bargaining or similar labor
agreement (each, a “
Company Non-Union Employee
”) with (A) annual base salary and annual cash incentive
compensation opportunities that are no less than the annual base salary and annual cash incentive compensation opportunities,
respectively, provided to each such Company Non-Union Employee immediately prior to the Closing Date, (B) employee benefits that
are substantially comparable in the aggregate to those benefits provided by the Company to each such Company Non-Union Employee
immediately prior to the Closing Date;
provided
that such employee benefits shall exclude any change in control,
transaction and retention benefits, equity and equity-based awards and programs, defined benefit pension benefits and retiree
medical benefits that may be provided by the Company immediately prior to the Closing Date, and (C) severance benefits that are
no less favorable than the severance benefits provided pursuant to the severance plans or policies listed in
Schedule 7.3(b)
.
As to each Continuing Employee whose terms and conditions of employment are subject to a collective bargaining or similar labor
agreement, Buyer shall comply with the terms and conditions of each applicable collective bargaining or similar labor agreement
in a manner consistent with Law.
(b)
From
and after the Closing, Buyer shall give each Company Non-Union Employee service credit for purposes of eligibility to participate,
level of benefits and vesting under any employee benefit plans (including severance and vacation/paid time off policies, but excluding
any defined benefit pension plan benefits) provided, sponsored, maintained or contributed to by Buyer or any of its Affiliates
for such Company Non-Union Employee’s service with the Company or any of its Subsidiaries, and with any predecessor employer,
to the same extent recognized by the Company or any of its Subsidiaries under any analogous Company Benefit Plan, except to the
extent such credit would result in the duplication of benefits for the same period of service.
(c)
Buyer
shall use commercially reasonable efforts to (i) waive or cause to be waived for each Company Non-Union Employee and his or her
dependents, any waiting period provision, payment requirement to avoid a waiting period, pre-existing condition limitation, actively-at-work
requirement and any other restriction that would prevent immediate or full participation under the welfare plans of Buyer or any
of its Affiliates applicable to such Company Non-Union Employee to the extent such waiting period, pre-existing condition limitation,
actively-at-work requirement or other restriction would not have been applicable to (or was previously satisfied by) such Company
Non-Union Employee under the terms of the analogous welfare plans of the Company and its Subsidiaries, and (ii) give or cause
to be given full credit under the welfare plans of Buyer and its Affiliates applicable to each Company Non-Union Employee and
his or her dependents under any analogous Company Benefit Plan for all co-payments, deductibles and out-of-pocket limits satisfied
prior to the Closing in the same plan year as the Closing and, for any lifetime maximums, as if there had been a single continuous
employer.
(d)
(i)
At least five Business Days prior to the Closing Date, the Company shall submit for approval by its stockholders, in conformance
with Section 280G of the Code and the regulations thereunder (the “
280G Stockholder Vote
”), any payments
that could constitute a “parachute payment” pursuant to Section 280G of the Code (each, a “
Parachute
Payment
”), (ii) at least seven Business Days prior to the Closing Date, the Company shall use reasonable best efforts
to ensure that the right to any Parachute Payment shall have been irrevocably waived by each of the applicable “disqualified
individuals” (as defined under Section 280G of the Code and the regulations promulgated thereunder) and (iii) the Seller
shall have delivered to the Buyer true and complete copies of all disclosure and documents that comprise the stockholder approval
of each Parachute Payment and the calculations and any backup data reasonably requested by Buyer used to determine what payments
might constitute Parachute Payments in sufficient time to allow the Buyer to comment thereon but no less than five Business Days
prior to the 280G Stockholder Vote, and shall reflect all reasonable comments of the Buyer thereon.
(e)
Prior
to the Closing Date, Seller shall cause the Company and its Affiliates to comply with any Law or other requirement (whether statutory
or pursuant to a Company Labor Agreement or any other written agreement with, or the constitution of, any works council or other
employee body), to inform and/or consult with any employees, a relevant trade union or works council or any other employee representatives
in relation to the transactions contemplated hereby.
(f)
The
parties acknowledge and agree that all provisions contained in this
Section 7.3
are included for the sole benefit of the
parties hereto. This Agreement is not intended by the parties to, and nothing in this
Section 7.3
or otherwise in this
Agreement, whether express or implied, shall, (i) constitute an amendment to or modification of any Company Benefit Plan or Company
Labor Agreement or any other employee benefit plan, program, policy, agreement or arrangement, (ii) create any obligation of the
parties hereto with respect to any employee benefit plan, program, policy, agreement or arrangement of Buyer or the Company or
any of their respective Affiliates, (iii) prevent Buyer or the Company or any of their respective Affiliates from amending or
terminating any Company Benefit Plans in accordance with their terms, or (iv) confer on any Continuing Employee or any other Person
(other than the parties to this Agreement) any rights or remedies (including third-party beneficiary rights).
7.4
Nonsolicitation
.
(a)
From
the date of this Agreement until the earlier of (x) the Closing or (y) the date on which this Agreement is terminated, other than
in connection with the transactions contemplated hereby and by the other Transaction Documents, Buyer agrees that it will not,
and will not authorize or permit any of its Affiliates or any of its or its Subsidiaries’ Representatives (in their capacity
as such), to, directly or indirectly, (i) initiate, solicit, or knowingly facilitate, or make any offers or proposals related
to, an initial Business Combination, (ii) enter into, engage in or continue any discussions or negotiations with respect to any
initial Business Combination with, or provide any non-public information, data or access to employees to, any Person that has
made, or that is considering making, a proposal with respect to an initial Business Combination, (iii) enter into any agreement
in principle of acquisition agreement or any similar agreement relating to an initial Business Combination or (iv) approve or
recommend or propose publicly to approve or recommend any initial Business Combination.
(b)
From
the date of this Agreement until the earlier of (x) the Closing or (y) the date on which this Agreement is terminated, other than
in connection with the transactions contemplated hereby and by the other Transaction Documents, Buyer shall immediately cease
and terminate any solicitations, discussions or negotiations with any Person with respect to any initial Business Combination
and shall direct its Representatives to cease and terminate any such solicitations, discussions or negotiations.
7.5
Proxy
Statement
.
(a)
As
promptly as practicable following the date hereof, Buyer shall prepare, and as promptly as practicable following receipt of the
Required Financial Statements and the other information relating to the Company required to be included in the Proxy Statement,
Buyer shall file with the SEC, in preliminary form, a proxy statement in connection with the transactions contemplated hereby
(the “
Proxy Statement
”) and provide its shareholders with the opportunity to redeem their Buyer Shares pursuant
to the Buyer Class A Redemption in accordance with the applicable terms of Buyer Articles of Association, any related agreements
of Buyer or its Affiliates, applicable Law and any applicable rules and regulations of the SEC and NYSE. Buyer shall use reasonable
best efforts to cause the Proxy Statement to comply with the rules and regulations of the SEC. In the Proxy Statement, Buyer shall
(i) solicit proxies from its shareholders to vote at the Buyer Shareholders Meeting in favor of (A) all shareholder approvals
required by the rules of the NYSE with respect to the issuance of Buyer Shares in connection with the Financing and (B) any other
proposals the Buyer deems necessary or desirable to consummate the transactions contemplated hereby (collectively, the “
Transaction
Proposals
”), and (ii) file with the SEC financial and other information about the transactions contemplated hereby in
accordance with Regulation 14A of the Exchange Act. Buyer may include in the Proxy Statement matters to be acted on by Buyer’s
shareholders at the Buyer Shareholder Meeting other than the Transaction Proposals, it being understood that the approval of any
such other matters shall not be conditions to or otherwise delay or hinder, the consummation of the transactions contemplated
by this Agreement. Buyer shall promptly respond to any SEC comments on the Proxy Statement and shall otherwise use commercially
reasonable best efforts to seek the completion of the review by the SEC of the Proxy Statement as promptly as practicable.
(b)
Buyer
shall cause the Proxy Statement to be mailed to its shareholders of record, as of the record date to be established by the board
of directors of the Buyer, promptly following (A) in the event the preliminary Proxy Statement is not reviewed by the SEC, the
expiration of the waiting period in Rule 14a-6(a) under the Exchange Act, or (B) in the event the preliminary Proxy Statement
is reviewed by the SEC, receipt of oral or written notification of the completion of the review by the SEC.
7.6
Buyer
Shareholders Meeting
. Buyer shall, as promptly as practicable, establish a record date (which date shall be mutually agreed
with the Company) for, call, give notice of, convene and hold a meeting of Buyer’s shareholders (the “
Buyer Shareholders
Meeting
”), for the purpose of voting on the approval of the Transaction Proposals, which meeting shall be held not more
than thirty-five (35) days after the date on which Buyer mails the Proxy Statement to its shareholders. Buyer shall take all actions
within its control that are necessary, proper or advisable to obtain the approval of the Transaction Proposals, including by soliciting
proxies as promptly as practicable for the purpose of approving the Transaction Proposals;
provided
,
however
, that
Buyer shall not be required to pay any consideration, or grant any accommodation, to any shareholder of Buyer to induce such shareholder
to vote on or for the Transaction Proposals. Buyer shall, through its board of directors, recommend to its shareholders that they
vote in favor of the Transaction Proposals (the “
Board Recommendation
”) and Buyer shall include the Board Recommendation
in the Proxy Statement. The board of directors of Buyer shall not (and no committee or subgroup thereof shall) change, withdraw,
withhold, qualify or modify, or publicly propose to change, withdraw, withhold, qualify or modify, the Board Recommendation. Notwithstanding
anything to the contrary contained in this Agreement, Buyer shall be entitled to adjourn the Buyer Shareholders Meeting, provided
that the Buyer Shareholders Meeting is not adjourned to a date that is more than thirty-five (35) days after the date for which
the Buyer Shareholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law),
(a) to ensure that any supplement or amendment to the Proxy Statement that the board of directors of Buyer has determined in good
faith is required by applicable Law is disclosed to Buyer’s shareholders and for such supplement or amendment to be promptly
disseminated to the Buyer’s shareholders prior to the Buyer Shareholders Meeting, (b) if, as of the time for which the Buyer
Shareholders Meeting is originally scheduled (as set forth in the Proxy Statement), there are insufficient Buyer Voting Shares
represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the Buyer
Shareholders Meeting, or (c) by up to ten (10) Business Days in order to solicit additional proxies from shareholders in favor
of the adoption of the Transaction Proposals;
provided
, that in the event of an adjournment pursuant to clauses (a)
or (b) above, the Buyer Shareholders Meeting shall be reconvened as promptly as practicable following such time as the matters
described in such clauses have been resolved, and in no event shall the Buyer Shareholders Meeting be reconvened on a date that
is later than ten (10) Business Days prior to the Termination Date.
7.7
Debt
Financing
.
(a)
Buyer
shall, and shall cause the Debt Financing Subsidiary to, take all actions within its control that are necessary, proper or advisable
to arrange and obtain the Debt Financing on terms and conditions not materially less favorable than those described in the Debt
Commitment Letter as promptly as practicable after the date hereof, including taking all actions within its control to (i) maintain
in effect the Debt Commitment Letter, (ii) negotiate and enter into definitive agreements with respect thereto on the terms and
conditions contained in the Debt Commitment Letter (including the flex provisions) or on other terms no less favorable to Buyer,
(iii) satisfy or obtain a waiver thereof on a timely basis all conditions in the Debt Commitment Letter, (iv) assuming that all
conditions contained in the Debt Commitment Letter have been satisfied, consummate the Debt Financing at or prior to the Closing
and (v) enforce its rights under the Debt Commitment Letter.
(b)
Buyer
shall, upon the reasonable request of the Company, keep the Company reasonably informed with respect to all material activity
concerning the status of the Debt Financing contemplated by the Debt Commitment Letter and shall give the Company notice of any
material adverse change with respect to such Financing as promptly as practicable. Without limiting the generality of the foregoing,
Buyer shall give the Company prompt notice (x) of any material breach or default by any party to the Debt Commitment Letter or
any definitive agreements related to the Debt Financing, in each case of which Buyer becomes aware, (y) of the receipt of any
written notice or other written communication, in each case received from any Debt Financing Source with respect to any (1) material
breach of Buyer’s or the Debt Financing Subsidiary’s obligations under the Debt Commitment Letter or definitive agreements
related to the Debt Financing, or default, termination or repudiation by any party of the Debt Commitment Letter or definitive
agreements related to the Debt Financing or (2) material dispute between or among any parties to the Debt Commitment Letter or
definitive agreements related to the Debt Financing or any provisions of the Debt Commitment Letter, in each case, with respect
to the obligation to fund the Debt Financing or the amount of the Debt Financing to be funded at Closing or (z) if, at any time,
Buyer believes in good faith that it will not be able to obtain all or any portion of the Debt Financing on terms and conditions,
in the manner, or from the sources contemplated by the Debt Commitment Letter or definitive agreements related to the Debt Financing;
provided
that in no event shall Buyer be under any obligation to disclose any information pursuant to clauses (1) or (2)
that would waive the protection of attorney-client or similar privilege if such party shall have used reasonable best efforts
to disclose such information in a way that would not waive such privilege. As soon as reasonably practicable, but in any event
within 24 hours of the delivery by the Company to Buyer of a written request therefor, Buyer 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.
(c)
Buyer
shall have the right from time to time to amend, supplement or otherwise modify or waive its rights under the Debt Commitment
Letter, including to (i) obtain alternative sources of financing in lieu of all or a portion of the Debt Financing, including
in a private placement of securities pursuant to Rule 144A under the Securities Act, (ii) add and appoint additional arrangers,
bookrunners, underwriters, agents, lenders and similar entities, to provide for the assignment and reallocation of a portion of
the financing commitments contained therein and to grant customary approval rights to such additional arrangers and other entities
in connection with such appointments or (iii) modify pricing and implement or exercise any of the “market flex” provisions
exercised by the Lenders in accordance with the Debt Commitment Letter; provided that no such amendment, supplement, modification
or waiver shall (A) reduce the aggregate amount of available Debt Financing, to less than the amount required to consummate the
transactions contemplated by this Agreement (except to the extent there is a corresponding increase to the Equity Financing),
(B) impose new or additional conditions precedent or expand upon the conditions precedent to the Debt Financing as set forth in
the existing Debt Commitment Letter or (C) otherwise amend, supplement, modify or waive the terms of the Debt Commitment Letter
in a manner that could reasonably be expected to impede, delay or prevent the Closing. Buyer shall furnish to the Company a copy
of any amendment, modification, waiver or consent of or relating to the Debt Commitment Letter promptly upon execution thereof.
Buyer shall use its reasonable best efforts to refrain, and shall cause the Debt Financing Subsidiary to use its reasonable best
efforts to refrain, from taking, directly or indirectly, any action that could reasonably be expected to result in a failure of
any of the conditions contained in the Debt Commitment Letter or in any definitive agreement related to the Debt Financing. Buyer
shall pay, or cause to be paid, as the same shall become due and payable, all fees and other amounts that become due and payable
under the Debt Commitment Letter and the definitive agreements with respect thereto.
(d)
In
the event that any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated by the Debt Commitment
Letter (including the flex provisions) (other than as a direct and proximate result of the Company’s material breach of
any provision of this Agreement), Buyer shall take all actions within its control that are necessary, proper or advisable to arrange
and obtain any such portion from alternative sources, on terms, taken as whole, that are not materially more adverse to Buyer
or the Debt Financing Subsidiary (including after giving effect to the market flex provisions) or that are otherwise reasonably
acceptable to Buyer, as promptly as practicable following the occurrence of such event;
provided
that the terms of such
alternative financing shall not (A) impose new or additional conditions precedent or expand upon the conditions precedent to the
Debt Financing as set forth in the existing Debt Commitment Letter or (B) reduce the aggregate amount of available Debt Financing
to less than the amount required to consummate the transactions contemplated by this Agreement (together with the other sources
of Financing contemplated hereby). Buyer shall deliver to the Company true, correct and complete copies of all agreements entered
into in connection with any such alternative financing promptly following the execution thereof; provided, that Buyer shall be
permitted to redact any fee letters required to be delivered pursuant to this sentence in the same manner as contemplated by
Section
5.8(d)
.
(e)
In
furtherance of, and subject to the conditions set forth in, the provisions of this
Section 7.7
,
the Debt Commitment Letter may be amended, restated, supplemented or otherwise modified or superseded at the option of
Buyer after the date of this Agreement but prior to the Closing by instruments (the “
New or Amended Debt Commitment Letters
”)
that either amend, amend and restate, or replace the existing Debt Commitment Letter or contemplate co-investment by or financing
from one or more other or additional parties. In such event, the term “Debt Commitment Letter” as used herein shall
be deemed to include the New or Amended Debt Commitment Letters to the extent then in effect and the term “Debt Financing”
as used herein shall be deemed to include the debt financing contemplated by any such New or Amended Debt Commitment Letters.
Buyer shall furnish to the Company a copy of any New or Amended Debt Commitment Letter promptly upon execution thereof.
(f)
Buyer
acknowledges and agrees that the obtaining of any financing is not a condition to the Closing.
(g)
At
all times prior to and including the Closing Date, the Buyer shall cause the Debt Financing Subsidiary to remain a wholly-owned
Subsidiary of the Buyer.
7.8
Forward
Purchase Agreements.
(a)
Buyer
shall take all actions within its control that are necessary, proper or advisable to ensure that the FP Financing is funded at
or prior to the Closing on the terms and conditions described in the Forward Purchase Agreements, including, to the extent within
its control, (i) maintaining in effect the Forward Purchase Agreements, (ii) satisfying or obtaining a waiver thereof on a timely
basis all conditions in the Forward Purchase Agreements, (iii) consummating the FP Financing at or prior to the Closing and (iv)
enforcing its rights under the Forward Purchase Agreements, including seeking specific performance of the parties thereunder.
Buyer shall not amend, supplement or otherwise modify or waive its rights under the Forward Purchase Agreements without the prior
written consent of Seller if such amendment, supplement, modification or waiver would (1) impose new or additional conditions
precedent or expand upon the conditions precedent to the FP Financing as set forth in the existing Forward Purchase Agreements
or (2) reduce the aggregate amount of available FP Financing to less than the amount required to consummate the transactions contemplated
by this Agreement (together with the other sources of Financing contemplated hereby). Buyer shall not terminate, or assign its
rights under, the Forward Purchase Agreements without the prior written consent of Seller.
(b)
Buyer
shall give the Company prompt notice (x) of any actual or anticipated breach or default (or any circumstance or event that, with
or without notice, lapse of time or both, would reasonably be expected to give rise to any such breach or default) by any party
to any Forward Purchase Agreements or any condition which would reasonably be expected not to be satisfied and (y) of the receipt
of any written notice or other written communication, in each case received from any other party to the Forward Purchase Agreements
with respect to any (1) breach of Buyer’s obligations under any Forward Purchase Agreement or default, termination or repudiation
by any party to any of the Forward Purchase Agreements or the actual or potential failure of any conditions of the Forward Purchase
Agreements being met or (2) dispute between or among any parties to any of the Forward Purchase Agreements, in each case, with
respect to the obligation to fund the FP Financing or the amount of the FP Financing to be funded at Closing.
7.9
Equity
Financing
.
(a)
Buyer
shall take all actions within its control that are necessary, proper or advisable to ensure that the Equity Financing is funded
at or prior to the Closing on the terms and conditions described in the Equity Commitment Letters, including, to the extent within
its control, (i) maintaining in effect the Equity Commitment Letters, (ii) satisfying on a timely basis all conditions in the
Equity Commitment Letters, (iii) to the extent necessary to consummate the transactions contemplated by this Agreement, consummating
the Equity Financing contemplated by the Equity Commitment Letters at or prior to the Closing (if and to the extent required by
Section 11.15
) and (iv) enforcing its rights under the Equity Commitment Letters, including seeking specific performance
of the parties thereunder. Buyer shall not amend, supplement or otherwise modify or waive its rights under the Equity Commitment
Letters without the prior written consent of Seller if such amendment, supplement, modification or waiver would (1) impose new
or additional conditions precedent or expand upon the conditions precedent to the Equity Financing as set forth in the existing
Equity Commitment Letters or (2) reduce the aggregate amount of available Equity Financing to less than the amount required to
consummate the transactions contemplated by this Agreement (together with the other sources of Financing contemplated hereby).
Buyer shall not terminate, or assign its rights under, the Equity Commitment Letters without the prior written consent of Seller.
(b)
Buyer
shall give the Company prompt notice (x) of any actual or anticipated breach or default (or any circumstance or event that, with
or without notice, lapse of time or both, would reasonably be expected to give rise to any such breach or default) by any party
to any Equity Commitment Letter or any condition which would reasonably be expected not to be satisfied and (y) of the receipt
of any written notice or other written communication, in each case received from any Equity Financing Source with respect to any
(1) breach of Buyer’s obligations under any Equity Commitment Letter or default, termination or repudiation by any party
to any of the Equity Commitment Letters or the actual or potential failure of any conditions of the Equity Commitment Letters
being met or (2) dispute between or among any parties to any of the Equity Commitment Letters, in each case, with respect to the
obligation to fund the Equity Financing or the amount of the Equity Financing to be funded at Closing.
7.10
Trust
Account
. Upon the satisfaction (or waiver by Buyer) of the conditions set forth in
Article IX
,
and in accordance with and pursuant to the Trust Agreement, (i) at the Closing, (A) Buyer shall cause the documents, opinions
and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (B) Buyer shall make
arrangements to cause the Trustee to (1) pay as and when due all amounts payable to shareholders of Buyer holding Buyer Shares
sold in Buyer’s initial public offering who shall have previously validly elected to redeem their Buyer Shares pursuant
to the Buyer Class A Redemption and (2) promptly thereafter, pay all remaining amounts then available in the Trust Account in
accordance with this Agreement and the Trust Agreement and (ii) thereafter, the Trust Account shall terminate, except as otherwise
provided in the Trust Agreement. Buyer shall not amend, supplement or otherwise modify or waive its rights under the Trust Agreement
without the prior written consent of Seller.
7.11
Voting
Agreement
. Buyer shall not terminate, amend, supplement or otherwise modify or waive its rights under the Voting Agreement
without the prior written consent of Seller.
Article
VIII
JOINT COVENANTS
8.1
Support
of Transaction
. Without limiting any covenant contained in
Article VI
or
Article
VII
, including the obligations of Buyer with respect to the notifications, filings, reaffirmations and applications
described in
Section
6.3
and
Section
7.1
, which
obligations shall control to the extent of any conflict with the succeeding provisions of this
Section
8.1
,
but subject to the limitations set forth in
Section
7.1(c)
, Buyer and Seller shall each,
and shall each cause their respective Subsidiaries to: (a) use reasonable best efforts to assemble, prepare and file any
information (and, as needed, to supplement such information) as may be necessary to obtain as promptly as practicable all governmental
and regulatory consents required to be obtained in connection with the transactions contemplated hereby, (b) use reasonable
best efforts to obtain all material consents and approvals of third parties that any of Buyer, Seller, or their respective Affiliates
are required to obtain in order to consummate the transactions contemplated by this Agreement, and (c) take such other action
as may reasonably be necessary or as another party may reasonably request to satisfy the conditions of
Article
IX
or otherwise to comply with this Agreement and to consummate the transactions contemplated hereby as soon as practicable.
Notwithstanding the foregoing, in no event shall Seller or any of its Subsidiaries be obligated to (and without the prior written
consent of Buyer, none of Seller or any of its Subsidiaries shall) bear any expense or pay any fee (other than de minimis expenses
or fees) or grant any concessions in connection with obtaining any consents, authorizations or approvals pursuant to the terms
of any Contract to which the Company or any of its Subsidiaries is a party in connection with the consummation of the transactions
contemplated hereby.
8.2
Tax
Matters
.
(a)
Each
of Buyer and Seller shall bear 50% of any Transfer Taxes and any reasonable expenses incurred in filing necessary Tax Returns
and other documentation with respect to such Transfer Taxes. The party that has the primary obligation to do so under applicable
Law shall file all necessary Tax Returns and other documentation with respect to such Transfer Taxes and shall pay such Transfer
Taxes. The non-preparing party shall reimburse the preparing party for its 50% share of any such Transfer Taxes promptly after
request therefor (to the extent not taken into account in Closing Date Debt (as finally determined pursuant to
Section 2.5
)).
If required by applicable Law, each party shall, and shall cause its Affiliates to, join in the execution of any such Tax Returns
and other documentation.
(b)
The
parties agree that the Transaction Tax Deductions will be determined by assuming that the election to deduct 70% of success-based
fees pursuant to Internal Revenue Service Revenue Procedure 2011-29, 2011-18 Internal Revenue Bulletin 746, will be made.
(c)
Buyer
shall prepare or cause to be prepared and file or cause to be filed all Income Tax Returns for the Company and its Subsidiaries
for any Pre-Closing Tax Period due after the Closing Date. All such Tax Returns that could reasonably give rise to a refund required
to be paid to Seller pursuant to
Section 8.2(d)
shall be prepared in accordance with the past practice of the Company and
its Subsidiaries, unless otherwise required by applicable Law and Buyer shall provide drafts of such Tax Returns to Seller for
review and comment at least thirty (30) days prior to the due date for filing such Tax Returns (taking into account any applicable
extensions), or as promptly as possible after Closing if the applicable due date is within thirty (30) days after the Closing
Date. Buyer shall consider in good faith any changes to such Tax Returns as are reasonably requested by Seller.
(d)
Any
refunds (or credits obtained in lieu of refunds) of estimated Income Taxes of the Company and its Subsidiaries with respect to
any Pre-Closing Tax Period (collectively, “
Seller Refunds
”) will, to the extent provided herein, be for the
benefit of Seller except to the extent such Seller Refunds were included as an asset in Closing Date Debt (as finally determined
pursuant to
Section 2.5
), and Buyer shall pay over to Seller any such Seller Refunds within ten (10) Business Days
after the later of (i) the receipt thereof or (ii) the Determination Date, net of any out-of-pocket costs and expenses incurred
by Buyer or its Affiliates (including the Company and its Subsidiaries) in connection with obtaining such Seller Refunds (including
any Taxes imposed thereon). Buyer shall reasonably cooperate, and cause the Company and its Subsidiaries to cooperate, in obtaining
any Tax refund (or credit in lieu thereof) that Seller reasonably believes should be available, including through filing appropriate
forms and amended returns with the applicable taxing authority. For the avoidance of doubt, this
Section 8.2(d)
shall not
apply to the 2016 Tax Refund, which shall be for the benefit of Buyer.
(e)
For
purposes of determining the portion of any Taxes for a Straddle Period that are properly includible in Specified Current Taxes
and for purposes of determining any Seller Refunds, the taxable year of the Company and its Subsidiaries shall be deemed to end
with the Closing Date. For purposes of computing Specified Current Taxes and the amount payable pursuant to Section 8.2(d), the
taxable year of any Subsidiary or former Subsidiary of the Company (or any of its Subsidiaries) that is a “controlled foreign
corporation” (as defined in the Code) shall be deemed to have closed on the Closing Date, including for purposes of computing
any inclusion under sections 951 and 951A of the Code.
(f)
Except
as otherwise required by Law, the parties hereto agree to treat for all Tax purposes all payments under this
Section 8.2
as adjustments to the Closing Cash Consideration.
8.3
Notification
.
Between the date of this Agreement and the Closing Date, Seller shall give prompt notice to Buyer, and Buyer shall give prompt
notice to Seller, (i) of any notice or other communication received by such party from any Governmental Authority in connection
with the transactions contemplated by this Agreement or from any Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this Agreement, (ii) of any Actions relating to or otherwise affecting
such party or any of its Affiliates which relate to the transactions contemplated by this Agreement and (iii) any matter (including
a breach of any representation, warranty, covenant or agreement contained in this Agreement) that would reasonably be expected
to lead to the failure to satisfy any of the conditions to Closing in
Article IX
.
Article
IX
CONDITIONS TO OBLIGATIONS
9.1
Conditions
to Obligations to Consummate Transactions
. The obligations of Buyer and Seller to consummate, or cause to be consummated,
the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions, any one or more of
which may be waived (if legally permitted) in writing by all of such parties.
(a)
All
necessary permits, approvals, clearances, and consents of or filings with any Regulatory Consent Authorities or as specified in
Schedule 9.1
shall have been procured or made, as applicable.
(b)
There
shall not be in force any Governmental Order, statute, rule or regulation enjoining or prohibiting the consummation of the transactions
contemplated by this Agreement.
(c)
The
Buyer Shareholders Approval shall have been obtained.
9.2
Conditions
to Obligations of Buyer
. The obligations of Buyer to consummate, or cause to be consummated, the transactions contemplated
by this Agreement are subject to the satisfaction of the following additional conditions, any one or more of which may be waived
(if legally permitted) in writing by Buyer.
(a)
Representations
and Warranties.
(i)
Each
of the representations and warranties of Seller and the Company contained in this Agreement (without giving effect to any “Material
Adverse Effect” or similar materiality qualification therein), other than the representations and warranties set forth in
Section 3.1
(Corporate Organization of Seller),
Section 3.2
(Due Authorization),
Section 3.3(a)
(No Conflict),
Section 3.5
(Ownership of Shares),
Section 4.1
(Corporate Organization of the Company),
Section 4.2
(Subsidiaries),
Section 4.3
(Due Authorization),
Section 4.4(a)
(No Conflict),
Section 4.6
(Capitalization),
Section 4.16
(Brokers’ Fees) and
Section 4.20(a)
(No Material Adverse Effect), shall be true and correct as of the Closing
Date, as if made anew at and as of that time, except with respect to representations and warranties which speak as to an earlier
date, which representations and warranties shall be true and correct at and as of such date, except for, in each case, any inaccuracy
or omission that has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(ii)
The
representations and warranties of the Company contained in
Section 4.20(a)
(No Material Adverse Effect) shall be true and
correct in all respects as of the date that they expressly speak.
(iii)
Each
of the representations and warranties of Seller and the Company contained in
Section 3.1
(Corporate Organization of Seller),
Section 3.2
(Due Authorization),
Section 3.3(a)
(No Conflict),
Section 3.5
(Ownership of Shares),
Section
4.1
(Corporate Organization of the Company),
Section 4.2
(Subsidiaries),
Section 4.3
(Due Authorization),
Section
4.4(a)
(No Conflict),
Section 4.6
(Capitalization) and
Section 4.16
(Brokers’ Fees) (without giving effect
to any “Material Adverse Effect” or similar materiality qualification therein) shall be true and correct in all material
respects as of Closing Date, as if made anew at and as of that time (except to the extent that any such representation and warranty
speaks expressly as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier
date).
(b)
Each
of the covenants of Seller to be performed as of or prior to the Closing shall have been performed in all material respects.
(c)
Since
the date of this Agreement, there shall not have occurred any event, change, occurrence, effect, development, condition, circumstance,
state of facts or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
(d)
Seller
shall have delivered to Buyer a certificate signed by an officer of Buyer, dated the Closing Date, certifying that, to the knowledge
and belief of such officer, the conditions specified in
Section 9.2(a)
,
Section 9.2(b)
and
Section 9.2(c)
have been fulfilled.
9.3
Conditions
to the Obligations of Seller
. The obligation of Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following additional conditions, any one or more of which may be waived (if legally permitted) in writing
by Seller.
(a)
Each
of the representations and warranties of Buyer contained in this Agreement (without giving effect to any materiality qualification
therein) shall be true and correct in all respects as of the Closing Date, as if made anew at and as of that time, except with
respect to representations and warranties which speak as to an earlier date, which representations and warranties shall be true
and correct at and as of such date, except for, in each case, any inaccuracy or omission that would not reasonably be expected
to materially adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement.
(b)
Each
of the covenants of Buyer to be performed as of or prior to the Closing shall have been performed in all material respects.
(c)
Buyer
shall have delivered to Seller a certificate signed by an officer of Buyer, dated the Closing Date, certifying that, to the knowledge
and belief of such officer, the conditions specified in
Section 9.3(a)
and
Section 9.3(b)
have been fulfilled.
Article
X
TERMINATION/EFFECTIVENESS
10.1
Termination
.
This Agreement may be terminated and the transactions contemplated hereby abandoned:
(a)
by
written consent of Seller and Buyer;
(b)
prior
to the Closing, by written notice to Seller from Buyer if (i) there is any breach of any representation, warranty, covenant or
agreement on the part of Seller set forth in this Agreement, such that the conditions specified in
Section 9.2(a)
or
Section
9.2(b)
would not be satisfied at the Closing (a “
Terminating Seller Breach
”), except that, if such Terminating
Seller Breach is curable by Seller through the exercise of its reasonable best efforts, then, for a period of up to 30 days (or
any shorter period of the time that remains between the date Buyer provides written notice of such violation or breach and the
Termination Date) after receipt by the Company of notice from Buyer of such breach, but only as long as Seller continues to use
its reasonable best efforts to cure such Terminating Seller Breach (the “
Seller Cure Period
”), such termination
shall not be effective, and such termination shall become effective only if the Terminating Seller Breach is not cured within
the Seller Cure Period, (ii) the Closing has not occurred on or before July 12, 2019 (the “
Termination Date
”),
or (iii) the consummation of the transactions contemplated by this Agreement is permanently enjoined or prohibited by the terms
of a final, non-appealable Governmental Order or a statute, rule or regulation;
provided
that the right to terminate this
Agreement under subsection (ii) shall not be available if Buyer’s failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Closing to occur on or before such date.
(c)
prior
to the Closing, by written notice to Buyer from Seller if (i) there is any breach of any representation, warranty, covenant or
agreement on the part of Buyer set forth in this Agreement, such that the conditions specified in
Section 9.3(a)
or
Section
9.3(b)
would not be satisfied at the Closing (a “
Terminating Buyer Breach
”), except that, if any such Terminating
Buyer Breach is curable by Buyer through the exercise of its reasonable best efforts, then, for a period of up to 30 days (or
any shorter period of the time that remains between the date Buyer provides written notice of such violation or breach and the
Termination Date) after receipt by Buyer of notice from Seller of such breach, but only as long as Buyer continues to exercise
such reasonable best efforts to cure such Terminating Buyer Breach (the “
Buyer Cure Period
”), such termination
shall not be effective, and such termination shall become effective only if the Terminating Buyer Breach is not cured within the
Buyer Cure Period, (ii) the Closing has not occurred on or before the Termination Date, (iii) Buyer withdraws its Board Recommendation,
(iv) the approval of Buyer’s shareholders in respect of the Transaction Proposals is not obtained at the Buyer’s Shareholders
Meeting following Buyers initial call of such Buyer’s Shareholders Meeting (unless the Buyer’s Shareholders Meeting
is adjourned due to circumstances specified in clause (a) in the fifth sentence of
Section 7.6
, in which case Seller shall
have the ability to terminate this Agreement if the approval of Buyer’s shareholders in respect of the Transaction Proposals
is not obtained at the Buyer Shareholder Meeting within ten (10) calendar days following the dissemination of any supplement or
amendment to the Proxy Statement) or (v) the consummation of the transactions contemplated by this Agreement is permanently
enjoined or prohibited by the terms of a final, non-appealable Governmental Order or a statute, rule or regulation;
provided
that the right to terminate this Agreement under subsections (ii) or (iv) shall not be available if Seller’s failure
to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or
before such date;
(d)
by
Seller by giving written notice to Buyer at any time prior to the Closing if (i) Buyer fails to consummate the Closing on the
date on which the Closing is required to take place pursuant to
Section 2.2
, (ii) all of the conditions set forth in
Section
9.1
and
Section 9.2
(other than conditions which are to be satisfied by actions taken at the Closing, but which conditions
would be satisfied if the Closing were to occur on the date of such notice) have been satisfied, (iii) Seller has indicated in
writing to Buyer that all of the conditions set forth in
Section 9.1
and
Section 9.3
(other than those conditions
that by their nature are to be satisfied by actions taken at the Closing) have been satisfied or have been waived by Seller, (iv) Seller
is prepared to consummate the Closing, and (v) Buyer fails to consummate the Closing within ten (10) Business Days of receipt
of such notice; or
(e)
by
Buyer or Seller by giving written notice to the other Party if the Buyer Shareholder Approval is not obtained upon a vote duly
taken thereon at the Buyer’s Shareholder Meeting.
10.2
Effect
of Termination
. Except as otherwise set forth in this
Section
10.2
, in the event
of the termination of this Agreement pursuant to
Section
10.1
, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party hereto or its respective Affiliates, officers,
directors or stockholders, other than liability of Seller to Buyer for any material breach of this Agreement by Seller occurring
prior to such termination. The provisions of
Sections
10.2
,
11.5
,
11.6
,
11.7
,
11.12
,
11.14
and
11.16
(collectively, the “
Surviving
Provisions
”) and the Confidentiality Agreement, and any other Section or Article of this Agreement referenced in the
Surviving Provisions which are required to survive in order to give appropriate effect to the Surviving Provisions, shall in each
case survive any termination of this Agreement.
Article
XI
MISCELLANEOUS
11.1
Survival
.
The covenants and agreements of Seller, the Company and Buyer contained in this Agreement that are required to be performed (a)
at or prior to Closing shall terminate at, and not survive, the Closing and (b) after the Closing shall continue in full force
and effect in accordance with their respective terms. The representations and warranties of Seller, the Company and Buyer contained
in this Agreement shall terminate at, and not survive, the Closing. Prior to Closing, except for remedies described in
Article
X
and
Section
11.15
and except in the case of fraud, the sole and exclusive
remedy of any Party arising out of or in connection with any breach of inaccuracy of any representation or warranty in this Agreement
or any certificate or instrument delivered pursuant hereto shall be (
provided
that the conditions set forth in
Section
9.2(a)
or
Section
9.3(a)
, as applicable, shall
not have been satisfied or waived) not to consummate the transactions contemplated by this Agreement. Following the Closing, except
in the case of fraud, there shall be no remedy for (i) any breach or inaccuracy of any representation or warranty in this Agreement
or any certificate or instrument delivered pursuant hereto or (ii) any breach of any covenant or other agreement in this Agreement,
other than covenants and agreements that by their terms are required to be performed after Closing. Notwithstanding anything to
the contrary herein, nothing herein shall limit the recourse of Buyer, Seller and the Company in respect of claims for fraud.
11.2
Waiver
.
Any Party to this Agreement may, at any time prior to the Closing, by action taken by its board of directors, or officers thereunto
duly authorized, waive (in a writing signed by such Party) compliance with any of the terms or conditions of this Agreement applicable
to another Party or agree to an amendment or modification to this Agreement in the manner contemplated by
Section
11.11
.
No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided
by Law.
11.3
Notices
.
All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when
delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail
return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service,
or when delivered by fax or email (in each case in this clause or (iv), solely if receipt is confirmed), addressed as follows:
(b)
If
to Seller and Company, to:
Rack
Holdings Inc.
c/o
Rhône Partners IV L.P.
630 5th Avenue, 27th Floor
New York, NY 10016
Attn: Eytan Tigay
Fax No.: (212) 218-6789
Email: Tigay@RhoneGroup.com
and
to
Rack
Holdings Inc.
c/o
Rhône Partners IV L.P
630 5th Avenue, 27th Floor
New York, NY 10016
Attn: M. Allison Steiner
Fax No.: (212) 218-6789
Email: Steiner@RhoneGroup.com
with
copies to:
Sullivan
& Cromwell LLP
125 Broad Street
New York, New York 10004
Attn: Richard A. Pollack
Fax
No.: (212) 291-9116
Email: pollackr@sullcrom.com
(c)
If
to Buyer, prior to the Closing, to:
One
Madison Corporation
3
East 28
th
Street, 8
th
Floor
New
York, NY 10016
Attn:
David Murgio
Email:dmurgio@onemadisongroup.com
With
copies to:
Davis
Polk & Wardwell LLP
450
Lexington Avenue
New
York, New York 10017
Attn:
Lee Hochbaum
Email:
lee.hochbaum@davispolk.com
or
to such other address or addresses as the parties may from time to time designate in writing.
11.4
Assignment
.
No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties;
provided
that Buyer may, without the prior written consent of any other party, assign this Agreement or any of its rights, interests
or obligations under this Agreement to one or more of its Affiliates or, after the Closing, may assign all or any portion of its
rights, interests or obligations hereunder to any Person (including to any financing source as collateral to any acquirer of the
Company or its business), in each case without the consent of any other Parties (but such assignment shall not relieve Buyer of
any of its obligations hereunder). Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
11.5
Rights
of Third Parties
. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give
any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement;
provided
,
however
,
that, notwithstanding the foregoing (a) in the event the Closing occurs, the present and former officers and directors of
the Company (and their successors, heirs and representatives) are intended third-party beneficiaries of, and may enforce,
Section
7.2
, (b) each Debt Financing Source shall be an express third party beneficiary with respect to the DFS Provisions and
(c) the Persons specified in
Section
11.16
shall be express third party beneficiaries
of such Section.
11.6
Expenses
.
Except as otherwise provided herein, each party hereto shall bear its own expenses incurred in connection with this Agreement
and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal
counsel, financial advisers and accountants;
provided
,
however
, that the fees and expenses of the Independent Accountant,
if any, shall be paid in accordance with
Section
2.5
;
provided
,
further
,
that Buyer shall be responsible for reasonable and documented out-of-pocket fees, costs and expenses of Seller, the Company and
their Subsidiaries (x) specified in Section 6.9(c), (y) incurred by the legal and accounting advisers of the Seller and the Company
related to the preparation of the Proxy Statement and the preparation of the financial statements specified in Section 6.7(e)
and (z) otherwise incurred in connection with
Section 6.7
;
provided
that (1) with respect to clause (z), such actions
have been requested to be taken in advance by Buyer and (2) with respect to clauses (x), (y) and (z), (I) Buyer approved in writing
the applicable fees, cost or expenses in advance of such fees, costs and expenses being incurred (such approval not to be unreasonably
withheld), (II) such fees, costs and expenses are incurred on the same cost basis as any similar fees, costs and expenses borne
by Seller (including reflecting any applicable discounts or negotiated rates charged by the applicable service provider to Seller
and its Affiliates) and (III) Buyer is provided with reasonably detailed itemized invoices (including time entry details for service
providers billing by increments of time). Within ten (10) Business Days following the date of this Agreement, Buyer shall deposit
$1,000,000 into the bank account of an independent third party under an escrow or similar arrangement (the “
Escrow Account
”)
on terms reasonably satisfactory to Seller and Buyer that will be available to make payments by Buyer pursuant to, and subject
to the terms of, this
Section 11.6
. Buyer shall contribute funds from time to time to the Escrow Account to ensure that
such account holds at least $250,000 until all fees, costs and expenses are fully paid and settled pursuant to this
Section
11.6
. Any interest earned on amounts subject to the Escrow Account will be for the benefit of Buyer, and any amounts remaining
under this Escrow Account after all fees, costs and expenses are fully paid and settled pursuant to this
Section 11.16
will be returned to Buyer. Upon the occurrence of the Closing, the Escrow Account shall terminate and any amounts remaining under
the Escrow Account will be returned to Buyer, it being understood that the termination of the Escrow Account shall not release
Buyer from its obligations under this
Section 11.6
.
11.7
Governing
Law
.
(a)
This
Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated
hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles
or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another
jurisdiction.
(b)
Notwithstanding
anything to the contrary contained herein, any proceeding of any kind whatsoever, including a counterclaim, cross-claim, or defense,
regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract
or tort, or whether at law or in equity, or otherwise under any legal or equitable theory, that may be based upon, arising out
of or related to the Debt Commitment Letter and/or Debt Financing (including any action, suit, claim, investigation, counterclaim
or proceeding against or involving any Debt Financing Source, including their respective successors and permitted assigns) shall
be governed by and construed and interpreted in accordance with the laws of the State of New York without regard to choice of
law or conflicts of law rules or principles of the State of New York or any other jurisdiction that would cause the laws of any
jurisdiction other than the State of New York to apply.
11.8
Captions;
Counterparts
. The captions in this Agreement are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.9
Schedules
and Annexes
. The Schedules and Annexes referenced herein are a part of this Agreement as if fully set forth herein. All references
herein to Schedules and Annexes shall be deemed references to such parts of this Agreement, unless the context shall otherwise
require. Any disclosure made by a party in any section or subsection of the Schedules shall be deemed to be a disclosure with
respect to any other section or subsection to which the relevance of such disclosure is reasonably apparent based on the face
of such disclosure. Certain information set forth in the Schedules is included solely for informational purposes and may not be
required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment
that such information is required to be disclosed in connection with the representations and warranties made in this Agreement,
nor shall such information be deemed to establish a standard of materiality.
11.10
Entire
Agreement
. This Agreement (together with the Schedules and Annexes to this Agreement), that certain Confidentiality Agreement,
dated as of July 11, 2018 by and between Buyer and Seller (the “
Confidentiality Agreement
”) and the other Transaction
Documents, constitute the entire agreement among the parties relating to the transactions contemplated hereby and supersede any
other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any
of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants,
understandings, agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the parties
except as expressly set forth in this Agreement, the Confidentiality Agreement and the other Transaction Documents.
11.11
Amendments
.
This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the
same manner as this Agreement and which makes reference to this Agreement. Notwithstanding anything to the contrary in the foregoing,
Section
10.2
,
Section
11.2
,
Section
11.4
,
Section
11.5
,
Section
11.7
, this
Section
11.11
,
Section
11.14
and
Section
11.16
(together, the “
DFS Provisions
”) or defined terms used therein may not be amended, modified, waived,
terminated or otherwise modified in a manner adverse to the Debt Financing Sources without the prior written consent of the Debt
Financing Sources that are party to the Debt Commitment Letter (including pursuant to any joinder or amendment thereto or thereof)
and no other amendment, waiver, termination or other modification to any other provision of this Agreement that would have the
substantive effect of amending, waiving or modifying any of the DFS Provisions in a manner adverse to the Debt Financing Sources
shall be effective without the consent of the Debt Financing Sources that are party to the Debt Commitment Letter (including pursuant
to any joinder or amendment thereto or thereof).
11.12
Publicity
.
All press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement,
and the method of the release for publication thereof, shall be subject to the prior mutual approval of Buyer and Seller which
approval shall not be unreasonably withheld by any party, except for any press releases or other public communications required
by applicable Law or any rules of, or listing agreement with, any national securities exchange (in which case, the Party proposing
to issue such press release or other public communication shall to the extent reasonably permissible under such applicable Law,
rules or listing agreement and reasonably practicable under the circumstances consult in good faith with the other Party prior
to the issuance thereof).
11.13
Severability
.
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is,
to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions
necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and,
to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held
invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.
11.14
Jurisdiction;
WAIVER OF TRIAL BY JURY
.
(a)
Subject
to
Section 11.7
, any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby
may be brought in the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the
State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal
court of the United States of America sitting in the State of Delaware), and each of the parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction,
venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such
court, and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby
in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted
by Law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case,
to enforce judgments obtained in any Action brought pursuant to this
Section 11.14
. Notwithstanding the foregoing, each
party hereto agrees that it will not bring or support any action, cause of action, claim, cross-claim or third-party claim of
any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against the Debt Financing
Sources in any way relating to this Agreement, including any dispute arising out of the Debt Financing, the Debt Commitment Letter
or the performance thereof or otherwise, in any forum other than the Supreme Court of the State of New York, County of New York,
or, if under applicable Law exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern
District of New York (and of the appropriate appellate courts therefrom). EACH OF THE PARTIES HERETO (AND IN THE CASE OF THE BUYER,
ON BEHALF OF ITSELF AND THE BUYER AND ITS AFFILIATES) HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING WITH RESPECT TO THE
DEBT COMMITMENT LETTER AND/OR THE DEBT FINANCING OR RELATING TO ANY DEBT FINANCING SOURCE).
(b)
Notwithstanding
anything to the contrary in this
Section 11.14
, each party hereto hereby submits itself to the exclusive jurisdiction of
the Supreme Court of the State of New York sitting in the Borough of Manhattan in the City of New York and the United States District
Court for the Southern District of New York and any appellate courts thereof with respect to any suit, action or proceeding against
any Debt Financing Source in connection with this Agreement, the Debt Financing, the Debt Commitment Letter and the transactions
contemplated hereby and thereby, whether at law or in equity and whether in tort, contract or otherwise, and hereby agrees that
it will not bring or support any such suit, action or proceeding in any other forum.
11.15
Enforcement
.
(a) Subject to the terms of this
Section
11.15
, the Parties agree that irreparable damage
for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not
perform their obligations under the provisions of this Agreement (including failing to take such actions as are required of them
hereunder to consummate this Agreement) in accordance with its specified terms or otherwise breach such provisions;
provided
that it is acknowledged and agreed by each Party that Seller and the Company shall be entitled to specific performance of
Buyer’s obligations to cause the Equity Financing and the FP Financing to be funded and to consummate the Closing only in
the event that each of the following conditions has been satisfied: (i) all of the conditions set forth in
Sections
9.1
and
9.2
have been satisfied (other than those conditions that, by their terms,
are to be satisfied at the Closing but which conditions are then capable of being satisfied), (ii) the other sources of Financing
contemplated hereby have been funded or will be funded at the Closing if the Equity Financing and the FP Financing are funded
at the Closing, (iii) Buyer is required to consummate the Closing in accordance with
Section
2.2
,
and (iv) Seller and the Company have irrevocably confirmed in writing that (A) all conditions to the Closing set forth in
Sections
9.1
and
9.3
have been satisfied or are waived by
Seller and (B) if specific performance is granted and the Equity Financing, the FP Financing and the other sources of Financing
contemplated hereby are funded, then the Closing will occur. For the avoidance of doubt, the requirements set forth in the foregoing
proviso shall only apply and be a condition to Seller and the Company’s right to specific performance of Buyer’s obligations
to cause the Equity Financing and the FP Financing to be funded and to consummate the Closing and shall not apply or be a condition
to Seller and the Company’s right to specific performance of Buyer’s other obligations hereunder.
(b)
The
Parties acknowledge and agree that, subject to the terms of this
Section 11.15
, (i) the Parties shall be entitled
to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, without proof of damages, prior to the valid termination of this Agreement in accordance with
Section 10.1
, this being in addition to any other remedy to which they are entitled under this Agreement, and (ii) the
right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, the
Parties would not have entered into this Agreement. The Parties hereby further acknowledge and agree that prior to Closing, the
Seller and the Company shall be entitled to seek specific performance to enforce specifically the terms and provisions of, and
to prevent or cure breaches of,
Section 7.7
(Debt Financing),
Section 7.8
(Forward Purchase Agreements),
Section
7.9
(Equity Financing) and Section 7.10 (Trust Account), including by compelling Buyer to enforce (or cause the Debt Financing
Subsidiary to enforce) its rights under the Debt Commitment Letter, the Forward Purchase Agreements, the Equity Commitment Letters
and the Trust Agreement through the commencement of litigation and other legal actions against the counterparties of the Debt
Commitment Letter, the counterparties of the Forward Purchase Agreements, the Equity Financing Sources and the Trustee, as applicable.
Each Party agrees that it will not oppose the granting in accordance with the terms hereof of specific performance and other equitable
relief on the basis that the other Parties have an adequate remedy at Law or that an award of specific performance is not an appropriate
remedy for any reason at Law or equity. The Parties acknowledge and agree that any party seeking an injunction in accordance with
the terms hereof to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement
in accordance with this
Section 11.15
shall not be required to provide any bond or other security in connection with any
such injunction. In no event shall Seller or the Company be entitled to, or permitted to seek, specific performance in respect
of any Equity Financing or FP Financing source, and nor shall there be any right of Seller or the Company to cause Buyer or the
Debt Financing Subsidiary to, or any obligation of Buyer or the Debt Financing Subsidiary to, enforce specifically any of its
or their respective rights under any Equity Commitment Letters or the Forward Purchase Agreements unless the conditions specified
in clauses (i) – (iv) in
Section 11.15(a)
are satisfied.
11.16
Non-Recourse
.
(a)
Without
limiting the rights of the Parties hereunder, this Agreement may only be enforced against, and any claim or cause of action based
upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the entities
that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect
to such party. Without limiting the rights of the Parties hereunder, except to the extent a named party to this Agreement (and
then only to the extent of the specific obligations undertaken by such named party in this Agreement), (i) no past, present
or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative
or Affiliate of any named party to this Agreement or any Equity Financing Sources and (ii) no past, present or future director,
officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate
of any of the foregoing shall have any direct liability (whether in contract, tort, at law or in equity or otherwise) for any
one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of
the Parties under this Agreement of or for any claim based on, arising out of, or related to this Agreement, the Debt Financing,
the Debt Commitment Letter or the transactions contemplated hereby and thereby, it being understood that this
Section 11.16
shall not limit any liability or obligations of (A) the Debt Financing Sources to Buyer (or to the Debt Financing Subsidiary)
pursuant to the Debt Commitment Letter, (B) the Forward Purchasers to Buyer pursuant to the Forward Purchase Agreements or (C)
the Equity Financing Sources to Buyer pursuant to the Equity Commitment Letters, nor prevent the Company from seeking specific
performance by Buyer of its obligations hereunder, including under
Sections 7.7
,
7.8
and
7.9
.
(b)
Notwithstanding
anything to the contrary contained in this
Section 11.16
, each of Seller and the Company (on behalf of itself and its Affiliates
and each officer, director, employee, member, manager, partner, controlling person, advisor, attorney, agent and representative
thereof) (i) hereby waives any claims or rights against any Debt Financing Source relating to or arising out of this Agreement,
the Debt Financing, the Debt Commitment Letter and/or the transactions contemplated hereby and thereby, whether at law or in equity
and whether in tort, contract or otherwise and (ii) hereby agrees to cause any suit, action or proceeding asserted against any
Debt Financing Source by or on behalf of Seller, the Company or any of their respective Affiliates or any officer, director, employee,
member, manager, partner, controlling person, advisor, attorney, agent and representative thereof in connection with this Agreement,
the Debt Financing, the Debt Commitment Letter, and the transactions contemplated hereby and thereby to be dismissed or otherwise
terminated. In furtherance and not in limitation of the foregoing waivers and agreements, it is acknowledged and agreed that no
Debt Financing Source shall have any liability for any claims or damages to Seller in connection with this Agreement, the Debt
Financing, the Debt Commitment Letter and the transactions contemplated hereby and thereby. Notwithstanding the foregoing, nothing
in this
Section 11.16(b)
shall in any way limit or modify the rights of Buyer or the Debt Financing Subsidiary under
this Agreement or the Debt Commitment Letter or the obligations of any Debt Financing Source under the Debt Commitment Letter
owing to Buyer or the Debt Financing Subsidiary.
11.17
Acknowledgement
and Waiver
.
(a)
It
is acknowledged by each of the parties hereto that Seller and the Company have retained Sullivan & Cromwell LLP (“
S&C
”)
to act as their counsel in connection with the transactions contemplated hereby and that S&C has not acted as counsel for
any other Person in connection with the transactions contemplated hereby for conflict of interest or any other purposes. Buyer
and the Company agree that any attorney-client privilege attaching as a result of S&C’s representation of the Company
and Seller related to the preparation for, and negotiation and consummation of, the transactions contemplated by this Agreement,
including all privileged communications among S&C and the Company, Seller and/or their respective Affiliates preparation for,
and negotiation and consummation of, the transactions contemplated by this Agreement, shall survive the Closing and shall remain
in effect. Furthermore, effective as of the Closing, (i) all privileged communications (and privileged materials relating thereto)
between the Company and its Subsidiaries and S&C related to the preparation for, and negotiation and consummation of, the
transactions contemplated by this Agreement are hereby assigned and transferred to Seller, (ii) the Company and its Subsidiaries
hereby release all of their respective rights and interests to and in such communications and related materials and (iii) the
Company and its Subsidiaries hereby release any right to assert or waive any privilege related to the communications referenced
in this
Section 11.17
the Company and its Subsidiaries acknowledge and agree that all such rights shall reside with Seller.
The Parties agree that the foregoing assignment, release and waiver shall not extend to any communications or related materials
not related to the preparation for, and negotiation and consummation of, the transactions contemplated by this Agreement.
(b)
Buyer
and the Company agree that, notwithstanding any current or prior representation of the Company by S&C, after Closing, S&C
shall be allowed to represent Seller or any of its respective Affiliates in any matters and disputes adverse to Buyer or the Company
that either is existing on the date hereof or arises in the future and relates to this Agreement and the transactions contemplated
hereby; and Buyer and the Company hereby waive any conflicts or claim of privilege that may arise in connection with such representation.
Further, Buyer and the Company agree that, in the event that a dispute arises after Closing between Buyer or the Company and Seller
or any of its respective Affiliates, S&C may represent Seller or such Affiliate in such dispute even though the interests
of Seller or such Affiliate may be directly adverse to Buyer or the Company and even though S&C may have represented the Company
in a matter substantially related to such dispute.
(c)
Buyer
acknowledges that any advice given to or communication with Seller or any of its respective Affiliates (other than the Company)
shall not be subject to any joint privilege and shall be owned solely by Seller and any of its Affiliates. Buyer and the Company
each hereby acknowledge that each of them have had the opportunity to discuss and obtain adequate information concerning the significance
and material risks of, and reasonable available alternatives to, the waivers, permissions and other provisions of this Agreement,
including the opportunity to consult with counsel other than S&C.
(d)
Notwithstanding
the foregoing, none of Buyer, the Company or any of their Subsidiaries is waiving any privilege (including related to the preparation
for, and negotiation and consummation of, the transactions contemplated by this Agreement) in connection with any Action, and
the foregoing shall not limit or otherwise affect Buyer’s the Company’s or any of its Subsidiaries’ rights to
assert any privilege with respect to any communications or related materials referred to in this
Section 11.17
, against
any Person other than Seller and its Affiliates.
11.18
Trust
Account Waiver
. The Company acknowledges that Buyer is a blank check company with the powers and privileges to effect a Business
Combination. The Company further acknowledges that, as described in the prospectus dated January 19, 2018 (the “
Prospectus
”)
available as part of the Buyer Reports at www.sec.gov, substantially all of Buyer’s assets consist of the cash proceeds
of Buyer’s initial public offering and private placements of its securities and substantially all of those proceeds have
been deposited in the Trust Account for the benefit of Buyer, certain of its public shareholders and the underwriters of Buyer’s
initial public offering. The Company acknowledges that it has been advised by Buyer that, except with respect to interest earned
on the funds held in the Trust Account that may be released to Buyer to pay its Income Taxes, the Trust Agreement provides that
cash in the Trust Account may be disbursed only (i) if Buyer completes the transactions which constitute a Business Combination,
then to those Persons and in such amounts as described in the Prospectus; and (ii) if Buyer fails to complete a Business
Combination within the allotted time period and liquidates, subject to the terms of the Trust Agreement, to Buyer in limited amounts
to permit Buyer to pay the costs and expenses of its liquidation and dissolution, and then to Buyer’s public shareholders.
For and in consideration of Buyer entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged,
the Company hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or
to any monies in the Trust Account and agree not to seek recourse against the Trust Account or any funds distributed therefrom
as a result of, or arising out of, this Agreement and any negotiations, contracts or agreements with Buyer;
provided
,
however
,
that nothing in this
Section
11.18
shall amend, limit, alter, change, supersede or otherwise
modify the right of Seller and the Company to (a) bring any action or actions for specific performance, injunctive and/or other
equitable relief (including, subject to
Section 11.15
, the right of the Company to compel specific performance by Buyer
of its obligations under this Agreement) or (b) bring or seek a claim for damages against Buyer, or any of its successors or assigns,
for any breach of this Agreement (but such claim shall not be against the Trust Account or any funds distributed from the Trust
Account to holders of Buyer Shares in accordance with Buyer Articles of Association and the Trust Agreement).
IN
WITNESS WHEREOF the parties have hereunto caused this Agreement to be duly executed as of the date hereof.
|
One Madison Corporation
|
|
|
|
By:
|
/s/ Omar M. Asali
|
|
Name:
|
Omar M. Asali
|
|
Title:
|
Chairman and Chief Executive Officer
|
|
|
|
|
RACK HOLDINGS L.P.
|
|
|
|
By:
|
/s/ Eytan Tigay
|
|
Name:
|
Eytan Tigay
|
|
Title:
|
Authorized Signatory
|
|
|
|
|
RACK HOLDINGS INC.
|
|
|
|
By:
|
/s/ Eytan Tigay
|
|
Name:
|
Eytan Tigay
|
|
Title:
|
Authorized Signatory
|
[
Signature Page to Stock Purchase Agreement
]
Annex
A
FOREIGN
INVESTMENT IN REAL PROPERTY TAX ACT CERTIFICATION
PURSUANT
TO SECTION 1445 OF THE INTERNAL REVENUE CODE
Transferor’s
Certification of Non-Foreign Status
Section
1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title
to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform
the transferee, that withholding of tax is not required upon the disposition of a U.S. real property interest by Rack Holdings
L.P., a Delaware limited partnership (the “
Transferor
”), the undersigned hereby certifies the following on behalf
of the Transferor:
1. The
Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations);
2. The
Transferor is not a disregarded entity as defined in Treasury Regulations § 1.1445-2(b)(2)(iii);
3. The
Transferor’s U.S. employer identification number is: 47-1899666; and
4. The
Transferor’s office address is:
12
E. 49
th
Street, 20
th
Floor
New
York, NY
10017
The
Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.