Exhibit 10.1

 

Execution Version

 

SUBSCRIPTION AGREEMENT

 

BY AND BETWEEN

 

THE CHEESECAKE FACTORY INCORPORATED

 

AND

 

RC CAKE HOLDINGS LLC

 

Dated as of April 20, 2020

 

 

 

 

TABLE OF CONTENTS

 

    Page       Article I PURCHASE AND SALE OF PURCHASED SHARES 1      
Section 1.1 Purchase and Sale 1 Section 1.2 Closing 1 Section 1.3 Commitment Fee
2       Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2      
Section 2.1 Organization and Power 2 Section 2.2 Authorization, Etc. 2
Section 2.3 Government Approvals 3 Section 2.4 Authorized and Outstanding Stock
3 Section 2.5 Subsidiaries 4 Section 2.6 Private Placement 4 Section 2.7 SEC
Documents; Financial Information 5 Section 2.8 Internal Control Over Financial
Reporting 5 Section 2.9 Disclosure Controls and Procedures 5 Section 2.10
Litigation 6 Section 2.11 Compliance with Laws; Permits 6 Section 2.12 Taxes 6
Section 2.13 Employee Matters 6 Section 2.14 Environmental Matters 7
Section 2.15 Registration Rights 7 Section 2.16 Investment Company Act 7
Section 2.17 Nasdaq 7 Section 2.18 No Brokers or Finders 7 Section 2.19 Illegal
Payments; FCPA Violations 7 Section 2.20 Economic Sanctions 8 Section 2.21 No
Additional Representations 8       Article III REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER  8       Section 3.1 Organization and Power 8 Section 3.2
Authorization, Etc. 9 Section 3.3 Government Approvals 9 Section 3.4 Investment
Representations 9 Section 3.5 No Prior Ownership 10 Section 3.6 No Brokers or
Finders 10 Section 3.7 ERISA 10 Section 3.8 No Additional Representations 11

 

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Article IV COVENANTS OF THE PARTIES 11       Section 4.1 Board of Directors 11
Section 4.2 Restrictions on Transfer 12 Section 4.3 Restrictive Legends 13
Section 4.4 Standstill 14 Section 4.5 Hedging Transactions 15 Section 4.6 Use of
Proceeds 15 Section 4.7 Confidentiality 15 Section 4.8 Financial Statements and
Other Information 16 Section 4.9 Certain New Securities 17 Section 4.10 Filings;
Other Actions 19 Section 4.11 Voting Agreement 20 Section 4.12 Tax Matters 20
Section 4.13 Nasdaq Listing 21       Article V CONDITIONS TO THE PARTIES’
OBLIGATIONS 21       Section 5.1 Conditions of the Purchaser 21 Section 5.2
Conditions of the Company 21       Article VI MISCELLANEOUS 22       Section 6.1
Survival 22 Section 6.2 Counterparts 22 Section 6.3 Governing Law 22 Section 6.4
Entire Agreement; No Third Party Beneficiary 23 Section 6.5 Expenses 23
Section 6.6 Notices 23 Section 6.7 Successors and Assigns 24 Section 6.8
Headings 25 Section 6.9 Amendments and Waivers 25 Section 6.10 Interpretation;
Absence of Presumption 25 Section 6.11 Severability 25 Section 6.12 Specific
Performance 25 Section 6.13 Corporate Opportunities 26 Section 6.14 Net Funding
27 Section 6.15 Public Announcement 27

 

EXHIBITS

 

Exhibit A Definitions A-1 Exhibit B Form of Certificate of Designations B-1
Exhibit C Form of Registration Rights Agreement C-1 Exhibit D Disclosure
Schedule D-1 Exhibit E Form of Indemnification Agreement E-1 Exhibit F Form of
Management Rights Letter F-1 Exhibit G Form of Support Agreement G-1

 

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SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT dated as of April 20, 2020 (this “Agreement”) is by
and between The Cheesecake Factory Incorporated, a Delaware corporation (the
“Company”), and RC Cake Holdings LLC, a Delaware limited liability company (the
“Purchaser”). Capitalized terms used but not defined herein have the meanings
assigned to them in Exhibit A.

 

The Purchaser desires to purchase from the Company, and the Company desires to
issue and sell to the Purchaser, 200,000 shares (the “Purchased Shares”) of the
Company’s Series A Convertible Preferred Stock, par value $.01 per share (the
“Series A Preferred Stock”), on the terms and subject to the conditions
hereinafter set forth.

 

Concurrently with the execution and delivery of this Agreement, and as a
condition of and inducement to the Purchaser’s willingness to enter into this
Agreement, (a) Mr. David Overton, on the one hand, and the Purchaser, on the
other hand, are entering into a Support Agreement, (b) the Series A Director and
the Company are entering into the Indemnification Agreement and (c) the Company
and Roark Capital Partners V (TE) LP are entering into the Management Rights
Letter.

 

In consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

Article I

PURCHASE AND SALE OF PURCHASED SHARES

 

Section 1.1            Purchase and Sale. On the terms and subject to the
satisfaction or waiver of the conditions set forth in this Agreement, at the
Closing, the Purchaser shall purchase, and the Company shall issue and sell to
the Purchaser, the Purchased Shares, free and clear of any liens (other than
liens incurred by Purchaser or its Affiliates, restrictions arising under
applicable securities laws, or restrictions imposed by the this Agreement, the
Certificate of Designations or the Registration Rights Agreement) for an
aggregate purchase price of $200,000,000. The Series A Preferred Stock shall
have the rights, powers, preferences and privileges set forth in the Certificate
of Designations (the “Certificate of Designations”) attached as Exhibit B.

 

Section 1.2            Closing. On the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, the closing of the
issuance, sale and purchase of the Purchased Shares (the “Closing”) shall take
place remotely via the exchange of final documents and signature pages, on the
date of this Agreement subject the satisfaction or waiver of all of the
conditions set forth in Article V, or such other time and place as the Company
and the Purchaser may agree. The date on which the Closing is to occur is herein
referred to as the “Closing Date.” At the Closing, upon receipt by the Company
of payment of the full purchase price to be paid at the Closing therefor by or
on behalf of such Purchaser to the Company by wire transfer of immediately
available funds to an account designated in writing by the Company, the Company
will deliver to the Purchaser evidence reasonably satisfactory to the Purchaser
of the issuance of the Purchased Shares in the name of the Purchaser by
book-entry on the books and records of the Company. At the Closing, the
Purchaser shall deliver to the Company a duly executed, valid, accurate and
properly completed Internal Revenue Service Form W-9 certifying that such
Purchaser is a U.S. person and that such Purchaser is not subject to backup
withholding.

 

 

 

 

Section 1.3            Commitment Fee. At the Closing, the Company shall pay to
the Purchaser a commitment fee equal to $2,000,000, representing one percent
(1%) of the aggregate purchase price for the Purchased Shares.

 

Article II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Purchaser that, except (a) as set
forth in the SEC Documents filed by the Company with the SEC on or after January
1, 2019 (other than disclosures in the “Risk Factors” or “Forward-Looking
Statements” sections or similarly captioned sections of any such filings) and
(b) as set forth on Exhibit D (the “Disclosure Schedule”) (all such exceptions
disclosed in the Disclosure Schedule being numbered to correspond to the
applicable Section of this Article II, provided, however, that any such
exception shall be deemed to be disclosed with respect to each other
representation or warranty to which the relevance of such exception is
reasonably apparent on the face of such disclosure):

 

Section 2.1            Organization and Power. The Company and each of its
Subsidiaries is a corporation, limited liability company, partnership or other
entity validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation (as applicable) and has all requisite
corporate, limited liability company, partnership or other entity power and
authority to own or lease its properties and to carry on its business as
presently conducted and as proposed to be conducted. The Company and each of its
Subsidiaries is duly licensed or qualified to do business as a foreign
corporation, limited liability company, partnership or other entity in each
jurisdiction wherein the character of its property or the nature of the
activities presently conducted by it, makes such qualification necessary, except
where the failure to so qualify has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 2.2            Authorization, Etc. The Company has all necessary
corporate power and authority and has taken all necessary corporate action
required for the due authorization, execution, delivery and performance by the
Company of this Agreement and the Registration Rights Agreement, and the
consummation by the Company of the transactions contemplated hereby and thereby,
the filing of the Certificate of Designations with the Secretary of State of the
State of Delaware and for the due authorization, issuance, sale and delivery of
the Purchased Shares and the reservation, issuance and delivery of the
Conversion Shares. The authorization, execution, delivery and performance by the
Company of this Agreement and the Registration Rights Agreement, and the
consummation by the Company of the transactions contemplated hereby and thereby,
including the filing of the Certificate of Designations and the issuance of the
Purchased Shares and the Conversion Shares do not and will not: (a) violate or
result in the breach of any provision of the Certificate of Incorporation or
Bylaws of the Company; or (b) with such exceptions that have not had, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect: (i) violate any provision of, constitute a breach of, or default
under, any judgment, order, writ, or decree applicable to the Company or any of
its Subsidiaries or any material mortgage, credit agreement or contract to which
the Company or any of its Subsidiaries is a party; (ii) violate any provision
of, constitute a breach of, or default under, any applicable state, federal or
local law, rule or regulation; or (iii) result in the creation of any lien upon
any assets of the Company or any of its Subsidiaries or the suspension,
revocation or forfeiture of any franchise, permit or license granted by a
governmental authority to the Company or any of its Subsidiaries, other than
liens under federal or state securities laws. This Agreement has been, and the
Registration Rights Agreement, at the Closing will be, duly executed and
delivered by the Company. Assuming due execution and delivery thereof by each of
the other parties hereto or thereto, this Agreement and the Registration Rights
Agreement will each be a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable laws relating to bankruptcy, insolvency,
reorganization, moratorium or other similar legal requirement relating to or
affecting creditors’ rights generally and except as such enforceability is
subject to general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The Company has taken all
appropriate actions so that the restrictions on business combinations contained
in Section 203 of the DGCL will not apply with respect to or as a result of the
issuance of the Purchased Shares (or the Conversion Shares) to the Purchaser or
the Transfer thereof to its Permitted Transferees in accordance with this
Agreement, without any further action on the part of the stockholders or the
Board of Directors.

 

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Section 2.3            Government Approvals. No consent, approval or
authorization of, or filing with, any court or governmental authority is or will
be required on the part of the Company in connection with the execution,
delivery and performance by the Company of this Agreement and the Registration
Rights Agreement, or in connection with the issuance of the Purchased Shares or
the Conversion Shares, except for (a) the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware; (b) those
which have already been made or granted; (c) the filing of a Form D and current
report on Form 8-K with the SEC; (d) filings with applicable state securities
commissions; (e) the listing of the Conversion Shares with the Nasdaq Stock
Market; or (f) the expiration or termination of any applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”).

 

Section 2.4            Authorized and Outstanding Stock.

 

(a)               The authorized capital stock of the Company consists of
250,000,000 shares of common stock, $.01 par value per share (“Common Stock”)
and 5,000,000 shares of preferred stock, par value $.01 per share (“Preferred
Stock”). Of such Preferred Stock, upon the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware, 200,000
shares will be designated as the Series A Preferred Stock.

 

(b)               As of March 31, 2020, (i) 45,461,336 shares of Common Stock
were issued and outstanding, and (ii) 4,786,651 shares of Common Stock were
reserved for issuance upon the exercise of outstanding stock options or the
vesting of unvested restricted stock awards, and restricted stock units issued
pursuant to the Stock Plans or the vesting of unvested restricted stock units
not issued pursuant to a Stock Plan.

 

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(c)               All of the issued and outstanding shares of Common Stock of
the Company are, and when issued in accordance with the terms hereof, the
Purchased Shares will be, duly authorized and validly issued and fully paid and
non-assessable. The shares of Common Stock issuable upon conversion of the
Purchased Shares (the “Conversion Shares”) have been reserved for issuance and,
when issued upon conversion thereof in accordance with the terms of the
Certificate of Designations in accordance with their terms will be validly
issued and fully paid and non-assessable and will not be subject to any
preemptive right or any restrictions on transfer under applicable law or any
contract to which the Company is a party, other than those under applicable
state and federal securities and antitakeover laws, this Agreement and the
Registration Rights Agreement. When issued in accordance with the terms hereof,
the Purchased Shares and the Conversion Shares will be free and clear of all
liens (other than liens incurred by Purchaser or its Affiliates, restrictions
arising under applicable securities laws, or restrictions imposed by the this
Agreement, the Certificate of Designations or the Registration Rights
Agreement).

 

(d)               Except as otherwise expressly described in this Agreement: (i)
no subscription, warrant, option, convertible security or other right issued by
the Company to purchase or acquire any shares of capital stock of the Company is
authorized or outstanding; (ii) there is not any commitment of the Company to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock;
(iii) the Company has no obligation to purchase, redeem or otherwise acquire any
shares of its capital stock or to pay any dividend or make any other
distribution in respect thereof; and (iv) there are no agreements between the
Company and any holder of its capital stock relating to the acquisition,
disposition or voting of the capital stock of the Company. No person or entity
is entitled to any preemptive right granted by the Company with respect to the
issuance of any capital stock of the Company.

 

Section 2.5            Subsidiaries. The Company’s Subsidiaries consist of all
the entities listed on Exhibit 21.1 to the Company’s Form 10-K for the year
ended December 31, 2019. Except as described in the SEC Documents, the Company,
directly or indirectly, owns of record and beneficially, free and clear of all
liens, all of the issued and outstanding capital stock or equity interests of
each of its Subsidiaries. All of the issued and outstanding capital stock or
equity interests of the Company’s Subsidiaries has been duly authorized and
validly issued, and in the case of corporations, is fully paid and
non-assessable. Except as described in the SEC Documents, there are no
outstanding rights, options, warrants, preemptive rights, conversion rights,
rights of first refusal or similar rights for the purchase or acquisition from
any of the Company’s Subsidiaries of any securities of such Subsidiaries nor are
there any commitments to issue or execute any such rights, options, warrants,
preemptive rights, conversion rights or rights of first refusal.

 

Section 2.6            Private Placement. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Section 3.4
(Investment Representations), the offer and sale of the Purchased Shares
pursuant to this Agreement will be exempt from the registration requirements of
the Securities Act.

 

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Section 2.7            SEC Documents; Financial Information. Since January 1,
2019, the Company has timely filed (a) all annual and quarterly reports and
proxy statements (including all amendments, exhibits and schedules thereto) and
(b) all other reports and other documents (including all amendments, exhibits
and schedules thereto), in each case required to be filed by the Company with
the SEC pursuant to the Exchange Act and the Securities Act except, in the case
of clause (b), where the failure to file has not had, and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. As of their respective filing dates, such SEC Documents complied in all
material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations of the SEC thereunder applicable to such SEC
Documents, and as of their respective dates none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents (the “Financial Statements”) comply as of their respective dates in
all material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-Q promulgated by the SEC), and present fairly in all material respects as of
their respective dates the consolidated financial position of the Company and
its Subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for each of the respective periods,
all in conformity with GAAP, applied on a consistent basis during the periods
involved (except as may be indicated in such Financial Statements or the notes
thereto). The Company satisfies the “registrant requirements” for use of Form
S-3 set forth in General Instruction I.A to Form S-3 promulgated by the SEC. The
Company and its Subsidiaries do not have any liabilities or obligations that
would be required under GAAP, as in effect on the date of this Agreement, to be
reflected on a consolidated balance sheet of the Company (accrued, absolute,
contingent or otherwise), other than liabilities or obligations (i) reflected
on, reserved against, or disclosed in the notes to, the Company’s consolidated
balance sheet included in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2019, (ii) that were incurred in the ordinary
course of business and would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, or (iii) that were not incurred
in the ordinary course of business.

 

Section 2.8            Internal Control Over Financial Reporting. The Company
has disclosed, based on its most recent evaluation prior to the date hereof, to
the Company’s outside auditors and the Audit Committee of the Board of Directors
(a) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information and (b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal control
over financial reporting.

 

Section 2.9            Disclosure Controls and Procedures. The Company has
established and maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act) that are designed to
provide reasonable assurance that material information relating to the Company,
including its Subsidiaries, that is required to be disclosed by the Company in
the reports that it furnishes or files under the Exchange Act is reported within
the time periods specified in the rules and forms of the SEC and that such
material information is communicated to the Company’s management to allow timely
decisions regarding required disclosure.

 

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Section 2.10        Litigation. There is no litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened in writing,
against the Company or any of its Subsidiaries or affecting any of the business,
operations, properties or assets of the Company or any of its Subsidiaries which
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in
default with respect to any order, writ, injunction, decree, ruling or decision
of any court, commission, board or other government agency that is expressly
applicable to the Company or any of its Subsidiaries which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 2.11        Compliance with Laws; Permits.

 

(a)               The Company and its Subsidiaries are in compliance with all
applicable laws, except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
and its Subsidiaries possess all permits and licenses of governmental
authorities that are required to conduct their business, except as has not had,
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.

 

(b)               Each of the facilities of the Company and its Subsidiaries is
in compliance in all material respects with the Americans with Disabilities Act
of 1990, as amended, and other similar laws applicable to such facilities.

 

(c)               None of the Company nor any of its Subsidiaries has, during
the last three years, been cited, fined or otherwise been notified by any
governmental authority or third party of any material (i) failure to comply with
any applicable laws related to the preparation, holding, offering for sale and
sale of food and beverages, including any applicable laws governing food and
beverage safety and handling, nutrition labeling on menus or branding or (ii)
investigation or review by any governmental authority regarding the foregoing.

 

Section 2.12        Taxes. The Company and each of its Subsidiaries has filed
all Tax Returns required to be filed within the applicable periods for such
filings (with due regard to any extension) and has timely paid all Taxes
required to be paid, except for any such failures to file or pay that have not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company is not a United States real
property holding corporation within the meaning of Section 897 of the Code
(“USRPHC”).

 

Section 2.13        Employee Matters. Except where the failure to comply has not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, the Company and its Subsidiaries are in
compliance with all applicable laws relating to labor, employment, fair
employment practices, terms and conditions of employment, and wages and hours,
and with the terms of the ERISA Documents, and each such ERISA Document is in
compliance with all applicable requirements of ERISA.

 

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Section 2.14        Environmental Matters. The Company and its Subsidiaries are
in compliance with all applicable Requirements of Environmental Law and required
Environmental Permits, except, in each case, where the failure to comply has not
had, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company and its Subsidiaries have not
received within the past three years any written notice from any governmental
authority of any violation or alleged violation of any Requirements of
Environmental Law or Environmental Permit in connection with their respective
properties, except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 2.15        Registration Rights. Except as provided in this Agreement or
the Registration Rights Agreement or disclosed in the SEC Documents, the Company
has not granted any rights to register under the Securities Act any of its
presently outstanding securities or any of its securities that may be issued
subsequently.

 

Section 2.16        Investment Company Act. The Company is not, and immediately
after giving effect to the sale of the Purchased Shares in accordance with this
Agreement and the application of the proceeds thereof will not be required to be
registered as, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act.

 

Section 2.17        Nasdaq. As of the date hereof, the Company’s Common Stock is
listed on the Nasdaq Stock Market, and no event has occurred, and the Company is
not aware of any event that is reasonably likely to occur, that would result in
the Common Stock being delisted from the Nasdaq Stock Market. The Company is in
compliance with applicable continued listing requirements of the Nasdaq Stock
Market. 

 

Section 2.18        No Brokers or Finders. No Person has or will have, as a
result of the transactions contemplated by this Agreement, any right, interest
or claim against or upon the Company, any of its Subsidiaries or the Purchaser
for any commission, fee or other compensation as a finder or broker because of
any act of the Company or any of its Subsidiaries, other than Wells Fargo
Securities and J.P. Morgan Securities LLC whose fees are the sole responsibility
of the Company.

 

Section 2.19        Illegal Payments; FCPA Violations. Except as has not had,
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, since January 1, 2019, none of the Company, any of
its Subsidiaries or, to the knowledge of the Company, any officer, director,
employee, agent, representative or consultant acting on behalf of the Company or
any of its Subsidiaries (and only in their capacities as such) has, in
connection with the business of the Company: (a) unlawfully offered, paid,
promised to pay, or authorized the payment of, directly or indirectly, anything
of value, including money, loans, gifts, travel, or entertainment, to any
Government Official with the purpose of (i) influencing any act or decision of
such Government Official in his or her official capacity; (ii) inducing such
Government Official to perform or omit to perform any activity in violation of
his or her legal duties; (iii) securing any improper advantage; or (iv) inducing
such Government Official to influence or affect any act or decision of such
Governmental Entity, except, with respect to the foregoing clauses (i) through
(iv), as permitted under the U.S. Foreign Corrupt Practices Act or other
applicable law; (b) made any illegal contribution to any political party or
candidate; (c) made, offered or promised to pay any unlawful bribe, payoff,
influence payment, kickback, unlawful rebate, or other similar unlawful payment
of any nature, directly or indirectly, in connection with the business of the
Company, to any person, including any supplier or customer; (d) knowingly
established or maintained any unrecorded fund or asset or made any false entry
on any book or record of the Company or any of its Subsidiaries for any purpose;
or (e) otherwise violated the U.S. Foreign Corrupt Practices Act of 1977, as
amended, the UK Bribery Act 2010, as amended, or any other applicable
anti-corruption or anti-bribery law.

 

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Section 2.20        Economic Sanctions. Except as has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Company is not in contravention of any sanction, and has not
engaged in any conduct sanctionable, under U.S. economic sanctions Laws,
including applicable laws administered and enforced by the U.S. Department of
the Treasury’s Office of Foreign Assets Control, 31 C.F.R. Part V, the Iran
Sanctions Act, as amended, the Comprehensive Iran Sanctions, Accountability and
Divestment Act, as amended, the Iran Threat Reduction and Syria Human Rights
Act, as amended, the Iran Freedom and Counter-Proliferation Act of 2012, as
amended, and any executive order issued pursuant to any of the foregoing.

 

Section 2.21        No Additional Representations. Except for the
representations and warranties made by the Company in this Article II, neither
the Company nor any other Person makes any express or implied representation or
warranty with respect to the Company or any Subsidiaries or their respective
businesses, operations, assets, liabilities, employees, employee benefit plans,
conditions or prospects, and the Company hereby disclaims any such other
representations or warranties. In particular, without limiting the foregoing
disclaimer, neither the Company nor any other Person makes or has made any
representation or warranty to the Purchaser, or any of its Affiliates or
representatives, with respect to (a) any financial projection, forecast,
estimate, budget or prospect information relating to the Company or any of its
Subsidiaries or their respective business, or (b) any oral or written
information presented to the Purchaser or any of its Affiliates or
representatives in the course of their due diligence investigation of the
Company, the negotiation of this Agreement or in the course of the transactions
contemplated hereby. Notwithstanding anything to the contrary herein, nothing in
this Agreement shall limit the right of the Purchaser and its Affiliates to rely
on the representations, warranties, covenants and agreements expressly set forth
in this Agreement, nor will anything in this Agreement operate to limit any
claim by any Purchaser or any of its respective Affiliates for actual and
intentional fraud.

 

Article III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser represents and warrants to the Company that:

 

Section 3.1            Organization and Power. The Purchaser is a limited
liability company duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation and has all requisite limited
partnership or other entity power and authority to own its properties and to
carry on its business as presently conducted.

 

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Section 3.2            Authorization, Etc. The Purchaser has all necessary
limited partnership or other entity power and authority and has taken all
necessary limited partnership or other entity action required for the due
authorization, execution, delivery and performance by the Purchaser of this
Agreement and the Registration Rights Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and thereby. The
authorization, execution, delivery and performance by the Purchaser of this
Agreement and the Registration Rights Agreement, and the consummation by the
Purchaser of the transactions contemplated hereby and thereby do not and will
not: (a) violate or result in the breach of any provision of the certificate of
limited partnership and limited partnership agreement (or similar organizational
document) of the Purchaser; or (b) with the exceptions that are not reasonably
likely to have, individually or in the aggregate, a material adverse effect on
its ability to perform its obligations under this Agreement and the Registration
Rights Agreement: (i) violate any provision of, constitute a breach of, or
default under, any judgment, order, writ, or decree applicable to the Purchaser
or any material contract to which the Purchaser is a party; or (ii) violate any
provision of, constitute a breach of, or default under, any applicable state,
federal or local law, rule or regulation. This Agreement has been, and the
Registration Rights Agreement will, at the Closing be party will be, duly
executed and delivered by the Purchaser. Assuming due execution and delivery
thereof by the other parties hereto or thereto, this Agreement and the
Registration Rights Agreement will each be a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as the enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, reorganization, moratorium or other similar legal requirement
relating to or affecting creditors’ rights generally and except as the
enforceability is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).

 

Section 3.3            Government Approvals. No consent, approval, license or
authorization of, or filing with, any court or governmental authority is or will
be required on the part of the Purchaser in connection with the execution,
delivery and performance by the Purchaser of this Agreement and the Registration
Rights Agreement, except for: (a) those which have already been made or granted;
(b) the filing with the SEC of a Schedule 13D or Schedule 13G and a Form 3 to
report the Purchaser’s ownership of the Purchased Shares; (c) those where the
failure to obtain such consent, approval or license would not have a material
adverse effect on the ability of the Purchaser to perform its obligations
hereunder; or (d) the expiration or termination of any applicable waiting
periods under the HSR Act.

 

Section 3.4            Investment Representations.

 

(a)               The Purchaser is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(b)               The Purchaser has been advised by the Company that the
Purchased Shares have not been registered under the Securities Act, that the
Purchased Shares will be issued on the basis of the statutory exemption provided
by Section 4(a)(2) under the Securities Act or Regulation D promulgated
thereunder, or both, relating to transactions by an issuer not involving any
public offering and under similar exemptions under certain state securities
laws, that this transaction has not been reviewed by, passed on or submitted to
any federal or state agency or self-regulatory organization where an exemption
is being relied upon, and that the Company’s reliance thereon is based in part
upon the representations made by the Purchaser in this Agreement and the
Registration Rights Agreement. The Purchaser acknowledges that it has been
informed by the Company of, or is otherwise familiar with, the nature of the
limitations imposed by the Securities Act and the rules and regulations
thereunder on the transfer of securities.

 

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(c)               The Purchaser is purchasing the Purchased Shares for its own
account and not with a view to, or for sale in connection with, any distribution
thereof in violation of federal or state securities laws.

 

(d)               By reason of its business or financial experience, the
Purchaser has the capacity to protect its own interest in connection with the
transactions contemplated hereunder.

 

(e)               The Company has provided to the Purchaser all documents and
information that the Purchaser has requested relating to an investment in the
Company. The Purchaser recognizes that investing in the Company involves
substantial risks, and has taken full cognizance of and understands all of the
risk factors related to the acquisition of the Purchased Shares. The Purchaser
has carefully considered and has, to the extent it believes such discussion
necessary, discussed with the Purchaser’s professional legal, tax and financial
advisers the suitability of an investment in the Company, and the Purchaser has
determined that the acquisition of the Purchased Shares is a suitable investment
for the Purchaser. The Purchaser has not relied on the Company for any tax or
legal advice in connection with the purchase of the Purchased Shares. In
evaluating the suitability of an investment in the Company, the Purchaser has
not relied upon any representations or other information (other than the
representations and warranties of the Company set forth in Article II).

 

Section 3.5            No Prior Ownership. Prior to the Closing, the Purchaser
does not have record or beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of any shares of the Company’s Common Stock.

 

Section 3.6            No Brokers or Finders. No Person has or will have, as a
result of the transactions contemplated by this Agreement, any right, interest
or claim against or upon the Company, any of its Subsidiaries or any Purchaser
for any commission, fee or other compensation as a finder or broker because of
any act by the Purchaser.

 

Section 3.7            ERISA. The Purchaser does not hold, and no part of the
funds used by the Purchaser to acquire any Purchased Shares constitutes, “plan
assets” (within the meaning of the ERISA Regulations). The Purchaser is not (a)
an “employee benefit plan” that is subject to Part 4 of Title I of ERISA, (b) a
“plan” to which Section 4975 of the Code applies or (c) an entity whose
underlying assets could be deemed to include “plan assets” by reason of an
employee benefit plan’s or a plan’s investment in such entity.

 

10

 

 

Section 3.8            No Additional Representations. The Purchaser acknowledges
and agrees, on behalf of itself and its Affiliates, that, except for the
representations and warranties contained in Article II, neither the Company nor
any other Person, makes any express or implied representation or warranty with
respect to the Company, its Subsidiaries or their respective businesses,
operations, assets, liabilities, employees, employee benefit plans, conditions
or prospects, and the Purchaser, on behalf of itself and its Affiliates, hereby
disclaims reliance upon any such other representations or warranties. In
particular, without limiting the foregoing disclaimer, the Purchaser
acknowledges and agrees, on behalf of itself and its Affiliates, that neither
the Company nor any other Person, makes or has made any representation or
warranty with respect to, and the Purchaser, on behalf of itself and its
Affiliates, hereby disclaims reliance upon (a) any financial projection,
forecast, estimate, budget or prospect information relating to the Company, its
Subsidiaries or their respective business, or (b) without limiting the
representations and warranties made by the Company in Article II, any
information presented to the Purchaser or any of its Affiliates or
representatives in the course of their due diligence investigation of the
Company, the negotiation of this Agreement or in the course of the transactions
contemplated hereby. To the fullest extent permitted by applicable law, without
limiting the representations and warranties contained in Article II, neither the
Company nor any of its Subsidiaries shall have any liability to any Purchaser or
its Affiliates or representatives on any basis (including in contract or tort,
under federal or state securities laws or otherwise) based upon any other
representation or warranty, either express or implied, included in any
information or statements (or any omissions therefrom) provided or made
available by the Company or its Subsidiaries to Purchaser or its Affiliates or
representatives in the course of their due diligence investigation of the
Company, the negotiation of this Agreement or in the course of the transactions
contemplated by this Agreement.

 

Article IV

COVENANTS OF THE PARTIES

 

Section 4.1            Board of Directors.

 

(a)               The Purchaser shall have the right to designate one director
to the Board of Directors (the “Series A Director”) to the extent provided in
the Certificate of Designations. The initial Series A Director shall be Paul D.
Ginsberg.

 

(b)               If the Purchaser ceases to have the right to designate the
Series A Director in accordance with the Certificate of Designations, and for so
long as the Purchaser has record and beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of Conversion Shares that constitute at least
five percent (5%) of the outstanding Common Stock of the Company, the Purchaser
shall have the right to nominate one person for election to the Board of
Directors (a “Purchaser Nominee”) each year. If the Purchaser has the right to
so nominate a Purchaser Nominee in a given year, the Company shall, at the
annual meeting of the stockholders of the Company during such year, nominate the
Purchaser Nominee for election to the Board of Directors and use reasonable
efforts to cause the Purchaser Nominee to be elected to the Board of Directors;
provided, however, that the Purchaser Nominee shall (x) be reasonably acceptable
to the Corporate Governance and Nominating Committee of the Board of Directors
applying the Company’s standard practices and the same considerations to the
Purchaser Nominee as would be applied by such committee to any other director
appointee, nominee or applicant and (y) comply with the Corporate Governance
Principles and Guidelines of the Company as in effect from time to time to the
extent such compliance is required from all of the other director appointees,
nominees or applicants. If, following election to the Board of Directors, the
Purchaser Nominee resigns, is removed, is not re-elected or is otherwise unable
to serve for any reason and the Purchaser still has the right to nominate such
Purchaser Nominee, then, subject to compliance with the proviso to the
immediately preceding sentence, the Purchaser shall be entitled to designate a
replacement Purchaser Nominee, and the Board of Directors shall use reasonable
efforts to elect such replacement Purchaser Nominee to the Board of Directors.
In the event that the Purchaser ceases to hold the minimum percentage of the
outstanding Common Stock that entitles it to nominate the Purchaser Nominee as
provided above, if requested by the Board of Directors, the Purchaser shall use
reasonable best efforts to have such Purchaser Nominee resign as a director. As
a pre-condition to the nomination of a Purchaser Nominee, such Purchaser Nominee
shall execute and deliver to the Board of Directors an irrevocable letter of
resignation to be deemed tendered at the time the Purchaser is required to use
reasonable best efforts to have him or her so resign. For the avoidance of
doubt, only Conversion Shares shall be counted towards whether the Purchaser
meets the minimum percentage described above and, in the event that the
Purchaser’s holdings of Conversion Shares drops below such minimum percentage,
the Purchaser will not regain the right to nominate a Purchaser Nominee through
the acquisition of other shares of Common Stock.

 

11

 

 

(c)               Subject to applicable legal requirements and stock exchange
rules, for as long as the Series A Director or Purchaser Nominee, as applicable,
serves on the Board of Directors, such Series A Director or Purchaser Nominee
shall be a member of any M&A/transaction committee or any executive committee
formed by the Board of Directors other than any committee formed for the
purposes of considering any transaction with the Purchaser or its Affiliates.

 

(d)               The Series A Director or Purchaser Nominee, as applicable,
shall be entitled to (i) reimbursement of expenses and indemnification in the
same manner and to the same extent as the other members of the Board of
Directors, in accordance with the Company’s organizational documents and on the
basis of the director indemnification agreement attached hereto as Exhibit E,
and (ii) compensation to the extent and in the manner set forth in Schedule
4.1(d) attached hereto. Any director minimum ownership requirements shall be
deemed satisfied in respect of the Series A Director or Purchaser Nominee, as
applicable, by the Purchased Shares, or any Conversion Shares, as applicable,
held by the Purchaser or one or more of its Affiliates.

 

Section 4.2            Restrictions on Transfer.

 

(a)               After the Closing, the Purchaser shall not Transfer any of the
Purchased Shares to any Person without the consent of the Company; provided,
however, that, without the consent of the Company, the Purchaser may Transfer
Purchased Shares (i) to a Permitted Transferee of the Purchaser that agrees to
be bound by the terms of this Article IV pursuant to a written agreement in form
and substance reasonably satisfactory to the Company (and upon such Transfer the
Permitted Transferee shall become a “Purchaser” for purposes of this Article
IV); (ii) pursuant to a tender or exchange offer, merger, consolidation,
division, acquisition, reorganization or recapitalization involving the Company;
or (iii) following the date the Company commences a voluntary case under Title
11 of the United States Bankruptcy Code or any other similar insolvency laws.

 

12

 

 

(b)               At no time shall the Purchaser knowingly (after reasonable
inquiry) Transfer any Purchased Shares or Conversion Shares to (i) any Company
Competitor, (ii) any Person such that, as a result of such Transfer, such
Person, together with its Affiliates, owns, controls or otherwise has any
beneficial or other ownership interest in the aggregate of more than five
percent (5%) of the outstanding capital stock of the Company (other than any
investment company or mutual fund that has filed, or has a current obligation to
file, a report on Schedule 13G (and not Schedule 13D) pursuant to Regulation
13D-G under the Exchange Act with respect to its ownership of shares of capital
stock of the Company), (iii) any Person who is reasonably known to have engaged
in activist campaigns in the three years prior to the date of any such proposed
Transfer, including by stating an intention to or actually attempting to
(pursuant to proxy solicitation, tender or exchange offer or other means) obtain
a seat on the board of directors of a company or effecting a significant change
within the company; provided, however that, notwithstanding anything to the
contrary in the foregoing, this Section 4.2(b) shall not restrict a Transfer (x)
pursuant to a traditional underwritten offering (including any block trade) or
Rule 144 under the Securities Act (provided that any such Transfer pursuant to
Rule 144 either is not a direct placement or satisfies the requirements of
paragraph (f) of such rule) and (y) following the date the Company commences a
voluntary case under Title 11 of the United States Bankruptcy Code or any other
similar insolvency laws.

 

(c)               In any event, Restricted Securities shall not be Transferred
except upon the conditions specified in Section 4.3, which conditions are
intended to ensure compliance with the provisions of the Securities Act. Any
attempted Transfer in violation of this Section 4.2 shall be void ab initio.

 

Section 4.3            Restrictive Legends.

 

(a)               Each certificate representing the Purchased Shares or
Conversion Shares (unless otherwise permitted by the provisions of Section
4.3(d)) shall be stamped or otherwise imprinted with a legend in substantially
the following form (in addition to any legend required under applicable state
securities laws):

 

“THE OFFER AND SALE OF THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY AND SUCH
SHARES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO
A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT; OR (B)
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

 

(b)               In addition, for so long as the Purchased Shares or Conversion
Shares are subject to the restrictions set forth in Section 4.2, each
certificate representing the Purchased Shares or Conversion Shares shall be
stamped or otherwise imprinted with a legend in substantially the following
form:

 

13

 

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER SET FORTH IN A SUBSCRIPTION AGREEMENT. THE COMPANY WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF SUCH SUBSCRIPTION AGREEMENT, AS IN EFFECT
ON THE DATE OF MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR.”

 

(c)               The Purchaser consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Purchased Shares or
the Conversion Shares in order to implement the restrictions on transfer set
forth in this Section 4.3.

 

(d)               Prior to any proposed Transfer of any Restricted Securities,
unless there is in effect a registration statement under the Securities Act
covering the proposed Transfer, a Purchaser shall give written notice to the
Company of such Purchaser’s intention to effect such Transfer. Each such notice
shall describe the manner and circumstances of the proposed Transfer in
sufficient detail, and shall be accompanied by either (i) an opinion of legal
counsel reasonably satisfactory to the Company to the effect that the proposed
Transfer of the Restricted Securities may be effected without registration under
the Securities Act, or (ii) any other evidence reasonably satisfactory to
counsel to the Company, whereupon such Purchaser shall be entitled to Transfer
such Restricted Securities in accordance with the terms of the notice delivered
by such Purchaser to the Company. Notwithstanding the foregoing, in the event a
Purchaser shall give the Company a representation letter containing such
representations as the Company shall reasonably request, the Company will not
require such legal opinion or such other evidence (A) in a routine sales
transaction in compliance with Rule 144 under the Securities Act, (B) in any
transaction in which a Purchaser that is a corporation distributes Restricted
Securities solely to its majority owned subsidiaries or Affiliates for no
consideration or (C) in any transaction in which a Purchaser that is a
partnership or limited liability company distributes Restricted Securities
solely to its Affiliates (including affiliated fund partnerships), or partners
or members of such Purchaser or its Affiliates for no consideration. Each
certificate evidencing the Restricted Securities transferred shall bear the
appropriate restrictive legend set forth in Section 4.3 above, except that such
certificate shall not bear the first such restrictive legend if such legend is
not required in order to establish compliance with any provisions of the
Securities Act. Upon the request of a Purchaser of a certificate bearing the
first such restrictive legend and, if necessary, the appropriate evidence as
required by clause (i) or (ii) above, the Company shall remove the first such
restrictive legend from such certificate and from the certificate to be issued
to the applicable transferee if such legend is not required in order to
establish compliance with any provisions of the Securities Act and the Purchaser
promptly Transfers the Purchased Shares or Conversion Shares. If the Purchaser
holds a certificate bearing the second restrictive legend, upon the request of
the Purchaser, the Company shall remove such restrictive legend from such
certificate when the provisions of Section 4.2 are no longer applicable to the
applicable Purchased Shares or Conversion Shares.

 

Section 4.4            Standstill. The Purchaser agrees that until the later of
the (x) third anniversary of the date of this Agreement, and (y) date on which
the Purchaser no longer has record and beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of Conversion Shares that constitute at
least five percent (5%) of the outstanding Common Stock of the Company, without
the prior written consent of the Company, it will not at any time, nor will it
cause or permit any of its Affiliates to: (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or announce any intention to effect
or cause or participate in or in any way assist, facilitate or encourage any
other person to effect or seek, offer or propose (whether publicly or otherwise)
to effect or participate in, (i) any acquisition of any securities (or
beneficial ownership thereof), or rights or options to acquire any securities
(or beneficial ownership thereof), or any assets, indebtedness or businesses of
the Company or its Subsidiaries, (ii) any tender or exchange offer, merger or
other business combination involving the Company or its Subsidiaries or assets
of the Company or its Subsidiaries constituting a significant portion of the
consolidated assets of the Company and its Subsidiaries, or (iii) any
“solicitation” of “proxies” (as such terms are used in the proxy rules of the
SEC) or consents to vote any voting securities of the Company or any of its
Affiliates; (b) form, join or in any way participate in a “group” (as defined
under the Exchange Act) with respect to the Company or otherwise act in concert
with any person in respect of any such securities; (c) otherwise act, alone or
in concert with others, to seek representation on or to control or influence the
management, Board of Directors or policies of the Company or to obtain
representation on the Board of Directors of the Company; (d) take any action
which would or would reasonably be expected to force the Company to make a
public announcement regarding any of the types of matters set forth in clause
(a) above; or (e) enter into any discussions or arrangements with any third
party with respect to any of the foregoing; it being understood that nothing in
this Section 4.4 shall (x) restrict or prohibit the Series A Director or
Purchaser Nominee, as applicable, from taking any action, or refraining from
taking any action, which he or she determines, in his or her reasonable
discretion, is necessary to fulfill his or her fiduciary duties as a member of
the Board of Directors or (y) restrict the Purchaser’s acquisition of the
Purchased Shares (including the accretion of dividends thereon and any dividends
payable in any other security) or Conversion Shares issuable upon conversion of
the Purchased Shares, in each case, in accordance with the terms of this
Agreement and the Certificate of Designations.

 

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Section 4.5            Hedging Transactions. So long as the Purchaser has the
right to designate or nominate a director to the Board of Directors pursuant to
the Certificate of Designations or Section 4.1, the Purchaser agrees that it
will not enter into any Hedging Transactions to the extent directors of the
Company are prohibited from entering into such Hedging Transactions pursuant to
a policy applicable to all directors of the Company.

 

Section 4.6            Use of Proceeds. The Company shall use the proceeds from
the sale of the Purchased Shares (a) to fund working capital, (b) to pay for the
fees and expenses incurred by the Company in connection with the transactions
contemplated by this Agreement and the Registration Rights Agreement and (c)
general corporate purposes.

 

Section 4.7            Confidentiality.

 

(a)               So long as the Purchaser has the right to designate or
nominate a director to the Board of Directors pursuant to the Certificate of
Designations or Section 4.1, (i) the Purchaser shall keep all Confidential
Information confidential and shall not, without the Company’s prior written
consent, disclose any Confidential Information in any manner whatsoever, in
whole or in part and (ii) the Purchaser shall not use any Confidential
Information, other than in connection with the performance of its obligations
hereunder. During such period, the Purchaser shall disclose the Confidential
Information only to such of its Representatives who need to know the
Confidential Information for such purpose, who are informed by the Purchaser of
the confidential nature of the Confidential Information and who either (A) are
otherwise bound by an obligation of confidentiality to the Company to ensure
compliance with the terms of this Section 4.7 or (B) shall agree to act in
accordance with the terms and conditions of this Section 4.7. The Purchaser
shall be responsible for any non-compliance with this Section 4.7 by its
Representatives. The Purchaser shall return to the Company or, insofar as
reasonably practicable, destroy all copies of Confidential Information upon the
Company’s written request. Notwithstanding the foregoing, the Purchaser may
retain such materials to the extent required by applicable law or in accordance
with internal compliance procedures; provided, however, that the Purchaser shall
keep all such copies confidential in accordance with this Section 4.7.

 

15

 

 

(b)               In the event that the Purchaser or any of its Representatives
is required or requested by applicable law (including oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or other process) to disclose any of the Confidential
Information, the Purchaser will provide the Company with prompt notice (unless
such notification is prohibited by applicable law and other than in connection
with a routine audit or examination by, or a blanket document request from, a
regulatory or governmental entity that does not reference the Company or this
Agreement) so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section 4.7. In the
event that such a protective order or other remedy is not obtained, that no such
notice is required to be provided to the Company or that the Company waives
compliance with the provisions of this Section 4.7, the Purchaser may disclose
such Confidential Information without liability hereunder.

 

Section 4.8            Financial Statements and Other Information.

 

(a)               Subject to Section 4.8(b), and for so long as the Purchaser
holds record and beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of more than five percent (5%) of the outstanding shares of
the Company’s Common Stock (which shall be determined assuming the conversion of
all of the shares of Series A Preferred Stock), the Company shall deliver to the
Purchaser:

 

(i)                 within 90 days after the end of each fiscal year of the
Company, (A) an audited, consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year, (B) an audited, consolidated
income statement of the Company and its Subsidiaries for such fiscal year and
(C) an audited, consolidated statement of cash flows of the Company and its
Subsidiaries for such fiscal year; and

 

(ii)              within 45 days after the end of each of the first three
quarters of each fiscal year of the Company, (A) an unaudited, consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
quarter, (B) an unaudited, consolidated income statement of the Company and its
Subsidiaries for such fiscal quarter and (C) an unaudited, consolidated
statement of cash flows of the Company and its Subsidiaries for such fiscal
quarter.

 

(b)               Notwithstanding the foregoing, financial statements and other
reports required to be delivered pursuant to this Section 4.8 filed by the
Company with the SEC and available on EDGAR (or such other free,
publicly-accessible internet database that may be established and maintained by
the SEC as a substitute for or successor to EDGAR) shall be deemed to have been
delivered to the Purchaser on the date on which the Company posts such documents
to EDGAR (or such other free, publicly-accessible internet database that may be
established and maintained by the SEC as a substitute for or successor to
EDGAR).

 

16

 

 

(c)               For so long as the Purchaser holds record and beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than
five percent (5%) of the outstanding shares of the Company’s Common Stock (which
shall be determined assuming the conversion of all of the shares of Series A
Preferred Stock), the Purchaser or the employees of the Purchaser shall have the
reasonable right to consult from time to time with the officers of the Company
at its principal place of business regarding operating and financial matters of
the Company; provided that the exercise of such right does not materially
interfere with the operations of the business of the Company.

 

Section 4.9            Certain New Securities.

 

(a)               For purposes of this Section 4.9, the following terms shall
have the following meanings:

 

(i)                 “Convertible Securities” means any security convertible into
or exchangeable for Common Stock.

 

(ii)              “Equity Securities” means (A) all shares of capital stock of
the Company, (B) all securities convertible into or exchangeable for shares of
capital stock of the Company and (C) all options, warrants or other rights to
purchase or otherwise acquire from the Company shares of such capital stock, or
securities convertible into or exchangeable for shares of such capital stock.

 

(iii)            “Excluded Securities” means (A) any securities issued by the
Company as full or partial consideration in connection with a merger,
acquisition, consolidation or purchase of all or substantially all of the
securities or assets of a corporation or other entity; (B) any shares of capital
stock or options to purchase shares of capital stock, or other equity-based
awards (including restricted stock units), issued or granted to employees (or
prospective employees who have accepted an offer of employment), directors or
consultants of the Company or any of its Subsidiaries, pursuant to plans that
have been approved by a majority of the independent members of the Board of
Directors or that exist as of the date of this Agreement; (C) securities issued
by the Company upon the exercise, exchange or conversion of any securities that
are exercisable or exchangeable for, or convertible into, shares of capital
stock and are outstanding as of the date of this Agreement, provided that such
exercise, exchange or conversion is effected pursuant to the terms of such
securities as in effect on the date of this Agreement; (D) securities issued by
the Company pursuant to any equipment loan or leasing arrangement, real property
leasing arrangement or debt financing from a bank or similar financial
institution approved by a majority of the disinterested members of the Board of
Directors; and (E) the Convertible Preferred Stock and any Conversion Shares.
For purposes of this definition, “consultant” means a consultant that may
participate in an “employee benefit plan” in accordance with the definition of
such term in Rule 405 under the Securities Act.

 

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(iv)             “New Securities” means all Equity Securities other than: (A)
Excluded Securities; (B) shares of any class of capital stock of the Company
issued on a pro rata basis to all holders of such class as a stock dividend or
upon any stock split or other subdivision of shares of capital stock; (C) shares
of capital stock of the Company issued as consideration in connection with the
acquisition, approved by the Board of Directors, by the Company of assets or
capital stock of any Person; (D) shares of Common Stock issued pursuant to a
bona fide public offering, or Convertible Securities or shares of Common Stock
issuable upon exercise or conversion of Convertible Securities issued pursuant
to a bona fide public offering, in each case with aggregate proceeds of at least
$25,000,000, (E) shares of Common Stock, Convertible Securities and Options
issued to existing or former officers, directors, employees or consultants of
the Company pursuant to any equity incentive plan adopted or approved by the
Board of Directors from time to time, including any shares of Common Stock
issuable upon exercise of any such Option or settlement or vesting of any award
issued under such plans, (F) rights issued pursuant to a shareholder rights
plan, and (G) the issuance of warrants with indebtedness for purposes of yield
enhancement.

 

(v)               “Options” means any options, warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, any Common
Stock or Convertible Securities.

 

(b)               If, after the Closing Date, the Company intends to issue New
Securities for cash to any Person, then, at least 15 Business Days prior to the
issuance of the New Securities, the Company shall deliver to the Purchaser an
offer (the “Offer”) to issue the New Securities to the Purchaser upon the terms
set forth in this Section 4.9; provided, however, that the Company shall have no
obligation to make an Offer unless at such time the Purchaser has record and
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of more than five percent (5%) of the outstanding shares of the Company’s Common
Stock (which shall be determined assuming conversion of all of the shares of
Series A Preferred Stock). Notwithstanding the foregoing, the Company in its
discretion may voluntarily provide an Offer to the Purchaser even if the
foregoing conditions have not been satisfied. The Offer shall state that the
Company proposes to issue the New Securities and shall specify their number and
terms (including purchase price). Any Offer may contemplate market flex terms
for the issuance of the New Securities. The Offer shall remain open and
irrevocable for a period of 15 Business Days (the “Offer Period”) from the date
of its delivery.

 

(c)               The Purchaser shall have the right to purchase all but not
less than all of the New Securities on the terms and conditions set forth in the
Offer by delivering written notice of acceptance thereof to the Company during
the Offer Period. The closing of the purchase of New Securities by the Purchaser
shall be held at the principal office of the Company at 11:00 a.m. local time on
the closing date set forth in the Offer or at such other time and place as the
parties to the transaction may agree. At such closing, the Company shall deliver
the New Securities to the Purchaser against payment of the purchase price
therefor by the Purchaser. At such closing, all of the parties to the
transaction shall execute such additional documents as are otherwise necessary
or appropriate to consummate such transactions.

 

(d)               If the Purchaser does not elect to purchase all of the New
Securities pursuant to Section 4.9(c), the Company may sell the New Securities
on terms and conditions that are no more favorable in the aggregate to the
applicable purchaser than those set forth in the Offer. If such sale is not
consummated within 180 days of the date upon which the Offer is given, then no
issuance of New Securities may be made thereafter by the Company without again
offering the same to the Purchaser in accordance with this Section 4.9.

 

18

 

 

(e)               The rights granted in this Section 4.9 are personal to the
Purchaser and its Permitted Transferees and do not constitute a right of holders
of any securities of the Company, including, without limitation, the Series A
Preferred Stock, as such.

 

Section 4.10        Filings; Other Actions.

 

(a)               As set forth in the Certificate of Designations, the Purchased
Shares shall be initially issued to the Purchaser without voting rights in the
election of directors of the Company or conversion rights into Common Stock.
After issuance and following the expiration or termination of the waiting period
under the HSR Act (or receipt by the Company of written notice from Purchaser
that clearance under the HSR Act is not required), the Purchased Shares shall
gain the right to vote on an as-converted basis with the Common Stock, pursuant
to, and in accordance with, the terms of the Certificate of Designations. The
Purchaser and the Company shall use all reasonable best efforts to obtain or
submit, as the case may be, as promptly as practicable following the date
hereof, the approvals and authorizations of, filings and registrations with, and
notifications to, or expiration or termination of any applicable waiting period,
under the HSR Act and other Antitrust Laws (the “Antitrust Approval”). Without
limiting the foregoing, the Purchaser and the Company shall each prepare and
file within five (5) business days after the date hereof a required Notification
and Report Form pursuant to the HSR Act in connection with the transactions
contemplated by this Agreement. In connection with such undertakings, the
Purchaser, on the one hand, and the Company, on the other hand, will cooperate
and consult with the other and use reasonable best efforts to prepare and file
all necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits,
consents, orders, approvals and authorizations of, or any exemption by, all
third parties and Governmental Entities, necessary or advisable to consummate
the transactions contemplated by this Agreement, including obtaining the
Antitrust Approval. The Purchaser and the Company shall execute and deliver both
before and after the Closing such further certificates, agreements and other
documents and take such other actions as the other party may reasonably request
to consummate or implement such transactions or to evidence such events or
matters.

 

(b)               The Purchaser and the Company will have the right to review in
advance, and to the extent practicable, each will consult with the other, in
each case, subject to applicable laws relating to the exchange of information,
all the information relating to such other party, and any of their respective
Affiliates, which appears in any filing made with, or written materials
submitted to, any third party or any governmental authority in connection with
the transactions contemplated by this Agreement, including obtaining the
Antitrust Approval. In exercising the foregoing right, each of the parties
hereto agrees to act reasonably and as promptly as practicable. Each party
hereto agrees to keep the other party apprised of the status of matters referred
to in this Section 4.10. The Purchaser shall promptly furnish the Company, and
the Company shall promptly furnish each Purchaser, to the extent permitted by
law, with copies of written communications received by it or its Subsidiaries
from any governmental authority in respect of the transactions contemplated by
this Agreement, including obtaining the Antitrust Approval. Neither the
Purchaser nor the Company shall participate in any substantive meeting with any
governmental authority in respect of the transactions contemplated by this
Agreement, including obtaining the Antitrust Approval unless it consults with
the other party in advance and, to the extent not prohibited by such
governmental authority, gives the other party the opportunity to attend and
participate therein or thereat.

 

19

 

 

 

Section 4.11          Voting Agreement. On or after the expiration or
termination of any applicable waiting periods under the HSR Act, and for so long
as the Purchaser has the right to designate or nominate a director to the Board
of Directors pursuant to the Certificate of Designations or Section 4.1, at each
meeting of the stockholders of the Company and at every postponement or
adjournment thereof, the Purchaser shall take such action as may be required so
that all of the Purchased Shares, Conversion Shares or other shares of Common
Stock owned, directly or indirectly, of record or beneficially by such Purchaser
and entitled to vote at such meeting of stockholders are voted (a) in favor of
each director nominated or recommended by the Board of Directors for election at
any such meeting, and against the removal of any director who has been elected
following nomination or recommendation by the Board of Directors, (b) against
any stockholder nomination for director that is not approved and recommended by
the Board of Directors for election at any such meeting, (c) in favor of the
Company’s “say-on-pay” proposal and any proposal by the Company relating to
equity compensation that has been approved by the Board of Directors or the
Compensation Committee of the Board of Directors (or any successor committee,
however denominated), and (d) in favor of the Company’s proposal for
ratification of the appointment of the Company’s independent registered public
accounting firm, but no Purchaser shall be under any obligation to vote in the
same manner as recommended by the Board of Directors or in any other manner,
other than in its sole discretion, with respect to any other matter. In
furtherance of the foregoing, for so long as the Purchaser has the right to
designate or nominate a director to the Board of Directors pursuant to the
Certificate of Designations or Section 4.1, the Purchaser shall take such action
as may be required so that the Purchaser is present, in person or by proxy, at
each meeting of the stockholders of the Company and at every postponement or
adjournment thereof so that all of the Purchased Shares, Conversion Shares or
other shares of Common Stock owned, directly or indirectly, of record or
beneficially by the Purchaser may be counted for the purposes of determining the
presence of a quorum and voted in accordance with the terms and conditions of
this Section 4.11.

 

Section 4.12          Tax Matters.

 

(a)           USRPHC Status. At the Purchaser’s request from time to time while
the Purchaser owns an equity interest in the Company, the Company shall use
commercially reasonable efforts to determine as promptly as practicable whether
it is a USRPHC and shall promptly notify the Purchaser in writing of its
determination of its status as a USRPHC (and if in connection with a sale, shall
promptly provide to the Purchaser a statement in accordance with Treasury
Regulations Section 1.897-2(h)(1) where it determines the interest being sold is
not a United States real property interest within the meaning of Section 897 of
the Code).

 

(b)          Tax Treatment. The Company and the Purchaser shall treat the
Commitment Fee as reducing the purchase price of the Purchased Shares for U.S.
federal and applicable state and local income Tax purposes and shall take no
positions or actions inconsistent with the foregoing unless otherwise required
by a determination within the meaning of Section 1313(a) of the Code or similar
provision of applicable state or local income Tax law.

 

20

 

 

Section 4.13          Nasdaq Listing. To the extent it has not already done so,
promptly following the execution of this Agreement, the Company shall apply to
cause the Conversion Shares to be approved for listing on the Nasdaq Stock
Market, subject to official notice of issuance.

 

Article V

CONDITIONS TO THE PARTIES’ OBLIGATIONS

 

Section 5.1            Conditions of the Purchaser. The obligations of the
Purchaser to consummate the transactions contemplated hereby to be consummated
at the Closing are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions precedent:

 

(a)          Representations and Warranties. Each of the representations and
warranties of the Company contained in Article II of this Agreement shall be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
except for representations and warranties that speak as of a specific date or
time other than the Closing Date (which need only be true and correct in all
material respects as of such date or time), except where the failure of such
representations and warranties to be so true and correct, without giving effect
to any qualification or limitation as to “materiality,” “Material Adverse
Effect” or similar qualifier set forth therein, has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(b)           Covenants. The Company shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it at or prior to the Closing.

 

(c)          Certificate of Designations. The Certificate of Designations shall
have been duly filed with the Secretary of State of the State of Delaware.

 

Section 5.2           Conditions of the Company. The obligations of the Company
to consummate the transactions contemplated hereby are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent:

 

(a)           Representations and Warranties; Performance. Each of the
representations and warranties of the Purchaser contained in Article III of this
Agreement shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date, except for representations and warranties that speak as of a
specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time), except where the
failure of such representations and warranties to be so true and correct,
without giving effect to any qualification or limitation as to “materiality,”
“material adverse effect” or similar qualifier set forth therein, has not had,
and would not reasonably be expected to have, individually or in the aggregate,
a material adverse effect on the Purchaser’s ability to consummate the
transactions under this Agreement and the Registration Rights Agreement.

 

21

 

 

(b)               Covenants. The Purchaser shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by the Purchaser at or prior to the
Closing.

 

(c)               Consideration for the Securities. The Purchaser shall have
paid the purchase price of the Purchased Shares to be purchased by such
Purchaser in full at the Closing either by certified check or by wire transfer
of immediately available funds to an account designated in writing by the
Company.

 

(d)               Certificate of Designations. The Certificate of Designations
shall have been duly filed with the Secretary of State of the State of Delaware.

 

Article VI

MISCELLANEOUS

 

Section 6.1            Survival. Except in the case of intentional and actual
fraud, the representations and warranties of the parties contained in Article II
and Article III hereof shall not survive, and shall terminate automatically as
of, the Closing, and there shall be no liability in respect thereof, whether
such liability has accrued prior to or after the Closing, on the part of any
party or any of their respective Representatives. All other covenants and
agreements of the parties contained herein shall survive the Closing in
accordance with their terms.

 

Section 6.2            Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and will become effective when one or more counterparts have been signed by a
party and delivered to the other parties. Copies of executed counterparts of
signature pages to this Agreement may be transmitted by PDF (portable document
format) or facsimile and such PDFs or facsimiles will be deemed as sufficient as
if actual signature pages had been delivered.

 

Section 6.3            Governing Law.

 

(a)          This Agreement shall be governed by, and construed in accordance
with, the laws of the state of Delaware, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the state of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the state of Delaware.

 

(b)           Any dispute relating hereto shall be heard first in the Delaware
Court of Chancery, and, if applicable, in any state or federal court located in
of Delaware in which appeal from the Court of Chancery may validly be taken
under the laws of the State of Delaware (each a “Chosen Court” and collectively,
the “Chosen Courts”), and the parties agree to the exclusive jurisdiction and
venue of the Chosen Courts. Such Persons further agree that any proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby or by
any matters related to the foregoing (the “Applicable Matters”) shall be brought
exclusively in a Chosen Court, and that any proceeding arising out of this
Agreement or any other Applicable Matter shall be deemed to have arisen from a
transaction of business in the state of Delaware, and each of the foregoing
Persons hereby irrevocably consents to the jurisdiction of such Chosen Courts in
any such proceeding and irrevocably and unconditionally waives, to the fullest
extent permitted by law, any objection that such Person may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such Chosen Court or that any such proceeding brought in any such Chosen Court
has been brought in an inconvenient forum.

 

22

 

 

(c)           Such Persons further covenant not to bring a proceeding with
respect to the Applicable Matters (or that could affect any Applicable Matter)
other than in such Chosen Court and not to challenge or enforce in another
jurisdiction a judgment of such Chosen Court.

 

(d)           Process in any such proceeding may be served on any Person with
respect to such Applicable Matters anywhere in the world, whether within or
without the jurisdiction of any such Chosen Court. Without limiting the
foregoing, each such Person agrees that service of process on such party as
provided in Section 6.6 shall be deemed effective service of process on such
Person.

 

(e)           Waiver of Jury Trial. EACH PARTY HERETO, FOR ITSELF AND ITS
AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES
PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT HEREOF.

 

Section 6.4            Entire Agreement; No Third Party Beneficiary. This
Agreement and the Registration Rights Agreement contain the entire agreement by
and among the parties with respect to the subject matter hereof and all prior
negotiations, writings and understandings relating to the subject matter of this
Agreement. This Agreement is not intended to confer upon any Person not a party
hereto (or their successors and permitted assigns) any rights or remedies
hereunder.

 

Section 6.5            Expenses. All fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including accounting and legal fees shall be paid by the party incurring such
expenses, except that, upon consummation of the Closing, the Company shall
reimburse the Purchaser for all reasonable and documented out-of-pocket costs
and expenses, including legal fees, expenses, other professional fees and
expenses, and all reasonable out-of-pocket due diligence expenses, in an
aggregate amount not to exceed two hundred fifty thousand dollars ($250,000),
incurred by the Purchaser in connection with the transaction contemplated by
this Agreement.

 

Section 6.6            Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given or made as follows: (a) if sent by registered or certified
mail in the United States return receipt requested, upon receipt; (b) if sent by
nationally recognized overnight air courier, one (1) Business Day after mailing;
(c) if sent by e-mail transmission, with a copy sent on the same day in the
manner provided in the foregoing clause (a) or (b), when transmitted and receipt
is confirmed; and (d) if otherwise actually personally delivered, when
delivered, provided, that such notices, requests, demands and other
communications are delivered to the address set forth below, or to such other
address as any party shall provide by like notice to the other parties to this
Agreement:

 

23

 

 

If to the Company, to:

 

The Cheesecake Factory Incorporated
26901 Malibu Hills Road
Calabasas Hills, CA 91301
E-mail: smay@thecheesecakefactory.com
Attention: General Counsel

 

with a copy (which shall not constitute notice) to:

 

Latham & Watkins LLP
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071
E-mail: david.zaheer@lw.com
Attention: David Zaheer

 

If to a Purchaser, to:

 

Roark Capital Acquisitions LLC
1180 Peachtree Street NE, Suite 2500
Atlanta, GA 30309
Attention: Stephen Aronson
E-mail: sda@roarkcapital.com

 

with a copy (which shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
E-mail: jmarell@paulweiss.com, sstasny@paulweiss.com
Attention: Jeffrey D. Marell, Sarah Stasny

 

Section 6.7            Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may be assigned in connection
with a Transfer to a Permitted Transferee permitted by Section 4.2(a)(i). No
other assignment of this Agreement or of any rights or obligations hereunder may
be made by any party hereto without the prior written consent of the other
parties hereto Any purported assignment or delegation in violation of this
Agreement shall be null and void ab initio.

 

24

 

 

Section 6.8            Headings. The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement.

 

Section 6.9            Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
each party hereto. Any party hereto may, only by an instrument in writing, waive
compliance by any other party or parties hereto with any term or provision
hereof on the part of such other party or parties hereto to be performed or
complied with. No failure or delay of any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor will any single or
partial exercise of any right or power, or any abandonment or discontinuance of
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The waiver by any party
hereto of a breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach. The rights and remedies of the parties
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have hereunder.

 

Section 6.10           Interpretation; Absence of Presumption.

 

(a)               For the purposes hereof: (i) words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other gender as the context requires; (ii) the terms “hereof,”
“herein,” and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits) and not to any particular provision of this Agreement,
and Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits, and Schedules to this Agreement unless
otherwise specified; (iii) the word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless the
context otherwise requires or unless otherwise specified; and (iv) the word “or”
shall not be exclusive.

 

(b)           With regard to each and every term and condition of this Agreement
and any and all agreements and instruments subject to the terms hereof, the
parties hereto understand and agree that the same have or has been mutually
negotiated, prepared and drafted, and if at any time the parties hereto desire
or are required to interpret or construe any such term or condition or any
agreement or instrument subject hereto, no consideration will be given to the
issue of which party hereto actually prepared, drafted or requested any term or
condition of this Agreement or any agreement or instrument subject hereto.

 

Section 6.11         Severability. Any provision hereof that is held to be
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, shall be ineffective only to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the remaining
provisions hereof, provided, however, that the parties will attempt in good
faith to reform this Agreement in a manner consistent with the intent of any
such ineffective provision for the purpose of carrying out such intent.

 

Section 6.12          Specific Performance. The parties hereto agree that
irreparable damage could occur and that the a party may not have any adequate
remedy at law in the event that any of the provisions of this Agreement are not
performed in accordance with their terms or were otherwise breached.
Accordingly, each party shall without the necessity of proving the inadequacy of
money damages or posting a bond be entitled to seek an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms,
provisions and covenants contained therein, this being in addition to any other
remedy to which they are entitled at law or in equity.

 

25

 

 

Section 6.13          Corporate Opportunities. Subject to the provisions of
Section 4.2(b)(i) and Section 4.7 and the proviso set forth in the penultimate
sentence of this Section 6.13, the Company, on behalf of itself and its
Subsidiaries, to the fullest extent permitted by applicable law, (a)
acknowledges and affirms that the Purchaser and its Affiliates, portfolio
companies and Representatives, including any Series A Director or Purchaser
Nominee (the “Purchaser Group”): (i) have participated (directly or indirectly)
and will continue to participate (directly or indirectly) in private equity,
venture capital and other direct investments in corporations, joint ventures,
limited liability companies and other entities (“Other Investments”), including
Other Investments engaged in various aspects of businesses similar to those
engaged in by the Company and its Subsidiaries (and related services businesses)
that may, are or will be competitive with the Company’s or any of its
Subsidiaries’ businesses or that could be suitable for the Company’s or any of
its Subsidiaries’ interests, (ii) do business with any client, customer, vendor
or lessor of any of the Company or its Affiliates or any other person with which
any of the Company or its Affiliates has a business relationship, (iii) have
interests in, participate with, aid and maintain seats on the board of directors
or similar governing bodies of, or serve as officers of, Other Investments, (iv)
may develop or become aware of business opportunities for Other Investments; and
(v) may or will, as a result of or arising from the matters referenced in this
Section 6.13, the nature of the Purchaser Group’s businesses and other factors,
have conflicts of interest or potential conflicts of interest, (b) hereby
renounces and disclaims any interest or expectancy in any business opportunity
(including any Other Investments or any other opportunities that may arise in
connection with the circumstances described in the foregoing clauses (a)(i)
through (a)(v) (each, a “Renounced Business Opportunity”)), (c) acknowledges and
affirms that no member of Purchaser Group, including any Series A Director or
Purchaser Nominee, shall have any obligation to communicate or offer any
Renounced Business Opportunity to the Company or any of its Subsidiaries, and
any member of Purchaser Group may pursue a Renounced Business Opportunity and
(d) waives any claim against the Purchaser Group and each member thereof. The
Company agrees that in the event that the Purchaser Group or any member thereof
acquires knowledge of a potential transaction or matter which may constitute a
corporate opportunity for both (x) the Purchaser Group and (y) the Company or
its Subsidiaries, a member of the Purchaser Group shall not have any duty to
offer or communicate information regarding such corporate opportunity to the
Company or its Subsidiaries. To the fullest extent permitted by applicable law,
the Company hereby waives any claim against the Purchaser Group and each member
thereof that such member or the Purchaser Group is liable to the Company or its
stockholders for breach of any fiduciary duty solely by reason of the fact that
the Purchaser Group or such member of the Purchaser Group (A) pursues or
acquires any corporate opportunity for its own account or the account of any
Affiliate or other person, (B) directs, recommends, sells, assigns or otherwise
transfers such corporate opportunity to another Person or (C) does not
communicate information regarding such corporate opportunity to the Company.
Notwithstanding anything to the contrary in the foregoing, the Company does not
renounce its interest in any corporate opportunity if such corporate opportunity
was expressly offered to a Series A Director or Purchaser Nominee solely in his
or her capacity as a member of the Board of Directors; provided that such
opportunity has not been separately presented to the Purchaser or its
Affiliates. Notwithstanding anything to the contrary in the foregoing, the
Company shall not be prohibited from pursuing any Renounced Business Opportunity
as a result of this Section 6.13.

 

26

 

 

Section 6.14           Net Funding. In order to simplify the cash movements in
respect of the payment of the purchase price set forth in Section 1.1, the
commitment fee described in Section 1.3 and the reimbursement amount set forth
in Section 6.5, the Company and the Purchaser hereby agree that, at the option
of the Purchaser, the commitment fee described in Section 1.3 and the
reimbursement amount set forth in Section 6.5 shall be deducted from purchase
price set forth in Section 1.1, such that the aggregate amount payable by the
Purchaser on the Closing Date shall equal $197,750,000, whereupon, following the
payment of such amount, all obligations of the Purchaser under this Agreement in
connection with its payment of the purchase price set forth in Section 1.1 shall
be deemed to have been satisfied in full as if the Purchaser had paid the full
amount of the purchase price set forth in Section 1.1 to the Company.

 

Section 6.15          Public Announcement. Subject to each party’s disclosure
obligations imposed by applicable law or the rules of any stock exchange upon
which its securities are listed, each of the parties hereto will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement, and neither the Company nor any
Purchaser will make any such news release or public disclosure without first
consulting with the other, and, in each case, also receiving the other’s consent
(which shall not be unreasonably withheld or delayed) and each party shall
coordinate with the party whose consent is required with respect to any such
news release or public disclosure. Notwithstanding the foregoing, this Section
6.14 shall not apply to any press release or other public statement made by the
Company or a Purchaser (a) that is consistent with prior disclosure and does not
contain any information relating to the transactions that has not been
previously announced or made public in accordance with the terms of this
Agreement or (b) is made to its auditors, attorneys, accountants, financial
advisors, limited partners or other Permitted Transferees.

 

(The next page is the signature page)

 

27

 

 

The parties have caused this Subscription Agreement to be executed as of the
date first written above.

 

  THE CHEESECAKE FACTORY INCORPORATED       By: /s/ Matthew E. Clark  

Name: Matthew Clark

Title: Executive Vice President, Chief Financial Officer

      RC CAKE HOLDINGS LLC       By: /s/ Paul D. Ginsberg   Name: Paul D.
Ginsberg
Title: President

 

 

 

 

EXHIBIT A

 

DEFINED TERMS

 

1.       The following capitalized terms have the meanings indicated:

 

“Affiliate” of any Person means any Person, directly or indirectly, Controlling,
Controlled by or under common Control with such Person.

 

“Antitrust Laws” means the HSR Act and any applicable law designed or intended
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition, through merger
of acquisition or otherwise.

 

“Board of Directors” means the Company’s board of directors.

 

“Business Day” means any day other than a Saturday, a Sunday or any day on which
the Federal Reserve Bank of New York is authorized or required by law or
executive order to close or be closed.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Bylaws” means the Bylaws of the Company, amended and restated, on May 20, 2009,
as the same may be further amended, supplemented or restated.

 

“Certificate of Incorporation” means the Company’s Restated Certificate of
Incorporation, as the same may be further amended, supplemented or restated.

 

“Company Competitor” means any Person that is engaged in any restaurant
business, including casual dining, fast-casual, fine dining or family style
restaurants and any Affiliate thereof; provided, however, that a private equity
fund shall not be deemed to be a “Company Competitor” solely as a result of
owning an investment in a portfolio company that is a Company Competitor.

 

“Confidential Information” means information regarding the Company or its
Subsidiaries that is non-public, confidential or proprietary in nature, together
with all analyses, compilations, forecasts, studies or other documents prepared
by the Purchaser or its Representatives which contain or otherwise reflect such
information. “Confidential Information” shall not include such portions of the
Confidential Information that (a) are or become generally available to the
public other than as a result of the Purchasers’ or its Affiliates’ disclosure
in violation of this Agreement, (b) become available to the Purchasers or its
Affiliates on a non-confidential basis from a source other than the Company or
its Subsidiaries, (c) was already in the Purchaser’s or its Affiliate’s
possession prior to the date of this Agreement and which was not obtained from
the Company or its Subsidiaries or (d) are independently developed by the
Purchaser or its Affiliates without reference to the Confidential Information.

 

“Control” (including its correlative meanings “under common Control with” and
“Controlled by”) means, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through ownership of securities or partnership
or other interests, by contract or otherwise.

 

A-1

 

 

“DGCL” means the General Corporation Law of the State of Delaware (as amended
from time to time).

 

“Environmental Permit” means any permit, license, approval or other
authorization under any applicable law, rule or regulations of the United States
or of any state, municipality or other subdivision thereof relating to pollution
or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or Hazardous Substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, recycling, presence, use, treatment,
storage, disposal, transport, or handling of, wastes, pollutants, contaminants
or Hazardous Substances.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Documents” means all material “employment benefit plans” as defined in
Section 3(3) of ERISA that are maintained or sponsored by the Company or its
Subsidiaries for the benefit of their respective current or former employees and
with respect to which the Company or its Subsidiaries have any liability.

 

“ERISA Regulations” means the regulations promulgated by the Department of Labor
in 29 C.F.R. § 2510.3-101, and any amendments or successor regulations thereto,
as modified by Section 3(42) of ERISA.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” means generally accepted accounting principles as in effect in the United
States.

 

“Governmental Entity” means any supranational, national, state, municipal, local
or foreign government, any court, tribunal, arbitrator, administrative agency,
commission or other governmental official, authority or instrumentality.

 

“Government Official” means any officer or employee of a foreign governmental
authority or any department, agency, or instrumentality thereof, or of a public
international organization, or any person acting in an official capacity for or
on behalf of any such foreign governmental authority or department, agency, or
instrumentality, or for or on behalf of any such public international
organization, or any political party, party official, or candidate thereof,
excluding officials of the governments of the United States, the several states
thereof, any local subdivision of any of them or any agency, department or unit
of any of the foregoing.

 

“Hazardous Substance” means any waste, substance, product or material defined or
regulated as “hazardous” or “toxic” by any applicable law, rule, regulation or
order described in the definition of “Requirements of Environmental Law,“
including petroleum and any fraction thereof, and any radioactive materials and
waste.

 

A-2

 

 

“Hedging Transactions” means the entering (a) into a Short Sale, (b) into or
establishment of any agreement constituting a “put equivalent position,” as
defined by Rule 16a-1(h) of the Exchange Act, or (c) otherwise entering into a
hedging transaction the primary purpose of which is to offset the loss which
results from a decline in the market price of the Common Stock.

 

“Indemnification Agreement” means the Indemnification Agreement between the
Company and the Series A Director in the form attached to this Agreement as
Exhibit E.

 

“Investment Company Act” mean the Investment Company Act of 1940, as amended.

 

“Management Rights Letter” means the Management Rights Letter between the
Company and Roark Capital Partners V (TE) LP in the form attached to this
Agreement as Exhibit F.

 

“Material Adverse Effect” means a material adverse effect upon the financial
condition, assets, liabilities or results of operations of the Company and its
Subsidiaries, taken as a whole; provided, however, that any such effect
resulting or arising from or relating to any of the following matters shall not
be considered when determining whether a Material Adverse Effect has occurred or
would reasonably be expected to occur: (a) any change, development, occurrence
or event affecting the industry in which the Company and its Subsidiaries
operate; (b) any conditions affecting the United States general economy or the
general economy in any geographic area in which the Company or its Subsidiaries
operate or developments or changes therein or the financial and securities
markets and credit markets in the United States or elsewhere in the world;
(c) political conditions, including the continuation, occurrence, escalation,
outbreak or worsening of any hostilities, war, political action, acts of
terrorism, sabotage or military conflicts, whether or not pursuant to the
declaration of an emergency or war; (d) any conditions resulting from the
existence, occurrence or continuation of any force majeure events, including any
earthquakes, floods, hurricanes, tropical storms, fires or other natural or
manmade disasters, any epidemic, pandemic (including COVID-19) or other similar
outbreak (including any non-human epidemic, pandemic or other similar outbreak)
or any other national, international ore regional calamity; (e) changes in any
law, rule, regulation or GAAP; (f) any action taken or omitted to be taken by or
at the written request or with the written consent of a Purchaser; (g) any
announcement of this Agreement or the transactions contemplated hereby; (h)
changes in the market price or trading volume of Common Stock or any other
equity, equity-related or debt securities of the Company or its Affiliates (it
being understood that the underlying circumstances, events or reasons giving
rise to any such change can be taken into account in determining whether a
Material Adverse Effect has occurred or would reasonably be expected to occur);
(i) any failure to meet any internal or public projections, forecasts, estimates
or guidance for any period (it being understood that the underlying
circumstances, events or reasons giving rise to any such failure can be taken
into account in determining whether a Material Adverse Effect has occurred or
would reasonably be expected to occur); or (j) any effect arising out of or
resulting from any claims or proceedings made by any of the Company’s
stockholders arising out of or related to this Agreement; provided, that any of
the matters described in clauses (a), (b) or (c), will be taken into account for
purposes of determining whether or not a Material Adverse Effect has occurred to
the extent that such matter disproportionately and adversely affects the Company
and its Subsidiaries, taken as a whole, as compared with other companies
operating in the industry in which the Company and its Subsidiaries operate.

 

A-3

 

 

“Permitted Transferee” means any investment fund, investment vehicle or account
Controlled by (i) Roark Capital Management, LLC or (ii) one or more Affiliates
of Roark Capital Management, LLC.

 

“Person” means an individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization or a government or
agency or political subdivision thereof.

 

“Registration Rights Agreement” means the Registration Rights Agreement between
the Company and the Purchaser in the form attached to the Agreement as Exhibit
C.

 

“Representatives” means a Persons’ Affiliates, employees, agents, consultants,
accountants, attorneys or financial advisors and direct or indirect members or
partners or Affiliates of the foregoing.

 

“Requirements of Environmental Law” means all requirements imposed by any law
(including the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Clean Air Act, and any state analogues of any of the foregoing), rule,
regulation, or order of any governmental authority which relate to (a)
pollution, protection or clean-up of the air, surface water, ground water or
land; (b) solid, gaseous or liquid waste or Hazardous Substance generation,
recycling, reclamation, release, threatened release, treatment, storage,
disposal or transportation; (c) exposure of Persons or property to Hazardous
Substances; or (d) the manufacture, presence, processing, distribution in
commerce, use, discharge, releases, threatened releases, emissions or storage of
Hazardous Substances into the environment.

 

“Restricted Securities” means Purchased Shares or Conversion Shares required to
bear the legend set forth in Section 4.3(a) under the applicable provisions of
the Securities Act.

 

“SEC” means the Securities and Exchange Commission.

 

“SEC Documents” means all reports, schedules, registration statements, proxy
statements and other documents (including all amendments, exhibits and schedules
thereto) filed by the Company with the SEC on or after January 1, 2019.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Short Sale” means a sale of Common Stock that is marked as a short sale.

 

“Stock Plans” means The Cheesecake Factory Incorporated 2010 Stock Incentive
Plan, as amended, and The Cheesecake Factory Incorporated Stock Incentive Plan.

 

“Subsidiary” means, when used with reference to a party, any corporation or
other organization, whether incorporated or unincorporated, of which such party
or any other Subsidiary of such party is a general partner or serves in a
similar capacity, or, with respect to such corporation or other organization, at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions is directly or indirectly owned or controlled by
such party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries.

 

A-4

 

 

“Support Agreement” means the Support Agreement between Mr. David Overton, on
the one hand, and the Purchaser, on the other hand, in the form attached to this
Agreement as Exhibit G.

 

“Tax” and “Taxes” means all federal, state, local and foreign taxes (including,
without limitation, income, franchise, property, sales, withholding, payroll and
employment taxes), assessments, fees or other charges imposed by any
Governmental Entity, including any interest, additions to tax or penalties
applicable thereto.

 

“Tax Return” means any return, report or similar filing (including the attached
schedules) filed or required to be filed with respect to Taxes (and any
amendments thereto), including any information return, claim for refund or
declaration of estimated Taxes.

 

“Transfer” means any direct or indirect (a) sale, transfer, hypothecation,
assignment, gift, bequest or disposition by any other means, whether for value
or no value and whether voluntary or involuntary (including, without limitation,
by realization upon any lien or by operation of law or by judgment, levy,
attachment, garnishment, bankruptcy or other legal or equitable proceedings) or
(b) grant of any option, warrant or other right to purchase or the entry into
any hedge, swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of Common Stock. The term “Transferred” shall have a correlative meaning.

 

“Treasury Regulations” means the U.S. Treasury regulations promulgated under the
Code, as amended.

  

A-5

 

 

2.       The following terms are defined in the Sections of the Agreement
indicated:

 

INDEX OF TERMS

 

Term Section Agreement Preamble Antitrust Approval 4.10(a) Applicable Matters
6.3(b) Certificate of Designations 1.1 Chosen Court 6.3(b) Chosen Courts 6.3(b)
Closing 1.2 Closing Date 1.2 Common Stock 2.4(a) Company Preamble consultant
4.9(a)(iii) Conversion Shares 2.4(c) Convertible Securities 4.9(a)(i) Disclosure
Schedule Article II Equity Securities 4.9(a)(iii) Excluded Securities
4.9(a)(iii) Financial Statements 2.7 HSR Act 2.3 New Securities 4.9(a)(iv) Offer
4.9(b) Offer Period 4.9(b) Options 4.9(a)(v) Other Investments 6.13 Preferred
Stock 2.4(a) Purchased Shares Preamble Purchaser Preamble Purchaser Group 6.13
Purchaser Nominee 4.1(b) Renounced Business Opportunity 6.13 SECURITIES ACT
4.3(a) Series A Director 4.1(a) Series A Preferred Stock Preamble USRPHC 2.12

 

A-6