Exhibit 10.1

EXECUTION VERSION

SECURITIES PURCHASE AGREEMENT

among

NN, INC.

and

THE PURCHASERS PARTY HERETO

December 5, 2019

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1  

Section 1.01

 

Definitions

     1  

Section 1.02

 

Accounting Procedures and Interpretation

     9  

ARTICLE II AGREEMENT TO SELL AND PURCHASE

     10  

Section 2.01

 

Sale and Purchase

     10  

Section 2.02

 

Closing

     10  

Section 2.03

 

Mutual Conditions

     10  

Section 2.04

 

Conditions to Each Purchaser’s Obligations

     10  

Section 2.05

 

Conditions to the Company’s Obligations

     11  

Section 2.06

 

Deliveries at the Closing

     12  

Section 2.07

 

Independent Nature of Purchasers’ Obligations and Rights

     13  

Section 2.08

 

Further Assurances

     14  

ARTICLE III REPRESENTATIONS AND WARRANTIES RELATED TO THE COMPANY

     14  

Section 3.01

 

Existence, Qualification and Power

     14  

Section 3.02

 

Capitalization and Valid Issuance of Securities

     14  

Section 3.03

 

Ownership of the Material Subsidiaries

     15  

Section 3.04

 

Company SEC Documents

     16  

Section 3.05

 

Financial Statements

     16  

Section 3.06

 

Internal Controls

     17  

Section 3.07

 

Disclosure Controls and Procedures

     17  

Section 3.08

 

No Material Adverse Change

     17  

Section 3.09

 

No Registration Required

     18  

Section 3.10

 

No Restrictions or Registration Rights

     18  

Section 3.11

 

Litigation

     18  

Section 3.12

 

Compliance with Law

     18  

Section 3.13

 

No Existing Defaults; No Conflicts

     19  

Section 3.14

 

Authority; Enforceability

     19  

Section 3.15

 

Approvals

     20  

Section 3.16

 

Investment Company Status

     20  

Section 3.17

 

Certain Fees

     20  

Section 3.18

 

Insurance

     20  

Section 3.19

 

Listing and Maintenance Requirements

     21  

Section 3.20

 

ERISA Compliance

     21  

Section 3.21

 

Tax Returns; Taxes

     22  

Section 3.22

 

Required Disclosures and Descriptions

     22  

Section 3.23

 

Environmental Compliance

     22  

Section 3.24

 

Title to Property

     22  

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Section 3.25

 

Anti-Corruption Laws and Sanctions

     23  

Section 3.26

 

Form S-3 Eligibility

     23  

Section 3.27

 

No Directed Selling Efforts or General Solicitation

     23  

Section 3.28

 

No Integrated Offering

     23  

Section 3.29

 

Intellectual Property

     23  

Section 3.30

 

Occupational Safety

     24  

Section 3.31

 

Information Technology

     24  

Section 3.32

 

Restricted Payments

     24  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     25  

Section 4.01

 

Existence

     25  

Section 4.02

 

Authorization, Enforceability

     25  

Section 4.03

 

No Breach

     25  

Section 4.04

 

Certain Fees

     25  

Section 4.05

 

Unregistered Securities

     25  

Section 4.06

 

Sufficient Funds

     27  

Section 4.07

 

Ownership; No Prohibited Trading

     27  

Section 4.08

 

No General Solicitation

     28  

Section 4.09

 

No Reliance

     28  

Section 4.10

 

Use of Proceeds

     28  

ARTICLE V COVENANTS

     29  

Section 5.01

 

Cooperation; Further Assurances

     29  

Section 5.02

 

Regulatory Approvals

     29  

Section 5.03

 

Use of Proceeds; Amended & Restated Credit Agreement

     29  

Section 5.04

 

Subsequent Equity Sales

     30  

Section 5.05

 

Stockholder Approval

     30  

Section 5.06

 

Consent Rights.

     31  

Section 5.07

 

Qualifying Transactions.

     31  

Section 5.08

 

Removal of Legend

     33  

Section 5.09

 

Tax Matters

     33  

Section 5.10

 

Listing; SEC Compliance

     34  

Section 5.11

 

Dividend Blockers

     34  

ARTICLE VI INDEMNIFICATION, COSTS AND EXPENSES

     34  

Section 6.01

 

Indemnification by the Company

     34  

Section 6.02

 

Indemnification Procedure

     35  

Section 6.03

 

Tax Matters

     36  

ARTICLE VII TERMINATION

     36  

Section 7.01

 

Termination

     36  

Section 7.02

 

Certain Effects of Termination

     37  

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ARTICLE VIII MISCELLANEOUS

     37  

Section 8.01

 

Expenses

     37  

Section 8.02

 

Interpretation

     37  

Section 8.03

 

Survival of Provisions

     38  

Section 8.04

 

No Waiver: Modifications in Writing

     38  

Section 8.05

 

Binding Effect; Assignment

     39  

Section 8.06

 

Publicity

     39  

Section 8.07

 

Communications

     40  

Section 8.08

 

Entire Agreement

     41  

Section 8.09

 

Governing Law; Submission to Jurisdiction

     41  

Section 8.10

 

Waiver of Jury Trial

     41  

Section 8.11

 

No Recourse Against Others

     42  

Section 8.12

 

No Third-Party Beneficiaries

     42  

Section 8.13

 

Execution in Counterparts

     42  

 

SCHEDULE A – Purchaser Allocations of Purchased Preferred Stock and Purchased
Warrants

  

SCHEDULE B – Purchaser Ownership of Common Stock

  

EXHIBIT A – Form of Registration Rights Agreement

     A-1  

EXHIBIT B – Form of Certificate of Designation for the Series B Convertible
Preferred Stock

     B-1  

EXHIBIT C – Form of Warrant

     C-1  

EXHIBIT D – Tax Matters

     D-1  

EXHIBIT E – Legal Opinion

     E-1  

 

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SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT, dated as of December 5, 2019 (this
“Agreement”), is entered into by and among NN, INC., a Delaware corporation (the
“Company”), and the purchasers set forth in Schedule A hereto (the
“Purchasers”).

WHEREAS, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, the Purchased Securities (as
defined below), in accordance with the provisions of this Agreement; and

WHEREAS, in connection with the issuance of the Purchased Securities pursuant to
this Agreement, the Company and the Purchasers will enter into a registration
rights agreement (the “Registration Rights Agreement”), pursuant to which the
Company will provide the Purchasers with certain registration rights with
respect to the Purchased Preferred Stock and Underlying Shares acquired pursuant
hereto.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, the following terms have
the meanings indicated:

“2020 Stockholder Meeting” has the meaning specified in Section 5.05.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries’ controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise. For the avoidance of
doubt, for purposes of this Agreement, (a) the Company Entities, on the one
hand, and any Purchaser, on the other, shall not be considered Affiliates and
(b) any fund or account managed, advised or subadvised, directly or indirectly,
by a Purchaser or its Affiliates, shall be considered an Affiliate of such
Purchaser. In addition, the Wuxi JV shall not be considered an Affiliate of the
Company or any other Company Entity for purposes of this Agreement.

“Agent” means J.P. Morgan Securities LLC.

“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.

“Allocated Purchase Price” means with respect to each Purchaser, the dollar
amount set forth opposite such Purchaser’s name under the heading “Allocated
Purchase Price” on Schedule A hereto.

 

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“Amended and Restated Credit Agreement” means the amended and restated credit
agreement dated as of September 30, 2016 (as amended by the Incremental
Amendment to Amended and Restated Credit Agreement, dated as of October 31,
2016, Amendment No. 1 to Amended and Restated Credit Agreement, dated as of
April 3, 2017, Amendment No. 2 to Amended and Restated Credit Agreement, dated
as of August 15, 2017, Amendment No. 3 to Amended and Restated Credit Agreement,
dated as of November 24, 2017 and Amendment No. 4 to Amended and Restated Credit
Agreement, dated as of May 7, 2018, Amendment No. 5 to Amended and Restated
Credit Agreement, dated as of December 26, 2018, Amendment No. 6 to Amended and
Restated Credit Agreement, dated as of March 15, 2019 and Amendment No. 7 to
Amended and Restated Credit Agreement, dated June 11, 2019 and as it may be
further amended, restated, amended and restated or otherwise modified from time
to time), by and among the Company, as the Borrower, SunTrust Bank, as
Administrative Agent, Regions Bank, as Syndication Agent and Co-Documentation
Agent, and Keybank National Association, as Co-Documentation Agent.

“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction
applicable to the Company or its Subsidiaries from time to time concerning or
relating to bribery, money-laundering or corruption.

Any Person shall be deemed to “beneficially own”, to have “beneficial ownership”
of, or to be “beneficially owning” any securities (which securities shall also
be deemed “beneficially owned” by such Person) that such Person is deemed to
“beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act.

“Balance Sheet Date” has the meaning specified in Section 3.05(b).

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

“Business Day” means any day other than a Saturday, Sunday, any federal legal
holiday or day on which banking institutions in the State of New York are
authorized or required by Law or other governmental action to close.

“Certificate of Designation” has the meaning specified in Section 2.04(d).

“Change of Control” shall be deemed to have occurred at such time as any of the
following events shall occur:

(a) any “person” or “group”, other than the Company, its Subsidiaries or any
employee benefits plan of the Company or its Subsidiaries, files, or is required
by applicable law to file, a Schedule 13D (or any successor schedule, form or
report) pursuant to the Exchange Act, disclosing that such person has become the
direct or indirect beneficial owner of shares with a majority of the total
voting power of the Company’s outstanding Common Stock or the Company becomes
otherwise aware that any person or group has become the direct or indirect
beneficial owner of shares with a majority of the total voting power of the
Company’s outstanding Common Stock; unless such beneficial ownership arises
solely as a result of a revocable proxy delivered in response to a proxy or
consent solicitation made pursuant to applicable rules and regulations under the
Exchange Act;

 

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(b) the Company consolidates with or merges with or into another person (other
than a Subsidiary of the Company), or sells, conveys, transfers, leases or
otherwise disposes of all or substantially all of the consolidated properties
and assets of the Company and its Subsidiaries to any person (other than a
Subsidiary of the Company) or any person (other than a Subsidiary of the
Company) consolidates with, or merges with or into the Company, provided that
none of the circumstances set forth in this clause (b) shall be a Change of
Control if persons that beneficially own the Common Stock of the Company
immediately prior to the transaction own, directly or indirectly, shares with a
majority of the total voting power of all outstanding Common Stock of the
surviving or transferee person immediately after the transaction in
substantially the same proportion as their ownership of the Company’s Common
Stock immediately prior to the transaction; or

(c) the Common Stock ceases to be listed or quoted on any of the New York Stock
Exchange, New York Stock Exchange American, the NASDAQ Global Select Market or
the NASDAQ Global Market or any other national securities exchange regulated
under Section 6(a) of the Exchange Act.

“Closing” has the meaning specified in Section 2.02.

“Closing Date” means the date on which the Closing occurs.

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

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.01 per share, of the
Company.

“Company” has the meaning set forth in the introductory paragraph of this
Agreement.

“Company Entities” means, collectively, the Company and Company’s Subsidiaries.

“Company SEC Documents” means the Company’s forms, registration statements,
reports, schedules and statements or other document (including exhibits) filed
with, or furnished to, the Commission and publicly available after December 31,
2017 and prior to the date hereof.

“Consent” has the meaning specified in Section 3.15.

“Contract” means any contract, agreement, indenture, note, bond, mortgage, deed
of trust, loan, instrument, lease, license, commitment or other arrangement,
understanding, undertaking, commitment or obligation, in each case that is
legally binding, whether written or oral.

“DGCL” means the Delaware General Corporation Law, as may be amended or revised
from time to time.

 

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“Dividend Withholding Taxes” means any taxes withheld by the Company under
Sections 1441 and 1442 of the Code with respect to dividend income (including
deemed dividends under Section 305 of the Code) attributable to the Purchased
Preferred Stock. For the avoidance of doubt, Dividend Withholding Taxes shall
not include any backup withholding or withholding under Sections 1471 through
1474 of the Code.

“Environmental Law” means any and all Federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to water or public
wastewater treatment systems, applicable in, or pursuant to the laws of, any
jurisdiction.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate any Pension
Plan or the treatment of a Pension Plan amendment, in each case, as a
termination under Section 4041 or 4041A of ERISA; (e) the institution by the
PBGC of proceedings to terminate a Pension Plan; (f) any event or condition
which constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; or (g) the
determination that any Pension Plan is considered an at-risk plan or a plan in
endangered or critical status within the meaning of Sections 430, 431 and 432 of
the Code or Sections 303, 304 and 305 of ERISA.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

“Foreign Government Scheme or Arrangement” has the meaning specified in
Section 3.20(e).

“Foreign Plan” has the meaning specified in Section 3.20(e).

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.

 

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“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

“Indemnified Party” has the meaning specified in Section 6.02(b).

“Indemnifying Party” has the meaning specified in Section 6.02(b).

“IT Systems” has the meaning specified in Section 3.31.

“Law” means collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“Lien” means any mortgage, pledge, lien (statutory or otherwise), security
interest, security agreement, or other encumbrance upon or with respect to any
property of any kind.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon the operations, business, properties, assets, or condition
(financial or otherwise) of the Company or the Company Entities, taken as a
whole; or (b) a material impairment of the ability of the Company Entities,
taken as a whole to perform their obligations under the Transaction Documents to
which they are party; provided however, that a Material Adverse Effect shall not
include any material and adverse effect on the foregoing to the extent such
material and adverse effect result from, arises out of, or relates to (1) the
announcement of the transactions contemplated by this Agreement or the
satisfaction of the obligations set forth herein, (2) a general deterioration in
the industry in which the Company operates, (3) a general deterioration in the
economy, credit or financial or capital markets, in the United States or
elsewhere in the world, in which the Company operates, including changes in
interest or exchange rates, (4) any change or decline in market price or change
in trading volume, of the capital stock of the Company, or (5) the outbreak or
escalation of hostilities involving the United States, the declaration by the
United States of a national emergency or war or the occurrence of any other
calamity or crisis, including acts of terrorism; except, in each case with
respect to subclauses (b)(2) or (b)(5), to the extent that such event, change or
development disproportionately affects the Company Entities, taken as a whole,
relative to other similar situated companies in the industries in which the
Company Entities operate.

 

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“Material Subsidiaries” means the Subsidiaries of the Company that are
“significant subsidiaries” of the Company as defined in Rule 1-02(w) of
Regulation S-X under the Exchange Act.

“Minimum Ownership Requirement” for any Purchaser means that such Purchaser
continues to beneficially own at all times shares of Series B Convertible
Preferred Stock with an aggregate liquidation preference of at least
$10 million.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including the Company or any ERISA Affiliate) at least two of whom are
not under common control, as such a plan is described in Section 4064 of ERISA.

“NASDAQ” means the NASDAQ Stock Market, Inc.

“Organizational Documents” means, (a) (i) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(ii) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (iii) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, or (b) with respect to entities incorporated in any
non-U.S. jurisdiction, equivalent or comparable constitutive documents.

“Outside Date” has the meaning specified in Section 7.01(c).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Sections 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by the Company and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code.

 

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“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof or any other form of entity.

“Personal Data” has the meaning specified in Section 3.31.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of the Company or any
ERISA Affiliate or any such Plan to which the Company or any ERISA Affiliate is
required to contribute on behalf of any of its employees.

“Proxy Statement” has the meaning specified in Section 5.05.

“Purchased Preferred Stock” means, with respect to each Purchaser, the number of
shares of Series B Convertible Preferred Stock as set forth opposite such
Purchaser’s name on Schedule A hereto.

“Purchased Securities” means the Purchased Preferred Stock and the Purchased
Warrants, collectively.

“Purchased Warrants” means, with respect to each Purchaser, the number of
Warrants as set forth opposite such Purchaser’s name on Schedule A hereto.

“Purchaser Related Parties” has the meaning specified in Section 6.01.

“Purchasers” has the meaning specified in the introductory paragraph of this
Agreement.

“Qualifying Tender/Exchange Offer” shall have the meaning specified in
Section 5.07(d).

“Qualifying Transaction” means a Change of Control (a) with regard to which the
holder of Series B Convertible Preferred Stock is entitled to receive in respect
of its Series B Convertible Preferred Stock, in connection with the consummation
of such transaction (without regard to limitations or restrictions on
conversion), consideration consisting solely of cash in an amount per
outstanding share of Series B Convertible Preferred Stock that is at least equal
to: (x) the applicable “Redemption Price” (as defined in the Certificate of
Designation) that would be paid to the holder of such share if a redemption of
such share of the Series B Convertible Preferred Stock were to occur, as of the
date of closing of the Qualifying Transaction; plus (y) any accrued dividends on
the Series B Convertible Preferred Stock that have not been paid to the date of
such closing; minus (z) the 35% of the aggregate amount of any Dividend
Withholding Taxes as of such closing that the Company has paid prior to such
closing with respect to such share of Series B Convertible Preferred Stock, or
will pay or otherwise be required to deduct and withhold in connection with the
payment of the consideration in respect of such share of the Series B
Convertible Preferred Stock in the Qualifying Transaction (following repayment
of all “Loan Obligations,” under the Credit Agreement, it being understood that
the requirement to repay the Credit Agreement in no way modifies the requirement
for the Redemption Price of the

 

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Series B Convertible Preferred Stock to be paid in full, whether by the Company
or a third party, in cash upon consummation of the applicable transaction for
the Change of Control to qualify as a Qualifying Transaction) or (b) that is
otherwise consented to by (i) the holders of a majority of the outstanding
Series B Convertible Preferred Stock and (ii) each Purchaser party to this
Agreement so long as such Purchaser continues to satisfy the Minimum Ownership
Requirement.

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between the Company and the Purchasers,
substantially in the form attached hereto as Exhibit A.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Representatives” means, with respect to a specified Person, the Purchasers,
Affiliates, officers, directors, managers, employees, agents, advisors, counsel,
accountants, investment bankers and other representatives of such Person.

“Sanctioned Country” means at any time, a country or territory which is itself
the subject or target of any Sanctions.

“Sanction(s)” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State or (b) the United
Nations Security Council, the European Union, Her Majesty’s Treasury of the
United Kingdom, the Netherlands or any other European Union member state.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

“Series B Convertible Preferred Stock” means the Series B Convertible Preferred
Stock having the terms set forth in the Certificate of Designation.

“Short Sales” means, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and forward sale contracts, options, puts,
calls, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements.

“Stockholder Approval” has the meaning specified in Section 5.05.

“Subsidiary” means, as to any Person, any corporation or other entity of which:
(a) at least a majority of the outstanding equity interest having by the terms
thereof ordinary voting power to elect a majority of the board of directors or
similar governing body of such corporation or other entity (irrespective of
whether or not at the time any equity interest of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
or controlled by such Person or one or more of its Subsidiaries; (b) such Person
or a Subsidiary of such Person is a general partner or, in the case of a limited
liability company, the sole or managing member or manager thereof; or (c) any
corporation or other entity as to which such Person consolidates for accounting
purposes; provided, however, for the avoidance of doubt that the Wuxi JV shall
not be considered a Subsidiary for purposes of this Agreement.

 

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“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.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“Third-Party Claim” has the meaning specified in Section 6.03(b).

“Total Purchase Price” means the aggregate amount of Allocated Purchase Prices
of all of the Purchasers participating in the Closing.

“Trading Affiliates” has the meaning set forth in Section 4.07.

“Transaction Documents” means, collectively, this Agreement, the Registration
Rights Agreement, the Certificate of Designation, Warrants and any and all other
agreements or instruments executed and delivered to the Purchasers by the
Company hereunder or thereunder, as applicable.

“Underlying Preferred Shares” has the meaning set forth in Section 3.02(d).

“Underlying Shares” has the meaning set forth in Section 3.02(d).

“Warrants” shall mean the warrants, as evidenced by certificates substantially
in the form attached as Exhibit C, with such changes thereto as may be consented
to by the parties hereto prior to Closing, it being agreed that the parties
hereto shall consent to any commercially reasonable changes as may be reasonably
required by NASDAQ staff to comply with NASDAQ listing rules.

“Wuxi JV” shall mean the Company’s 49% investment in the joint venture with Wuxi
Weifu Hi-Technology Co., Ltd..

Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements of the Company and certificates and reports as to
financial matters required to be furnished to the Purchasers hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q promulgated by the
Commission) and in compliance as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto.

 

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ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01 Sale and Purchase.

(a) Subject to the terms and conditions hereof, at the Closing, each Purchaser
hereby agrees to purchase from the Company such number of Purchased Securities
as set forth on Schedule A, and each Purchaser agrees to pay the Company its
Allocated Purchase Price with respect to such Purchased Securities. Each
Purchaser shall be permitted, prior to Closing, to allocate its obligation to
purchase Purchased Securities among funds and other accounts managed by or under
common management with such Purchaser; provided that, if any such fund or
account fails to perform its obligation to purchase the applicable portion of
the Purchasers’ Purchased Securities, the Purchaser shall purchase such
Purchased Securities.

(b) Subject to the terms and conditions hereof, at the Closing, the Company
hereby agrees to issue and sell to each Purchaser the Purchased Securities.

Section 2.02 Closing. Subject to the satisfaction or waiver of the conditions
precedent set forth in Section 2.03, Section 2.04 and Section 2.05 (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions at such time), the
consummation of the purchase and sale of the Purchased Securities hereunder (the
“Closing”) shall take place at 9:00 a.m. Eastern Time on December 10, 2019, at
the offices of Simpson Thacher & Bartlett LLP located at 425 Lexington Avenue,
New York, New York 10017, or at such other place, time or date as may be
mutually agreed upon in writing by the Company and the Purchasers.

Section 2.03 Mutual Conditions. The respective obligations of each party to
consummate the purchase and sale of the Purchased Securities at the Closing
shall be subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions (any or all of which may be waived by a party on
behalf of itself in writing, in whole or in part, to the extent permitted by
applicable Law):

(a) no statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Authority
which temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the transactions contemplated hereby or
makes the transactions contemplated hereby illegal; and

(b) there shall not be pending any suit, action or proceeding by any
Governmental Authority seeking to restrain, preclude, enjoin or prohibit the
transactions contemplated by this Agreement.

Section 2.04 Conditions to Each Purchaser’s Obligations. The obligation of a
Purchaser to consummate its purchase of Purchased Securities shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by the applicable Purchaser with
respect to itself in writing, in whole or in part, to the extent permitted by
applicable Law):

 

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(a) the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects (other than those
representations and warranties contained in Section 3.01, Section 3.02,
Section 3.04, Section 3.09. Section 3.10, Section 3.13(a)(i) and (b)(i),
Section 3.14, Section 3.16, Section 3.17, Section 3.26 or Section 3.32 or other
representations and warranties that are qualified by materiality or Material
Adverse Effect, which, in each case, shall be true and correct in all respects)
when made and as of the Closing Date (except that representations and warranties
made as of a specific date shall be required to be true and correct as of such
date only);

(b) the Company shall have performed and complied in all material respects with
all of the covenants and agreements contained in this Agreement that are
required to be performed or complied with by it on or prior to the Closing Date;

(c) the Company shall have filed with NASDAQ a “Notification Form: Listing of
Additional Shares” and supporting documentation, if required, related to the
Underlying Shares and NASDAQ shall have not raised any objection with respect
thereto that has not been withdrawn;

(d) the Company shall have duly adopted and filed with the Secretary of State of
the State of Delaware the Certificate of Designation in substantially the form
attached hereto as Exhibit B, with such changes thereto as may be consented to
by the parties hereto prior to the Closing, it being agreed that the parties
hereto shall consent to any commercially reasonable changes as may be reasonably
required by NASDAQ staff to comply with NASDAQ listing rules (the “Certificate
of Designation”) and such filing shall have been accepted and the Certificate of
Designation shall be effective;

(e) since the date of this Agreement, no downgrading shall have occurred in the
rating accorded the Company’s Indebtedness (as defined in the Amended and
Restated Credit Agreement) by any “nationally recognized statistical rating
organization”, as that term is defined in Section 3(a)(62) under the Exchange
Act;

(f) no notice of delisting from NASDAQ shall have been received by the Company
with respect to the Common Stock; and

(g) the Company shall have delivered, or caused to be delivered, to the
Purchaser the Company’s closing deliveries described in Section 2.06(a), as
applicable.

Section 2.05 Conditions to the Company’s Obligations. The obligation of the
Company to consummate the sale and issuance of the Purchased Securities to each
Purchaser shall be subject to the satisfaction on or prior to the Closing Date
of each of the following conditions (any or all of which may be waived by the
Company in writing, in whole or in part, to the extent permitted by applicable
Law):

(a) the representations and warranties of such Purchaser contained in this
Agreement shall be true and correct in all material respects (other than those
representations and warranties that are qualified by materiality, which, in each
case, shall be true and correct in all respects) when made and as of the Closing
Date (except that representations and warranties made as of a specific date or
for a specific period shall be required to be true and correct as of such date
or for such specific period only);

 

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(b) such Purchaser shall have performed and complied in all material respects
with all of the covenants and agreements contained in this Agreement that are
required to be performed or complied with by it on or prior to the Closing Date;
and

(c) such Purchaser shall have delivered, or caused to be delivered, to the
Company the Purchaser’s closing deliveries described in Section 2.06(b), as
applicable.

Section 2.06 Deliveries at the Closing.

(a) Deliveries of the Company. At the Closing, the Company shall deliver, or
cause to be delivered, to the Purchasers:

(i) A duly executed warrant for each Purchaser providing for the purchase by
such Purchaser of the number of shares of Common Stock set forth opposite such
Purchasers name on Schedule A shall have been delivered to each such Purchaser
free and clear of any Liens, other than transfer restrictions under this
Agreement and applicable federal and state securities Laws and those created by
the Purchasers;

(ii) A counterpart of the Registration Rights Agreement, which shall have been
duly executed by the Company;

(iii) A fully executed “Supplemental Listing Application” approving the
Underlying Shares for listing by NASDAQ;

(iv) Evidence of issuance of the Purchased Preferred Stock credited to
book-entry accounts maintained by the transfer agent of the Company, bearing a
restrictive notation meeting the requirements of the Securities Act, free and
clear of any Liens, other than transfer restrictions under this Agreement and
applicable federal and state securities Laws and those created by the
Purchasers;

(v) A certificate of the Secretary of the Company, on behalf of the Company,
dated the Closing Date, certifying as to and attaching (A) the certificate of
incorporation of the Company, (B) the bylaws of the Company and (C) board
resolutions authorizing the execution and delivery of the Transaction Documents
and the consummation of the transactions contemplated thereby, including the
issuance of the Purchased Securities;

(vi) A certificate of the Secretary of State of Delaware dated as of a recent
date, to the effect that the Company is in good standing in its jurisdiction of
formation;

(vii) A certificate of the Chief Financial Officer of the Company, on behalf of
the Company, dated the Closing Date, certifying, in their applicable capacities,
to the effect that the conditions set forth in Section 2.04(a) and
Section 2.04(b) have been satisfied;

 

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(viii) A cross-receipt executed by the Company and delivered to the Purchasers
certifying as to the amounts that it has received from the Purchasers;

(ix) An opinion of Simpson Thacher & Bartlett LLP, counsel to the Company, that
includes paragraphs substantially in the form of Exhibit E, subject to customary
assumptions, limitations and qualifications; and

(x) Such other documents relating to the transactions contemplated by this
Agreement as the Purchasers or their respective counsel may reasonably request.

(b) Deliveries of Each Purchaser. At the Closing, each Purchaser shall deliver
or cause to be delivered to the Company:

(i) A counterpart of the Registration Rights Agreement, which shall have been
duly executed by such Purchaser;

(ii) A cross-receipt executed by such Purchaser and delivered to the Company
certifying that it has received from the Company the number of Purchased
Securities to be received by such Purchaser in connection with the Closing;

(iii) Payment of such Purchaser’s Allocated Purchase Price payable by wire
transfer of immediately available funds to an account designated in advance of
the Closing Date by the Company;

(iv) A properly executed Internal Revenue Service Form W-9 from such Purchaser;

(v) A certificate of an duly appointed officer of such Purchaser, on behalf of
such Purchaser, dated the Closing Date, certifying, in their applicable
capacities, to the effect that the conditions set forth in Section 2.05(a) and
Section 2.05(b) have been satisfied; and

(vi) Such other documents relating to the transactions contemplated by this
Agreement as the Company or its counsel may reasonably request.

Section 2.07 Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The failure of any Purchaser to
perform, or waiver by the Company of such performance, under any Transaction
Document shall not excuse performance by any other Purchaser or the Company, and
the waiver by any Purchaser of performance of the Company under any Transaction
Document shall not excuse performance by the Company with respect to any other
Purchaser. Nothing contained herein or in any other Transaction Document, and no
action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Further, nothing herein
(including the

 

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requirements of Section 5.05 and Section 5.06) shall be deemed to form a group
(as defined in Rule 13d-5 of the Exchange Act) as between the Corre related
purchasers on the one hand and the Legion related purchasers on the other hand.
Each Purchaser shall be entitled to independently protect and enforce its
rights, including the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

Section 2.08 Further Assurances. From time to time after the date hereof,
without further consideration, the Company shall use its commercially reasonable
efforts to take, or cause to be taken, all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATED TO THE COMPANY

The Company represents and warrants to and covenants with the Purchasers as of
the date hereof and the Closing Date as follows:

Section 3.01 Existence, Qualification and Power. Each of the Company Entities
(a) is duly organized or formed, validly existing and, as applicable, in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (b)(1) has all requisite power and authority and (2) all requisite
governmental licenses, authorizations, consents and approvals to in the case of
each of clause (b)(1) and (2), (i) own or lease its assets and carry on its
business and (ii) execute, deliver and perform its obligations under this
Agreement to which it is a party, and (c) is duly qualified and is licensed and,
as applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in the case of clause (b)(2) and
clause (c), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.

Section 3.02 Capitalization and Valid Issuance of Securities.

(a) As of December 2, 2019, (i) the authorized capital stock of the Company is
95,000,000 shares, of which 90,000,000 shares, par value $0.01 per share, are
designated as common shares and of which 5,000,000 shares, par value $0.01 per
share, are designated as preferred shares (of which only 200,000 shares have
been designated as Series A Junior Participating Preferred Shares and no other
preferred shares have been designated or issued); (ii) the number of shares of
capital stock issued and outstanding is 42,314,888 shares of voting common
stock; (iii) no shares of Series A Junior Participating Preferred Shares are
outstanding; (iv) the number of shares of capital stock issuable pursuant to the
Company’s stock plans (including the 2019 Omnibus Incentive Plan) is 3,594,926;
and (v) the number of shares of capital stock issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock of the Company is 1,084,380. All of the issued and
outstanding shares of the Company’s capital stock have been duly authorized and
validly issued and are fully paid and nonassessable and were issued in
compliance with applicable state and federal securities laws and any rights of
third parties or in violation of pre-emptive or similar rights.

 

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(b) The Purchased Securities have been, or prior to the Closing will be, duly
and validly authorized and, when issued and paid for pursuant to this Agreement,
will be validly issued, fully paid and nonassessable, and shall be free and
clear of all Liens and restrictions on transfer, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws.

(c) No Person is entitled to pre-emptive or similar statutory or contractual
rights with respect to any securities of the Company Entities. Other than as
contemplated by this Agreement, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which any Company Entity is or may be obligated to issue any
equity securities of any kind, other than options granted under the Company’s
stock plans (including the 2019 Omnibus Incentive Plan) and prior stock plans.
Other than as contemplated by this Agreement, there are no voting agreements,
buy-sell agreements, option or right of first purchase agreements or other
agreements of any kind among the Company and any of the securityholders of the
Company relating to the securities of the Company held by them. Other than the
Registration Rights Agreement, no Person has the right to require the Company to
register any securities of the Company under the Securities Act, whether on a
demand basis or in connection with the registration of securities of the Company
for its own account or for the account of any other Person. The issuance and
sale of the Purchased Securities hereunder will not obligate the Company to
issue Common Stock or other securities to any other Person (other than the
Purchasers) and will not result in the adjustment of the exercise, conversion,
exchange or reset price of any outstanding security. The Company does not have
outstanding stockholder purchase rights or “poison pill” or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.

(d) All shares of Common Stock issuable upon conversion or redemption of the
Series B Convertible Preferred Stock (the “Underlying Preferred Shares”) and
upon exercise of the Warrants (together with the Underlying Preferred Shares,
the “Underlying Shares”) (without regard to any limitations on beneficial
ownership) have been duly authorized and reserved pursuant to the Company’s
Restated Certificate of Incorporation, the Certificate of Designation (with
respect to the Series B Convertible Preferred Stock) and the Warrants and, upon
issuance and delivery by the Company to such Purchaser in accordance with this
Agreement and the terms of the Purchased Securities and upon obtaining
Stockholder Approval, will be duly authorized, validly issued, fully paid and
non-assessable and will be free of any preemptive rights or any Liens and
restrictions on transfer, other than (i) restrictions on transfer under the
Certificate of Designation (with respect to the Series B Convertible Preferred
Stock), the Warrants or this Agreement and under applicable state and federal
securities laws and (ii) such Liens as are created by such Purchaser or its
Affiliates.

Section 3.03 Ownership of the Material Subsidiaries. Except as disclosed in the
Company’s SEC Documents (excluding any disclosures set forth in the risk factors
or “forward-looking statements” sections of such reports or similar statements
that are similarly non-specific and are predictive or forward-looking in
nature), all of the outstanding shares of capital stock or other equity
interests of each Material Subsidiary owned directly or indirectly by the
Company (a) have been duly authorized and validly issued and are fully paid and
nonassessable, and (b) are wholly-owned, directly or indirectly, by the Company,
free and clear of all Liens, except for (i) Liens under the Company’s existing
debt arrangements and for restrictions on transferability in the Organizational
Documents of such Material Subsidiary and (ii) as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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Section 3.04 Company SEC Documents. Since October 31, 2018, the Company’s forms,
registration statements, reports, schedules and statements required to be filed
by it under the Exchange Act have been filed with the Commission on a timely
basis. The Company SEC Documents, at the time filed (or in the case of
registration statements, solely on the dates of effectiveness), except to the
extent corrected by a subsequent Company SEC Document, (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made in the case of any such
documents other than a registration statement, not misleading and (b) complied
as to form in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be.

Section 3.05 Financial Statements.

(a) Except as disclosed in the Company’s SEC Documents (excluding any
disclosures set forth in the risk factors or “forward-looking statements”
sections of such reports or similar statements that are similarly non-specific
and are predictive or forward-looking in nature), the historical financial
statements (including the related notes and supporting schedule) contained or
incorporated by reference in the Company SEC Documents (i) comply as to form in
all material respects with the applicable accounting requirements under the
Securities Act and the Exchange Act (except that certain supporting schedules
are omitted), (ii) fairly present in all material respects the consolidated
financial condition of the Company and its Subsidiaries as of the date thereof
and the consolidated results of operations, cash flow and stockholder equity for
the respective periods (subject, in the case of unaudited quarterly financial
statements, to normal year-end adjustments) and (iii) have been prepared in all
material respects in accordance with GAAP (except, in the case of unaudited
quarterly statements, as permitted by Form 10-Q of the Commission or other rules
and regulations of the Commission) consistently applied throughout the periods
involved, (except (y) as may be indicated in the notes thereto or (z) as
permitted by Regulation S-X).

(b) Neither the Company nor any of its Subsidiaries has any liabilities of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required under GAAP, as in effect on the date hereof, to be reflected on a
consolidated balance sheet of the Company (including the notes thereto) except
(i) liabilities reflected or reserved against in the balance sheet (or notes
thereto) of the Company and its Subsidiaries as of the date of the most recent
balance sheet of the Company audited by the Company’s auditors prior to the date
hereof (the “Balance Sheet Date”) including in the Company SEC Documents,
(ii) (A) trade payables and accrued expenses and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, in each case, incurred after the Balance
Sheet Date, (iii) as contemplated by this Agreement or otherwise incurred in
connection with the transactions contemplated hereby, (iv) that have been
discharged or paid prior to the date of this Agreement or (v) as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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Section 3.06 Internal Controls. Except as disclosed in the Company’s SEC
Documents (excluding any disclosures set forth in the risk factors or
“forward-looking statements” sections of such reports or similar statements that
are similarly non-specific and are predictive or forward-looking in nature), the
Company Entities, taken as a whole, maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (a) transactions are
executed in accordance with management’s general or specific authorization,
(b) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(c) access to assets is permitted only in accordance with management’s general
or specific authorization and (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Except as disclosed in the Company’s SEC
Documents (excluding any disclosures set forth in the risk factors or
“forward-looking statements” sections of such reports or similar statements that
are similarly non-specific and are predictive or forward-looking in nature), the
Company is not aware of (i) any “material weakness” in the Company’s internal
control over reporting, whether or not subsequently remediated or (ii) 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 3.07 Disclosure Controls and Procedures. Except as disclosed in the
Company’s SEC Documents (excluding any disclosures set forth in the risk factors
or “forward-looking statements” sections of such reports or similar statements
that are similarly non-specific and are predictive or forward-looking in
nature), (a) to the extent required by Rule 13a-15 under the Exchange Act, each
of the Company Entities has established and maintains disclosure controls and
procedures (to the extent required by and as such term is defined in Rule
13a-15(e) under the Exchange Act), (b) such disclosure controls and procedures
are designed to provide reasonable assurance that that the information required
to be disclosed by the Company in the reports to be filed or submitted under the
Exchange Act is accumulated and communicated to management of the Company, as
appropriate, to allow timely decisions regarding required disclosure to be made
and (c) to the extent required by Rule 13a-15 under the Exchange Act, such
disclosure controls and procedures are effective in all material respects to
perform the functions for which they were established.

Section 3.08 No Material Adverse Change. Since December 31, 2018, except as
disclosed in the Company’s SEC Documents (excluding any disclosures set forth in
the risk factors or “forward-looking statements” sections of such reports or
similar statements that are similarly non-specific and are predictive or
forward-looking in nature) and except for the execution and performance of this
Agreement (i) there has been no event or circumstance, either individually or in
the aggregate, that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (iii) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Purchased
Securities contemplated by this Agreement, no event, liability or development
has occurred or exists with respect to any Company Entity or their respective
business, properties, operations or financial condition, that would be required
to be disclosed by the Company under applicable federal securities laws at the
time this representation is made that has not been publicly disclosed.

 

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Section 3.09 No Registration Required. Assuming the accuracy of the
representations and warranties of the applicable Purchaser contained in Article
IV, the issuance and sale of the Purchased Securities to such Purchaser pursuant
to this Agreement is exempt from registration requirements of the Securities
Act, and neither the Company nor, to the Company’s knowledge, any Person acting
on its behalf, has taken nor will take any action hereafter that would cause the
loss of such exemption.

Section 3.10 No Restrictions or Registration Rights. There are no restrictions
upon the voting or transfer of, any Common Stock arising under the Company’s
Organizational Documents or the DGCL. Neither the offering nor sale of the
Purchased Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any Purchased Securities (other than
pursuant to the Registration Rights Agreement) or other securities of the
Company. The Company has not granted registration rights to any Person other
than the Purchasers that would provide such Person priority over the Purchasers’
rights with respect to any piggyback registration.

Section 3.11 Litigation. Except as disclosed in the Company’s SEC Documents
(excluding any disclosures set forth in the risk factors or “forward-looking
statements” sections of such reports or similar statements that are similarly
non-specific and are predictive or forward-looking in nature), (a) there are no
actions, suits, proceedings, claims or disputes pending or, to the knowledge of
the Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority, by or against any of the Company Entities or against any
of their properties, or before or by any self-regulatory organization or other
non-government regulatory authority, that (i) purport to affect or pertain to
this Agreement or any other Transaction Document, or any of the transactions
contemplated hereby or thereby, or (ii) either individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect and (b) no labor
dispute with the employees of the Company or any Subsidiary exists or, to the
Company’s knowledge, is threatened, except as would not have a Material Adverse
Effect.

Section 3.12 Compliance with Law. Except as disclosed in the Company’s SEC
Documents (excluding any disclosures set forth in the risk factors or
“forward-looking statements” sections of such reports or similar statements that
are similarly non-specific and are predictive or forward-looking in nature), the
Company and each Subsidiary thereof is in compliance in all material respects
with the requirements of all Laws, and any rule or regulation of any
self-regulatory organization or other non-governmental regulatory authority
(including the rules and regulations of NASDAQ), and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

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Section 3.13 No Existing Defaults; No Conflicts.

(a) Neither the Company nor any of its Subsidiaries is (i) in violation of its
certificate of incorporation or by-laws, limited liability company agreement or
similar organizational documents, as applicable, (ii) in violation of any
statute or any judgment, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its Subsidiaries
or any of their respective properties, or (iii) in default (or, with the giving
of notice or lapse of time or both, would be in default) under any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, except, in the case
of clauses (ii) and (iii) above, for any such violation or default that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;

(b) The issuance and sale by the Company of the Purchased Securities, the
execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby by each Company Entity do
not and will not (i) contravene the terms of any of such Company Entity’s
Organizational Documents; (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (x) any provision of any security issued by such Company Entity or
of any agreement, instrument or other undertaking to which such Company Entity
is a party or by which it or any of its property is bound or (y) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Company Entity or its property is subject; or (iii) violate any
Law or any rule or regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the rules
and regulations of NASDAQ), except in the case of clauses (ii) and (iii) for
such violations which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

Section 3.14 Authority; Enforceability.

(a) The execution, delivery and performance by the Company of each the
Transaction Documents have been duly authorized by all necessary corporate
action. The Company has all requisite power and authority to issue, sell and
deliver the Purchased Securities, in accordance with and upon the terms and
conditions set forth in this Agreement. On or prior to the Closing Date, all
action required to be taken by the Company for the authorization, issuance, sale
and delivery of the Purchased Securities, the execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
thereby shall have been validly taken. Except for the Stockholder Approval, no
approval from the holders of outstanding Common Stock is required under the
Organizational Documents of the Company or the rules of NASDAQ in connection
with the Company’s issuance and sale of the Purchased Securities (or Underlying
Shares) to the Purchasers.

(b) Each of the Transaction Documents has been or, when delivered hereunder,
will have been, duly executed and delivered by the Company. Each of the
Transaction Documents constitutes, or will constitute, a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms;
provided that, with respect to each such agreement, the enforceability thereof
may be limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar Laws from time to time in effect affecting
the enforcement of creditors’ rights and remedies generally and by general
principles of equity (regardless of whether such principles are considered in a
proceeding in equity or at law).

 

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Section 3.15 Approvals. No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person (each, a “Consent”), is necessary or required in connection with the
issuance and sale of the Purchased Securities by the Company, the execution,
delivery and performance of this Agreement and the other Transaction Documents
by the Company and the consummation by the Company of the transactions
contemplated hereby or thereby, other than (i) the applicable Consents required
by the Commission in connection with the Company’s obligations under the
Registration Rights Agreement, (ii) the filing of the Certificate of Designation
with the Secretary of State of Delaware, (iii) obtaining the Stockholder
Approval, (iv) the applicable requirements under the state securities or “blue
sky” Laws, (v) compliance with and filings or notifications under the HSR Act
and other applicable U.S. or foreign competition, antitrust, or merger control
Laws, as set forth in Section 5.02 and (vi) such other Consents, the failure of
which to be obtained or made would not reasonably be expected to have a Material
Adverse Effect.

Section 3.16 Investment Company Status. None of the Company Entities is, and
immediately after the sale of the Purchased Securities hereunder and the
application of the net proceeds from such sale none of the Company Entities will
be, required to be registered as an “investment company” under the Investment
Company Act of 1940, as amended.

Section 3.17 Certain Fees. Except for J.P. Morgan Securities LLC, no broker,
finder or investment banker is entitled to any brokerage, finder’s or other fee
or commission from the Company with respect to the sale of any of the Purchased
Securities or the consummation of the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any Company Entities.
The Company agrees that it will indemnify and hold harmless the Purchasers from
and against any and all claims, demands, or liabilities for broker’s, finder’s,
placement, or other similar fees or commissions incurred by the Company Entities
or alleged to have been incurred by the Company Entities in connection with the
sale of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement.

Section 3.18 Insurance. Except as disclosed in the Company’s SEC Documents
(excluding any disclosures set forth in the risk factors or “forward-looking
statements” sections of such reports or similar statements that are similarly
non-specific and are predictive or forward-looking in nature), the properties of
the Company and its Subsidiaries are insured with financially sound and
reputable insurance companies not Affiliates of the Company, in such amounts
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Company or the applicable Subsidiary operates. The Company
has no reason to believe that it or any of its Subsidiaries will not be able
(i) to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost that would
not reasonably be expected to have a Material Adverse Effect.

 

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Section 3.19 Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Common Stock is listed on
NASDAQ, and the Company has not received any notice of delisting that is in
effect as of the date of this Agreement. The Company is in compliance in all
material respects with the listing and listing maintenance requirements of
NASDAQ applicable to it for the continued trading of its Common Stock on NASDAQ.

Section 3.20 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other applicable federal or state Laws. Each
Plan that is intended to be a qualified plan under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service
to the effect that the form of such Plan is qualified under Section 401(a) of
the Code and the trust related thereto has been determined by the Internal
Revenue Service to be exempt from federal income tax under Section 501(a) of the
Code, or an application for such a letter is currently being processed by the
Internal Revenue Service. To the knowledge of the Company, nothing has occurred
that would prevent or cause the loss of, such tax-qualified status.

(b) There are no pending or, to the knowledge of the Company, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan that could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c) Except as could not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect, (i) no ERISA Event has occurred
with respect to any Pension Plan; (ii) the Company and each ERISA Affiliate have
met all applicable requirements under the Pension Funding Rules in respect of
each Pension Plan, and no waiver of the minimum funding standards under the
Pension Funding Rules has been applied for or obtained; (iii) except as
disclosed in the Company’s SEC Documents (excluding any disclosures set forth in
the risk factors or “forward-looking statements” sections of such reports or
similar statements that are similarly non-specific and are predictive or
forward-looking in nature), neither the Company nor any ERISA Affiliate has
incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due that are unpaid; and
(iv) neither the Company nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or Section 4212(c) of ERISA.

(d) Except as disclosed in the Company’s SEC Documents (excluding any
disclosures set forth in the risk factors or “forward-looking statements”
sections of such reports or similar statements that are similarly non-specific
and are predictive or forward-looking in nature), neither the Company or any
ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation
to contribute to, or liability under, any active or terminated Pension Plan.

 

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(e) With respect to each scheme or arrangement mandated by a government other
than the United States (a “Foreign Government Scheme or Arrangement”) and with
respect to each employee benefit plan maintained or contributed to by the
Company or any Subsidiary of the Company that is not subject to United States
Law (a “Foreign Plan”), each such Foreign Plan required to be registered has
been registered and has been maintained in good standing with applicable
regulatory authorities.

Section 3.21 Tax Returns; Taxes. Except as could not reasonably be expected to
have a Material Adverse Effect, the Company and its Subsidiaries have filed all
Tax Returns required to be filed, and have paid all Taxes imposed upon them that
are due and payable, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. As of the date hereof, no Tax Lien
has been filed against the Company, any Subsidiary, or any assets of either that
could reasonably be expected to have a Material Adverse Effect. There is no
proposed tax assessment against the Company or any Subsidiary that would, if
made, have a Material Adverse Effect.

Section 3.22 Required Disclosures and Descriptions. There are no legal or
governmental actions, suits or proceedings (including an audit or examination by
any taxing authority) pending or, to the knowledge of the Company Entities,
threatened, against any of the Company Entities, or to which any of the Company
Entities is a party, or to which any of their respective properties is subject,
that are required to be described in the Company SEC Documents but are not
described as required, and there are no Contracts that are required to be
described in the Company SEC Documents or to be filed as an exhibit to the
Company SEC Documents that are not described or filed as required by the
Securities Act or the Exchange Act.

Section 3.23 Environmental Compliance. Except as disclosed in the Company’s SEC
Documents (excluding any disclosures set forth in the risk factors or
“forward-looking statements” sections of such reports or similar statements that
are similarly non-specific and are predictive or forward-looking in nature),
each Company Entity conducts in the ordinary course of business a review of the
effect of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof the Company has
reasonably concluded that, such Environmental Laws and claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

Section 3.24 Title to Property. The Company Entities have good and marketable
title to, or valid, subsisting and enforceable leasehold interests in all
property material to its business and described in the Company SEC Documents as
being owned or leased by any of them, free and clear of all Liens, except for
(a) Liens that do not materially affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company Entities and (b) Liens as are described in the Company SEC
Documents.

 

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Section 3.25 Anti-Corruption Laws and Sanctions.

(a) None of the Company, any of its Subsidiaries or any director, officer,
agent, employee, affiliate or other person associated with or acting on behalf
of the Company or its Subsidiaries has (i) made, offered, promised or authorized
any unlawful contribution, gift, entertainment or other unlawful expense;
(ii) made, offered, promised or authorized any direct or indirect unlawful
payment; or (iii) violated or is in violation of any provision of any applicable
Anti-Corruption Laws; the Company and its Subsidiaries have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, compliance with all applicable Anti-Corruption
Laws. No action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to applicable Anti-Corruption Laws is pending or, to
the knowledge of the Company, threatened.

(b) None of the Company, any of its Subsidiaries, or any director, officer,
agent, employee or affiliate of the Company or any of its Subsidiaries is
currently the subject or the target of any Sanctions, nor is the Company or any
of its Subsidiaries located, organized or resident in a Sanctioned Country, and
the Company has not directly or indirectly funded or facilitated any activities
of or business with any person, or in any country or territory, that, at the
time of such funding, was the subject or the target of Sanctions or in any other
manner that resulted in a violation by any person of Sanctions and will not use
the proceeds from the transactions contemplated hereby for such purpose.

Section 3.26 Form S-3 Eligibility. As of the date hereof, the Company is
eligible to register the Purchased Securities for resale by the Purchasers under
Form S-3 promulgated under the Securities Act.

Section 3.27 No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D of
the Securities Act) in connection with the offer or sale of any of the Purchased
Securities.

Section 3.28 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(a)(2) of the Securities Act for the
exemption from registration for the transactions contemplated hereby or would
require registration of the Purchased Securities under the Securities Act.

Section 3.29 Intellectual Property. Except as disclosed in the Company’s SEC
Documents, the Company and its Subsidiaries own, possess or can acquire on
commercially reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information and other
intellectual property necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company Entities could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.

 

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Section 3.30 Occupational Safety. Except as disclosed in the Company’s SEC
Documents, the Company and each of its Subsidiaries are in compliance in all
respects with all applicable provisions of the Occupational Safety and Health
Act of 1970, as amended, including all applicable regulations thereunder, except
for such noncompliance as would not, individually or in the aggregate, have a
Material Adverse Effect.

Section 3.31 Information Technology. Except as disclosed in the Company’s SEC
Documents, the Company and its Subsidiaries’ information technology assets and
equipment, computers, systems, networks, hardware, software, websites,
applications and databases (collectively, “IT Systems”) are adequate for, and
operate and perform as required in connection with the operation of the business
of the Company and its Subsidiaries as currently conducted, free and clear of
all bugs, errors, defects, Trojan horses, time bombs, malware and other
corruptants, except in each case as would not, singly or in the aggregate,
result in a Material Adverse Effect. The Company and its Subsidiaries (i) (x)
have implemented and maintained commercially reasonable controls, policies,
procedures and safeguards to maintain and protect their confidential information
and the integrity, continuous operation, redundancy and security of all IT
Systems and data (including all personal, personally identifiable, sensitive,
confidential or regulated data (“Personal Data”)) used in connection with their
businesses, and (y) there have been no breaches, violations, outages or
unauthorized uses of or accesses to same, nor any incidents under internal
review or investigations relating to the same; (ii) are presently in compliance
with all applicable laws or statutes and all judgments, orders, rules and
regulations of any court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the privacy and
security of IT Systems and Personal Data and to the protection of such IT
Systems and Personal Data from unauthorized use, access, misappropriation or
modification; and (iii) have taken all necessary actions to prepare to comply
with the European Union General Data Protection Regulation (and all other
applicable laws and regulations with respect to Personal Data that have been
announced as of the date hereof as becoming effective within 12 months after the
date hereof) as soon they take effect; except, with respect to each of the
foregoing clauses (i)(y), (ii) and (iii), as would not, singly or in the
aggregate, result in a Material Adverse Effect.

Section 3.32 Restricted Payments. (a) Except for the Amended and Restated Credit
Agreement, there are no agreements to which the Company or any of its
Subsidiaries is subject, prohibiting the Company or any of its Subsidiaries from
making distributions on the Series B Convertible Preferred Stock or Warrants or
repurchasing, redeeming or repaying the Series B Convertible Preferred Stock or
exercising the Warrants and (b) the Company is not aware of any laws and
regulations of the State of Delaware or any political subdivisions thereof,
prohibiting it directly or indirectly, from paying any dividends or from making
any other distribution on its capital stock or repurchasing, redeeming or
repaying its capital stock, except as described in or contemplated by SEC
Documents.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each of the Purchasers, severally but not jointly, represents and warrants and
covenants to the Company as of the date hereof and the Closing Date as follows:

Section 4.01 Existence. Such Purchaser is duly organized and validly existing
and in good standing under the Laws of its jurisdiction of organization or
formation, with all necessary power and authority to own and operate its
properties and to conduct its business as currently conducted.

Section 4.02 Authorization, Enforceability. Such Purchaser has all necessary
corporate, limited liability company, trust or partnership power and authority
to execute, deliver and perform its obligations under the Transaction Documents
to which it is a party. The execution, delivery and performance of such
Transaction Documents by such Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary legal action, and no further consent or authorization of such
Purchaser or any other Person is required. Each of the Transaction Documents to
which such Purchaser is a party has been duly executed and delivered by such
Purchaser, where applicable, and constitutes a legal, valid and binding
obligation of such Purchaser; provided that, with respect to each such
agreement, the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar Laws from
time to time in effect affecting the enforcement of creditors’ rights and
remedies generally and by general principles of equity (regardless of whether
such principles are considered in a proceeding in equity or at law).

Section 4.03 No Breach. The execution, delivery and performance of the
Transaction Documents to which such Purchaser is a party by such Purchaser and
the consummation by such Purchaser of the transactions contemplated thereby will
not (a) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material agreement to which
such Purchaser is a party or by which such Purchaser is bound or to which any of
the property or assets of such Purchaser is subject, (b) conflict with or result
in any violation of the provisions of the Organizational Documents of such
Purchaser, or (c) violate any Law of any Governmental Authority or body having
jurisdiction over such Purchaser or the property or assets of such Purchaser,
except in the case of clauses (a) and (c), for such conflicts, breaches,
violations or defaults as would not prevent the consummation of the transactions
contemplated by such Transaction Documents.

Section 4.04 Certain Fees. No fees or commissions are or will be payable by such
Purchaser to brokers, finders or investment bankers with respect to the purchase
of any of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement, except for fees or commissions for which the
Company is not responsible.

Section 4.05 Unregistered Securities.

(a) Accredited Purchaser Status; Sophisticated Purchaser. Such Purchaser is
(a) an “accredited investor” within the meaning of Rule 501(a) (1), (2), (3) or
(7) under the Securities Act, as amended, and (b) an Institutional Account as
defined in FINRA Rule 4512(c) and (c) a sophisticated institutional investor,
experienced in investing in private equity transactions and capable of
evaluating investment risks independently, both in general and with regard to
all transactions and investment strategies involving a security or securities,
including such Purchaser’s participation in the transactions contemplated
hereby. Such Purchaser has determined based on its own independent review and
such professional advice as it deems

 

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appropriate that its purchase of the Purchased Securities and participation in
the transactions contemplated hereby (i) are consistent with its financial
needs, objectives and condition, (ii) comply and are consistent with all
investment policies, guidelines and other restrictions applicable to such
Purchaser, (iii) have been duly authorized and approved by all necessary action,
and (iv) are a fit, proper and suitable investment for such Purchaser,
notwithstanding the substantial risks inherent in investing in or holding the
Purchased Securities. Such Purchaser is able to bear the substantial risks
associated with its purchase of the Purchased Securities, including but not
limited to loss of its entire investment therein.

(b) Information. Such Purchaser and its Representatives have (i) had the
opportunity to ask questions of and receive answers from the Company directly
and review the Company’s public filings with the Commission and (ii) conducted
and completed its own independent due diligence with respect to the transactions
contemplated hereby. Based on such information as such Purchaser has deemed
appropriate and without reliance upon the Agent or any of its affiliates, such
Purchaser has independently made its own judgment concerning the Company and its
businesses, operations and prospects and analysis and decision to enter into
this Agreement and the transactions contemplated hereby. Except for the
representations, warranties and agreements of the Company expressly set forth in
this Agreement and the other Transaction Documents, such Purchaser is relying
exclusively on its own sources of information, investment analysis and due
diligence (including professional advice it deems appropriate) with respect to
the transactions contemplated hereby, the Purchased Securities and the business,
condition (financial and otherwise), management, operations and properties of
the Company, including but not limited to all business, legal, regulatory,
accounting, credit and tax matters. Neither any inquiries nor any other due
diligence investigations conducted at any time by such Purchasers and its
Representatives shall modify, amend or affect such Purchasers’ right (i) to rely
on the Company’s representations and warranties contained herein or in any other
Transaction Document or (ii) to indemnification or any other remedy based on, or
with respect to the accuracy or inaccuracy of, or compliance with, the
representations, warranties, covenants and agreements in any Transaction
Document. Such Purchaser understands that its purchase of the Purchased
Securities involves a high degree of risk.

(c) Legends. Such Purchaser understands that, until such time as the Purchased
Securities or Underlying Shares have been sold pursuant to an effective
registration statement under the Securities Act, or the Purchased Securities or
Underlying Shares are eligible for resale pursuant to Rule 144 promulgated under
the Securities Act without any restriction as to the number of securities as of
a particular date that can then be immediately sold, the Purchased Securities or
Underlying Shares (as applicable) will bear a restrictive legend substantially
as follows: “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE SECURITIES LAWS.” Additionally, if required by the
authorities of any state in connection with the issuance or sale of the
Purchased Securities or Underlying Shares, such Purchased Securities or
Underlying Shares (as applicable) shall bear the legend required by such state
authority.

 

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(d) Acquisition for Investment Purposes. Such Purchaser is acquiring its entire
beneficial ownership interest in the Purchased Securities for its own account
for investment purposes only and not with a view to any distribution of the
Purchased Securities in any manner that would violate the securities laws of the
United States or any other jurisdiction. Such Purchaser has been advised and
understands that the Purchased Securities have not been registered under the
Securities Act, the “blue sky” laws of any jurisdiction or the laws of any other
jurisdiction and may be resold only if registered pursuant to the provisions of
the Securities Act (or if eligible, pursuant to the provisions of Rule 144
promulgated under the Securities Act or pursuant to another available exemption
from the registration requirements of the Securities Act) and in compliance with
the restrictions on transfer set forth in the Transaction Documents. Such
Purchaser has been advised and understands that the Company, in issuing the
Purchased Securities, is relying upon, among other things, the representations
and warranties of such Purchaser contained in this Article IV in concluding that
such issuance is a “private offering” and is exempt from the registration
provisions of the Securities Act.

(e) Rule 144. Such Purchaser understands that the Purchased Securities must be
held indefinitely unless and until the Purchased Securities are registered under
the Securities Act or an exemption from registration is available. Such
Purchaser has been advised of and is aware of the provisions of Rule 144
promulgated under the Securities Act.

(f) Reliance by the Company. Such Purchaser understands that the Purchased
Securities are being offered and sold in reliance on a transactional exemption
from the registration requirements of federal and state securities Laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Purchased Securities.

Section 4.06 Sufficient Funds. Such Purchaser will have available to it at the
Closing sufficient funds to enable such Purchaser to pay in full at the Closing
the entire amount of such Purchaser’s Allocated Purchase Price in immediately
available cash funds.

Section 4.07 Ownership; No Prohibited Trading.

(a) As of the date of this Agreement, such Purchaser beneficially owns, directly
or indirectly, only the number of shares of Common Stock as described opposite
its name on Schedule B and Schedule B reflects all shares of Common Stock in
which such Purchaser or its Affiliate, has any interest or right to acquire,
whether through derivative securities, voting agreements or otherwise (whether
or not such Common Stock can be acquired within sixty (60) days).

(b) From such time as such Purchaser was first contacted by the Company or any
other Person acting on behalf of the Company regarding the transactions
contemplated hereby until the first public announcement of the execution of this
Agreement, such Purchaser and any Affiliate of such Purchaser which (i) had
knowledge of the transactions contemplated

 

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hereby, (ii) has or shares discretion relating to such Purchaser’s investments
or trading or information concerning such Purchaser’s investments, including in
respect of the Securities, or (iii) is subject to such Purchaser’s review or
input concerning such Affiliate’s investments or trading (collectively, “Trading
Affiliates”) has not (x) offered, sold, contracted to sell, sold any option or
contract to purchase, purchased any option or contract to sell, granted any
option, right or warrant to purchase, lent, or otherwise transferred or disposed
of, directly or indirectly, any of the Purchased Securities or (y) directly or
indirectly engaged in any Short Sales or other derivative or hedging
transactions with respect to Common Stock, including by means of any swap or
other transaction or arrangement that transfers or that is designed to, or that
might reasonably be expected to, result in the transfer to another, in whole or
in part, of any of the economic consequences of ownership of any Purchased
Securities, regardless of whether any transaction described in this Section 4.07
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise. For the avoidance of doubt, nothing in this Section 4.07 shall
preclude any actions described in clauses (x) or (y) above following the first
public announcement of the execution of this Agreement.

Section 4.08 No General Solicitation. Such Purchaser did not learn of the
investment in the Purchased Securities as a result of any general solicitation
or general advertising.

Section 4.09 No Reliance. Such Purchaser hereby acknowledges and agrees that
(a) the Agent is acting solely as the Company’s placement agent in connection
with the transactions contemplated hereby and is not acting as underwriter or in
any other capacity and is not and shall not be construed as a fiduciary for such
Purchaser, the Company or any other person or entity in connection with the
transactions contemplated hereby, (b) the Agent and its Affiliates have not made
and will not make any representation or warranty, whether express or implied, of
any kind or character and has not provided any advice or recommendation in
connection with the transactions contemplated hereby, (c) the Agent and its
Affiliates will have no responsibility with respect to (i) any representations,
warranties or agreements made by any person or entity under or in connection
with the transactions contemplated hereby or any of the documents furnished
pursuant thereto or in connection therewith, or the execution, legality,
validity or enforceability (with respect to any person) or any thereof, or
(ii) the business, affairs, financial condition, operations, properties or
prospects of, or any other matter concerning the Company or the transactions
contemplated hereby, and (d) the Agent and its Affiliates shall have no
liability or obligation (including without limitation, for or with respect to
any losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses or disbursements incurred by such Purchaser, the
Company or any other person or entity), whether in contract, tort or otherwise,
to such Purchaser, or to any person claiming through such Purchaser, in respect
of the transactions contemplated hereby. In connection with the issuance of the
Purchased Securities to the Purchaser, neither the Agent nor any of its
Affiliates have acted as a financial advisor or fiduciary to such Purchaser.

Section 4.10 Use of Proceeds. Each Purchaser hereby acknowledges that an
affiliate of the Agent will receive a portion of any proceeds of the offering
that are used to repay all or a part of the Revolving Credit Loans (as defined
below) and the Amended and Restated Credit Agreement (as defined below).

 

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ARTICLE V

COVENANTS

Section 5.01 Cooperation; Further Assurances. The Company shall use its
reasonable best efforts to obtain all approvals and consents required by or
necessary to consummate the transactions contemplated by this Agreement and the
other Transaction Documents. The Company agrees to execute and deliver all such
documents or instruments, to take all commercially reasonable action and to do
all other commercially reasonable things it determines to be necessary, proper
or advisable under applicable Laws and regulations or as otherwise reasonably
requested by the Purchasers to consummate the transactions contemplated by this
Agreement.

Section 5.02 Regulatory Approvals. The Company and each Purchaser acknowledge
that one or more filings under the HSR Act or other antitrust laws may be
necessary in connection with the issuance of Common Stock upon conversion of the
Series B Convertible Preferred Stock or the Warrants. The Purchaser will
promptly notify the Company if any such filing is required and, to the extent
reasonably requested by such Purchaser, the Company and such Purchaser will use
all reasonable efforts to cooperate in timely making or causing to be made all
applications and filings under the HSR Act or any other antitrust requirements
in connection with the issuance of Common Stock upon conversion of the Series B
Convertible Preferred Stock or Warrants held by such Purchaser in a timely
manner and as required by the law of the applicable jurisdiction; provided that,
notwithstanding anything in this Agreement to the contrary, the Company shall
not have any responsibility or liability for failure of any Purchaser or any of
its Affiliates to comply with any such applicable law. For as long as there are
Series B Convertible Preferred Stock or Warrants outstanding and owned by a
Purchaser, the Company shall as promptly as reasonably practicable provide (no
more than four (4) times per calendar year) such information regarding the
Company and its Subsidiaries as such Person may reasonably request in order to
determine what antitrust or foreign investment requirements may exist with
respect to any potential conversion of the Series B Convertible Preferred Stock
or Warrants. The Purchaser shall be responsible for the payment of the filing
fees associated with any such applications or filings.

Section 5.03 Use of Proceeds; Amended & Restated Credit Agreement.

(a) The Company shall only use the proceeds of the offering of the Purchased
Securities for one or more of the following purposes: (i) repay all or a part of
the Revolving Credit Loans (as defined in the Amended and Restated Credit
Agreement); (ii) prepay Term Loans (as defined in the Amended and Restated
Credit Agreement) in accordance with the Amended and Restated Credit Agreement;
(iii) pay consent, amendment, solicitation, arrangement and other fees (to
market or otherwise) and expenses in connection with the extension of the
Maturity Date (as defined in the Amended and Restated Credit Agreement and any
other amendment to the Amended and Restated Credit Agreement); (iv) pay any
fees, costs and expenses (including fees and disbursements of the Agent,
counsel, financial advisors and accountants) incurred in connection with clauses
(i) and (ii) above and in connection with any amendment to the Amended and
Restated Credit Agreement (including the extension of any Maturity Date
thereunder), (v) pay any fees and expenses in connection with the transactions
contemplated by this Agreement and (vi) with respect to any remaining proceeds
after giving effect to clauses (i) through (v), for the Company’s working
capital and other general corporate purposes.

 

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(b) The Company shall use its reasonable best efforts to amend and extend the
Amended and Restated Credit Agreement (including the extension of any Maturity
Date thereunder) as soon as practicable after Closing.

Section 5.04 Subsequent Equity Sales. The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
will be integrated with the offer or sale of the Purchased Securities in a
manner that would require the registration under the Securities Act of the sale
of the Purchased Securities to the Purchasers, or that will be integrated with
the offer or sale of the Purchased Securities for purposes of the rules and
regulations of any trading market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.

Section 5.05 Stockholder Approval.

(a) The Company agrees to include in its proxy statement prepared and filed with
the Commission (the “Proxy Statement”) for the 2020 annual meeting of the
stockholders of the Company (the “2020 Stockholder Meeting”) a proposal for
approval by the holders of Common Stock that is required under the listing
standards of NASDAQ (and any successor thereto and any other trading market on
which the Common Stock is listed), including NASDAQ Stock Market Rule 5635(b)
and Rule 5635(d), to approve the issuance of Common Stock in excess of the
thresholds set forth in such rules upon exercise of the Warrants or conversion
or redemption of the Series B Convertible Preferred Stock of the Company issued
to Purchasers pursuant to this Agreement (the “Stockholder Approval”). Subject
to the directors’ fiduciary duties, the Proxy Statement shall include the
recommendation from the Board of Directors that the stockholders vote in favor
of the Stockholder Approval. The Company shall use its reasonable best efforts
to solicit from the stockholders proxies in favor of the Stockholder Approval
and to obtain the Stockholder Approval. Each Purchaser acknowledges that no
votes of the shares of Series B Convertible Preferred Stock sold and issued will
be counted toward the Stockholder Approval in compliance with NASDAQ Stock
Market Rule 5635. Each Purchaser agrees with the Company (but not with each
other) that it shall vote or cause to be voted any shares of Common Stock over
which it has voting power as of the record date of such annual meeting in favor
of the Stockholder Approval. Each Purchaser and its Affiliates agree to furnish
to the Company all information concerning such Purchaser and its Affiliates as
the Company may reasonably request in connection with the preparation and filing
of the Proxy Statement and any such annual meeting of the stockholders of the
Company. The Company shall respond reasonably promptly to any comments received
from the Commission with respect to the Proxy Statement. The Company shall
provide to each Purchaser, as promptly as reasonably practicable after receipt
thereof, any written comments from the Commission or any written request from
the Commission or its staff for amendments or supplements to the Proxy Statement
and shall provide each Purchaser with copies of all correspondence between the
Company, on the one hand, and the Commission and its staff, on the other hand,
relating to the Proxy Statement. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the Proxy Statement (or, in each case, any
amendment or supplement thereto) or responding to any comments of the Commission
or its staff with respect thereto, the Company shall provide the Purchasers with
a reasonable opportunity to review and comment on such document or response.

 

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(b) If the Stockholder Approval is not obtained at the 2020 Stockholder Meeting,
or an adjournment or postponement thereof, then the Company agrees to submit the
Stockholder Approval to its stockholders at each subsequent annual meetings of
the stockholders of the Company until the earliest to occur of: (i) the
Stockholder Approval; or (ii) the 2024 annual meeting of the stockholders of the
Company (or an adjournment or postponement thereof).

(c) The Company will use commercially reasonable efforts to increase the number
of authorized shares of Common Stock at the Company’s 2023 annual meeting of
stockholders (or in any event, no later than June 30, 2023), if any shares of
Series B Convertible Preferred Stock or Warrants are then outstanding, and shall
adopt and submit and recommend to the stockholders for approval at such annual
meeting of stockholders an amendment to the Company’s certificate of
incorporation to such effect.

Section 5.06 Consent Rights.

(a) For so long as any Series B Convertible Preferred Stock remains outstanding,
the Company shall not consummate an agreement that provides for a transaction
that constitutes a Change of Control, or otherwise effect a Change of Control,
other than (i) a Change of Control not approved by the Board of Directors prior
to the consummation thereof or (ii) a Qualifying Transaction.

(b) The Company shall not take any of the actions set forth in Section 5,
clauses (i) through (v) of Section 6.2 and Section 11, respectively, of the
Certificate of Designation without the prior consent of each Purchaser to this
Agreement so long as such Purchaser continues to satisfy the Minimum Ownership
Requirement.

Section 5.07 Qualifying Transactions. Each Purchaser hereby agrees with the
Company (but not with each other) during such time as such Purchaser holds
Series B Convertible Preferred Stock as follows:

(a) In connection with any Qualifying Transaction approved by the Board of
Directors for which a meeting of any stockholders of the Company is called (and
at every adjournment or postponement thereof) or for which action or approval by
written consent of stockholders of the Company is requested, each Purchaser
shall, and shall cause the holder of record of any Series B Convertible
Preferred Stock beneficially owned by such Purchaser on any applicable record
date to, vote all such Series B Convertible Preferred Stock beneficially owned
by such Purchaser on any applicable record date, to the extent such Series B
Convertible Preferred Stock are entitled to be voted, (i) in favor of the
approval and adoption of such Qualifying Transaction and (ii) in opposition to
any action that is intended, or would reasonably be expected, to impede, delay
or adversely affect a Qualifying Transaction. Solely in connection with the
preceding sentence of this Section 5.07(a), in the event that a meeting of
stockholders of the Company is held for the purposes of approving a Qualifying
Transaction, and only so long as each Purchaser holds Series B Convertible
Preferred Stock, each Purchaser shall appear at such meeting (and at every
adjournment or postponement thereof) or otherwise cause all such Series B
Convertible Preferred Stock beneficially owned by such Purchaser on any
applicable record date to be counted as present thereat for purposes of
establishing a quorum.

 

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(b) Each Purchaser shall not, and shall cause each of its Affiliates holding
Series B Convertible Preferred Stock not to, directly or indirectly, with
respect to any Qualifying Transaction:

(i) deposit any Series B Convertible Preferred Stock in a voting trust;

(ii) grant any proxies with respect to any Series B Convertible Preferred Stock;
or

(iii) subject any Series B Convertible Preferred Stock to any arrangement with
respect to the voting thereof, in each case, other than voting trusts with,
proxies to or agreements entered into with the Company.

(c) Each Purchaser waives, and agrees not to assert or perfect, any rights of
appraisal or rights to dissent from a Qualifying Transaction that such Purchaser
may have by virtue of ownership of such Series B Convertible Preferred Stock.

(d) Each Purchaser shall tender (and shall not withdraw), or cause to be
tendered (and not withdrawn), if there is a Qualifying Transaction that is a
tender or exchange offer for Company Common Stock and Series B Convertible
Preferred Stock, all Series B Convertible Preferred Stock beneficially owned by
such Purchaser into any exchange offer or offer to purchase such Series B
Convertible Preferred Stock by any Person in connection with such Qualifying
Transaction, conditioned on and subject to the completion of such Qualifying
Transaction (any such offer, a “Qualifying Tender/Exchange Offer”). During any
period in which such Purchaser holds Series B Convertible Preferred Stock, no
later than two (2) Business Days prior to the expiration date of any such
Qualifying Tender/Exchange Offer, such Purchaser shall (i) deliver to the
depositary designated in the Qualifying Tender/Exchange Offer all documents or
instruments required to be delivered pursuant to the terms of the Qualifying
Tender/Exchange Offer and Section 14d-2 of the Exchange Act, and/or (b) instruct
its broker or such other person that is the holder of record of any Series B
Convertible Preferred Stock beneficially owned by the Purchaser to tender such
Series B Convertible Preferred Stock pursuant to the terms and conditions of the
Qualifying Return Tender/Exchange Offer.

(e) The provisions of this Section 5.07 shall apply only to the Series B
Convertible Preferred Stock and shall not apply to the Warrants or shares issued
upon exercise of the Warrants or any other shares of Common Stock or other
securities issued by the Company held by such Purchaser (including derivatives
with a value tied to the Common Stock or such other securities).

 

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Section 5.08 Removal of Legend. In connection with a sale of Purchased
Securities or Underlying Shares by a Purchaser in reliance on Rule 144
promulgated under the Securities Act, the applicable Purchaser or its broker
shall deliver to the Company a broker representation letter reasonably
acceptable to the Company and its transfer agent, providing to the Company the
information required under Rule 144 to determine that the sale of such Purchased
Securities is made in compliance with Rule 144 promulgated under the Securities
Act, including, as may be appropriate, a certification that the Purchaser is not
an affiliate of the Company (as defined in Rule 144 promulgated under the
Securities Act) and a certification as to the length of time that such
securities have been held. Upon receipt of such representation letter, the
Company shall promptly remove the notation of a restrictive legend in such
Purchaser’s book-entry account maintained by the Company, including the legend
referred to in Section 4.05(d), and the Company shall bear all costs associated
with the removal of such legend in the Company’s books. At such time as the
Purchased Securities or Underlying Shares (as applicable) have been sold
pursuant to an effective registration statement under the Securities Act or have
been held by any Purchaser for more than one year where such Purchaser is not,
and has not been in the preceding three months, an affiliate of the Company (as
defined in Rule 144 promulgated under the Securities Act) or acting in concert
with such a Person, if the book-entry account of such Purchaser still bears the
notation of the restrictive legend referred to in Section 4.05, the Company
agrees, upon request of the Purchaser or its permitted assignee, to take all
steps necessary to promptly effect the removal of the legend described in
Section 4.05, and the Company shall bear all costs associated with the removal
of such legend in the Company’s books, regardless of whether the request is made
in connection with a sale or otherwise, so long as such Purchaser or its
permitted assignee provides to the Company the information required under Rule
144 (or other applicable exemptions) to determine that the legend is no longer
required under the Securities Act or applicable state Laws, including (if there
is no such registration statement) a certification that the holder is not an
affiliate of the Company (as defined in Rule 144 promulgated under the
Securities Act), a covenant to inform the Company if it should thereafter become
an affiliate (as defined in Rule 144 promulgated under the Securities Act) and
to consent to the notation of an appropriate restriction, and a certification as
to the length of time such securities have been held. The Company shall
cooperate with each Purchaser to effect the removal of the legend referred to in
Section 4.05 at any time such legend is no longer appropriate.

Section 5.09 Tax Matters.

(a) Withholding. Subject to the following sentence in this Section 5.09(a), the
Company may deduct and withhold any withholding Taxes or other amounts required
to be withheld with respect to the Purchased Securities and may set off any such
amounts required to be withheld against payments (whether made in cash or other
property) on the Purchased Securities. Notwithstanding the foregoing, the
Company may only set off 35% of the amount of any Dividend Withholding Taxes
imposed on (x) constructive dividends accreted pursuant to clause (a)(iii) of
the tax treatment paragraph in Exhibit D and (y) actual cash dividends declared
and paid pursuant to Section 3 of the Certificate of Designation against
payments (whether made in cash or other property) on the Purchased Securities
(including dividends on, payments made in redemption of or issuances upon
conversion of the Purchased Preferred Stock) and the Company shall bear the
remaining 65% of such Dividend Withholding Taxes (and any Dividend Withholding
Taxes or other withholding taxes imposed under Section 1441 or 1442 of the Code
on amounts borne by the Company on behalf of a holder pursuant to this
Section 5.09(a)).

 

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(b) Purchase Price Allocation. Each Purchaser and the Company agree to allocate
the Total Purchase Price among the Purchased Securities as follows for U.S.
federal income Tax purposes as provided in Exhibit D attached hereto.

(c) Tax Treatment. Each Purchaser and the Company has agreed to the tax
treatment principles as provided in Exhibit D attached hereto.

(d) Delayed Redemption. If the Company (i) fails to redeem the Purchased
Preferred Stock on or before December 31, 2020, (ii) at that time determines
that a subsequent redemption date is more likely than not to occur and
(iii) thereafter accretes additional constructive distributions under
Section 305(c) of the Code and Treasury Regulation Section 1.305-5, the Company
shall gross up the Purchasers for all Dividend Withholding Taxes incurred on or
after January 1, 2021 as a result of such additional constructive distributions,
such that the Purchasers would receive the same amounts they would have received
from the Company had no such Dividend Withholding Taxes been incurred.

Section 5.10 Listing; SEC Compliance. The Company shall use its reasonable best
efforts to maintain the listing of all of the Underlying Shares upon each
national securities exchange and automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of the Underlying Shares.

Section 5.11 Dividend Blockers. As long as the Purchasers continue to
beneficially own at all times shares of Series B Convertible Preferred Stock
with an aggregate liquidation preference of at least $15 million, the Company
shall not enter into any instrument or agreement that includes a provision that
restricts the Company and its Subsidiaries from paying dividends or other
distributions on the capital stock of any subsidiary in a manner that is, on the
whole, more restrictive than the restrictions as of the date hereof set forth in
Section 7.09 of the Amended and Restated Credit Agreement.

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

Section 6.01 Indemnification by the Company. The Company agrees to indemnify
each Purchaser and its Representatives (collectively, “Purchaser Related
Parties”) from costs, losses, liabilities, damages or expenses of any kind or
nature whatsoever, and hold each of them harmless against, any and all actions,
suits, proceedings (including any investigations, litigation or inquiries),
demands and causes of action, and, in connection therewith, promptly upon
demand, pay or reimburse each of them for all costs, losses, liabilities,
damages, or expenses of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them),
whether or not involving a Third-Party Claim, as a result of or arising out of
(a) the failure of any of the representations or warranties made by the Company
contained herein to be true and correct in all material respects (other than
those representations and warranties contained in Section 3.01, Section 3.02,
Section 3.04, Section 3.09. Section 3.10, Section 3.13(a)(i) and (b)(i),
Section 3.14, Section 3.16, Section 3.17, Section

 

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3.26 or Section 3.32 or other representations and warranties that are qualified
by materiality or Material Adverse Effect, which, in each case, shall be true
and correct in all respects) when made and as of the Closing Date (except for
any representations and warranties made as of a specific date, which shall be
required to be true and correct as of such date only) or (b) the breach in any
material respect of any covenants of the Company contained herein; provided
that, in the case of the immediately preceding clause (a), such claim for
indemnification is made prior to the expiration of the survival period of such
representation or warranty; provided, further, that for purposes of determining
when an indemnification claim has been made, the date upon which a Purchaser
Related Party shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the Company shall constitute the date upon
which such claim has been made; and provided, further, that the aggregate
liability of the Company to each Purchaser pursuant to this Section 6.01 shall
not be greater in amount than such Purchaser’s Allocated Purchase Price, and the
aggregate liability of the Company to all Purchasers pursuant to this
Section 6.01 shall not exceed the Total Purchase Price. No Purchaser Related
Party shall be entitled to recover special, indirect, incidental, consequential,
exemplary, lost profits, speculative or punitive damages under this
Section 6.01; provided, however, that such limitation shall not prevent any
Purchaser Related Party from recovering under this Section 6.01 for any such
damages to the extent that such damages are in the form of diminution in value
or are payable to a third party in connection with any Third-Party Claims.

Section 6.02 Indemnification Procedures.

(a) A claim for indemnification for any matter not involving a Third-Party Claim
may be asserted by notice to the party from whom indemnification is sought;
provided, however, that failure to so notify the indemnifying party shall not
preclude the indemnified party from any indemnification which it may claim in
accordance with this Article VI, except as otherwise provided in Section 6.01.

(b) Promptly after any Purchaser Related Party (hereinafter, the “Indemnified
Party”) has received notice of any indemnifiable claim hereunder, or the
commencement of any action, suit or proceeding by a third person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement (each a “Third-Party Claim”), the Indemnified Party shall give the
indemnitor hereunder (the “Indemnifying Party”) written notice of such
Third-Party Claim, but failure to so notify the Indemnifying Party will not
relieve the Indemnifying Party from any liability it may have to such
Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and
the basis of such Third-Party Claim to the extent then known. The Indemnifying
Party shall have the right to defend and settle, at its own expense and by its
own counsel who shall be reasonably acceptable to the Indemnified Party, any
such matter as long as the Indemnifying Party pursues the same diligently and in
good faith. If the Indemnifying Party undertakes to defend or settle, it shall
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
all commercially reasonable respects in the defense thereof and the settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party’s possession or
control. Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party. After the Indemnifying Party has notified the Indemnified

 

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Party of its intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified
Party shall be entitled (i) at its expense, to participate in the defense of
such asserted liability and the negotiations of the settlement thereof and
(ii) if (A) the Indemnifying Party has failed to assume the defense or employ
counsel reasonably acceptable to the Indemnified Party or (B) if the defendants
in any such action include both the Indemnified Party and the Indemnifying Party
and counsel to the Indemnified Party shall have concluded that there may be
reasonable defenses available to the Indemnified Party that are different from
or in addition to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, then the Indemnified Party shall have the right to
select a separate counsel and to assume such legal defense and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred. Notwithstanding any other
provision of this Agreement, the Indemnifying Party shall not settle any
indemnified claim without the consent of the Indemnified Party, unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, and does not include any admission of
wrongdoing or malfeasance by, the Indemnified Party.

Section 6.03 Tax Matters. All indemnification payments under this Article VI
shall be treated as adjustments to the applicable Purchaser’s Allocated Purchase
Price for Tax purposes except as otherwise required by applicable Law.

ARTICLE VII

TERMINATION

Section 7.01 Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by mutual written consent of the Company and a Purchaser, with respect to
itself but not any other Purchaser;

(b) by written notice from either the Company or a Purchaser, with respect to
itself but not any other Purchaser, if any Governmental Authority with lawful
jurisdiction shall have issued a final order, decree or ruling or taken any
other final action restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Transaction Documents and such order, decree,
ruling or other action is or shall have become final and non-appealable;

(c) by written notice from either the Company or a Purchaser, with respect to
itself but not any other Purchaser, if Closing does not occur by 11:59 p.m. New
York time on December 31, 2019 (the “Outside Date”); provided, however, that no
party may terminate this Agreement pursuant to this Section 7.01(c) if such
party is, at the time of providing such written notice, in breach of any of its
obligations under this Agreement; or

(d) at such time as no Purchased Securities remain outstanding.

 

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Section 7.02 Certain Effects of Termination. In the event that this Agreement is
terminated pursuant to Section 7.01, this Agreement (other than Article VI and
Section 8.01) shall become null and void and have no further force or effect and
there shall be no liability on the part of the Company or any Purchaser or any
of their respective Representatives in connection with this Agreement, except
that no such termination shall relieve any party from liability for damages to
another party resulting for a willful and material breach of this Agreement
prior to the date of termination or from fraud; provided that, notwithstanding
any other provision set forth in this Agreement, except in the case of fraud,
the Company shall not have any such liability in excess of the Total Purchase
Price and no Purchaser shall have any liability in excess of such Purchaser’s
Allocated Purchase Price.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Expenses. All costs and expenses, including fees and disbursements
of counsel, financial advisors and accountants, incurred in connection with the
Transaction Documents and the transactions contemplated thereby shall be paid by
the party incurring such costs and expenses; provided, that the Company shall
pay for the fees of the Purchaser’s counsel incurred in connection with the
execution of this Agreement, the other Transaction Documents and the purchase by
the Purchaser of the Purchased Securities pursuant to this Agreement, provided
that such fees shall not exceed $300,000 in the aggregate.

Section 8.02 Interpretation. Article, Section, Schedule and Exhibit references
in this Agreement are references to the corresponding Article, Section, Schedule
or Exhibit to this Agreement, unless otherwise specified. All Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof as if
set forth in full herein and are an integral part of this Agreement. All
references to instruments, documents, Contracts and agreements are references to
such instruments, documents, Contracts and agreements as the same may be
amended, supplemented and otherwise modified from time to time, unless otherwise
specified. The word “including” shall mean “including but not limited to” and
shall not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it.. Any reference in
this Agreement to “$” shall mean U.S. dollars. Whenever any determination,
consent or approval is to be made or given by any party to this Agreement, such
action shall be in such party’s sole discretion, unless otherwise specified in
this Agreement. If any provision in the Transaction Documents is held to be
illegal, invalid, not binding or unenforceable, (a) such provision shall be
fully severable and the Transaction Documents shall be construed and enforced as
if such illegal, invalid, not binding or unenforceable provision had never
comprised a part of the Transaction Documents, and the remaining provisions
shall remain in full force and effect, and (b) the parties hereto shall
negotiate in good faith to modify the Transaction Documents so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible. When calculating the period of
time before which, within which or following which any act is to be done or step
taken pursuant to the Transaction Documents, the date that is the reference date
in calculating such period shall be excluded. If the last day of such period is
not a Business Day, the period in question shall end on the next succeeding
Business Day. Any words imparting the singular number only shall include the
plural and vice versa. The words such as “herein,” “hereinafter,” “hereof” and
“hereunder” refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires. The provision
of a Table of Contents, the division of this Agreement into Articles, Sections
and other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in construing or interpreting
this Agreement.

 

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Section 8.03 Survival of Provisions. The representations and warranties set
forth in Section 3.01, Section 3.02, Section 3.14, Section 3.15, Section 3.16,
Section 3.17, Section 3.19, Section 3.26, Section 3.32, Section 4.01,
Section 4.02, Section 4.04, Section 4.05(a), Section 4.05(b), Section 4.05(d)
and Section 4.07(b) hereunder shall survive the execution and delivery of this
Agreement indefinitely and the other representations and warranties set forth
herein shall survive for a period of twelve (12) months following the Closing
Date, regardless of any investigation made by or on behalf of the Company, the
Purchasers or the Agent and its affiliates. The covenants made in this Agreement
(including those in Article V) or any other Transaction Document that by their
terms are to be performed following the Closing shall survive the Closing and
remain operative and in full force and effect until fully performed. Regardless
of any purported general termination of this Agreement, the provisions of
Article VI and all indemnification rights and obligations of the Company and the
Purchasers thereunder, Section 8.01 and this Article VIII shall remain operative
and in full force and effect as between the Company and each Purchaser, unless
the Company and the applicable Purchaser execute a writing that expressly
terminates such rights and obligations as between the Company and such
Purchaser.

Section 8.04 No Waiver: Modifications in Writing.

(a) Delay. No failure or delay on the part of any party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to a party at law or in equity or otherwise.

(b) Specific Waiver; Amendment. Except as otherwise provided herein or as
specifically provided otherwise in any other Transaction Document with respect
thereto, no amendment, waiver, consent, modification or termination of any
provision of any Transaction Document shall be effective unless signed by
(i) before Closing, each of the parties thereto affected by such amendment,
waiver, consent, modification or termination and (ii) after Closing, Purchasers
holding a majority of the Purchased Securities then held by the Purchasers;
provided that (A) any amendment, waiver, consent, modification or termination
pursuant to clause (ii) shall not apply with respect to any Purchaser without
the written consent of such Purchaser unless such amendment or waiver applies to
all Purchasers in the same fashion and (B) no consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents (for
clarification purposes, this clause (B) constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
shall not in any way be construed as the Purchasers acting in concert or as a
group with respect to the purchase, disposition or voting of

 

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Purchased Securities or otherwise). Any amendment, supplement or modification of
or to any provision of any Transaction Document, any waiver of any provision of
any Transaction Document and any consent to any departure by the Company or any
Purchaser from the terms of any provision of any Transaction Document shall be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this Agreement,
no notice to or demand on the Company or any Purchaser in any case shall entitle
the Company or such Purchaser to any other or further notice or demand in
similar or other circumstances. Any investigation by or on behalf of any party
shall not be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein.

Section 8.05 Binding Effect; Assignment.

(a) This Agreement shall be binding upon the Company, each of the Purchasers and
their respective successors and permitted assigns. Except as expressly provided
in this Agreement, this Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and permitted assigns.

(b) Neither this Agreement not any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation of Law or
otherwise, by any Purchaser without the prior written consent of the Company
(such consent not to be unreasonably withheld); provided, however, that a
Purchaser may transfer or assign its rights hereunder in connection with the
transfer of the Purchased Preferred Stock or the Purchased Warrants, each in
accordance with the terms thereof, and subject to Purchaser providing written
notice of any such assignment to the Company promptly after such assignment is
effected and that the transferee agrees to assume all of such Purchaser’s rights
and obligations in connection with such transfer and be bound by, and entitled
to the benefits of, this Agreement as an original party hereto.

Section 8.06 Publicity. Except as set forth below, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
the Company or the Purchasers without the prior consent of the Company (in the
case of a release or announcement by the Purchasers) or the Purchasers (in the
case of a release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Purchasers, as the case may
be, shall allow the Purchasers or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance. The parties acknowledge
that (i) as of 9:30 a.m. (New York time) on the trading day immediately
following the date hereof, no Purchaser shall be in possession of any material,
nonpublic information received from the Company or any of its respective
officers, directors, employees or agents, with respect to the transactions
contemplated hereby, and (ii) prior to such time the Company shall issue a press
release or file a report on Form 8-K disclosing any material information
required to comply with the preceding clause (i), and that, in addition, the
Company will make such other filings and notices in the manner and time required
by the Commission or NASDAQ with respect to such matters. The Company shall not,
and shall cause each of its

 

39

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Subsidiaries and each of their respective officers, directors, employees and
agents, not to, provide any Purchaser with any such material, nonpublic
information regarding the Company or any of the Company Entities from and after
the filing of the press release without the express written consent of such
Purchaser. For the avoidance of doubt, following the issuance of such press
release, this Agreement shall not prohibit any Purchaser from trading Common
Stock as it sees fit.

Section 8.07 Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by registered or certified mail, return
receipt requested, telecopy, electronic mail, air courier guaranteeing overnight
delivery or personal delivery to the following addresses

(a) If to the Purchasers, to the addresses set forth on Schedule A.

(b) If to the Company, to:

Matthew S. Heiter

Senior Vice President and General Counsel

NN, Inc.

6210 Ardrey Kell Road

Charlotte, North Carolina 28277

Email: matt.heiter@nninc.com

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

Eric M. Swedenburg

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Email: eswedenburg@stblaw.com

and:

Daniel N. Webb

Simpson Thacher & Bartlett LLP

2475 Hanover Street

Palo Alto, CA 94304

Email: dwebb@stblaw.com

or to such other address as the Company or the Purchasers may designate in
writing. All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; upon actual receipt if
sent by certified or registered mail, return receipt requested, or regular mail,
if mailed; upon actual receipt of the facsimile, if sent via facsimile; when
sent, if sent by electronic mail prior to 5:00 pm New York time on a Business
Day, or on the next succeeding Business Day, if not; and upon actual receipt
when delivered to an air courier guaranteeing overnight delivery.

 

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Section 8.08 Entire Agreement. This Agreement, the other Transaction Documents
and the other agreements and documents referred to herein are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to in this Agreement or the other Transaction Documents with respect
to the rights granted by the Company or any of its Affiliates or the Purchasers
or any of their respective Affiliates. This Agreement, the other Transaction
Documents and the other agreements and documents referred to herein or therein
supersede all prior agreements and understandings among the parties with respect
to such subject matter.

Section 8.09 Governing Law; Submission to Jurisdiction. This Agreement, and all
claims or causes of action (whether in contract or tort) that may be based upon,
arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement (including any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in
connection with this Agreement), will be construed in accordance with and
governed by the Laws of the State of New York without regard to principles of
conflicts of laws that would result in the application of the law of any other
jurisdiction. Any action against any party relating to the foregoing shall be
brought in any federal or state court of competent jurisdiction located within
the State of New York, and the parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of New York over any such action. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.

Section 8.10 Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY
WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

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Section 8.11 No Recourse Against Others.

(a) All claims, obligations, liabilities or causes of action (whether in
contract or in tort, in law or in equity, or granted by statute) that may be
based upon, in respect of, arise under, out or by reason of, be connected with
or relate in any manner to this Agreement, or the negotiation, execution or
performance of this Agreement (including any representation or warranty made in,
in connection with, or as an inducement to, this Agreement), may be made only
against (and are expressly limited to) the Company and its Subsidiaries and the
Purchasers. No Person other than the Company or the Purchasers, including no
member, partner, stockholder, Affiliate or Representative thereof, nor any
member, partner, stockholder, Affiliate or Representative of any of the
foregoing, shall have any liability (whether in contract or in tort, in law or
in equity, or granted by statute) for any claims, causes of action, obligations
or liabilities arising under, out of, in connection with or related in any
manner to this Agreement or based on, in respect of or by reason of this
Agreement or its negotiation, execution, performance or breach; and, to the
maximum extent permitted by Law, each of the Company and the Purchasers hereby
waives and releases all such liabilities, claims, causes of action and
obligations against any such third Person.

(b) Without limiting the foregoing, to the maximum extent permitted by Law,
(i) each of the Company and its Subsidiaries on the one hand and the Purchasers
on the other hereby waives and releases any and all rights, claims, demands or
causes of action that may otherwise be available at law or in equity, or granted
by statute, to avoid or disregard the entity form of the other or otherwise
impose liability of the other on any third Person in respect of the transactions
contemplated hereby, whether granted by statute or based on theories of equity,
agency, control, instrumentality, alter ego, domination, sham, single business
enterprise, piercing the veil, unfairness, undercapitalization or otherwise; and
(ii) each of the Company and the Purchasers disclaims any reliance upon any
third Person with respect to the performance of this Agreement or any
representation or warranty made in, in connection with or as an inducement to
this Agreement.

Section 8.12 No Third-Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person, other than the Company
and the Purchasers and their respective permitted assigns any rights or remedies
hereunder. Notwithstanding the foregoing, the Agent is a third party beneficiary
of, and may rely on, the representations and warranties of each Purchaser
contained in Section 4.05, Section 4.08 and Section 4.09.

Section 8.13 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

 

NN, INC. By:  

/s/ Warren A. Veltman

  Name: Warren A. Veltman   Title: President and CEO

 

[Signature Page to Purchase Agreement]

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PURCHASERS: CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP By:  

/s/ Eric Soderlund

  Name: Eric Soderlund   Title: Authorized Signatory CORRE OPPORTUNITIES II
MASTER FUND, LP By:  

/s/ Eric Soderlund

  Name: Eric Soderlund   Title: Authorized Signatory CORRE HORIZON FUND, LP By:
 

/s/ Eric Soderlund

  Name: Eric Soderlund   Title: Authorized Signatory

 

[Signature Page to Purchase Agreement]

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PURCHASERS: LEGION PARTNERS, L.P. I By: Legion Partners Asset Management, LLC
       Investment Advisor By:  

/s/ Christopher S. Kiper

  Name: Christopher S. Kiper   Title: Managing Director LEGION PARTNERS, L.P. II
By: Legion Partners Asset Management, LLC        Investment Advisor By:  

/s/ Christopher S. Kiper

  Name: Christopher S. Kiper   Title: Managing Director

 

[Signature Page to Purchase Agreement]

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Schedule A

 

Purchaser

 

Address

   Series B
Convertible
Preferred Stock      Warrants to
Purchase
Common
Stock      Allocated
Purchase
Price  

Corre Partners Management, L.L.C.

          

Corre Opportunities Qualified Master Fund, LP

  12 East 49th St., 40th Floor, New York, NY 10017      59,380        890,700  
   $ 59,380,000  

Corre Opportunities II Master Fund, LP

  12 East 49th St., 40th Floor, New York, NY 10017      12,620        189,300  
   $ 12,620,000  

Corre Horizon Fund, LP

  12 East 49th St., 40th Floor, New York, NY 10017      13,000        195,000  
   $ 13,000,000  

Attn: Micah Spiegel

          

Legion Partners Asset Management, LLC

          

LEGION PARTNERS, L.P. I

  9401 Wilshire Blvd, Suite 705, Beverly Hills, CA 90212      14,273       
214,095      $ 14,273,000  

LEGION PARTNERS, L.P. II

  9401 Wilshire Blvd, Suite 705, Beverly Hills, CA 90212      727        10,905
     $ 727,000  

Attn: Christopher S. Kiper

          

TOTAL

           $ 100,000,000  

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Schedule B

 

Name of Purchaser

   Number of shares of Common Stock  

Corre Partners Management, L.L.C.

     2,736,432  

Legion Partners Asset Management, LLC

      3,885,317 1 

 

1 

Note that this does not include 300 shares owned by Legion Partners Holdings,
LLC