UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 30, 2019

 

 

 

Carrols Restaurant Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware   001-33174   83-3804854

(State or other jurisdiction of

incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

968 James Street

Syracuse, New York

  13203
(Address of principal executive office)   (Zip Code)

 

Registrant’s telephone number, including area code (315) 424-0513

 

N/A

(Former name or former address, if changed since last report.)

 

 

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $.01 per share   TAST   The NASDAQ Global Market

  

 

 

 

 

 

Explanatory Note

 

Carrols Restaurant Group, Inc. (formerly Carrols Holdco Inc.), a Delaware corporation (the “Company”), is providing the disclosure contained in this Current Report on Form 8-K in connection with the April 30, 2019 closing of the Mergers and the Refinancing (each as defined in Item 1.01 and Item 2.03, respectively to this Current Report on Form 8-K), under the following items of Form 8-K: Item 1.01, Item 1.02, Item 2.01, Item 2.03, Item 3.01, Item 3.02, Item 3.03, Item 5.02, Item 5.03, Item 8.01 and Item 9.01.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Merger Agreement

 

As previously disclosed, on February 19, 2019, Carrols Holdco, Inc. (formerly Carrols Restaurant Group, Inc.), now a wholly owned subsidiary of the Company (“OldCRG”), the Company, GRC MergerSub Inc., a wholly owned subsidiary of OldCRG (“Carrols Merger Sub”), and GRC MergerSub LLC, a wholly owned subsidiary of OldCRG (“Carrols CFP Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cambridge Franchise Partners, LLC (“CFP”), Cambridge Franchise Holdings, LLC, a wholly owned subsidiary of CFP (“Cambridge Holdings”), and New CFH, LLC, a wholly owned subsidiary of Cambridge Holdings (“New CFH”), pursuant to which OldCRG agreed to purchase the business of the subsidiaries of Cambridge Holdings, which included 165 Burger King® restaurants, 55 Popeyes® restaurants, six convenience stores and certain real property through (i) a merger of Carrols Merger Sub and OldCRG with OldCRG as the surviving entity which resulted in OldCRG becoming a wholly-owned subsidiary of the Company (the “Holding Company Reorganization”) and (ii) the merger of Carrols CFP Merger Sub and New CFH with New CFH as the surviving entity (the “Cambridge Merger” and, together with the Holding Company Reorganization, the “Mergers”), in consideration for the issuance to Cambridge Holdings of 7,364,413 shares of common stock, par value $0.01 per share, of the Company (the “Company Common Stock” and such shares, the “Company Investor Shares”) and 10,000 shares of Series C Convertible Preferred Stock, par value $0.01 per share, of the Company (the “Company Series C Preferred Stock”), each share of which is initially convertible into 745.04 shares of Company Common Stock. The Merger Agreement is described in Item 1.01 of the Company’s Current Report on Form 8-K filed on February 25, 2019, which description is incorporated by reference into this Item 1.01.

 

The foregoing description of the transaction and the Merger Agreement and of the terms of the Company Series C Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 25, 2019, and the Certificate of Designations of Series C Convertible Preferred Stock of the Company, which is attached hereto as Exhibit 4.2, and each of which is incorporated by reference into this Item 1.01.

 

Registration Rights and Stockholders’ Agreement

 

Simultaneously with the closing of the Mergers, the Company and Cambridge Holdings entered into a Registration Rights and Stockholders’ Agreement (the “Registration Rights and Stockholders’ Agreement”), which is described in Item 1.01 of the Company’s Current Report on Form 8-K filed on February 25, 2019, which description is incorporated by reference into this Item 1.01.

 

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Registration Rights and Stockholders’ Agreement, which is attached hereto as Exhibit 4.3 and is incorporated by reference into this Item 1.01.

 

Loan Agreement

 

On April 30, 2019, the Company, as borrower, and certain subsidiaries of the Company, as guarantors (the “Guarantors”), entered into a Credit Agreement dated as of April 30, 2019 (the “Loan Agreement”) with Wells Fargo Bank, National Association, as administrative agent (the “Administrative Agent”), and the lenders party thereto (each individually, a “Lender” and, collectively, the “Lenders”), as further described below in “Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant” which description is incorporated by reference in this Item 1.01.

 

Security Agreement

 

In connection with the Loan Agreement, on April 30, 2019, the Company and the Guarantors entered into a Security Agreement (the “Security Agreement”) with the Administrative Agent. Pursuant to the Security Agreement, the Company and the Guarantors pledged and granted to the Administrative Agent for the benefit of the Administrative Agent and the other Secured Parties (as defined therein), a first lien on, and security interest in, all of the right, title and interest of the Company and the Guarantors in substantially all of their respective assets, subject to certain exceptions as specified in the Security Agreement. In addition, under the Security Agreement, all of the outstanding capital stock and equity interests of the direct and indirect subsidiaries of the Company were pledged as security to the Administrative Agent for the benefit of the Secured Parties. The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Security Agreement, which is attached hereto as Exhibit 10.2 and is incorporated by reference herein.

 

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Voting Agreement

 

On April 30, 2019, Burger King Corporation (“BKC”), Blue Holdco 1, LLC (“Blue Holdco” and together with BKC, the “BK Stockholders”), Cambridge Holdings and the Company entered into a Voting Agreement, pursuant to which (i) the BK Shareholders will agree to vote their respective shares of Series B Convertible Preferred Stock of the Company (the “Series B Preferred Stock”) that they hold in favor of a proposal at any annual or special meeting of the Company’s stockholders, or execute written consents in lieu of any annual or special meeting, to remove the restrictions limiting the conversion of the Company Series C Preferred Stock and the issuance of shares of Company Common Stock upon conversion thereof (the “Issuance Restrictions”) and against any action, proposal, transaction or agreement that would reasonably be expected to impede, interfere with, delay, disadvantage or adversely effect the removal of the Issuance Restrictions and (ii) Cambridge Holdings will agree to vote its shares of the Company Common Stock that it holds in favor of a proposal at any annual or special meeting of the Company’s stockholders, or execute written consents in lieu of any annual or special meeting, to amend the Certificate of Designations of the Series B Preferred Stock (the “Series B Certificate of Designations”) changing the definition of (A) the Director Step-Down Date (as defined in the Series B Certificate of Designations) to occur upon the first date on which the number of shares of Company Common Stock into which the outstanding shares of Series B Preferred Stock held by the BK Stockholders are then convertible constitute less than 11.5% of the total number of outstanding shares of Company Common Stock and (B) Director Cessation Date (as defined in the Series B Certificate of Designations) as the first date on which the number of shares of Company Common Stock into which the outstanding shares of Series B Preferred Stock held by the BK Stockholders are then convertible constitute less than 7.5% of the total number of outstanding shares of Company Common Stock. The foregoing description of the Voting Agreement and the Series B Certificate of Designations does not purport to be complete and is qualified in its entirety by reference to the Voting Agreement and Series B Certificate of Designations, which are attached hereto as Exhibit 10.3 and Exhibit 4.1, respectively, and are incorporated by reference herein.

 

Consent Agreement

 

On April 30, 2019, BKC, Blue Holdco, OldCRG, Carrols Corporation and the Company entered into the Consent Agreement (the “Consent Agreement”) which provides, among other things, that the Company (i) include in the Company’s proxy statement for the next annual meeting of stockholders, a proposal soliciting the Company’s stockholders’ affirmative vote at such annual meeting of stockholders for approval of a modification of the following definitions included in the Series B Certificate of Designations: (a) “Director Step-Down Date” to be modified by replacing the percentage set forth therein (14.5%) with 11.5% and (b) “Director Cessation Date” to be modified by replacing the percentage set forth therein (10%) with 7.5% to reflect the increase in the number of directors of the Company (the “Stockholder Approval”) and (ii) use its commercially reasonable efforts to solicit its stockholders’ approval of such proposal and to cause the board of directors of the Company to recommend to the stockholders that they vote in favor of such proposal, unless the board of directors of the Company determines, after consultation with outside legal counsel, that making such recommendation would reasonably be expected to cause the board of directors to be in breach of its fiduciary duties under applicable law. If the Stockholder Approval is not obtained at an annual meeting of stockholders of the Company, then the Company will use its commercially reasonable efforts (including continuing to recommend the Stockholder Approval to the stockholders) to obtain the Stockholder Approval at each of the following meetings of the stockholders of the Company until such Stockholder Approval is obtained. The Company entered into the forgoing obligations in consideration for the consent of the BK Stockholders under the Series B Certificate of Designations for certain matters related to the Mergers and the Holding Company Reorganization. The foregoing description of the Consent Agreement does not purport to be complete and is qualified in its entirety by reference to the Consent Agreement which is attached hereto as Exhibit 10.4 and is incorporated by reference herein.

 

ITEM 1.02. Termination of a Material Definitive Agreement.

 

On April 30, 2019, OldCRG repaid all outstanding borrowings and other obligations under its existing senior credit facility which was governed by the Credit Agreement dated as of May 30, 2012, as amended (the “Prior Credit Agreement”), by and among OldCRG, the guarantors named therein, the lenders named therein and Wells Fargo Bank, National Association, as administrative agent. On April 30, 2019, OldCRG terminated the Prior Credit Agreement, the First Lien Security Agreement dated as of May 30, 2012, as amended (the “Prior First Lien Security Agreement”), among OldCRG, the guarantors named therein and the Administrative Agent and all other instruments and documents related to the Prior Credit Agreement and the Prior First Lien Security Agreement. All outstanding obligations under the Prior Credit Agreement were repaid with a portion of the net proceeds from the Loan Agreement.

 

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On April 30, 2019, OldCRG irrevocably called for the redemption of $275,000,000 of 8.00% Senior Secured Second Lien Notes due 2022 (the “Existing Notes”) and irrevocably deposited with The Bank of New York Mellon Trust Company, N.A., as trustee for the Existing Notes (the “Trustee”), an amount of funds sufficient to redeem such Existing Notes on May 30, 2019 (including accrued interest thereon to, but not including, the date of redemption). Consequently, on April 30, 2019, each of OldCRG and the guarantors under the Existing Notes (i) discharged its respective obligations under the Existing Notes and the Indenture related thereto dated as of April 29, 2015, by and among OldCRG and the guarantors listed therein, as amended by the Supplemental Indenture in Respect of Guarantee, dated as of July 6, 2017, among OldCRG, the guarantor named therein and the Trustee (as amended, the “Existing Indenture”), other than those obligations which by the terms of the Existing Indenture survive and (ii) terminated its respective obligations under the Second Lien Security Agreement dated as of April 29, 2015 among the Company, the guarantors party thereto and the Trustee.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On April 30, 2019, immediately prior to the completion of the Cambridge Merger, OldCRG effected the Holding Company Reorganization, and the Company changed its name from Carrols Holdco Inc. to “Carrols Restaurant Group, Inc.”

 

Immediately after the effective time of the Holding Company Reorganization, (1) Carrols CFP Merger Sub and New CFH effectuated the Cambridge Merger and (2) the Company issued to Cambridge Holdings the Company Investor Shares and the Company Series C Preferred Stock. The Mergers and the transactions related thereto did not require the approval of OldCRG shareholders.

 

Shares of Company Common Stock are listed and traded on The Nasdaq Global Market (“Nasdaq”) under the ticker symbol “TAST.”

 

The foregoing description of the Holding Company Reorganization and the Mergers, does not purport to be complete and is further described in the Company’s Current Report on Form 8-K filed on February 25, 2019 and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 25, 2019, both of which are incorporated by reference into this Item 2.01.

 

ITEM 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet ARRANGEMENT of a Registrant.

 

On April 30, 2019, the Company and the Guarantors entered into the Loan Agreement. The Loan Agreement provides for senior secured credit facilities in an aggregate principal amount of $550.0 million, consisting of (i) a term loan B facility in an aggregate principal amount of $425.0 million (the “Term Loan B Facility”), the entire amount of which was borrowed by the Company on April 30, 2019 and (ii) a revolving credit facility (including a sub-facility for standby letters of credit) in an aggregate principal amount of $125.0 million (the “Revolving Credit Facility” and, together with the Term Loan B Facility, the “Senior Credit Facilities”), which was undrawn as of April 30, 2019. The Loan Agreement also provides that the Company has the right at any time and from time to time, subject to customary conditions, to incur one or more incremental term loan facilities and/or to increase the commitments under the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and Revolving Credit Facility increases of up to (a) the greater of (i) $135.0 million and (ii) an amount equal to 100% of the Company’s Consolidated EBITDA (as such term is defined in the Loan Agreement) for the period of four consecutive fiscal quarters ended on or prior to the applicable date of determination, plus (b) an amount equal to all voluntary prepayments, repurchases, redemptions and other retirements of the Term Loan B Facility and certain other incremental term loans and incremental equivalent debt, in each case, made prior to such date of incurrence and/or increase (other than voluntary prepayments, repurchases, redemptions and other retirements and voluntary commitment reductions to the extent funded by a refinancing with long-term funded indebtedness (other than loans under the Revolving Credit Facility)) plus (c) an additional amount at any time (including at any time prior to utilization of amounts set forth in clauses (a) and (b) above) so long as, in the case of this clause (c) only, (1) in the case of any such indebtedness secured on a pari passu lien basis with the Term Loan B Facility, the Company not exceeding a specified pro forma first lien net leverage ratio, (2) in the case of any such indebtedness secured on a junior lien basis to the Term Loan B Facility, the Company not exceeding a specified pro forma secured net leverage ratio and (3) in the case of any such indebtedness that is unsecured, the Company not exceeding a specified pro forma total net leverage ratio. The Term Loan B Facility matures on April 30, 2026. The Revolving Credit Facility matures on April 30, 2024. The Company used borrowings under the Term Loan B Facility to refinance the existing indebtedness of (i) OldCRG and (ii) New CFH and its subsidiaries and the payment of fees and expenses in connection with the transactions contemplated by the Merger Agreement and the Loan Agreement (the “Refinancing”). The proceeds of the Revolving Credit Facility will be used to finance ongoing working capital and for other general corporate purposes of the Company and its subsidiaries, including permitted acquisitions and required expenditures under development agreements.

 

Borrowings under the Term Loan B Facility and the Revolving Credit Facility will bear interest at a rate per annum, at the Company’s option, of (i) the Alternate Base Rate (as defined in the Loan Agreement) plus the applicable margin of 2.25% or (ii) the LIBOR Rate (as defined in the Loan Agreement) plus the applicable margin of 3.25%.

 

The Company’s obligations under the Loan Agreement are secured by first priority liens on substantially all of the assets of the Company and the Guarantors (including a pledge of all of the capital stock and equity interests of the Guarantors) pursuant to the Security Agreement.

 

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Under the Loan Agreement, the Company will be required to make mandatory prepayments of borrowings in the event of dispositions of assets, debt issuances and insurance and condemnation proceeds (all subject to certain exceptions).

 

The Loan Agreement contains certain covenants, including, without limitation, those limiting the Company’s and the Guarantors’ ability to, among other things, incur indebtedness, incur liens, sell or acquire assets or businesses, change the character of its business in any material respects, engage in transactions with related parties, make certain investments, make certain restricted payments or pay dividends.

 

Under the Loan Agreement, the Lenders may terminate their obligation to advance and may declare the unpaid balance of borrowings, or any part thereof, immediately due and payable upon the occurrence and during the continuance of customary defaults which include, without limitation, payment default, covenant defaults, bankruptcy type defaults, defaults on other indebtedness, judgments or upon the occurrence of a change of control (as specified therein). The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement, which is attached hereto as Exhibit 10.1 and is incorporated by reference herein.

 

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

 

On April 30, 2019, in connection with the Holding Company Reorganization, OldCRG notified Nasdaq that the Holding Company Reorganization had been completed and requested that trading of shares of OldCRG common stock be suspended and requested that Nasdaq file with the U.S. Securities and Exchange Commission (the “Commission”) an application on Form 25 to delist the OldCRG common shares from Nasdaq and deregister the shares of OldCRG common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). OldCRG intends to file a certificate on Form 15 requesting that the shares of OldCRG common stock be deregistered under the Exchange Act, and that OldCRG’s reporting obligations under Section 15(d) of the Exchange Act be suspended (except to the extent of the succession of the Company to the Exchange Act Section 12(b) registration and reporting obligations of OldCRG as described under the heading, “Successor Issuer,” under Item 8.01 below).

 

The information set forth in Item 8.01 under the heading “Successor Issuer,” describing the succession of the Company to Exchange Act Section 12(b) and reporting obligations of OldCRG, is incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth in Item 1.01 is hereby incorporated by reference in this Item 3.02. Exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), for the issuance to Cambridge Holdings of the Company Investor Shares and the shares of Company Series C Preferred Stock pursuant to the terms of the Merger Agreement is based on Section 4(a)(2) of the Securities Act. Cambridge Holdings is an “accredited investor” as such term is defined in Regulation D, as promulgated under the Securities Act.

 

Item 3.03. Material Modification of Rights of Securityholders.

 

At the effective time of the Holding Company Reorganization, each share of OldCRG common stock was automatically converted into one share of Company Common Stock and each share of OldCRG Series B Convertible Preferred Stock (“OldCRG Series B Preferred Stock”) was automatically exchanged for one share of Series B Preferred Stock which has the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of OldCRG Series B Preferred Stock. The Company (as Carrols Holdco Inc.) filed a Registration Statement on Form S-4 (Registration No. 333-230554) in connection with the Holding Company Reorganization, which was declared effective by the Commission on April 16, 2019.

 

The information set forth in Item 2.01 is hereby incorporated by reference in this Item 3.03.

 

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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Appointment of Certain Officers of the Company; Election of New Directors of the Company

 

The directors and executive officers of the Company are the same as the directors and executive officers of OldCRG immediately prior to the closing of the Mergers. OldCRG appointed Matthew Perelman as a Class I director and Alexander Sloane as a Class II director to the board of directors immediately prior to the consummation of the Holding Company Reorganization.

 

The charts below list the Company’s directors and executive officers, effective as of April 30, 2019.

 

Directors

 

Name   Age   Year Became a Director   Year Term Expires 
and Class
Daniel T. Accordino   68   1993   2019 Class I
Matthew Perelman(2), (3), (4)   32   2019   2019 Class I
Hannah S. Craven(1), (2), (3)   53   2015   2020 Class II
Lawrence E. Hyatt(1), (3), (4)   64   2017   2020 Class II
Alexander Sloane(2), (3), (4)   32   2019   2020 Class II
David S. Harris(1), (2), (3), (4)   59   2012   2021 Class III
Deborah M. Derby(2)   55   2018   2021 Class III
Jose E. Cil   49   2015   2019 Class B
Matthew Dunnigan   35   2018   2019 Class B

 

(1)Member of the Audit Committee.
(2)Member of the Compensation Committee.
(3)Member of the Corporate Governance and Nominating Committee.
(4)Member of the Finance Committee.

 

Executive Officers

 

Name   Age   Position
Daniel T. Accordino   68   Chairman of the Board of Directors, Chief Executive Officer and President
Paul R. Flanders   62   Vice President, Chief Financial Officer and Treasurer
William E. Myers   63   Vice President, General Counsel and Secretary
Richard G. Cross   56   Vice President, Real Estate
Gerald J. DiGenova   62   Vice President, Human Resources
Nathan Mucher   47   Vice President, Chief Information Officer

 

Biographical information about the Company’s directors, other than Messrs. Perelman and Sloane, is included in OldCRG’s Form 10-K for the fiscal year ended December 30, 2018 under “Item 10. Directors, Executive Officers and Corporate Governance” and is incorporated by reference herein.

 

Biographical information about each of Messrs. Perelman and Sloane is set forth below:

 

Matthew Perelman is a Co-Founder and Managing Partner of Garnett Station Partners, an investment firm focused on retail and consumer companies and a Co-President of Cambridge Holdings. Prior to founding Garnett Station Partners in September 2013, Mr. Perelman worked at LCatterton, a large consumer-focused private equity fund, from June 2011 to June 2013. Prior to LCatterton, Mr. Perelman worked in the Investment Banking Division of Citigroup from June 2009 to June 2011, where he focused on consumer and retail M&A and financings. Mr. Perelman serves on the boards of Garnett Station Partners’ portfolio companies.

 

Alexander Sloane is a Co-Founder and Managing Partner of Garnett Station Partners, an investment firm focused on retail and consumer companies and a Co-President of Cambridge Holdings. Prior to founding Garnett Station Partners in September 2013, Mr. Sloane worked in private equity at Apollo Global Management from 2011 to 2013. Prior to Apollo, Mr. Sloane worked in Investment Banking at Goldman Sachs from 2009 to 2011. Mr. Sloane serves on the boards of Garnett Station Partners’ portfolio companies.

 

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In connection with the completion of the Holding Company Reorganization, the Company assumed (i) the Employment Agreement dated as of December 22, 2011, as amended, among OldCRG, Carrols LLC and Daniel T. Accordino, (ii) each of the Change of Control and Severance Agreements dated as of June 3, 2013, between OldCRG, Carrols Corporation, Carrols LLC and each of Paul R. Flanders, Richard G. Cross William E. Myers and Gerald J. DiGenova and (iii) each of the OldCRG 2006 Stock Inventive Plan, as amended (the “2006 Plan”), the OldCRG 2016 Stock Incentive Plan (the “2016 Plan”) and underlying grant agreements under the 2006 Plan and the 2016 Plan. Each of the officers and directors of the Company will be entitled to participate in such plans, as applicable, on the same terms and conditions as the officers and directors of OldCRG immediately prior to the closing of the Mergers.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

In connection with the completion of the Holding Company Reorganization, the Company’s board of directors adopted an Amended and Restated Certificate of Incorporation of the Company (the “Amended and Restated Certificate of Incorporation”), an Amended and Restated Bylaws of the Company (the “Amended and Restated Bylaws”), an Amendment to the Amended and Restated Certificate of Incorporation of the Company (the “Amendment to Amended and Restated Certificate of Incorporation”) and an Amendment to Amended and Restated Bylaws of the Company (the “Bylaws Amendment”).

 

Upon consummation of the Holding Company Reorganization, the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of the Company were the same as the certificate of incorporation and bylaws of OldCRG immediately prior to consummation of the Holding Company Reorganization. The Amended and Restated Certificate of Incorporation and the Amendment to Amended and Restated Certificate of Incorporation were filed with the Delaware Secretary of State on April 30, 2019 and are filed as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K and incorporated by reference herein.

 

The Amended and Restated Bylaws and the Bylaws Amendment are filed as Exhibit 3.3 and Exhibit 3.4, respectively, to this Current Report on Form 8-K and incorporated by reference herein.

 

Item 8.01. Other Events.

 

Successor Issuer

 

In connection with the Holding Company Reorganization and by operation of Rule 12g-3(a) promulgated under the Exchange Act, the Company is the successor issuer to OldCRG and has succeeded to the attributes of OldCRG as the registrant, including OldCRG’s Commission file number and CIK number. Shares of the Company Common Stock are deemed to be registered under Section 12(b) of the Exchange Act, and the Company is subject to the informational requirements of the Exchange Act, and the rules and regulations promulgated thereunder, and will file reports and other information with the Commission using OldCRG’s Commission file number (001-33174). The Company hereby reports this succession in accordance with Rule 12g-3(f) promulgated under the Exchange Act.

 

Item 9.01. Financial Statements and Exhibits.

 

(a) Financial statements of the business acquired

 

The financial statements with respect to the Mergers required to be filed pursuant to Item 9.01(a) of Form 8-K will be filed by amendment as soon as practicable, but in no event later than 71 days after the date of this Current Report on Form 8-K is required to be filed.

 

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(b) Pro forma financial information

 

The pro forma financial statements with respect to the Mergers required to be filed pursuant to Item 9.01(b) of Form 8-K will be filed by amendment as soon as practicable, but in no event later than 71 days after the date of this Current Report on Form 8-K is required to be filed.

  

Exhibit No.   Description
3.1   Amended and Restated Certificate of Incorporation of the Company
     
3.2   Amendment to Amended and Restated Certificate of Incorporation of the Company
     
3.3   Amended and Restated Bylaws of the Company
     
3.4   Amendment to Amended and Restated Bylaws of the Company
     
4.1   Certificate of Designations of Series B Convertible Preferred Stock of the Company
     
4.2   Certificate of Designations of Series C Convertible Preferred Stock of the Company
     
4.3   Registration Rights and Stockholders’ Agreement, dated as of April 30, 2019 between the Company and Cambridge Franchise Holdings, LLC
     
10.1   Credit Agreement dated as of April 30, 2019, among the Company, the guarantors named therein, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto
     
10.2   Security Agreement, dated as of April 30, 2019, among the Company, the guarantors named therein, and Wells Fargo Bank, National Association, as administrative agent
     
10.3   Voting Agreement, dated as of April 30, 2019, among the Company, Burger King Corporation, Blue Holdco 1, LLC and Cambridge Franchise Holdings, LLC
     
10.4   Consent Agreement, dated as of April 30, 2019, among the Company, Carrols Holdco Inc. (formerly Carrols Restaurant Group, Inc.),  Carrols Corporation, Burger King Corporation and Blue Holdco 1, LLC

 

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Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Carrols Restaurant Group, Inc.
     
Date: May 6, 2019 By: /s/ Paul R. Flanders
   

Name: Paul R. Flanders

Title: Vice President, Chief Financial Officer and Treasurer

 

 

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Exhibit 3.1

 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

CARROLS HOLDCO INC.

 

Carrols Holdco Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY as follows:

 

1. The name of the Corporation is Carrols Holdco Inc.

 

2. The Certificate of Incorporation of the Corporation was originally filed under the name Carrols Holdco Inc. with the Delaware Secretary of State on February 15, 2019.

 

3. The Board of Directors of the Corporation and the stockholders of the Corporation adopted resolutions, pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”), authorizing the amendment and restatement of the Certificate of Incorporation of the Corporation as follows:

 

FIRST: Name. The name of the Corporation is Carrols Holdco Inc.

 

SECOND: Registered Office. The registered office and registered agent of the Corporation in the State of Delaware is the Corporation Service Company, 251 Little Falls Drive, Wilmington, County of New Castle, Delaware 19808.

 

THIRD: Purposes. The purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the DGCL.

 

FOURTH: Capital Stock. The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 120,000,000 shares, consisting of 20,000,000 shares of Preferred Stock, par value $.01 per share (the “Preferred Stock”), and 100,000,000 shares of Common Stock, par value $.01 per share (the “Common Stock”).

 

(A) Preferred Stock. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors (the “Board”) of the Corporation is hereby authorized to create and provide for the issuance of shares of Preferred Stock in series and, by filing a certificate (hereinafter referred to as a “Preferred Stock Designation”), pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

 

The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

 

(1) The designation of the series, which may be by distinguishing number, letter or title;

 

(2) The number of shares of the series, which number the Board may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares of such series then outstanding);

 

(3) Whether dividends, if any, shall be cumulative or noncumulative and the dividend rate, if any, of the series;

 

(4) The date or dates at which dividends, if any, shall be payable;

 

(5) The redemption rights and price or prices, if any, for shares of the series;

 

(6) The terms and amount of any sinking fund provided for the purchase or redemption of shares of the series;

 

(7) The amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

 

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(8) Whether the shares of the series shall be convertible or exchangeable into shares of any other class or series, or any other security, of the Corporation or any other entity, and, if so, the specification of such other class or series or of such other security, the conversion price or prices or exchange rate or rates and provisions for any adjustments to such prices or rates, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;

 

(9) The ranking of such series with respect to dividends and amounts payable on the Corporation’s liquidation, dissolution or winding-up, which may include provisions that such series will rank senior to the Common Stock with respect to dividends and those distributions;

 

(10) Restrictions on the issuance of shares of the same series or of any other class or series;

 

(11) Whether the Preferred Stock of a series shall have voting rights, in addition to the voting rights provided by law, and the terms of such voting rights, if any, of the holders of shares of the series; and

 

(12) Such other powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof as the Board shall determine.

 

(B) Common Stock. The following is a statement of the powers, preferences and participating, optional or other special rights, and the qualifications, limitations and restrictions of the Common Stock:

 

(1) Dividends. Subject to the rights of the holders of Preferred Stock, holders of the Common Stock shall be entitled to receive such dividends and other distributions in cash, stock of any corporation, other securities or property of the Corporation as may be declared thereon by the Board from time to time out of assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in all such dividends and other distributions.

 

(2) Voting Rights. Except as otherwise provided by law or in a Preferred Stock Designation, all of the voting power of the stockholders of the Corporation shall be vested in the holders of the Common Stock, and holders of shares of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. The holders of Common Stock shall vote together as a single class on all matters with respect to which stockholders are entitled to vote under applicable law, this Certificate of Incorporation as then in effect or the Bylaws of the Corporation, as then in effect (the “Bylaws”), or upon which a vote of stockholders is otherwise duly called for by the Corporation. At every meeting of the stockholders of the Corporation every holder of Common Stock shall be entitled to one vote in person or by proxy for each share of Common Stock standing in his or her name in the transfer books of the Corporation in connection with the election of directors and all other matters submitted to a vote of stockholders. There shall be no cumulative voting in the election of directors.

 

(3) Liquidation or Dissolution. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment of or provision for all liabilities of the Corporation and the amounts, if any, required to be paid to the holders of Preferred Stock, if any, ranking prior to the Common Stock with respect to such distribution, the remaining assets and funds of the Corporation shall be distributed pro rata to the holders of Common Stock. For purposes of this paragraph (3), unless otherwise provided with respect to any series of Preferred Stock, the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the assets of the Corporation or a consolidation or merger of the Corporation with one or more other corporations (whether or not the Corporation is the corporation surviving such consolidation or merger) shall not be deemed to be a liquidation, dissolution or winding up, either voluntary or involuntary.

 

(C) Record Holders. The Corporation shall be entitled to treat the person in whose name any share of its capital stock is registered on the stock transfer books of the Corporation as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.

 

FIFTH: Bylaws; Accounts and Books. In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized:

 

(1) to adopt, amend, repeal or change the Bylaws; provided, however, that the Bylaws or any provision therein may also be adopted, amended, repealed or changed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then outstanding Voting Stock (as defined below), voting together as a single class; and

 

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(2) from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts, books and documents of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined, or as expressly provided in this Certificate of Incorporation as then in effect or in any Preferred Stock Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law.

 

For purposes of this Restated Certificate of Incorporation, “Voting Stock” shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.

 

SIXTH: (A) Meetings of Stockholders. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws.

 

(B) Special Meetings of Stockholders. Subject to any rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, special meetings of stockholders of the Corporation may be called only by the Board or the chief executive officer of the Corporation for any purpose and by the secretary of the Corporation if directed by the Board. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the Corporation’s notice of meeting.

 

(C) No Stockholder Action by Written Consent. Subject to any rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances or to consent to specific actions taken by the Corporation, any action required or permitted to be taken by the stockholders of the Corporation must be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing in lieu of a meeting of such stockholders.

 

SEVENTH: Limited Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Article Seventh by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

 

EIGHTH: Indemnification.

 

(A) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “Indemnitee”), whether the basis of such Proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”), penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in paragraph (B) of this Article Eighth with respect to Proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Indemnitee in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this paragraph (A) of this Article Eighth shall be a contract right and shall include the obligation of the Corporation to pay the expenses incurred in defending any such Proceeding in advance of its final disposition (an “Advance of Expenses”); provided, however, that an Advance of Expenses incurred by an Indemnitee shall be made only upon delivery to the Corporation of an undertaking (an “Undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such Indemnitee is not entitled to be indemnified for such expenses under this paragraph (A) of this Article Eighth or otherwise. The Corporation may, by action of the Board, provide indemnification to employees and agents of the Corporation with the same or lesser scope and effect as the foregoing indemnification of directors and officers.

 

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(B) Procedure for Indemnification. Any indemnification of a director or officer of the Corporation or Advance of Expenses under paragraph (A) of this Article Eighth shall be made promptly, and in any event within forty-five days (or, in the case of an Advance of Expenses, twenty days, provided that the director or officer has delivered the Undertaking contemplated by paragraph (A) of this Article Eighth), upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article Eighth is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved the request. If the Corporation denies a written request for indemnification or Advance of Expenses, in whole or in part, or if payment in full pursuant to such request is not made within forty-five days (or, in the case of an Advance of Expenses, twenty days, provided that the director or officer has delivered the Undertaking contemplated by paragraph (A) of this Article Eighth), the right to indemnification or advances as granted by this Article Eighth shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the Advance of Expenses where the Undertaking required pursuant to paragraph (A) of this Article Eighth, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. The procedure for indemnification of other employees and agents for whom indemnification is provided pursuant to paragraph (A) of this Article Eighth shall be the same procedure set forth in this paragraph (B) for directors or officers, unless otherwise set forth in the action of the Board providing indemnification for such employee or agent.

 

(C) Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee or agent of the Corporation or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, whether or not the Corporation would have the power to indemnify such person against such expenses, liability or loss under the DGCL.

 

(D) Service for Subsidiaries. Any person serving as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture or other enterprise, at least 50% of whose equity interests are owned by the Corporation (a “Subsidiary” for this Article Eighth) shall be conclusively presumed to be serving in such capacity at the request of the Corporation.

 

(E) Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a Subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, Advance of Expenses and other rights contained in this Article Eighth in entering into or continuing such service. The rights to indemnification and to the Advance of Expenses conferred in this Article Eighth shall apply to claims made against an Indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.

 

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(F) Non-Exclusivity of Rights. The rights to indemnification and to the Advance of Expenses conferred in this Article Eighth shall not be exclusive of and shall not limit any other right which any person may have or hereafter acquire under this Certificate of Incorporation as then in effect or under any statute, by-law, agreement, instrument, vote of stockholders or disinterested directors or otherwise.

 

(G) Merger or Consolidation. For purposes of this Article Eighth, references to the “Corporation” shall include, in addition to the resulting Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article Eighth with respect to the resulting or surviving Corporation as he or she would have with respect to such constituent Corporation if its separate existence had continued.

 

(H) Savings Clause. If this Article Eighth or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person entitled to indemnification under paragraph (A) of this Article Eighth as to all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification is available to such person pursuant to this Article Eighth to the full extent permitted by any applicable portion of this Article Eighth that shall not have been invalidated and to the full extent permitted by applicable law.

 

NINTH: Board of Directors.

 

(A) The business and affairs of the Corporation shall be managed by or under the direction of the Board which shall consist of not less than three directors, the exact number of directors to be determined from time to time by resolution adopted by an affirmative vote of a majority of the Board. The directors shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board. Class I directors shall be originally elected for a term expiring at the annual meeting of stockholders occurring in 2019, Class II directors shall be originally elected for a term expiring at the annual meeting of stockholders in 2020, and Class III directors shall be originally elected for a term expiring at the annual meeting of stockholders in 2021. At each such succeeding annual meeting of stockholders, successors to the class of directors whose term expires at that annual meeting shall be elected by an affirmative vote of a majority of the votes cast with respect to such nominee at any meeting for the election of directors at which a quorum is present, provided that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of the votes of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. In an election of directors, a majority of the votes cast means that the number of votes cast “for” a nominee must exceed 50% of the votes cast with respect to such nominee (excluding abstentions). If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any newly created directorship on the Board that results from an increase in the number of directors or any vacancies in the Board resulting from death, resignation, retirement, disqualification or removal from office or any other cause shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director so elected to fill a vacancy in the Board resulting from death, resignation, disqualification or removal from office or any other cause shall have the same remaining term as that of his predecessor. Directors may be removed only for cause, and either by majority of the entire Board or the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 ⅔%) of the voting power of the outstanding Voting Stock, voting together as a single class.

 

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(B) Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate of Incorporation as then in effect (including any Preferred Stock Designation) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article Ninth unless expressly provided by such terms.

 

(C) Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.

 

TENTH: Amendment. Notwithstanding any provisions of this Restated Certificate of Incorporation to the contrary, Section (1) of Article Fifth, Sections (B) and (C) of Article Sixth, Article Seventh, Article Eighth, Article Ninth and this Article Tenth shall not be amended or repealed and no provision inconsistent therewith or herewith shall be adopted without the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then outstanding Voting Stock, voting together as a single class.

 

ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this reservation.

 

4. This amendment and restatement of the Certificate of Incorporation of the Corporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL and by a majority of the Corporation’s stockholders in accordance with Section 228 of the DGCL.

 

***

 

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IN WITNESS WHEREOF, said Carrols Holdco Inc. has caused this Certificate to be signed by William E. Myers, its Vice President, General Counsel and Secretary this 30th day of April, 2019.

 

  CARROLS HOLDCO INC.
   
  By: /s/ William E. Myers
    Name: William E. Myers
    Title: Vice President, General Counsel and Secretary

 

 

 

 

Exhibit 3.2

 

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

CARROLS HOLDCO INC.

 

Carrols Holdco Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:

 

FIRST: Article FIRST of the Amended and Restated Certificate of Incorporation is hereby amended in its entirety by inserting the following in lieu thereof:

 

Name. The name of the Corporation is Carrols Restaurant Group, Inc.”

 

SECOND: The foregoing amendment was duly adopted in accordance with the provisions of Section 242(b)(1) of the General Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 30th day of April, 2019.

 

  CARROLS HOLDCO INC.
   
  /s/ William E. Myers
  Name: William E. Myers
  Title: Vice President, General Counsel and Secretary

 

Exhibit 3.3

 

AMENDED AND RESTATED BYLAWS

 

OF

 

CARROLS HOLDCO INC.

 

(Adopted April 30, 2019)

 

ARTICLE I.

 

STOCKHOLDERS

 

Section 1. Annual Meeting. The annual meeting of the stockholders of Carrols Holdco Inc. (the “Corporation”) for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting shall be held on such date, and at such time and place within or without the State of Delaware, as may be designated from time to time by the Board of Directors (the “Board”) of the Corporation.

 

Section 2. Special Meetings. Except as otherwise required by law and subject to the rights of the holders of any series of the Corporation’s Preferred Stock, par value $0.01 per share (the “Preferred Stock”), special meetings of stockholders of the Corporation may be called only by the Board or the Chief Executive Officer of the Corporation for any purpose and by the Secretary of the Corporation if directed by the Board. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the Corporation’s notice of meeting.

 

Section 3. Notice of Meetings. Except as otherwise provided by law, the Certificate of Incorporation of the Corporation as then in effect (the “Certificate of Incorporation”) or these Bylaws, notice of the time, place and, in the case of a special meeting, the purpose or purposes of the meeting of stockholders shall not be given more than sixty, nor less than ten days before the date of such meeting, to each stockholder of record entitled to vote at the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage pre-paid, directed to the stockholder at such address as appears on the records of the Corporation.

 

Section 4. Vote Required; Adjournment. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of all business including, without limitation, (i) a vote for any director in a contested election, (ii) the removal of a director or (iii) the filling of a vacancy on the Board. If at any regularly called meeting of stockholders there be less than a quorum present, the stockholders present may adjourn the meeting from time to time without further notice other than announcement at the meeting until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At any meeting of stockholders, whether or not a quorum shall be present or represented by proxy, the Chairman of the Board or the chairperson of such meeting shall have the power to adjourn such meeting from time to time, to reconvene such meeting at the same or some other place, notice need not be given of such reconvened meeting if the time and place of the reconvened meeting are announced at the meeting that has been adjourned. At the reconvened meeting, any business may be transacted that might have been transacted at the meeting that has been adjourned. Notwithstanding the foregoing, if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the reconvened meeting, a notice of the adjournment shall be given, in accordance with the requirements of Section 3 of this Article I, to each stockholder of record entitled to notice of and to vote at the reconvened meeting.

 

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Section 5. Organization. The Chairman of the Board, or in the Chairman’s absence or at the Chairman’s direction, any officer of the Corporation shall call all meetings of the stockholders to order and shall act as chairman of such meeting. The Secretary of the Corporation or, in such officer’s absence, an Assistant Secretary shall act as secretary of the meeting. If neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

Section 6. Proxies. At all meetings of stockholders, any stockholder entitled to vote thereat shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy pursuant to the General Corporation Law of the State of Delaware (the “DGCL”), the following shall constitute a valid means by which a stockholder may grant such authority: (1) a stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy, and execution of the writing may be accomplished by the stockholder or the stockholder’s authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature; or (2) a stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors, or if there are no inspectors, such other persons making that determination shall specify the information upon which they relied.

 

Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to the preceding paragraph of this Section 6 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

 

Proxies shall be filed with the Secretary of the meeting prior to or at the commencement of the meeting to which they relate.

 

A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Any proxy is suspended when the person executing the proxy is present at a meeting of stockholders and elects to vote, except that when such proxy is coupled with an interest and the fact of the interest appears on the face of the proxy, the agent named in the proxy shall have all voting and other rights referred to in the proxy, notwithstanding the presence of the person executing the proxy. At each meeting of the stockholders, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the secretary or a person designated by the secretary, and no shares may be represented or voted under a proxy that has been found to be invalid or irregular.

 

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Section 7. Quorum; Voting Rights. When a quorum is present at any meeting, the vote of the holders of a majority in voting power of the stock present in person or represented by proxy and entitled to vote on the matter shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation, these Bylaws or the rules or regulations of any stock exchange applicable to the Corporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Except as provided for by the DGCL or by the Certificate of Incorporation, and subject to these Bylaws, every stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of Corporation’s Common Stock, par value $.01 per share (the “Common Stock”) held by such stockholder.

 

Section 8. Fixing Date of Determination of Stockholders of Record. In order that the Corporation may determine the stockholders (a) entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or (b) entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date (i) in the case of clause (a) above, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting and (ii) in the case of clause (b) above, shall not be more than sixty days prior to such action. If for any reason the Board shall not have fixed a record date for any such purpose, the record date for such purpose shall be determined as provided by law. A determination of the stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

Section 9. Listed Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall prepare and make available at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, as required by applicable law. The list shall also be produced at the time and kept at the place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

Section 10. Inspector of Elections. The Corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

 

Section 11. Stockholder Nominations for the Board; Stockholder Proposals.

 

(A) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Article I, Section 3 of these Bylaws, (b) by or at the direction of the Board or (c) by any stockholder of the Corporation who is entitled to vote at the meeting, who has complied with the notice procedures set forth in subparagraphs (2) and (3) of this paragraph (A) of this Section and who was a stockholder of record at the time such notice is delivered to the Secretary of the Corporation and at the time of the annual meeting; clause (c) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

 

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(2) Without qualification, for any nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and, in the case of business other than nominations, such other business must be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary (other than a request for inclusion of a proposal in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Exchange Act) at the principal executive offices of the Corporation not more than one hundred twenty days, nor less than ninety days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty days, or delayed by more than seventy days, from such anniversary date, notice by the stockholder to be timely must be so delivered (a) not more than the one hundred twentieth day prior to such annual meeting and (b) not less than (i) the close of business on the later of the ninetieth day prior to such annual meeting or (ii) the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation. Such stockholder’s notice (whether given pursuant to this Section 11(A)(2) or Section 11(B) to the Secretary of the Corporation) shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand; (b) as to any other business (other than a nomination of a director or directors) that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting, any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and a description of all agreements, arrangements or understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the Corporation which are directly or indirectly owned beneficially and of record by such stockholder and such beneficial owner, and that such shares have been held for the period required by any applicable law, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (iv) a representation whether such stockholder is a party to any arrangement, contract or understanding (such as derivative transactions, put or call arrangements, short positions, hedging, swap or stock lending arrangements) pursuant to which the voting or economic interests of the stockholders are affected and in each case describing any changes in voting or economic rights which may arise pursuant to such arrangement, contract or understanding and (v) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

 

(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board made by the Corporation at least one hundred days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

 

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(B) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting in the case of a meeting called by the Chief Executive Officer of the Corporation or the Board or by the Secretary of the Corporation if directed by the Board pursuant to a resolution approved by the Board, pursuant to the Corporation’s notice of meeting pursuant to Article I, Section 3 of these Bylaws, and such other purposes as shall be directed by the Board, in each case as set forth in the Corporation’s notice of meeting pursuant to Article I, Section 3 of these Bylaws. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board or (b) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in these Bylaws as to such nomination and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. Nominations by stockholders of persons for election to the Board may be made at such a special meeting of stockholders if the stockholder’s notice as required by paragraph (A)(2) of this Section shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.

 

(C) General. (1) Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors elected by the Corporation’s stockholders and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these Bylaws. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of these Bylaws, if the nominating or proposing stockholder (or a qualified representative of the nominating or proposing stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

 

(2) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(3) For purposes of these Bylaws, no adjournment nor notice of adjournment of any meeting shall be deemed to constitute a new notice of such meeting for purposes of this Section 11, and in order for any notification required to be delivered by a stockholder pursuant to this Section 11 to be timely, such notification must be delivered within the periods set forth above with respect to the originally scheduled meeting.

 

(4) Notwithstanding the foregoing provisions of these Bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Bylaws, provided, however that any references in these Bylaws to the Exchange Act are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 11(A)(1)(c) or Section 11(B) of these Bylaws. Nothing in these Bylaws shall be deemed to affect any rights of (a) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation (including any certificate of designations relating to such series).

 

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ARTICLE II.

 

BOARD OF DIRECTORS

 

Section 1. Number. The Board shall consist of such number of directors, which shall not be less than three, as shall from time to time be fixed exclusively by resolution of the Board. The directors shall be divided into three classes in the manner set forth in the Certificate of Incorporation, each class to be elected for the term set forth therein. A nominee for director election shall be elected by the affirmative vote of a majority of the votes cast with respect to such nominee at any meeting for the election of directors at which a quorum is present, provided that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of the votes of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. In an election of directors, a majority of the votes cast means that the number of votes cast “for” a nominee must exceed 50% of the votes cast with respect to such nominee (excluding abstentions). If a director is not elected, the director shall promptly tender his or her resignation to the Board. The Corporate Governance and Nominating Committee (the “Corporate Governance and Nominating Committee”) will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the resignation taking into account the recommendation of the Corporate Governance and Nominating Committee and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The director who tenders his or her resignation will not participate in the decisions of the Corporate Governance and Nominating Committee or the Board that concern such resignation. If a director’s resignation is accepted by the Board pursuant to this Bylaw, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Article II, Section 2 or may decrease the size of the Board pursuant to the provisions of Article II, Section 1. A majority of the total number of directors then in office (but not less than one-third of the number of directors constituting the entire Board) shall constitute a quorum for the transaction of business and, except as otherwise provided by law or by the Certificate of Incorporation, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. Directors need not be stockholders.

 

Section 2. Vacancy; Removal. Subject to the rights of holders of the Preferred Stock, newly created directorships in the Board that result from (a) an increase in the number of directors or (b) death, resignation, retirement, disqualification or removal (whether or not for cause) shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director; and the directors so chosen shall hold office for a term as set forth in the Certificate of Incorporation. Directors may be removed only for cause, and only by a majority of the directors then in office, although less than a quorum or by the affirmative vote of holders of no less than sixty-six and two-thirds percent (66 2/3%) of all outstanding shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

 

Section 3. Regular Meetings; Special Meetings. Meetings of the Board shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board or as may be specified in the notice of any meeting. Regular meetings of the Board shall be held at such times as may from time to time be fixed by resolution of the Board and special meetings may be held at any time upon the call of the Chairman of the Board, the Chief Executive Officer or a majority of the directors, by oral, or written notice including, telegram, cablegram, telecopy or other means of electronic transmission, duly served on or sent or mailed to each director at such director’s address or telecopy number as shown on the books of the Corporation not less than twenty-four hours before the special meeting. The notice of any meeting need not specify the purposes thereof. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting is held. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. Notice of any meeting need not be given to any director who shall attend such meeting in person (except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened), or who shall waive notice thereof, before or after such meeting, in writing or by electronic transmission. At all meetings of the Board, a majority of the whole Board shall constitute a quorum for the transaction of such business unless the Certificate of Incorporation or these Bylaws provide otherwise, and the vote of a majority of the directors present at any meeting of the Board at which a quorum is present shall be the actions of the Board.

 

Section 4. Term. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by series, to elect one or more directors (separate and apart from any directors to be elected by the holders of Common Stock), the election, term of office, removal, and other features of such directorships shall be governed by the terms of the Certificate of Incorporation applicable thereto, and such directors so elected shall not be divided into classes pursuant to Article Ninth of the Certificate of Incorporation unless expressly provided by such terms. The number of directors that may be elected by the holders of any such series of Preferred Stock shall be in addition to the number fixed by or pursuant to these Bylaws. Except as otherwise expressly provided in the terms of such series, the number of directors that may be so elected by the holders of any such series of Preferred Stock shall be elected for terms expiring at the next annual meeting of stockholders and without regard to the classification of the members of the Board as set forth in Section 1 hereof and vacancies among directors so elected by the separate vote of the holders of any such series of Preferred Stock shall be filled by the affirmative vote of a majority of the remaining directors elected by such series, or, if there are no such remaining directors, by the holders of such series in the same manner in which such series initially elected a director.

 

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Section 5. Quorum. If at any meeting for the election of directors the Corporation has outstanding more than one class of stock, and one or more such classes or series thereof are entitled to vote separately as a class, and there shall be a quorum of only one such class or series of stock, that class or series of stock shall be entitled to elect its quota of directors notwithstanding the absence of a quorum of the other class or series of stock.

 

Section 6. Executive Committee. The Board may designate as many directors as it desires to constitute an executive committee, one of whom shall be designated Chairman of such committee. The members of such committee shall hold such office until the next election of the Board and until their successors are elected and qualify. Any vacancy occurring in the committee shall be filled by the Board. Regular meetings of the committee shall be held at such times and on such notice and at such places as it may from time to time determine. The committee shall act, advise with and aid the officers of the Corporation in all matters concerning the management of its business, and shall generally perform such duties and exercise such powers as may from time to time be delegated to it by the Board, and shall have authority to exercise all the powers of the Board, so far as may be permitted by law, in the management of the business and the affairs of the Corporation whenever the Board is not in session. The committee shall have the power to authorize the seal of the Corporation to be affixed to all papers which are required by the DGCL to have the seal affixed thereto. The fact that the executive committee has acted shall be conclusive evidence that the Board was not in session at such time.

 

The executive committee shall keep regular minutes of its transactions and shall cause them to be recorded in a book kept in the office of the Corporation designated for that purpose, and shall report the same to the Board at its regular meeting. The committee shall make and adopt its own rules for the governance thereof and shall elect its own officers and in the absence of such rules, each committee shall conduct its business pursuant to Article II of these Bylaws.

 

Section 7. Committees. The Board may from time to time establish such other committees to serve at the pleasure of the Board which shall be comprised of such members of the Board and have such duties as the Board shall from time to time establish. Any director may belong to any number of committees of the Board.

 

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Provision shall be made for notice to members of all meetings; a majority of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present at any meeting at which there is a quorum. Except to the extent restricted by applicable law or the Certificate of Incorporation, each committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board.

 

Section 8. Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee, as the case may be in accordance with applicable law.

 

Section 9. Telephonic Meetings. The members of the Board or any committee thereof may participate in a meeting of such Board or committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such a meeting.

 

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Section 10. Compensation. The Board shall have authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.

 

Section 11. Chairman of the Board. The Chairman of the Board of the Corporation shall preside at all meetings of the stockholders and of the Board and shall have such other powers and perform such other duties as may be prescribed to him or her by the Board or provided in these Bylaws.

 

Section 12. Reliance upon Records. Every director, and every member of any committee of the Board, shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board, or by any other person as to matters the director or member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, including, but not limited to, such records, information, opinions, reports or statements as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid, or with which the Corporation’s capital stock might properly be purchased or redeemed.

 

Section 13. Interested Directors. A director who is directly or indirectly a party to a contract or transaction with the Corporation, or is a director or officer of or has a financial interest in any other corporation, partnership, association or other organization which is a party to a contract or transaction with the Corporation, may be counted in determining whether a quorum is present at any meeting of the Board or a committee thereof at which such contract or transaction is considered or authorized, and such director may participate in such meeting and vote on such authorization to the extent permitted by applicable law, including, without limitation, Section 144 of the DGCL.

 

ARTICLE III.

 

OFFICERS

 

Section 1. Executive Officers. The Board shall elect officers of the Corporation, including a Chief Executive Officer, a Chief Financial Officer and a Secretary. The Board may also from time to time elect such other officers (including, without limitation, a President, one or more Vice Presidents, a Treasurer, one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers) as it may deem proper or may delegate to any elected officer of the Corporation the power to appoint and remove any such other officers and to prescribe their respective terms of office, authorities and duties. The Board may elect the Chairman of the Board of Directors as an officer of the Corporation, provided that the Chairman may not be regarded as an officer of the Corporation unless the Board so determines at the time of election in accordance with these Bylaws. Any Vice President may be designated Executive, Senior or Corporate, or may be given such other designation or combination of designations as the Board may determine. Any two or more offices may be held by the same person.

 

Section 2. Term; Removal; Resignation; Vacancy. All officers of the Corporation elected by the Board shall hold office for such term as may be determined by the Board or until their respective successors are chosen and qualified. Any officer may be removed from office at any time either with or without cause by the affirmative vote of a majority of the members of the Board then in office, and, in the case of appointed officers, by any elected officer upon whom such power of removal shall have been conferred by the Board. Any officer may resign at any time by giving written notice to the Chairman of the Board, if any, the Chief Executive Officer, the President or the Secretary. Unless otherwise stated in a notice of resignation, it shall take effect when received by the officer to whom it is directed, without any need for its acceptance. A vacancy occurring in any office of the Corporation may be filled for the unexpired portion of the term thereof by the Board at any regular or special meeting.

 

Section 3. Powers and Duties.

 

(A) Chief Executive Officer. The Chief Executive Officer of the Corporation shall have the powers and perform the duties incident to that position. Subject to the powers of the Board and the Chairman of the Board, the Chief Executive Officer shall be in the general and active charge of the entire business and affairs of the Corporation, and shall be its chief policy making officer. The Chief Executive Officer shall have such other powers and perform such other duties as may be prescribed by the Board or provided in these Bylaws. The Chief Executive Officer is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board to some other officer or agent of the Corporation. Whenever the President is unable to serve, by reason of sickness, absence or otherwise, the Chief Executive Officer shall perform all the duties and responsibilities and exercise all the powers of the president.

 

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(B) The President. The President of the Corporation shall, subject to the powers of the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, and the Chief Executive Officer, have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees. The President shall see that all orders and resolutions of the Board are carried into effect. The President is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board to some other officer or agent of the Corporation. The President shall have such other powers and perform such other duties as may be prescribed by the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the Board or as may be provided in these Bylaws.

 

(C) Vice-Presidents. The Vice-President of the Corporation, or if there shall be more than one, the Vice-Presidents of the Corporation, in the order determined by the Board or the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, shall, in the absence or disability of the President, act with all of the powers and be subject to all the restrictions of the President. The Vice-Presidents shall also perform such other duties and have such other powers as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe. The Vice-Presidents may also be designated as Executive Vice-Presidents, Senior Vice-Presidents or Corporate Vice-Presidents, as the Board may from time to time prescribe.

 

(D) The Secretary and Assistant Secretaries. The Secretary of the Corporation shall attend all meetings of the Board (other than executive sessions thereof) and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose or shall ensure that his or her designee attends each such meeting to act in such capacity.

 

Under the Chairman of the Board’s supervision, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws or by law; shall have such powers and perform such duties as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe; and shall have custody of the corporate seal of the Corporation. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal or a facsimile thereof to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal or a facsimile thereof of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one, any of the Assistant Secretaries, shall in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President, or Secretary may, from time to time, prescribe.

 

(E) The Chief Financial Officer. The Chief Financial Officer shall have the custody of the corporate funds and securities; shall keep full and accurate all books and accounts of the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or the Board; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the Board, at its regular meeting or when the Board so requires, an account of the Corporation; shall have such powers and perform such duties as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe.

 

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(F) Treasurer and Assistant Treasurers. The Treasurer of the Corporation shall in general have all duties incident to the position of Treasurer of the Corporation and such other powers and duties as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe. The Assistant Treasurer, or if there be more than one, any of the Assistant Treasurers, shall in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board, the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, the Chief Executive Officer, the President or the Treasurer may, from time to time, prescribe.

 

(G) Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board.

 

Section 4. Delegation of Duties. Unless otherwise provided in these Bylaws, in the absence or disability of any officer of the Corporation, the Board may, during such period, delegate such officer’s powers and duties to any other officer or to any director and the person to whom such powers and duties are delegated shall, for the time being, hold such office.

 

Section 5. Compensation. Compensation of all executive officers shall be approved by the Board, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the Corporation; provided however, that compensation of some or all executive officers may be determined by a committee established for that purpose if so authorized by the Board or as required by applicable law or regulation, including any exchange or market upon which the Corporation’s securities are then listed for trading or quotation.

 

ARTICLE IV

 

CERTIFICATES OF STOCK

 

Section 1. Certificates. The shares of stock of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, or as otherwise permitted by law, representing the number of shares registered in certificate form. Any or all the signatures on the certificate may be a facsimile.

 

Section 2. Transfers of Stock. Transfers of stock shall be made on the books of the Corporation by the holder of the shares in person or by such holder’s attorney upon surrender and cancellation of certificates for a like number of shares, or as otherwise provided by law with respect to uncertificated shares.

 

Section 3. Lost, Stolen or Destroyed Certificates; Issuance of New Certificates; Stockholders of Record. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. The Corporation shall be entitled to treat the holder of record of any stock of the Corporation as the holder thereof and shall not be bound to recognize any equitable or other claim to or interest in such stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by the laws of the State of Delaware.

 

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ARTICLE V.

 

CORPORATE BOOKS

 

The books and records of the Corporation may be kept outside of the State of Delaware at such place or places as the Board may from time to time determine.

 

ARTICLE VI.

 

CHECKS, NOTES, PROXIES, ETC.

 

All checks and drafts on the Corporation’s bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be thereunto authorized from time to time by the Board. Proxies to vote and consents with respect to securities of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chairman of the Board, provided that the Chairman of the Board is an executive officer of the Corporation pursuant to Article III, Section 1 of these Bylaws, or the Chief Executive Officer, or by any such officers as the Board may from time to time determine.

 

ARTICLE VII.

 

FISCAL YEAR

 

The fiscal year of the Corporation shall be fixed by the Board.

 

ARTICLE VIII.

 

CORPORATE SEAL

 

The corporate seal shall have inscribed thereon the name of the Corporation. In lieu of the corporate seal, a facsimile thereof may be impressed or affixed or reproduced.

 

ARTICLE IX.

 

DIVIDENDS

 

Subject to the provisions of law and the provisions of the Certificate of Incorporation or any resolution or resolutions adopted by the Board, the Board may, out of funds legally available therefor, declare dividends upon the capital stock of the Corporation as and when it deems expedient. Before declaring any dividend there may be set apart out of any funds of the Corporation legally available for dividends, such sum or sums as the Board from time to time in its discretion deems proper for working capital or future capital needs or as a reserve fund to meet contingencies or for such other purposes as the Board shall deem appropriate or in the interests of the Corporation.

 

ARTICLE XI.

 

FACSIMILE OR OTHER SIGNATURES

 

In addition to the provisions for use of facsimile or other electronically transmitted signatures elsewhere specifically authorized in these Bylaws, facsimile or other electronically transmitted signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board or a committee thereof.

 

ARTICLE XII.

 

AMENDMENTS

 

The Board shall be authorized to make, amend, alter, change, add to or repeal these Bylaws without a stockholder vote in any manner not inconsistent with the laws of the State of Delaware, subject to the power of the stockholders entitled to vote to amend, alter, change, add to or repeal these Bylaws. Notwithstanding anything contained in these Bylaws to the contrary, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) in voting power of the outstanding shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required in order for the stockholders to amend, alter, change, add to or repeal these Bylaws.

 

 

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Exhibit 3.4

 

FIRST AMENDMENT

TO

AMENDED AND RESTATED BYLAWS

OF

CARROLS RESTAURANT GROUP, INC.

(effective as of April 30, 2019)

 

Each reference to “Carrols Holdco Inc.” in the Amended and Restated Bylaws of Carrols Restaurant Group, Inc. (the “Corporation”) is hereby deleted and replaced with a reference to “Carrols Restaurant Group, Inc.”.

 

Section 11(A)(2) of the Amended and Restated Bylaws of the Corporation is hereby amended and restated in its entirety as follows:

 

“(2) Without qualification, for any nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and, in the case of business other than nominations, such other business must be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary (other than a request for inclusion of a proposal in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Exchange Act) at the principal executive offices of the Corporation (a) in the case of the first annual meeting of the Corporation following the effectiveness of the First Amendment to these Bylaws, not more than one hundred twenty days, nor less than ninety days prior to June 7, 2019, provided, however, that in the event that the date of the first annual meeting is advanced by more than thirty days, or delayed by more than seventy days, from June 7, 2019, notice by the stockholder to be timely must be so delivered (i) not more than the one hundred twentieth day prior to such annual meeting and (ii) not less than (y) the close of business on the later of the ninetieth day prior to such annual meeting or (z) the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation, and (b) in the case of any subsequent annual meeting of the Corporation, not more than one hundred twenty days, nor less than ninety days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty days, or delayed by more than seventy days, from such anniversary date, notice by the stockholder to be timely must be so delivered (i) not more than the one hundred twentieth day prior to such annual meeting and (ii) not less than (y) the close of business on the later of the ninetieth day prior to such annual meeting or (z) the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation. Such stockholder’s notice (whether given pursuant to this Section 11(A)(2) or Section 11(B) to the Secretary of the Corporation) shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand; (b) as to any other business (other than a nomination of a director or directors) that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting, any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and a description of all agreements, arrangements or understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class and number of shares of the Corporation which are directly or indirectly owned beneficially and of record by such stockholder and such beneficial owner, and that such shares have been held for the period required by any applicable law, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (iv) a representation whether such stockholder is a party to any arrangement, contract or understanding (such as derivative transactions, put or call arrangements, short positions, hedging, swap or stock lending arrangements) pursuant to which the voting or economic interests of the stockholders are affected and in each case describing any changes in voting or economic rights which may arise pursuant to such arrangement, contract or understanding and (v) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.”

  

Section 11(A)(3) of the Amended and Restated Bylaws of the Corporation is hereby amended and restated in its entirety as follows:

 

“(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board made by the Corporation at least one hundred days (a) in the case of the first annual meeting of the Corporation, prior to June 7, 2019, and (b) in the case of any subsequent annual meeting of the Corporation, prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.”

 

Exhibit 4.1

 

CARROLS Holdco INC.

 

CERTIFICATE OF DESIGNATION

 

OF

 

SERIES B CONVERTIBLE PREFERRED STOCK

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

Carrols Holdco Inc., a Delaware corporation (the “Company”), hereby certifies that:

 

A. The Restated Certificate of Incorporation of the Company (as amended, the “Certificate of Incorporation”) fixes the total number of shares of capital stock that the Company shall have the authority to issue at 100,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”).

 

B. The Certificate of Incorporation expressly vests the Board of Directors of the Company with authority from time to time to provide for the issuance of shares of one or more series of the undesignated Preferred Stock and in connection therewith to fix by resolution or resolutions providing for the issue of any such series, the number of shares to be included therein, the voting powers thereof, and such of the designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions of each such series, including, without limitation, dividend rights, voting rights, rights of redemption, conversion rights, and liquidation preferences.

 

C. Pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation, the Board of Directors, by action duly taken on April 29, 2019, adopted resolutions establishing a series of Preferred Stock and fixing the designation, powers, preferences and rights of the shares of this series of Preferred Stock and the qualifications, limitations or restrictions thereof as follows:

 

Section 1. Designation; Number of Shares.

 

The designation of the series of Preferred Stock shall be “Series B Convertible Preferred Stock” (the “Series B Convertible Preferred Stock”). The number of authorized shares of Series B Convertible Preferred Stock shall be 100.

 

Section 2. Definitions.

 

Unless the context otherwise requires, each of the terms defined in this Section 2 shall have, for all purposes of this Certificate of Designation, the meaning herein specified (with terms defined in the singular having comparable meanings when used in the plural):

 

Affiliate” as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and, in addition to the foregoing, a Person shall be deemed to control another Person if the controlling Person owns 20% or more of any class of voting securities (or other ownership interest) of the controlled Person.

 

Board of Directors” means the Board of Directors of the Company.

 

Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

By-Laws” means the Company’s Amended and Restated By-Laws, as amended, as in effect on the date of this Certificate of Designation.

  

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Capital Stock” means any and all shares, interests, participations or other equivalents in the equity interest (however designated) in the Company.

 

Certificate of Incorporation” means the Company’s Restated Certificate of Incorporation, as amended, as in effect on the date of this Certificate of Designation.

 

Class B Director” means each individual elected by the Investors to serve as a member of the Board of Directors pursuant to the terms and subject to the conditions of Section 8 hereof.

 

Common Share Equivalents” means securities, options, warrants, derivatives, debt instruments or other rights convertible into, or exercisable or exchangeable for, or entitling the holder thereof to receive directly or indirectly, Common Stock.

 

Common Stock” means the common stock, $0.01 par value per share, of the Company or any other Capital Stock into which such shares of common stock shall be reclassified or changed.

 

Common Stock Transfer Agent” has the meaning set forth in Section 6(c) hereof.

 

Company” means Carrols Holdco Inc., a Delaware corporation, and its successors and assigns.

 

Company’s Organizational Documents” means the Certificate of Incorporation, this Certificate of Designation, any other certificate of designation issued pursuant to the Certificate of Incorporation, and the By-Laws.

 

Conversion Number” has the meaning set forth in Section 6(a) hereof.

 

Converted Shares” has the meaning set forth in Section 6(c).

 

Converting Shares” has the meaning set forth in Section 6(c).

 

DGCL” means the General Corporation Law of the State of Delaware.

 

Director Cessation Date” means the first date on which the number of shares of Common Stock into which the outstanding shares of Series B Convertible Preferred Stock held by the Investors are then convertible constitute less than 10% of the total number of outstanding shares of Common Stock.

 

Director Step-Down Date” means the first date on which the number of shares of Common Stock into which the outstanding shares of Series B Convertible Preferred Stock held by the Investors are then convertible constitute less than 14.5% of the total number of outstanding shares of Common Stock.

 

Holders” means the record holders of the shares of Series B Convertible Preferred Stock, as shown on the books and records of the Company.

 

Investors” means, collectively, Burger King Corporation, a Florida corporation, as the sole record holder of shares of Series B Convertible Preferred Stock as of the date of this Certificate of Designation, and any other Person who is both (1) an Affiliate of Burger King Corporation and (2) a wholly-owned direct or indirect subsidiary of either Restaurant Brands International, Inc. or Restaurant Brands International Limited Partnership to whom one or more shares of Series B Convertible Preferred Stock are Transferred on or after the date of this Certificate of Designation.

 

Junior Stock” has the meaning set forth in Section 3 hereof.

 

Liquidation Event” means (i) any voluntary or involuntary liquidation, dissolution or winding-up of the Company, (ii) the consummation of a merger or consolidation in which the stockholders of the Company prior to such transaction own less than a majority of the voting securities of the entity surviving such transaction, or (iii) the sale, distribution or other disposition of all or substantially all of the Company’s assets.

 

Liquidation Preference” has the meaning set forth in Section 5(a) hereof.

  

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Market Price” means the last reported sale price of the Common Stock on the primary U.S. national securities exchange, automated quotation system or inter-dealer quotation system upon which the Common Stock is then traded or quoted.

 

Operating Agreement” means the Operating Agreement, dated as of May 30, 2012, as amended, among Burger King Corporation and Carrols LLC.

 

Parity Stock” has the meaning set forth in Section 3 hereof.

 

Person” includes all natural persons, corporations, business trusts, limited liability companies, associations, companies, partnerships, joint ventures and other entities, as well as governments and their respective agencies and political subdivisions.

 

SEC” means the United States Securities and Exchange Commission.

 

Senior Stock” has the meaning set forth in Section 3 hereof.

 

Series B Convertible Preferred Stock” has the meaning set forth in Section 1 hereof.

 

Stated Value” means $0.01 per share of Series B Convertible Preferred Stock, as may be adjusted for any stock split, dividend or similar event relating to the Series B Convertible Preferred Stock.

 

Transfer” means a direct or indirect sale, assignment, transfer, pledge, offer, exchange, disposition, encumbrance, alienation or other disposition.

 

Transfer Agent” means the entity designated from time to time by the Company to act as the registrar and transfer agent for the Series B Convertible Preferred Stock or, if no entity has been so designated to act in such capacity, the Company.

 

Section 3. Ranking.

 

The Series B Convertible Preferred Stock shall, with respect to rights on the liquidation, winding-up and dissolution of the Company (as provided in Section 5 below), rank (a) senior to all classes of Common Stock and to each other class of Capital Stock or series of Preferred Stock established hereafter by the Board of Directors the terms of which expressly provide that such class ranks junior to the Series B Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Junior Stock”), (b) on a parity with each other class of Capital Stock or series of Preferred Stock established hereafter by the Board of Directors with the written consent of the Holders of at least a majority of the outstanding shares of Series B Convertible Preferred Stock, the terms of which expressly provide that such class or series ranks on a parity with the Series B Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Parity Stock”) and (c) junior to any future class of Preferred Stock established hereafter by the Board of Directors, the terms of which expressly provide that such class ranks senior to the Series B Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Senior Stock”).

 

The Series B Convertible Preferred Stock shall, with respect to rights to dividends (as provided in Section 4 below), rank on a parity with each class of Common Stock.

 

Section 4. Dividends.

 

The Company shall not declare, pay or set aside any dividends on shares of Common Stock (other than dividends on shares of Common Stock payable solely in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Company’s Organizational Documents) the Holders simultaneously receive a dividend on each outstanding share of Series B Convertible Preferred Stock in an amount equal to that dividend per share of Series B Convertible Preferred Stock as would equal the product of the dividend payable on each share of Common Stock and the number of shares of Common Stock then issuable upon conversion of one share of Series B Convertible Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend.

  

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Section 5. Liquidation Preference.

 

(a) Except as otherwise provided in Section 6(h), upon any Liquidation Event, each Holder shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, on account of each share of Series B Convertible Preferred Stock held by such Holder, (i) prior to the holders of any class or series of Common Stock and Junior Stock, (ii) pro rata with the holders of any Parity Stock and (iii) after the holders of any Senior Stock, an amount (such amount, the “Liquidation Preference”) equal to the Stated Value.

 

(b) Except as otherwise provided in Section 6(h), upon any Liquidation Event, after the payment of the Liquidation Preference the remaining assets of the Company available for distribution to its stockholders shall be distributed among the Holders and the holders of the shares of Capital Stock, pro rata, based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock pursuant to the terms of this Certificate of Designation (or any other applicable certificate of designation) immediately prior to such Liquidation Event.

 

Section 6. Conversion.

 

(a) Right to Convert. Each Holder shall have the right, upon the delivery of a written notice to the Company, to convert any share of Series B Convertible Preferred Stock held by it into that number of fully paid and nonassessable shares of Common Stock equal to the Conversion Number at the time in effect. Any Holder may convert all or less than all of the shares of Series B Convertible Preferred Stock held by it at any time. Any Holder’s conversion of shares of Series B Convertible Preferred Stock under this Section 6(a) shall not be effective unless such Holder has also complied with the provisions set forth in Section 6(c) hereof at the time of delivery of its aforesaid written notice to the Company. The initial “Conversion Number” per share of Series B Convertible Preferred Stock shall be 94,145.8; provided, however, that the Conversion Number in effect from time to time shall be subject to adjustment as provided hereinafter.

 

(b) Intentionally omitted.

 

(c) Conversion Procedures. Each conversion of shares of Series B Convertible Preferred Stock into shares of Common Stock shall be effected by the surrender of the certificate(s) evidencing the shares of Series B Convertible Preferred Stock to be converted (the “Converting Shares”) at the principal office of the Company (or such other office or agency of the Company as the Company may designate by notice in writing to the Holders of the Series B Convertible Preferred Stock) at any time during its usual business hours, together with written notice by the holder of such Converting Shares, (i) stating that the Holder desires to convert the Converting Shares, or a specified number of such Converting Shares, evidenced by such certificate(s) into shares of Common Stock (the “Converted Shares”), and (ii) giving the name(s) (with addresses) and denominations in which the Converted Shares should either be registered with the Company’s transfer agent and registrar for the Common Stock (the “Common Stock Transfer Agent”) on its records in book-entry form under The Direct Registration System or certificated, and, in either case, instructions for the delivery of a statement evidencing book-entry ownership of the Converted Shares or the certificates evidencing the Converted Shares. Upon receipt of the notice described in the first sentence of this Section 6(c), together with the certificate(s) evidencing the Converting Shares, the Company shall be obligated to, and shall, cause to be issued and delivered in accordance with such instructions, as applicable, either (x) a statement from the Common Stock Transfer Agent evidencing ownership of the Converted Shares, registered in the name of the Holder or its designee on the Common Stock Transfer Agent’s records in book-entry form under The Direct Registration System or (y) certificate(s) evidencing the Converted Shares and, if applicable, a certificate (which shall contain such applicable legends, if any, as were set forth on the surrendered certificate(s)) representing any shares which were represented by the certificate(s) surrendered to the Company in connection with such conversion but which were not Converting Shares and, therefore, were not converted. All or some Converted Shares so issued whether in book-entry form under the Direct Registration System or in certificated form may be subject to restrictions on transfer as required by applicable federal and state securities laws. Any such Converted Shares subject to restrictions on transfer under applicable federal and state securities laws shall be encumbered by stop transfer orders and restrictive legends (or equivalent encumbrances). Such conversion, to the extent permitted by law, shall be deemed to have been effected as of the close of business on the date on which such certificate(s) shall have been surrendered and such written notice shall have been received by the Company unless a later date has been specified by such Holder, and at such time the rights of the Holder of such Converting Shares as such Holder shall cease, and the Person(s) in whose name or names the Converted Shares are to be issued either in book-entry form or certificated form, as applicable, upon such conversion shall be deemed to have become the holder(s) of record of the Converted Shares.

  

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(d) Effect of Conversion. Upon the issuance of the Converted Shares in accordance with Section 6, such shares shall be deemed to be duly authorized, validly issued, fully paid and non-assessable.

 

(e) Adjustments for Common Stock Dividends and Distributions. If the Company at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, in each such event the Conversion Number then in effect shall be increased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Conversion Number then in effect by a fraction (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution and (ii) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date. To the extent an adjustment is made in respect of the foregoing pursuant to Section 6(f) or the Holder actually receives the dividend to which any such adjustment relates, an adjustment shall not be made pursuant to this Section 6(e).

 

(f) Conversion Number Adjustments for Subdivisions, Combinations or Consolidations of Common Stock.

 

(i) In the event the Company should at any time or from time to time fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of shares of Common Stock entitled to receive a dividend or other distribution payable in additional Common Share Equivalents, without payment of any consideration by such holder for additional Common Share Equivalents (including the additional Common Stock issuable upon conversion, exchange or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Conversion Number then in effect shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each such share of such Series B Convertible Preferred Stock shall be increased in proportion to such increase of outstanding shares of Common Stock and shares issuable with respect to Common Share Equivalents.

 

(ii) If the number of shares of Common Stock outstanding at any time is decreased by a combination, consolidation, reclassification or reverse stock split of the outstanding shares of Common Stock or other similar event, then, following the record date of such combination, the Conversion Number then in effect shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each such share of such Series B Convertible Preferred Stock shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 

(g) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination, merger or sale of assets transaction provided for elsewhere in this Section 6), provision shall be made so that the Holders shall thereafter be entitled to receive upon conversion of the Series B Convertible Preferred Stock the number of shares of Capital Stock or other securities or property of the Company to which a holder of Common Stock would have been entitled on recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 6 with respect to the rights of the Holders after the recapitalization to the end that the provisions of this Section 6 (including adjustment of the Conversion Number then in effect and the number of shares issuable upon conversion of the Series B Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

 

(h) Mergers and Other Reorganizations. If at any time or from time to time there shall be a reclassification of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 6) or a merger or consolidation of the Company with or into another entity or the sale of all or substantially all of the Company’s properties and assets to any other Person, then, as a part of and as a condition to the effectiveness of such reclassification, merger, consolidation or sale, lawful and adequate provision shall be made so that the Holders shall thereafter be entitled to receive upon conversion of the Series B Convertible Preferred Stock the number of shares of Capital Stock or other securities or property, if any, of the Company or of the successor entity resulting from such reclassification, merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled in connection with such reclassification, merger, consolidation or sale. In any such case, appropriate provision shall be made with respect to the rights of the Holders after the reclassification, merger, consolidation or sale to the end that the provisions of this Section 6 (including, without limitation, provisions for adjustment of the Conversion Number and the number of shares purchasable upon conversion of the Series B Convertible Preferred Stock) shall thereafter be applicable, as nearly as may be, with respect to any shares of Capital Stock, securities or property to be deliverable thereafter upon the conversion of the Series B Convertible Preferred Stock.

  

5

 

 

Each Holder, upon the occurrence of a reclassification, merger or consolidation of the Company or the sale of all or substantially all its assets and properties, as such events are more fully set forth in the first paragraph of this Section 6(h), shall have the option of electing treatment of its shares of Series B Convertible Preferred Stock under either this Section 6(h) or Section 5 hereof, notice of which election shall be submitted in writing to the Company at its principal offices no later than ten (10) days before the effective date of such event, provided that any such notice of election shall be effective if given not later than fifteen (15) days after the date of the Company’s notice pursuant to Section 6(i) hereof with respect to such event, and, provided, further, that if any Holder fails to give the Company such notice of election, the provisions of this Section 6(h) shall govern the treatment of such Holder’s shares of Series B Convertible Preferred Stock upon the occurrence of such event.

 

(i) Notices of Record Date. In the event (i) the Company fixes a record date to determine the holders of Common Stock who are entitled to receive any dividend or other distribution, or (ii) there occurs any capital reorganization of the Company, any reclassification or recapitalization of the Common Stock of the Company, any merger or consolidation of the Company, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to each Holder at least ten (10) days prior to the record date specified therein, a notice specifying (a) the date of such record date for the purpose of such dividend or distribution and a description of such dividend or distribution, (b) the date on which any such reorganization, reclassification, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (c) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock or other securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, dissolution, liquidation or winding up.

 

(j) No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 6 and in the taking of all such actions as may be necessary or appropriate in order to protect the conversion rights of the Holders against impairment.

 

(k) Fractional Shares and Certificate as to Adjustments. In lieu of any fractional shares to which a Holder would otherwise be entitled upon conversion, the Company shall pay cash equal to such fraction multiplied by the Market Price of one share of Common Stock, as determined in good faith by the Board of Directors. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series B Convertible Preferred Stock of each Holder at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

 

Upon the occurrence of each adjustment or readjustment of the Conversion Number of any share of Series B Convertible Preferred Stock pursuant to this Section 6, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any Holder, furnish or cause to be furnished to such Holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Number at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such Holder’s shares of Series B Convertible Preferred Stock. The provisions of Section 6(e), (f), (g) and (h) shall apply to any transaction and successively to any series of transactions that would require any adjustment pursuant thereto.

  

6

 

 

(l) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Convertible Preferred Stock (taking into account the adjustments required by this Section 6), such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Convertible Preferred Stock, in addition to such other remedies as shall be available to the Holders, the Company will, as soon as is reasonably practicable, take all such action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

Section 7. Voting Rights.

 

(a) General. Each Holder, except as otherwise required under the DGCL or as set forth herein (including, without limitation, in Sections 7(c) and 8 below), shall be entitled or permitted to vote on all matters required or permitted to be voted on by the holders of Common Stock of the Company and shall be entitled to that number of votes equal to the largest number of whole shares of Common Stock into which such Holder’s shares of the Series B Convertible Preferred Stock could then be converted, pursuant to the provisions of Section 6 hereof, at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. Except as otherwise expressly provided herein or as otherwise required by law, the Series B Convertible Preferred Stock and the Common Stock shall vote together (or render written consents in lieu of a vote) as a single class on all matters upon which the Common Stock is entitled to vote.

 

(b) Intentionally omitted.

 

(c) Voting by Investors With Respect to Certain Matters. In addition to any other rights provided by law or set forth herein, until the Director Cessation Date, the Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of all of the Investors:

 

(i) alter, amend or repeal the Company’s Organizational Documents;

 

(ii) amend the size of the Board of Directors (other than pursuant to Section 8 hereof);

 

(iii) authorize or consummate any Liquidation Event, except as permitted pursuant to the Operating Agreement;

 

(iv) engage in any business other than the ownership, operation, development and acquisition of Burger King restaurants and matters incidental thereto; provided that this clause (iv) shall not apply from and after the occurrence of any bankruptcy filing or reorganization or insolvency proceeding by or against Restaurant Brands International, Inc. or Burger King Corporation or their respective successors or assigns, which filing shall not have been dismissed within 60 days;

 

(v) issue, in any single transaction or series of related transactions, shares of Common Stock in an amount exceeding 35% of the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance;

 

(vi) declare or pay any special cash dividend;

 

(vii) except for management fees or transactions entered into or contemplated on or prior to May 30, 2012, and included in the Company’s filings with the SEC (including, without limitation, pursuant to any agreements entered into in connection with the spin-off of Fiesta Restaurant Group, Inc. by the Company), approve or pay any management fee or enter into any other transaction with Affiliates of the Company or its subsidiaries, or permit subsidiaries of the Company to enter into any transaction with Affiliates of the Company or its subsidiaries; or

 

(viii) initiate or settle any lawsuit (other than with respect to any Holder) in which the damages (or claimed damages, as applicable) would exceed U.S. $10 million.

  

7

 

 

Section 8. Board Representation.

 

(a) Immediately following the issuance of shares of Series B Convertible Preferred Stock pursuant to that certain Preferred Stock Exchange Agreement, dated as of on or about the date of the filing of this Certificate of Designation of Series B Convertible Preferred Stock with the Secretary of State of the State of Delaware, by and between the Company and Burger King Corporation, the then otherwise total number of directors of the Company shall automatically be increased by two and, immediately thereafter, the Board of Directors shall cause such two newly created directorships to be filled with two individuals nominated or designated by the Investor by written consent or other written instrument delivered to the Company. The Class B Directors shall be a separate class of directors on the Board of Directors from the Class I, Class II and Class III directors of the Board of Directors. Class B Directors shall be elected by all of the Investors for terms expiring at the next annual meeting of stockholders.

 

(b) Until the Director Step-Down Date, the Investors, voting as a separate class, shall have the right to elect two Class B Directors to the Board of Directors at each annual meeting of stockholders or pursuant to each consent of the Company’s stockholders for the election of directors, and to remove from office any such Class B Director and to fill any vacancy caused by the resignation, death or removal of any such Class B Director. Each share of Series B Convertible Preferred Stock shall be entitled to one vote and any election or removal of the Class B Director shall be subject to the affirmative vote of all of the Investors. On the Director Step-Down Date, the Investors shall cause one Class B Director to submit his or her resignation as a Class B Director to the Board of Directors; provided that if such Class B Director does not resign as a Class B Director on the Director Step-Down Date, the Board of Directors may vote to remove such Class B Director without cause at any time following the Director Step-Down Date.

 

(c) From the Director Step-Down Date until the Director Cessation Date, the Investors, voting as a separate class, shall have the right to elect one Class B Director to the Board of Directors at each annual meeting of stockholders or pursuant to each consent of the Company’s stockholders for the election of directors, and to remove from office such Class B Director and to fill any vacancy caused by the resignation, death or removal of such Class B Director. Each share of Series B Convertible Preferred Stock shall be entitled to one vote and any election or removal of the Class B Director shall be subject to the affirmative vote of all of the Investors. On the Director Cessation Date, the Investors shall cause all Class B Directors to submit his or her resignation as Class B Directors to the Board of Directors; provided that if such Class B Director(s) does or do not resign as a Class B Director or as Class B Directors, as the case may be, on the Director Cessation Date, the Board of Directors may vote to remove such Class B Director(s) without cause at any time following the Director Cessation Date.

 

(d) Each Class B Director, in his capacity as a member of the Board of Directors, shall be afforded the same rights and privileges as the other members of the Board of Directors, including, without limitation, rights to indemnification, insurance, notice, information and the reimbursement of expenses. Nothing in this paragraph (d) is intended to limit any such Class B Director’s rights to indemnification, and the rights set forth herein are in addition to any and all other rights to indemnification.

 

Section 9. Reissuance of Shares of Series B Convertible Preferred Stock.

 

Shares of Series B Convertible Preferred Stock that have been issued and reacquired in any manner, including shares purchased, redeemed, converted or exchanged, shall (upon compliance with any applicable provisions of the DGCL) be permanently retired or cancelled and shall not under any circumstances be reissued. The Company shall from time to time take such appropriate action as may be required by applicable law to reduce the authorized number of shares of Series B Convertible Preferred Stock by the number of shares that have been so reacquired.

 

Section 10. Notices.

 

Any and all notices, consents, approval or other communications or deliveries required or permitted to be provided under this Certificate of Designation shall be in writing and shall be deemed given and effective on the earliest of (a) the date of receipt, if such notice, consent, approval or other communication is delivered by hand (with written confirmation of receipt) or via facsimile to the Company or the Holders, as applicable, at the facsimile number specified in the register of Holders of Series B Convertible Preferred Stock maintained by the Transfer Agent prior to 5:00 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of receipt, if such notice, consent, approval or other communication is delivered via facsimile to the Company or the Holder, as applicable, at the facsimile number specified in the register of Holders of Series B Convertible Preferred Stock maintained by the Transfer Agent on a day that is not a Business Day or later than 5:00 p.m. (New York City time) on any Business Day, or (c) the third Business Day following the date of deposit with a nationally recognized overnight courier service for next Business Day delivery and addressed to the Company or the Holder, as applicable, at the address specified in the register of Holders of Series B Convertible Preferred Stock maintained by the Transfer Agent.

 

Section 11. Headings.

 

The headings of the various sections and subsections hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

 

Section 12. Severability of Provisions.

 

If any powers, preferences and relative, participating, optional and other special rights of the Series B Convertible Preferred Stock and the qualifications, limitations and restrictions thereof set forth in this Certificate of Designation (as it may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule or law or public policy, all other powers, preferences and relative, participating, optional and other special rights of the Series B Convertible Preferred Stock and the qualifications, limitations and restrictions thereof set forth in this Certificate of Designation (as so amended) which can be given effect without the invalid, unlawful or unenforceable powers, preferences and relative, participating, optional and other special rights of the Series B Convertible Preferred Stock and the qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no powers, preferences and relative, participating, optional or other special rights of the Series B Convertible Preferred Stock and the qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such powers, preferences and relative, participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.

 

[Intentionally Left Blank; Signature Page Follows]

  

8

 

 

IN WITNESS WHEREOF, this Certificate of Designation has been executed on behalf of the Company by its Vice President, General Counsel and Secretary this 30th day of April, 2019.

  

  CARROLS Holdco INC.
     
  By:

/s/ William E. Myers

  Name:  William E. Myers
  Title: Vice President, General Counsel and Secretary

 

[Signature Page to Certificate of Designation]

 

 

 

Exhibit 4.2

 

CARROLS HOLDCO INC.

 

CERTIFICATE OF DESIGNATIONS

 

OF

 

SERIES C CONVERTIBLE PREFERRED STOCK

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

Carrols Holdco Inc., a Delaware corporation, hereby certifies that:

 

A. The Restated Certificate of Incorporation of the Company fixes the total number of shares of capital stock that the Company shall have the authority to issue at 100,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”).

 

B. The Certificate of Incorporation expressly vests the Board of Directors of the Company with authority from time to time to provide for the issuance of shares of one or more series of the undesignated Preferred Stock and in connection therewith to fix by resolution or resolutions providing for the issue of any such series, the number of shares to be included therein, the voting powers thereof, and such of the designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions of each such series, including dividend rights, voting rights, rights of redemption, conversion rights, and liquidation preferences.

 

C. Pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation, the Board of Directors, by action duly taken on April 29, 2019, adopted resolutions establishing a series of Preferred Stock and fixing the designation, powers, preferences and rights of the shares of this series of Preferred Stock and the qualifications, limitations or restrictions thereof as follows:

 

Section 1. Designation; Number of Shares; Restrictions.

 

(a) Designation; Number of Shares. The designation of the series of Preferred Stock shall be “Series C Convertible Preferred Stock” (the “Series C Convertible Preferred Stock”). The number of authorized shares of Series C Convertible Preferred Stock shall be 10,000.

 

(b) Legend. During the Holding Period, each certificate representing Series C Convertible Preferred Stock and Conversion Shares shall include the following legend:

 

“THE DIRECT OR INDIRECT SALE, ASSIGNMENT, TRANSFER, PLEDGE, OFFER, EXCHANGE, DISPOSITION, ENCUMBRANCE, ALIENATION OR OTHER DISPOSITION (“TRANSFER”), WHETHER BY OPERATION OF LAW OR OTHERWISE, OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE ENTERING INTO OF ANY CONTRACT, OPTION OR OTHER AGREEMENT WITH RESPECT TO, OR THE CONSENT TO, A TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR THE HOLDER’S VOTING OR ECONOMIC INTEREST THEREIN, BY THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS STRICTLY PROHIBITED IN ACCORDANCE WITH THAT CERTAIN REGISTRATION RIGHTS AND STOCKHOLDERS’ AGREEMENT, DATED AS OF THE ISSUE DATE, BY AND BETWEEN THE ISSUER AND THE INVESTOR, AND ANY TRANSFER MADE, OR CONTRACT, OPTION OR OTHER AGREEMENT ENTERED INTO, IN VIOLATION OF THIS PROHIBITION WILL NOT BE BINDING UPON OR RECOGNIZED BY THE ISSUER.”

 

 

 

 

Section 2. Definitions.

 

Unless the context otherwise requires, each of the terms defined in this Section 2 shall have, for all purposes of this Certificate of Designations, the meaning herein specified (with terms defined in the singular having comparable meanings when used in the plural):

 

Board of Directors” means the Board of Directors of the Company.

 

Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

By-Laws” means the Company’s Amended and Restated By-Laws, as amended from time to time in accordance with Section 7.

 

Capital Stock” means any and all shares, interests, participations or other equivalents in the equity (however designated) in the Company.

 

Certificate of Incorporation” means the Company’s Restated Certificate of Incorporation, as amended from time to time in accordance with Section 7.

 

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

 

Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time; provided, that Common Stock Deemed Outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly owned subsidiaries.

 

Common Stock Transfer Agent” has the meaning set forth in Section 6(c) hereof.

 

Company” means Carrols Holdco Inc., a Delaware corporation, and its successors and assigns.

 

Company’s Organizational Documents” means the Certificate of Incorporation, this Certificate of Designations, any other certificate of designations issued pursuant to the Certificate of Incorporation, and the By-Laws.

 

Conversion Price” has the meaning set forth in Section 6(a) hereof.

 

Conversion Shares” has the meaning set forth in Section 6(b) hereof.

 

Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

 

DGCL” means the General Corporation Law of the State of Delaware.

 

Dividend” has the meaning set forth in Section 4(b) hereof.

 

Dividend Accrual Period” has the meaning set forth in Section 4(b) hereof.

 

Dividend Payment Date” has the meaning set forth in Section 4(b) hereof.

 

Excluded Issuances” means any issuance or sale (or deemed issuance or sale in accordance with Section 6(e)(iii)) by the Company after the Issue Date of: (a) shares of Common Stock issued on the conversion of the Series B Convertible Preferred Stock of the Company pursuant to the terms of the Series B Convertible Preferred Stock in effect on the Issue Date; (b) shares of Common Stock issued on the conversion of the Series C Convertible Preferred Stock; or (c) shares of Common Stock issued directly or upon the exercise of Options, restricted stock units, equity securities or any other awards or grants to directors, officers, employees, or consultants of the Company or any of its Subsidiaries in connection with their service as directors of the Company or any of its Subsidiaries, their employment by the Company or any of its Subsidiaries or their retention as consultants by the Company or any of its Subsidiaries, in each case authorized by the Board of Directors (or a committee thereof) and issued pursuant to the Company's 2006 Stock Incentive Plan or the Company's 2016 Stock Incentive Plan (including all such shares of Common Stock and Options outstanding prior to the Issue Date) or any other stock incentive plan of the Company authorized by the Board of Directors (or a committee thereof) and approved by holders of Common Stock in effect after the Issue Date.

 

- 2 -

 

 

Holders” means the record holders of the shares of Series C Convertible Preferred Stock, as shown on the books and records of the Company.

 

Holding Period” means a two (2) year period commencing on the Issue Date and ending on the second anniversary of the Issue Date.

 

Investor” means Cambridge Franchise Holdings, LLC, a Delaware limited liability company.

 

Issue Date” means April 30, 2019.

 

Junior Stock” has the meaning set forth in Section 3 hereof.

 

Liquidation Event” means (i) any voluntary or involuntary liquidation, dissolution or winding-up of the Company, (ii) the consummation of a merger or consolidation in which the stockholders of the Company prior to such transaction own less than a majority of the voting securities of (a) the entity surviving or resulting from such transaction or (b) if the surviving or resulting entity is a wholly owned Subsidiary of another corporation or entity immediately following such transaction, the parent corporation or entity of such surviving or resulting entity, or (iii) the sale, distribution or other disposition of all or substantially all of the Company’s assets (on a consolidated basis).

 

Mandatory Conversion” has the meaning set forth in Section 6(a) hereof.

 

Mandatory Conversion Date” has the meaning set forth in Section 6(a) hereof.

 

Market Price” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price, of shares of Common Stock on The NASDAQ Global Market on such date. If the Common Stock is not traded on The NASDAQ Global Market on any date of determination, the Market Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal United States securities exchange or automated quotation system on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a United States securities exchange or automated quotation system, the last quoted bid price for the Common Stock in the over-the-counter market as reported by OTC Market Group, Inc. or any similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by an independent financial advisor retained by the Company for such purpose.

 

Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

 

Parity Stock” has the meaning set forth in Section 3 hereof.

 

Person” includes all natural persons, corporations, business trusts, limited liability companies, associations, companies, partnerships, joint ventures and other entities, as well as governments and their respective agencies and political subdivisions.

 

SEC” means the United States Securities and Exchange Commission.

 

Senior Stock” has the meaning set forth in Section 3 hereof.

 

Series B Convertible Preferred Stock” means the Series B Convertible Preferred Stock of the Company, par value $0.01 per share, outstanding on the Issue Date.

 

Series C Convertible Preferred Stock” has the meaning set forth in Section 1 hereof.

 

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Stated Value” means, as of any time of determination, an amount per share of Series C Convertible Preferred Stock equal to $10,058.04 plus the sum of all Dividends paid in respect of such share at or prior to such time, plus the sum of all Dividends accumulated and unpaid in respect of such share at or prior to such time.

 

Stockholder Approval” has the meaning set forth in Section 6(b) hereof.

 

Subsidiary” means, with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.

 

Transfer Agent” means the entity designated from time to time by the Company to act as the registrar and transfer agent for the Series C Convertible Preferred Stock or, if no entity has been so designated to act in such capacity, the Company.

 

Section 3. Ranking.

 

The Series C Convertible Preferred Stock shall, with respect to rights on the liquidation, winding-up and dissolution of the Company (as provided in Section 5 below), rank (a) senior to all classes of Common Stock and to each other class of Capital Stock or series of Preferred Stock established hereafter by the Board of Directors the terms of which expressly provide that such class ranks junior to the Series C Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Junior Stock”), (b) on a parity with the Series B Convertible Preferred Stock and with each other class of Capital Stock or series of Preferred Stock established hereafter by the Board of Directors with the written consent of the Holders of at least a majority of the outstanding shares of Series C Convertible Preferred Stock, the terms of which expressly provide that such class or series ranks on a parity with the Series C Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Parity Stock”) and (c) junior to any future class of Preferred Stock established hereafter by the Board of Directors with the written consent of the Holders of at least a majority of the outstanding shares of Series C Convertible Preferred Stock, the terms of which expressly provide that such class ranks senior to the Series C Convertible Preferred Stock as to rights on the liquidation, winding-up and dissolution of the Company (collectively referred to as the “Senior Stock”).

 

Subject to Section 4(b), the Series C Convertible Preferred Stock shall, with respect to rights to dividends (as provided in Section 4 below), rank on a parity with each class of Common Stock and the Series B Convertible Preferred Stock.

 

Section 4. Dividends.

 

(a) The Company shall not (and shall cause its direct and indirect Subsidiaries not to) declare, pay or set aside any dividends on shares of Common Stock (other than dividends on shares of Common Stock payable solely in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Company’s Organizational Documents) the Holders simultaneously receive a dividend (payable in the same form of stock, securities, cash or other property paid to the holders of Common Stock) on each outstanding share of Series C Convertible Preferred Stock in an amount equal to that dividend per share of Series C Convertible Preferred Stock as would equal the product of the dividend payable on each share of Common Stock and the number of shares of Common Stock then issuable upon conversion of one share of Series C Convertible Preferred Stock, calculated on the record date for determination of holders entitled to receive such dividend and without regard to any limitation on conversion set forth in Section  6(b) hereof.

 

(b) From and after the Issue Date, each Holder of Series C Convertible Preferred Stock, in preference and priority to the holders of all other classes or series of stock, shall be entitled to receive, with respect to each share, or fraction of a share, of Series C Convertible Preferred Stock then outstanding and held by such Holder, dividends accruing on a daily basis, commencing from the date of issuance of such share of Series C Convertible Preferred Stock, at the rate of nine percent (9%) per annum of the Stated Value per whole share (or proportion thereof with respect to fractional shares) of Series C Convertible Preferred Stock (the “Dividends”). The Dividends shall be cumulative, whether or not earned or declared, shall compound semi-annually and shall be paid semi-annually in arrears on April 30th and October 30th in each year (each a “Divided Payment Date”), commencing October 30, 2019. For the avoidance of doubt, dividends shall accrue daily on the Stated Value of each share of Series C Convertible Preferred Stock as such Stated Value is increased by any payment of Dividends pursuant to the immediately succeeding sentence. The Dividends shall be paid in the form of an increase in the Stated Value of the Series C Convertible Preferred Stock. In the event that the Mandatory Conversion Date occurs on a date other than a Dividend Payment Date, the aggregate amount of the Dividend accrued and unpaid since the last Dividend Payment Date shall be automatically forfeited without any further action on the part of the Company or the Holders, will not increase the Stated Value, and will not be paid to any Holder.

 

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Section 5. Liquidation Preference.

 

(a) Upon any Liquidation Event, the Holders of the Series C Convertible Preferred Stock shall receive from the net assets of the Company, (i) prior to the holders of any class or series of Common Stock and Junior Stock, (ii) pro rata with the holders of any Parity Stock and (iii) after the holders of any Senior Stock, and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders and holders of Parity Stock in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full, the greater of (a) the Stated Value multiplied by the number of shares of Series C Convertible Preferred Stock held by such Holders and (b) the per share amount of all cash, securities and other property (such securities or other property having a value equal to its fair market value as reasonably determined by the Board of Directors) that would be distributed in respect of the Common Stock such Holder would have received had it converted such Series C Convertible Preferred Stock immediately prior to the date fixed for such Liquidation Event, without regard to any limitation on conversion set forth in Section 6(b) hereof.

 

Section 6. Conversion.

 

(a) Mandatory Conversion upon Stockholder Approval. Upon the later of (i) the date that the Stockholder Approval is obtained or (ii) in the event clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), for such conversion is required and has not yet been obtained, the date that all applicable waiting periods (and extensions thereof) under the HSR Act have expired or been terminated (such date the “Mandatory Conversion Date”), each outstanding share of Series C Convertible Preferred Stock shall automatically be converted into a number of shares of Common Stock (the “Mandatory Conversion”) equal to (i) the Stated Value divided by (ii) the Conversion Price in effect immediately prior to such conversion. The initial conversion price per share of Series C Convertible Preferred Stock (the “Conversion Price”) shall be $13.50 per share of Series C Convertible Preferred Stock, subject to adjustment as applicable in accordance with Section 6(e) below. Each share of Series C Convertible Preferred Stock shall initially be convertible into 745.04 shares of Common Stock subject to adjustment as provided herein.

 

(b) Limitation on Conversion. Notwithstanding anything herein to the contrary, the Company shall not issue to any Holder, and the Holders shall not have the right to the issuance of any shares of Common Stock issuable upon conversion of Series C Convertible Preferred Stock (“Conversion Shares”), unless and until the Company obtains stockholder approval permitting such issuances in accordance with applicable NASDAQ Stock Market Rules (“Stockholder Approval”).

 

(c) Conversion Procedures. The Company shall send to all Holders written notice of the Mandatory Conversion Date. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Date. Upon receipt of such notice, each Holder shall surrender his, her or its certificate or certificates for all such shares of Series C Convertible Preferred Stock (or, if such Holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company at the place designated in such notice. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the Holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series C Convertible Preferred Stock converted pursuant to Section 6(a), including the rights, if any, to receive notices and vote (other than notice of the Mandatory Conversion Date or as a holder of Common Stock), will terminate at the Mandatory Conversion Date (notwithstanding the failure of the Holder or Holders thereof to surrender the certificates at or prior to such time). As soon as practicable after the Mandatory Conversion Date and the surrender of the certificate or certificates (or lost certificate affidavit and agreement), if any, for Series C Convertible Preferred Stock, the Company shall authorize its transfer agent and registrar for the Common Stock (the “Common Stock Transfer Agent”) to register in the name of the Holder such Conversion Shares on the book-entry system of the Transfer Agent. If the Holder wishes to hold the Conversion Shares in certificated form, the Holder may so request and the Common Stock Transfer Agent will mail to the Holder one or more stock certificates evidencing the Holder's Conversion Shares. Holders of uncertificated shares of Series C Convertible Preferred Stock will have their shares automatically converted, and such Conversion Shares will be reflected on the book-entry system of the Common Stock Transfer Agent. The Company will also issue and deliver to such Holder cash as provided in Section 6(h) in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion. All or some Conversion Shares so issued whether in book-entry form or in certificated form may be subject to restrictions on transfer as required by applicable federal and state securities laws. Any such Conversion Shares subject to restrictions on transfer under applicable federal and state securities laws shall be encumbered by stop transfer orders and restrictive legends (or equivalent encumbrances). Upon surrender of the certificate(s), if any, representing shares of Series C Convertible Preferred Stock converted pursuant to Section 6(a), such conversion, to the extent permitted by law, shall be deemed to have been effected, and such surrendering Holder shall be deemed to have become the holder of record of the Conversion Shares issued to such Holder, as of the Mandatory Conversion Date.

 

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(d) Effect of Conversion. Upon the issuance of the Conversion Shares in accordance with Section  6, such shares shall be deemed to be duly authorized, validly issued, fully paid and non-assessable.

 

(e) Adjustment to Conversion Price and number of Conversion Shares. The Conversion Price shall be subject to adjustment from time to time as provided in this Section 6(e).

 

(i) Adjustment to Conversion Price upon Issuance of Common Stock. Except as provided in Section 6(e)(ii) and except in the case of an event described in either Section 6(e)(iv) or Section 6(e)(v), if the Company shall, at any time or from time to time after the Issue Date, issue or sell, or in accordance with Section 6(e)(iii) is deemed to have issued or sold, any shares of Common Stock without consideration or for consideration per share less than the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to a Conversion Price equal to the quotient obtained by dividing:

 

(1) the sum of (A) the product obtained by multiplying the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) by the Conversion Price then in effect plus (B) the aggregate consideration, if any, received by the Company upon such issuance or sale (or deemed issuance or sale); by

 

(2) the sum of (A) the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) plus (B) the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Company in such issuance or sale (or deemed issuance or sale).

 

Whenever following the Issue Date the Company shall issue or sell, or in accordance with Section 6(e)(iii) is deemed to have issued or sold, any shares of Common Stock, the Company shall prepare a certificate signed by an executive officer setting forth, in reasonable detail, the number of shares issued or sold, or deemed issued or sold, the amount and the form of the consideration received by the Company and the method of computation of such amount and shall cause copies of such certificate to be mailed to the Holders at the address specified for such Holders in the books and records of the Company (or at such other address as may be provided to the Company in writing by such Holders).

 

(ii) Exceptions to Adjustment Upon Issuance of Common Stock. Anything herein to the contrary notwithstanding, there shall be no adjustment to the Conversion Price or the number of Conversion Shares issuable upon conversion of the Series C Convertible Preferred Stock with respect to any Excluded Issuance.

 

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(iii) Effect of Certain Events on Adjustment to Conversion Price. For purposes of determining the adjusted Conversion Price under Section 6(e)(i) hereof, the following shall be applicable:

 

(A) Issuance of Options. If the Company shall, at any time or from time to time after the Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Options, whether or not such Options or the right to convert or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 6(e)(iii)(E)) for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon the exercise of such Options is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued as of the date of granting or sale of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Conversion Price under Section 6(e)(i)), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 6(e)(i)) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of all such Options, plus (y) the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of all such Convertible Securities and the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of all Convertible Securities issuable upon the exercise of all such Options. Except as otherwise provided in Section 6(e)(iii)(C), no further adjustment of the Conversion Price shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

(B) Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to convert or exchange any such Convertible Securities is immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 6(e)(iii)(E)) for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such Convertible Securities, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of the total maximum amount of such Convertible Securities shall be deemed to have been issued as of the date of granting or sale of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Conversion Price pursuant to Section 6(e)(i)), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 6(e)(i)) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. Except as otherwise provided in Section 6(e)(iii)(C), (A) no further adjustment of the Conversion Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such Convertible Securities and (B) no further adjustment of the Conversion Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Conversion Price have been made pursuant to the other provisions of this Section 6(e)(iii).

 

(C) Change in Terms of Options or Convertible Securities. Upon any change in any of (A) the total amount received or receivable by the Company as consideration for the granting or sale of any Options or Convertible Securities referred to in Section 6(e)(iii)(A) or Section 6(e)(iii)(B) hereof, (B) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of any Options or upon the issuance, conversion or exchange of any Convertible Securities referred to in Section 6(e)(iii)(A) or Section 6(e)(iii)(B) hereof, (C) the rate at which Convertible Securities referred to in Section 6(e)(iii)(A) or Section 6(e)(iii)(B) hereof are convertible into or exchangeable for Common Stock, or (D) the maximum number of shares of Common Stock issuable in connection with any Options referred to in Section 6(e)(iii)(A) hereof or any Convertible Securities referred to in Section 6(e)(iii)(B) hereof (in each case, other than in connection with an Excluded Issuance), then if the original issuance or sale of such Options or Convertible Securities resulted in an adjustment to the Conversion Price pursuant to this Section 6(e), the Conversion Price in effect at the time of such change shall be readjusted to the Conversion Price which would have been in effect at such time pursuant to the provisions of this Section 6(e) had such Options or Convertible Securities still outstanding provided for such changed consideration, conversion rate or maximum number of shares, as the case may be, at the time initially granted, issued or sold and the number of Conversion Shares issuable upon the conversion of the Series C Convertible Preferred Stock immediately prior to any such adjustment or readjustment shall be correspondingly readjusted.

 

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(D) Treatment of Expired or Terminated Options or Convertible Securities. Upon the expiration or termination of any unexercised Option (or portion thereof) or any unconverted or unexchanged Convertible Security (or portion thereof) for which any adjustment (either upon its original issuance or upon a revision of its terms) was made pursuant to this Section 6(e) (including upon the redemption or purchase for consideration of all or any portion of such Option or Convertible Security by the Company), the Conversion Price then in effect hereunder shall forthwith be changed pursuant to the provisions of this Section 6(e) to the Conversion Price which would have been in effect at the time of such expiration or termination had such unexercised Option (or portion thereof) or unconverted or unexchanged Convertible Security (or portion thereof), to the extent outstanding immediately prior to such expiration or termination, never been issued.

 

(E) Calculation of Consideration Received. If the Company shall, at any time or from time to time after the Issue Date, issue or sell, or is deemed to have issued or sold in accordance with Section 6(e)(iii), any shares of Common Stock, Options or Convertible Securities: (A) for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor; (B) for consideration other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Company shall be the market price (as reflected on any securities exchange, quotation system or association or similar pricing system covering such security) for such securities as of the end of business on the date of receipt of such securities; (C) for no specifically allocated consideration in connection with an issuance or sale of other securities of the Company, together comprising one integrated transaction, the amount of the consideration therefor shall be deemed to be the fair value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued in such transaction; or (D) to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued to such owners. The net amount of any cash consideration and the fair value of any consideration other than cash or marketable securities shall be determined in good faith by the Board of Directors.

 

(F) Record Date. For purposes of any adjustment to the Conversion Price or the number of Conversion Shares in accordance with this Section 6(e), in case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

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(G) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly owned Subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof or the transfer of such shares among the Company and its wholly owned Subsidiaries) shall be considered an issue or sale of Common Stock for the purpose of this Section 6(e).

 

(iv) Adjustment to Conversion Price and Conversion Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Conversion Shares issuable upon the conversion of the Series C Convertible Preferred Stock shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased and the number of Conversion Shares issuable upon the conversion of the Series C Convertible Preferred Stock shall be proportionately decreased. Any adjustment under this Section 6(e)(iv) shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

(v) Adjustment to Conversion Price and Conversion Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (A) capital reorganization of the Company, (B) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (C) consolidation or merger of the Company with or into another Person, (D) sale of all or substantially all of the Company's assets to another Person or (E) other similar transaction (other than any such transaction covered by Section 6(e)(iv)), in each case which entitles the holders of Common Stock (but not the holders of the Series C Convertible Preferred Stock) to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for their shares, each share of Series C Convertible Preferred Stock shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Conversion Shares then issuable upon conversion of such share of Series C Convertible Preferred Stock, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which such share of Series C Convertible Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the share of Series C Convertible Preferred Stock had been converted in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Conversion Shares then issuable hereunder as a result of such conversion (without taking into account any limitations or restrictions on the convertibility of such share of Series C Convertible Preferred Stock, if any); and, in such case, appropriate adjustment shall be made with respect to such holder's rights under this Certificate of Designations to insure that the provisions of this Section 6 hereof shall thereafter be applicable, as nearly as possible, to the Series C Convertible Preferred Stock in relation to any shares of stock, securities or assets thereafter acquirable upon conversion of Series C Convertible Preferred Stock (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Conversion Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Conversion Shares acquirable upon conversion of the Series C Convertible Preferred Stock without regard to any limitations or restrictions on conversion, if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 6(e)(v) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Certificate of Designations, the obligation to deliver to the holders of Series C Convertible Preferred Stock such shares of stock, securities or assets which, in accordance with the foregoing provisions, such holders shall be entitled to receive upon conversion of the Series C Convertible Preferred Stock.

 

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Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 6(e)(v), each holder of shares of Series C Convertible Preferred Stock shall have the right to elect prior to the consummation of such event or transaction, to give effect to the provisions of Section 5 hereunder, instead of giving effect to the provisions contained in this Section 6(e)(v) with respect to such holder's Series C Convertible Preferred Stock and notice of which election shall be submitted in writing to the Company at its principal offices no later than ten (10) days before the effective date of such event, provided that any such notice of election shall be effective if given not later than fifteen (15) days after the date of the Company’s notice pursuant to Section 6(f) hereof with respect to such event, and, provided, further, that if any Holder fails to give the Company such notice of election, the provisions of this Section 6(e)(v) shall govern the treatment of such Holder’s shares of Series C Convertible Preferred Stock upon the occurrence of such event.

 

(vi) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination, merger or sale of assets transaction provided for elsewhere in this Section  6(e)), provision shall be made so that the Holders shall thereafter be entitled to receive upon conversion of the Series C Convertible Preferred Stock the number of shares of Capital Stock or other securities or property of the Company to which a holder of Common Stock would have been entitled on recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section  6(e) with respect to the rights of the Holders after the recapitalization to the end that the provisions of this Section  6(e) (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of the Series C Convertible Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable.

 

(f) Notices of Record Date. In the event (i) the Company fixes a record date to determine the holders of Common Stock who are entitled to receive any dividend or other distribution, or (ii) there occurs any capital reorganization of the Company, any reclassification or recapitalization of the Common Stock of the Company, any merger or consolidation of the Company, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to each Holder at least ten (10) days prior to the record date specified therein, a notice specifying (a) the date of such record date for the purpose of such dividend or distribution and a description of such dividend or distribution, (b) the date on which any such reorganization, reclassification, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (c) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock or other securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, dissolution, liquidation or winding up.

 

(g) No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section  6 and in the taking of all such actions as may be necessary or appropriate in order to protect the conversion rights of the Holders against impairment.

 

(h) Fractional Shares and Certificate as to Adjustments. In lieu of any fractional shares of Common Stock to which a Holder would otherwise be entitled upon conversion, the Company shall pay, in respect of each such fractional share, an amount in cash equal to such fraction multiplied by the Market Price of one share of Common Stock on the date of conversion.

 

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Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 6, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any Holder, furnish or cause to be furnished to such Holder a like certificate setting forth (A) the calculation of such adjustment or readjustment, (B) the Conversion Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such Holder’s shares of Series C Convertible Preferred Stock. The provisions of Section 6(e) shall apply to any transaction and successively to any series of transactions that would require any adjustment pursuant thereto.

 

(i) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Convertible Preferred Stock (taking into account the adjustments required by this Section  6), such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series C Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Convertible Preferred Stock, in addition to such other remedies as shall be available to the Holders, the Company will, as soon as is reasonably practicable, take all such action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

Section 7. Voting Rights.

 

(a) In addition to any other vote of the Holders required by law, this Certificate of Designations or the Certificate of Incorporation, without the prior consent of the Holders of at least a majority of the shares of Series C Convertible Preferred Stock then outstanding, the Company will not (and shall not permit any direct or indirect Subsidiary of the Company):

 

(i) authorize, create, designate, establish or issue (including as a result of a merger, consolidation, or other similar or extraordinary transaction) (A) an increased number of shares of Series C Convertible Preferred Stock, or (B) any other class or series of capital stock ranking senior to or on parity with the Series C Convertible Preferred Stock as to dividends or upon liquidation or (y) reclassify any shares of Common Stock into shares of capital stock having any preference or priority as to dividends or upon liquidation senior to or on parity with any such preference or priority of the Series C Convertible Preferred Stock;

 

(ii) amend, restate, alter or repeal (including as a result of a merger, consolidation, or other similar or extraordinary transaction) this Certificate of Designations or any of the rights, powers or preferences of the Series C Convertible Preferred Stock;

 

(iii) amend, restate, alter or repeal (including as a result of a merger, consolidation, or other similar or extraordinary transaction) any of the Company’s Organizational Documents if such amendment, restatement, alteration or repeal would have an adverse effect on the rights, powers or preferences of the Series C Convertible Preferred Stock or the Holders in their capacity as such; or

 

(iv) agree to do any of the foregoing.

 

Section 8. Reissuance of Shares of Series C Convertible Preferred Stock.

 

Shares of Series C Convertible Preferred Stock that have been issued and reacquired by the Company in any manner, including shares purchased, redeemed, converted or exchanged, shall (upon compliance with any applicable provisions of the DGCL) be permanently retired or cancelled and shall not under any circumstances be reissued. The Company shall from time to time take such appropriate action as may be required by applicable law to reduce the authorized number of shares of Series C Convertible Preferred Stock by the number of shares that have been so reacquired.

 

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Section 9. Notices.

 

Any and all notices, consents, approval or other communications or deliveries required or permitted to be provided under this Certificate of Designations shall be in writing and shall be deemed given and effective on the earliest of (a) the date of receipt, if such notice, consent, approval or other communication is delivered by hand (with written confirmation of receipt) or via facsimile or email to the Company or the Holders, as applicable, at the facsimile number or email address specified in the register of Holders of Series C Convertible Preferred Stock maintained by the Transfer Agent prior to 5:00 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of receipt, if such notice, consent, approval or other communication is delivered via facsimile or email to the Company or the Holder, as applicable, at the facsimile number or email address specified in the register of Holders of Series C Convertible Preferred Stock maintained by the Transfer Agent on a day that is not a Business Day or later than 5:00 p.m. (New York City time) on any Business Day, or (c) the third Business Day following the date of deposit with a nationally recognized overnight courier service for next Business Day delivery and addressed to the Company or the Holder, as applicable, at the address specified in the register of Holders of Series C Convertible Preferred Stock maintained by the Transfer Agent.

 

Section 10. Headings; References.

 

The headings of the various sections and subsections hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. References herein to Sections are to Sections of this Certificate of Designations unless otherwise specified.

 

Section 11. Severability of Provisions.

 

If any powers, preferences and relative, participating, optional and other special rights of the Series C Convertible Preferred Stock and the qualifications, limitations and restrictions thereof set forth in this Certificate of Designations (as it may be amended from time to time) are invalid, unlawful or incapable of being enforced by reason of any rule or law or public policy, all other powers, preferences and relative, participating, optional and other special rights of the Series C Convertible Preferred Stock and the qualifications, limitations and restrictions thereof set forth in this Certificate of Designations (as so amended) which can be given effect without the invalid, unlawful or unenforceable powers, preferences and relative, participating, optional and other special rights of the Series C Convertible Preferred Stock and the qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no powers, preferences and relative, participating, optional or other special rights of the Series C Convertible Preferred Stock and the qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such powers, preferences and relative, participating, optional or other special rights of Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.

 

[Intentionally Left Blank; Signature Page Follows]

 

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IN WITNESS WHEREOF, this Certificate of Designations has been executed on behalf of the Company by its Vice President, General Counsel and Secretary this 30th day of April, 2019.

 

  CARROLS HOLDCO INC.
     
  By:

/s/ William E. Myers

  Name: William E. Myers
  Title: Vice President, General Counsel and Secretary

 

[Signature Page to Certificate of Designations – Series C Convertible Preferred Stock]

 

 

 

Exhibit 4.3

 

REGISTRATION RIGHTS AND STOCKHOLDERS’ AGREEMENT

 

This Registration Rights and Stockholders’ Agreement (this “Agreement”) is entered into as of April 30, 2019, by and between CARROLS RESTAURANT GROUP, INC. (formerly known as “Carrols Holdco Inc.”), a Delaware corporation (the “Company”), and CAMBRIDGE FRANCHISE HOLDINGS, LLC, a Delaware limited liability company (the “Investor”).

 

WHEREAS, the Company, Carrols Holdco Inc. (formerly known as “Carrols Restaurant Group, Inc.”), GRC MergerSub Inc., GRC MergerSub LLC (“Carrols MergerSub”), Cambridge Franchise Partners, LLC, New CFH, LLC (“New CFH”) and the Investor have entered into that certain Agreement and Plan of Merger, dated as of February 19, 2019 (as may be amended from time to time, the “Merger Agreement”), providing for, among other things, the acquisition of New CFH through the merger of Carrols MergerSub and New CFH, with New CFH as the surviving entity, in exchange for the issuance by the Company to the Investor of 7,364,413 shares of Common Stock (the “Investor Common Stock”) and 10,000 shares of newly-designated Series C Convertible Preferred Stock, par value $0.01 per share, of the Company (together with any shares of capital stock into which such shares are reclassified or converted (including by merger or otherwise), the “Preferred Stock”); and

 

WHEREAS, as an inducement to the Company and the Investor to close the transactions contemplated by the Merger Agreement, the Company and the Investor have agreed that this Agreement shall provide certain rights and govern certain matters as set forth herein.

 

NOW, THEREFORE, the Company and the Investor hereby agree as follows:

 

1. Definitions. When used in this Agreement, the following terms shall have the meanings indicated below:

 

(a) “Adverse Disclosure” means, in the good faith determination of the Board, material undisclosed circumstances or developments with respect to which the disclosure that would be required in a Registration Statement would be premature and would have an adverse effect on the Company.

 

(b) “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, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

(c) “Agreement” has the meaning set forth in the preamble to this Agreement.

 

(d) “Approved Block Trade” means a block sale or non-marketed underwritten offering of Registrable Securities (i) for a sales price per share of no less than 90% of the average closing price of the Common Stock on the NASDAQ Global Market for the five trading days ending immediately prior to such sale or offering (excluding any commissions paid in connection with such block sale or offering) and (ii) for not less than 300,000 shares of Common Stock, in the case of each of clauses (i) and (ii), in a bid process effected through an underwriter.

 

 

 

 

(e)  “BKC Investors” has the meaning set forth in Section 15(a) of this Agreement.

 

(f) “BKC Registration Rights Agreement” has the meaning set forth in Section 15(a) of this Agreement.

 

(g) “Board” means the board of directors of the Company.

 

(h) “Business Day” means any day except Saturday, Sunday or any days on which banks are generally not open for business in New York, New York.

 

(i) “Carrols MergerSub” has the meaning set forth in the preamble to this Agreement.

 

(j) “Class I Director” means a director of the Board designated as a Class I director of the Board in accordance with the certificate of incorporation of the Company or, in the event that the certificate of incorporation of the Company ceases to contemplate a classified Board, a director of the Board.

 

(k) “Class II Director” means a director of the Board designated as a Class II director of the Board in accordance with the certificate of incorporation of the Company or, in the event that the certificate of incorporation of the Company ceases to contemplate a classified Board, a director of the Board.

 

(l) “Commission” means the United States Securities and Exchange Commission.

 

(m) “Common Stock” means the common stock, par value $.01 per share, of the Company and any shares of capital stock into which such shares are reclassified or converted (including by merger or otherwise).

 

(n) “Company” has the meaning set forth in the preamble to this Agreement.

 

(o) “Company Indemnified Party” has the meaning set forth in Section 10(a) of this Agreement.

 

(p) “Conversion Common Stock” means all shares of Common Stock issued or issuable to the Investor upon conversion of any shares of Preferred Stock.

 

(q) “Demand Registration” has the meaning set forth in Section 3(a) of this Agreement.

 

(r) “Director Cessation Date” means the first date on which the aggregate number of shares of Investor Common Stock and shares of Conversion Common Stock then held by the Investor and its Permitted Affiliates together constitutes less than ten percent (10%) of the aggregate number of then-outstanding shares of Common Stock.

 

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(s) “Director Step-Down Date” means the first date on which the aggregate number of shares of Investor Common Stock and shares of Conversion Common Stock then held by the Investor and its Permitted Affiliates together constitutes less than fourteen point five percent (14.5%) of the total number of then-outstanding shares of Common Stock.

 

(t) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(u) Extraordinary Transaction” means any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization, purchase or license of all or a material portion of the assets, properties or equity securities of, or other similar extraordinary transaction involving, the Company or any of its Subsidiaries or any of their respective securities.

 

(v) “Governmental Authority” means any domestic (including federal, state or local) or foreign government, any political subdivision thereof or any court, administrative or regulatory agency, department, instrumentality, body or commission or other governmental authority or agency.

 

(w) “Inspectors” has the meaning set forth in Section 7(i) of this Agreement.

 

(x) “Initial Investor Directors” has the meaning set forth in Section 14(a)(i) of this Agreement.

 

(y) “Investor” has the meaning set forth in the preamble to this Agreement.

 

(z) “Investor Common Stock” has the meaning set forth in the preamble to this Agreement.

 

(aa) “Investor Director” has the meaning set forth in Section 14(a)(i) of this Agreement.

 

(bb) “Investor Indemnified Party” has the meaning set forth in Section 10(b) of this Agreement.

 

(cc) “Law” or “Laws” means any statutes, rules, codes, regulations, ordinances or Orders of, or issued by, any Governmental Authority.

 

(dd) “Management Investors” has the meaning set forth in Section 15(a) of this Agreement.

 

(ee) “Management Registration Rights Agreement” has the meaning set forth in Section 15(a) of this Agreement.

 

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(ff) “Merger Agreement” has the meaning set forth in the preamble to this Agreement.

 

(gg) “NASDAQ” has the meaning set forth in Section 14(a)(iii) of this Agreement.

 

(hh) “New CFH” has the meaning set forth in the preamble to this Agreement.

 

(ii) “Order” means any writ, decree, order, judgment, injunction, rule, ruling, or consent decree of or by a Governmental Authority.

 

(jj) “Parties” means the Company and the Investor and “Party” means any one of them.

 

(kk) “Person” means any individual, partnership, corporation, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

(ll) “Piggyback Registration” has the meaning set forth in Section 4(a) of this Agreement.

 

(mm) “Preferred Stock” has the meaning set forth in the preamble to this Agreement.

 

(nn) “Prospectus” means the prospectus included in any Registration Statement, as amended or supplemented by any Prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.

 

(oo) “Qualifying Approved Tender Offer” means a tender offer or exchange offer that has been at any time recommended by, or approved by, the Board.

 

(pp) “Qualifying Non-Approved Tender Offer” means a tender offer or exchange offer that (a) has not been recommended or has been recommended against by the Board, (b) includes a majority minimum tender or approval condition, and, as of the tender date, all of the conditions to closing of which (including the majority minimum tender or approval condition) have been satisfied or (other than with respect to the majority minimum tender or approval condition) waived and (c) is expiring on the tender date (provided that, if such tender or exchange offer is subsequently extended, such offer shall cease to be a “Qualifying Non-Approved Tender Offer” until subsequently complying with the terms hereof).

 

(qq) “Records” has the meaning set forth in Section 7(i) of this Agreement.

 

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(rr) “Registrable Securities” means, at any time, (i) all of the shares of Investor Common Stock, (ii) all shares of Conversion Common Stock and (iii) any shares of Common Stock issued or issuable to the Investor with respect to Investor Common Stock and Conversion Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a Registration Statement covering such securities has been declared effective by the Commission and such securities have been disposed of pursuant to such effective Registration Statement, (B) such securities may be sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities Act are met without volume limitations or other restrictions on transfer thereunder, (C) such securities shall have ceased to be outstanding or (D) such securities are no longer owned by, or issuable upon conversion to, the Investor or any of its Permitted Affiliates.

 

(ss) “registered” and “registration” means a registration effected pursuant to an effective Registration Statement under the Securities Act.

 

(tt) “Registration Statement” means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, together with the Prospectus, any amendment and/or supplement to such Registration Statement (including any post-effective amendment), all exhibits to such registration statement and all materials incorporated by reference in such registration statement.

 

(uu) “Rule 144” means Rule 144 promulgated under the Securities Act, or any successor or complementary rule thereto.

 

(vv) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(ww) “Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, in each case, not customarily paid by the issuers of securities, and all expenses of the Investor’s legal counsel in connection with such sale.

 

(xx) “Shelf Offering” has the meaning set forth in Section 3(a) of this Agreement.

 

(yy) “Shelf Period” has the meaning set forth in Section 2(b) of this Agreement.

 

(zz) “Shelf Registration Statement” means a Registration Statement in connection with a Shelf Offering.

 

(aaa) “Suspension Period” has the meaning set forth in Section 7(h) of this Agreement.

 

(bbb) “Underwritten Offering” has the meaning set forth in Section 3(a) of this Agreement.

 

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2. S-3 Shelf Registration.

 

(a) Filing. At any time after the second (2nd) anniversary of the Closing Date (as defined in the Merger Agreement), to the extent that the Company is eligible to register the resale of shares on Form S-3 or any successor form thereto, upon the written request of the Investor, the Company shall file, as promptly as practicable thereafter, with the Commission a Shelf Registration Statement on Form S-3 relating to the offer and sale of an amount of Registrable Securities requested by the Investor; provided, however, that, unless consented to by the Company, each such request must cover at least thirty percent (30%) of the Registrable Securities then held by the Investor. The Company shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act (unless it becomes effective automatically upon filing). The Company shall not be required to effect more than one (1) Shelf Registration pursuant to this Section 2.

 

(b) Continued Effectiveness. Subject to the permitted Suspension Periods set forth in Section 7(h) hereof, the Company shall use its reasonable best efforts to keep such Shelf Registration Statement (or a replacement Shelf Registration Statement) continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by the Investor until the earlier of (i) the date as of which all Registrable Securities covered by such Shelf Registration Statement have been sold and (ii) the date as of which the Investor is permitted to sell its Registrable Securities without Registration pursuant to Rule 144 without volume limitations or other restrictions on transfer thereunder (such period of effectiveness, the “Shelf Period”).

 

3. Demand Registration.

 

(a) Subject to the limitations contained in this Section 3, at any time following the second (2nd) anniversary of the Closing Date (as defined in the Merger Agreement), the Investor may, at any time and from time to time, request that the Company register for sale all or any of its Registrable Securities under the Securities Act in connection with an Underwritten Offering by sending the Company a written request setting forth such request and specifying the number of Registrable Securities required to be registered and the intended method of disposition (any such registration being referred to herein as a “Demand Registration”); provided that the minimum number of Registrable Securities to be registered on behalf of the Investor in any Demand Registration must be equal to at least thirty-three and one-third percent (33.33%) of the Registrable Securities held by Investor (on an as-converted basis) on the date hereof. For the avoidance of doubt, the Investor’s right to Demand Registration includes, without limitation, the right to require registration of an underwritten public offering of Registrable Securities (an “Underwritten Offering”) or the right to require the filing of a preliminary and final prospectus supplement to the extent that a Shelf Registration Statement is then effective. However, the registration of shares of Common Stock pursuant to any continuous offering of Registrable Securities pursuant to Rule 415 promulgated under the Securities Act (a “Shelf Offering”) shall be governed by Section 2 hereof.

 

(b) Subject to the limitations contained in this Section 3, upon the receipt by the Company of a written request for a Demand Registration pursuant to Section 3(a), the Company shall cause a Registration Statement on Form S-3 or any successor form thereto (or, if the Company is not then eligible to register the resale of shares on Form S-3, on another appropriate form in accordance with the Securities Act) to be filed within sixty (60) days after the date on which the initial request is given (provided, however, that no filing of a Demand Registration shall be made earlier than the 24 month anniversary of the date of the closing of the Merger Agreement) and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter covering all of the Registrable Securities requested to be registered in the Demand Registration. The Company shall not be required to effect more than three (3) Demand Registrations pursuant to this Section 3. Any registration initiated as a Demand Registration pursuant to Section 3(a) shall not count as a Demand Registration unless and until the Registration Statement with respect to such registration shall have become effective.

 

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(c) The Company shall not be obligated to effect any Demand Registration within one-hundred eighty (180) days after the effective date of a previous Demand Registration or a previous registration in which the Investor was given Piggyback Registration rights. The Company may postpone the filing or effectiveness of a Registration Statement for a Demand Registration (i) for up to ninety (90) days if the Company, in good faith, determines that such Demand Registration would reasonably be expected to result in an Adverse Disclosure or (ii) for up to ninety (90) days, if the Company, in good faith, intends to conduct a primary offering of Common Stock within ninety (90) days of the proposed Demand Registration; provided that in such event the Investor shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder and the Company shall pay all registration expenses in connection with such registration.

 

(d) The Investor may withdraw its Registrable Securities from a Demand Registration at any time prior to the effectiveness of the applicable Registration Statement. Upon receipt of notice from the Investor to such effect, the Company shall cease all efforts to secure effectiveness of the applicable Registration Statement and such registration shall nonetheless be deemed a Demand Registration hereunder unless the withdrawal is made after a material adverse change to the Company or after notice of a postponement pursuant to Section 3(c).

 

(e) In the case of any Demand Registration that relates to an Underwritten Offering, the Investor shall select the investment banking firms to act as the managing underwriter or underwriters in connection with such Underwritten Offering, provided that such investment banking firms shall be reasonably acceptable to the Company.

 

(f) If a Demand Registration is initiated by the Investor as an Underwritten Offering, and the managing underwriter advises the Investor and the Company in writing that, in its opinion, the number of shares of Common Stock proposed to be included in such registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such Underwritten Offering, exceeds the number of shares of Common Stock which can be sold in such offering or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the marketability of such offering, the Company shall include in such registration (i) first, the number of shares of Common Stock requested to be included therein by the Investor and the BKC Investors; and (ii) second, the number of shares of Common Stock requested to be included therein by the holders of Common Stock (other than the Investor and the BKC Investors), allocated among such holders in such manner as they may agree.

 

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4. Piggyback Registration.

 

(a) Whenever the Company proposes to register any shares of its Common Stock under the Securities Act (other than (i) a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Securities Act is applicable, or (ii) a Registration Statement on Form S-4, S-8 or any successor form thereto or another form not available for registering the Registrable Securities for sale to the public), whether for its own account or for the account of one or more stockholders of the Company, the Company shall give prompt written notice (in any event, no later than thirty (30) days prior to the filing of such Registration Statement) to the Investor of its intention to effect such a registration and, subject to Section 4(b) and Section 4(c), shall include in such registration all Registrable Securities requested to be included by the Investor within fifteen (15) days after the date on which the Company’s notice is given (a “Piggyback Registration”). The Investor may withdraw all or any part of its Registrable Securities from a Piggyback Registration at any time. For the avoidance of doubt, no registration of Registrable Securities effected pursuant to a request under this Section 4 shall be deemed to have been effected pursuant to Section 3 of this Agreement or shall relieve the Company of its obligations under Section 3. The Company may postpone for up to one-hundred twenty (120) days the filing or effectiveness of a Piggyback Registration if the Company, in good faith, determines that such Piggyback Registration would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its Subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization or similar transaction.

 

(b) If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriter advises the Company and the Investor (if the Investor has elected to include Registrable Securities in such Piggyback Registration) in writing that in its opinion the number of shares of Common Stock proposed to be included in such registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the marketability of such offering, the Company shall include in such registration (i) first, the number of shares of Common Stock that the Company proposes to sell; (ii) second, the number of shares of Common Stock requested to be included by any stockholder having registration rights with priority over the registration rights of the Investor; (iii) third, the number of shares of Common Stock requested to be included therein by the Investor and the BKC Investors; and (iv) fourth, the number of shares of Common Stock requested to be included therein by holders of Common Stock (other than the Investor, the BKC Investors and the Management Investors), allocated among such holders in such manner as they may agree.

 

(c) If any Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

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(d) If a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of Common Stock other than the Investor, and the managing underwriter advises the Company in writing that in its opinion the number of shares of Common Stock proposed to be included in such registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the marketability of such offering, the Company shall include in such registration (i) first, the number of shares of Common Stock requested to be included by any stockholder having registration rights with priority over the registration rights of the Investor; (ii) second, the number of shares of Common Stock requested to be included therein by the Investor and the BKC Investors; and (iii) third, the number of shares of Common Stock requested to be included therein by holders of Common Stock (other than the Investor, the BKC Investors and the Management Investors), allocated among such holders in such manner as they may agree.

 

5. Block Trades.

 

(a) To the extent that a Shelf Registration Statement is effective, the Investor shall have the right to request that the Company file a prospectus supplement in connection with an Approved Block Trade, and the filing of such prospectus supplement shall not count as a Demand Registration. The Investor and the Company shall equally split the fees of the Company’s independent public accountants and printing expenses associated with the preparation and distribution of the requested prospectuses and prospectus supplements associated with up to two (2) Approved Block Trades. The Investor shall pay all other costs and expenses associated with an Approved Block Trade, including all of its costs and expenses associated with such sales (including attorneys’ fees of the Investor and applicable stock transfer taxes and underwriting discounts and commissions); provided, however, that the Company shall pay the fees and expenses of its attorneys in connection with such Approved Block Trades. With respect to any additional Approved Block Trades in excess of such initial two (2), the Investor shall be responsible for all associated costs.

 

(b) In connection with an Approved Block Trade, to the extent required by the relevant underwriters, the Company shall obtain so-called “comfort letters” from the Company’s independent public accountants, and legal opinions of counsel to the Company addressed to the underwriters and the Commission, in customary form and covering such matters as are customarily covered by such letters and opinions and shall enter into such other agreements, including underwriting agreements in customary form. Delivery of any such opinions or comfort letters shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by underwriters who receive such comfort letters or opinions. In connection with an Approved Block Trade, the Company shall make available for inspection by (i) one authorized representative of the Investor, (ii) any underwriter participating in an Approved Block Trade and (iii) each of their respective representatives, all financial and other information as shall be reasonably requested by them, and provide such Persons the opportunity to discuss the business affairs of the Company with its principal executives and independent public accountants who have certified the audited financial statements included in the Registration Statement, in each case, as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that the information that the Company determines, in good faith, to be confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Company. In addition, the Company shall take such other actions as are reasonably required and customary in order to expedite or facilitate an Approved Block Trade.

 

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6. Lock-up Agreements.

 

(a) The Investor agrees that, in connection with any underwritten public offering of the Company’s Common Stock, and upon the request of the managing underwriter in such offering, the Investor shall enter into such customary lock-up agreements as may be requested by the managing underwriter, pursuant to which the Investor shall agree not to, directly or indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell (or announce any offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option or contract to purchase, purchase of any option or contract of sale, grant of any option, right or warrant to purchase or other sale or disposition), or otherwise transfer or dispose of (or enter into any transaction that is designed to, or could reasonably be expected to, result in the disposition by any Person at any time in the future of), any shares of Investor Common Stock or Conversion Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Investor Common Stock or Conversion Common Stock beneficially owned by it within the meaning of the Exchange Act or (ii) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic benefit of ownership and/or beneficial ownership of such securities, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of any shares of Investor Common Stock, Conversion Common Stock or such other securities, in cash or otherwise, subject to customary exceptions, and provided that the period of any such lock-up shall not exceed the lesser of (x) the shortest lock-up period to which any executive officer or director is subjected and (y) one-hundred eighty (180) days. The Investor agrees to execute and deliver such other customary agreements as may be requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto.

 

(b) Notwithstanding anything to the contrary contained in this Agreement,

 

(i) the provisions of this Section 6 shall not apply to sales of Registrable Securities to be included in an underwritten offering pursuant to Section 4(a);

 

(ii) the provisions of this Section 6 shall not apply to the Investor unless all directors and executive officers of the Company are subject to the same restrictions; and

 

(iii) in the event that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than five percent (5%) of the outstanding Common Stock, the Investor shall be released from any lock-up agreement entered into pursuant to this Section 6 to the same extent as such officer, director or holder.

 

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(c) In the case of a registration of Registrable Securities pursuant to Section 3 for an Underwritten Offering, the Company agrees, if requested by the managing underwriter or underwriters, to enter into such customary lock-up agreements as may be requested by the managing underwriter, pursuant to which the Company shall agree to not (i) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Common Stock, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership and/or beneficial ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, subject to customary exceptions (including the ability to sell shares of common stock pursuant to Form S-4 or Form S-8, pursuant to any employee benefit plan then in effect or pursuant to any other contractual obligations that that the Company may then have), and provided that the period of any such lock-up shall not exceed the lesser of (x) the shortest lock-up period to which the Investor is subjected and (y) one-hundred eighty (180) days. The Company agrees to execute and deliver such other agreements as may be reasonably requested by the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Without limiting the foregoing, if, after the date hereof, the Company grants any Person (other than the Investor) any rights to demand or participate in a registration, the Company agrees that the agreement with respect thereto shall include such Person’s agreement to comply with any black-out period required by this Section 6(c) as if it were the Company hereunder.

 

7. Registration Procedures. If and whenever the Investor requests that any Registrable Securities be registered pursuant to the provisions of this Agreement, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant thereto, the Company shall as soon as practicable:

 

(a) subject to Section 3(c), prepare and file with the Commission a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective as soon as practicable;

 

(b) prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than one-hundred eighty (180) days (or for the Shelf Period, in the case of a Shelf Registration), or, if earlier, until all of such Registrable Securities have been disposed of, and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

 

(c) at least five (5) Business Days before filing such Registration Statement, Prospectus or amendments or supplements thereto, furnish to counsel for the Investor copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel within three (3) Business Days after receipt thereof, with respect to only those sections of the Registration Statement containing information about or provided in writing by or on behalf of the Investor, including, without limitation, the Selling Securityholder section and the Plan of Distribution section (and the Company shall not file any such document to which the Investor reasonably objects);

 

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(d) notify the Investor, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed;

 

(e) furnish to the Investor such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as the Investor may request in order to facilitate the disposition of the Registrable Securities;

 

(f) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” Laws of such jurisdictions as the Investor requests and do any and all other acts and things which may be necessary or advisable to enable the Investor to consummate the disposition of Registrable Securities in such jurisdictions; provided that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 7(f);

 

(g) notify the Investor, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of the Investor, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

(h) notify the Investor, with at least two (2) days’ prior written notice, at any time when the continued use of a Registration Statement filed would require the Company to make an Adverse Disclosure and, as a result, the Company needs to suspend the use of the Registration Statement (each, a “Suspension Period”); provided, however, (i) no Suspension Period shall exceed ninety (90) days, (ii) the Company shall not be permitted to have more than two Suspension Periods in any twelve-month period and (iii) the aggregate amount of all Suspension Periods in any twenty-four month period shall not exceed one-hundred eighty (180) days. In the case of a suspension, the Investor agrees, promptly upon receipt of the notice, to suspend use of the applicable Prospectus in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities. The Company shall immediately notify the Investor upon the termination of any suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Investor such numbers of copies of the Prospectus as so amended or supplemented as the Investor may reasonably request. The Company agrees, if necessary, to promptly supplement or make amendments to the Registration Statement, if required by the registration form used by the Company for the Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Investor;

 

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(i) make available for inspection by the Investor, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent or representative of the Investor or such underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such Registration Statement;

 

(j) provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

 

(k) use its reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Stock is then listed;

 

(l) in connection with an underwritten offering, take all such customary actions as the managing underwriter of such offering requests in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities));

 

(m) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder) no later than ninety (90) days after the end of the twelve-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said twelve-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

 

(n) furnish each underwriter, if any, with (i) a legal opinion of the Company’s outside counsel, dated the effective date of such Registration Statement (and, if such registration includes an Underwritten Offering, dated the date of the closing under the underwriting agreement), in form and substance as is customarily given in opinions of a registrant’s counsel to underwriters in underwritten public offerings; and (ii) a “comfort” letter signed by the Company’s independent certified public accountants, in form and substance as is customarily given in accountants’ letters to underwriters in Underwritten Offerings;

 

(o) without limiting Section 7(f) above, use its reasonable best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Investor to consummate the disposition of such Registrable Securities in accordance with its intended method of distribution thereof;

 

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(p) notify the Investor promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information (and provide copies of the relevant documents to the Investor);

 

(q) advise the Investor, promptly after it shall receive notice or obtain knowledge thereof, of (i) the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued, (ii) any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or such Prospectus or for additional information (and provide copies of the relevant documents to the Investor) and (iii) the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

(r) cooperate with the Investor and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such Investor may request; and

 

(s) otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

 

8. Deemed Underwriter. If any Registration Statement refers to the Investor by name or otherwise as the holder of any securities of the Company and if, in its sole and exclusive judgment, the Investor is or might be deemed to be an underwriter or a controlling Person of the Company, the Investor shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to the Investor and presented to the Company in writing, to the effect that the holding by the Investor of such securities is not to be construed as a recommendation by the Investor of the investment quality of the Company’s securities covered thereby and that such holding does not imply that the Investor shall assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to the Investor by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to the Investor. In no event shall the Investor be named as an underwriter in any Registration Statement without its prior written consent; provided, however, that if the failure to provide such consent requires, in the reasonable opinion of counsel to the Company, the withdrawal of the Investor’s Registrable Securities from a Demand Registration, then such Registrable Securities shall be so withdrawn, the Company shall cease all efforts to secure effectiveness of such Registration Statement if the Registrable Securities are the only securities covered by such Registration Statement and such Registration Statement shall nonetheless be deemed a Demand Registration hereunder.

 

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9. Expenses. Except as set forth in Section 5, all expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities, including, without limitation, all registration and filing fees, underwriting expenses (other than fees, commissions or discounts), expenses of any audits incident to or required by any such registration, and fees and expenses of complying with securities and “blue sky” Laws, printing expenses, fees and expenses of the Company’s counsel and accountants shall be paid by the Company. All Selling Expenses relating to Registrable Securities registered pursuant to this Agreement shall be paid by the Investor. The Company shall pay the reasonable fees and expenses of one counsel for the Investor up to $50,000 in the aggregate for any registration hereunder, subject to the limitations set forth herein.

 

10. Indemnification.

 

(a) Indemnification by the Company. In connection with any registration effected under this Agreement, the Company shall indemnify the Investor, each underwriter (if any) of the securities so registered, each of their respective officers, directors, managers, members, partners, stockholders and Affiliates, and each Person who controls any of the foregoing within the meaning of the Securities Act (each, a “Company Indemnified Party”) against any and all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of any material fact contained in any Prospectus, offering circular or other document incident to any registration, qualification or compliance (or in any related Registration Statement, notification or the like) or any omission (or alleged omission) to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to any action or inaction required of the Company in connection with any such registration, qualification or compliance, and the Company will promptly reimburse each of the Company Indemnified Parties for any reasonable legal and any other expenses reasonably incurred by them in connection with investigating or defending any such claim, loss, damage, liability or action, whether or not otherwise resulting in liability; provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Company Indemnified Party or its counsel or representative and specifically for use in such Prospectus, offering circular or other document (or related Registration Statement, notification or the like).

 

(b) Indemnification by the Investor. In connection with any registration effected under this Agreement, the Investor shall indemnify each underwriter (if any) of the securities so registered, the Company, each of their respective officers, directors, managers, members, partners, stockholders and Affiliates, and each Person who controls any of the foregoing within the meaning of the Securities Act (each, an “Investor Indemnified Party”) against any and all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of any material fact contained in any Prospectus, offering circular or other document incident to any registration, qualification or compliance (or in any related Registration Statement, notification or the like) or any omission (or alleged omission) to state therein any material fact required to be stated therein or necessary to make the statement therein not misleading, and the Investor will promptly reimburse each Investor Indemnified Party for any reasonable legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, whether or not otherwise resulting in liability; provided, however, that this Section 10(b) shall apply only if (and only to the extent that) such statement or omission was made in reliance upon written information furnished to such underwriter or the Company by the Investor or its counsel or representative specifically for use in such Prospectus, offering circular or other document (or related Registration Statement, notification or the like); and provided further that the Investor’s liability hereunder with respect to any particular registration shall be limited to an amount equal to the net proceeds (after deducting underwriting fees, commissions or discounts) received by the Investor from the Registrable Securities sold by it in such registration.

 

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(c) Indemnification Proceedings. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 10, such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (except to the extent such failure shall have prejudiced the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party and, after written notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided that, if (i) any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party’s prior written consent (but, without such consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim.

 

(d) Contribution in Lieu of Indemnification. If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of the Investor, to an amount equal to the net proceeds (after deducting underwriting fees, commissions or discounts) actually received by the Investor from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any Person.

 

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11. Participation in Underwritten Registrations. No Person may participate in any registration hereunder which relates to an Underwritten Offering unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided that in no event shall the Investor be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding the Investor, the Investor’s ownership of its shares of Common Stock to be sold in the offering, the Investor’s intended method of distribution and other customary representations and warranties of selling stockholders) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as is customary for selling stockholders in Underwritten Offerings and as otherwise provided in Section 10. In the case of an Underwritten Offering pursuant to Section 3 above, the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Investor. In addition, in the case of any Underwritten Offering, each of the Holders may withdraw their request to participate in the registration pursuant to Section 3 or Section 4 after being advised of such price, underwriting discount and other financial terms and shall not be required to enter into any agreements or documentation that would require otherwise.

 

12. Rule 144. The Company shall make publicly available and available to the Investor such information as shall be necessary to enable the Investor to make sales of Registrable Securities pursuant to Rule 144 of the Securities Act. The Company shall cause any restrictive legends and/or stop-transfer orders to be removed or lifted with respect to any Registrable Securities promptly following receipt by the Company from the Investor of a certificate certifying: (i) that the Investor has held such Registrable Securities for the applicable holding period under Rule 144, (ii) that the Investor has not been an affiliate (as defined in Rule 144) of the Company during the ninety (90) days preceding and has complied with all of the requirements of Rule 144 in connection with any such sale of shares and (iii) as to such other matters relating to Rule 144 as the Company or counsel to the Company may request and may be appropriate in accordance with such Rule.

 

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13. Transfer Restrictions.

 

(a) During the period beginning on the date hereof and ending on the second (2nd) anniversary hereof, without the approval of a majority of the directors of the Company other than the Investor Directors, the Investor:

 

(i) shall not, directly or indirectly, (A) sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell, or otherwise transfer or dispose of (or enter into any transaction that is designed to, or would reasonably be expected to, result in the disposition by any Person at any time in the future of), any shares of Preferred Stock, Investor Common Stock or Conversion Common Stock, or any securities convertible into or exercisable or exchangeable for any shares of Preferred Stock, Investor Common Stock or Conversion Common Stock, beneficially owned (as defined under Rule 13d-3 promulgated under the Exchange Act) by the Investor or (B) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic benefit of ownership and/or beneficial ownership of any shares of Preferred Stock, Investor Common Stock or Conversion Common Stock, whether or not any such swap or transaction described in clause (A) or (B) above is to be settled by delivery of any Preferred Stock, Investor Common Stock or Conversion Common Stock or such other securities, in cash or otherwise (each, a “Transfer”);

 

(ii) authorizes the Company to place a legend on any shares of Preferred Stock, Investor Common Stock and Conversion Common Stock in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY;

 

(iii) authorizes the Company to cause any transfer agent (as applicable) to decline to transfer and/or to note stop transfer restrictions on the transfer books and records of the Company with respect to any shares of Preferred Stock, Investor Common Stock or Conversion Common Stock and any securities convertible into or exercisable or exchangeable for any shares of Preferred Stock, Investor Common Stock or Conversion Common Stock for which the undersigned is the record holder and, in the case of any such shares or securities for which the undersigned is the beneficial owner, but not the record holder, agrees to cause the record holder to cause the transfer agent to decline to transfer and/or to note stop transfer restrictions on such books and records with respect to such shares or securities.

 

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(b) Notwithstanding anything herein to the contrary, Section 13(a)(i) and Section 13(a)(iii) shall not prohibit or otherwise apply to (i) any Transfer of or with respect to a number of shares of Investor Common Stock or Conversion Common Stock yielding gross proceeds that, together with all such previous or simultaneous Transfers, do not exceed $6,000,000 in the aggregate, (ii) any Transfer to an Affiliate of the Investor set forth on Schedule A (a “Permitted Affiliate”); provided that, as a condition to such Transfer, such Permitted Affiliate shall execute and deliver to the Company a joinder to this Agreement substantially in the form attached hereto as Exhibit B, (iii) any Transfer pursuant to (A) a Qualifying Approved Tender Offer initiated and commenced by any Person or (B) a Qualifying Non-Approved Tender Offer initiated and commenced by any Person other than the Investor or any of its Affiliates or (iv) any Transfer pursuant to any Extraordinary Transaction or similar business combination transaction that has been recommended or approved by a majority of the Board.

 

14. Board of Directors.

 

(a) From and after the date hereof and until the provisions of this Section 14(a) cease to be effective pursuant to this Section 14(a) of this Agreement, the Company and the Board and each applicable committee or subcommittee thereof shall take all necessary or desirable actions within their respective control (including, without limitation, and as applicable, calling special Board and stockholder meetings, recommending to the Board and any applicable committee thereof and to the stockholders of the Company the election and re-election of each Investor Director, ensuring sufficient vacancies on the Board for the Investor Directors, and including each Investor Director as a nominee for director in the Company’s proxy materials and form of proxy and soliciting proxies from stockholders in favor of the election and re-election of each Investor Director in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees) so that:

 

(i) until the Director Step-Down Date, two individuals designated by the Investor (each, an “Investor Director”) are elected and appointed by the Board and are nominated by the Board for election or re-election, as applicable, by the stockholders of the Company at each annual or special meeting of the stockholders at which Class I Directors or Class II Directors, as applicable, are subject to election or re-election, as applicable, as a Class I Director and a Class II Director, respectively, and it is hereby acknowledged that the initial Investor Directors shall be Matthew Perelman and Alex Sloane (the “Initial Investor Directors”). On the Director Step-Down Date, if two Investor Directors are then serving as a Class I Director and a Class II Director, respectively, the Investor shall cause and take all necessary action within its control to cause one Investor Director to submit his or her resignation as a Class I Director or Class II Director, as applicable, to the Board in substantially the form set forth as Exhibit A hereto;

 

(ii) from the Director Step-Down Date until the Director Cessation Date, one Investor Director is elected and appointed by the Board and nominated by the Board for election or re-election, as applicable, by the stockholders of the Company at each annual or special meeting of the stockholders at which Class I Directors or Class II Directors, as applicable, are subject to election or re-election, as applicable, as a Class I Director or Class II Director. On the Director Cessation Date, the Investor shall cause and take all necessary action within its control to cause all Investor Directors to submit their resignation(s) as Class I Directors or Class II Directors, as applicable, to the Board in substantially the form set forth as Exhibit A hereto; and

 

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(iii) until the Director Cessation Date, in the event that any Initial Investor Director ceases to serve as a Class I Director or Class II Director (other than as a result of his or her resignation pursuant to Section 14(a)(i)), the resulting vacancy on the Board shall promptly be filled by a representative designated by the Investor who shall satisfy the requirements to serve as a director under the rules and regulations of the NASDAQ Stock Market LLC (“NASDAQ”) and under the Securities Act and the Exchange Act and under the written policies of the Corporate Governance and Nominating Committee of the Board. For the avoidance of doubt, the Investor shall not be required to comply with the advance notice provisions generally applicable to the nomination of directors by the Company so long as the Investor, in the event any Initial Investor Director ceases to serve as a Class I Director or Class II Director, provides reasonable advance notice to the Company of the individual designated by the Investor prior to the mailing of the proxy statement by the Company.

 

(b) Until the Director Cessation Date, if the Investor fails to designate a representative to fill a directorship pursuant to the terms of this Section 14, such directorship shall remain vacant until the Investor exercises its right to designate a director hereunder until such time as such right to designate a director ceases to be in effect as provided in Section 14(a) of this Agreement.

 

(c) Until the Director Cessation Date, the Board and the Company shall take all necessary or desirable action within their control to ensure that, unless otherwise consented to by the Investor, the number of Investor Directors serving on each committee of the Board at any time is, to the extent possible, proportional to the number of Investor Directors serving on the Board at such time and, in any event, that at least one Investor Director serves on each of the Compensation Committee of the Board, the Finance Committee of the Board and the Nominating and Corporate Governance Committee of the Board at all times, provided that an Investor Director satisfies the requirements to serve on such committee under the rules and regulations of NASDAQ and under the Securities Act and the Exchange Act. Notwithstanding the foregoing, in the event an Investor Director ceases to meet the requirements to serve on the Compensation Committee of the Board, the Finance Committee of the Board or the Nominating and Corporate Governance Committee of the Board, as applicable, pursuant to the rules and regulations of NASDAQ or under the Securities Act and the Exchange Act, the Board may remove such Investor Director from such committee(s); provided that, in the event such Investor Director is so removed, the Board shall appoint another Investor Director to such committee(s) in accordance with this Section 14(c).

 

(d) Each Investor Director, in his or her capacity as a director, shall be afforded the same rights and privileges as other members of the Board, including, without limitation, with respect to indemnification, insurance, notice, information and the reimbursement of expenses, but excluding equity grants or any other grants made by the Company to non-employee members of the Board from time to time pursuant the Company’s 2016 Equity Incentive Plan or any other equity incentive plan of the Company then in effect. For the avoidance of doubt, nothing in this Section 14(d) is intended to limit such Investor Director’s rights or privileges.

 

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(e) Until the Director Cessation Date, at each annual or special meeting of the stockholders at which any Person is subject to election or re-election as a member of the Board, Investor will cause to be present for quorum purposes all shares of Investor Common Stock and Conversion Common Stock that Investor and its Permitted Affiliates have the right to vote as of the record date for such meeting of the stockholders, and vote or cause to be voted all such shares of Investor Common Stock and Conversion Common Stock on the Company’s proxy card (or in person if any such holder of such shares is present in person at the meeting) in favor of the election of all of the director nominees recommended for election by the Board, and against the removal of any such director (unless proposed by the Company).

 

15. Miscellaneous.

 

(a) Preservation of Rights. The Company is currently a party to the Registration Rights Agreement, as amended (the “BKC Registration Rights Agreement”), dated as of May 30, 2012, by and between the Company and Burger King Corporation (together with its permitted assigns, the “BKC Investors”) and the Registration Rights Agreement, as amended (the “Management Registration Rights Agreement”), dated as of March 27, 1997, by and among the Company, Atlantic Restaurants, Inc., Madison Dearborn Capital Partners, L.P., Madison Dearborn Capital Partners II, L.P., BIB Holdings (Bermuda) Ltd, Alan Vituli, Daniel T. Accordino and Joseph A. Zirkman (Messrs. Vituli, Accordino and Zirkman are collectively referred to as the “Management Investors”). Under the BKC Registration Rights Agreement, the Company is permitted to grant registration rights to other Persons so long as such registration rights to third parties are not more favorable than or inconsistent with and do not subordinate or violate the rights expressly granted to the BKC Investors under the BKC Registration Rights Agreement. Under the Management Registration Rights Agreement, the Company is permitted to grant rights to other Persons to participate in Piggyback Registrations so long as such rights are subordinate to the rights of the Management Investors with respect to such Piggyback Registrations. The Company shall not (i) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder or the registration rights agreements referred to in this Section 15(a), or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the Investor in this Agreement or to the BKC Investors or the Management Investors in the registration rights agreements referred to in this Section 15(a).

 

(b) Termination. Sections 2, 3, 4, 5, 6, 7, 8, 11 and 12 of this Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Securities outstanding; provided that the provisions of Section 9 and Section 10 shall survive any such termination.

 

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(c) Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given and effective (i) three (3) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service, (iii) immediately upon delivery by hand on a Business Day during regular business hours, (iv) upon transmission, if sent via email prior to 5:00 p.m. New York time on a Business Day (with a copy sent on the same Business Day for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service) or (v) the Business Day following transmission, if sent via email at or after 5:00 p.m. New York time on a Business Day (with a copy sent on the same Business Day for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service), in each case, to the parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

(i) if to the Company, to:

 

Carrols Restaurant Group, Inc.

968 James St.

Syracuse, NY 13203

Attention: William E. Myers; VP & General Counsel

Email: wmyers@carrols.com

 

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

 

Akerman LLP

666 5th Avenue, 20th Floor

New York, NY 10103

Attention: Wayne Wald; Palash Pandya

Email: wayne.wald@akerman.com; palash.pandya@akerman.com

 

(ii) if to the Investor, to

 

Cambridge Franchise Holdings, LLC

853 Broadway, Suite 2014

New York, NY 10003

Attention: Matthew Perelman; Alex Sloane

Email: perelman@garnettstation.com; sloane@garnettstation.com

 

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

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention: Eric L. Schiele, P.C.; Willard S. Boothby

Email: eric.schiele@kirkland.com; willard.boothby@kirkland.com

 

and

 

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, IL 60654

Attention: Jeremy S. Liss, P.C.; Matthew S. Arenson

Email: jliss@kirkland.com; marenson@kirkland.com

 

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(d) Entire Agreement. This Agreement, together with the Merger Agreement and any related exhibits and schedules thereto, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. Notwithstanding the foregoing, in the event of any conflict between the terms and provisions of this Agreement and those of the Merger Agreement, the terms and conditions of this Agreement shall control.

 

(e) Successor and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Investor may not assign this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the Company, other than to Permitted Affiliates of the Investor. The Company may not assign this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the Investor.

 

(f) No Third-Party Beneficiaries. Except for Section 10, the provisions of which are solely for the benefit of the Persons expressly identified therein, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

(g) Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

(h) Amendment, Modification and Waiver. The provisions of this Agreement may only be amended, modified, supplemented or waived with the prior written consent of the Company and the Investor. No waiver by any party or parties shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

(i) Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

23

 

 

(j) Remedies. The Investor, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company acknowledges that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and the Company hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. The failure to effect any of the provisions of this Agreement that expressly contemplate action or forbearance by the Board shall be deemed a breach of this Agreement by Carrols.

 

(k) Governing Law; Submission to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof. Each of the Parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware or any federal court within the District of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware or any federal court within the District of Delaware, (d) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action in the Court of Chancery of the State of Delaware or such Federal court. Each Party agrees that (i) this Agreement involves at least $100,000.00 and (ii) this Agreement has been entered into by the Parties in express reliance upon 6 Del. C. § 2708. Each Party agrees that a final judgment in any such action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Any judgment from any such court described above may, however, be enforced by any Party in any other court in any other jurisdiction.

 

(l) Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 15(l).

 

(m) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

(n) Further Assurances. The Investor agrees to execute and deliver such other agreements and take all such other acts as may be reasonably requested by the Company or the managing underwriter in any Underwritten Offering that are consistent with the terms of this Agreement or which are reasonably necessary to effect any of the registrations described herein.

 

[Signature Page Follows.]

 

24

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above.

 

  CARROLS RESTAURANT GROUP, INC.
     
  By: /s/ William E. Myers
    Name: William E. Myers
    Title: Vice President, General Counsel and Secretary
     
  CAMBRIDGE FRANCHISE HOLDINGS, LLC
     
  By: /s/ Alex Sloane
    Name: Alex Sloane
    Title: Co-President

 

[Registration Rights and Stockholders’ Agreement Signature Page]

 

25

 

 

Exhibit A

 

Form of Investor Director Resignation Letter

 

[Date]

 

Carrols Restaurant Group, Inc.

968 James St.

Syracuse, NY 13203

 

Dear Sir/Madam:

 

I, [Investor Director], hereby resign as Class [__] Director of Carrols Restaurant Group, Inc., a Delaware corporation, effective immediately.

 

   
  [Investor Director], for [himself/herself]

 

26

 

 

Exhibit B

 

Joinder to Registration Rights and Stockholders’ Agreement

 

This JOINDER AGREEMENT (this “Joinder”) is made and effective as of the date written below by the undersigned in accordance with the Registration Rights and Stockholders’ Agreement, dated as of [________], 2019 (the “Agreement”), by and between Carrols Restaurant Group, Inc., a Delaware corporation (the “Company”), and Cambridge Franchise Holdings, LLC, a Delaware limited liability company. Capitalized terms used and not defined herein shall have the meanings set forth in the Agreement.

 

This Joinder is the joinder to the Agreement contemplated by Section 13(b) of the Agreement.

 

By executing and delivering this Joinder, the undersigned (a) agrees to become a party to, to be bound by, and to comply with all of the terms and provisions of the Agreement as a Permitted Affiliate and (b) shall have all the rights and obligations of a Permitted Affiliate as if it had executed the Agreement as an original party thereto.

 

Accordingly, the undersigned has executed and delivered this Joinder as of [_______________].

 

  [NAME OF PERMITTED AFFILIATE]
                                   
  By:                              
  Name:  
  Title:  
  Address for Notices:

 

27

 

 

Schedule A

 

Permitted Affiliates

 

Any trusts created for bona fide estate planning purposes and controlled by Alex Sloane or Matt Perelman.

 

Cambridge Franchise Partners, LLC or any wholly-owned subsidiary of Cambridge Franchise Partners, LLC; provided, for the avoidance of doubt, the restrictions on Transfer set forth in Section 13 shall continue to bind any such transferee as though it were the Investor.

 

 

28

 

Exhibit 10.1

 

EXECUTION VERSION

  

Published CUSIP Number: 14576JAC7
Revolving Loan CUSIP Number: 14576JAD5
Term Loan CUSIP Number: 14576JAE3

 

 

  

$550,000,000

 

CREDIT AGREEMENT

 

among

 

CARROLS RESTAURANT GROUP, INC.
(formerly known as Carrols Holdco Inc.),
as Borrower,

 

CERTAIN DOMESTIC SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,

 

THE LENDERS PARTY HERETO,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent

 

Dated as of April 30, 2019

 

WELLS FARGO SECURITIES, LLC,
Coöperatieve Rabobank U.A., New York Branch,

Manufacturers and Traders Trust Company, and

SunTrust Robinson Humphrey, Inc.,

as Co- Lead Arrangers and Joint Bookrunners,

 

Coöperatieve Rabobank U.A., New York Branch,

Manufacturers and Traders Trust Company, and

SUNTRUST BANK,

as Co- Syndication Agents

and

 

FIFTH THIRD BANK,

as Documentation Agent

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
ARTICLE I  
   
DEFINITIONS 1
   
Section 1.1 Defined Terms 1
Section 1.2 Other Definitional Provisions 38
Section 1.3 Accounting Terms 38
Section 1.4 Time References 39
Section 1.5 Execution of Documents 39
Section 1.6 Limited Condition Acquisition. 40
Section 1.7 Designation of Subsidiaries. 41
Section 1.8 Effectuation of Transactions. 41
Section 1.9 Division. 41
     
ARTICLE II  
   
THE LOANS; AMOUNT AND TERMS 42
   
Section 2.1 Revolving Loans 42
Section 2.2 Term Loans 43
Section 2.3 Letter of Credit Subfacility 45
Section 2.4 [Reserved] 48
Section 2.5 Fees 48
Section 2.6 Commitment Reductions 48
Section 2.7 Prepayments 49
Section 2.8 Default Rate and Payment Dates 52
Section 2.9 Conversion Options 53
Section 2.10 Computation of Interest and Fees; Usury 53
Section 2.11 Pro Rata Treatment and Payments 54
Section 2.12 Non-Receipt of Funds by the Administrative Agent 56
Section 2.13 Inability to Determine Interest Rate 57
Section 2.14 Yield Protection 58
Section 2.15 Compensation for Losses; Eurocurrency Liabilities 59
Section 2.16 Taxes 60
Section 2.17 Indemnification; Nature of Issuing Lender’s Duties 62
Section 2.18 Illegality 63
Section 2.19 Mitigation Obligations; Replacement of Lenders 64
Section 2.20 Cash Collateral 65
Section 2.21 Defaulting Lenders 65
Section 2.22 Incremental Term Loans and Revolving Facility Increase 67
Section 2.23 Refinancing Facilities. 70
Section 2.24 Amend and Extend Transactions. 75
     
ARTICLE III  
   
REPRESENTATIONS AND WARRANTIES 76
   
Section 3.1 Financial Statements 76
Section 3.2 No Material Adverse Effect 76
Section 3.3 Corporate Existence; Compliance with Law; Patriot Act Information 76
Section 3.4 Corporate Power; Authorization; Enforceable Obligations 77

 

-i-

 

 

    Page
     
Section 3.5 No Legal Bar; No Default 77
Section 3.6 No Material Litigation 77
Section 3.7 Investment Company Act; etc. 77
Section 3.8 Margin Regulations 78
Section 3.9 ERISA 78
Section 3.10 Environmental Matters 78
Section 3.11 Use of Proceeds 79
Section 3.12 Subsidiaries; Joint Ventures; Partnerships; Capital Structure 79
Section 3.13 Ownership 79
Section 3.14 Consent; Governmental Authorizations 80
Section 3.15 Taxes and Payments 80
Section 3.16 Collateral Representations 80
Section 3.17 Solvency 81
Section 3.18 Compliance with FCPA and Anti-Corruption Laws 81
Section 3.19 [Reserved] 81
Section 3.20 Brokers’ Fees 81
Section 3.21 Labor Matters 82
Section 3.22 Accuracy and Completeness of Information 82
Section 3.23 Material Contracts 82
Section 3.24 Insurance 82
Section 3.25 Security Documents 82
Section 3.26 Classification of Senior Indebtedness 82
Section 3.27 Anti-Terrorism Laws 83
Section 3.28 Compliance with OFAC Rules and Regulations and Sanctions 83
Section 3.29 [Reserved]. 83
Section 3.30 Flood Hazards Determinations; Flood Hazard Insurance 83
Section 3.31 Franchise Agreements 83
Section 3.32 Beneficial Ownership Certification 83
     
ARTICLE IV  
   
CONDITIONS PRECEDENT 84
   
Section 4.1 Conditions to Closing Date 84
Section 4.2 Conditions to All Extensions of Credit after the Closing Date 84
     
ARTICLE V  
   
AFFIRMATIVE COVENANTS 85
   
Section 5.1 Financial Statements 85
Section 5.2 Certificates; Other Information 86
Section 5.3 Payment of Taxes and Other Obligations 92
Section 5.4 Conduct of Business and Maintenance of Existence 92
Section 5.5 Maintenance of Property; Insurance 92
Section 5.6 Maintenance of Books and Records 92
Section 5.7 Notices 93
Section 5.8 Environmental Laws 94
Section 5.9 Financial Covenant 94
Section 5.10 Additional Guarantors 94
Section 5.11 Compliance with Law 95
Section 5.12 Pledged Assets 95
Section 5.13 [Reserved]. 96
Section 5.14 Further Assurances and Post-Closing Covenants 96

 

-ii-

 

 

    Page
     
Section 5.15 New Restaurants; Franchise Agreements 97
Section 5.16 Use of Proceeds 97
Section 5.17 Compliance with Material Contracts 98
Section 5.18 Maintenance of Consents, Approvals, Licenses and Permits 98
Section 5.19 Compliance with ERISA 98
Section 5.20 Maintenance of Debt Ratings 98
Section 5.21 Patriot Act, etc. 98
     
ARTICLE VI  
   
NEGATIVE COVENANTS 98
   
Section 6.1 Indebtedness 98
Section 6.2 Liens 100
Section 6.3 Nature of Business 103
Section 6.4 Fundamental Changes; Consolidation, Merger, Sale or Purchase of Assets 103
Section 6.5 Advances, Investments and Loans 105
Section 6.6 Transactions with Affiliates 106
Section 6.7 Ownership of Subsidiaries; Restrictions 106
Section 6.8 Corporate and Accounting Changes; Material Contracts 107
Section 6.9 Limitation on Certain Restricted Actions on Restricted Subsidiaries 107
Section 6.10 Restricted Payments 107
Section 6.11 Payments and Amendments of Junior Debt. 108
Section 6.12 Sale Leasebacks 109
Section 6.13 No Further Negative Pledges 109
Section 6.14 Compliance with OFAC Rules and Regulations and Sanctions and Compliance with FCPA and Anti-Corruption Laws 110
     
ARTICLE VII  
   
EVENTS OF DEFAULT 110
   
Section 7.1 Events of Default 110
Section 7.2 Acceleration; Remedies 113
     
ARTICLE VIII  
   
THE ADMINISTRATIVE AGENT 113
   
Section 8.1 Appointment and Authority 113
Section 8.2 Nature of Duties 113
Section 8.3 Exculpatory Provisions 114
Section 8.4 Reliance by Administrative Agent 115
Section 8.5 Notice of Default 115
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders 115
Section 8.7 Indemnification 115
Section 8.8 Administrative Agent in Its Individual Capacity 116
Section 8.9 Resignation of Administrative Agent 116
Section 8.10 Collateral and Guaranty Matters 117
Section 8.11 Bank Products 118
Section 8.12 Withholding Taxes. 118

 

-iii-

 

 

    Page
     
ARTICLE IX  
   
MISCELLANEOUS 119
   
Section 9.1 Amendments, Waivers, Consents and Release of Collateral 121
Section 9.2 Notices 122
Section 9.3 No Waiver; Cumulative Remedies 122
Section 9.4 Survival of Representations and Warranties 123
Section 9.5 Payment of Expenses and Taxes; Indemnity 123
Section 9.6 Successors and Assigns; Participations 124
Section 9.7 Right of Set-off; Sharing of Payments 128
Section 9.8 Table of Contents and Section Headings 129
Section 9.9 Counterparts; Effectiveness; Electronic Execution 129
Section 9.10 Severability 129
Section 9.11 Integration 129
Section 9.12 Governing Law 130
Section 9.13 Consent to Jurisdiction; Service of Process and Venue 130
Section 9.14 Confidentiality 130
Section 9.15 Acknowledgments 131
Section 9.16 Waivers of Jury Trial; Waiver of Punitive and Consequential Damages 131
Section 9.17 Patriot Act Notice 131
Section 9.18 Resolution of Drafting Ambiguities 132
Section 9.19 Subordination of Intercompany Debt 132
Section 9.20 Continuing Agreement 132
Section 9.21 [Reserved] 132
Section 9.22 Press Releases and Related Matters 132
Section 9.23 Appointment of Borrower 133
Section 9.24 No Advisory or Fiduciary Responsibility 133
Section 9.25 Responsible Officers 133
Section 9.26 Acknowledgement and Consent to Bail-In of EEA Financial Institutions 134
Section 9.27 Certain ERISA Matters 134
     
ARTICLE X  
   
GUARANTY 135
   
Section 10.1 The Guaranty 136
Section 10.2 Bankruptcy 136
Section 10.3 Nature of Liability 136
Section 10.4 Independent Obligation 136
Section 10.5 Authorization 136
Section 10.6 Reliance 136
Section 10.7 Waiver 137
Section 10.8 Limitation on Enforcement 137
Section 10.9 Confirmation of Payment 138
Section 10.10 Eligible Contract Participant 138
Section 10.11 Keepwell 138
Section 10.12 Termination and Release 138

 

-iv-

 

 

Schedules    
     
Schedule 1.1(a) Investments  
Schedule 1.1(b) Liens  
Schedule 1.1(c) Excluded Real Property  
Schedule 1.1(d) Existing Letters of Credit  
Schedule 1.1(f) Revolving Commitments and Percentages  
Schedule 3.3 Patriot Act Information  
Schedule 3.6 Litigation  
Schedule 3.12(a) Restricted Subsidiaries  
Schedule 3.12(b) Unrestricted Subsidiaries  
Schedule 3.16(a) Intellectual Property  
Schedule 3.16(b) Documents, Instruments and Tangible Chattel Paper  
Schedule 3.16(c) Electronic Chattel Paper, Letter-of-Credit Rights and Uncertificated Securities  
Schedule 3.16(d) Commercial Tort Claims  
Schedule 3.16(e) Pledged Equity Interests  
Schedule 3.16(f)(i) Mortgaged Properties  
Schedule 3.16(f)(ii) Other Collateral Locations  
Schedule 3.23 Material Contracts  
Schedule 3.24 Insurance  
Schedule 3.31 Franchise Agreements  
Schedule 6.1(b) Indebtedness  
     
Exhibits    
     
Exhibit 1.1(b) Form of Assignment and Assumption  
Exhibit 1.1(c) Form of Joinder Agreement  
Exhibit 1.1(d) Form of Notice of Borrowing  
Exhibit 1.1(e) Form of Notice of Conversion/Extension  
Exhibit 1.1(f) Form of Permitted Acquisition Certificate  
Exhibit 1.1(g) Form of Bank Product Provider Notice  
Exhibit 2.1(a) Form of Funding Indemnity Letter  
Exhibit 2.1(e) Form of Revolving Loan Note  
Exhibit 2.2(d) Form of Term Loan Note  
Exhibit 2.16-1 Form of U.S. Tax Compliance Certificate  
Exhibit 2.16-2 Form of U.S. Tax Compliance Certificate  
Exhibit 2.16-3 Form of U.S. Tax Compliance Certificate  
Exhibit 2.16-4 Form of U.S. Tax Compliance Certificate  
Exhibit 4.1(b) Form of Officer’s Certificate  
Exhibit 4.1(l) Form of Solvency Certificate  
Exhibit 4.1(r) Form of Closing Certificate  
Exhibit 5.2(b) Form of Officer’s Compliance Certificate  

  

-v-

 

 

THIS CREDIT AGREEMENT, dated as of April 30, 2019, is by and among CARROLS RESTAURANT GROUP, INC., a Delaware corporation formerly known as Carrols Holdco Inc. (the “Borrower”), the Guarantors (as hereinafter defined), the Lenders (as hereinafter defined) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to an Agreement and Plan of Merger (together with the exhibits and disclosures schedules thereto, the “Cambridge Acquisition Agreement”), by and among the corporation formerly known as Carrols Restaurant Group, Inc., a Delaware corporation now known as Carrols Holdco Inc. (“Carrols”), the Borrower, GRC Mergersub Inc., a Delaware corporation and a direct, wholly-owned Subsidiary of the Borrower (“Carrols Merger Sub”), GRC Mergersub LLC, a Delaware limited liability company and a direct, wholly-owned Subsidiary of the Borrower (“Carrols CFP Merger Sub”), Cambridge Franchise Partners, LLC, a Delaware limited liability company (“CFP”), Cambridge Franchise Holdings, LLC, a Delaware limited liability company and a wholly-owned Subsidiary of CFP (the “LLC Member”), and New CFH, LLC, a Delaware limited liability company and a wholly-owned Subsidiary of the LLC Member (the “Acquired Company”), (i) Carrols Merger Sub shall be merged with and into Carrols, whereupon the separate existence of Carrols Merger Sub shall cease and Carrols shall be the surviving corporation and a wholly-owned Subsidiary of the Borrower, and (ii) Carrols CFP Merger Sub shall be merged with and into the Acquired Company, whereupon the separate existence of Carrols CFP Merger Sub shall cease and the Acquired Company shall be the surviving entity and a wholly-owned Subsidiary of the Borrower, each in accordance with the terms thereof (the foregoing transactions, the “Cambridge Acquisition”);

 

WHEREAS, the Credit Parties (as hereinafter defined) have requested that the Lenders make loans and other financial accommodations to the Credit Parties in an aggregate amount of up to $550,000,000, as more particularly described herein; and

 

WHEREAS, the Lenders have agreed to make such loans and other financial accommodations to the Credit Parties on the terms and conditions contained herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Defined Terms.

 

As used in this Agreement, terms defined in the preamble to this Agreement have the meanings therein indicated, and the following terms have the following meanings:

 

Acceptable Intercreditor Agreement” shall mean an intercreditor agreement, the terms of which are consistent with market terms governing security arrangements for the sharing of liens and/or arrangements relating to the distribution of payments, as applicable, (a) to the extent executed in connection with the incurrence of Indebtedness secured by Liens on the Collateral intended to rank equal in priority to the Liens on the Collateral securing the Obligations, on a pari passu basis, (b) to the extent executed in connection with the incurrence of Indebtedness secured by Liens on the Collateral intended to rank junior in priority to the Liens on the Collateral securing the Obligations, on a junior basis, and/or (c) to the extent executed in connection with the incurrence of Indebtedness intended to rank junior in rights to payment to the Obligations, on a junior basis, in each case at the time such intercreditor agreement is proposed to be established, as determined by the Administrative Agent and the Borrower in the exercise of reasonable judgment, and, in each case that is reasonably satisfactory to the Administrative Agent and is among the Administrative Agent and one or more representatives for the holders of any such Indebtedness.

 

 

 

 

Additional Credit Party” shall mean each Person that becomes a Guarantor by execution of a Joinder Agreement in accordance with Section 5.10.

 

Additional First Lien Debt” shall have the meaning set forth in Section 2.7(b)(vi)(B).

 

Administrative Agent” or “Agent” shall have the meaning set forth in the preamble of this Agreement and shall include any successors in such capacity.

 

Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

Affiliate” shall mean, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by, or is under common Control with, the Person specified.

 

Agreement” or “Credit Agreement” shall mean this Agreement, as amended, modified, extended, restated, replaced, or supplemented from time to time in accordance with its terms.

 

Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1.0% and (c) the sum of (i) LIBOR (as determined pursuant to the definition of “LIBOR”), for an Interest Period of one (1) month commencing on such day plus (ii) 1.0%, in each instance as of such date of determination. For purposes hereof: “Prime Rate” shall mean, at any time, the rate of interest per annum publicly announced or otherwise identified from time to time by Wells Fargo at its principal office in San Francisco, California as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wells Fargo as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) (A) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms above or (B) that the Prime Rate or LIBOR no longer accurately reflects an accurate determination of the prevailing Prime Rate or LIBOR, the Administrative Agent may select a reasonably comparable index or source to use as the basis for the Alternate Base Rate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in any of the foregoing will become effective on the effective date of such change in the Federal Funds Rate, the Prime Rate or LIBOR for an Interest Period of one (1) month. Notwithstanding anything contained herein to the contrary, to the extent that the provisions of Section 2.13 shall be in effect in determining LIBOR pursuant to clause (c) hereof, the Alternate Base Rate shall be the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1.0%.

 

Alternate Base Rate Loans” shall mean Loans that bear interest at an interest rate based on the Alternate Base Rate.

 

Anti-Corruption Laws” shall have the meaning set forth in Section 3.18.

 

Anti-Money Laundering Laws” shall mean any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to a Credit Party, its Subsidiaries or Affiliates related to terrorism financing or money laundering, including any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959.

 

-2-

 

 

Anti-Terrorism Order” shall mean that certain Executive Order 13224 signed into law on September 23, 2001.

 

Applicable Margin” shall mean (a) in the case of the Revolving Facility and the Letter of Credit Fees, initially, 3.25% for LIBOR Rate Loans and 2.25% for Alternate Base Rate Loans and (b) in the case of the Initial Term Loan Facility, 3.25% for LIBOR Rate Loans and 2.25% for Alternate Base Rate Loans.

 

Applicable Percentage” shall mean, with respect to any Revolving Lender, the percentage of the total Revolving Commitments represented by such Revolving Lender’s Revolving Commitment. If the Revolving Commitments have terminated or expired, the Applicable Percentage shall be determined based on the Revolving Commitments most recently in effect, giving effect to any assignments.

 

Approved Bank” shall have the meaning set forth in the definition of “Cash Equivalents.”

 

Approved Fund” shall mean any Fund that is administered, managed or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Asset Disposition” shall mean the disposition of any or all of the assets (including, without limitation, the Equity Interests of a Subsidiary or any ownership interest in a joint venture) of any Credit Party or any Restricted Subsidiary of a Credit Party whether by sale, lease, transfer or otherwise, in a single transaction or in a series of transactions. The term “Asset Disposition” shall not include (a) the sale, lease, transfer or other disposition of assets permitted by Sections 6.4(a)(i) through (vi) and (x), or (b) any issuance by the Borrower of its Equity Interests.

 

Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.6), and accepted by the Administrative Agent, in substantially the form of Exhibit 1.1(b) or any other form approved by the Administrative Agent.

 

Available Amount” shall mean, at any time, an amount, at such time equal to the sum, without duplication, of:

 

(a) $27,000,000; plus

 

(b) Retained Excess Cash Flow (to the extent greater than zero) (the “Growth Amount”); plus

 

(c) 100% of the aggregate Net Cash Proceeds and the Fair Market Value of Cash Equivalents or other property received by the Borrower following the Closing Date from (i) an issuance of Qualified Equity Interests that are Not Otherwise Applied (other than an issuance of Equity Interests (A) of Disqualified Equity Interests or (B) to a Restricted Subsidiary thereof) and (ii) Indebtedness of the Borrower or a Restricted Subsidiary of the Borrower that has been converted into or exchanged for such Qualified Equity Interests of the Borrower or any direct or indirect parent company of the Borrower; plus

 

(d) 100% of the aggregate amount of cash and the Fair Market Value of Cash Equivalents or other property contributed to the capital of the Borrower from a Person other than its Restricted Subsidiaries following the Closing Date (other than Disqualified Equity Interests); plus

 

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(e) 100% of (i) the aggregate amount received in cash and the Fair Market Value of any Cash Equivalents or other property received by means of (A) a sale or other disposition (other than to the Borrower or any Restricted Subsidiary) of Investments made by the Borrower or a Restricted Subsidiary pursuant to Section 6.5(n) and (B) repurchases and redemptions of such Investments from the Borrower or any of its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Investments made by a Borrower or the Restricted Subsidiaries pursuant to Section 6.5(n), in each case, not in an amount in excess of the original amount of such Investment, (ii) returns, profits, distributions and similar amounts actually received by the Borrower and its Restricted Subsidiaries on Investments made pursuant to Section 6.5(n) and not in an amount in excess of the original amount of such Investment and (iii) the sale (other than to the Borrower or any Restricted Subsidiary) of the Equity Interests of an Unrestricted Subsidiary or a distribution or dividend of cash, Cash Equivalents or other property actually received by the Borrower or a Restricted Subsidiary from an Unrestricted Subsidiary (with the amount of any distribution or dividend of Cash Equivalents or other property (other than cash) to be the Fair Market Value thereof) after the Closing Date; plus

 

(f) in the case of a redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the Closing Date, the Fair Market Value of the Investment in such Unrestricted Subsidiary at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary;

 

(g) minus the sum, without duplication, of:

 

(i) the aggregate amount of Declined Proceeds retained by the Borrower and its respective Restricted Subsidiaries pursuant to Section 2.7(b)(vii); plus

 

(ii) the aggregate amount of Investments made pursuant to Section 6.5(n) prior to such date of determination; plus

 

(iii) the aggregate amount of Restricted Payments made pursuant to Section 6.10(h) prior to such date of determination; plus

 

(iv) the aggregate amount of Restricted Junior Debt Payments made pursuant to Section 6.11(b)(vi) prior to such date of determination.

 

Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation” shall mean, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bank Product” shall mean any of the following products, services or facilities extended to any Credit Party or any Restricted Subsidiary of a Credit Party by any Bank Product Provider: (a) Cash Management Services; (b) products under any Hedging Agreement; and (c) commercial credit card, purchase card and merchant card services; provided, however, that for any of the foregoing to be included as “Credit Party Obligations” for purposes of a distribution under Section 2.11(b), the applicable Bank Product Provider must have previously provided a Bank Product Provider Notice to the Administrative Agent which shall provide the following information: (i) the existence of such Bank Product and (ii) the maximum dollar amount (if reasonably capable of being determined) of obligations arising thereunder (the “Bank Product Amount”). The Bank Product Amount may be changed from time to time upon written notice to the Administrative Agent by the Bank Product Provider. Any Bank Product established from and after the time that the Lenders have received written notice from the Borrower or the Administrative Agent that an Event of Default exists, until such Event of Default has been waived in accordance with Section 9.1, shall not be included as “Credit Party Obligations” for purposes of a distribution under Section 2.11(b).

 

Bank Product Amount” shall have the meaning set forth in the definition of “Bank Product.”

 

Bank Product Debt” shall mean the Indebtedness and other obligations of any Credit Party or Restricted Subsidiary relating to Bank Products.

 

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Bank Product Provider” shall mean any Person that provides (a) Cash Management Services, (b) products under any Hedging Agreement and (c) commercial credit card, purchase card and merchant card services to a Credit Party or any Restricted Subsidiary of a Credit Party to the extent that (a) such Person is the Administrative Agent, a Lender, a Lead Arranger, an Affiliate of the Administrative Agent, a Lender or a Lead Arranger, or any other Person that was the Administrative Agent, a Lender or a Lead Arranger (or an Affiliate of the Administrative Agent, a Lender or a Lead Arranger) at the time it entered into the Bank Product (even if such Person has ceased to be the Administrative Agent, a Lender or a Lead Arranger (or whose Affiliate has ceased to be the Administrative Agent, a Lender or a Lead Arranger) under the Credit Agreement) or (b) such Person is the Administrative Agent, a Lender or a Lead Arranger or an Affiliate of the Administrative Agent, a Lender or the Lead Arranger on the Closing Date and the Bank Product was entered into on or prior to the Closing Date (even if such Person ceases to be the Administrative Agent, a Lender or a Lead Arranger or such Person’s Affiliate ceased to be the Administrative Agent, a Lender or a Lead Arranger).

 

Bank Product Provider Notice” shall mean a notice substantially in the form of Exhibit 1.1(g).

 

Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

 

Bankruptcy Event” shall mean any of the events described in Section 7.1(f).

 

Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

 

Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”

 

BK Leases” shall mean any leases or subleases with respect to a Restaurant where Burger King Corporation is the lessor or sublessor, respectively whether entered at, on, prior to, or after the Closing Date, as any of the same may from time to time be amended, modified, supplemented or restated.

 

Borrower” shall have the meaning set forth in the preamble of this Agreement.

 

Borrowing Date” shall mean, in respect of any Loan, the date such Loan is made.

 

Burger King Corporation” shall mean Burger King Corporation, a Florida corporation.

 

Burger King Franchise Agreement” shall mean any Franchise Agreement with Burger King Corporation.

 

Burger King Rights” shall mean the collective reference to Burger King Corporation’s rights (if any) under each Burger King Franchise Agreement pursuant to which Burger King Corporation shall be entitled to: (a) prior written notice of any sale of all or substantially all of the Voting Stock of the Borrower or any other Credit Party; (b) a right of first refusal to purchase all or substantially all of the Voting Stock of the Borrower or any other Credit Party or all or substantially all of the assets of a Restaurant subject to a Burger King Franchise Agreement in connection with a sale thereof; (c) prior approval of any sale of all or substantially all of the Voting Stock of the Borrower or any other Credit Party; and (d) prior written consent to the sale, assignment, transfer, conveyance or give-away of substantially all of the assets of any Restaurant subject to a Burger King Franchise Agreement; in each case to the extent set forth in a legally binding Burger King Franchise Agreement.

 

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Business” shall have the meaning set forth in Section 3.10(b).

 

Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Boston, Massachusetts, San Francisco, California or New York, New York are authorized or required by law to close; provided, however, that when used in connection with a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the term “Business Day” shall also exclude any day on which banks in London, England are not open for dealings in Dollar deposits in the London interbank market.

 

Cambridge Acquisition” shall have the meaning specified in the recitals hereto.

 

Cambridge Acquisition Agreement” shall have the meaning specified in the recitals hereto.

 

Cambridge Registration Rights and Stockholders’ Agreement” shall mean the Registration Rights and Stockholders’ Agreement dated as of even date herewith between the Borrower and the LLC Member.

 

Capital Lease” shall mean any finance lease (within the meaning of FASB ASC 842).

 

Capital Lease Obligations” shall mean, at the time any determination thereof is to be made, the amount of finance lease liabilities in respect of finance leases (within the meaning of FASB ASC 842) that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP; provided that “Capital Lease Obligations” shall in no event include Operating Lease Liabilities.

 

Cash Collateralize” shall mean to deposit in a Controlled Account or to pledge and deposit with, or deliver to, the Administrative Agent, for the benefit of one or more of the Issuing Lenders or the Lenders (as applicable), as collateral for LOC Obligations or obligations of Lenders to fund participations in respect of LOC Obligations, cash or deposit account balances or, if the applicable Issuing Lender shall agree, in its sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Administrative Agent and (b) the applicable Issuing Lender. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

Cash Equivalents” shall mean (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve (12) months from the date of acquisition (“Government Obligations”), (b) Dollar denominated time deposits, certificates of deposit, Eurodollar time deposits and Eurodollar certificates of deposit of (i) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (ii) any bank whose short-term commercial paper rating at the time of the acquisition thereof is at least A-1 or the equivalent thereof from S&P or from Moody’s is at least P-1 or the equivalent thereof from Moody’s (any such bank being an “Approved Bank”), in each case with maturities of not more than 364 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six (6) months of the date of acquisition, (d) repurchase agreements with a term of not more than thirty (30) days with a bank or trust company (including a Lender) or a recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America, (e) obligations of any state of the United States or any political subdivision thereof for the payment of the principal and redemption price of and interest on which there shall have been irrevocably deposited Government Obligations maturing as to principal and interest at times and in amounts sufficient to provide such payment, (f) money market accounts subject to Rule 2a-7 of the Investment Company Act of 1940 (“Rule 2a-7”) which consist primarily of cash and cash equivalents set forth in clauses (a) through (e) above and of which 95% shall at all times be comprised of First Tier Securities (as defined in Rule 2a-7) and any remaining amount shall at all times be comprised of Second Tier Securities (as defined in Rule 2a-7) and (g) shares of any so-called “money market fund”; provided that such fund is registered under the Investment Company Act of 1940, has net assets of at least $500,000,000 and has an investment portfolio with an average maturity of 365 days or less.

 

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Cash Management Services” shall mean any services provided from time to time to any Credit Party or Restricted Subsidiary of a Credit Party in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automatic clearinghouse, controlled disbursement, depository, electronic funds transfer, information reporting, lockbox, stop payment, overdraft and/or wire transfer services and all other treasury and cash management services.

 

CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

 

Change of Control” shall mean at any time the occurrence of any of the following events: (a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than the Permitted Holders (individually or in any combination as a group), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, in excess of 40% of the then outstanding Voting Stock of the Borrower, (b) the replacement of a majority of the Board of Directors of the Borrower over a two-year period from the directors who constituted the Board of Directors at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Borrower then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or (c) there shall have occurred under any indenture or other instrument evidencing any Indebtedness in excess of $10,000,000 any “change in control” or similar provision (as set forth in the indenture, agreement or other evidence of such Indebtedness) obligating the Borrower or any of its Restricted Subsidiaries to repurchase, redeem or repay all or any part of the Indebtedness provided for therein.

 

Closing Date” shall mean the date of this Agreement.

 

Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

Collateral” shall mean a collective reference to the collateral which is subject (or purported to be subject) to any Security Document and any other property or assets of a Credit Party, whether tangible or intangible and whether real or personal, that may from time to time secure (or purport to secure) the Credit Party Obligations; provided that there shall be excluded from the Collateral all Excluded Property (as defined in the Security Agreement).

 

Commitment Fee” shall have the meaning set forth in Section 2.5(a).

 

Commitment Period” shall mean (a) with respect to any Revolving Loan, the period from and including the Closing Date to but excluding the Revolving Maturity Date and (b) with respect to Letters of Credit, the period from and including the Closing Date to but excluding the date that is thirty (30) days prior to the Revolving Maturity Date.

 

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Commitment Percentage” shall mean the Revolving Commitment Percentage and/or the Term Loan Commitment Percentage, as appropriate.

 

Commitments” shall mean the Revolving Commitment, the LOC Commitment and the Term Loan Commitment, individually or collectively, as appropriate.

 

Committed Funded Exposure” shall mean, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Loans, LOC Obligations and Participation Interests at such time.

 

Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Commonly Controlled Entity” shall mean an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001(b)(1) of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Section 412 of the Code to the extent required by such Section, Section 414(m) or 414(o) of the Code.

 

Company Material Adverse Effect” shall have the meaning assigned to “Material Adverse Effect” set forth in the Cambridge Acquisition Agreement as it relates to the Acquired Company and its Subsidiaries.

 

Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated” shall mean, when used with reference to financial statements or financial statement items of the Borrower and its Restricted Subsidiaries or any other Person, such statements or items on a consolidated basis in accordance with the consolidation principles of GAAP.

 

Consolidated Capital Expenditures” shall mean, as of the last day of the most recently completed Reference Period, for such Reference Period, all expenditures of the Credit Parties and their Restricted Subsidiaries on a Consolidated basis for such period that in accordance with GAAP would be classified as capital expenditures, including, without limitation, Capital Lease Obligations.

 

Consolidated EBITDA” shall mean, as of the last day of the most recently completed Reference Period, for such Reference Period, without duplication,

 

(a) Consolidated Net Income for such period; plus

 

(b) the sum of the following to the extent deducted (other than clauses (vi) and (ix) below) in calculating Consolidated Net Income for such period:

 

(i) Consolidated Interest Expense for such period; plus

 

(ii) the provision for Income Taxes of the Credit Parties and their Restricted Subsidiaries for such period; plus

 

(iii) depreciation and amortization expense of the Credit Parties and their Restricted Subsidiaries for such period; plus

 

(iv) Other Designated Expenses, plus

 

(v) other non-cash charges (excluding reserves for future cash charges (other than occupancy-related costs accrued in connection with store closings)) of the Credit Parties and their Restricted Subsidiaries for such period (including, without limitation, non-cash expense related to stock option or other equity compensation plans or grants); plus

 

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(vi) the “run rate” amount of cost savings, operating expense reductions, operating enhancements, and synergies related to the Transactions, Specified Transactions and to mergers and other business combinations, acquisitions, investments, dispositions, divestitures, restructurings, operating improvements, cost savings initiatives and other similar initiatives (including newly completed modifications and renegotiation of contracts and other arrangements) that are projected by the Borrower in good faith to be realized as a result of actions either taken or expected to be taken (in the good faith determination of the Borrower) within eighteen (18) months after the determination to take such action, net of the amount of actual benefits realized during such period from such actions, which such cost savings, operating expense reductions, operating enhancements and synergies shall be calculated on a Pro Forma Basis as though such cost savings, operating expense reductions, operating enhancement and synergies had been realized on the first day of such period; provided that such cost savings, operating expense reductions, operating enhancements and synergies (A) are reasonably identifiable and factually supportable, (B) are certified by a Responsible Officer of the Borrower (with supporting detail reasonably acceptable to the Administrative Agent) and (C) in an aggregate amount for such period, when combined with any amounts included in Consolidated Net Income for such period, shall not exceed 25% of Consolidated EBITDA as of the most recently completed Reference Period (calculated after giving effect to such allowance and determined for this purpose without giving effect to any amounts that would otherwise be added back pursuant to this clause (b)(vi)); plus

 

(vii) extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including any unusual or non-recurring operating expenses directly attributable to the implementation of cost savings initiatives and any accruals or reserves in respect of any extraordinary, non-recurring or unusual items), severance, relocation costs, integration and facilities’ opening costs, costs related to closure or consolidation of Restaurants, stores and facilities and other business optimization expenses (including related to new product introductions and other strategic or cost savings initiatives), restructuring charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements, signing costs, retention or completion bonuses, other executive recruiting and retention costs, transition costs, costs related to closure or consolidation of facilities and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities and charges resulting from changes in estimates, valuations and judgments); provided that such any such costs, expenses or charges are (A) reasonably identifiable and factually supportable and (B) certified by a Responsible Officer of the Borrower (with supporting detail reasonably acceptable to the Administrative Agent); plus

 

(viii) Transaction Costs; plus

 

(ix) to the extent not already included in Consolidated Net Income, proceeds of business interruption insurance (to the extent actually received); plus

 

(x) cash recoveries received during such period from third parties relating to losses incurred by the Borrower and its Restricted Subsidiaries prior to the Closing Date; provided that the aggregate amount of such recoveries added back to Consolidated EBITDA pursuant to this clause (x) since the Closing Date shall not exceed $5,000,000; plus

 

(c) minus, the sum, without duplication, of:

 

(i) non-cash charges previously added back to Consolidated Net Income in determining Consolidated EBITDA to the extent such non-cash charges have become cash charges during such period; plus

 

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(ii) to the extent not deducted in the calculation of Consolidated Net Income, all amounts paid by the Credit Parties pursuant to Section 6.10(d) other than any payments or reimbursements for capital expenditures made for the benefit of the Credit Parties and their Restricted Subsidiaries.

 

Consolidated Funded Debt” shall mean, as of any date of determination, Funded Debt of the Credit Parties and their Restricted Subsidiaries on a Consolidated basis.

 

Consolidated Interest Expense” shall mean, as of the last day of the most recently completed Reference Period, for such Reference Period, all interest expense (excluding amortization of debt discount and premium, but including the interest component under Capital Leases) for such period of the Credit Parties and their Restricted Subsidiaries on a Consolidated basis.

 

Consolidated Net Income” shall mean, as of the last day of the most recently completed Reference Period, the net income (excluding (a) extraordinary losses and gains, (b) gains from Dispositions not in the ordinary course of business, (c) gains from the early extinguishment of Indebtedness, (d) all non-cash income (other than amortization of deferred gains from Sale Leaseback transactions), (e) interest income, (f) tax credits, rebates and other benefits and (g) income received from joint venture investments to the extent not received in cash) of the Credit Parties and their Restricted Subsidiaries on a Consolidated basis for such period, all as determined in accordance with GAAP.

 

Consolidated Total Assets” shall mean, as of any date of determination with respect to the Credit Parties and their Restricted Subsidiaries on a Consolidated basis, without duplication, in accordance with GAAP, the total amount of assets (less applicable reserves and other properly deductible items) reflected on the most recent balance sheet of the Credit Parties and their Restricted Subsidiaries as of such date.

 

Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any contract, agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

 

Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” have meanings correlative thereto.

 

Controlled Account” shall mean each deposit account and securities account that is subject to an account control agreement perfecting the Administrative Agent’s Lien thereon and in form and substance satisfactory to the Administrative Agent and each of the applicable Issuing Lenders that is entitled to Cash Collateral hereunder at the time such control agreement is executed.

 

Copyright Licenses” shall mean any agreement, whether written or oral, providing for the grant by or to a Person of any right under any Copyright.

 

Copyrights” shall mean all copyrights in all Works, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise and all renewals thereof.

 

Credit Documents” shall mean this Agreement, each of the Notes, any Joinder Agreement, the Letters of Credit, LOC Documents, the Security Documents and all other agreements, documents, certificates and instruments delivered to the Administrative Agent or any Lender by any Credit Party in connection therewith (other than any agreement, document, certificate or instrument related to a Bank Product).

 

Credit Party” shall mean any of the Borrower or the other Guarantors.

 

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Credit Party Obligations” shall mean, without duplication, (a) the Obligations and (b) for purposes of the Guaranty, the Security Documents and all provisions under the other Credit Documents relating to the Collateral, the sharing thereof and/or payments from proceeds of the Collateral, all Bank Product Debt. In no event shall the Credit Party Obligations include any Excluded Swap Obligations.

 

Debt Issuance” shall mean the issuance of any Indebtedness by any Credit Party or any of its Restricted Subsidiaries (excluding any issuance by the Borrower of its Equity Interests or any Indebtedness of any Credit Party and its Restricted Subsidiaries permitted to be incurred pursuant to Sections 6.1(a) through(p) hereof).

 

Debt Ratings” shall mean the collective reference to (a) the public corporate family rating of the Borrower as determined by Moody’s from time to time, (b) the public corporate credit rating of the Borrower as determined by S&P from time to time and (c) the public ratings with respect to the Senior Credit Facilities as determined by both Moody’s and S&P from time to time and “Debt Rating” shall mean, as applicable, any of the foregoing.

 

Debtor Relief Laws” shall mean the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

Default” shall mean any of the events specified in Section 7.1, whether or not any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

 

Default Rate” shall mean (a) when used with respect to the Obligations, other than Letter of Credit Fees, an interest rate equal to (i) for Alternate Base Rate Loans (A) the Alternate Base Rate plus (B) the Applicable Margin applicable to Alternate Base Rate Loans plus (C) 2.0% per annum and (ii) for LIBOR Rate Loans, (A) the LIBOR Rate plus (B) the Applicable Margin applicable to LIBOR Rate Loans plus (C) 2.0% per annum, (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Margin applicable to Letter of Credit Fees plus 2.0% per annum and (c) when used when used with respect to any other fee or amount due hereunder, a rate equal to the Alternate Base Rate plus the Applicable Margin applicable to Alternate Base Rate Loans plus 2.0% per annum.

 

Defaulting Lender” shall mean, subject to Section 2.21(b) any Lender that, (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or any Issuing Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each Issuing Lender and each Lender.

 

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Designated Lender” shall mean SunTrust Bank.

 

Designated Non-Cash Consideration” shall mean the Fair Market Value of non-cash consideration received by the Borrower or a Restricted Subsidiary in connection with a Disposition that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to the closing of such Disposition, setting forth the basis of such valuation, executed by a Responsible Officer of the Borrower, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 6.4.

 

Development Period” shall have the meaning set forth in Section 5.12 (c).

 

Disposition” shall have the meaning set forth in Section 6.4(a).

 

Disqualified Equity Interests” shall mean any Equity Interests that, by their terms (or by the terms of any security or other Equity Interest into which they are convertible or for which they are exchangeable) or upon the happening of any event or condition, (a) mature or are mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) are redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), in whole or in part, (c) provide for the scheduled payment of dividends in cash or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Term Loan Maturity Date; provided that if such Equity Interests are issued pursuant to a plan for the benefit of the Borrower or its Restricted Subsidiaries or by any such plan to such officers or employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

 

Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

 

Domestic Lending Office” shall mean, initially, the office of each Lender designated as such Lender’s Domestic Lending Office shown in such Lender’s Administrative Questionnaire; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which Alternate Base Rate Loans of such Lender are to be made.

 

Domestic Subsidiary” shall mean any Subsidiary that is organized under the laws of the United States, any state or commonwealth thereof, or the District of Columbia.

 

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Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent (which approval shall not unreasonable be withheld or delayed in the case of an assignment pursuant to Section 2.19), (ii) in the case of any assignment of a Revolving Commitment, the Issuing Lender and (iii) unless an Event of Default has occurred and is continuing and so long as the primary syndication of the Loans has been completed as determined by Wells Fargo, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (A) any Credit Party or any of the Credit Party’s Affiliates or Subsidiaries or (B) any Defaulting Lender (or any of their Affiliates).

 

Employee Benefit Plan” shall mean any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established or maintained by any Credit Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any Commonly Controlled Entity.

 

Environmental Laws” shall mean any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirement of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time be in effect during the term of this Agreement.

 

Equity Interests” shall mean (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general, preferred or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers or could confer on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, without limitation, options, warrants and any other “equity security” as defined in Rule 3a11-1 of the Exchange Act.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.

 

Event of Default” shall mean any of the events specified in Section 7.1; provided, however, that any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.

 

Excess Cash Flow” shall mean, for the Borrower and its Restricted Subsidiaries on a Consolidated basis, for any fiscal year, an amount (if positive) equal to excess of:

 

(a) the sum, without duplication, of

 

(i) Consolidated Net Income for such fiscal year; plus

 

(ii) an amount equal to the amount of all non-cash charges or losses to the extent deducted in determining Consolidated Net Income for such fiscal year (excluding any non-cash charges representing an accrual or reserve for a potential cash charge in any future fiscal year or amortization of a prepaid cash gain that was paid in a prior fiscal year but including amounts expensed in such fiscal year with respect to cash expenditures made in prior fiscal years (to the extent such cash expenditures did not reduce Consolidated Net Income in such prior fiscal years)); plus

 

(iii) increases in non-current deferred revenue (to the extent deducted or otherwise not included in determining Consolidated Net Income for such fiscal year); plus

 

(iv) extraordinary cash gains (actually received in cash during such period) to the extent excluded from, or not included in, the calculation of Consolidated Net Income for such period; plus

 

(v) decreases in Working Capital for such fiscal year;

 

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minus

 

(b) the sum, without duplication, of:

 

(i) an amount equal to the amount of all non-cash credits included in determining Consolidated Net Income for such fiscal year; plus

 

(ii) Transaction Costs and all other cash charges, and expenses to the extent excluded in determining Consolidated Net Income for such fiscal year; plus

 

(iii) the aggregate amount of Consolidated Capital Expenditures, Permitted Acquisitions, Investments pursuant to Sections 6.5(e), (h), (k), (l) and (m) and acquisitions of Intellectual Property made in cash during such fiscal year, except to the extent financed (directly or indirectly) with (A) proceeds of long-term Indebtedness (other than the incurrence of Revolving Loans or extensions of credit under any other revolving credit or similar facility) of the Borrower or any of its Restricted Subsidiaries, other than intercompany loans permitted hereunder, (B) the Retained Excess Cash Flow portion of the Available Amount or (C) Net Cash Proceeds reinvested pursuant to Section 2.7(b); plus

 

(iv) the aggregate amount of all principal payments of Indebtedness of the Borrower and its Restricted Subsidiaries (including, without limitation, (1) the principal component of payments in respect of Capital Lease Obligations, (2) the amount of any scheduled repayment of Term Loans pursuant to Section 2.2(b), and (3) the amount of a mandatory prepayment of Term Loans pursuant to Section 2.7(b) to the extent required due to an Asset Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase, but excluding (x) all other prepayments of Term Loans and (y) all prepayments of Revolving Loans and Replacement Revolving Loans (and any other revolving loans (in each case, unless there is an equivalent permanent reduction in commitments thereunder)) made during such fiscal year, except to the extent financed (directly or indirectly) with (A) proceeds of long-term Indebtedness (other than the incurrence of Revolving Loans or extensions of credit under any other revolving credit or similar facility) of the Borrower or any of its Restricted Subsidiaries other than intercompany loans permitted hereunder, (B) the Retained Excess Cash Flow portion of the Available Amount or (C) Net Cash Proceeds reinvested pursuant to Section 2.7(b); plus

 

(v) an amount equal to the aggregate net non-cash gain on Asset Dispositions or Recovery Events (other than Asset Dispositions in the ordinary course of business) that resulted in an increase in determining Consolidated Net Income for such fiscal year (up to the amount of such increase); plus

 

(vi) payments in cash by the Borrower and its Restricted Subsidiaries during such period in respect of any purchase price holdbacks, earn-out obligations, and long-term liabilities of the Borrower and its Restricted Subsidiaries (other than Indebtedness), to the extent not expensed during such fiscal year or already deducted in determining Consolidated Net Income for such fiscal year; plus

 

(vii) the aggregate amount of cash consideration paid by the Borrower and its Restricted Subsidiaries (on a Consolidated basis) in connection with Investments (including acquisitions, but excluding Investments in cash or Cash Equivalents, Investments in the Borrower or any Restricted Subsidiary and the amount of any Investments deducted pursuant to clause (b)(iii) or (b)(vi) above or clause (b)(xi) below) made during such fiscal year pursuant to Section 6.5 to the extent that such Investments were not financed (directly or indirectly) with (A) proceeds of long-term Indebtedness (other than the incurrence of Revolving Loans or extensions of credit under any other revolving credit or similar facility) of the Borrower or any of its Restricted Subsidiaries, (B) the issuance of Equity Interests, (C) the Retained Excess Cash Flow portion of the Available Amount or (D) Net Cash Proceeds reinvested pursuant to Section 2.7(b); plus

 

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(viii) the aggregate amount of Restricted Payments paid or made in cash during such fiscal year (on a consolidated basis) by the Borrower and its Restricted Subsidiaries, to the extent such Restricted Payments were not financed (directly or indirectly) with (A) proceeds of long-term Indebtedness (other than the incurrence of Revolving Loans or extensions of credit under any other revolving credit or similar facility) of the Borrower or any of its Restricted Subsidiaries or (B) the Retained Excess Cash Flow portion of the Available Amount; plus

 

(ix) the aggregate amount of expenditures actually made by the Borrower and its Restricted Subsidiaries in cash during such fiscal year (including expenditures for the payment of financing fees and cash restructuring charges) to the extent that such expenditures are not expensed during such fiscal year and are not deducted in determining Consolidated Net Income for such fiscal year; plus

 

(x) the aggregate amount of any premium, make-whole, or penalty payments actually paid in cash by the Borrower and its Restricted Subsidiaries during such fiscal year that are made in connection with any prepayment, early extinguishment or conversion of Indebtedness to the extent that such payments are not deducted in determining Consolidated Net Income for such fiscal year; plus

 

(xi) without duplication of amounts deducted from Excess Cash Flow in other periods, (1) the aggregate consideration required to be paid in cash by the Borrower and its Restricted Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (such amount, the “Contract Consideration”) entered into prior to or during such fiscal year and (2) any planned cash expenditures by the Borrower and its Restricted Subsidiaries (such amount, the “Planned Expenditures”), in the case of each of clauses (1) and (2), relating to Permitted Acquisitions (or other permitted Investments), Consolidated Capital Expenditures, or acquisitions of Intellectual Property or other assets to be consummated or made during the period of four (4) consecutive fiscal quarters of the Borrower following the end of such fiscal year and identified in writing to the Administrative Agent with reasonable supporting calculations (except to the extent financed (directly or indirectly) with (A) proceeds of long-term Indebtedness of the Borrower or any of its Restricted Subsidiaries, (B) the issuance of Equity Interests, (C) the Retained Excess Cash Flow portion of the Available Amount or (D) Net Cash Proceeds reinvested pursuant to Section 2.7(b)); provided that to the extent that the aggregate amount of cash actually utilized to finance such Permitted Acquisitions (or other Investments), Consolidated Capital Expenditures, or acquisitions of Intellectual Property or other assets during such following period of four consecutive fiscal quarters is less than such Contract Consideration and Planned Expenditures, the amount of such shortfall shall be added to the calculation of Excess Cash Flow, at the end of such period of four consecutive fiscal quarters; plus

 

(xii) the amount of taxes (including penalties and interest) paid in cash or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such fiscal year; plus

 

(xiii) cash expenditures in respect of Hedging Agreements during such fiscal year to the extent not deducted in determining Consolidated Net Income for such fiscal year; plus

 

(xiv) cash recoveries received during such fiscal year from third parties relating to losses incurred by the Borrower and its Restricted Subsidiaries prior to the Closing Date; provided that the aggregate amount of such recoveries deducted when calculating Excess Cash Flow pursuant to this clause (xiv) since the Closing Date shall not exceed $5,000,000; plus

 

(xv) decreases in non-current deferred revenue (to the extent not deducted or otherwise included in determining Consolidated Net Income for such fiscal year); plus

 

(xvi) extraordinary losses; plus

 

(xvii) increases to Working Capital for such fiscal year.

 

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Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Excluded Information” shall mean any non-public information with respect to the Borrower or its Subsidiaries or any of their respective securities to the extent such information could have a material effect upon, or otherwise be material to, an assigning Term Loan Lender’s decision to assign Term Loans or a purchasing Term Loan Lender’s decision to purchase Term Loans.

 

Excluded Real Property” shall mean the owned real property set forth on Schedule 1.1(c) hereto.

 

Excluded Subsidiary” shall mean, collectively, (a) Unrestricted Subsidiaries, (b) any Immaterial Subsidiaries, (c) any Restricted Subsidiary that is prohibited by applicable law or by any contractual obligation permitted under this Agreement existing on the Closing Date or on the date any such Subsidiary is acquired (so long as, in respect of any such contractual prohibition, such prohibition is identified to the Administrative Agent in writing and is not incurred in contemplation of such acquisition, in each case, so long as the prohibition has been identified to the Administrative Agent in writing, prior to the Closing Date (or, with respect to subsidiaries acquired after the Closing Date, promptly following the acquisition thereof)), from guaranteeing the payment of the Obligations (and for so long as such prohibition or any replacement or renewal thereof is in effect) or which would require consent, approval, license or authorization from any Governmental Authority to provide a guarantee of payment of the Obligations (and for so long as such requirement or any replacement or renewal thereof is in effect and such consent, approval, license or authorization has not been obtained or received), (d) any Domestic Subsidiary of a Foreign Subsidiary that is a CFC, (e) any FSHCO, (f) any not for-profit Subsidiaries, captive insurance Subsidiaries or other special-purpose entities as reasonably determined by the Borrower and the Administrative Agent, if any, (g) any Subsidiary where the Administrative Agent and the Borrower agree that the cost or burden of providing such a guarantee is excessive in light of the practical benefit afforded to the Lenders thereby and (h) any other Subsidiary as mutually agreed by the Borrower and the Administrative Agent.

 

Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal for the reasons identified in the immediately preceding sentence of this definition.

 

Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by the Recipient’s net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) by the jurisdiction (or any political subdivision thereof) under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) that are Connection Income Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires an interest in the applicable Commitment (or, to the extent such Lender did not fund an applicable Loan pursuant to a prior commitment, on the date on which such Lender acquires its interest in such Loan; provided that this clause (i) shall not apply to a Lender that became a Lender pursuant to an assignment request by the Borrower under Section 2.19) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.16(g) and (d) any U.S. federal withholding Taxes imposed under FATCA. For purposes of clause (b)(i) of this definition, a participation acquired pursuant to Section 9.7 shall be treated as having been acquired on the earlier date(s) on which the applicable Lender acquired the applicable interests in the Commitments or Loans to which such participation relates.

 

-16-

 

 

Existing Letter of Credit” shall mean each of the letters of credit described by applicant, date of issuance, letter of credit number, amount, beneficiary and the date of expiry on Schedule 1.1(d) hereto.

 

Extended Revolving Commitment” shall mean any class of Revolving Commitments or Replacement Revolving Commitments the maturity of which shall have been extended pursuant to Section 2.24.

 

Extended Revolving Loans” shall mean any Revolving Loans made pursuant to the Extended Revolving Commitments.

 

Extended Term Loans” shall mean any class of Term Loans the maturity of which shall have been extended pursuant to Section 2.24.

 

Extension” shall have the meaning set forth in Section 2.24(a).

 

Extension Amendment” shall mean an amendment to this Agreement (which may, at the option of the Administrative Agent and the Borrower, be in the form of an amendment and restatement of this Agreement) among the Credit Parties, the applicable extending Lenders, the Administrative Agent and, to the extent required by Section 2.24, any Issuing Lender implementing an Extension in accordance with Section 2.24.

 

Extension Offer shall have the meaning set forth in Section 2.24(a).

 

Extension of Credit” shall mean, as to any Lender, the making of a Loan by such Lender, any conversion of a Loan from one Type to another Type, any extension of any Loan or the issuance, extension or renewal of, or participation in, a Letter of Credit by such Lender.

 

Fair Market Value” shall mean with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a sale of such asset at such date of determination assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as determined in good faith by the Borrower.

 

FASB ASC 842” shall mean Accounting Standards Update No. 2016-02 February 2016, Leases (Topic 842) promulgated by the Financial Accounting Standards Board.

 

FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, as of the date of this Agreement (or any amended or successor version described above), and any intergovernmental agreement among Governmental Authorities (and any related legislation, rules or official practices) implementing the foregoing.

 

Federal Funds Effective Rate” shall have the meaning set forth in the definition of “Alternate Base Rate.”

 

Fee Letter” shall mean the letter agreement dated March 1, 2019, addressed to the Borrower from Wells Fargo, WFS, M&T Bank, Rabobank and STRH, as amended, modified, extended, restated, replaced, or supplemented from time to time.

 

Financial Covenant” shall have the meaning set forth in Section 5.9.

 

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First Lien Net Leverage Ratio” shall mean, as of any date of determination, for the Credit Parties and their Restricted Subsidiaries on a Consolidated basis, the ratio of (i) Consolidated Funded Debt and Purchase Money Indebtedness as reflected on the balance sheet of the Borrower and its Restricted Subsidiaries, in each case (other than Capital Lease Obligations and Purchase Money Indebtedness) to the extent secured, in whole or in part, by first priority liens pari passu with the Initial Term Loan Facility on the Collateral, minus unrestricted cash and cash equivalents to (ii) Consolidated EBITDA for the most recently completed Reference Period.

 

First Quarter” shall mean, with respect to any fiscal year of the Borrower, the thirteen (13) week period ending on the Sunday closest to March 31 of such fiscal year.

 

Flood Hazard Property” shall mean any Mortgaged Property that is in an area designated by the Federal Emergency Management Agency as having special flood or mudslide hazards.

 

Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

 

Foreign Lender” shall mean a Lender that is not a U.S. Person.

 

Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

 

Fourth Quarter” shall mean, with respect to any fiscal year of the Borrower, the thirteen (13) or fourteen (14) week period ending on the Sunday closest to December 31 of such fiscal year.

 

Franchise Agreements” shall mean all of the franchise agreements to which Borrower or any of its Restricted Subsidiaries is a party as franchisee, as any of the same may from time to time be amended, modified, supplemented or restated.

 

Free and Clear Incremental Amount” shall have the meaning set forth in Section 2.22(a).

 

Fronting Exposure” shall mean, with respect to any Issuing Lender at any time there is a Defaulting Lender, such Defaulting Lender’s Applicable Percentage of the outstanding LOC Obligations with respect to Letters of Credit issued by such Issuing Lender, other than such LOC Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

 

FSHCO” shall mean any Subsidiary that owns no material assets other than equity interest of Foreign Subsidiaries that are CFCs.

 

Fund” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

Funded Debt” shall mean, with respect to any Person, without duplication, all Indebtedness of such Person (other than Indebtedness set forth in clauses (e) and (i) of such definition); provided that (a) Funded Debt shall only include Indebtedness set forth in clause (j) of the definition thereof to the extent of unreimbursed drawings under such letters of credit or bankers’ acceptances facilities and (b) Funded Debt shall exclude all Operating Lease Liabilities.

 

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GAAP” shall mean generally accepted accounting principles in effect in the United States of America (or, in the case of Foreign Subsidiaries with significant operations outside the United States of America, generally accepted accounting principles in effect from time to time in their respective jurisdictions of organization or formation) applied on a consistent basis, subject, however, in the case of determination of compliance with the financial covenant set out in Section 5.9 to the provisions of Section 1.3.

 

Government Acts” shall have the meaning set forth in Section 2.17(a).

 

Government Obligations” shall have the meaning set forth in the definition of “Cash Equivalents.”

 

Governmental Authority” shall mean the government of the United States of America 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 (including any supra-national bodies such as the European Union or the European Central Bank).

 

Growth Amount” shall have the meaning set forth in the definition of “Available Amount.”

 

Guarantor” shall mean, collectively, the Borrower (solely with respect to its Credit Party Obligations other than its direct Credit Party Obligations as a primary obligor (as opposed to a guarantor) under the Credit Documents or a Bank Product Debt) and each Subsidiary Guarantor.

 

Guaranty” shall mean the guaranty of the Guarantors set forth in Article X.

 

Guaranty Obligations” shall mean, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including, without limitation, any obligation, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting security therefor, (b) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (c) to lease or purchase property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

 

Hedging Agreements” shall mean, with respect to any Person, any agreement entered into to protect such Person against fluctuations in interest rates, or currency or raw materials values, including, without limitation, any interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more counterparties, any foreign currency exchange agreement, currency protection agreements, commodity purchase or option agreements or other interest or exchange rate hedging agreements.

 

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Immaterial Subsidiary” shall mean any Restricted Subsidiary designated in writing by the Borrower to the Administrative Agent as an Immaterial Subsidiary that is not already a Guarantor and that does not, as of the last day of the most recently completed Reference Period hereunder, have assets with a value in excess of 5.0% of the Consolidated Total Assets of the Borrower and its Restricted Subsidiaries and did not, as of the most recently completed Reference Period, have revenues exceeding 5.0% of the Consolidated revenues of the Borrower and its Restricted Subsidiaries; provided that if (a) such Restricted Subsidiary shall have been designated in writing by the Borrower to the Administrative Agent as an Immaterial Subsidiary, and (b) if (i) the aggregate assets then owned by all Restricted Subsidiaries of the Borrower that would otherwise constitute Immaterial Subsidiaries (other than Restricted Subsidiaries that are Excluded Subsidiaries by virtue of any of clauses (c) through (h) of the definition of “Excluded Subsidiary”) shall have a value in excess of 10.0% of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries as of the last day of such Reference Period or (ii) the combined revenues of all Restricted Subsidiaries of the Borrower that would otherwise constitute Immaterial Subsidiaries shall exceed 10.0% of the Consolidated revenues of the Borrower and the Restricted Subsidiaries (other than Restricted Subsidiaries that are Excluded Subsidiaries by virtue of any of clauses (c) through (h) of the definition of “Excluded Subsidiary”) for such Reference Period, the Borrower shall re-designate one or more of such Restricted Subsidiaries to not be Immaterial Subsidiaries within ten (10) Business Days after delivery of the Officer’s Compliance Certificate for such Reference Period such that, with the exception of any Restricted Subsidiaries that are Excluded Subsidiaries by virtue of any of clauses (c) through (h) of the definition of “Excluded Subsidiary,” only those Restricted Subsidiaries as shall then have aggregate assets of less than 10.0% of the Consolidated Total Assets of the Borrower and its Restricted Subsidiaries and combined revenues of less than 10.0% of the Consolidated revenues of the Borrower and its Restricted Subsidiaries shall constitute Immaterial Subsidiaries. Notwithstanding the foregoing, in no event shall any Subsidiary that is an obligor or guarantor of (i) any Refinancing Debt, (ii) any Incremental Equivalent Debt, (iii) any Ratio Debt, (iv) any unsecured Indebtedness with an aggregate principal amount in excess of $10,000,000 or (v) any Indebtedness with an aggregate principal amount in excess of the $10,000,000 that is secured on a junior basis or pari passu basis to the Obligations, in any such case be designated as an Immaterial Subsidiary.

  

Income Taxes” shall mean federal, state, local and foreign income and similar taxes (including franchise taxes, to the extent such franchise taxes are based on the income or revenues of the Credit Parties and their Restricted Subsidiaries).

 

Incremental Equivalent Debt” shall mean any additional Indebtedness in the form of senior secured junior lien loans or notes, subordinated loans or notes or senior unsecured loans or notes, in each case in respect of the issuance of notes issued in a public offering, Rule 144A or other private placement or bridge financing in lieu of any Incremental Term Facility or Revolving Facility Increase, or secured or unsecured “mezzanine” debt, in each case, which shall be incurred under a separate facility; provided that (i) the aggregate principal amount of such Incremental Equivalent Debt shall not exceed the then Incremental Increase Amount incurred by the Borrower or any Guarantor, (ii) such Incremental Equivalent Debt shall satisfy all of the terms and conditions applicable to any Incremental Term Facility or Revolving Facility Increase, as applicable, including, without limitation, the provisions of Section 2.22 and (iii) to the extent such Incremental Equivalent Debt is secured, then such Incremental Equivalent Debt shall be subject to an Acceptable Intercreditor Agreement; provided, however, that such Incremental Equivalent Debt shall not be subject to (1) Section 2.22(b)(i)(viii) or (b)(ii)(viii), as applicable, other than with respect to the absence of an Event of Default, (2) Section 2.22(b)(i)(ii) or (b)(ii)(ii), as applicable, (3) Section 2.22(b)(i)(iv) with respect to any Incremental Equivalent Debt consisting of a customary bridge facility, so long as the long-term debt into which any such customary bridge facility is to be converted satisfies such clause and (4) Section 2.22(c), other than with respect to Incremental Equivalent Debt consisting of term loans secured on a pari passu lien basis with the Term Loan Facility, which shall be subject to the provisions of Section 2.22(c) as if applicable thereto.

 

Incremental Increase Amount” shall have the meaning set forth in Section 2.22(a).

 

Incremental Term Facility” shall have the meaning set forth in Section 2.22(a).

 

Incremental Term Loan Lender” shall have the meaning set forth in Section 2.22(b)(i).

 

Incurrence-Based Incremental Amount” shall have the meaning set forth in Section 2.22(a).

 

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Indebtedness” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations (including, without limitation, earnout obligations) of such Person incurred, issued or assumed as the deferred purchase price of property or services purchased by such Person (other than trade debt and accrued expenses incurred in the ordinary course of business and due within six (6) months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (e) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guaranty Obligations of such Person with respect to Indebtedness of another Person, (h) the principal portion of all Capital Lease Obligations plus any accrued interest thereon, (i) all net obligations of such Person under Hedging Agreements, (j) the maximum amount of all letters of credit issued or bankers’ acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Equity Interests issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration on or prior to the Term Loan Maturity Date, and (l) all obligations of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venture. For the avoidance of doubt, in no event shall there be included in “Indebtedness” any Operating Lease Liabilities.

 

Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

Indemnitee” shall have the meaning set forth in Section 9.5(b).

 

Indenture” shall have the meaning set forth in Section 4.1(j).

 

Initial Term Loan” shall have the meaning set forth in Section 2.2(a).

 

Initial Term Loan Committed Amount” shall have the meaning set forth in Section 2.2(a).

 

Initial Term Loan Facility” shall have the meaning set forth in Section 2.2(a).

 

Insolvency” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.

 

Intellectual Property” shall mean, collectively, all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses of the Credit Parties and their Subsidiaries, all goodwill associated therewith and all rights to sue for infringement thereof.

 

Intercompany Debt” shall have the meaning set forth in Section 9.19.

 

Interest Payment Date” shall mean (a) as to any Alternate Base Rate Loan, the last Business Day of each of the First Quarter, Second Quarter, Third Quarter and Fourth Quarter and on the Term Loan Maturity Date or Revolving Maturity Date, as applicable, (b) as to any LIBOR Rate Loan having an Interest Period of three (3) months or less, the last day of such Interest Period, (c) as to any LIBOR Rate Loan having an Interest Period longer than three (3) months, (i) each three (3) month anniversary following the first day of such Interest Period and (ii) the last day of such Interest Period and (d) as to any Loan which is the subject of a mandatory prepayment required pursuant to Section 2.7(b), the date on which such mandatory prepayment is due.

 

Interest Period” shall mean, with respect to any LIBOR Rate Loan,

 

(a) initially, the period commencing on the Borrowing Date or conversion date, as the case may be, with respect to such LIBOR Rate Loan and ending one, two, three, six, nine or twelve months thereafter, subject to availability to all applicable Lenders, as selected by the Borrower in the Notice of Borrowing or Notice of Conversion given with respect thereto; and

 

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(b) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such LIBOR Rate Loan and ending one, two, three, six, nine or twelve months thereafter, subject to availability to all applicable Lenders, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three (3) Business Days prior to the last day of the then current Interest Period with respect thereto; provided that the foregoing provisions are subject to the following:

 

(i) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(ii) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month;

 

(iii) if the Borrower shall fail to give notice as provided above, the Borrower shall be deemed to have selected an Alternate Base Rate Loan to replace the affected LIBOR Rate Loan;

 

(iv) no Interest Period in respect of any Loan shall extend beyond the Term Loan Maturity Date or the Revolving Maturity Date, as applicable, and, further with regard to the Term Loans, no Interest Period shall extend beyond any principal amortization payment date with respect to such Term Loans unless the portion of such Term Loans consisting of Alternate Base Rate Loans together with the portion of such Term Loans consisting of LIBOR Rate Loans with Interest Periods expiring prior to or concurrently with the date such principal amortization payment date is due, is at least equal to the amount of such principal amortization payment due on such date; and

 

(v) no more than six (6) LIBOR Rate Loans may be in effect at any time. For purposes hereof, LIBOR Rate Loans with different Interest Periods shall be considered as separate LIBOR Rate Loans, even if they shall begin on the same date and have the same duration, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new LIBOR Rate Loan with a single Interest Period.

 

Investment” shall mean (a) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of Equity Interests, other ownership interests or other securities of any Person or bonds, notes, debentures or all or substantially all of the assets of any Person, (b) any deposit with, or advance, loan or other extension of credit to, any Person (other than deposits made in the ordinary course of business), (c) the construction or development of, or the entering into of a binding commitment to construct or develop, a new Restaurant, or (d) any other capital contribution to or investment in any Person, including, without limitation, any Guaranty Obligation (including any support for a letter of credit issued on behalf of such Person) incurred for the benefit of such Person.

 

IRS” shall mean the United States Internal Revenue Service.

 

Issuing Lender” shall mean Wells Fargo together with any successor and any other Revolving Lender identified by the Borrower and reasonably acceptable to the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed) who agrees to issue Letters of Credit.

 

Joinder Agreement” shall mean a Joinder Agreement in substantially the form of Exhibit 1.1(c), executed and delivered by an Additional Credit Party in accordance with the provisions of Section 5.10.

 

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Junior Debt” shall mean any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any other Credit Party) that is (a) unsecured, (b) Subordinated Debt or (c) secured on a junior basis to the Liens securing the Obligations.

 

Latest Maturity Date” shall mean, at any date of determination, the latest maturity date or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity date of any Incremental Term Loan or Extended Term Loan or any Refinancing Debt, in each case as extended in accordance with this Agreement from time to time.

 

Lead Arrangers” shall mean WFS, M&T Bank, Rabobank and STRH.

 

Lender” shall mean any of the several banks and other financial institutions as are, or may from time to time become parties to this Agreement; provided that notwithstanding the foregoing, “Lender” shall not include any Credit Party or any of the Credit Party’s Affiliates or Subsidiaries.

 

Letter of Credit” shall mean (a) any standby letter of credit issued by the Issuing Lender pursuant to the terms hereof, as such letter of credit may be amended, modified, restated, extended, renewed, increased, replaced or supplemented from time to time in accordance with the terms of this Agreement and (b) any Existing Letter of Credit, in each case as such letter of credit may be amended, modified, extended, renewed or replaced from time to time in accordance with the terms of this Agreement.

 

Letter of Credit Facing Fee” shall have the meaning set forth in Section 2.5(c).

 

Letter of Credit Fee” shall have the meaning set forth in Section 2.5(b).

 

LIBOR” shall mean, subject to the implementation of a Replacement Rate in accordance with Section 2.13(c), for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1.0%) for deposits of Dollars for a term coextensive with the designated Interest Period which the ICE Benchmark Administration (or any successor administrator of LIBOR rates) fixes as its LIBOR rate as of 11:00 a.m. (London time) on the day which is two (2) Business Days prior to the beginning of such Interest Period; provided that, if such rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. If for any reason such rate is not available, then “LIBOR” shall mean the rate per annum at which, as determined by the Administrative Agent in accordance with its customary practices, Dollars in an amount comparable to the Loans then requested are being offered to leading banks at approximately 11:00 A.M. London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected. Notwithstanding the foregoing, unless otherwise specified in any amendment to this Agreement entered into in accordance with Section 2.13(c), in the event that a Replacement Rate with respect to LIBOR is implemented then all references herein to LIBOR shall be deemed references to such Replacement Rate.

 

LIBOR Lending Office” shall mean, initially, the office(s) of each Lender designated as such Lender’s LIBOR Lending Office in such Lender’s Administrative Questionnaire; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which the LIBOR Rate Loans of such Lender are to be made.

 

LIBOR Rate” shall mean a LIBOR rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1.0%) determined by the Administrative Agent in accordance with the definition of “LIBOR.”

 

LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which is based on the LIBOR Rate.

 

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Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, (a) any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing, (b) the filing of, or the agreement to give, any UCC financing statement and (c) the Burger King Rights and the Popeyes Rights.

 

Limited Condition Acquisition” shall mean any acquisition permitted under this Agreement that, in each case, is permitted under this Agreement and is not conditioned on the availability of, or on obtaining, third party financing.

 

LLC Member” shall have the meaning specified in the recitals hereto.

 

Loan” shall mean a Revolving Loan and/or the Term Loans, as appropriate.

 

LOC Commitment” shall mean the commitment of the Issuing Lender to issue Letters of Credit and with respect to each Revolving Lender, the commitment of such Revolving Lender to purchase Participation Interests in the Letters of Credit up to such Lender’s Revolving Commitment Percentage of the LOC Committed Amount.

 

LOC Committed Amount” shall have the meaning set forth in Section 2.3(a).

 

LOC Documents” shall mean, with respect to each Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or (b) any collateral for such obligations.

 

LOC Obligations” shall mean, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lender but not theretofore reimbursed. The LOC Obligations of any Lender at any time shall be its Applicable Percentage of the total LOC Obligations at such time.

 

Mandatory LOC Borrowing” shall have the meaning set forth in Section 2.3(e).

 

Material Adverse Effect” shall mean (a) with respect to the Acquired Company and its subsidiaries on the Closing Date, a Company Material Adverse Effect, and (b) with respect to Carrols and its Restricted Subsidiaries on the Closing Date and the Borrower and its Restricted Subsidiaries after the Closing Date, a material adverse effect on (i) the business, operations, property, assets or financial condition of the Credit Parties and their Restricted Subsidiaries after the Closing Date, taken as a whole, (ii) the rights and remedies, taken as a whole, of the senior Administrative Agent under the Credit Documents, (iii) the ability of the Borrower or any Guarantor to perform its obligations, when such obligations are required to be performed, under this Agreement, any of the Notes or any other Credit Document or (iv) the validity or enforceability of this Agreement, any of the Notes or any of the other Credit Documents, the Administrative Agent’s Liens (for the benefit of the Secured Parties) on the Collateral or the priority of such Liens or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

 

Material Contract” shall mean any contract or agreement of the Credit Parties or any of their Restricted Subsidiaries as to which the breach, nonperformance, cancellation or failure to renew by any party thereto, would reasonably be expected to have a Material Adverse Effect. The parties acknowledge that no individual Restaurant real property lease or individual Franchise Agreement is a Material Contract for purposes of this Agreement; provided, however, depending on the materiality of the obligations subject thereto, an individual Franchise Agreement may be deemed to be a Material Contract to the extent a default thereunder shall result in a cross default under one or more other Franchise Agreements, and such defaults, in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

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Materials of Environmental Concern” shall mean any gasoline or petroleum (including crude oil or any extraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, perchlorate, polychlorinated biphenyls and urea-formaldehyde insulation.

 

Moody’s” shall mean Moody’s Investors Service, Inc.

 

Mortgage Instrument” shall mean any mortgage, deed of trust or deed to secure debt executed by a Credit Party in favor of the Administrative Agent, for the benefit of the Secured Parties, as the same may be amended, modified, extended, restated, replaced, or supplemented from time to time.

 

Mortgaged Property” shall mean any owned real property of a Credit Party listed on Schedule 3.16(f)(i) and any other owned real property of a Credit Party that is or will become encumbered by a Mortgage Instrument in favor of the Administrative Agent in accordance with the terms of this Agreement. Mortgaged Properties shall not include any Excluded Real Property.

 

Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

M&T Bank” shall mean Manufacturers and Traders Trust Company, together with its successors and assigns.

 

Net Cash Proceeds” shall mean the aggregate cash proceeds received by any Credit Party or any Restricted Subsidiary in respect of any Asset Disposition, Debt Issuance or Recovery Events, net of (a) reasonable direct costs and expenses (including, without limitation, legal, accounting and investment banking fees, sales commissions, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, other customary expenses and brokerage, consultant and other customary fees and expenses actually incurred in connection therewith) associated therewith and paid to Persons who are not Credit Parties or their Affiliates, (b) amounts held in escrow to be applied as part of the purchase price of any Asset Disposition or the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, (c) the amount of such proceeds required to be used to permanently repay any Indebtedness (other than the Obligations), together with any applicable premium, penalty, interest and breakage costs and (d) taxes paid or reasonably estimated to be payable as a result thereof; it being understood that “Net Cash Proceeds” shall include, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received by any Credit Party or any Restricted Subsidiary in any Asset Disposition, Debt Issuance or Recovery Event and any cash released from escrow as part of the purchase price in connection with any Asset Disposition.

 

Non-Consenting Lender” shall mean any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all affected Lenders in accordance with the terms of Section 9.1 and (b) has been approved by the Required Lenders.

 

Non-Defaulting Lender’ shall mean, at any time, each Lender that is not a Defaulting Lender at such time.

 

Non-Guarantor Subsidiary” shall mean any Restricted Subsidiary of that Borrower that is not a Subsidiary Guarantor.

 

Not Otherwise Applied” shall mean, with reference to any amount of proceeds of any transaction or event, that such amount (a) was not required to be applied to prepay the Loans pursuant to Section 2.7(b), (b) was not previously (and is not concurrently being) applied in determining the permissibility of a transaction under the Credit Documents where such permissibility was or is (or may have been) contingent on receipt of such amount or the utilization of such amount for a specified purpose, (c) was not applied to incur Indebtedness pursuant to Section 6.1, (d) was not utilized to make Restricted Payments pursuant to Section 6.10, (e) was not utilized to make Investments pursuant to Section 6.5, (f) was not utilized to make prepayments of any Junior Debt pursuant to Section 6.11(b) or (g) was not utilized to increase availability under any clause of the definition of “Available Amount.”

 

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Note” or “Notes” shall mean the Revolving Loan Notes and/or the Term Loan Notes, collectively, separately or individually, as appropriate.

 

Notice of Borrowing” shall mean a request for a Revolving Loan borrowing pursuant to Section 2.1(b)(i) or a request for a Term Loan borrowing pursuant to Section 2.2(a). A Form of Notice of Borrowing is attached as Exhibit 1.1(d).

 

Notice of Conversion/Extension” shall mean the written notice of conversion of a LIBOR Rate Loan to an Alternate Base Rate Loan or an Alternate Base Rate Loan to a LIBOR Rate Loan, or extension of a LIBOR Rate Loan, in each case substantially in the form of Exhibit 1.1(e).

 

Obligations” shall mean, collectively, all of the obligations, Indebtedness and liabilities of the Credit Parties to the Lenders (including the Issuing Lender) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Credit Documents, including principal, interest, fees, costs, charges, expenses, professional fees, reimbursements, all sums chargeable to the Credit Parties or for which any Credit Party is liable as an indemnitor and whether or not evidenced by a note or other instrument and indemnification obligations and other amounts (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code). In no event shall the Obligations include any Excluded Swap Obligations.

 

OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

Operating Lease Liabilities” shall mean all operating lease liabilities (within the meaning of FASB ASC 842) whether or not required to be capitalized and reflected as a liability on a balance sheet prepared in accordance with GAAP and all liabilities in respect of “failed” sale leasebacks under FASB ASC 842 that would have been accounted for as operating lease liabilities but for such “failed” sale and leaseback accounting rules.

 

Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).

 

Other Designated Expenses” shall mean, for any period, (a) consolidated impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles” and Financial Accounting Standard No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets,” or any successor pronouncements, (b) amortization associated with the excess of purchase price over the value allocated to tangible property or assets acquired by the Borrower or its consolidated Restricted Subsidiaries, (c) any non-recurring cash fees, charges or other expenses made or incurred in connection with the credit facilities under this Agreement, (d) start-up costs related to the acquisition, opening and organizing of new Restaurants, including, without limitation, the cost of feasibility studies, staff training and recruiting and travel costs for employees engaged in such start-up activities and (e) cash fees, charges or other expenses made or incurred in connection with the Cambridge Acquisition.

 

Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).

 

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Participant” shall have the meaning assigned to such term in clause (d) of Section 9.6.

 

Participant Register” shall have the meaning specified in clause (d) of Section 9.6.

 

Participation Interest” shall mean a participation interest purchased by a Revolving Lender in LOC Obligations as provided in Section 2.3(c).

 

Patent Licenses” shall mean any agreement, whether written or oral, providing for the grant by or to a Person of any right to manufacture, use or sell any invention or design covered by a Patent.

 

Patents” shall mean (a) all letters patent of the United States or any other country, now existing or hereafter arising, and all improvement patents, reissues, reexaminations, patents of additions, renewals and extensions thereof and (b) all applications for letters patent of the United States or any other country and all provisionals, divisions, continuations and continuations-in-part and substitutes thereof.

 

Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended or modified from time to time.

 

PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

 

Perfection Certificate” shall mean, with respect to any Credit Party, a certificate, in form reasonably satisfactory to the Administrative Agent, completed and supplemented with schedules and attachments contemplated thereby and duly executed on behalf of such Credit Party by a Responsible Officer of such Credit Party.

 

Permitted Acquisition” shall mean an acquisition or any series of related acquisitions by a Credit Party of (a) all or substantially all of the assets or a majority of the outstanding Voting Stock or economic interests of a Person that is incorporated, formed or organized in the United States, (b) a Person that is incorporated, formed or organized in the United States by a merger, amalgamation or consolidation or any other combination with such Person, (c) any division, line of business or other business unit of a Person that is incorporated, formed or organized in the United States (such Person or such division, line of business or other business unit of such Person shall be referred to herein as the “Target”), in each case that is a type of business (or assets used in a type of business) permitted to be engaged in by the Credit Parties and their Restricted Subsidiaries pursuant to Section 6.3 or (d) one or more Restaurants not part of a transaction described in clause (a), (b) or (c) above, in each case so long as:

 

(i) no Default or Event of Default shall then exist or would exist after giving effect thereto;

 

(ii) after giving effect to the acquisition on a Pro Forma Basis, the Credit Parties shall be in compliance with the Financial Covenant on a Pro Forma Basis as of the most recently completed Reference Period;

 

(iii) the Administrative Agent, on behalf of the Secured Parties, shall have received (or shall receive in connection with the closing of such acquisition) a first priority perfected security interest in all property (including, without limitation, Equity Interests) acquired with respect to the Target in accordance with the terms of Sections 5.10 and 5.12 and the Target, if a Person, shall have executed a Joinder Agreement in accordance with the terms of Section 5.10;

 

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(iv) in connection with any Permitted Acquisition with a purchase price in excess of $5,000,000, the Administrative Agent and the Lenders shall have received (A) a description of the material terms of such acquisition, (B) with respect to Permitted Acquisitions referred to in clause (a) above, audited financial statements (or, if unavailable, unaudited financial statements prepared by management of the Target) of the Target for the periods available to the Borrower (which shall not exceed its two most recent fiscal years) and for any fiscal quarters ended within the fiscal year to date (which quarters financial statements shall be unaudited), (C) with respect to Permitted Acquisitions referred to in clause (b) or (c) above, financial statements of the Target that are made available to the Borrower (or such other financial information reasonably acceptable to the Administrative Agent) for its most recent fiscal year, (D) with respect to Permitted Acquisitions referred to in clause (d) above, profit and loss statements with respect to each Restaurant acquired and (E) not less than five (5) Business Days prior to the consummation of any such Permitted Acquisition, a certificate substantially in the form of Exhibit 1.1(f), executed by an Responsible Officer of the Borrower certifying that such Permitted Acquisition complies with the requirements of this Agreement; and

 

(v) such acquisition shall not be a “hostile” acquisition and shall have been approved by the Board of Directors (or equivalent) and/or shareholders (or equivalent) of the applicable Credit Party and the Target.

 

Permitted Construction Transaction” shall have the meaning set forth in Section 6.5(h).

 

Permitted Debt Exchange Offer” shall have the meaning set forth in Section 2.23(b)(ii).

 

Permitted Holders” shall mean (i) Burger King Corporation, RBI and/or any of their respective Affiliates, (ii) the LLC Member and/or its Permitted Affiliates (as defined in the Cambridge Registration Rights and Stockholders’ Agreement as in effect on the Closing Date), and (iii) Daniel T. Accordino, Paul R. Flanders, Richard Cross, Gerald DiGenova and William E. Myers and any member of executive management (vice president or more senior) of any of the Credit Parties.

 

Permitted Investments” shall have the meaning set forth in Section 6.5.

 

Permitted Liens” shall have the meaning set forth in Section 6.2.

 

Permitted Refinancing Amendment” shall have the meaning assigned thereto in Section 9.1.

 

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Permitted Refinancing Indebtedness” shall mean any Indebtedness (the “Refinancing Indebtedness”), the proceeds of which are used to refinance, refund, renew, extend or replace outstanding Indebtedness (such outstanding Indebtedness, the “Refinanced Indebtedness”); provided that (a) the principal amount (or accreted value, if applicable) of such Refinancing Indebtedness (including any unused commitments thereunder) is not greater than the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness at the time of such refinancing, refunding, renewal, extension or replacement, except by an amount equal to any original issue discount thereon and the amount of unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such refinancing, refunding, renewal, extension or replacement, and by an amount equal to any existing commitments thereunder that have not been utilized at the time of such refinancing, refunding, renewal, extension or replacement, (b) the final stated maturity and weighted average life to maturity of such Refinancing Indebtedness shall not be prior to or shorter than that applicable to the Refinanced Indebtedness and such Refinancing Indebtedness does not require any scheduled payment of principal, mandatory repayment, redemption or repurchase that is more favorable to the holders of the Refinancing Indebtedness than the corresponding terms (if any) of the Refinanced Indebtedness (including by virtue of such Refinancing Indebtedness participating on a greater basis in any mandatory repayment, redemption or repurchase as compared to the Refinanced Indebtedness, but excluding any scheduled payment of principal, mandatory repayment, redemption or repurchase occurring on or after the date that is 91 days after the Latest Maturity Date in effect at the time of such incurrence in effect at the time of the issuance or incurrence of such Refinancing Indebtedness); provided that the restrictions of this clause (b) shall not apply to the extent such Refinancing Indebtedness constitutes a customary bridge or similar facility that is to be automatically converted or exchanged into notes or other Indebtedness that otherwise would satisfy this clause (b) so long as such conversion or exchange is subject only to conditions customary for similar conversions and exchanges and the Borrower irrevocably agrees at the time of incurrence thereof to take, and cause each applicable Restricted Subsidiary to take, all actions necessary to convert or exchange such Refinancing Indebtedness); (c) such Refinancing Indebtedness shall not be secured by (i) Liens on assets other than assets securing the Refinanced Indebtedness at the time of such refinancing, refunding, renewal, extension or replacement or (ii) Liens having a higher priority than the Liens, if any, securing the Refinanced Indebtedness; (d) such Refinancing Indebtedness shall not be guaranteed by or otherwise recourse to any Person other than the Person(s) to whom the Refinanced Indebtedness is recourse or by whom it is guaranteed, in each case as of the time of such refinancing, refunding, renewal, extension or replacement; (e) to the extent such Refinanced Indebtedness is subordinated in right of payment to the Obligations (or the Liens securing such Indebtedness were originally contractually subordinated to the Liens securing the Collateral pursuant to the Security Documents), such refinancing, refunding, renewal, extension or replacement is subordinated in right of payment to the Obligations (or the Liens securing such Indebtedness shall be subordinated to the Liens securing the Collateral pursuant to the Security Documents) on terms at least as favorable to the Lenders as those contained in the documentation governing such Refinanced Indebtedness or otherwise reasonably acceptable to the Administrative Agent; (f) the covenants with respect to such Refinancing Indebtedness, when taken as a whole, are not materially more restrictive to the Borrower and the Restricted Subsidiaries than those in the Refinanced Indebtedness (taken as a whole) (except (i) for covenants with respect to such Indebtedness that are applicable only to the periods after the Latest Maturity Date in effect at the time of such incurrence in effect at the time of incurrence of such Refinancing Indebtedness and (ii) to the extent that any financial maintenance covenant is added for the benefit of any such Refinancing Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such financial maintenance covenant is also added for the benefit of the Lenders hereunder with respect to any Loans or Commitments remaining outstanding after giving effect to the incurrence of such Refinancing Indebtedness and the application of the proceeds thereof); provided that a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent at least five (5) Business Days (or such shorter period as the Administrative Agent may agree to) prior to the incurrence of such Refinancing Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Refinancing Indebtedness or substantially final drafts of the documentation related thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within two (2) Business Days after receipt of such certificate that it disagrees with such determination (including a reasonable description of the basis upon which it disagrees); (g) in the event that the Refinancing Indebtedness is unsecured Indebtedness (including unsecured Junior Debt) such Refinancing Indebtedness does not include cross-defaults (but may include cross-payment defaults and cross-defaults at the final stated maturity thereof and cross-acceleration); (h) no Default shall have occurred and be continuing at the time of, or would result from, such refinancing, refunding, renewal, extension or replacement and (i) the Refinancing Indebtedness shall have pricing (including interest rates, fees and premiums), optional prepayment and redemption terms as may be agreed to by the Borrower and the lenders or holders of such Refinancing Indebtedness; provided that if such Refinancing Indebtedness is in the form of term loans secured on a pari passu lien basis with the Term Loan Facility, it shall be subject to the provisions of Section 2.22(c) as if applicable thereto.

 

Person” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

Plan” shall mean, as of any date of determination, any employee benefit plan which is covered by Title IV of ERISA and in respect of which any Credit Party or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Popeyes Franchise Agreement” shall mean any Franchise Agreement with Popeyes Louisiana Kitchen, Inc.

 

Popeyes Leases” shall mean any leases or subleases with respect to a Restaurant where Popeyes Louisiana Kitchen, Inc. is the lessor or sublessor, respectively whether entered at, on, prior to, or after the Closing Date, as any of the same may from time to time be amended, modified, supplemented or restated.

 

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Popeyes Louisiana Kitchen, Inc.” shall mean Popeyes Louisiana Kitchen, Inc., a Minnesota corporation.

 

Popeyes Rights” shall mean the collective reference to Popeyes Louisiana Kitchen, Inc.’s rights (if any) under each Popeyes Franchise Agreement pursuant to which Popeyes Louisiana Kitchen, Inc. shall be entitled to: (a) prior written notice of any sale of the Voting Stock of the Borrower or any other Credit Party; (b) a right of first refusal to purchase the Voting Stock of the Borrower or any other Credit Party; and (c) prior approval of any sale of the Voting Stock of the Borrower or any other Credit Party; in each case to the extent set forth in a legally binding Popeyes Franchise Agreement.

 

Prime Rate” shall have the meaning set forth in the definition of “Alternate Base Rate.”

 

Pro Forma Basis” shall mean, (i) for purposes of calculating Consolidated EBITDA for any period during which one or more Specified Transactions occurs, such Specified Transaction (and all other Specified Transactions that have been consummated during the applicable period) shall be deemed to have occurred as of the first day of the applicable period of measurement and income statement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (1) in the case of a Specified Disposition or other sale, transfer, or other disposition of all or substantially all Equity Interests in any Subsidiary of the Borrower or any division, product line, or facility used for operations of the Borrower or any of its Subsidiaries, shall be excluded, and (2) in the case of a Permitted Acquisition or Investment (including any Permitted Construction Transaction) described in the definition of “Specified Transaction,” shall be included (provided that such income statement items to be included are directly attributable to such transaction, reflected in financial statements or other financial data reasonably acceptable to the Administrative Agent and based upon reasonable assumptions and calculations which are factually supportable and expected to have a continuous impact and subject to clause (vii) of the definition of “Consolidated EBITDA”); and (ii) in the event that the Borrower or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement, discharge, defeasance or extinguishment) any Indebtedness included in the calculations of any financial ratio or test (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable measurement period or (ii) subsequent to the end of the applicable measurement period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the last day of the applicable measurement period and any such Indebtedness that is incurred (including by assumption or guarantee) that has a floating or formula rate of interest shall have an implied rate of interest for the applicable period determined by utilizing the rate.

 

Properties” shall have the meaning set forth in Section 3.10(a).

 

PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

Purchase Money Indebtedness” shall have the meaning set forth in Section 6.1(c).

 

Qualified ECP Guarantor” shall mean, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time such Swap Obligation is incurred or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder.

 

Qualified Equity Interests” shall mean any Equity Interests that are not Disqualified Equity Interests.

 

Rabobank” shall mean Coöperatieve Rabobank U.A., New York Branch, together with its successors and assigns.

 

Ratio Debt” shall have the meaning set forth in Section 6.1(n).

 

RBI” shall mean Restaurant Brands International Inc.

 

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Recipient” shall mean (a) the Administrative Agent, (b) any Lender and (c) any Issuing Lender, as applicable.

 

Recovery Event” shall mean the receipt by any Credit Party or its Restricted Subsidiaries of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets.

 

Reference Period” shall mean, as of any date of determination, the period of four (4) consecutive fiscal quarters ended on or immediately prior to such date for which financial statements of the Borrower have been delivered to the Administrative Agent hereunder.

 

Refinance” shall have the meaning set forth in Section 2.23(a)(i).

 

Refinanced Indebtedness” shall have the meaning set forth in the definition of “Permitted Refinancing Indebtedness.”

 

Refinancing Amendment” shall have the meaning set forth in Section 2.23(a)(v).

 

Refinancing Debt” shall have the meaning set forth in Section 2.23(b)(i).

 

Refinancing Equivalent Debt” shall have the meaning set forth in Section 2.23(b)(i).

 

Refinancing Facility” shall have the meaning set forth in Section 2.23(a)(i).

 

Refinancing Indebtedness” shall have the meaning set forth in the definition of “Permitted Refinancing Indebtedness.”

 

Refinancing Term Lender” shall mean with respect to any Refinancing Term Loan Series, collectively, all of the Persons agreeing to make a Refinancing Term Loan of such Refinancing Term Loan Series.

 

Refinancing Term Loan Series” shall have the meaning set forth in Section 2.23(a)(iii).

 

Refinancing Term Loans” shall have the meaning set forth in Section 2.23(a)(i).

 

Refinancing/Replacement Effective Date” shall have the meaning set forth in Section 2.23(a)(i).

 

Register” shall have the meaning set forth in Section 9.6(c).

 

Registered Intellectual Property Collateral” shall mean the Collateral consisting of United States Patents, United States registered Trademarks and United States registered Copyrights and, in each case, applications therefor.

 

Reimbursement Obligation” shall mean the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 2.3(d) for amounts drawn under Letters of Credit.

 

Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

 

Reorganization” shall mean, with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of such term as used in Section 4241 of ERISA.

 

Replacement Rate shall have the meaning set forth in Section 2.13(c).

 

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Replacement Revolving Commitment Series” shall have the meaning set forth in Section 2.23(a)(iii).

 

Replacement Revolving Commitments” shall have the meaning set forth in Section 2.23(a)(i).

 

Replacement Revolving Lender” shall have the meaning set forth in Section 2.23(a)(ii).

 

Replacement Revolving Loans” shall have the meaning set forth in Section 2.23(a)(i).

 

Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the thirty-day notice period is waived under PBGC Reg. §4043.

 

Repricing Transaction” shall have the meaning set forth in Section 2.7(d).

 

Required Lenders” shall mean, as of any date of determination, Lenders holding at least a majority of (i) the outstanding Loans and unfunded Commitments under the Senior Credit Facilities or (ii) if the Senior Credit Facilities have been terminated, the outstanding Loans and Participation Interests; provided, however, that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Lenders, such Defaulting Lender’s outstanding Loans and Participation Interests and unfunded Commitments under the Senior Credit Facilities.

 

Required Revolving Lenders” shall mean, as of any date of determination, any combination of Revolving Lenders holding at least a majority of the sum of the aggregate amount of the Revolving Commitment or, if the Revolving Commitment has been terminated, any combination of Revolving Lenders holding at least a majority of the aggregate Extensions of Credit under the Revolving Facility; provided, however, that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Revolving Lenders, such Defaulting Lender’s outstanding Loans and Participation Interests and unfunded Commitments under the Revolving Facility.

 

Requirement of Law” shall mean, as to any Person, (a) the articles or certificate of incorporation, by-laws or other organizational or governing documents of such Person, and (b) all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders, 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); in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

Responsible Officer” shall mean, for any Credit Party, the chief executive officer, the president, chief financial officer, general counsel, secretary, treasurer or any vice president of such Credit Party and any additional responsible officer that is designated as such to the Administrative Agent.

 

Restaurant” shall mean any restaurant owned or leased by the Borrower or any of its Restricted Subsidiaries.

 

Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of Equity Interests of any Credit Party or any of its Restricted Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Equity Interests of any Credit Party or any of its Restricted Subsidiaries, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Equity Interests of any Credit Party or any of its Restricted Subsidiaries, now or hereafter outstanding or (d) the payment by any Credit Party or any of its Subsidiaries of any management, advisor or consulting fee to any Person that is an Affiliate of a Credit Party.

 

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Restricted Subsidiary” shall mean any Subsidiary other than an Unrestricted Subsidiary.

 

Retained Excess Cash Flow” shall mean the cumulative amount of Excess Cash Flow (but not less than zero in any period) in respect of all fiscal years (commencing with the fiscal year ending December 31, 2020) that is not required to be applied in prepayment of the Loans pursuant to Section 2.7 (but excluding the amount of any voluntary prepayments that are applied to reduce the amount of such required prepayment in accordance with Section 2.7(b)(iv)).

 

Revolving Commitment” shall mean, (a) with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans in an aggregate principal amount at any time outstanding up to an amount equal to such Revolving Lender’s Revolving Commitment Percentage of the Revolving Committed Amount, as such amount may be modified at any time or from time to time pursuant to the terms hereof (including, without limitation, Section 2.22) and (b) as to all Revolving Lenders, the aggregate commitment of all Revolving Lenders to make Revolving Loans, as such amount may be modified at any at any time or from time to time pursuant to the terms hereof. The initial Revolving Commitment of each Revolving Lender is set forth opposite the name of such Lender on Schedule 1.1(f). Except where the context otherwise dictates, references herein and in the other Credit Documents to Revolving Commitment shall include any applicable Replacement Revolving Commitment.

 

Revolving Commitment Percentage” shall mean, for each Revolving Lender at any time, the percentage of the total Revolving Commitments of all the Revolving Lenders represented by such Revolving Lender’s Revolving Commitment, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 9.6(b). The initial Revolving Commitment Percentage of each Revolving Lender on the Closing Date is set forth opposite the name of such Lender on Schedule 1.1(f).

 

Revolving Committed Amount” shall have the meaning set forth in Section 2.1(a).

 

Revolving Facility” shall have the meaning set forth in Section 2.1(a).

 

Revolving Facility Increase” shall have the meaning set forth in Section 2.22(a).

 

Revolving Facility Increase Lender” shall have the meaning set forth in Section 2.22(b)(ii).

 

Revolving Lender” shall mean, as of any date of determination, a Lender holding a Revolving Commitment, a Revolving Loan or a Participation Interest on such date.

 

Revolving Loan” shall have the meaning set forth in Section 2.1(a).

 

Revolving Loan Note” or “Revolving Loan Notes” shall mean the promissory notes of the Borrower provided pursuant to Section 2.1(e) in favor of any of the Revolving Lenders evidencing the Revolving Loan provided by any such Revolving Lender pursuant to Section 2.1(a), individually or collectively, as appropriate, as such promissory notes may be amended, modified, extended, restated, replaced, or supplemented from time to time.

 

Revolving Maturity Date” shall mean the date that is five years following the Closing Date; provided, however, if such date is not a Business Day, the Revolving Maturity Date shall be the next preceding Business Day.

 

S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

 

Sale Leaseback” shall have the meaning set forth in Section 6.12.

 

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Sanctioned Entity” shall mean, at any time, (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a person or entity resident in or determined to be resident in a country, that is itself the subject or target of any Sanctions.

 

Sanctioned Person” shall mean, at any time, (a) any Person listed on the Specially Designated Nationals and Blocked Persons List or Foreign Sanctions Evader List maintained by OFAC or in a Sanctions-related list maintained by the U.S. Department of State, (b) any Person operating, organized or resident in a country or territory which is itself the subject or target of any Sanctions or (c) any Person owned or controlled by any such Person or Persons.

 

Sanctions” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (i) the U.S. government, including those administered by OFAC or the U.S. Department of State, (ii) the European Union or any member state thereof, (iii) Her Majesty’s Treasury, or (iv) the United Nations.

 

Sarbanes-Oxley” shall mean the Sarbanes-Oxley Act of 2002.

 

SEC” shall mean the Securities and Exchange Commission or any successor Governmental Authority.

 

Second Quarter” shall mean, with respect to any fiscal year of the Borrower, the thirteen (13) week period ending on the Sunday closest to June 30 of such fiscal year.

 

Secured Net Leverage Ratio” shall mean, as of any date of determination, for the Credit Parties and their Restricted Subsidiaries on a Consolidated basis, the ratio of (i) Consolidated Funded Debt and Purchase Money Indebtedness as reflected on the balance sheet of the Borrower and its Restricted Subsidiaries, in each case (other than Capital Lease Obligations and Purchase Money Indebtedness) to the extent secured, in whole or in part, by liens on the Collateral, minus unrestricted cash and cash equivalents to (ii) Consolidated EBITDA for the most recently completed Reference Period.

 

Secured Parties” shall mean the Administrative Agent, the Lenders, the Issuing Lender and the Bank Product Providers.

 

Securities Act” shall mean the Securities Act of 1933, together with any amendment thereto or replacement thereof and any rules or regulations promulgated thereunder.

 

Securities Laws” shall mean the Securities Act, the Exchange Act, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.

 

Security Agreement” shall mean the Security Agreement dated as of the Closing Date among the Credit Parties and the Administrative Agent, as amended, modified, extended, restated, replaced, or supplemented from time to time in accordance with its terms.

 

Security Documents” shall mean the Security Agreement, the Mortgage Instruments and any Acceptable Intercreditor Agreement, as applicable, and all other agreements, documents and instruments relating to, arising out of, or in any way connected with any of the foregoing documents or granting to the Administrative Agent, for the benefit of the Secured Parties, Liens or security interests to secure, inter alia, the Credit Party Obligations whether now or hereafter executed and/or filed, each as may be amended from time to time in accordance with the terms hereof, executed and delivered in connection with the granting, attachment and perfection of the Administrative Agent’s security interests and liens arising thereunder, including, without limitation, UCC financing statements.

 

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Senior Credit Facilities” shall mean the Revolving Facility and the Term Loan Facility.

 

Single Employer Plan” shall mean any Plan that is not a Multiemployer Plan.

 

Specified Acquisition Agreement Representations” shall mean any representation and warranty by the Acquired Company or its subsidiaries or affiliates or with respect to the Acquired Company, its subsidiaries or its businesses, in each case, in the Cambridge Acquisition Agreement, that is material to the interests of the Lenders, but only to the extent that the Borrower or its Affiliates have the right to terminate its or their respective obligations under the Cambridge Acquisition or otherwise decline to close the Cambridge Acquisition as a result of a breach of such representation and warranties not being accurate (in each case, taking into account any applicable cure provisions under the Cambridge Acquisition Agreement).

 

Specified Disposition” shall mean any (a) Asset Disposition having gross sales proceeds in excess of $5,000,000, or (b) any Asset Disposition (without regard to any de minimis thresholds) (i) that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Borrower or (ii) of a business, business unit, line of business or division of the Borrower or a Restricted Subsidiary, whether by merger, amalgamation, consolidation or otherwise.

 

Specified Representations” shall mean the representations and warranties set forth in Section 3.3; Section 3.4, as it relates to the Credit Parties entering into and performing under the Credit Documents; Section 3.5(a) and (b), as it relates to the execution, delivery and performance of the Credit Documents; Section 3.17 as of the Closing Date and after giving effect to the Transactions; Section 3.7; Section 3.8; Section 3.27(c); Sections 3.18 and 3.28, as they relate to the use of proceeds of the Senior Credit Facilities; and Section 3.25.

 

Specified Transactions” shall mean (a) any Specified Disposition, (b) any Permitted Acquisition or any other purchase or other acquisition of a business of any Person, of assets constituting a business unit, line of business or division of any Person, in each case, to the extent permitted hereunder, (c) any Permitted Construction Transaction, (d) the Transactions, (e) any designation of operations or assets of the Borrower or a Restricted Subsidiary as discontinued operations (as defined under GAAP), (f) any Investment that results in a Person becoming a Restricted Subsidiary, (g) any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary in compliance with this Agreement, (h) any operational changes identified by the Borrower that have been made by the Borrower or any Restricted Subsidiary during the Reference Period, (i) the borrowing under an Incremental Term Facility, Revolving Facility Increase or Incremental Equivalent Debt (or the establishment of Commitments in respect thereof), or (j) any Restricted Payment or other transaction that by the terms of this Agreement requires a financial ratio to be calculated on a pro forma basis.

 

STRH” shall mean SunTrust Robinson Humphrey, Inc., together with its successors and assigns.

 

Subject Properties” shall have the meaning set forth in Section 5.12(c).

 

Subordinated Debt” shall mean any Indebtedness incurred by any Credit Party which by its terms is specifically subordinated in right of payment to the prior payment of the Credit Party Obligations and contains subordination and other terms acceptable to the Administrative Agent.

 

Subsidiary” shall mean, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

Subsidiary Guarantors” shall mean, collectively, all Subsidiaries of the Borrower that are a party to this Agreement on the Closing Date and all additional Credit Parties.

 

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Swap Obligations” shall mean, with respect to any Guarantor, an obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of § 1a(47) of the Commodity Exchange Act.

 

Target” shall have the meaning set forth in the definition of “Permitted Acquisition.”

 

Taxes” shall mean 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.

 

Term Loan Commitment” shall mean, (a) with respect to each Term Loan Lender, the commitment of such Term Loan Lender to make its portion of the Initial Term Loan in a principal amount equal to such Term Loan Lender’s Term Loan Commitment Percentage of the Initial Term Loan Committed Amount and (b) with respect to all Term Loan Lenders, the aggregate commitment of all Term Loan Lenders to make such Term Loans.

 

Term Loan Commitment Percentage” shall mean, for any Term Loan Lender at any time, the percentage of the total outstanding principal balance of the Term Loans represented by the outstanding principal balance of such Term Loan Lender’s Term Loans, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 9.6(b).

 

Term Loan Facility” shall mean the Initial Term Loan Facility, and except where the context otherwise dictates, the Term Loan Facility shall include each facility providing for the borrowing of Extended Term Loans and Incremental Term Loans and each facility providing for the borrowing of Refinancing Term Loans in respect of the foregoing.

 

Term Loan Lender” shall mean a Lender holding a Term Loan Commitment or a portion of the outstanding Term Loan, including any Incremental Term Loan Lenders and any Refinancing Term Lender.

 

Term Loan Maturity Date” shall mean the date that is seven years following the Closing Date; provided, however, if such date is not a Business Day, the Term Loan Maturity Date shall be the next preceding Business Day.

 

Term Loan Note” or “Term Loan Notes” shall mean the promissory notes of the Borrower (if any) in favor of any of the Term Loan Lenders evidencing the portion of the Term Loans provided by any such Term Loan Lender, individually or collectively, as appropriate, as such promissory notes may be amended, modified, extended, restated, replaced, or supplemented from time to time.

 

Term Loans” shall mean the Initial Term Loans, and, if applicable, any Incremental Term Loans, any Extended Term Loans and any Refinancing Term Loans. “Term Loan” shall mean any of such Term Loans.

 

Third Quarter” shall mean, with respect to any fiscal year of the Borrower, the thirteen (13) week period ending on the Sunday closest to September 30 of such fiscal year.

 

Total Net Leverage Ratio” shall mean, as of any date of determination, for the Credit Parties and their Restricted Subsidiaries on a Consolidated basis, the ratio of (i) Consolidated Funded Debt and Purchase Money Indebtedness as reflected on the balance sheet of the Borrower and its Restricted Subsidiaries, minus unrestricted cash and cash equivalents to (ii) Consolidated EBITDA for the most recently completed Reference Period.

 

Trademark License” shall mean any agreement, whether written or oral, providing for the grant by or to a Person of any right to use any Trademark.

 

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Trademarks” shall mean (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, service marks, elements of package or trade dress of goods or services, logos and other source or business identifiers, together with the goodwill associated therewith, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof and (b) all renewals thereof.

 

Tranche” shall mean the collective reference to (a) LIBOR Rate Loans whose Interest Periods begin and end on the same day and (b) Alternate Base Rate Loans made on the same day.

 

Transaction Costs” shall mean for any period, all expenses, fees, charges and other amounts (other than depreciation or amortization expense) related to (a) the Transactions, (b) any Permitted Acquisitions and (c) any offerings of Equity Interests, Investments, Permitted Construction Transactions, Dispositions, Restricted Payments, recapitalizations or incurrence of Indebtedness, in each case permitted hereunder (including, without limitation, any financing fees, merger and acquisition fees, legal fees and expenses, financial advisory fees, due diligence fees or any other fees and expenses in connection therewith), including (i) such fees, expenses, or charges related to the incurrence of the Loans hereunder and all fees, costs, or expenses incurred or paid by the Borrower, or any of its Affiliates in connection with the Transactions, this Agreement, and the other Credit Documents, and the transactions contemplated hereby and thereby, (ii) such fees, expenses, or charges related to the offering of the Credit Documents and any other credit facilities or debt issuances and (iii) any amendment or other modification of the Loans hereunder or other Indebtedness, and, in each case, including any such transaction undertaken but not completed.

 

Transactions” shall mean (a) the closing of this Agreement and the other Credit Documents and the other transactions contemplated hereby and pursuant to the other Credit Documents, including, without limitation, the initial borrowings under the Credit Documents and (b) the consummation of the Cambridge Acquisition, in each case, including, without limitation, the payment of fees and expenses in connection with all of the foregoing.

 

Type” shall mean, as to any Loan, its nature as an Alternate Base Rate Loan or LIBOR Rate Loan, as the case may be.

 

UCC” shall mean the Uniform Commercial Code from time to time in effect in any applicable jurisdiction.

 

Unrestricted Subsidiary” shall mean (a) as of the Closing Date, each Subsidiary listed on Schedule 3.12(b), (b) any Subsidiary designated by the Borrower as an Unrestricted Subsidiary subsequent to the Closing Date pursuant to Section 1.7 hereof and (c) any Subsidiary of an Unrestricted Subsidiary.

 

U.S. Person” shall mean any Person that is a “United States Person” as defined in section 7701(a)(30) of the Code.

 

U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.16(g)(ii)(B)(iii).

 

Voting Stock” shall mean, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote may be or have been suspended by the happening of such a contingency.

 

Wells Fargo” shall mean Wells Fargo Bank, National Association, a national banking association, together with its successors and/or assigns.

 

WFS” shall mean Wells Fargo Securities, LLC, together with its successors and assigns.

 

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Working Capital” shall mean, for the Borrower and its Restricted Subsidiaries on a Consolidated basis and calculated in accordance with GAAP, as of any date of determination, the excess of (a) current assets (other than cash, Cash Equivalents and current and deferred taxes based on income or profits) over (b) current liabilities, excluding, without duplication, (i) the current portion of any long-term Indebtedness, (ii) outstanding Revolving Loans or Replacement Revolving Loans, (iii) the current portion of current taxes and deferred taxes based on income and profits, (iv) the current portion of accrued Consolidated Interest Expense (excluding Consolidated Interest Expense that is past due and unpaid) and (v) accruals of any costs or expenses related to restructuring reserves; provided that increases or decreases in Working Capital shall be calculated without regard to any changes in current assets or current liabilities as a result of (A) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and non-current or (B) the effects of purchase accounting thereon; provided, further, that any payables or receivables in connection with amounts transferred or distributed to Affiliates in the ordinary course of business and consistent with past practice of the Borrower that constitute Restricted Payments shall not be included as current assets or current liabilities for purposes of this definition.

 

Works” shall mean all works which are subject to copyright protection pursuant to Title 17 of the United States Code.

 

Write-Down and Conversion Powers” shall mean, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

Section 1.2 Other Definitional Provisions.

 

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, amended and restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (g) all terms defined in this Agreement shall have the defined meanings when used in any other Credit Document or any certificate or other document made or delivered pursuant hereto unless the context otherwise requires or such term is otherwise defined in any such other Credit Document or any certificate or other document.

 

Section 1.3 Accounting Terms.

 

(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the most recently delivered audited Consolidated financial statements of the Borrower, except as otherwise specifically prescribed herein. Without limitation to the definition of “Operating Lease Liabilities” and the application of such term in this Agreement, notwithstanding any other provision contained herein or in any other Credit Document, any “failed” sale leaseback under FASB ASC 842 that would have been accounted for as an operating lease but for such “failed” sale and leaseback accounting rules shall be treated as an operating lease for all purposes of this Agreement and the other Credit Documents.

 

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(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower, the Required Revolving Lenders or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP; provided, further, that, unless a breach of Section 5.9 has become an Event of Default with respect to the Term Loans in accordance with Section 7.1, any such amendment shall not affect the computation of any financial ratio or requirement in, and for the purposes of, Section 5.9 until approved in writing by the Required Revolving Lenders.

 

(c) Financial Covenant Calculations. The parties hereto acknowledge and agree that, for purposes of all calculations made in determining compliance for any applicable period with the covenants set forth in Section 5.9, (i) after consummation of any Permitted Acquisition, (A) Consolidated EBITDA shall be calculated after giving effect thereto on a Pro Forma Basis (subject to (x) adjustments consistent with the definition of “Consolidated EBITDA” and (y) other adjustments, in the case of this clause (y), reasonably acceptable to the Required Lenders) and (B) Consolidated Interest Expense shall be calculated after giving effect thereto (including the effect of any related incurrence of Indebtedness) on a Pro Forma Basis (ii) after the consummation of any Permitted Construction Transaction, (A) Consolidated EBITDA shall be calculated after giving effect thereto on a Pro Forma Basis (subject to (x) adjustments consistent with the definition of “Consolidated EBITDA” and (y) other adjustments, in the case of this clause (y), reasonably acceptable to the Required Lenders) and (B) Consolidated Interest Expense shall be calculated after giving effect thereto (including the effect of any related incurrence of Indebtedness) on a Pro Forma Basis and (iii) after any other Specified Transaction, (A) Consolidated EBITDA shall be calculated after giving effect thereto on a Pro Forma Basis (in the case of any Asset Disposition, to the extent the property or assets subject to such Disposition were owned during the applicable period of calculation) and (B) Consolidated Interest Expense shall be calculated after giving effect thereto (including the effect of any related incurrence of Indebtedness) on a Pro Forma Basis.

 

(d) Order of Calculations. In the event any fixed baskets are intended to be utilized together with any incurrence-based baskets in a single transaction or series of related transactions (including utilization of the Free and Clear Incremental Amount and the Incurrence-Based Incremental Amount), (i) compliance with or satisfaction of any applicable financial ratios or tests for the portion of such Indebtedness or other applicable transaction or action to be incurred under any incurrence-based baskets shall first be calculated without giving effect to amounts being utilized pursuant to any fixed baskets, but giving effect, on a Pro Forma Basis, to all applicable and related transactions (including, subject to the foregoing with respect to fixed baskets, any incurrence and repayments of Indebtedness) and all other permitted pro forma adjustments, and (ii) thereafter, incurrence of the portion of such Indebtedness or other applicable transaction or action to be incurred under any fixed baskets shall be calculated.

 

Section 1.4 Time References.

 

Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

Section 1.5 Execution of Documents.

 

Unless otherwise specified, all Credit Documents and all other certificates executed in connection therewith must be signed by a Responsible Officer.

 

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Section 1.6 Limited Condition Acquisition.

 

(a) In the event that the Borrower notifies the Administrative Agent in writing that any proposed acquisition is a Limited Condition Acquisition and that the Borrower wishes to test the conditions to such Limited Condition Acquisition and any Indebtedness or Liens incurred, the making of any Investments, Restricted Payments or fundamental changes or the designation of any Restricted Subsidiaries or Unrestricted Subsidiaries substantially concurrently with such Limited Condition Acquisition in connection with such Limited Condition Acquisition in accordance with this Section 1.6 (such notification, an “LCA Election”), then, so long as agreed to by the lenders providing such Indebtedness (if any), the following provisions shall apply:

 

(i) any condition to any action being taken in connection with such Limited Condition Acquisition (including the incurrence of Indebtedness) that requires that no Default or Event of Default, as applicable, shall have occurred, be continuing at the time of such Limited Condition Acquisition or would result therefrom or the incurrence of such Indebtedness, shall be satisfied if no Default or Event of Default, as applicable, exists at the time of the execution of the definitive agreements governing such Limited Condition Acquisition (such date, the “LCA Test Date”).

 

(ii) any financial ratio test (including any such test calculated in determining amounts under baskets) or financial condition to any action in connection with such Limited Condition Acquisition (including the incurrence of Indebtedness) shall be tested on the LCA Test Date;

 

(iii) notwithstanding the foregoing, in the event a Limited Condition Acquisition is elected, any calculation of a ratio or basket not in connection with such Limited Condition Acquisition that is made prior to the earlier of (1) the date on which such Limited Condition Acquisition is consummated or (2) the date that the definitive agreement for such Limited Condition Acquisition is terminated, in connection with (x) determining whether or not Borrower is in compliance with the financial covenant set forth in Section 5.9 shall be calculated assuming such Limited Condition Acquisition and other transactions in connection therewith (including the incurrence or assumption of Indebtedness) have not been consummated, (y) determining whether the Borrower or its Restricted Subsidiaries may make a Restricted Payment shall be calculated both (1) on a Pro Forma Basis assuming such Limited Condition Acquisition and other transactions in connection therewith (including the incurrence or assumption of Indebtedness and the use of proceeds thereof) have been consummated and (2) assuming such Limited Condition Acquisition and other transactions in connection therewith (including the incurrence or assumption of Indebtedness and the use of proceeds thereof) have not been consummated and (z) calculating Restricted Payments, the Consolidated Net Income and Consolidated EBITDA shall not be included. For the avoidance of doubt, if the Borrower has made an LCA Election and any of the ratios or baskets for which compliance was determined or tested as of the LCA Test Date are exceeded as a result of fluctuations in any such ratio or basket (including due to fluctuations in Consolidated EBITDA of the Borrower or of the target of any Limited Condition Acquisition) after the LCA Test Date, but at or prior to the consummation of the Limited Condition Acquisition, such basket or ratio will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the relevant transaction or action is permitted to be consummated or taken; provided that if such ratios improve as a result of such fluctuations, such improved ratios may be utilized; and

 

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(iv) any requirement under this Agreement or any other Credit Document that the representations and warranties be true and correct as a condition precedent to such Limited Condition Acquisition or any action in connection therewith (including the incurrence and the availability of such Indebtedness) shall be limited to those representations and warranties, the accuracy of which is customarily included as a condition precedent to the incurrence or availability of third party acquisition financings that are subject to customary “funds certain provisions” (including, without limitation, certain specified representations and warranties under this Agreement and the representations and warranties under the relevant agreement governing such acquisition that are material to the lenders providing such Indebtedness to the extent that the Borrower or its applicable Restricted Subsidiary has the right to terminate its obligations under such agreement or otherwise decline to close such Limited Condition Acquisition as a result of the failure of such representations and warranties to be true and correct), so long as all representations and warranties in this Agreement and the other Credit Documents are true and correct in all material respects (except for any such representation or warranty is qualified by Material Adverse Effect or materiality which shall be true and correct in all respects) at the time of execution of the relevant agreement governing such Limited Condition Acquisition (except for any such representation and warranty that by its terms is made only as of an earlier date, which representation and warranty shall remain true and correct in all material respects as of such earlier date, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects as of such earlier date).

 

(b) The foregoing provisions shall apply with similar effect during the pendency of multiple Limited Condition Acquisitions such that each of the possible scenarios is separately tested.

 

Section 1.7 Designation of Subsidiaries.

 

The board of directors of the Borrower may at any time designate any Restricted Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary by written notice to the Administrative Agent which written notice shall certify that such designation complies with this Section 1.7; provided that after giving effect to such designation, no Event of Default shall have occurred and be continuing. The designation of any Subsidiary as an Unrestricted Subsidiary after the Closing Date shall constitute an Investment by the Borrower therein in an amount equal to the Fair Market Value of the Borrower’s or its applicable Restricted Subsidiary’s Investment therein as determined at the time of such designation. The designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (i) the incurrence, at the time of designation, of any Investment, Indebtedness or Liens of such Subsidiary existing or outstanding at such time and (ii) a return on any Investment made by the Borrower and its respective Restricted Subsidiaries in such Unrestricted Subsidiary pursuant to the preceding sentence in an amount equal to the Fair Market Value of the Borrower’s or its Restricted Subsidiary’s Investment as determined at the time of such designation of such Subsidiary as an Unrestricted Subsidiary.

 

Section 1.8 Effectuation of Transactions.

 

All references herein to the Borrower and the other Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of the Borrower and the other Credit Parties contained in this Agreement and the other Credit Documents shall be deemed made, in each case, after giving effect to the Cambridge Acquisition and the other Transactions to occur on the Closing Date, unless the context otherwise requires.

 

Section 1.9 Division.

 

For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

 

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ARTICLE II

THE LOANS; AMOUNT AND TERMS

 

Section 2.1 Revolving Loans.

 

(a) Revolving Commitment. During the Commitment Period, subject to the terms and conditions hereof, each Revolving Lender severally, but not jointly, agrees to make revolving credit loans in Dollars (together with all such revolving loans collectively as the context requires, the “Revolving Loans”) to the Borrower from time to time in an aggregate principal amount of up to ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (as increased from time to time as provided in Section 2.22, as such aggregate maximum amount may be reduced from time to time as provided in Section 2.6 and, except where context otherwise dictates, reflecting any amount under any Replacement Revolving Commitment Series, the “Revolving Committed Amount”) for the purposes hereinafter set forth (such facility, including any Revolving Facility Increase established pursuant to Section 2.22 and together with, except where context otherwise dictates, each Extended Revolving Commitment and Replacement Revolving Commitment Series, the “Revolving Facility”); provided, however, that (i) with regard to each Revolving Lender individually, the sum of such Revolving Lender’s Revolving Commitment Percentage of the aggregate principal amount of outstanding Revolving Loans plus such Lender’s Revolving Commitment Percentage of outstanding LOC Obligations shall not exceed such Revolving Lender’s Revolving Commitment and (iii) with regard to the Revolving Lenders collectively, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed Amount then in effect. Revolving Loans may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided, however, the Revolving Loans made on any of the three (3) Business Days following the Closing Date, may only consist of Alternate Base Rate Loans unless the Borrower delivers a funding indemnity letter, substantially in the form of Exhibit 2.1(a), reasonably acceptable to the Administrative Agent not less than three (3) Business Days prior to the requested borrowing date. LIBOR Rate Loans shall be made by each Revolving Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic Lending Office.

 

(b) Revolving Loan Borrowings.

 

(i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing by delivering a written Notice of Borrowing (or telephone notice promptly confirmed in writing by delivery of a written Notice of Borrowing, which delivery may be by fax) to the Administrative Agent not later than 11:00 A.M. on the date of the requested borrowing in the case of Alternate Base Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of LIBOR Rate Loans. Each such Notice of Borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed and (D) whether the borrowing shall be comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a combination thereof, and if LIBOR Rate Loans are requested, the Interest Period(s) therefor. If the Borrower shall fail to specify in any such Notice of Borrowing (1) an applicable Interest Period in the case of a LIBOR Rate Loan, then such notice shall be deemed to be a request for an Interest Period of one (1) month, or (2) the Type of Revolving Loan requested, then such notice shall be deemed to be a request for an Alternate Base Rate Loan hereunder. The Administrative Agent shall give notice to each Revolving Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Revolving Lender’s share thereof.

 

(ii) Minimum Amounts. Each Revolving Loan that is made as an Alternate Base Rate Loan shall be in a minimum aggregate amount of $500,000 and in integral multiples of $250,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less). Each Revolving Loan that is made as a LIBOR Rate Loan shall be in a minimum aggregate amount of $500,000 and in integral multiples of $250,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less).

 

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(iii) Advances. Each Revolving Lender will make its Revolving Commitment Percentage of each Revolving Loan borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in Section 9.2, or at such other office as the Administrative Agent may designate in writing, by 1:00 P.M. on the date specified in the applicable Notice of Borrowing, in Dollars and in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office (or such other account that the Borrower may designate in writing to the Administrative Agent) with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent.

 

(c) Repayment. Subject to the terms of this Agreement, Revolving Loans may be borrowed, repaid and reborrowed during the Commitment Period, subject to Section 2.7(a). The principal amount of all Revolving Loans shall be due and payable in full on the Revolving Maturity Date, unless accelerated sooner pursuant to Section 7.2.

 

(d) Interest. Subject to the provisions of Section 2.8, Revolving Loans shall bear interest as follows:

 

(i) Alternate Base Rate Loans. During such periods as any Revolving Loans shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall bear interest at a per annum rate equal to the sum of the Alternate Base Rate plus the Applicable Margin; and

 

(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the sum of the LIBOR Rate plus the Applicable Margin.

 

Interest on Revolving Loans shall be payable in arrears on each Interest Payment Date.

 

(e) Revolving Loan Notes; Covenant to Pay. The Borrower’s obligation to pay each Revolving Lender shall be evidenced by this Agreement and, upon such Revolving Lender’s request, by a duly executed promissory note of the Borrower to such Revolving Lender in substantially the form of Exhibit 2.1(e). The Borrower covenants and agrees to pay the Revolving Loans in accordance with the terms of this Agreement.

 

Section 2.2 Term Loans.

 

(a) Term Loans. Subject to the terms and conditions hereof and in reliance upon the representations and warranties set forth herein, each Term Loan Lender severally, but not jointly, agrees to make available to the Borrower (through the Administrative Agent) on the Closing Date such Term Loan Lender’s Term Loan Commitment Percentage of a term loan in Dollars (the “Initial Term Loan”) in the aggregate principal amount of FOUR HUNDRED TWENTY-FIVE MILLION DOLLARS ($425,000,000) (the “Initial Term Loan Committed Amount”) for the purposes hereinafter set forth (such facility, the “Initial Term Loan Facility”). Upon receipt by the Administrative Agent of the proceeds of the Initial Term Loan, such proceeds will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of the office of the Administrative Agent specified in Section 9.2, or at such other office as the Administrative Agent may designate in writing, with the aggregate of such proceeds made available to the Administrative Agent by the Term Loan Lenders and in like funds as received by the Administrative Agent (or by crediting such other account(s) as directed by the Borrower). The Term Loans may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may request in the Notice of Borrowing delivered to the Administrative Agent prior to the Closing Date; provided, however, that the Initial Term Loan made on the Closing Date may only consist of Alternate Base Rate Loans unless the Borrower delivers a funding indemnity letter, substantially in the form of Exhibit 2.1(a), reasonably acceptable to the Administrative Agent not less than three (3) Business Days prior to the Closing Date. LIBOR Rate Loans shall be made by each Term Loan Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic Lending Office. Amounts repaid or prepaid on the Term Loan may not be reborrowed.

 

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(b) Repayment of Term Loan. The principal amount of the Initial Term Loan shall be repaid in consecutive quarterly installments on the last day of the fiscal quarters set forth below (and on the Term Loan Maturity Date), starting with the first full fiscal quarter following the Closing Date, based on the quarterly percentages of the original principal amount of the Initial Term Loan set forth on the table below (provided, however, if such payment date is not a Business Day, such payment shall be due on the preceding Business Day), unless accelerated sooner pursuant to Section 7.2:

 

Quarterly Amortization   
Payment Dates  Amortization
Third Quarter of 2019  0.25%
Fourth Quarter of 2019  0.25%
First Quarter of 2020  0.25%
Second Quarter of 2020  0.25%
Third Quarter of 2020  0.25%
Fourth Quarter of 2020  0.25%
First Quarter of 2021  0.25%
Second Quarter of 2021  0.25%
Third Quarter of 2021  0.25%
Fourth Quarter of 2021  0.25%
First Quarter of 2022  0.25%
Second Quarter of 2022  0.25%
Third Quarter of 2022  0.25%
Fourth Quarter of 2022  0.25%
First Quarter of 2023  0.25%
Second Quarter of 2023  0.25%
Third Quarter of 2023  0.25%
Fourth Quarter of 2023  0.25%
First Quarter of 2024  0.25%
Second Quarter of 2024  0.25%
Third Quarter of 2024  0.25%
Fourth Quarter of 2024  0.25%
First Quarter of 2025  0.25%
Second Quarter of 2025  0.25%
Third Quarter of 2025  0.25%
Fourth Quarter of 2025  0.25%
First Quarter of 2026  0.25%
Maturity Date  The remaining outstanding
   principal of the Initial Term Loan

  

The outstanding principal amount of the Initial Term Loan and all accrued but unpaid interest and other amounts payable with respect to the Initial Term Loan shall be repaid on the Term Loan Maturity Date.

 

(c) Interest on a Term Loan. Subject to the provisions of Section 2.8, the Term Loans shall bear interest as follows:

 

(i) Alternate Base Rate Loans. During such periods as the Term Loans shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan shall bear interest at a per annum rate equal to the sum of the Alternate Base Rate plus the Applicable Margin; and

 

(ii) LIBOR Rate Loans. During such periods as the Term Loans shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the sum of the LIBOR Rate plus the Applicable Margin.

 

Interest on the Term Loans shall be payable in arrears on each Interest Payment Date.

 

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(d) Term Loan Notes; Covenant to Pay. The Borrower’s obligation to pay each Term Loan Lender shall be evidenced by this Agreement and, upon such Term Loan Lender’s request, by a duly executed promissory note of the Borrower to such Term Loan Lender in substantially the form of Exhibit 2.2(d). The Borrower covenants and agrees to pay the Term Loans in accordance with the terms of this Agreement.

 

Section 2.3 Letter of Credit Subfacility.

 

(a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the Issuing Lender may reasonably require, during the Commitment Period the Issuing Lender shall issue, and the Revolving Lenders shall participate in, standby Letters of Credit for the account of the Borrower from time to time upon request in a form acceptable to the Issuing Lender; provided, however, that (i) the aggregate amount of LOC Obligations shall not at any time exceed $35,000,000 (the “LOC Committed Amount”), (ii) the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations shall not at any time exceed the Revolving Committed Amount then in effect, (iii) all Letters of Credit shall be denominated in Dollars and (iv) Letters of Credit shall be issued for any lawful corporate purposes and shall be issued as standby letters of credit, including in connection with workers’ compensation and other insurance programs. Except as otherwise expressly agreed in writing upon by all the Revolving Lenders, no Letter of Credit shall have an original expiry date more than twenty-four (24) months from the date of issuance; provided, however, so long as no Default or Event of Default has occurred and is continuing and subject to the other terms and conditions to the issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit may be extended annually or periodically from time to time (i) on the request of the Borrower, (ii) as permitted by the Administrative Agent in its sole discretion or (iii) by operation of the terms of the applicable Letter of Credit to a date not more than twelve (12) months from the date of extension; provided, further, that Letters of Credit may, as originally issued or as extended, have an expiry date extending beyond the Revolving Maturity Date, when subject to the provisions Section 2.3(k). Each Letter of Credit shall comply with the related LOC Documents. The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement. The issuance and expiry date of each Letter of Credit shall be a Business Day. Each Letter of Credit issued hereunder shall be in a minimum original face amount of $100,000 or such lesser amount as approved by the Issuing Lender. The Borrower’s Reimbursement Obligations in respect of each Existing Letter of Credit, and each Revolving Lender’s participation obligations in connection therewith, shall be governed by the terms of this Credit Agreement. Wells Fargo shall be the Issuing Lender on all Letters of Credit issued after the Closing Date.

 

(b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted to the Issuing Lender at least five (5) Business Days prior to the requested date of issuance. The Issuing Lender will promptly upon request provide to the Administrative Agent for dissemination to the Revolving Lenders a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of any prior report, and including therein, among other things, the account party, the beneficiary, the face amount, expiry date as well as any payments or expirations which may have occurred. The Issuing Lender will further provide to the Administrative Agent promptly upon request copies of the Letters of Credit. The Issuing Lender will provide to the Administrative Agent promptly upon request a summary report of the nature and extent of LOC Obligations then outstanding.

 

(c) Participations. Each Revolving Lender, (i) on the Closing Date with respect to each Existing Letter of Credit and (ii) upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the Issuing Lender in such Letter of Credit and the obligations arising thereunder and any Collateral relating thereto, in each case in an amount equal to its Revolving Commitment Percentage of the obligations under such Letter of Credit and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its Revolving Commitment Percentage of the obligations arising under such Letter of Credit; provided that any Person that becomes a Revolving Lender after the Closing Date shall be deemed to have purchased a Participation Interest in all outstanding Letters of Credit on the date it becomes a Lender hereunder and any Letter of Credit issued on or after such date, in each case in accordance with the foregoing terms. Without limiting the scope and nature of each Revolving Lender’s participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed as required hereunder or under any LOC Document, each such Revolving Lender shall pay to the Issuing Lender its Revolving Commitment Percentage of such unreimbursed drawing in same day funds pursuant to and in accordance with the provisions of subsection (d) hereof. The obligation of each Revolving Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided.

 

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(d) Reimbursement. In the event of any drawing under any Letter of Credit, the Issuing Lender will promptly notify the Borrower and the Administrative Agent. The Borrower shall reimburse the Issuing Lender on the day of drawing under any Letter of Credit if notified prior to 1:00 P.M. on a Business Day or, if after 1:00 P.M., on the following Business Day (either with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds as provided herein or in the LOC Documents. If the Borrower shall fail to reimburse the Issuing Lender as provided herein, the unreimbursed amount of such drawing shall automatically bear interest at a per annum rate equal to the Default Rate. Unless the Borrower shall immediately notify the Issuing Lender and the Administrative Agent of its intent to otherwise reimburse the Issuing Lender, the Borrower shall be deemed to have requested a Mandatory LOC Borrowing in the amount of the drawing as provided in subsection (e) hereof, the proceeds of which will be used to satisfy the Reimbursement Obligations. The Borrower’s Reimbursement Obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the Issuing Lender, the Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person, including, without limitation, any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The Administrative Agent will promptly notify the other Revolving Lenders of the amount of any unreimbursed drawing and each Revolving Lender shall promptly pay to the Administrative Agent for the account of the Issuing Lender, in Dollars and in immediately available funds, the amount of such Revolving Lender’s Revolving Commitment Percentage of such unreimbursed drawing. Such payment shall be made on the Business Day such notice is received by such Revolving Lender from the Administrative Agent if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 P.M. on the Business Day next succeeding the Business Day such notice is received. If such Revolving Lender does not pay such amount to the Administrative Agent for the account of the Issuing Lender in full upon such request, such Revolving Lender shall, on demand, pay to the Administrative Agent for the account of the Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Revolving Lender pays such amount to the Administrative Agent for the account of the Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the Alternate Base Rate. Each Revolving Lender’s obligation to make such payment to the Issuing Lender, and the right of the Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the Obligations hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e) Repayment with Revolving Loans. On any day on which the Borrower shall have requested, or been deemed to have requested, a Revolving Loan to reimburse a drawing under a Letter of Credit, the Administrative Agent shall give notice to the Revolving Lenders that a Revolving Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised entirely of Alternate Base Rate Loans (each such borrowing, a “Mandatory LOC Borrowing”) shall be made (without giving effect to any termination of the Commitments pursuant to Section 7.2) pro rata based on each Revolving Lender’s respective Revolving Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7.2) and the proceeds thereof shall be paid directly to the Administrative Agent for the account of the Issuing Lender for application to the respective LOC Obligations. Each Revolving Lender hereby irrevocably agrees to make such Revolving Loans on the day such notice is received by the Revolving Lenders from the Administrative Agent if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 P.M. on the Business Day next succeeding the day such notice is received, in each case notwithstanding (i) the amount of Mandatory LOC Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v) the date of such Mandatory LOC Borrowing, or (vi) any reduction in the Revolving Committed Amount after any such Letter of Credit may have been drawn upon. In the event that any Mandatory LOC Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the occurrence of a Bankruptcy Event), then each such Revolving Lender hereby agrees that it shall forthwith fund its Participation Interests in the outstanding LOC Obligations on the Business Day such notice to fund is received by such Revolving Lender from the Administrative Agent if such notice is received at or before 2:00 P.M., otherwise such payment shall be made at or before 12:00 Noon on the Business Day next succeeding the Business Day such notice is received; provided, further, that in the event any Lender shall fail to fund its Participation Interest as required herein, then the amount of such Revolving Lender’s unfunded Participation Interest therein shall automatically bear interest payable by such Revolving Lender to the Administrative Agent for the account of the Issuing Lender upon demand, at the rate equal to, if paid within two (2) Business Days of such date, the Federal Funds Effective Rate, and thereafter at a rate equal to the Alternate Base Rate.

 

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(f) Modification, Extension. The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

 

(g) ISP98. Unless otherwise expressly agreed by the Issuing Lender and the Borrower, when a Letter of Credit is issued, the rules of the “International Standby Practices 1998,” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit.

 

(h) Conflict with LOC Documents. In the event of any conflict between this Agreement and any LOC Document (including any letter of credit application and any LOC Documents relating to the Existing Letters of Credit), this Agreement shall control.

 

(i) Designation of Subsidiaries as Account Parties. Notwithstanding anything to the contrary set forth in this Agreement, including, without limitation, Section 2.3(a), a Letter of Credit issued hereunder may contain a statement to the effect that such Letter of Credit is issued for the account of a Subsidiary of the Borrower; provided that, notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Agreement for such Letter of Credit and such statement shall not affect the Borrower’s Reimbursement Obligations hereunder with respect to such Letter of Credit.

 

(j) [Reserved].

 

(k) Letters of Credit Expiring After Revolving Maturity Date. With respect to any Letter of Credit with an expiry date after the Revolving Maturity Date (a “Cash Collateralized LC”), the Borrower shall deliver Cash Collateral to the Issuing Lender no later than the date that is thirty (30) days prior to the Revolving Maturity Date (the “LC Expiration Date”) in an amount equal to 103% of the LOC Obligations of any such Letter of Credit (the “LC Cash Collateral”). To the extent the Borrower fails to provide the LC Cash Collateral on the LC Expiration Date, the Borrower shall be deemed to have requested a Mandatory LOC Borrowing in an amount equal to 100% of the LOC Obligations of the Cash Collateralized LC as provided in Section 2.3(e) hereof, the proceeds of which will be delivered to the Issuing Lender as LC Cash Collateral. In the event that any Mandatory LOC Borrowing cannot for any reason be made on the LC Expiration Date, then each such Revolving Lender hereby agrees that it shall promptly fund its Participation Interests in such Cash Collateralized LC (which shall be delivered to the Issuing Lender as LC Cash Collateral). Upon the Cash Collateralization of any Letter of Credit pursuant to this Section 2.3(k), such Cash Collateralized LC shall be deemed to be issued outside of this Agreement; provided that, (i) the fees associated with such Letter of Credit shall continue to accrue, but shall thereafter be solely for the benefit of the Issuing Lender and (ii) any principal, interest or other amounts owed or owing to the Revolving Lenders in connection with a Mandatory LOC Borrowing or a funded Participation Interest hereunder shall continue to be owed and paid in accordance with the terms of this Agreement.

 

(l) Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, this Section 2.3 shall be subject to the terms and conditions of Sections 2.20 and 2.21.

 

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Section 2.4 [Reserved].

 

Section 2.5 Fees.

 

(a) Commitment Fee. Subject to Section 2.21, in consideration of the Revolving Commitments, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Revolving Lenders, a commitment fee (the “Commitment Fee”) in an amount equal to 0.50% per annum on the average daily unused amount of the Revolving Committed Amount. The Commitment Fee shall be calculated quarterly in arrears and will accrue from the Closing Date. For purposes of computation of the Commitment Fee, LOC Obligations shall be considered usage of the Revolving Committed Amount. The Commitment Fee shall be fully earned and due and payable quarterly in arrears (calculated on a 360-day basis) on the last Business Day of each calendar quarter.

 

(b) Letter of Credit Fees. Subject to Section 2.3(k) or 2.21, in consideration of the LOC Commitments, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Revolving Lenders, a fee (the “Letter of Credit Fee”) equal to the Applicable Margin for Revolving Loans that are LIBOR Rate Loans per annum on the average daily maximum amount available to be drawn under each Letter of Credit from the date of issuance to the date of expiration. The Letter of Credit Fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter.

 

(c) Issuing Lender Fees. In addition to the Letter of Credit Fees payable pursuant to subsection (b) hereof, the Issuing Lender may charge, and retain for its own account without sharing by the other Lenders, an additional facing fee (the “Letter of Credit Facing Fee”) both as described in the Fee Letter and separately agreed.

 

(d) Administrative Fee. The Borrower agrees to pay to the Administrative Agent the annual administrative fee as described in the Fee Letter.

 

Section 2.6 Commitment Reductions.

 

(a) Voluntary Reductions. The Borrower shall have the right to terminate or permanently reduce the unused portion of the Revolving Committed Amount at any time or from time to time upon not less than five (5) Business Days’ prior written notice to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction which shall be in a minimum amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof and, subject to the final sentence of Section 2.7(a) below, shall be irrevocable and effective upon receipt by the Administrative Agent; provided that no such reduction or termination shall be permitted if after giving effect thereto, and to any prepayments of the Revolving Loans made on the effective date thereof, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations would exceed the Revolving Committed Amount then in effect. Any reduction in the Revolving Committed Amount shall be applied to the Commitment of each Revolving Lender in accordance with its Revolving Commitment Percentage.

 

(b) LOC Committed Amount. If the Revolving Committed Amount is reduced below the then current LOC Committed Amount, the LOC Committed Amount shall automatically be reduced by an amount such that the LOC Committed Amount equals the Revolving Committed Amount.

 

(c) Revolving Maturity Date. The Revolving Commitments and the LOC Commitment shall automatically terminate on the Revolving Maturity Date.

 

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Section 2.7 Prepayments.

 

(a) Optional Prepayments and Repayments. The Borrower shall have the right to prepay the Term Loans and repay Revolving Loans in whole or in part from time to time; provided, however, that each partial prepayment or repayment of (i) Revolving Loans or Term Loans that are Alternate Base Rate Loans shall be in a minimum principal amount of $500,000 and integral multiples of $250,000 in excess thereof (or the remaining outstanding principal amount) and (ii) Revolving Loans or Term Loans that LIBOR Rate Loans shall be in a minimum principal amount of $500,000 and integral multiples of $250,000 in excess thereof (or the remaining outstanding principal amount). The Borrower shall give three (3) Business Days’ irrevocable notice of prepayment in the case of LIBOR Rate Loans and same-day irrevocable notice on any Business Day in the case of Alternate Base Rate Loans, to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable) and the Borrower shall specify whether the repayment is of the Initial Term Loan, an Incremental Term Loan or a combination thereof, and if a combination thereof, the amount allocable to each. Each optional prepayment of the Term Loans hereunder shall be applied to the outstanding principal installments of the Initial Term Loan and, if applicable, any Incremental Term Loans as directed by the Borrower. To the extent the Borrower elects to repay the Revolving Loans, amounts prepaid under this Section shall be applied to the Revolving Loans of the Revolving Lenders in accordance with their respective Revolving Commitment Percentages. Within the foregoing parameters, prepayments of Term Loans under this Section shall be applied at the direction of the Borrower. All prepayments under this Section shall be subject to Section 2.15, but otherwise without premium or penalty except as set forth in Section 2.7(d). Interest on the principal amount prepaid shall be payable on the next occurring Interest Payment Date that would have occurred had such loan not been prepaid. Notwithstanding the foregoing or anything in Section 2.6(a) above to the contrary, any notice of prepayment delivered pursuant to this Section 2.7(a) and/or any notice of termination delivered pursuant to Section 2.6(a) above, in each case, in connection with any refinancing of all of the Senior Credit Facilities with the proceeds of such refinancing or of any other incurrence of Indebtedness or the occurrence of some other identifiable event or condition, may be, if expressly so stated to be, contingent upon the consummation of such refinancing or incurrence or occurrence of such other identifiable event or condition and may be postponed and/or revoked by the Borrower in the event such contingency is delayed and/or not met; provided that the delay or failure of such contingency shall not relieve the Borrower from its obligations in respect thereof under Section 2.15.

 

(b) Mandatory Prepayments.

 

(i) Revolving Committed Amount. If at any time, the sum of the aggregate principal amount of outstanding Revolving Loans plus outstanding LOC Obligations shall exceed the Revolving Committed Amount, the Borrower shall immediately prepay the Revolving Loans and (after all Revolving Loans have been repaid) Cash Collateralize the LOC Obligations in an amount sufficient to eliminate such excess (such prepayment to be applied as set forth in clause (vi) below).

 

(ii) Asset Dispositions. Within five Business Days following the receipt of Net Cash Proceeds derived from any Asset Disposition (or related series of Asset Dispositions) by the Borrower or any of its Restricted Subsidiaries (including the issuance by any such Restricted Subsidiary of any of its equity interests to any Person that is not a Credit Party or any Restricted Subsidiary thereof), the Borrower shall prepay the Term Loans (such prepayment to be applied as set forth in clause (vi) below) in an aggregate amount equal to (A) 100% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is greater than 2.75 to 1.00, (B) 50% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is equal to or less than 2.75 to 1.00 but greater than 2.50 to 1.00 and (C) 25% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is equal to or less than 2.50 to 1.00; provided, however, that such Net Cash Proceeds shall not be required to be so applied to prepay the Term Loans until the aggregate amount of the Net Cash Proceeds derived from any Asset Dispositions in any fiscal year of the Borrower or any of its Restricted Subsidiaries (including the issuance by any such Restricted Subsidiary of any of its equity interests to any Person that is not a Credit Party or any Restricted Subsidiary thereof)) is equal to or greater than $5,000,000 for each individual Asset Disposition (or related series of Asset Dispositions) and $10,000,000 in the aggregate for all such Asset Dispositions during any fiscal year (and in each case only to the extent of such excess); provided, further, that, so long as no Event of Default has occurred and is continuing at the time of receipt of such Net Cash Proceeds, such Net Cash Proceeds shall not be required to be used to prepay the Term Loans to the extent the Borrower or any of its Restricted Subsidiaries uses any portion of such Net Cash Proceeds to acquire, maintain, develop, construct, improve, upgrade or repair Restaurants or other assets useful in the business of the Borrower or its Restricted Subsidiaries, in each case, within fifteen (15) months of the receipt of such Net Cash Proceeds, except to the extent not, within fifteen (15) months of such receipt, so used (or, if any portion of such Net Cash Proceeds are not so used within such 15-month period but within such 15-month period are contractually committed to be so used, then, if such Net Cash Proceeds are not so used within six (6) months after the end of such 15-month period), it being understood that any portion of Net Cash Proceeds not so reinvested within such applicable time period shall be applied to prepay the Term Loans (such prepayment to be applied as set forth in clause (vi) below).

 

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(iii) Debt Issuances. Immediately upon receipt by any Credit Party or any of its Restricted Subsidiaries of proceeds from any Debt Issuance, the Borrower shall prepay the Term Loans in an aggregate amount equal to 100% of the Net Cash Proceeds of such Debt Issuance (such prepayment to be applied as set forth in clause (vi) below).

 

(iv) Excess Cash Flow. Within ninety (90) days after the end of each fiscal year (commencing with fiscal year ending on or about December 31, 2020), if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the end of such fiscal year is (A) greater than 2.75 to 1.00, the Borrower shall prepay the Term Loans in an aggregate amount equal to 50% of the Excess Cash Flow for such fiscal year (such prepayments to be applied as set forth in clause (vi) below), (B) equal to or less than 2.75 to 1.00 but greater than 2.50 to 1.00, the Borrower shall prepay the Loans in an aggregate amount equal to 25% of the Excess Cash Flow for such fiscal year (such prepayments to be applied as set forth in clause (vi) below) and (C) equal to or less than 2.50 to 1.00, the Borrower shall not be required prepay the Loans; in each case, minus, if not deducted in any prior fiscal year, on a dollar-for-dollar basis (not to exceed the amount of cash actually spent), the aggregate amount of (1) all voluntary prepayments, repurchases or redemptions of the loans under any Revolving Facility or any revolving Additional First Lien Debt (accompanied by a corresponding permanent reduction in the aggregate Revolving Committed Amount) and (2) all voluntary prepayments, repurchases or redemptions of the loans under any Term Loan Facility and any Additional First Lien Debt, in each case, secured on a pari passu basis with the Initial Term Loan Facility and repurchased or redeemed on a pro rata basis or less than pro rata basis with the Initial Term Loan Facility; provided, in each case, prepayments, repurchases or redemptions to the extent funded with the proceeds of long-term funded Indebtedness (other than Revolving Loans) shall be excluded.

 

(v) Recovery Events. Within five Business Days following the receipt by any Credit Party or any of its Restricted Subsidiaries of Net Cash Proceeds from a Recovery Event, the Borrower shall prepay the Term Loans in an aggregate amount equal to (A) 100% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is greater than 2.75 to 1.00, (B) 50% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is equal to or less than 2.75 to 1.00 but greater than 2.50 to 1.00 and (C) 25% of such Net Cash Proceeds, if the Borrower’s First Lien Net Leverage Ratio, calculated on a Pro Forma Basis and as of the most recently completed Reference Period, is equal to or less than 2.50 to 1.00; provided, however, that such Net Cash Proceeds shall not be required to be so applied until the aggregate amount of the Net Cash Proceeds derived from any Recovery Event in any fiscal year of the Borrower is equal to or greater than $5,000,000 for each individual Recovery Event and $10,000,000 in the aggregate for all such Recovery Events during any fiscal year (and in each case only to the extent of such excess); provided, further, that, so long as no Event of Default has occurred and is continuing at the time of receipt of such Net Cash Proceeds, such Net Cash Proceeds shall not be required to be used to prepay the Term Loans to the extent the Borrower or any of its Restricted Subsidiaries uses any portion of such Net Cash Proceeds to acquire, maintain, develop, construct, improve, upgrade or repair Restaurants or other assets useful in the business of the Borrower or its Restricted Subsidiaries, in each case, within fifteen (15) months of the receipt of such Net Cash Proceeds, except to the extent not, within fifteen (15) months of such receipt, so used (or, if any of such Net Cash Proceeds are not so used within such 15-month period but within such 15-month period are contractually committed to be so used, then, if such Net Cash Proceeds are not so used within six (6) months after the end of such 15-month period), it being understood that any such remaining portion of Net Cash Proceeds not so reinvested within such applicable time period shall be applied to prepay the Term Loans (such prepayment to be applied as set forth in clause (vi) below).

 

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(vi) Application of Mandatory Prepayments. All amounts required to be paid pursuant to this Section 2.7(b) shall be applied as follows:

 

(A) with respect to all amounts prepaid pursuant to Section 2.7(b)(i), first to the principal amount of outstanding Revolving Loans (without a simultaneous corresponding reduction of the Revolving Committed Amount) and (2) second with respect to any Letters of Credit then outstanding, to Cash Collateralize the LOC Obligations; and

 

(B) with respe