EXHIBIT C
CARROLS HOLDINGS CORPORATION
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of
_______, 1997 by and among Carrols Holdings Corporation, a Delaware corporation
(the "Company"), Madison Dearborn Capital Partners, L.P., Madison Dearborn
Capital Partners II, L.P. (together with Madison Dearborn Capital Partners,
L.P., the "Investors"), Atlantic Restaurants, Inc. ("ARI"), ▇▇▇▇ ▇▇▇▇▇▇
("Vituli") and the Management Investors (as defined herein). For purposes of
this Agreement, the Management Holders (as defined herein), ARI, the Investors
and Vituli are collectively referred to as the "Stockholders"). Capitalized
terms used herein are defined in paragraph 11 hereof.
The Investors shall purchase certain shares of the Company's
Common Stock pursuant to a stock purchase agreement among the Company, the
Investors and ARI (the "Purchase Agreement") dated as of February 25, 1997.
The Company and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition of
the Company's Board of Directors (the "Board"), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Stockholders' Common Stock may be transferred. The execution and
delivery of this Agreement is a condition to the Investors' purchase of the
Company's and ARI's stock pursuant to the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Board of Directors.
(a) From and after the Closing (as defined in the Purchase
Agreement) and until the provisions of this paragraph 1 cease to be effective,
each holder of Stockholder Shares shall vote all of such holder's Stockholder
Shares which are voting shares and any other voting securities of the Company
over which such holder has voting control and shall take all other necessary or
desirable actions within such holder's control (whether in his capacity as a
stockholder, director, member of a board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary or desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall
be established at eight directors, or, as provided in subparagraph (e)
below, six directors;
(ii) the following individuals shall be elected to the
Board:
(A) subject to paragraph 1(c) below, three
representatives designated by the Investors (the "Investor
Directors"); provided that so long as the Investors are entitled
to three Investor Directors, one of the Investor Directors shall
not be an employee or officer of either of the Investors or any
of their Affiliates and such director shall not be elected to or
remain on the Board unless there are three ARI Directors serving
on the Board at such time but if and only if ARI is entitled to
three ARI Directors at such time;
(B) subject to paragraph 1(d) below, three
representatives designated by ARI (the "ARI Directors"); provided
that so long as ARI is entitled to three ARI Directors, one of
the ARI Directors shall not be an employee or officer of ARI or
any of its Affiliates and such director shall not be elected to
or remain on the Board unless there are three Investor Directors
serving on the Board at such time but if and only if the
Investors are entitled to three Investor Directors at such time;
and
(C) so long as Vituli is the Chief Executive
Officer of Carrols Corporation ("Carrols"), two representatives
designated by Vituli who shall be executive officers of Carrols
(the "Management Directors");
(iii) the composition of the board of directors of each of
the Company's Subsidiaries (a "Sub Board") shall be the same as that of
the Board;
(iv) any committees of the Board or a Sub Board shall be
created, and the members thereof determined, only with the approval of a
majority of the Investor Directors and a majority of the ARI Directors
(it being understood that (x) the audit committee and the compensation
committee, which committees shall be created on the date hereof, shall
not include any Management Directors and (y) at least one of the
Management Directors shall serve on all other committees (if any) of the
Board);
(v) the removal from the Board or a Sub Board (with or
without cause) of any representative designated hereunder by the
Investors, ARI or Vituli shall be at the Investors', ARI's or Vituli's
written request, respectively, but only upon such written request and
under no other circumstances, and if any Management Director ceases to
be an employee of the Company and its Subsidiaries, he shall be removed
as a director promptly after his employment ceases; and
(vi) (A) in the event that any Investor Director ceases to
serve as a member of the Board or a Sub Board during his term of office,
the resulting vacancy on the Board or Sub Board shall be filled by a
representative designated as provided in subparagraph (ii)(A) above, (B)
in the event that any ARI Director ceases to serve as a
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member of the Board or a Sub Board during his term of office, the
resulting vacancy on the Board or Sub Board shall be filled by a
representative designated as provided in subparagraph (ii)(B) above, and
(C) in the event that any Management Director ceases to serve as a
member of the Board or a Sub Board during his term of office, the
resulting vacancy on the Board or Sub Board shall be filled by a
representative designated as provided in subparagraph (ii)(C) above.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the
Board, any Sub Board and any committee thereof. In addition, the Company shall
pay to each Investor Director and each ARI Director an annual fee in an amount
determined by the Board from time to time to be paid by the Company to each
non-employee director as and when determined by the Board. So long as any
Investor Director, ARI Director or Management Director serves on the Board or a
Sub Board, and for five years thereafter, the Company's Restated Certificate of
Incorporation and Bylaws shall provide for the indemnification and exculpation
or directors to the fullest extent permitted under applicable law.
(c) Subject to paragraph (h) below, at such time as the Investor
Holders hold in the aggregate less than (i) 80% of the Stockholder Shares held
by the Investors on the date hereof, the number of Investor Directors shall be
reduced to two directors and ARI, if the number of the ARI Directors has not
been reduced pursuant to paragraph (d) below, shall then have the right to
designate an additional ARI Director, which individual shall serve as an ARI
Director pursuant to the provisions of this paragraph 1; (ii) 65% of the
Stockholder Shares held by the Investors on the date hereof, the number of
Investor Directors shall be reduced to one director and ARI, if the number of
the ARI Directors has not been reduced pursuant to paragraph (d) below, shall
then have the right to designate two additional ARI Directors, which individuals
shall serve as ARI Directors pursuant to the provisions of this paragraph 1; and
(iii) 33% of the Stockholder Shares held by the Investors on the date hereof,
the number of Investor Directors shall be reduced to zero and ARI, if the number
of the ARI Directors has not been reduced pursuant to paragraph (d) below, shall
then have the right to designate an additional three ARI Directors, which
individuals shall serve as ARI Directors pursuant to the provisions of this
paragraph 1.
(d) Subject to paragraph (h) below, at such time as the ARI
Holders hold in the aggregate less than (i) 80% of the Stockholder Shares held
by ARI on the date hereof, the number of ARI Directors shall be reduced to two
directors and the Investors, if the number of the Investor Directors has not
been reduced pursuant to paragraph (c) above, shall then have the right to
designate an additional Investor Director, which individual shall serve as an
Investor Director pursuant to the provisions of this paragraph 1; (ii) 65% of
the Stockholder Shares held by ARI on the date hereof, the number of ARI
Directors shall be reduced to one director and the Investors, if the number of
the Investor Directors has not been reduced pursuant to paragraph (c) above,
shall then have the right to designate two additional Investor Directors, which
individuals shall serve as Investor Directors pursuant to the provisions of this
paragraph 1; and (iii) 33% of the Stockholder Shares held by ARI on the date
hereof, the number of ARI Directors shall be reduced to zero and the Investors,
if the number of the Investor Directors has not been reduced
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pursuant to paragraph (c) above, shall then have the right to designate an
additional three Investor Directors, which individuals shall serve as Investor
Directors pursuant to the provisions of this paragraph 1.
(e) If Vituli ceases to be Chief Executive Officer of Carrols,
his right to designate any Management Directors under this paragraph 1 shall
cease immediately, the Management Directors shall resign or be removed from the
Board hereunder and the size of the Board shall be reduced to six directors.
(f) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this paragraph 1, the individual
previously holding such directorship shall be elected to such position, or if
such individual fails or declines to serve, the election of an individual to
such directorship shall be accomplished in accordance with the Company's Bylaws
and applicable law; provided that the Stockholders shall vote to remove such
individual if the party which failed to designate such directorship so directs.
(g) Each of (i) the Investors and (ii) ARI shall be entitled to
appoint up to two individuals (who shall be officers or employees of the
Investors or their Affiliates or of ARI or its Affiliates, respectively) who may
attend as an observer all meetings of the Board (the "Board Attendees");
provided that only one appointee of each of the Investors and ARI shall be
entitled to attend any given meeting of the Board. The Company shall give
written notice of each meeting of the Board to such individuals at the same time
and in the same manner as notice is given to the directors (which notice shall
be promptly confirmed in writing to such Person). The Board Attendees shall be
entitled to receive all written materials and other information (including,
without limitation, copies of meeting minutes) given to directors in connection
with such meetings at the time such materials and information are given to the
directors. If the Company proposes to take any action by written consent in lieu
of a meeting of the Board, the Company shall give written notice thereof to each
Board Attendee prior to the effective date of such consent describing in
reasonable detail the nature and substance of such action. At such time as the
Investors or ARI appoint a new Board Attendee, the Investors or ARI, as the case
may be, shall promptly provide notice to the Company of such action and the
identity of such new Board Attendee.
(h) The provisions of this paragraph 1 shall continue to be in
effect following the consummation of the Company's initial Public Offering,
except that thereafter, neither ARI nor the Investors shall be entitled to
designate any additional directors under paragraphs (1)(c) or (1)(d),
respectively.
2. Representations and Warranties. Each Stockholder represents
and warrants that (i) such Stockholder is the record owner of the number of
Stockholder Shares set forth opposite its name on the Schedule of Stockholders
attached hereto, (ii) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, and (iii) such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No holder
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of Stockholder Shares shall grant any proxy or become party to any voting trust
or other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement.
3. Retention of Stockholder Shares. Until the fourth anniversary
of the date of this Agreement, neither Vituli nor any Management Investor shall
sell, transfer, assign, pledge or otherwise dispose of any Stockholder Shares
held by him on the date hereof or hereafter acquired, except pursuant to an
Approved Sale or a Public Sale; provided that nothing contained in this
paragraph 3 shall prohibit Vituli or any Management Investor from transferring
Stockholder Shares as permitted by paragraphs 4(d) and 4(e) hereof; and provided
further that the provisions of this paragraph 3 shall terminate and cease to be
effective (i) upon the consummation of a Qualified Public Offering or an
Approved Sale, (ii) upon the termination of such individual's employment with
the Company or any of its Subsidiaries because of such individual's death,
Permanent Disability, termination for Good Reason or termination without Cause,
or (iii) upon a Change in Control. For purposes of this paragraph 3, the terms
"Permanent Disability", "Good Reason", "Cause" and "Change of Control" shall
have the definitions ascribed to them in the Executive Option Agreements.
4. Restrictions on Transfer of Stockholder Shares.
(a) Transfer of Stockholder Shares. No holder of Stockholder
Shares shall sell, transfer, assign, pledge or otherwise dispose of (whether
with or without consideration and whether voluntarily or involuntarily or by
operation of law) any interest in Stockholder Shares (a "Transfer"), except
pursuant to a Public Sale or an Approved Sale (an "Exempt Transfer") or pursuant
to this paragraph 4; provided that in no event shall any Transfer of Stockholder
Shares pursuant to this paragraph 4 be made for any consideration other than
cash payable upon consummation of such Transfer or in installments over time.
(b) Sale Notice. Prior to making any Transfer other than an
Exempt Transfer, any holder of Stockholder Shares intending to make such a
Transfer (the "Transferring Stockholder") shall deliver written notice (the
"Sale Notice") to the Company and to each Investor Holder, each ▇▇▇ ▇▇▇▇▇▇ and
each Management Holder other than the Transferring Stockholder (the "Other
Holders"). The Sale Notice shall disclose in reasonable detail the identity of
the prospective transferee(s), the number of shares to be transferred (the
"Specified Shares") and the terms and conditions of the proposed Transfer. No
Transferring Stockholder shall consummate any such Transfer until 45 days after
the Sale Notice has been delivered to the Company and to the Other Holders,
unless the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 45-day period.
(c) First Refusal Rights. The Company may elect to purchase all
(but not less than all) of the Specified Shares upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to the Transferring Stockholder and the Other Holders within 30
days after the Sale Notice has been delivered to the Company. If the Company has
not elected to purchase all of the Specified Shares within such 30-day period,
each of the Other Holders may elect to purchase any or all of the Specified
Shares set forth in the Sale Notice at the price and on the terms specified
therein by delivering written notice of such election
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to the Transferring Stockholder and the Other Holders as soon as practical but
in any event within 45 days after delivery of the Sale Notice. If the Other
Holders have in the aggregate elected to purchase more than the Specified
Shares, the Specified Shares shall be allocated among the Other Holders electing
to purchase shares pro rata based on the number of Stockholder Shares owned by
such Other Holder. If the Company or the Other Holders have elected to purchase
Specified Shares, the purchase of such shares shall be consummated as soon as
practical after the delivery of the election notice(s) to the Transferring
Stockholder, but in any event within 15 days after the delivery of the election
notice to the Transferring Stockholder. If the Company and the Other Holders
have not elected to purchase all of the Specified Shares, the Transferring
Stockholder may transfer the remaining Specified Shares at a price and on terms
no more favorable to the transferee(s) thereof than those specified in the Sale
Notice. Any Specified Shares not so transferred by the Transferring Stockholder
within 30 days shall be reoffered to the Company and the Other Holders pursuant
to this paragraph 4(c) prior to any subsequent Transfer.
(d) Co-Sale Rights. Any Other Holders who have not elected to
purchase Specified Shares from the Transferring Stockholder pursuant to
paragraph 4(c) may elect to participate in the proposed Transfer by delivering
written notice to the Transferring Stockholder and the Company within 45 days
after the Sale Notice has been delivered by the Transferring Stockholder. If any
such Other Holder elects to participate in such Transfer (a "Participating
Stockholder"), the Transferring Stockholder and each Participating Stockholder
shall be entitled to sell in the contemplated Transfer, on the same terms, a
number of Stockholder Shares equal to the product of (i) the quotient determined
by dividing the percentage of Stockholder Shares owned by the Participating
Stockholder by the aggregate percentage of Stockholder Shares owned by the
Transferring Stockholder and all Participating Stockholders and (ii) the number
of Stockholder Shares to be sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares by the Transferring Stockholder, and if the
Transferring Stockholder at such time owns 30% of all
Stockholder Shares and if the Participating Stockholder owns 20%
of all Stockholder Shares, the Transferring Stockholder would be
entitled to sell 60 shares (30%[div]50% x 100 shares) and the
Participating Stockholder would be entitled to sell 40 shares
(20%[div]50% x 100 shares).
Each Transferring Stockholder shall use best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the Participating
Stockholder in any such contemplated Transfer, and no Transferring Stockholder
shall transfer any of its Stockholder Shares to any prospective transferee if
such prospective transferee(s) declines to allow the participation of the
Participating Stockholder. Each Person transferring Stockholder Shares pursuant
to this paragraph 4(d) shall pay its pro rata share (based on the number of
Stockholder Shares to be sold) of any expenses incurred in connection with such
Transfer and shall be obligated to join on a pro rata basis in any
indemnification or other obligations that the Transferring Stockholder agrees to
provide in connection with such Transfer (other than any such obligations that
relate specifically to a particular Stockholder such as indemnification with
respect to representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Stockholder Shares); provided that no
holder shall be obligated in connection with such Transfer to agree to
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indemnify or hold harmless the transferees with respect to an amount in excess
of the net cash proceeds paid to such holder in connection with such Transfer.
In the event that any Management Holder elects neither to purchase any Specified
Shares pursuant to paragraph 4(c) nor to participate in any Transfer pursuant to
the terms of this paragraph 4(d), those shares which such Management Holder
would have been entitled to sell in such Transfer (the "Management Participating
Shares") shall cease to be subject to the restrictions set forth in paragraph 3
hereof, but shall continue to be subject to the restrictions set forth in this
paragraph 4. Notwithstanding the foregoing, in the event that the participation
of any Management Holder pursuant to this paragraph 4(d) would result in a
Change of Control, the prior written consent of ARI (if the Transferring
Stockholder is one of the Investors) or the Investors (if the Transferring
Stockholder is ARI), as the case may be, shall be required for such Management
Holder to participate in such Transfer.
(e) Permitted Transfers. The restrictions set forth in this
paragraph 4 shall not apply with respect to any Transfer of Stockholder Shares
by any Person (i) in the case of an individual, pursuant to applicable laws of
descent and distribution or among such individual's Family Group or (ii) in the
case of a Person other than an individual, among its Affiliates (collectively
referred to herein as "Permitted Transferees"); provided that the restrictions
contained in this paragraph 4 shall continue to be applicable to the Stockholder
Shares after any such Transfer and provided further that the transferees of such
Stockholder Shares shall have agreed in writing to be bound by the provisions of
this Agreement affecting the Stockholder Shares so transferred. For purposes of
this Agreement, "Family Group" means an individual's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of the
individual and/or the individual's spouse and/or descendants, and "Affiliate" of
a Person other than an individual means any other Person, directly or indirectly
controlling, controlled by or under common control with such Person or, with
respect to any partnership, any partner thereof. Notwithstanding the foregoing,
no party hereto shall avoid the provisions of this Agreement by making one or
more transfers to one or more Permitted Transferees and then disposing of all of
any portion of such party's interest in any such Permitted Transferee.
(f) Termination of Restrictions. The restrictions on the
Transfer of Stockholder Shares set forth in this paragraph 4 shall continue with
respect to each Stockholder Share until the date on which such Stockholder Share
has been transferred in a Public Sale or an Approved Sale.
5. Company Covenants.
(a) Financial Statements and Other Information. The Company
shall deliver to (x) the Investors (so long as the Investors and their
Affiliates hold in the aggregate at least 5% of the outstanding Common Stock),
(y) ARI (so long as ARI and its Affiliates hold in the aggregate at least 5% of
the outstanding Common Stock) and (z) Vituli (so long as Vituli and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ hold in the aggregate at least 2% of the outstanding Common Stock
(including shares of Common Stock into which their options may be exercised) and
Vituli holds some amount of such Common Stock):
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(i) as soon as available but in any event within 30 days
after the end of each monthly accounting period in each fiscal year,
unaudited consolidating and consolidated statements of income and cash
flows of the Company and its Subsidiaries for such monthly period and
for the period from the beginning of the fiscal year to the end of such
month, and, unless the Company, the Investors and ARI mutually agree
otherwise, unaudited consolidating and consolidated balance sheets of
the Company and its Subsidiaries as of the end of such monthly period,
setting forth in each case comparisons to the Company's annual budget
and to the corresponding period in the preceding fiscal year, and all
such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied and shall be certified by
the Company's chief financial officer;
(ii) accompanying the financial statements referred to in
subparagraph (i), (a) an officer's certificate on behalf of the Company
stating that neither the Company nor any of its Subsidiaries is in
default under any of its other material agreements or, if any such
default exists, specifying the nature and period of existence thereof
and what actions the Company and its Subsidiaries have taken and propose
to take with respect thereto, and (b) a summary prepared by management
of the Company describing significant aspects of the Company's and its
Subsidiaries' operations and financial affairs (including, but not
limited to, material deviations from the Company's annual or other
budgets, material breaches or defaults under material agreements or any
other material adverse change, event or circumstance affecting the
Company or any Subsidiary (including, without limitation, the filing of
any material litigation against the Company or any Subsidiary));
(iii) upon the completion thereof, but in no event later
than 90 days after the end of each fiscal year, consolidating and
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal year, and consolidating and consolidated
balance sheets of the Company and its Subsidiaries as of the end of such
fiscal year, setting forth in each case comparisons to the Company's
annual budget and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by (a) with respect to the consolidated
portions of such statements, an opinion of an independent accounting
firm of recognized national standing acceptable to the holders of a
majority of the outstanding Common Stock that is unqualified with
respect to the scope of such firm's examination, (b) a certificate from
such accounting firm, addressed to the Board, stating that in the course
of its examination nothing came to its attention that caused it to
believe that there was any default by the Company or any Subsidiary in
the fulfillment of or compliance with any of the financial provisions of
any other material agreement to which the Company or any Subsidiary is a
party or, if such accountants have reason to believe any default by the
Company or any Subsidiary exists, a certificate specifying the nature
and period of existence thereof, and (c) a copy of such firm's annual
management letter to the board of directors;
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(iv) promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning
significant aspects of the Company's and its Subsidiaries' operations or
financial affairs given to the Company by its independent accountants
(and not otherwise contained in other materials provided hereunder);
(v) at least 30 days but not more than 90 days prior to
the beginning of each fiscal year, an annual budget prepared on a
monthly basis for the Company and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or
other budgets;
(vi) within ten days after transmission thereof, copies of
all registration statements and all regular, special or periodic reports
which it files, or any of its officers or directors file with respect to
the Company, with the Securities and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and
copies of all press releases and other statements made available
generally by the Company to the public concerning material developments
in the Company's and its Subsidiaries' businesses; and
(vii) with reasonable promptness, such other information
and financial data concerning the Company and its Subsidiaries as any
Person entitled to receive information under this paragraph 5(a) may
reasonably request.
(b) Inspection of Property. The Company shall permit any
representatives designated by (x) the Investors (so long as the Investors and
their Affiliates hold in the aggregate at least 5% of the outstanding Common
Stock), (y) ARI (so long as ARI and its Affiliates hold in the aggregate at
least 5% of the Common Stock), or (z) Vituli (so long as Vituli and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ hold in the aggregate at least 2% of the outstanding Common Stock
(including shares of Common Stock into which their options may be exercised) and
Vituli holds some amount of such Common Stock) , upon reasonable notice and
during normal business hours and at such other times as any such holder may
reasonably request, to (i) visit and inspect any of the properties of the
Company and its Subsidiaries, (ii) examine the corporate and financial records
of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries. The presentation of an executed
copy of this Agreement by the Investors or ARI to the Company's independent
accountants shall constitute the Company's permission to its independent
accountants to participate in discussions with such Persons.
(c) Restrictions. The Company shall not, without the prior
written consent of the Investors (so long as the Investors and their Affiliates
hold at least 50% of the Common Stock owned by the Investors on the date hereof)
and of ARI (so long as ARI and its Affiliates hold at least 50% of the Common
Stock owned by ARI on the date hereof):
(i) directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise
acquire, any of the Company's or
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any Subsidiary's capital stock or other equity securities, except for
(A) the redemption of any preferred stock issued and outstanding as of
the date hereof in accordance with and as permitted by the Company's
Restated Certificate of Incorporation and senior notes and other lending
arrangements and (B) the repurchase of shares of Common Stock from
former employees of the Company and its Subsidiaries in connection with
the termination of their employment in an aggregate amount not exceeding
$1,000,000;
(ii) directly or indirectly declare or pay any dividends
or make any distributions upon any of its capital stock or other equity
securities, except for dividends on the Company's Class A Preferred
Stock issued and outstanding as of the date hereof in accordance with
and as permitted by the Company's Restated Certificate of Incorporation,
dividends payable in shares of Common Stock issued upon the outstanding
shares of Common Stock and repurchases permitted under paragraph
5(c)(i);
(iii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without
limitation, any reorganization into a limited liability company, a
partnership or any other non-corporate entity which is treated as a
partnership for federal income tax purposes);
(iv) authorize, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any capital
stock or other equity securities (or any securities convertible into or
exchangeable for any capital stock or other equity securities or
containing any profit participation features), or any stock options,
stock appreciation rights, phantom stock rights or similar rights,
except for shares of Common Stock issued upon exercise of the options
pursuant to the Executive Option Agreements and options that have been
or may, from time to time, be approved by the compensation committee of
the Board;
(v) merge or consolidate with any Person or, except as
permitted by subparagraph (vii) below, permit any Subsidiary to merge or
consolidate with any Person (other than a Wholly-Owned Subsidiary);
(vi) other than sale/leaseback transactions entered into
in the ordinary course of business, sell, lease (as lessor) or otherwise
dispose of, or permit any Subsidiary to sell, lease (as lessor) or
otherwise dispose of, more than $3,000,000 of assets of the Company and
its Subsidiaries (computed on the basis of book value, determined in
accordance with generally accepted accounting principles consistently
applied, or fair market value, determined by the Board in its reasonable
good faith judgment) in any transaction or series of related
transactions;
(vii) acquire or enter into, or permit any Subsidiary to
acquire or enter into, any interest in any company or business (whether
by a purchase of assets, purchase of stock, merger or otherwise), or any
joint venture, guarantee of any obligation, or make any Investment, loan
or advance in each case involving an aggregate consideration (including,
without limitation, the assumption of liabilities whether direct or
indirect) exceeding $10,000,000 in any one transaction or series of
related transactions or
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exceeding $25,000,000 in the aggregate (the "Threshold Amount") for all
such transactions consummated after the date of this Agreement.
Notwithstanding the foregoing, to the extent that such transaction or
series of related transactions was approved by the Board or was
otherwise consummated, but the prior written consent of the Investors
and ARI was not obtained pursuant to this paragraph 5(c), the aggregate
consideration involved in such transaction or series of related
transactions shall be included in calculating whether or not the
Threshold Amount has been met. At such time as the Threshold Amount has
been met, all such transactions or series of related transactions which
follow shall require the prior written consent of the Investors and ARI
in accordance with this paragraph 5(c);
(viii) other than any Indebtedness outstanding from time
to time under the Loan Agreement and other than Indebtedness arising
from sale/leaseback transactions entered into by the Company or any of
its Subsidiaries in the ordinary course of business, create, incur or
assume, or permit any Subsidiary to create, incur or assume any
Indebtedness exceeding an aggregate principal amount of $10,000,000
outstanding at any time on a consolidated basis;
(ix) amend or modify any provision of the Loan Agreement
which would increase the aggregate maximum principal amount of
Indebtedness permitted to be outstanding at any time pursuant to the
terms thereof or which would extend the maturity date of such
Indebtedness by more than one year;
(x) make any capital expenditures (including, without
limitation, payments with respect to capitalized leases, as determined
in accordance with generally accepted accounting principles consistently
applied, but excluding capital expenditures arising from damage to the
Company's property to the extent such damage is covered by the Company's
insurance) on a consolidated basis during any fiscal year exceeding by
more than $1,000,000 the Company's capital budget approved by the Board
for such year, as modified by the Board at any time;
(xi) make any amendment to the Company's Restated
Certificate of Incorporation or the Company's Bylaws or file any
certificate of designations with the Delaware Secretary of State;
(xii) enter into, amend, modify or supplement, or permit
any Subsidiary to enter into, amend, modify or supplement, any
agreement, transaction, commitment or arrangement with any of its or any
Subsidiary's officers, directors, employees, stockholders or Affiliates
or with any individual related by blood, marriage or adoption to any
such individual or with any entity in which any such Person or
individual owns a material beneficial interest, except for customary
employment arrangements and benefit programs on reasonable terms and
except as otherwise expressly contemplated by this Agreement;
-11-
(xiii) enter into, or permit any Subsidiary to enter into,
the ownership, active management or operation of any business other than
Burger King franchise restaurants;
(xiv) amend, modify or waive any provision of the 1996
Plan or any other stock option plan other than by action of the
compensation committee of the Board; or
(xv) approve or consummate a sale of all or substantially
all of the Company's assets determined on a consolidated basis or a sale
of all or substantially all of the Company's outstanding capital stock
(whether by merger, consolidation or otherwise) to any Independent Third
Party or group of Independent Third Parties (any of the foregoing which
have been so approved, being referred to herein as an "Approved Sale").
In the event of an Approved Sale, the holders of Stockholder Shares shall bear
their pro rata share (based upon the proceeds to be received by the holders of
Stockholder Shares) of the costs of any sale of Stockholder Shares in connection
therewith to the extent such costs are incurred for the benefit of all holders
of Stockholder Shares and are not otherwise paid by the Company or the acquiring
party. Costs incurred in exercising reasonable efforts to take all necessary
actions in connection with the consummation of an Approved Sale in accordance
with this paragraph shall be deemed to be for the benefit of all holders of
Stockholder Shares. Costs incurred by holders of Stockholder Shares on their own
behalf will not be considered costs of the transaction hereunder. The provisions
of this paragraph shall terminate upon a Qualified Public Offering.
Notwithstanding the foregoing, the Company shall not be required
to obtain the prior written consent of the Investors, following an Investor
Material Change, or ARI, following an ARI Material Change, with respect to any
of the actions set forth in subparagraphs (ii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xiv) and (xv) of this paragraph 5(c).
(d) Affirmative Covenants. Prior to the consummation of a
Qualified Public Offering, the Company shall, and shall cause each Subsidiary
to, unless otherwise approved by the Investors (so long as the Investors and
their Affiliates hold at least 50% of the Common Stock owned by Investors on the
date hereof) and by ARI (so long as ARI and its Affiliates hold at least 50% of
the Common Stock owned by ARI on the date hereof):
(i) at all times cause to be done all things necessary to
maintain, preserve and renew its corporate existence and all material
licenses, authorizations and permits necessary to the conduct of its
businesses;
(ii) maintain and keep its properties in good repair,
working order and condition, and from time to time make all necessary or
desirable repairs, renewals and replacements, so that its businesses may
be properly and advantageously conducted at all times;
(iii) pay and discharge when payable all taxes,
assessments and governmental charges imposed upon its properties or upon
the income or profits
-12-
therefrom (in each case before the same becomes delinquent and before
penalties accrue thereon) and all claims for labor, materials or
supplies which if unpaid would by law become a Lien upon any of its
property, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with generally accepted accounting principles,
consistently applied) have been established on its books with respect
thereto;
(iv) comply with all other obligations which it incurs
pursuant to any contract or agreement, whether oral or written, express
or implied, as such obligations become due, unless and to the extent
that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with
generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
(v) comply with all applicable laws, rules and regulations
of all governmental authorities, the violation of which would reasonably
be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects
of the Company and its Subsidiaries taken as a whole;
(vi) apply for and continue in force with good and
responsible insurance companies adequate insurance covering risks of
such types and in such amounts as are customary for corporations of
similar size engaged in similar lines of business;
(vii) maintain and continue in effect the key man policy
on the life of ▇▇▇▇ ▇▇▇▇▇▇ referred to in paragraph 2K of the Purchase
Agreement;
(viii) maintain proper books of record and account which
present fairly in all material respects its financial condition and
results of operations and make provisions on its financial statements
for all such proper reserves as in each case are required in accordance
with generally accepted accounting principles, consistently applied; and
(ix) until the aggregate principal amount, premium, if
any, and all interest is paid in full, comply in all respects with the
terms and provisions of that certain Indenture, dated as of August 17,
1993 (the "Indenture"), as in effect from time to time, including, but
not limited to, providing the required notices to the trustee and all
holders of securities issued under the Indenture in connection with the
transactions contemplated by the Purchase Agreement.
(e) Current Public Information. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably
-13-
request, all to the extent required to enable such holders to sell Restricted
Securities pursuant to (i) Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act (as such rule may be amended from time to
time) or any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission or (ii) a registration statement on Form S-2 or S-3 or any
similar registration form hereafter adopted by the Securities and Exchange
Commission. Upon request, the Company shall deliver to any holder of Restricted
Securities a written statement as to whether it has complied with such
requirements.
(f) Unrelated Business Taxable Income. Except with the
Investors' prior written consent, the Company shall not knowingly engage, and
shall not knowingly permit any Subsidiary to engage, in any transaction which is
reasonably likely to cause any holder of Common Stock or any of such holder's
limited partners which are exempt from income taxation under Section 501(a) of
the Code and, if applicable, any pension plan that any such limited partner may
be a part of, to recognize unrelated business taxable income as defined in
Section 512 and Section 514 of the Code.
6. Legend. Each certificate evidencing Stockholder Shares and
each certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF ________, 1997 AMONG THE
ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS, AS AMENDED AND MODIFIED FROM TIME TO
TIME. A COPY OF SUCH STOCKHOLDERS AGREEMENT SHALL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 11 hereof.
7. Preemptive Rights.
(a) Except for issuance of equity securities of the Company or
options or other rights to acquire equity securities of the Company:
(i) in connection with a registered primary public
offering;
(ii) to employees of the Company or its Subsidiaries;
(iii) to any lender in connection with the incurrence of
Indebtedness by the Company or any of its Subsidiaries;
-14-
(iv) as payment of all or a portion of the purchase price
of any business or assets thereof acquired by the Company or any of its
Subsidiaries; or
(v) upon exercise of any option or other right described
in any of clauses (i) through (iv) above or any other option or right to
acquire equity securities issued by the Company;
if the Company authorizes the issuance or sale of any equity securities of the
Company or any securities containing options or rights to acquire any equity
securities of the Company (other than as a dividend on the outstanding Common
Stock), the Company shall first offer to sell to each Investor Holder, each ▇▇▇
▇▇▇▇▇▇ and each Management Holder a portion of such stock or securities equal to
the percentage of Stockholder Shares owned by such Person. Each Person shall be
entitled to purchase such stock or securities at the most favorable price and on
the most favorable terms as such stock or securities are to be offered to any
other Persons.
(b) In order to exercise its purchase rights hereunder, a
Stockholder must within 15 days after receipt of written notice from the Company
describing in reasonable detail the stock or securities being offered, the
purchase price thereof, the payment terms and such holder's percentage
allotment, deliver a written notice to the Company describing its election
hereunder. If all of the stock and securities offered to the Stockholders is not
fully subscribed by such holders, the remaining stock and securities shall be
reoffered by the Company to the holders purchasing their full allotment pro rata
(based on the number of Stockholder Shares owned by such holders) upon the terms
set forth in this paragraph, except that such holders must give written notice
of its election to purchase such reoffered stock and securities within 10 days
after receipt of such reoffer.
(c) Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such stock or securities which the
Stockholders have not elected to purchase during the 90 days following such
expiration on terms and conditions no more favorable to the purchasers thereof
than those offered to such holders. Any stock or securities offered or sold by
the Company after such 90-day period must be reoffered to the Stockholders who
have purchased their full allotment pursuant to paragraph 7(b) pro rata (based
on the number of Stockholder Shares owned by such Stockholders).
(d) The rights pursuant to this paragraph 7 shall terminate upon
the consummation of a Public Offering.
8. Repurchase Option.
(a) In the event that Vituli or any Management Investor ceases
to be employed by the Company or any of its Subsidiaries as a result of Vituli's
or such Management Investor's (as the case may be) termination for Cause (as
such term is defined in the Executive Option Agreements) (the "Termination"),
any and all Stockholder Shares which Vituli or such Management Investor (as the
case may be) has acquired upon the exercise of the option granted to him
pursuant to those certain Unvested Stock Option Agreements, dated as of the date
of the Closing (whether held by Vituli, such Management Investor or one or more
of their respective
-15-
Permitted Transferees) (the "Repurchase Shares"), shall be subject to repurchase
by the Company pursuant to the terms and conditions set forth in this paragraph
8 (the "Repurchase Option").
(b) The purchase price for each Repurchase Share shall be the
lesser of (i) Vituli's or such Management Investor's Original Cost for such
Repurchase Share, and (ii) the Fair Market Value for such Repurchase Share.
(c) The Board may elect to purchase all or any portion of the
Repurchase Shares by delivering written notice (the "Repurchase Notice") to the
holder or holders of the Repurchase Shares within 90 days after the Termination.
The Repurchase Notice shall set forth the number of Repurchase Shares to be
acquired from such holder of Repurchase Shares, the aggregate consideration to
be paid therefor and the time and place for the closing of the transaction.
(d) The closing of the purchase of the Repurchase Shares
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice, which date shall not be more than 60 days nor
less than five days after the delivery of such notice. The Company shall pay for
the Repurchase Shares to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds. The Company shall be entitled to
receive from Vituli or the Management Investors (as the case may be) customary
representations and warranties regarding the sale of the Repurchase Shares
(including representations and warranties regarding good title to such shares,
free and clear of any liens or encumbrances).
(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Repurchase Shares by the Company shall be subject
to applicable restrictions contained in the Delaware General Corporation Law and
in the Company's and its Subsidiaries debt and equity financing agreements. If
any such restrictions prohibit the repurchase of Repurchase Shares hereunder
which the Company is otherwise entitled or required to make, the time periods
provided in this paragraph 8 shall be suspended, and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
9. Sale of the Company.
(a) If the Board and the holders of a majority of Stockholder
Shares (including the Investors and ARI, to the extent that the approval of the
Investors and/or ARI is required pursuant to the terms of paragraph 5(c)(xv)
herein) shall approve a Sale of the Company, the holders of Stockholder Shares
shall consent to and raise no objections against the Sale of the Company, and if
the Sale of the Company is structured as a sale of capital stock, the holders of
Stockholder Shares shall agree to sell their Stockholder Shares on the terms and
conditions approved by the Board, the holders of a majority of the Stockholder
Shares and the Investors and ARI (as the case may be). The holders of
Stockholder Shares shall take all necessary and desirable actions in connection
with the consummation of the Sale of the Company.
-16-
(b) The obligations of the holders of Stockholder Shares with
respect to the Sale of the Company is subject to the satisfaction of the
condition that, upon the consummation of the Sale of the Company, all of the
holders of Stockholder Shares receive the same form and amount of consideration
per Stockholder Share, or if any holders of Stockholder Shares are given an
option as to the form and amount of consideration to be received, all holders be
given the same option.
(c) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Stockholder Shares shall
at the request of the Company, appoint a "purchaser representative" (as such
term is defined in Rule 501) reasonably acceptable to the Company. If any holder
of Stockholder Shares appoints a purchaser representative designated by the
Company, the Company shall pay the fees of such purchaser representative.
However, if any holder of Stockholder Shares declines to appoint the purchaser
representative designated by the Company, such holder shall appoint another
purchaser representative (reasonably acceptable to the Company), and such holder
shall be responsible for the fees of the purchaser representative so appointed.
(d) Holders of Stockholder Shares shall bear their pro-rata
share (based upon the number of shares sold) of the costs of any sale of
Stockholder Shares pursuant to a Sale of the Company to the extent such costs
are incurred for the benefit of all holders of Stockholder Shares and are not
otherwise paid by the Company or the acquiring party. Costs incurred by holders
of Stockholder Shares on their own behalf shall not be considered costs of the
transaction hereunder.
(e) The provisions of this paragraph 9 shall terminate upon the
completion of a Qualified Public Offering.
(f) "Sale of the Company" shall mean the sale of the Company to
an Independent Third Party or affiliated group of Independent Third Parties
pursuant to which such party or parties acquire (i) capital stock of the Company
possessing the voting power to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
10. Transfers; Future Sales. Prior to any holder of Stockholder
Shares Transferring any Stockholder Shares (other than pursuant to an Exempt
Transfer) to any Person and prior to the Company issuing any Common Stock (other
than pursuant to a Public Offering) or any options or other rights to acquire
Common Stock or any securities convertible into or exchangeable for such Common
Stock to any Person, such holder or the Company, as the case may be, shall cause
the prospective transferee to be bound by this Agreement as a holder of
Stockholder Shares and to execute and deliver to the Company and the other
Stockholders a counterpart to this Agreement.
-17-
11. Definitions.
"Affiliate" has the meaning set forth in paragraph 4(e).
"Approved Sale" has the meaning set forth in subparagraph
5(c)(xv).
"ARI" has the meaning set forth in the preamble.
"ARI Holders" means ARI and its Affiliates so long as they hold
any Stockholder Shares.
"ARI Material Change" shall have occurred if (i) either of the
two ARI Directors as of the date hereof who are officers or employees of ARI or
its Affiliates cease to serve as a director on the Board; provided, however,
that ARI shall have one opportunity, which shall not be deemed an ARI Material
Change, to replace such ARI Director with a new ARI Director, so long as such
individual is reasonably acceptable to the Investors, it being understood that
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall be deemed reasonably
acceptable to the Investors, (ii) any Person or group of affiliated Persons
acquires (x) more than 51% of the issued and outstanding capital stock or other
equity ownership interests of Bahrain International Bank (E.C.) or (y) the right
to elect a majority of the members of its board of directors or other governing
body, (iii) Bahrain International Bank (E.C.) ceases to own directly or
indirectly through one or more Wholly-Owned Subsidiaries (x) at least 51% of the
issued and outstanding capital stock of ARI or (y) the right to elect a majority
of the members of the board of directors of ARI or (iv) there occurs any event
which affects the control of Bahrain International Bank (E.C.) or its ability to
exercise its rights or to perform its obligations under this Agreement,
regardless of whether such event results in the occurrence of any of the events
set forth in (i), (ii) or (iii) above.
"Board" has the meaning set forth in the preamble.
"Change of Control" shall have the meaning set forth in the
Executive Option Agreements.
"Closing" has the meaning set forth in the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular Code section shall be interpreted to include
any revision of or successor to that section regardless of how numbered or
classified.
"Common Stock" means the Company's Common Stock, par value $0.01
per share.
"Company" has the meaning set forth in the preamble.
"Executive Option Agreements" shall have the meaning set forth in
the Stock Purchase Agreement.
-18-
"Fair Market Value" of each Repurchase Share means the average of
the closing prices of the sales of the Company's Common Stock on all securities
exchanges on which the Common Stock may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day the Common Stock is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time the Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value shall
be the fair value of the Common Stock determined in good faith by the Board
(without taking into account the effect of any contemporaneous repurchase of
Repurchase Shares under paragraph 8 hereof).
"Indebtedness" means at a particular time, without duplication,
(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business), (iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit), (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) any indebtedness secured by a Lien on a Person's
assets and (viii) any unsatisfied obligation for "withdrawal liability" to a
"multiemployer plan" as such terms are defined under the Employee Retirement
Income Security Act of 1974, as amended.
"Independent Third Party" means any Person who, immediately prior
to the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Investor Directors" has the meaning set forth in paragraph 1(a).
-19-
"Investor Holder" means the Investors and their Affiliates so
long as they hold any Stockholder Shares.
"Investor Material Change" shall have occurred if a majority of
the principals of the general partner (the "GP") of the general partner of the
Investors cease to be officers of the GP and two or more of ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III cease to be officers of
the GP.
"Investors" has the meaning set forth in the preamble.
"Lien" has the meaning set forth in the Stock Purchase Agreement.
"Loan Agreement" has the meaning set forth in the Stock Purchase
Agreement.
"Management Director" has the meaning set forth in paragraph
1(a).
"Management Holder" means Vituli and each Management Investor so
long as such individual holds any Stockholder Shares.
"Management Investor" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
"1996 Plan" has the meaning set forth in the Purchase Agreement.
"Original Cost" of each Repurchase Share shall be equal to
$101.7646 (as proportionately adjusted for all subsequent stock splits, stock
dividends and other recapitalizations).
"Permitted Transferee" has the meaning set forth in paragraph
4(e) hereof.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale of shares of the Company's
Common Stock in a public offering registered under the Securities Act.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Purchase Agreement" has the meaning set forth in the preamble.
"Qualified Public Offering" means the sale in an underwritten
public offering registered under the Securities Act of shares of the Company's
Common Stock resulting in aggregate gross proceeds to the Company of at least
$50 million and a price per share of not less
-20-
than $108.2353 (as such amount is equitably adjusted for subsequent stock
splits, stock dividends and recapitalizations).
"Restricted Securities" has the meaning set forth in the Purchase
Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any similar federal law then in place.
"Securities and Exchange Commission" includes any governmental
body or agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"Stockholder Shares" means (i) any Common Stock held by a
Stockholder as of the date hereof, (ii) any Common Stock issued or issuable to a
Stockholder under any options held by such Stockholder as of the date hereof,
(iii) any other shares of any class or series of capital stock of the Company
held by a Stockholder, and (iv) any capital stock or other equity securities
issued or issuable directly or indirectly with respect to the Common Stock
referred to in clauses (i), (ii), or (iii) above by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and after any Transfer permitted
by this Agreement, any such shares owned by the transferee thereof. As to any
particular shares constituting Stockholder Shares, such shares shall cease to be
Stockholder Shares when they have been (x) effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them or (y) sold to the public through a broker, dealer or market maker
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act. Notwithstanding the foregoing, for purposes of paragraph 4(d)
hereof, any unvested options held by any Stockholder shall be included in the
calculation of the percentage of Stockholder Shares owned by such Stockholder,
but shall not be included as Specified Shares.
"Stockholders" has the meaning set forth in the preamble.
"Sub Board" has the meaning set forth in paragraph 1(a).
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or
-21-
Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Threshold Amount" has the meaning set forth in paragraph
5(c)(vii).
"Transfer" has the meaning set forth in paragraph 4(a).
"Vituli" has the meaning set forth in the preamble.
"Wholly-Owned Subsidiary" has the meaning set forth in the Stock
Purchase Agreement.
12. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
13. Amendment and Waiver. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company, the Investor Holders, the ARI Holders or the
holders of Stockholder Shares unless such modification, amendment or waiver is
approved in writing by the Company, the Investors, ARI or the holders of a
majority of the Stockholder Shares, respectively. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
15. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
16. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and permitted
assigns of each of them, so long as they hold
-22-
Stockholder Shares; provided that neither the Investors nor ARI may assign its
rights under this Agreement to any subsequent holder of Stockholder Shares
except to an Investor Holder or a ▇▇▇ ▇▇▇▇▇▇, respectively.
17. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
18. Remedies. The Company and the holders of Stockholder Shares
shall be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that the Company, any Investor
Holder, any ▇▇▇ ▇▇▇▇▇▇ and any Management Holder may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
19. Notices. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service as follows:
(a) Notices to the Company and the Management Holders:
Carrols Holdings Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
With copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
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(b) Notices to the Investors:
Madison Dearborn Capital Partners, L.P.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Madison Dearborn Capital Partners II, L.P.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
With copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(c) Notices to ARI:
Atlantic Restaurants, Inc,
c/o Dilmun Investments, Inc.
Metro Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
With copies (which shall not constitute notice) to:
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
20. Governing Law. The corporate law of the State of Delaware
shall govern all issues and questions concerning the relative rights of the
Company and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
New York or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of New York.
-24-
In furtherance of the foregoing, the internal law of the State of New York shall
control the interpretation and construction of this Agreement (and all schedules
and exhibits hereto), even though under that jurisdiction's choice of law or
conflict of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.
21. Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall automatically be extended to the business day immediately
following such Saturday, Sunday or legal holiday.
22. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * *
-25-
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
CARROLS HOLDINGS CORPORATION
By
---------------------------------------
Its
---------------------------------------
MADISON DEARBORN CAPITAL
PARTNERS, L.P.
By Madison Dearborn Partners, L.P.
Its General Partner
By Madison Dearborn Partners, Inc.
Its General Partner
By
-----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its
-----------------------------
MADISON DEARBORN CAPITAL
PARTNERS II, L.P.
By Madison Dearborn Partners II, L.P.
Its General Partner
By Madison Dearborn Partners, Inc.
Its General Partner
By
----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its
----------------------------
ATLANTIC RESTAURANTS, INC.
By
------------------------------------
Its
------------------------------------
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------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-27-
The undersigned, as the indirect owner of all or substantially all of the
outstanding capital stock of Atlantic Restaurants, Inc., does hereby guarantee
the obligations of Atlantic Restaurants, Inc. under this Stockholders Agreement
and shall cause Atlantic Restaurants, Inc. to comply with the provisions of this
Stockholders Agreement.
BAHRAIN INTERNATIONAL BANK, E.C.
By
------------------------------------
Its
------------------------------------
-28-
SCHEDULE OF STOCKHOLDERS
Name and Address Number of Stockholder Shares
---------------- ----------------------------
Atlantic Restaurants, Inc.
c/o Dilmun Investments, Inc.
Metro Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇
Madison Dearborn Capital Partners, L.P.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Madison Dearborn Capital Partners II, L.P.
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
▇▇▇▇ ▇▇▇▇▇▇
c/o Carrols Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
c/o Carrols Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Carrols Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-29-
