EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
CARROLS HOLDINGS CORPORATION
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Under Section 242 of the
General Corporation Law
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Carrols Holdings Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), pursuant to Section 242 of the General Corporation Law of the
State of Delaware, hereby certifies as follows:
FIRST: The name of the Corporation is "Carrols Holdings Corporation".
SECOND: The Certificate of Incorporation of the Corporation originally
filed with the Secretary of State on September 15, 1986, was restated pursuant
to the Restated Certificate of Incorporation filed with the Secretary of State
on December 22, 1986, was amended and restated pursuant to the Certificate of
Amendment to Restated Certificate of Incorporation filed with the Secretary of
State on August 18, 1993 and was further amended and restated pursuant to the
Certificate of Amendment to Restated Certificate of Incorporation filed with the
Secretary of State on February 20, 1997.
THIRD: Pursuant to the unanimous written consent of the Board of Directors
of the Corporation, the following resolutions setting forth the proposed
amendment to the Restated Certificate of Incorporation of the Corporation were
duly adopted by the Board of Directors in accordance with the provision of
Section 141(f) of the General Corporation Law of the State of Delaware ("DGCL")
and were duly authorized and adopted by the holders of all of the outstanding
shares of the Corporation entitled to vote thereon in accordance with the
provision of Section 228 of the DGCL.
RESOLVED, that the class consisting of 7,250 shares of Class A 10%
Cumulative Redeemable Preferred Stock, par value $0.01 per share, all of
which are authorized but unissued, is hereby canceled; and
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RESOLVED, that the Board of Directors of this Corporation hereby declares
it advisable and recommends to the shareholders that the shares of Common
Stock, par value $0.01 per share of the Corporation be increased and
reclassified and that shares of Preferred Stock, par value $0.01 per share
of the Corporation be authorized and that, to effect such recommendations,
the Restated Certificate of Incorporation of the Corporation be amended by
amending Article FOURTH of the Restated Certificate of Incorporation to
read as follows:
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is Five Million One Hundred Thousand (5,100,000)
shares, of which Five Million (5,000,000) shares shall be shares of common
stock, par value $0.01 per share and One Hundred Thousand (100,000) shares shall
be shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock").
A. General. The Board of Directors, by adoption of this Certificate of Amendment
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to the Restated Certificate of Incorporation may fix, in whole or part, the
preferences, limitations and relative rights, within the limits set forth under
applicable law, of one or more series of Common Stock of the Corporation before
the issuance of any shares of that series.
B. Carrols Stock and Pollo Tropical Stock.
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(1) Designation of Series; Number of Shares of Each Series. One series of
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Common Stock is hereby designated as Carrols Stock ("Carrols Stock"), consisting
of Three Million (3,000,000) shares, par value $0.01 per share and a second
series of Common Stock is hereby designated as Pollo Tropical Stock ("Pollo
Tropical Stock") consisting of Two Million (2,000,000) shares, par value $0.01
per share. The number of shares of each such series may from time to time be
increased (but not above the total number of authorized shares of the class of
Common Stock) or decreased (but not below the number of shares of such series
then outstanding) by the Board of Directors of the Corporation.
(2) Dividends. Subject to any preferences, limitations and relative rights of
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any outstanding series of Preferred Stock, dividends may be declared and paid
upon the Carrols Stock and the Pollo Tropical Stock, upon the terms with respect
to each such series, and subject to the limitations provided for below in this
paragraph B(2) of this Article, as the Board of Directors may determine.
(a) Dividends on Carrols Stock. Dividends on Carrols Stock may be
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declared and paid only out of the lesser of (i) the assets legally available
therefor and (ii) the Carrols Available Dividend Amount.
(b) Dividends on Pollo Tropical Stock. Dividends on Pollo Tropical Stock
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may be declared and paid only out of the lesser of (i) the assets legally
available therefor and (ii) the Pollo Tropical Available Dividend Amount.
(c) Discrimination in Dividends Between Carrols Stock and Pollo Tropical
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Stock. The Board of Directors, subject to the provisions of paragraphs
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B(2)(a) and B(2)(b) of this Article, may at any time declare and pay
dividends exclusively on Carrols Stock,
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exclusively on Pollo Tropical Stock or on both such series, in equal or
unequal amounts, notwithstanding the relative amounts of the Carrols
Available Dividend Amount and the Pollo Tropical Available Dividend Amount,
the amount of dividends previously declared on each series, the respective
voting or liquidation rights of each series or any other factor.
(d) Share Distributions. Subject to paragraphs B(2)(a) and B(2)(b) of
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this Article, as the case may be, and except as permitted by paragraphs
B(5)(a) and B(5)(b)(ii)(2) of this Article, the Board of Directors may
declare and pay dividends or distributions of shares of the Common Stock (or
Convertible Securities convertible into or exchangeable or exercisable for
shares of the Common Stock) on shares of the Common Stock or shares of the
Preferred Stock only as follows:
(i) dividends or distributions of shares of Carrols Stock (or
Convertible Securities convertible into or exchangeable or exercisable
for shares of Carrols Stock) on shares of Carrols Stock; or shares of
the Preferred Stock attributed to the Carrols Group;
(ii) dividends or distributions of shares of Pollo Tropical
Stock (or Convertible Securities convertible into or exchangeable or
exercisable for shares of Pollo Tropical Stock) on shares of Pollo
Tropical Stock or shares of the Preferred Stock attributed to the Pollo
Tropical Group; and
(iii) dividends or distributions of shares of Pollo Tropical
Stock (or Convertible Securities convertible into or exchangeable or
exercisable for shares of Pollo Tropical Stock) on shares of Carrols
Stock or shares of the Preferred Stock attributed to the Carrols Group,
if any, but only if the sum of (1) the number of shares of Pollo
Tropical Stock to be so issued (or the number of such shares which
would be issuable upon conversion, exchange or exercise of any
Convertible Securities to be so issued) and (2) the number of shares of
Pollo Tropical Stock which are issuable upon conversion, exchange or
exercise of any Convertible Securities then outstanding that are
attributed in accordance with this Article to the Carrols Group is less
than or equal to the Number of Shares Issuable with Respect to the
Inter-Group Interest.
(3) Voting Rights.
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(a) The holders of Carrols Stock shall have the exclusive right to
vote for the election of directors and on all other matters requiring action by
the stockholders or submitted to the stockholders for action, except as may be
determined by the Board of Directors in establishing any series of Common or
Preferred Stock or as otherwise may be required by law. Each share of Carrols
Stock shall entitle the holder thereof to one vote.
(b) No holder of outstanding shares of Pollo Tropical Stock shall be
entitled to vote for the election of directors or upon any other matter, to
receive notice of or to participate in any meeting of the stockholders of the
Corporation, except as may be required by law.
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(4) Liquidation Rights. In the event of the dissolution, liquidation or
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winding up of the Corporation, whether voluntary or involuntary, the rights of
the holders of Carrols Stock and Pollo Tropical Stock shall be as follows:
(a) After the Corporation has satisfied or made provisions for its
debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the assets of the Corporation (including any accumulated
and unpaid dividends), the holders of Carrols Stock and Pollo Tropical
Stock shall be entitled to receive the assets, if any, of the Corporation
remaining for distribution, on a per share basis in proportion to the
respective liquidation units for all series of Common Stock. The Carrols
Stock shall have nine liquidation units and the Pollo Tropical Stock shall
have one liquidation unit. Upon the determination by the Corporation of the
amount of assets the holders of the Carrols Stock and Pollo Tropical Stock,
respectively, shall be entitled to receive (determined in accordance with
the then applicable liquidation units), the amount of assets to be
distributed to the holders of Pollo Tropical Stock shall be reduced and the
holders of Pollo Tropical Stock shall be entitled to receive, on a pro rata
basis, an amount equal to the product of (i) such distributable amount of
assets and (ii) the Outstanding Pollo Tropical Fraction. The liquidation
units of the Carrols Stock and the Pollo Tropical Stock shall be adjusted
by the Board as appropriate to reflect equitably any subdivision (by stock
split or otherwise) or combination (by reverse stock split or otherwise) of
such class of Common Stock or any dividend or other distribution of shares
or similar transaction with respect to such class of Common Stock. Whenever
a change in the liquidation units occurs, the Corporation shall prepare and
file a statement of such change with the Secretary of the Corporation and
distribute a notice of such change to all holders of shares of such class
or series of Common Stock, together with a notice of such stock split,
reverse split, distribution or other transaction requiring such change.
(b) For the purposes of this paragraph B(4), any merger or business
combination involving the Corporation or any sale of all or substantially
all of the assets of the Corporation shall not be treated as a liquidation,
dissolution or winding up of the Corporation.
(5) Redemption or Conversion of the Common Stock. The Carrols Stock is
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subject to redemption and the Pollo Tropical Stock is subject to redemption or
conversion upon the terms provided below in this paragraph B(5) of this Article;
provided, however, that neither the Carrols Stock nor the Pollo Tropical Stock
may be redeemed or converted, as the case may be, if the other series has been
redeemed or converted, as the case may be, in its entirety or notice thereof
shall have been given as required by this paragraph B(5) of this Article.
(a) Mandatory and Optional Redemption or Conversion of Common Stock
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Other than for Subsidiary Stock.
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(i) In the event of the Disposition, in one transaction or a
series of related transactions, by the Corporation and/or its
subsidiaries of all or substantially all of
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the properties and assets attributed to either Group to one or more
persons or entities (other than (1) the Disposition by the Corporation
of all or substantially all of its properties and assets in one
transaction or a series of related transactions in connection with the
liquidation, dissolution or winding up of the Corporation and the
distribution of assets to stockholders as referred to in paragraph
B(4) of this Article, (2) the Disposition of the properties and assets
of either Group as contemplated by paragraph B(5)(b) of this Article
or otherwise to all holders of shares of such Group divided among such
holders on a pro rata basis in accordance with the number of shares of
stock issued in respect of such Group outstanding and, in the case of
a Disposition of the properties and assets attributed to the Pollo
Tropical Group, to the Corporation or subsidiaries thereof, divided
among such holders and the Corporation or subsidiaries thereof on a
pro rata basis in accordance with the number of shares of stock issued
in respect of such Group outstanding and the Number of Shares Issuable
with Respect to the Inter-Group Interest or (3) to any person or
entity controlled (as determined by the Board of Directors) by the
Corporation), the Corporation shall, on or prior to the 30th Business
Day after the date of consummation of such Disposition (the
"Disposition Date"), pay a dividend on the Common Stock relating to
such Group or redeem some or all of such Common Stock, all as provided
by the following paragraph B(5)(a)(i) of this Article and, to the
extent applicable, by paragraph B(5)(d) of this Article, as the Board
of Directors shall have selected among such alternatives;
provided that there are assets legally available therefor:
(a) pay to the holders of the shares of the series of
the Common Stock relating to the Group subject to such
Disposition a dividend, as the Board of Directors shall have
declared subject to compliance with paragraph B(2) of this
Article, in cash and/or in securities (other than a dividend
of the Common Stock) or other property having a Fair Value
as of the Disposition Date in the aggregate equal to (I) in
the case of a Disposition of the properties and assets
attributed to the Carrols Group, the Net Proceeds of such
Disposition and (II) in the case of a Disposition of the
properties and assets attributed to the Pollo Tropical
Group, the product of the Outstanding Pollo Tropical
Fraction as of the record date for determining holders
entitled to receive such dividend and the Net Proceeds of
such Disposition; or
(b)(I) subject to the last sentence of this paragraph
B(5)(a)(i) of this Article, if such Disposition involves all
(not merely substantially all) of the properties and assets
attributed to such Group, redeem as of the Redemption Date
provided by paragraph B(5)(d)(iii), all outstanding shares
of the Common Stock relating to the Group subject to such
Disposition in exchange for cash and/or for securities
(other than the Common Stock) or other property having a
Fair Value as of the Disposition Date in the aggregate
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equal to (A) in the case of a Disposition of the properties
and assets attributed to the Carrols Group, the Net Proceeds
of such Disposition and (B) in the case of a Disposition of
the properties and assets attributed to the Pollo Tropical
Group, the product of the Outstanding Pollo Tropical
Fraction as of such Redemption Date and the Net Proceeds of
such Disposition; or
(II) subject to the last sentence of this paragraph
B(5)(a)(i) of this Article, if such Disposition involves
substantially all (but not all) of the properties and assets
attributed to such Group, redeem as of the Redemption Date
provided by paragraph B(5)(d)(iv) of this Article such
number of whole shares of the series of the Common Stock
relating to the Group subject to such Disposition (which may
be all of, but not more than, such shares outstanding) as
have (A) in the case of a Disposition of the properties and
assets attributed to the Carrols Group, the Fair Value as of
the Disposition Date of the Net Proceeds of such
Disposition, in consideration for cash and/or securities
(other than the Common Stock) or other property having a
Fair Value in the aggregate equal to such Net Proceeds of
such Disposition or (B) in the case of a Disposition of the
properties and assets attributed to the Pollo Tropical
Group, the product of the Outstanding Pollo Tropical
Fraction as of the date such shares are selected for
redemption and the Fair Value as of the Disposition Date of
the Net Proceeds of such Disposition in consideration for
cash and/or securities (other than the Common Stock) or
other property having a Fair Value in the aggregate equal to
such product; or
Notwithstanding the foregoing provisions of this paragraph B(5)(a)(i) of
this Article, the Corporation shall redeem shares of a series of the Common
Stock as provided by paragraphs B(5)(a)(i)(b)(I) or (II) of this Article only if
the amount to be paid in redemption of such stock is less than or equal to
either the Carrols Available Dividend Amount or the Pollo Tropical Available
Dividend Amount, as the case may be, with respect to the Group subject to such
Disposition as of the Redemption Date.
(ii) For purposes of this paragraph B(5)(a) of this Article:
(1) as of any date, "substantially all of the properties and
assets" attributed to either Group shall mean a portion of such properties
and assets (x) that represents at least 80% of the Fair Value of the
properties and assets attributed to such Group as of such date or (y) from
which were derived at least 80% of the aggregate revenues for the
immediately preceding twelve fiscal quarterly periods of the Company
(calculated on a pro forma basis to include revenues derived from any of
such properties and assets acquired during such period) derived from the
properties and assets of such Group as of such date;
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(2) in the case of a Disposition of the properties and assets
attributed to either Group in a series of related transactions, such
Disposition shall not be deemed to have been consummated until the
consummation of the last of such transactions; and
(3) the Board of Directors may pay any dividend or redemption
price referred to in paragraph B(5)(a)(i) of this Article in cash,
securities (other than the Common Stock) or other property, regardless
of the form or nature of the proceeds of the Disposition.
(iii) At any time prior to the closing of a firm commitment initial
public offering relating to the Carrols Stock (the "IPO"), the Board of
Directors may declare that each outstanding share of Pollo Tropical Stock
or Convertible Security convertible into or exchangeable for Pollo Tropical
Stock shall be converted, as of the Conversion Date provided by paragraph
B(5)(d)(v) of this Article, into the number of fully paid and nonassessable
shares of Carrols Stock equal the Fair Value Ratio of the Pollo Tropical
Stock to the Carrols Stock.
(b) Redemption of Common Stock for Subsidiary Stock.
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(i) At any time at which all of the assets and liabilities
attributed to the Pollo Tropical Group (and no other assets or liabilities
of the Corporation or any subsidiary thereof) are held directly or
indirectly by one or more wholly-owned subsidiaries of the Corporation
(each, a "Pollo Tropical Group Subsidiary"), the Board of Directors may,
provided that there are assets legally available therefor, redeem all of
the outstanding shares of Pollo Tropical Stock, on a Redemption Date of
which notice is delivered in accordance with paragraph B(5)(d)(vi) of this
Article, in exchange for the number of shares of common stock of each Pollo
Tropical Group Subsidiary equal to the product of the Outstanding Pollo
Tropical Fraction and the number of shares of common stock of such Pollo
Tropical Group Subsidiary to be outstanding immediately following such
exchange of shares, such Pollo Tropical Group Subsidiary shares to be
delivered to the holders of shares of Pollo Tropical Stock on the
Redemption Date either directly or indirectly through another Pollo
Tropical Group Subsidiary (as a wholly-owned subsidiary thereof) and to be
divided among the holders of Pollo Tropical Stock pro rata in accordance
with the number of shares of Pollo Tropical Stock held by each on such
Redemption Date, each of which shares of common stock of such Pollo
Tropical Group Subsidiary shall be, upon such delivery, fully paid and
nonassessable.
(ii) At any time at which all of the assets and liabilities
attributed to the Carrols Group (and no other assets or liabilities of the
Corporation or any subsidiary thereof) are held directly or indirectly by
one or more wholly-owned subsidiaries of the Corporation (each, a "Carrols
Group Subsidiary"), the Board of Directors may, provided that there are
assets legally available therefor;
(1) if the Number of Shares Issuable with Respect to the Inter-
Group Interest is zero, redeem all of the outstanding shares of
Carrols Stock, on a
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Redemption Date of which notice is delivered in accordance with
paragraph B(5)(d)(vi) of this Article, in exchange for all of the
shares of common stock of each Carrols Group Subsidiary as will be
outstanding immediately following such exchange of shares, such shares
of common stock of each Carrols Group Subsidiary to be delivered to
the holders of shares of Carrols Stock on the Redemption Date either
directly or indirectly through another Carrols Group Subsidiary (as a
wholly-owned subsidiary thereof) and to be divided among the holders
of Carrols Stock pro rata in accordance with the number of shares of
Carrols Stock held by each on such Redemption Date, each of which
shares of common stock of such Carrols Group Subsidiary shall be, upon
such delivery, fully paid and nonassessable; or
(2) if the Number of Shares Issuable with Respect to the Inter-
Group Interest is greater than zero, either (x) redeem all of the
outstanding shares of Carrols Stock, on such a Redemption Date, in
exchange for (1) all of the shares of common stock of each Carrols
Group Subsidiary as will be outstanding immediately following such
exchange of shares and (2) a number of shares of Pollo Tropical Stock
equal to the Number of Shares Issuable with Respect to the Inter-Group
Interest, such shares of common stock of each Carrols Group Subsidiary
to be delivered to the holders of shares of Carrols Stock on the
Redemption Date either directly or indirectly through another Carrols
Group Subsidiary (as a wholly-owned subsidiary thereof) and the shares
of common stock of each Carrols Group Subsidiary and the shares of
Pollo Tropical Stock to be divided among the holders of Carrols Stock
pro rata in accordance with the number of shares of Carrols Stock held
by each on such Redemption Date, each of which shares of common stock
of each Carrols Group Subsidiary and shares of Pollo Tropical Stock
shall be, upon such delivery, fully paid and nonassessable; or (y) (1)
redeem all of the outstanding shares of Carrols Stock as contemplated
by clause (x) (1) above and (2) issue to one or more of the Carrols
Group Subsidiaries a number of shares of Pollo Tropical Stock equal to
the Number of Shares Issuable with Respect to the Inter-Group
Interest.
(c) Treatment of Convertible Securities. After any Conversion Date or
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Redemption Date on which all outstanding shares of either series of the
Common Stock are converted or redeemed, any share of such series of the
Common Stock that is to be issued on conversion, exchange or exercise of
any Convertible Securities shall, immediately upon such conversion,
exchange or exercise and without any notice from or to, or any other action
on the part of, the Corporation or its Board of Directors or the holder of
such Convertible Security be converted into the amount of cash and/or the
number of shares of the kind of capital stock and/or other securities or
property of the Corporation that the number of shares of such series of the
Common Stock that were to be issued upon such conversion, exchange or
exercise would have received had such shares been outstanding on such
Conversion Date or Redemption Date. The provisions of the immediately
preceding sentence shall not apply to the extent that other adjustments in
respect of such conversion, exchange or redemption of a series of the
Common Stock are otherwise made pursuant to the provisions of such
Convertible Securities.
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(d) Notice and Other Provisions.
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(i) Not later than the 30/th/ Business Day following the
consummation of a Disposition referred to in paragraph B(5)(a)(i) of this
Article, the Corporation shall notify the holders of Common Stock with
respect to (1) the Net Proceeds of such Disposition, (2) the number of
shares outstanding of the series of the Common Stock relating to the Group
subject to such Disposition, (3) the number of shares of such series of
Common Stock into or for which Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (4) in the case of a Disposition of the properties and assets
attributable to the Pollo Tropical Group, the Outstanding Pollo Tropical
Fraction on the date of such notice.
(ii) If the Corporation determines to pay a dividend pursuant to
paragraph B(5)(a)(i)(a) of this Article, the Corporation shall, not later
than the 30th Business Day following the consummation of the Disposition
referred to in such paragraph, cause notice to be given to each holder of
shares of the series of the Common Stock relating to the Group subject to
such Disposition and to each holder of Convertible Securities that are
convertible into or exchangeable or exercisable for shares of such series
of Common Stock (unless alternate provision for such notice to the holders
of such Convertible Securities is made pursuant to the terms of such
Convertible Securities), setting forth (1) the record date for determining
holders entitled to receive such dividend, which shall be not earlier than
the 40th Business Day and not later than the 50th Business Day following
the consummation of such Disposition, (2) the anticipated payment date of
such dividend (which shall not be more than 85 Business Days following the
consummation of such Disposition), (3) the type of property to be paid as
such dividend in respect of the outstanding shares of such series of Common
Stock, (4) the Net Proceeds of such Disposition, (5) in the case of a
Disposition of the properties and assets attributable to the Pollo Tropical
Group, the Outstanding Pollo Tropical Fraction on the date of such notice,
(6) the number of outstanding shares of such series of Common Stock and the
number of shares of such series of Common Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof and (7)
in the case of notice to be given to holders of Convertible Securities, a
statement to the effect that a holder of such Convertible Securities shall
be entitled to receive such dividend only if such holder properly converts,
exchanges or exercises such Convertible Securities on or prior to the
record date referred to in clause (1) of this sentence. Such notice shall
be sent by first-class mail, postage prepaid, to each such holder at such
holder's address as the same appears on the transfer books of the
Corporation.
(iii) If the Corporation determines to undertake a redemption pursuant
to paragraph B(5)(a)(i)(b)(I) of this Article, the Corporation shall, not
less than 35 Business Days and not more than 45 Business Days prior to the
Redemption Date, cause notice to be given to each holder of shares of the
series of the Common Stock relating to the Group subject to the Disposition
referred to in such paragraph and to each holder of Convertible Securities
convertible into or exchangeable or exercisable for shares of such series
of
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Common Stock (unless alternate provision for such notice to the holders of
such Convertible Securities is made pursuant to the terms of such
Convertible Securities), setting forth (1) a statement that all shares of
such series of Common Stock outstanding on the Redemption Date shall be
redeemed, (2) the Redemption Date (which shall not be more than 85 Business
Days following the consummation of such Disposition), (3) the type of
property in which the redemption price for the shares of such series of
Common Stock to be redeemed is to be paid, (4) the Net Proceeds of such
Disposition, (5) in the case of a Disposition of the properties and assets
attributed to the Pollo Tropical Group, the Outstanding Pollo Tropical
Fraction on the date of such notice, (6) the place or places where
certificates for shares of such series of Common Stock, properly endorsed
or assigned for transfer (unless the Corporation waives such requirement),
are to be surrendered for delivery of cash and/or securities or other
property, (7) the number of outstanding shares of such series of Common
Stock and the number of shares of such series of the Common Stock into or
for which such outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof, (8) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to participate in such redemption only if such
holder properly converts, exchanges or exercises such Convertible
Securities on or prior to the Redemption Date referred to in clause (2) of
this sentence and a statement as to what, if anything, such holder will be
entitled to receive pursuant to the terms of such Convertible Securities
or, if applicable, this paragraph B(5) of this Article if such holder
thereafter converts, exchanges or exercises such Convertible Securities and
(9) a statement to the effect that, except as otherwise provided by
paragraph B(5)(d)(ix) of this Article, dividends on such shares of the
Common Stock shall cease to be paid as of such Redemption Date. Such notice
shall be sent by first-class mail, postage prepaid, to each such holder at
such holder's address as the same appears on the transfer books of the
Corporation.
(iv) If the Corporation determines to undertake a redemption pursuant
to paragraph B(5)(a)(i)(b)(II) of this Article, the Corporation shall, not
later than the 30th Business Day following the consummation of the
Disposition referred to in such paragraph, cause notice to be given to each
holder of shares of the series of the Common Stock relating to the Group
subject to such Disposition and to each holder of Convertible Securities
that are convertible into or exchangeable or exercisable for shares of such
series of Common Stock (unless alternate provision for such notice to the
holders of such Convertible Securities is made pursuant to the terms of
such Convertible Securities) setting forth (1) a date not earlier than the
40th Business Day and not later than the 50th Business Day following the
consummation of the Disposition in respect of which such redemption is to
be made on and which shares of such series of the Common Stock shall be
selected for redemption, (2) the anticipated Redemption Date (which shall
not be more than 85 Business Days following the consummation of such
Disposition), (3) the type of property in which the redemption price for
the shares to be redeemed is to be paid, (4) the Net Proceeds of such
Disposition, (5) in the case of a Disposition of the properties and assets
attributed to the Pollo Tropical Group, the Outstanding Pollo Tropical
Fraction, (6) the number of shares of such series of Common Stock
outstanding and the number of shares of such series of Common Stock into or
for which outstanding Convertible
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Securities are then convertible, exchangeable or exercisable and the
conversion, exchange or exercise price thereof, (7) in the case of notice
to be given to holders of Convertible Securities, a statement to the effect
that a holder of such Convertible Securities shall be eligible to
participate in such selection for redemption only if such holder properly
converts, exchanges or exercises such Convertible Securities on or prior to
the record date referred to in clause (1) of this sentence, and a statement
as to what, if anything, such holder will be entitled to receive pursuant
to the terms of such Convertible Securities or, if applicable, this
paragraph B(5) of this Article if such holder thereafter converts,
exchanges or exercises such Convertible Securities and (8) a statement that
the Corporation will not be required to register a transfer of any shares
of such series of the Common Stock for a period of 15 Business Days next
preceding the date referred to in clause (1) of this sentence. Promptly
following the date referred to in clause (1) of the preceding sentence, but
not earlier than 40 Business Days nor later than 50 Business Days following
the consummation of such Disposition, the Corporation shall cause a notice
to be given to each holder of record of shares of such series of Common
Stock to be redeemed setting forth (1) the number of shares of such series
of Common Stock held by such holder to be redeemed, (2) a statement that
such shares of such series of Common Stock shall be redeemed, (3) the
Redemption Date, (4) the kind and per share amount of cash and/or
securities or other property to be received by such holder with respect to
each share of such series of Common Stock to be redeemed, including details
as to the calculation thereof, (5) the place or places where certificates
for shares of such series of Common Stock, properly endorsed or assigned
for transfer (unless the Corporation shall waive such requirement), are to
be surrendered for delivery of such cash and/or securities or other
property, (6) if applicable, a statement to the effect that the shares
being redeemed may no longer be transferred on the transfer books of the
Corporation after the Redemption Date and (7) a statement to the effect
that, subject to paragraph B(5)(d)(ix) of this Article, dividends on such
shares of such series of Common Stock shall cease to be paid as of the
Redemption Date. Such notices shall be sent by first-class mail, postage
prepaid, to each such holder at such holder's address as the same appears
on the transfer books of the Corporation.
(v) If the Corporation determines to convert the Pollo Tropical Stock
into Carrols Stock (or another class or series of common stock of the
Corporation) pursuant to paragraph B(5)(a)(iii) of this Article, the
Corporation shall, not less than 35 Business Days prior to the Conversion
Date, cause notice to be given to each holder of shares of Pollo Tropical
Stock to be so converted and to each holder of Convertible Securities that
are convertible into or exchangeable or exercisable for shares of Pollo
Tropical Stock (unless alternate provision for such notice to the holders
of such Convertible Securities is made pursuant to the terms of such
Convertible Securities) setting forth (1) a statement that all outstanding
shares of Pollo Tropical Stock shall be converted, (2) the anticipated
Conversion Date, (3) the per share number of shares of Carrols Stock or
another class or series of common stock of the Corporation, as the case may
be, to be received with respect to each share of Pollo Tropical Stock,
including details as to the calculation thereof, (4) the place or places
where certificates for shares of Pollo Tropical Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such
requirement), are to be surrendered for delivery of certificates for shares
of Pollo Tropical
11
Stock, (5) the number of outstanding shares of Pollo Tropical Stock and the
number of shares of Pollo Tropical Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or exercisable
and the conversion, exchange or exercise price thereof, (6) a statement to
the effect that, subject to paragraph B(5)(d)(ix) of this Article,
dividends on Pollo Tropical Stock shall cease to be paid as of such
Conversion Date and (7) in the case of notice to holders of such
Convertible Securities, a statement to the effect that a holder of such
Convertible Securities shall be entitled to receive shares of Pollo
Tropical Stock upon such conversion only if such holder properly converts,
exchanges or exercises such Convertible Securities on or prior to such
Conversion Date and a statement as to what, if anything, such holder will
be entitled to receive pursuant to the terms of such Convertible Securities
or, if applicable, this paragraph B(5) of this Article if such holder
thereafter converts, exchanges or exercises such Convertible Securities.
Such notice shall be sent by first-class mail, postage prepaid, to each
such holder at such holder's address as the same appears on the transfer
books of the Corporation.
(vi) If the Corporation determines to redeem shares of either series
of the Common Stock pursuant to paragraph B(5)(b) of this Article, the
Corporation shall cause notice to be given to each holder of shares of such
series of the Common Stock to be redeemed and to each holder of Convertible
Securities that are convertible into or exchangeable or exercisable for
shares of such series of the Common Stock (unless alternate provision for
such notice to the holders of such Convertible Securities is made pursuant
to the terms of such Convertible Securities), setting forth (1) a statement
that all shares of such series of the Common Stock outstanding on the
Redemption Date shall be redeemed in exchange for shares of common stock of
each Carrols Group Subsidiary (and, if such redemption is pursuant to
paragraph B(5)(b)(ii)(2)(x) of this Article, Pollo Tropical Stock) or
common stock of each Pollo Tropical Group Subsidiary, as the case may be,
(2) the Redemption Date, (3) in the case of a redemption of the Pollo
Tropical Stock, the Outstanding Pollo Tropical Fraction on the date of such
notice, (4) the place or places where certificates for shares of the series
of the Common Stock to be redeemed, properly endorsed or assigned for
transfer (unless the Corporation shall waive such requirement), are to be
surrendered for delivery of certificates for shares of the common stock of
each Carrols Group Subsidiary (and, if such redemption is pursuant to
paragraph B(5)(b)(ii)(2)(x) of this Article, Pollo Tropical Stock) or
common stock of each Pollo Tropical Group Subsidiary, as the case may be,
(5) a statement to the effect that, subject to paragraph B(5)(d)(ix) of
this Article, dividends on such shares of the Common Stock shall cease to
be paid as of such Redemption Date, (6) the number of shares of such series
of the Common Stock outstanding and the number of shares of such series of
Common Stock into or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion, exchange or
exercise price thereof and (7) in the case of notice to holders of
Convertible Securities, a statement to the effect that a holder of
Convertible Securities shall be entitled to receive shares of common stock
of each Carrols Group Subsidiary (and, if such redemption is pursuant to
paragraph B(5)(b)(ii)(2)(x) of this Article, Pollo Tropical Stock) or
common stock of each Pollo Tropical Group Subsidiary, as the case may be,
upon redemption only if such holder properly converts, exchanges or
exercises such Convertible Securities on or prior to the Redemption Date
and a statement as to
12
what, if anything, such holder will be entitled to receive pursuant to the
terms of such Convertible Securities or, if applicable, this paragraph B(5)
of this Article, if such holder thereafter converts, exchanges or exercises
such Convertible Securities. Such notice shall be sent by first-class mail,
postage prepaid, not less than 30 Business Days nor more than 45 Business
Days prior to the Redemption Date to each such holder at such holder's
address as the same appears on the transfer books of the Corporation.
(vii) If less than all of the outstanding shares of the Common Stock
of a series are to be redeemed pursuant to paragraph B(5)(a)(i) of this
Article, the shares to be redeemed by the Corporation shall be selected
from among the holders of shares of such series of the Common Stock
outstanding at the close of business on the record date for such redemption
on a pro rata basis among all such holders or by lot or by such other
method as may be determined by the Board of Directors of the Corporation to
be equitable.
(viii) The Corporation shall not be required to issue or deliver
fractional shares of any capital stock or of any other securities to any
holder of either series of the Common Stock upon any conversion,
redemption, dividend or other distribution pursuant to this paragraph B(5)
of this Article. If more than one share of either series of the Common
Stock shall be held at the same time by the same holder, the Corporation
may aggregate the number of shares of any capital stock that shall be
issuable or any other securities or property that shall be distributable to
such holder upon any conversion, redemption, dividend or other distribution
(including any fractional shares). If there are fractional shares of any
capital stock or of any other securities remaining to be issued or
distributed to the holders of either series of the Common Stock, the
Corporation shall, if such fractional shares are not issued or distributed
to the holder, pay cash in respect of such fractional shares in an amount
equal to the Fair Value thereof on the fifth Business Day prior to the date
such payment is to be made (without interest).
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of either series of the Common
Stock; provided, however, that if the Conversion Date or Redemption Date,
as the case may be, with respect to any shares of either series of the
Common Stock shall be subsequent to the record date for the payment of a
dividend or other distribution thereon or with respect thereto, the holders
of such series of the Common Stock at the close of business on such record
date shall be entitled to receive the dividend or other distribution
payable on or with respect to such shares on the date set for payment of
such dividend or other distribution, in each case without interest,
notwithstanding the subsequent conversion or redemption of such shares.
(x) Before any holder of either series of the Common Stock shall be
entitled to receive any cash payment and/or certificates or instruments
representing shares of any capital stock and/or other securities or
property to be distributed to such holder with respect to such series of
the Common Stock pursuant to this paragraph B(5) of this Article, such
holder shall surrender at such place as the Corporation shall specify
certificates for such shares of the Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such
requirement). The Corporation shall, as soon as practicable after receipt
of certificates representing such shares of the Common
13
Stock deliver to the person for whose account such shares of the Common
Stock were so surrendered, or to such person's nominee or nominees, the
cash and/or the certificates or instruments representing the number of
whole shares of the kind of capital stock and/or other securities or
property to which such person shall be entitled as aforesaid, together with
any payment in respect of fractional shares contemplated by paragraph
B(5)(d)(viii) of this Article, in each case without interest. If less than
all of the shares of either series of the Common Stock represented by any
one certificate are to be redeemed, the Corporation shall issue and deliver
a new certificate for the shares of such series of Common Stock not
redeemed.
(xi) From and after any applicable Conversion Date or Redemption
Date, as the case may be, all rights of a holder of shares of either series
of the Common Stock that were converted or redeemed shall cease except for
the right, upon surrender of the certificates representing such shares of
the Common Stock as required by paragraph B(5)(d)(x) of this Article, to
receive the cash and/or the certificates or instruments representing shares
of the kind and amount of capital stock and/or other securities or property
for which such shares were converted or redeemed, together with any payment
in respect of fractional shares contemplated by paragraph B(5)(d)(viii) of
this Article and rights to dividends as provided in paragraph B(5)(d)(ix)
of this Article, in each case without interest. No holder of a certificate
that immediately prior to the applicable Conversion Date represented shares
of a series of the Common Stock shall be entitled to receive any dividend
or other distribution or interest payment with respect to shares of any
kind of capital stock or other security or instrument for which such series
of the Common Stock was converted until the surrender as required by this
paragraph B(5) of this Article of such certificate in exchange for a
certificate or certificates or instrument or instruments representing such
capital stock or other security. Subject to applicable escheat and similar
laws, upon such surrender, there shall be paid to the holder the amount of
any dividends or other distributions (without interest) which theretofore
became payable on any class or series of capital stock of the Corporation
as of a record date after the Conversion Date, but that were not paid by
reason of the foregoing, with respect to the number of whole shares of the
kind of capital stock represented by the certificate or certificates issued
upon such surrender. From and after a Conversion Date, the Corporation
shall, however, be entitled to treat the certificates for a series of the
Common Stock that have not yet been surrendered for conversion as
evidencing the ownership of the number of whole shares of the kind or kinds
of capital stock of the Corporation for which the shares of such series of
the Common Stock represented by such certificates shall have been
converted, notwithstanding the failure to surrender such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the
issuance or delivery of any shares of capital stock and/or other securities
upon conversion or redemption of shares of either series of the Common
Stock pursuant to this paragraph B(5) of this Article. The Corporation
shall not, however, be required to pay any tax that may be payable in
respect of any transfer involved in the issuance or delivery of any shares
of capital stock and/or other securities in a name other than that in which
the shares of such series of the Common Stock so converted or redeemed were
registered, and no such issuance or
14
delivery shall be made unless and until the person requesting such issuance
or delivery has paid to the Corporation the amount of any such tax or has
established to the satisfaction of the Corporation that such tax has been
paid.
(xiii) Neither the failure to mail any notice required by this
paragraph B(5)(d) of this Article to any particular holder of the Common
Stock or of Convertible Securities nor any defect therein shall affect the
sufficiency thereof with respect to any other holder of outstanding shares
of the Common Stock or of Convertible Securities or the validity of any
such conversion or redemption.
(xiv) The Board of Directors may establish such rules and
requirements to facilitate the effectuation of the transactions
contemplated by this paragraph B(5) of this Article as the Board of
Directors shall determine to be appropriate.
(6) Application of the Provisions of this Certificate of Amendment to the
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Restated Certificate of Incorporation.
- -------------------------------------
(a) Certain Determinations by the Board of Directors. The Board of
------------------------------------------------
Directors shall make such determinations with respect to the assets and
liabilities to be attributed to the Groups, the application of the
provisions of this paragraph B of this Article to transactions to be
engaged in by the Corporation and the preferences, limitations and relative
rights of the holders of either series of the Common Stock, and the
qualifications and restrictions thereon, provided by this Certificate of
Amendment to the Restated Certificate of Incorporation, as may be, or
become necessary or appropriate to the exercise of such preferences,
limitations and relative rights, including, without limiting the foregoing,
the determinations referred to in the following paragraphs B(6)(a)(i),
(ii), (iii), (iv) and (v) of this Article. A record of any such
determination shall be filed with the records of the actions of the Board
of Directors.
(i) Upon any acquisition by the Corporation or its subsidiaries
of any assets or business, or any assumption of liabilities, outside
of the ordinary course of business of the Carrols Group or the Pollo
Tropical Group, as the case may be, the Board of Directors shall
determine whether such assets, business and liabilities (or an
interest therein) shall be for the benefit of the Carrols Group or the
Pollo Tropical Group or that an interest therein shall be partly for
the benefit of the Carrols Group and partly for the benefit of the
Pollo Tropical Group and, accordingly, shall be attributed to the
Carrols Group or the Pollo Tropical Group, or partly to each, in
accordance with paragraph B(7)(c) or (r) of this Article, as the case
may be.
(ii) Upon any issuance of any shares of Pollo Tropical Stock at
a time when the Number of Shares Issuable with Respect to the Inter-
Group Interest is greater than zero, the Board of Directors shall
determine, based on the use of the proceeds of such issuance and any
other relevant factors, whether all or any part of the shares of Pollo
Tropical Stock so issued shall reduce the Number of Shares
15
Issuable with Respect to the Inter-Group Interest, and the Number of
Shares Issuable with Respect to the Inter-Group Interest shall be
adjusted accordingly.
(iii) Upon any issuance by the Corporation or any subsidiary
thereof of any Convertible Securities that are convertible into or
exchangeable or exercisable for shares of Pollo Tropical Stock, if at
the time such Convertible Securities are issued the Number of Shares
Issuable with Respect to the Inter-Group Interest is greater than
zero, the Board of Directors shall determine, based on the use of the
proceeds of such issuance of Convertible Securities in the business of
the Carrols Group or the Pollo Tropical Group and any other relevant
factors, whether, upon conversion, exchange or exercise thereof, the
issuance of shares of Pollo Tropical Stock pursuant thereto shall, in
whole or in part, reduce the Number of Shares Issuable with Respect to
the Inter-Group Interest.
(iv) Upon any issuance of any shares of the Preferred Stock of
any series, the Board of Directors shall attribute, based on the use
of proceeds of such issuance of shares of the Preferred Stock in the
business of the Carrols Group or the Pollo Tropical Group and any
other relevant factors, the shares so issued entirely to the Carrols
Group or entirely to the Pollo Tropical Group or partly to the Carrols
Group and partly to the Pollo Tropical Group in such proportion as the
Board of Directors shall determine.
(v) Upon any redemption or repurchase by the Corporation or any
subsidiary thereof of shares of the Preferred Stock of any class or
series or of other securities or debt obligations of the Corporation,
the Board of Directors shall determine, based on the property used to
redeem or purchase such shares, other securities or debt obligations,
which, if any, of such shares, other securities or debt obligations
redeemed or repurchased shall be attributed to the Carrols Group and
which, if any, of such shares, other securities or debt obligations
shall be attributed to the Pollo Tropical Group and, accordingly, how
many of the shares of such series of the Preferred Stock or of such
other securities, or how much of such debt obligations, that remain
outstanding, if any, are thereafter attributed to the Carrols Group or
to the Pollo Tropical Group.
(b) Certain Determinations Not Required. Notwithstanding the
-----------------------------------
foregoing provisions of this paragraph B(6) of this Article, the provisions
of paragraphs B(7)(c), (e), (r) or (s) of this Article or any other
provision of this Article, at any time when there are not outstanding both
(i) one or more shares of Carrols Stock or Convertible Securities
convertible into or exchangeable or exercisable for Carrols Stock and (ii)
one or more shares of Pollo Tropical Stock or Convertible Securities
convertible into or exchangeable or exercisable for Pollo Tropical Stock,
the Corporation need not (A) attribute any of the assets or liabilities of
the Corporation or any of its subsidiaries to the Carrols Group or the
Pollo Tropical Group or (B) make any determination required in connection
therewith, nor shall the Board of Directors be required to make any of the
determinations otherwise required by this Article, and in such
circumstances the holders of the shares of Carrols Stock or Pollo Tropical
Stock outstanding, as the case may be, shall (unless otherwise
16
specifically provided by this Certificate of Amendment to the Restated
Certificate of Incorporation) be entitled to all the preferences or other
relative rights of both series of the Common Stock without differentiation
between the Carrols Stock and the Pollo Tropical Stock.
(c) Board Determinations Binding. Subject to applicable law, any
----------------------------
determinations made in good faith by the Board under any provision of this
Article, and any determinations with respect to any Group or the rights of
holders of any class or series of capital stock made pursuant to or in
furtherance of the application of this Article, shall be final and binding
on all stockholders.
(7) Certain Definitions. As used in this Article, the following terms hall
-------------------
have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless the context
otherwise requires. As used in this paragraph B(7) of this Article, a
"contribution" or "transfer" of assets or properties from one Group to another
shall refer to the reattribution of such assets or properties from the
contributing or transferring Group to the other Group and correlative phrases
shall have correlative meanings.
(a) "Business Day" shall mean each weekday that banks are open for the
transaction of business in New York City.
(b) "Carrols Available Dividend Amount", as of any date shall mean, with
respect to the Carrols Group either (a) the excess of (i) an amount equal to the
total assets attributed to the Carrols Group less the total liabilities (not
including preferred stock) attributed to the Carrols Group as of such date over
(ii) the aggregate par value of, or any greater amount determined to be capital
in respect of, all outstanding shares of Carrols Stock and to the extent
applicable, each class or series of capital stock attributed to the Carrols
Group or (b) in case there is no such excess, an amount equal to Carrols Net
Earnings (Loss) (if positive) for the fiscal year in which such date occurs
and/or the preceding fiscal year. The Carrols Available Dividend Amount is
intended to be similar to an amount equal to the amount that would be legally
available for the payment of dividends on shares of Carrols Stock under the DGCL
if the Carrols Group was a separate Delaware corporation.
(c) "Carrols Group" shall mean, as of any date:
(i) the interest of the Corporation or any of its subsidiaries on
such date in all of the assets, liabilities and businesses of the
Corporation or any of its subsidiaries (and any successor companies), other
than any assets, liabilities and businesses attributed in accordance with
this Article to the Pollo Tropical Group;
(ii) a proportionate undivided interest in each and every business,
asset and liability attributed to the Pollo Tropical Group equal to the
Inter-Group Interest Fraction as of such date;
(iii) all properties and assets transferred to the Carrols Group from
the Pollo Tropical Group (other than pursuant to paragraph B(7)(c)(iv) or
(vi) of this Article)
17
pursuant to transactions in the ordinary course of business of both the
Carrols Group and the Pollo Tropical Group or otherwise as the Board of
Directors may have directed as permitted by this Article;
(iv) all properties and assets transferred to the Carrols Group from
the Pollo Tropical Group in connection with a reduction of the Number of
Shares Issuable with Respect to the Inter-Group Interest;
(v) the interest of the Corporation or any of its subsidiaries in
any business or asset acquired and any liabilities assumed by the
Corporation or any of its subsidiaries outside the ordinary course of
business and attributed to the Carrols Group, as determined by the Board of
Directors as contemplated by paragraph B(6)(a)(i) of this Article; and
(vi) from and after the payment date of any dividend, redemption or
other distribution with respect to shares of Pollo Tropical Stock (other
than a dividend or other distribution payable in shares of Pollo Tropical
Stock, with respect to which adjustment shall be made as provided in
paragraph B(7)(o)(i) of this Article, or in securities of the Corporation
attributed to the Pollo Tropical Group, for which provision shall be made
as set forth in the third to last sentence of this definition), an amount
of assets or properties previously attributed to the Pollo Tropical Group
of the same kind as were paid in such dividend or other distribution with
respect to shares of Pollo Tropical Stock as have a Fair Value on the
record date for such dividend or distribution equal to the product of (1)
the Fair Value on such record date of the aggregate of such dividend or
distribution to holders of shares of Pollo Tropical Stock declared and (2)
a fraction the numerator of which is equal to the Inter-Group Interest
Fraction in effect on the record date for such dividend or distribution and
the denominator of which is equal to the Outstanding Pollo Tropical
Fraction in effect on the record date for such dividend or distribution;
provided, that from and after any transfer of any assets or properties from
the Carrols Group to the Pollo Tropical Group, the Carrols Group shall no
longer include such assets or properties so transferred (other than as
reflected in respect of such a transfer by the Inter-Group Interest
Fraction, as provided by paragraph B(7)(c)(ii) of this Article). If the
Corporation shall pay a dividend or make some other distribution with
respect to shares of Pollo Tropical Stock payable in securities of the
Corporation that are attributed to the Pollo Tropical Group for purposes of
this Article (other than Pollo Tropical Stock), the Carrols Group shall be
deemed to hold an interest in the Pollo Tropical Group equivalent to the
number or amount of such securities that is equal to the product of the
number or amount of securities so distributed to holders of Pollo Tropical
Stock and the fraction specified in clause (2) of paragraph B(7)(c)(vi) of
this Article (determined as of the record date for such distribution) and,
to the extent interest is or dividends are paid on the securities so
distributed, the Carrols Group shall include, and there shall be
transferred thereto from the Pollo Tropical Group, a corresponding ratable
amount of the kind of assets paid as such interest or dividends as would
have been paid in respect of such securities so deemed to be held by the
Carrols Group if such securities were outstanding. The Corporation may
also, to the extent the securities so paid as a dividend or other
distribution to the holders of Pollo Tropical Stock are Convertible
Securities and at the
18
time are convertible into or exchangeable or exercisable for shares of
Pollo Tropical Stock, treat such Convertible Securities as are so deemed to
be held by the Carrols Group to be deemed to be converted, exchanged or
exercised, and shall do so to the extent such Convertible Securities are
mandatorily converted, exchanged or exercised (and to the extent the terms
of such Convertible Securities require payment of consideration for such
conversion, exchange or exercise, the Carrols Group shall then no longer
include an amount of the kind of properties or assets required to be paid
as such consideration for the amount of Convertible Securities deemed
converted, exchanged or exercised (and the Pollo Tropical Group shall be
attributed such properties or assets)), in which case, from and after such
time, the securities into or for which such Convertible Securities so
deemed to be held by the Carrols Group were so considered converted,
exchanged or exercised shall be deemed held by the Carrols Group (as
provided in clause (3) of paragraph B(7)(o)(iii) of this Article) and such
Convertible Securities shall no longer be deemed to be held by the Carrols
Group. A statement setting forth the election to effectuate any such deemed
conversion, exchange or exercise of Convertible Securities so deemed to be
held by the Carrols Group and the properties or assets, if any, to be
attributed to the Pollo Tropical Group in consideration of such conversion,
exchange or exercise (if any) shall be filed in the records of the actions
of the Board of Directors and, upon such filing, such deemed conversion,
exchange or exercise shall be effectuated.
(d) "Carrols Net Earnings (Loss)", for any period through any date, shall
mean the net earnings or loss of the Carrols Group for such period (or in
respect of fiscal periods of the Corporation commencing prior to the date of the
first issuance of Pollo Tropical Stock, the pro forma net earnings or loss of
the Carrols Group for such period as if such date had been the first day of such
period) determined in accordance with generally accepted accounting principles
in effect at such time, reflecting income and expense of the Corporation
attributed to the Carrols Group on a basis substantially consistent with
attributions of income and expense made in the calculation of Pollo Tropical Net
Earnings (Loss), including, without limitation, corporate administrative costs,
net interest and other financial costs and income taxes.
(e) "Common Stock" shall mean the collective reference to the Carrols
Stock and the Pollo Tropical Stock, and either may sometimes be called a series
of Common Stock.
(f) "Conversion Date" shall mean the closing date of the IPO, which date
shall be the effective date for the conversion of shares of Pollo Tropical Stock
into shares of Carrols Stock (or another class or series of common stock of the
Corporation, as the case may be) and set forth in the notice to holders of
shares of Pollo Tropical Stock subject to such conversion and to holders of any
Convertible Securities that are convertible into or exchangeable or exercisable
for shares of Pollo Tropical Stock subject to such conversion required pursuant
to paragraph (5)(d)(v) of this Article.
(g) "Convertible Securities" at any time shall mean any securities of the
Corporation or of any subsidiary thereof (other than shares of the Common
Stock), including warrants and options, outstanding at such time that by their
terms are convertible into or exchangeable or exercisable for or evidence the
right to acquire any shares of either series of the Common Stock, whether
convertible, exchangeable or exercisable at such time or a later time or only
upon the
19
occurrence of certain events, but in respect of anti-dilution provisions of such
securities only upon the effectiveness thereof.
(h) "Disposition" shall mean a sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of assets or
stock or otherwise) of properties or assets (including stock, other securities
and goodwill).
(i) "Fair Value" shall mean, (i) in the case of equity securities or debt
securities of a class or series that has previously been Publicly Traded for a
period of at least 3 months, the Market Value thereof (if such Market Value, as
so defined, can be determined); (ii) in the case of an equity security or debt
security that has not been Publicly Traded for at least 3 months or the Market
Value of which cannot be determined, the fair value per share of stock or per
other unit of such security, on a fully distributed basis, as determined by an
independent appraiser with recognized standing selected in good faith by the
Board of Directors; provided, however, that in the sole discretion of the Board
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of Directors, the appraisal may be conducted by the investment banking firm
engaged by the Corporation in connection with its IPO; (iii) in the case of cash
denominated in U.S. dollars, the face amount thereof and in the case of cash
denominated in other than U.S. dollars, the face amount thereof converted into
U.S. dollars at the rate published in The Wall Street Journal on the date for
the determination of Fair Value or, if not so published, at such rate as shall
be determined in good faith by the Board of Directors based upon such
information as the Board of Directors shall in good faith determine to be
appropriate in accordance with good business practice; and (iv) in the case of
property other than securities or cash, the "Fair Value" thereof shall be
determined in good faith by the Board of Directors based upon such appraisals or
valuation reports of such independent experts as the Board of Directors shall in
good faith determine to be appropriate in accordance with good business
practice. Any such determination of Fair Value shall be described in a statement
filed with the records of the actions of the Board of Directors.
(j) "Fair Value Ratio of the Pollo Tropical Stock to the Carrols Stock" as
of any Conversion Date shall mean the fraction (which may be greater or less
than 1/1), expressed as a decimal (rounded to the nearest five decimal places),
of a share of Carrols Stock to be issued in respect of a share of Pollo Tropical
Stock upon a conversion of Pollo Tropical Stock into Carrols Stock (or another
class or series of common stock of the Corporation) in accordance with paragraph
B(5)(a)(iii) of this Article, based on the ratio of the Fair Value of a share of
Pollo Tropical Stock to the Fair Value of a share of Carrols Stock as of such
date.
(k) "Group" shall mean, as of any date, the Carrols Group or the Pollo
Tropical Group, as the case may be.
(l) "Inter-Group Interest Fraction" as of any date shall mean a fraction
the numerator of which shall be the Number of Shares Issuable with Respect to
the Inter-Group Interest on such date and the denominator of which shall be the
sum of (A) such Number of Shares Issuable with Respect to the Inter-Group
Interest and (B) the aggregate number of shares of Pollo Tropical Stock
outstanding on such date. A statement setting forth the Inter-Group Interest
Fraction as of the record date for any dividend or distribution on either series
of the Common Stock, as of the effective date of any conversion, exchange or
exercise of Convertible Securities into or for shares
20
of Pollo Tropical Stock and as of the end of each fiscal quarter of the
Corporation shall be filed by the Secretary of the Corporation in the records of
the Board of Directors of the Corporation not later than ten days after such
date.
(m) "Market Value" of a share of any class or series of capital stock of
the Corporation on any day shall mean the average of the high and low reported
sales prices regular way of a share of such class or series on such Business Day
or, in case no such reported sale takes place on such Business Day, the average
of the reported closing bid and asked prices regular way of a share of such
class or series on such Business Day, in either case as reported on the New York
Stock Exchange Composite Tape or, if the shares of such class or series are not
listed or admitted to trading on such Exchange on such Business Day, on the
principal national securities exchange in the United States on which the shares
of such class or series are listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange on such Business Day, on
The Nasdaq National Market or, if the shares of such class or series are not
listed or admitted to trading on any national securities exchange or quoted on
The Nasdaq National Market on such Business Day, the average of the closing bid
and asked prices of a share of such class or series in the over-the-counter
market on such Business Day as furnished by any New York Stock Exchange member
firm selected from time to time by the Corporation or, if such closing bid and
asked prices are not made available by any such New York Stock Exchange member
firm on such Business Day, the Fair Value of a share of such class or series as
set forth in clause (ii) of the definition of Fair Value; provided that, for
purposes of determining the market value of a share of any class or series of
capital stock for any period, (i) the "Market Value" of a share of capital stock
on any day prior to any "ex-dividend" date or any similar date occurring during
such period for any dividend or distribution (other than any dividend or
distribution contemplated by clause (ii)(B) of this sentence) paid or to be paid
with respect to such capital stock shall be reduced by the Fair Value of the per
share amount of such dividend or distribution and (ii) the "Market Value" of any
share of capital stock on any day prior to (A) the effective date of any
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) of outstanding shares of such class or series of capital stock
occurring during such period or (B) any "ex-dividend" date or any similar date
occurring during such period for any dividend or distribution with respect to
such capital stock to be made in shares of such class or series of capital stock
or Convertible Securities that are convertible, exchangeable or exercisable for
such class or series of capital stock shall be appropriately adjusted, as
determined by the Board of Directors, to reflect such subdivision, combination,
dividend or distribution.
(n) "Net Proceeds" shall mean, as of any date with respect to any
Disposition of any of the properties and assets attributed to the Carrols Group
or the Pollo Tropical Group, as the case may be, an amount, if any, equal to
what remains of the gross proceeds received by the Corporation in such
Disposition after payment of, or reasonable provision is made as determined by
the Board of Directors for, (A) any taxes payable by the Corporation (or which
would have been payable but for the utilization of tax benefits attributable to
the other Group) in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to paragraphs B(5)(a)(i)(a) or (b) of this
Article, (B) any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses and (C) any liabilities
(contingent or otherwise) of or attributed to such Group, including, without
limitation, any liabilities for deferred taxes or any indemnity or guarantee
obligations of the Corporation incurred in connection with
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the Disposition or otherwise, and any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends in respect of the Preferred Stock attributed to such Group. For
purposes of this definition, any properties and assets attributed to the Group,
the properties and assets of which are subject to such Disposition, remaining
after such Disposition shall constitute "reasonable provision" for such amount
of taxes, costs and liabilities (contingent or otherwise) as the Board of
Directors determines can be expected to be supported by such properties and
assets.
(o) "Number of Shares Issuable with Respect to the Inter-Group Interest"
shall be determined by the Board of Directors prior to the first issuance of
shares of Pollo Tropical Stock or Convertible Securities convertible into or
exchangeable or exercisable for shares of Pollo Tropical Stock to be the number
of shares of Pollo Tropical Stock that initially represents 100% of the common
stockholders' equity of the Corporation attributable to the Pollo Tropical
Group, which determination shall be set forth in a statement filed with the
records of the actions of the Board of Directors; provided, however, that such
number shall from time to time thereafter be: (i) adjusted, if before such
adjustment such number is greater than zero, as determined by the Board of
Directors to be appropriate to reflect equitably any subdivision (by stock split
or otherwise) or combination (by reverse stock split or otherwise) of the Pollo
Tropical Stock or any dividend or other distribution of shares of Pollo Tropical
Stock to holders of shares of Pollo Tropical Stock or any reclassification of
Pollo Tropical Stock; (ii) decreased (but to not less than zero), if before such
adjustment such number is greater than zero, by action of the Board of Directors
by (1) the number of shares of Pollo Tropical Stock issued or sold by the
Corporation that, immediately prior to such issuance or sale, were included in
the Number of Shares Issuable with Respect to the Inter-Group Interest, (2) the
number of shares of Pollo Tropical Stock issued upon conversion, exchange or
exercise of Convertible Securities that, immediately prior to the issuance or
sale of such Convertible Securities, were included in the Number of Shares
Issuable with Respect to the Inter-Group Interest, (3) the number of shares of
Pollo Tropical Stock issued by the Corporation as a dividend or other
distribution (including in connection with any reclassification or exchange of
shares) to holders of Carrols Stock, (4) the number of shares of Pollo Tropical
Stock issued upon the conversion, exchange or exercise of any Convertible
Securities issued by the Corporation as a dividend or other distribution
including in connection with any reclassification or exchange of shares) to
holders of Carrols Stock, or (5) the number (rounded, if necessary, to the
nearest whole number) equal to the quotient of (a) the aggregate Fair Value as
of the date of contribution of properties or assets (including cash) transferred
from the Pollo Tropical Group to the Carrols Group in consideration for a
reduction in the Number of Shares Issuable with Respect to the Inter-Group
Interest and (b) the Fair Value of one share of Pollo Tropical Stock as of the
date of such transfer; and (iii) increased by (1) the number of outstanding
shares of Pollo Tropical Stock repurchased by the Corporation for consideration
that is attributed as provided by paragraph B(7)(c) of this Article to the
Carrols Group and (2) the number (rounded, if necessary, to the nearest whole
number) equal to the quotient of (a) the Fair Value of properties or assets
(including cash) theretofore attributed as provided by paragraph B(7)(c) of this
Article to the Carrols Group that are contributed to the Pollo Tropical Group in
consideration of an increase in the Number of Shares Issuable with Respect to
the Inter-Group Interest, and (b) the Fair Value of one share of Pollo Tropical
Stock as of the date of such contribution and (3) the number of shares of Pollo
Tropical Stock into or for which Convertible Securities are deemed converted,
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exchanged or exercised pursuant to the penultimate sentence of the definition of
"Carrols Group" in paragraph B(7)(c) of this Article.
(p) "Outstanding Pollo Tropical Fraction", as of any date, means the
fraction (which may simplify to 1/1) the numerator of which shall be the number
of shares of Pollo Tropical Stock outstanding on such date and the denominator
of which shall be the sum of the number of shares of Pollo Tropical Stock
outstanding on such date and the Number of Shares Issuable with Respect to the
Inter-Group Interest on such date. A statement setting forth the Outstanding
Pollo Tropical Fraction as of the record date for the payment of any dividend or
distribution on either series of the Common Stock and as of the end of each
fiscal quarter of the Corporation shall be filed by the Secretary of the
Corporation in the records of the actions of the Board of Directors not later
than ten days after such date.
(q) "Pollo Tropical Available Dividend Amount" as of any date shall mean,
with respect to the Pollo Tropical Group, the product of the Outstanding Pollo
Tropical Fraction and either (a) the excess of (i) an amount equal to the total
assets attributed to the Pollo Tropical Group less the total liabilities (not
including preferred stock) attributed to the Pollo Tropical Group as of such
date over (ii) the aggregate par value of, or any greater amount determined to
be capital in respect of, all outstanding shares of Pollo Tropical Stock and to
the extent applicable, each class or series capital stock attributed to the
Pollo Tropical Group or (b) in case there is no such excess, an amount equal to
Pollo Tropical Net Earnings (Loss) (if positive) for the fiscal year in which
such date occurs and/or the preceding fiscal year. The Pollo Tropical Available
Dividend Amount is intended to be similar to an amount equal to the product of
the Outstanding Pollo Tropical Fraction and the amount that would be legally
available for the payment of dividends on shares of Pollo Tropical Stock under
the DGCL if the Pollo Tropical Group was a separate Delaware corporation.
(r) "Pollo Tropical Group" shall mean, as of any date:
(i) all businesses, assets and liabilities of each of Pollo
Franchise, Inc., a Florida corporation and Pollo Operations, Inc. a Florida
corporation (the "Pollo Tropical Group Companies") as of the date of the
first issuance of Pollo Tropical Stock;
(ii) all assets and liabilities of the Corporation and its
subsidiaries attributed by the Board of Directors to the Pollo Tropical
Group, whether or not such assets or liabilities are or were also assets
and liabilities of any of the Pollo Tropical Group Companies;
(iii) all properties and assets transferred to the Pollo Tropical
Group from the Carrols Group (other than a transaction pursuant to
paragraph B(7)(r)(iv) of this Article) pursuant to transactions in the
ordinary course of business of both the Carrols Group and the Pollo
Tropical Group or otherwise as the Board of Directors may have directed as
permitted by this Article;
(iv) all properties and assets transferred to the Pollo Tropical
Group from the Carrols Group in connection with an increase in the Number
of Shares Issuable with respect to the Inter-Group Interest; and
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(v) the interest of the Corporation or any of its subsidiaries in
any business or asset acquired and any liabilities assumed by the
Corporation or any of its subsidiaries outside of the ordinary course of
business and attributed to the Pollo Tropical Group, as determined by the
Board of Directors as contemplated by paragraph B(6)(a)(i) of this Article;
provided, that (1) from and after the payment date of any dividend or other
distribution with respect to shares of Pollo Tropical Stock (other than a
dividend or other distribution payable in shares of Pollo Tropical Stock,
with respect to which adjustment shall be made as provided in paragraph
B(7)(o)(i) of this Article, or in securities of the Corporation attributed
to the Pollo Tropical Group, for which provision shall be made as set forth
in clause (2) of this proviso), the Pollo Tropical Group shall no longer
include an amount of assets or properties previously attributed to the
Pollo Tropical Group of the same kind as so paid in such dividend or other
distribution with respect of shares of Pollo Tropical Stock as have a Fair
Value on the record date for such dividend or distribution equal to the
product of (a) the Fair Value on such record date of the aggregate of such
dividend or distribution to holders of shares of Pollo Tropical Stock
declared and (b) a fraction the numerator of which is equal to the
Inter-Group Interest Fraction in effect on the record date for such
dividend or distribution and the denominator of which is equal to the
Outstanding Pollo Tropical Fraction in effect on the record date for such
dividend or distribution, (2) if the Corporation shall pay a dividend or
make some other distribution with respect to shares of Pollo Tropical Stock
payable in securities of the Corporation that are attributed to the Pollo
Tropical Group for purposes of this Article (other than Pollo Tropical
Stock), there shall be excluded from the Pollo Tropical Group an interest
in the Pollo Tropical Group equivalent to the number or amount of such
securities that is equal to the product of the number or amount of
securities so distributed to holders of Pollo Tropical Stock and the
fraction specified in clause 1(b) of this proviso (determined as of the
record date for such distribution) (and such interest in the Pollo Tropical
Group shall be attributed to the Carrols Group) and, to the extent interest
is or dividends are paid on the securities so distributed, the Pollo
Tropical Group shall no longer include a corresponding ratable amount of
the kind of assets paid as such interest or dividends as would have been
paid in respect of the securities equivalent to such interest in the Pollo
Tropical Group deemed held by the Carrols Group if the securities
equivalent to such interest were outstanding (and in such eventuality such
assets as are no longer included in the Pollo Tropical Group shall be
attributed to the Carrols Group) and (3) from and after any transfer of any
assets or properties from the Pollo Tropical Group to the Carrols Group,
the Pollo Tropical Group shall no longer include such assets or properties
so contributed or transferred. The Corporation may also, to the extent a
dividend or distribution on the Pollo Tropical Stock has been paid in
Convertible Securities that are convertible into or exchangeable or
exercisable for Pollo Tropical Stock, cause such Convertible Securities as
are deemed to be held by the Carrols Group in accordance with the third to
last sentence of paragraph B(7)(c) of this Article and clause (2) of the
proviso to the immediately preceding sentence to be deemed to be converted,
exchanged or exercised as provided in the penultimate sentence of paragraph
B(7)(c) of this Article, in
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which case such Convertible Securities shall no longer be deemed to be held
by the Carrols Group.
(s) "Pollo Tropical Net Earnings (Loss)", for any period through any date,
shall mean the net earnings or loss of the Pollo Tropical Group for such period
(or in respect of fiscal periods of the Corporation commencing prior to the date
of the first issuance of Pollo Tropical Stock, the pro forma net earnings or
loss of the Pollo Tropical Group for such period as if such date had been the
first day of such period) determined in accordance with generally accepted
accounting principles in effect at such time, reflecting income and expense of
the Corporation attributed to the Pollo Tropical Group on a basis substantially
consistent with attributions of income and expense made in the calculation of
the Carrols Net Earnings (Loss), including, without limitation, corporate
administrative costs, net interest and other financial costs and income taxes.
(t) "Publicly Traded" with respect to any security shall mean (i)
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(or any successor provision of law), and (ii) listed for trading on the New York
Stock Exchange or the American Stock Exchange (or any national securities
exchange registered under Section 7 of the Securities Exchange Act of 1934, as
amended (or any successor provision of law), that is the successor to either
such exchange) or listed on The Nasdaq Stock Market (or any successor market
system).
(u) "Redemption Date" shall mean the date fixed by the Board of Directors
as the effective date for a redemption of shares of either series of the Common
Stock, as set forth in a notice to holders thereof required pursuant to
paragraphs B(5)(d)(iii), (iv) or (vi) of this Article.
C. Redesignation of Existing Common Stock. As of the effective date of this
--------------------------------------
Certificate of Amendment to the Restated Certificate of Incorporation and
without any further action on the part of the Corporation or its shareholders,
each share of the Common Stock then issued shall automatically be redesignated,
changed and converted into one fully paid and nonassessable share of Carrols
Stock.
D. Preferred Stock. Shares of Preferred Stock may be issued from time to time
---------------
in one or more series, and the Board of Directors of the Corporation is hereby
authorized, subject to the limitations provided by law, to establish and
designate one or more series of Preferred Stock, to fix the number of shares
constituting each series, and to fix the designation, powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of each series and the variations and the
relative rights, preferences and limitations as between series, and to increase
and to decrease the number of shares constituting each series. The authority of
the Board of Directors of the Corporation with respect to each series shall
include, but shall not be limited to, the authority to determine the following:
(a) The designation of such series, which may be by distinguishing
number or letter;
(b) The number of shares initially constituting such series;
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(c) The increase, and the decrease to a number not less than the
number of the then outstanding shares of such series, of the number of
shares constituting such series theretofore fixed;
(d) The rate or rates, and the conditions upon and the times at
which dividends on the shares of such series shall be paid, the preference
or relation which such dividends shall bear to the dividends payable on any
other class or classes or on any other series of stock of the Corporation,
and whether or not such dividends shall be cumulative, and, if such
dividends shall be cumulative, the date or dates from and after which they
shall accumulate;
(e) Whether or not the shares of such series shall be redeemable
and, if such shares shall be redeemable, the terms and conditions of such
redemption, including, but not limited to, the date or dates upon or after
which such shares shall be redeemable and the amount per share which shall
be payable upon such redemption, which amount may vary under different
conditions and at different redemption dates;
(f) The rights to which the holders of the shares of such series
shall be entitled upon the voluntary or involuntary liquidation,
dissolution or winding up of, or upon any distribution of the assets of,
the Corporation, which rights may be different in the case of a voluntary
liquidation, dissolution or winding up than in the case of such an
involuntary event;
(g) Whether or not the shares of such series shall have voting
rights, in addition to the voting rights provided by law and, if such
shares shall have such voting rights, the terms and conditions thereof,
including, but not limited to, the right of the holders of such shares to
vote as a separate class either alone or with the holders of shares of one
or more other series of Preferred Stock and the right to have more than one
vote per share;
(h) Whether or not a sinking or a purchase fund shall be provided
for the redemption or purchase of the shares of such series and, if such a
sinking fund or purchase fund shall be provided, the terms and conditions
thereof;
(i) Whether or not the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or any
other series of the same or any other class or classes of stock or any
other security of the Corporation or any other entity and, if provision be
made for conversion or exchange, the terms and conditions of conversion or
exchange, including, but not limited to, any provision for the adjustment
of the conversion or exchange rate or price; and
(j) Any other relative rights, preferences and limitations.
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IN WITNESS WHEREOF, said CARROLS HOLDINGS CORPORATION has caused this
Certificate to be signed by Alan Vituli, its Chairman and Chief Executive
Officer this 1/st/ day of October, 1999.
CARROLS HOLDINGS CORPORATION
By: /s/ Alan Vituli
------------------------------------
Alan Vituli,
Chairman and Chief Executive Officer
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