Document:

carriage-thirdamendmentt

  1  Execution Version    THIRD AMENDMENT TO   FIRST AMENDED AND RESTATED CREDIT AGREEMENT    THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT  AGREEMENT (this “Third Amendment”), dated as of December 9, 2022, is by and among  CARRIAGE SERVICES, INC., a Delaware corporation (the “Borrower”), the banks listed as  Lenders on the signature pages hereof (the “Lenders”), and BANK OF AMERICA, N.A., as  Administrative Agent, Swing Line Lender and L/C Issuer (in said capacity as Administrative  Agent, the “Administrative Agent”).  BACKGROUND  A. The Borrower, the Lenders, and the Administrative Agent are parties to that  certain First Amended and Restated Credit Agreement, dated as of May 13, 2021, as amended by  that certain First Amendment and Commitment Increase to First Amended and Restated Credit  Agreement, dated as of November 22, 2021, that certain Second Amendment and Commitment  Increase to First Amended and Restated Credit Agreement, dated as of May 27, 2022 and that  certain Limited Consent to First Amended and Restated Credit Agreement, dated as of October  25, 2022 (as amended, restated, or otherwise modified from time to time, the “Credit  Agreement”; the terms defined in the Credit Agreement and not otherwise defined herein shall be  used herein as defined in the Credit Agreement).  B. The Borrower has requested that the Lenders amend certain provisions of the  Credit Agreement and the Lenders are willing to make such amendments to the Credit  Agreement, in accordance with and subject to the terms and conditions set forth herein.  NOW, THEREFORE, in consideration of the covenants, conditions and agreements  hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of  which are all hereby acknowledged, the parties hereto covenant and agree as follows:  1. AMENDMENTS.    (a) Section 1.01 of the Credit Agreement is hereby amended by adding the following  defined terms thereto in proper alphabetical order:  “Bakersfield Acquisition” means the Acquisition  by the Borrower, or any  of the Borrower’s Subsidiaries or Affiliates of all of the business operations,  assets and properties, including the real estate and real property located in and  around Bakersfield and Tehachapi, California related to and/or used in the  operation of, and future growth of, Greenlawn Funeral Homes, Cremations &  Cemeteries; Keep It Simple Cremation; Ed Helm Monument Company; and  Wood Family Funeral Services, for an aggregate cash purchase price not to  exceed $45.0 million.  Exhibit 10.1 

 

  2  “Third Amendment” means that certain Third Amendment to First  Amended and Restated Credit Agreement, dated as of December 9, 2022, among  the Borrower, the Lenders party thereto and the Administrative Agent.  “Third Amendment Effective Date” means the date that all conditions of  effectiveness set forth in Section 3 of the Third Amendment have been satisfied.  (b) The definition of “Applicable Fee Rate” set forth in set forth in Section 1.01 of  the Credit Agreement is hereby amended and restated to read as follows:  “Applicable Fee Rate” means, at any time, in respect of the Revolving  Credit Facility, the applicable percentage per annum set forth below determined  by reference to the Total Leverage Ratio as set forth in the most recent  Compliance Certificate received by the Administrative Agent pursuant to  Section 6.02(a):  Applicable Fee Rate  Pricing Level Total Leverage Ratio  Commitment  Fee  1 < 3.00 :  1.00 0.200%  2 < 3.50:  1.00 but ≥ 3.00:  1.00 0.250%  3 < 4.00:  1.00 but ≥ 3.50:  1.00 0.250%  4 < 4.50:  1.00 but ≥ 4.00:  1.00 0.300%  5 < 5.00:  1.00 but ≥ 4.50:  1.00  0.500%  6 < 5.50:  1.00 but ≥ 5.00:  1.00 0.625%  7  ≥ 5.50:  1.00 0.750%    Any increase or decrease in the Applicable Fee Rate resulting from a change in the  Total Leverage Ratio shall become effective as of the first Business Day  immediately following the date a Compliance Certificate is delivered pursuant to  Section 6.02(a); provided, however, that if a Compliance Certificate is not delivered  when due in accordance with such Section, then, upon the request of the Required  Lenders, Pricing Level 7 shall apply as of the first Business Day after the date on  which such Compliance Certificate was required to have been delivered and shall  remain in effect until the first Business Day following the date on which such  Compliance Certificate is delivered.  Notwithstanding the foregoing, the Applicable  Fee Rate in effect from and after the Third Amendment Effective Date through and  including the date the Compliance Certificate is delivered pursuant to  Section 6.02(a) for the Fiscal Year ending December 31, 2022 shall be Pricing  Level 6.  Notwithstanding anything to the contrary contained in this definition, the  determination of the Applicable Fee Rate for any period shall be subject to the  provisions of Section 2.10(b).  (c) The definition of “Applicable Rate” set forth in set forth in Section 1.01 of the  Credit Agreement is hereby amended and restated to read as follows:  

 

  3  “Applicable Rate” means the applicable percentage per annum set forth  below determined by reference to the Total Leverage Ratio as set forth in the most  recent Compliance Certificate received by the Administrative Agent pursuant to  Section 6.02(a):  Applicable Rate  Pricing  Level  Total  Leverage Ratio  BSBY Rate / Letter of  Credit Fees  Base  Rate  1 < 3.00 :  1.00 1.500% 0.500%  2 < 3.50:  1.00 but ≥ 3.00:  1.00 1.625% 0.625%  3 < 4.00:  1.00 but ≥ 3.50:  1.00 1.750% 0.750%  4 < 4.50:  1.00 but ≥ 4.00:  1.00 1.875% 0.875%  5 < 5.00:  1.00 but ≥ 4.50:  1.00 3.125% 2.125%  6 < 5.50:  1.00 but ≥ 5.00:  1.00 3.375% 2.375%  7  ≥ 5.50:  1.00 3.625% 2.625%    Any increase or decrease in the Applicable Rate resulting from a change in the  Total Leverage Ratio shall become effective as of the first Business Day  immediately following the date a Compliance Certificate is delivered pursuant to  Section 6.02(a); provided, however, that if a Compliance Certificate is not  delivered when due in accordance with such Section, then, upon the request of the  Required Lenders, Pricing Level 7 shall apply in respect of the Revolving Credit  Facility as of the first Business Day after the date on which such Compliance  Certificate was required to have been delivered and in each case shall remain in  effect until the first Business Day following the date on which such Compliance  Certificate is delivered. Notwithstanding the foregoing, the Applicable Rate in  effect from and after the Third Amendment Effective Date through and including  the date the Compliance Certificate is delivered pursuant to Section 6.02(a) for  the Fiscal Year ending December 31, 2022 shall be Pricing Level 6.  Notwithstanding anything to the contrary contained in this definition, the  determination of the Applicable Rate for any period shall be subject to the  provisions of Section 2.10(b).  (d) The definition of “Fee Letter” set forth in set forth in Section 1.01 of the Credit  Agreement is hereby amended and restated to read as follows:  “Fee Letter” means, collectively, (i) the letter agreement, dated April 7,  2021, among the Borrower, the Administrative Agent and BofA Securities, Inc.,  (ii) the letter agreement, dated November 22, 2021, among the Borrower, the  Administrative Agent and BofA Securities, Inc., (iii) the letter agreement, dated  May 27, 2022, among the Borrower, the Administrative Agent and BofA  Securities, Inc. and (iv) the letter agreement, dated December 9, 2022, among the  Borrower, the Administrative Agent and BofA Securities, Inc.  (e) The definition of “Real Property Collateral Trigger Event” set forth in set forth in  Section 1.01 of the Credit Agreement is hereby amended and restated to read as follows:  

 

  4  “Real Property Collateral Trigger Event” means at any time after the  Closing Date when the most recent Compliance Certificate delivered pursuant to  Section 6.02(a) indicates that the Total Leverage Ratio is equal to or greater than  4.25 to 1.00.  (f) Section 7.02(d) of the Credit Agreement is hereby amended and restated to read  as follows:  (d) (i) Investments as a result of Acquisitions (other than the  Bakersfield Acquisition), if each of the following conditions has been  satisfied:  (A) if the Acquisition Consideration for such Acquisition is in  excess of $20,000,000, the Borrower shall have given the Administrative  Agent notice thereof no less than ten Business Days prior to the closing of  such Acquisition, (B) immediately before and after giving pro-forma  effect to such Acquisition, no Default shall have occurred and be  continuing, (C) immediately after giving pro-forma effect to the proposed  Acquisition, Liquidity is at least $15,000,000, and (D) immediately after  giving pro-forma effect to the proposed Acquisition, the Total Leverage  Ratio is less than 4.25 to 1.00 and (ii) the Bakersfield Acquisition so long  as each of the conditions set forth in clause (d)(i)(A) – (C) above has been  satisfied.  (g) Section 7.06(a)(ii) of the Credit Agreement is hereby amended and restated to  read as follows:  (ii) so long as immediately before and after giving pro-forma effect to  any acquisition or purchase by the Borrower of Equity Interests of the Borrower,  (A) no Default shall have occurred and be continuing, (B) Liquidity is at least  $15,000,000 and (C) the Total Leverage Ratio is less than 4.25 to 1.00, the  Borrower may acquire or purchase such Equity Interests in an unlimited amount;    (h) Section 7.11(a) of the Credit Agreement is hereby amended and restated to read as  follows:  (a) Maximum Total Leverage Ratio.  Permit the Total Leverage Ratio  as of the end of any period of four consecutive Fiscal Quarters of the Borrower to  be greater than the ratio set forth below opposite such period:  Four Consecutive Fiscal Quarter Period Ended Maximum Total  Leverage Ratio  September 30, 2022  5.25 to 1.00  From and after the Third Amendment Effective Date  through June 30, 2023  6.00 to 1.00  September 30, 2023 through December 31, 2023  5.75 to 1.00  March 31, 2024 through June 30, 2024  5.50 to 1.00  

 

  5  September 30, 2024  5.25 to 1.00  December 31, 2024 and thereafter  5.00 to 1.00    (i) Exhibit D.  Exhibit D to the Credit Agreement is hereby amended in its entirety  and replaced with the document attached hereto as Exhibit D.  2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF  DEFAULT.  By its execution and delivery hereof, the Borrower represents and warrants that, as  of the date hereof, and both before and immediately after giving effect to this Third Amendment:  (a) the representations and warranties contained in the Credit Agreement and the  other Loan Documents that are subject to materiality or Material Adverse Effect qualifications  are true and correct in all respects on and as of the date hereof as made on and as of such date,  and the representations and warranties contained in the Credit Agreement and the other Loan  Documents that are not subject to materiality or Material Adverse Effect qualifications are true  and correct in all material respects on and as of the date hereof as made on and as of such date,  except in each case to the extent that such representations and warranties specifically refer to an  earlier date, in which case they shall be true and correct as of such earlier date, and except that  the representations and warranties contained in Sections 5.05(a) and (c) of the Credit Agreement  shall be deemed to refer to the most recent financial statements furnished pursuant to  Sections 6.01(a) and (b), respectively, of the Credit Agreement;  (b) no event has occurred and is continuing which constitutes a Default or Event of  Default;  (c) (i) the Borrower has full power and authority to execute and deliver this Third  Amendment, (ii) this Third Amendment has been duly executed and delivered by the Borrower  and (iii) this Third Amendment and the Credit Agreement, as amended hereby, constitute the  legal, valid and binding obligations of the Borrower, enforceable in accordance with their  respective terms, except as enforceability may be limited by applicable Debtor Relief Laws and  by general principles of equity (regardless of whether enforcement is sought in a proceeding in  equity or at law) and except as rights to indemnity may be limited by federal or state securities  laws;  (d) neither the execution, delivery and performance of this Third Amendment or the  Credit Agreement, as amended hereby, nor the consummation of any transactions contemplated  herein or therein, will conflict with (i) any Organization Documents of the Borrower or its  Subsidiaries, (ii) any Law applicable to the Borrower or its Subsidiaries or (iii) any Contractual  Obligation to which the Borrower or the Subsidiaries is a party; and  (e) no authorization, approval, consent, or other action by, notice to, or filing with,  any Governmental Authority or other Person not previously obtained is necessary or required in  connection with (i) the execution, delivery or performance by, or enforcement against, the  Borrower of this Third Amendment or (ii) the acknowledgement by each Guarantor of this Third  Amendment.  

 

  6  3. CONDITIONS OF EFFECTIVENESS.  All provisions of this Third Amendment  shall be effective upon satisfaction of, or completion of, the following:  (a) the Administrative Agent shall have received counterparts of this Third  Amendment executed by the Borrower, each Guarantor, and each Lender;  (b) the representations and warranties set forth in Section 2 of this Third Amendment  shall be true and correct;   (c) the Administrative Agent shall have received for the benefit of each Lender who  executes this Third Amendment, an amendment fee in the amount set forth in the Fee Letter;  (d) the Administrative Agent shall have received such other fees required to be paid  on or before the Third Amendment Effective Date;  (e) unless waived by the Administrative Agent, the Borrower shall have paid all fees,  charges and disbursements of counsel to the Administrative Agent directly to such counsel to the  extent invoiced prior to or on the Third Amendment Effective Date;  (f) since December 31, 2021, there shall not have occurred any event or condition  that has had or could reasonably be expected to have, either individually or in the aggregate, a  Material Adverse Effect; and  (g) the Administrative Agent shall have received, in form and substance satisfactory  to the Administrative Agent and its counsel, such other documents, certificates and instruments  as the Administrative Agent shall reasonably require.  4. REFERENCE TO THE CREDIT AGREEMENT.  (a) Upon and during the effectiveness of this Third Amendment, each reference in the  Credit Agreement to “this Agreement”, “hereunder”, or words of like import shall mean and be a  reference to the Credit Agreement, as affected and amended by this Third Amendment.  (b) Except as expressly set forth herein, this Third Amendment shall not by  implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or  remedies of the Administrative Agent or the Lenders under the Credit Agreement or any of the  other Loan Documents, and shall not alter, modify, amend, or in any way affect the terms,  conditions, obligations, covenants, or agreements contained in the Credit Agreement or the other  Loan Documents, all of which are hereby ratified and affirmed in all respects and shall continue  in full force and effect.  5. COSTS AND EXPENSES.  The Borrower shall be obligated to pay the  reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the  preparation, execution and delivery of this Third Amendment and the other instruments and  documents to be delivered hereunder.  6. GUARANTOR’S ACKNOWLEDGEMENT.  By signing below, each Guarantor  (a) acknowledges, consents and agrees to the execution, delivery and performance by Borrower  

 

  7  of this Third Amendment, (b) joins this Third Amendment for the purpose of consenting to and  being bound by the provisions thereof, (c) acknowledges and agrees that its obligations in respect  of its Guaranty are not released, diminished, waived, modified, impaired or affected in any  manner by this Third Amendment or any of the provisions contemplated herein, (d) ratifies and  confirms all of its obligations and liabilities under the Loan Documents to which it is a party and  ratifies and confirms that such obligations and liabilities extend to and continue in effect with  respect to, and continue to guarantee and secure the Secured Obligations of the Borrower under  the Credit Agreement, as amended pursuant to the terms of the Third Amendment; and (e)  acknowledges and agrees that as of the date of the foregoing Third Amendment, such Guarantor  (i) does not have any claim or cause of action against the Administrative Agent or any Lender (or  any of their respective directors, officers, employees, agents, attorneys or other representatives)  under or in connection with its Guaranty and the other Loan Documents to which it is a party and  (ii) has no offsets against, or defenses or counterclaims to, its Guaranty.    7. EXECUTION IN COUNTERPARTS.  This Third Amendment may be executed  in any number of counterparts and by different parties hereto in separate counterparts, each of  which when so executed and delivered shall be deemed to be an original and all of which when  taken together shall constitute but one and the same instrument.  For purposes of this Third  Amendment, a counterpart hereof (or signature page thereto) signed and transmitted by any  Person party hereto to the Administrative Agent (or its counsel) by facsimile or other electronic  imaging means (e.g., “pdf” or “tif”) is to be treated as an original.  The signature of such Person  thereon, for purposes hereof, is to be considered as an original signature, and the counterpart (or  signature page thereto) so transmitted is to be considered to have the same binding effect as an  original signature on an original document.  8. GOVERNING LAW; BINDING EFFECT.  This Third Amendment shall be  governed by and construed in accordance with the laws of the State of Texas applicable to  agreements made and to be performed entirely within such State; provided that each party shall  retain all rights arising under federal law.  This Third Amendment shall be binding upon the  Borrower, the Guarantors, the Administrative Agent and each Lender and their respective  successors and permitted assigns.  9. HEADINGS.  Section headings in this Third Amendment are included herein for  convenience of reference only and shall not constitute a part of this Third Amendment for any  other purpose.  10. ENTIRE AGREEMENT.  THE CREDIT AGREEMENT, AS AMENDED  BY THIS THIRD AMENDMENT, AND THE OTHER LOAN DOCUMENTS  REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE  SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED  BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL  AGREEMENTS BETWEEN THE PARTIES.    REMAINDER OF PAGE LEFT INTENTIONALLY BLANK    

 

 

 

 

 

Signature Page – Third Amendment [Carriage]     BANK OF AMERICA, N.A.,  as Administrative Agent  By:      Name:  Adam Rose  Title:    SVP    

 

Signature Page – Third Amendment [Carriage]       BANK OF AMERICA, N.A.,  as a Lender, L/C Issuer and Swing Line Lender  By:      Name:  Adam Rose  Title:    Senior Vice President        

 

 

 

  Signature Page – Third Amendment [Carriage]       PNC BANK (successor to BBVA USA),  as a Lender  By:     Name: Natalie Hill   Title:   Senior Vice President           

 

 

 

  Signature Page – Third Amendment [Carriage]    EXHIBIT D  FORM OF COMPLIANCE CERTIFICATE  Financial Statement Date:                     ,           TO:  Bank of America, N.A., as Administrative Agent  RE: First Amended and Restated Credit Agreement, dated as of May 13, 2021, by and  among Carriage Services, Inc., a Delaware corporation (the “Borrower”), the  Guarantors, the Lenders and Bank of America, N.A., as Administrative Agent, a  Swing Line Lender and L/C Issuer (as amended, modified, extended, restated,  replaced, or supplemented from time to time, the “Credit Agreement”; capitalized  terms used herein and not otherwise defined shall have the meanings set forth in  the Credit Agreement)  DATE: [Date]    The undersigned Responsible Officer hereby certifies as of the date hereof that [he/she]  is the _____________________ of the Borrower, and that, as such, [he/she] is authorized to  execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower  and the other Loan Parties, and that:  [Use following paragraph 1 for fiscal year-end financial  statements]  1. The Borrower has delivered the year-end audited financial statements required by  Section 6.01(a) of the Credit Agreement for the fiscal year of the Borrower ended as of the above  date, together with the report and opinion of an independent certified public accountant required  by such section.  [Use following paragraph 1 for fiscal quarter-end financial  statements]  1. The Borrower has delivered the unaudited financial statements required by  Section 6.01(b) of the Credit Agreement for the fiscal quarter of the Borrower ended as of the  above date.  Such consolidated financial statements fairly present the financial condition, results  of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in  accordance with GAAP as at such date and for such period, subject only to normal year-end  audit adjustments and the absence of footnotes.  2. The undersigned has reviewed and is familiar with the terms of the Credit  Agreement and has made, or has caused to be made under [his/her] supervision, a detailed  review of the transactions and condition (financial or otherwise) of the Borrower and its  Subsidiaries during the accounting period covered by such financial statements.  3. A review of the activities of the Borrower and its Subsidiaries during such fiscal  period has been made under the supervision of the undersigned with a view to determining  

 

  Signature Page – Third Amendment [Carriage]    whether during such fiscal period the Borrower and each of the other Loan Parties performed and  observed all its obligations under the Loan Documents, and  [select one:]  [to the best knowledge of the undersigned, during such fiscal period each of the  Loan Parties performed and observed each covenant and condition of the Loan Documents  applicable to it, and no Default has occurred and is continuing.]  [--or—]  [to the best knowledge of the undersigned, the following covenants or conditions  have not been performed or observed and the following is a list of each such Default and its  nature and status:]  4. The representations and warranties of the Borrower and each other Loan Party  contained in Article V of the Credit Agreement or any other Loan Document, or which are  contained in any document furnished at any time under or in connection therewith are (i) with  respect to representations and warranties that contain a materiality qualification, true and correct  on and as of the date hereof and (ii) with respect to representations and warranties that do not  contain a materiality qualification, true and correct in all material respects on and as of the date  hereof, and except that for purposes of this Compliance Certificate, the representations and  warranties contained in clauses (a) and (b) of Section 5.05 of the Credit Agreement shall be  deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b),  respectively, of Section 6.01 of the Credit Agreement, including the statements in connection  with which this Compliance Certificate is delivered.  5. The financial covenant analyses and information set forth on Schedule A attached  hereto are true and accurate on and as of the date of this Certificate.  Delivery of an executed counterpart of a signature page of this Certificate by fax  transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as  delivery of a manually executed counterpart of this Certificate.   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]  

 

     CARRIAGE SERVICES, INC.,  a Delaware corporation    By:    Name:    Title               

 

       For the Quarter/Year ended ___________________(“Statement Date”)  SCHEDULE A  to the Compliance Certificate  ($ in 000’s)  I. Section 7.01 – Liens.    A. Debt on acquired Property: $_____________   B. Purchase money Liens and surety bond deposits: $_____________   C. Total permitted Secured Debt (Lines I.A. + I.B.): $_____________   D. 10% of Borrower’s Net Worth: $_____________  II. Section 7.02 – Investments.    A. Investments made pursuant to Section 7.02(g): $_____________   B. Investments permitted pursuant to Section 7.02(g): $10,000,000   C. Investments in Unrestricted Subsidiaries pursuant to Section 7.02(j): $_____________   D. Investments permitted pursuant to Section 7.02(j): $10,000,000  III. Section 7.11 (a) –  Maximum Total Leverage Ratio.    A. Total Debt of the Borrower and its Subsidiaries at Statement Date: $_____________   B. EBITDA for four consecutive fiscal quarters ending on the Statement  Date (“Subject Period”):      (1) Net Income for the Subject Period: $_____________    (2) To the extent deducted in calculating Net Income, Interest Expense  for the Subject Period:  $_____________    (3) To the extent deducted in calculating Net Income, the provision for  federal, state, local and foreign income taxes payable by the  Borrower and its Subsidiaries for the Subject Period:  $_____________    (4) To the extent deducted in calculating Net Income, depreciation and  amortization expenses and payments in respect of Deferred  Purchase Price for the Subject Period:  $_____________    (5) To the extent deducted in calculating Net Income, other expenses of  the Borrower and the Subsidiaries reducing Net Income which do  not represent a cash item in the Subject Period or any future period:  $_____________    (6) To the extent deducted in calculating Net Income, non-recurring  costs and expenses, including acquisition costs, of the Borrower  and its Subsidiaries not to exceed $2,000,000 in aggregate amount:  $_____________  

 

       (7) To the extent deducted in calculating Net Income, transaction fees,  cost and expenses not to exceed $5,000,000 in aggregate amount  incurred in connection with the Credit Agreement, the Senior Notes  and the repayment and discharge of the Existing Senior Notes on  the Closing Date:  $_____________    (8) EBITDA of any Acquisition calculated on a historic basis for such  Acquisition as if the same had occurred on the first day of the  period for which such EBITDA is measured with such pro-forma  adjustments as the Administrative Agent shall approve:  $_____________    (9) For any period of calculation, severance costs not to exceed  $2,500,000 in aggregate amount:  $_____________    (10) Non-cash items increasing Net Income for the Subject Period: $_____________    (11) EBITDA of any Subsidiary or business Disposed of calculated on a  historic basis as if the same had occurred on the first day of the  period for which such EBITDA is measured with such pro-forma  adjustments as the Administrative Agent shall approve:  $_____________    (12) EBITDA (Lines III.B.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 -10 – 11): $_____________   C. Total Leverage Ratio (Line III.A.  Line III.B.12): _____ to ______    Maximum permitted:      Four Consecutive Fiscal Quarter Period  Ended  Maximum Total  Leverage Ratio  September 30, 2022 5.25 to 1.00  Third Amendment Effective Date through  June 30, 2023  6.00 to 1.00  September 30, 2023 through December 31,  2023   5.75 to 1.00  March 31, 2024 through June 30, 2024  5.50 to 1.00  September 30, 2024  5.25 to 1.00  December 31, 2024 and thereafter  5.00 to 1.00      

 

     IV. Section 7.11(b) – Minimum Fixed Charge Coverage Ratio.   A. EBITDA for the Subject Period (Line III.B.12. above): $_____________   B. Maintenance Capital Expenditures for the Subject Period: $_____________   C. Cash taxes paid during the Subject Period: $_____________   D. Cash tax refunds received during the Subject Period: $_____________   E. Dividends paid in cash during the Subject Period: $_____________   F. Cash Interest Expense during the Subject Period: $_____________   G. Scheduled and required principal payments during the Subject Period in  respect of Debt:   $_____________   H. Scheduled and required payments made by the Borrower in respect of  Deferred Purchase Price for the Subject Period (to extent not included in  IV.F. and IV.G. above):  $_____________   I. Fixed Charge Coverage Ratio (Lines IV.A. – IV.B. – IV.C. + IV.D. –  IV.E.)  (Lines IV.F. + IV.G. + IV.H.):  ______ to 1.00    Minimum required: 1.20 to 1.00Exhibit 4.1

 

INMUNE
BIO, INC.

 

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

 

This Amendment No. 2 (this
“Amendment”), dated as of December , 2022, to the Rights Agreement, dated December 30, 2020, as amended on December
20, 2021 (the “Rights Agreement”), between INmune Bio, Inc., a Nevada corporation (the “Company”),
and VStock Transfer LLC, as rights agent (the “Rights Agent”).

 

WHEREAS, the Company and the Rights Agent have
executed and entered into the Rights Agreement;

 

WHEREAS, Section 27
of the Rights Agreement provides, the Company, by action of the Board, may from time to time and in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend the Rights Agreement in any respect without the approval of
any holders of Rights, including, without limitation to shorten or lengthen any time period provided in the Rights Agreement;

 

WHEREAS, to the knowledge of the Company, no Person
has become an Acquiring Person;

 

WHEREAS, the Board of Directors
of the Company has deemed it advisable and in the best interests of the Company and its stockholders to amend certain provisions of the
Rights Agreement as set forth herein; and

 

WHEREAS, pursuant to and
in accordance with Section 27 of the Rights Agreement, the Company desires to amend the Rights Agreement as set forth below.

 

NOW THEREFORE, in consideration
of the foregoing and the mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereto hereby agree as follows:

 

 1. Section 7. Section 7(a) of the Rights Agreement is hereby amended and restated as follows:

 

“(a) Subject to Section
7(e) hereof or as otherwise provided in this Agreement, at any time after the Distribution Date the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii), and Section 23(a) hereof) in whole or in part upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate contained therein properly completed and duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose, accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, together with payment of the aggregate Purchase Price with respect to the total number of
one one-thousandths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares, other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i) the Close
of Business on December 30, 2023 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the “Redemption Date”), and (iii) the time at which the Rights are exchanged in full as provided
in Section 24 hereof (the earliest of (i), (ii), and (iii) being herein referred to as the “Expiration Date”). Except
for those provisions herein that expressly survive the termination of this Agreement, this Agreement shall terminate at such time as the
Rights are no longer exercisable hereunder.”

 

 2. Exhibit B. Exhibit B to the Rights Agreement is hereby amended by deleting all references therein to “December 30, 2022” and inserting “December 30, 2023” in place thereof.

 

 3. Exhibit C. Exhibit C to the Rights Agreement is hereby amended by deleting the reference therein to “December 30, 2022” in Section 4 and inserting “December 30, 2023” in place thereof.

 

     

     

    

 

 4. Full Force and Effect. Except as expressly amended hereby, the Rights Agreement shall continue in full force and effect in accordance with the provisions thereof.

 

 5. Governing Law.  This Amendment shall be deemed to be a contract made under the laws of the State of Nevada and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State; provided, that all provisions regarding the rights, duties, liabilities and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

 

 6. Counterparts; Facsimiles and PDFs; Effectiveness. This Amendment may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all such counterparts will together constitute one and the same instrument, it being understood that all parties need not sign the same counterpart. A signature to this Amendment executed or transmitted electronically (including by facsimile and a portable document format signature) will have the same authority, effect and enforceability as an original signature. No party hereto may raise the use of such electronic execution or transmission to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission, as a defense to the formation of a contract, and each party forever waives any such defense, except to the extent such defense relates to lack of authenticity.  This Amendment shall be effective as of the date hereof.

 

 7. Descriptive Headings. Descriptive headings of the several sections of this Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Amendment.

 

 8. Rights Agreement as Amended. From and after the date hereof, any reference to the Rights Agreement shall mean the Rights Agreement as amended hereby.

 

 9. Severability. If any term, provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be duly executed as of the day and year first above written.

 

	 	INMUNE BIO INC.
	 	 	 
	 	By:	 
	 	Name: 	David Moss
	 	Title:	Chief Financial Officer

 

	 	VSTOCK TRANSFER, LLC, AS RIGHTS AGENT
	 	 	 
	 	By:	 
	 	Name: 	Young D. Kim
	 	Title:	Compliance Officer

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