Document:

habt-ex43_34.htm

 

Exhibit 4.3

DESCRIPTION OF REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE 

SECURITIES EXCHANGE ACT OF 1934

 

The following description of our Class A common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our amended and restated certificate of incorporation and our amended and restated by-laws, each of which has been filed with the Securities and Exchange Commission as an exhibit to this Annual Report on Form 10-K. The summary below is also qualified by provisions of applicable law.

 

General

 

The total amount of our authorized capital stock consists of 70,000,000 shares of Class A common stock, par value $0.01 per share, and 70,000,000 shares of Class B common stock, par value $0.01 per share.

 

Our amended and restated certificate of incorporation and amended and restated by-laws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of us unless such takeover or change in control is approved by our board of directors. These provisions include a classified board of directors, elimination of stockholder action by written consents (except in limited circumstances), elimination of the ability of stockholders to call special meetings (except in limited circumstances), advance notice procedures for stockholder proposals and supermajority vote requirements for amendments to our certificate of incorporation and by-laws.

 

Registration Rights

 

Certain holders of our Class A common stock (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock) are entitled to rights with respect to the registration of their shares under the Securities Act of 1933, as amended (the “Securities Act”). These registration rights are contained in our registration rights agreement and are described in additional detail below. We have entered into such registration rights agreement with certain holders of common units in The Habit Restaurants, LLC (the “LLC Units”) pursuant to which we have granted them, their affiliates and certain of their transferees the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of Class A common stock delivered upon exchange of LLC Units held by them (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock). We will pay the registration expenses (other than underwriting discounts, selling commissions or any other brokerage or underwriting fees and expenses) of the holders of the shares registered pursuant to the registrations described below.

 

KarpReilly, LLC (“KarpReilly”) and its affiliates are entitled to certain demand registration rights. KarpReilly and its affiliates can request that we register the offer and sale of their shares. Such request for registration must cover securities the anticipated aggregate offering price of which, net of registration expenses, is at least $10 million ($25 million in the case of an underwritten offering). If from the time of any request through the date when such registration becomes effective, we engaged or have firm plans to engage within 90 days of such request in a registered public offering, then we may, at our option, decline such request.

 

If we propose to register, or receive a demand to register, the offer and sale of any of our securities under the Securities Act, in connection with the public offering of such securities, each party to the registration rights agreement is entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations. Upon the written request of any party to the registration rights agreement given after we provide notice of registration, we must use reasonable efforts to cause all such parties’ requested registrable shares to be registered. If we register a “piggyback” offering, our Board shall have the right to designate the managing underwriter. Each “piggyback” offering may have a maximum offering size, to be determined by the managing underwriter, so as the aggregate number of shares do not have a material adverse effect on the offering, and in such case, each party entitled to certain “piggyback” registration rights would have his, her or its registrable shares included in the offering reduced on a pro rata basis.

 

 

 

The registration rights agreement includes customary indemnification provisions in favor of any person who is or might be deemed a controlling person within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended, and related parties against liabilities under the Securities Act incurred in connection with the registration of any of our debt or equity securities. These provisions provide indemnification against certain liabilities arising under the Securities Act and certain liabilities resulting from violations of other applicable laws in connection with any filing or other disclosure made by us under the securities laws relating to any such registrations. We have agreed to reimburse such persons for any legal or other expenses incurred in connection with investigating or defending any such liability, action or proceeding, except that we are not required to indemnify any such person or reimburse related legal or other expenses if such loss or expense arises out of or is based on any untrue statement or omission made in reliance upon and in conformity with written information provided by such person.

Common Stock

Dividend Rights. Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of Class A common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine. 

Voting Rights. Holders of our Class A common stock and our Class B common stock have voting power over The Habit Restaurants, Inc., the sole managing member of The Habit Restaurants, LLC, at a level that is consistent with their overall equity ownership of our business. Pursuant to our amended and restated certificate of incorporation and amended and restated by-laws, each share of Class A common stock entitles the holder to one vote with respect to each matter presented to our stockholders on which the holders of Class A common stock are entitled to vote. Each holder of Class B common stock shall be entitled to the number of votes equal to the total number of LLC Units held by such holder multiplied by the exchange rate specified in the LLC Agreement with respect to each matter presented to our stockholders on which the holders of Class B common stock are entitled to vote. Accordingly, the holders of LLC Units collectively have a number of votes that is equal to the aggregate number of LLC Units that they hold. Subject to any rights that may be applicable to any then outstanding preferred stock, our Class A and Class B common stock vote as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise provided in our amended and restated certificate of incorporation or amended and restated by-laws or required by applicable law. Holders of our Class A and Class B common stock do not have cumulative voting rights. Except in respect of matters relating to the election and removal of directors on our board of directors and as otherwise provided in our amended and restated certificate of incorporation, our amended and restated by-laws, or as required by law, all matters to be voted on by our stockholders must be approved by a majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter.

Preemptive Rights. Our Class A common stock is not entitled to preemptive or other similar subscription rights to purchase any of our securities.

 

Conversion or Redemption Rights. Our Class A common stock is not convertible or redeemable.

Liquidation Rights. Upon our liquidation, the holders of our Class A common stock will be entitled to receive pro rata our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding. 

Preferred Stock

 

Our board of directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the Class A common stock. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our Class A common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation before any payment is made to the holders of shares of our Class A common stock. Under certain circumstances, the 

 

 

issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of our Class A common stock and the market value of our Class A common stock. 

Anti-Takeover Effects of our Amended and Restated Certificate of Incorporation and By-Laws

 

Our amended and restated certificate of incorporation and amended and restated by-laws contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by the board of directors.

These provisions include:

Classified Board. Our amended and restated certificate of incorporation provide that our board of directors is divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors are elected each year. The classification of directors has the effect of making it more difficult for stockholders to change the composition of our board. Our amended and restated certificate of incorporation also provides that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors is to be fixed exclusively pursuant to a resolution adopted by our board of directors. 

 

Action by Written Consent; Special Meetings of Stockholders. Our amended and restated certificate of incorporation provides that, from and after the first date on which our sponsor and its affiliates cease to beneficially own more than 50% of our outstanding shares, stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. Our amended and restated certificate of incorporation and our amended and restated by-laws also provide that, except as otherwise required by law, special meetings of the stockholders can only be called pursuant to a resolution adopted by a majority of the board of directors or, until the date that our sponsor and its affiliates cease to beneficially own more than 50% of our outstanding shares, at the request of holders of 50% or more of our outstanding shares. Except as described above, stockholders are not permitted to call a special meeting or to require the board of directors to call a special meeting.

Removal of Directors. Our amended and restated certificate of incorporation provides that our directors may be removed only for cause by the affirmative vote of at least 75% of the voting power of our outstanding shares of capital stock, voting together as a single class. Due to this supermajority vote requirement, a minority of our stockholders may be able to prevent a change in the composition of our board.

Advance Notice Procedures. Our amended and restated by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting are only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting. Although the by-laws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the by-laws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

Super Majority Approval Requirements. The Delaware General Corporation Law generally provides that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or by-laws, unless either a corporation’s certificate of incorporation or by-laws requires a greater percentage. Our amended and restated certificate of incorporation and amended and restated by-laws provide that the affirmative vote of holders of at least 75% of the total votes eligible to be cast in the election of 

 

 

directors are required to amend, alter, change or repeal specified provisions once our sponsor and its affiliates cease to beneficially own more than 50% of our outstanding shares. Due to this supermajority vote requirement, a minority of our stockholders may be able to exercise veto power over any such amendments.

Authorized but Unissued Shares. Our authorized but unissued shares of Class A common stock and preferred stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of Class A common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our Class A common stock by means of a proxy contest, tender offer, merger or otherwise.

Business Combinations with Interested Stockholders. We have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law, an antitakeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we are not subject to any anti-takeover effects of Section 203. However, our amended and restated certificate of incorporation contains provisions that have the same effect as Section 203, except that they provide that our sponsor, certain of its transferees, and its affiliates are not deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly are not subject to such restrictions.

 

Corporate Opportunities

 

Our amended and restated certificate of incorporation provides that we renounce any interest or expectancy of the company in the business opportunities of our sponsor and of its officers, directors, agents, shareholders, members, partners, affiliates and subsidiaries and each such party shall not have any obligation to offer us those opportunities unless presented to a director or officer of the company in his or her capacity as a director or officer of the company.

Limitations on Liability and Indemnification of Officers and Directors

 

Our amended and restated certificate of incorporation limit the liability of our directors to the fullest extent permitted by the Delaware General Corporation Law and provides that we will indemnify them to the fullest extent permitted by such law. We entered into indemnification agreements with our current directors and executive officers prior to the completion of our initial public offering and expect to enter into a similar agreement with any new directors or executive officers.habt-ex1023_110.htm

DRAFT

 

 

Exhibit 10.23

 

February 5, 2020

VIA HAND DELIVERY

Ms. Iwona Alter

 

 

Re:  Severance 

This letter agreement (this “Agreement”) sets forth the terms and conditions pursuant to which Habit Employment, LP (the “Company”) will provide you with severance benefits in the event that you experience a Qualifying Termination (as such term is defined below) after the date hereof.  Following the date of this Agreement, the severance payments and benefits described in this Agreement will be the only severance payments or benefits that you will be entitled to in connection with a Qualifying Termination and you will not be entitled to any severance payments or benefits under the terms of any other agreement with the Company or any of its Affiliates or any plan, policy or program of the Company or any of its Affiliates.

1.Change in Control Severance Payments and Benefits.  

	
(a)
	
In the event of a Qualifying Termination, then, subject to terms and conditions of this Agreement (including the execution, and nonrevocation, of a Separation Agreement (as defined below)), the Company will provide you with the following severance payments and benefits:

	
i.
	
payment of your base salary, at the rate in effect on the Separation Date, for a period of twelve (12) months following the Separation Date (the “Severance Payments”);

	
ii.
	
provided that you timely and properly elect to purchase continued healthcare coverage under the federal law known as “COBRA”, payment of a monthly amount equal to the employer portion of the monthly premiums paid under the Company’s group health plans as of the Separation Date, for the period ending on the earlier of (A) the date that is twelve (12) months following the Separation Date and (B) the date on which you become covered under another employer’s health plan (the “COBRA Payments”); and

	
iii.
	
the portion (if any) of any cash bonus earned for the performance year preceding the year of the Qualifying Termination that remains unpaid at the time of the Qualifying Termination (the “Prior Year Bonus Payment”).

	
(b)
	
The Severance Payments and the COBRA Payments (to the extent payable as described above) will be paid in substantially equal installments over a period of twelve (12) months following the Separation Date in accordance with the Company’s regular payroll practices, beginning on the Company’s first regular payroll date following the date that the Separation Agreement (as defined below) becomes fully effective and irrevocable (with the first installment to include all amounts that would have been paid on the regular payroll dates of the Company following the Separation Date prior to such date), except as described in Section 6 below.  

 

	
(c)
	
The Prior Year Bonus Payment (to the extent payable as described above) shall be paid to you within sixty (60) days following the Separation Date, except as described in Section 6 below.

	
(d)
	
Certain Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

	
i.
	
“Affiliate” means, with respect to any individual or entity, all Persons and entities directly or indirectly controlling, controlled by or under common control with such individual or entity, where control may be by management authority, equity interest or otherwise.

	
ii.
	
“Board” means the board of directors of Parent.

	
iii.
	
“Cause” means, as determined in good faith by the Board, (A) your substantial failure to perform, or willful misconduct or substantial negligence in the performance of, your duties and responsibilities  to the Company and its Affiliates; (B) your refusal or substantial failure to comply in any material respect with the legal directives of the Board, or a material breach of this Agreement or any written policy of the Company or Parent; (C) your deliberate attempt to do injury to the Company, Parent or any of their respective Affiliates; (D) your commission of any act of fraud, willful misrepresentation, misappropriation, embezzlement or any act of similar gravity involving moral turpitude; (E) your abuse of controlled substances or alcohol which impairs the goodwill or business of the Company, Parent or any of their respective Affiliates or causes material damage to its property, goodwill or business or impairs your fulfillment of your responsibilities to the Company, Parent or any of their respective Affiliates; (F) your commission of, or plea of nolo contendere to, a felony; or (G) your material breach of any agreement between you and the Company or any Affiliate; provided, that, if you are party to a written employment agreement with the Company or one of its Affiliates that contains a definition of “Cause”, the definition set forth in such agreement shall apply during the term of such agreement.

	
iv.
	
“Change in Control” means the occurrence, following the date of this Agreement, of (A) a sale or transfer (other than by way of merger or consolidation), of all or substantially all of Parent’s assets to any Person; (B) any merger, consolidation or other business combination transaction of Parent with or into another corporation, entity or Person, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of Parent outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock of Parent (or the surviving entity) outstanding immediately after such transaction; or (C) the direct or indirect acquisition (including by way of a tender or exchange offer) by any Person, or Persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares representing more than 50% of the total voting power of the then-outstanding shares of capital stock of Parent.

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

 

 

	
vi.
	
“Parent” means The Habit Restaurants, Inc., or any successor thereto.

	
vii.
	
“Person” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust or any other entity or organization, other than the Company, Parent or any Affiliate.

	
viii.
	
“Qualifying Termination” means a termination of your employment by the Company or any of its Affiliates without Cause within twenty-four (24) months following a Change in Control.  A “Qualifying Termination” does not include a termination of your employment due to your death or disability or a termination of your employment for Cause or due to voluntary resignation for any reason.

	
ix.
	
“Section 409A” means, collectively, Section 409A of the Code and the regulations thereunder.

	
x.
	
“Separation Date” means the date your employment with the Company and its Affiliates terminates.

2.Conditions to Payment.  Any obligation of the Company to pay or provide you with any severance payments or benefits under this Agreement is conditioned upon (i) your continued compliance with all confidentiality, non-solicitation, non-competition, no-hire, non-disparagement, invention assignment, cooperation and other similar obligations to, and other restrictive covenants in favor of, the Company or any of its Affiliates to which you are obligated (collectively, the “Restrictive Covenants”), and (ii) your execution and delivery to the Company of a separation agreement that includes a general release and waiver of claims in favor of the Company and its Affiliates (including Parent) in a form acceptable to the Company (a “Separation Agreement”) and such Separation Agreement becoming fully effective and irrevocable by the date specified therein, but in no event more than sixty (60) days following the Separation Date.  

3.No Other Severance Benefits.  The payments provided by this Agreement are in lieu of any severance or similar payments or benefits that you may otherwise be entitled to upon termination of your employment without Cause in connection with a Change in Control, including, without limitation, under any severance plan or policy of the Company or any of its Affiliates.  

4.Withholding.  Any payments made by the Company and its Affiliates under this Agreement shall be reduced by any tax or other amounts required to by withheld by the Company or any of its Affiliates under applicable law, as determined by the Company or any of its Affiliates in its sole discretion.

5.Scope of Agreement.  Nothing in this Agreement will be deemed to entitle you to continued employment or other service with the Company or any of its Affiliates, limit the rights of the Company or any of its Affiliates to terminate your employment at any time for any reason or alter the at-will nature of your employment.  

6.Section 409A.  All amounts payable under this Agreement are intended to be exempt from, or comply with, the requirements of Section 409A.  To the extent required to comply with or be exempt from Section 409A, you will not be considered to have terminated employment with the Company or its Affiliates for purposes of this Agreement, and no payment will be due to you under 

 

 

this Agreement, until you have incurred a “separation from service” from the Company and its Affiliates within the meaning of Section 409A (after giving effect to the presumptions set forth therein).  If you are determined to be a “specified employee” at the time of your separation from service then, to the extent necessary to prevent any accelerated or additional tax under Section 409A, payment of the amounts payable under this Agreement will be delayed until the earlier of (i) the date that is six months and one day following your separation from service or (ii) your death.  Each amount paid to you pursuant to this Agreement shall be treated as a separate payment for purposes of Section 409A and the right to a series of installment payments under this Agreement shall be treated as the right to a series of separate payments.  To the extent required by Section 409A, if the period available to execute (and not revoke) the Separation Agreement spans two calendar years, any payments or benefits provided to you under this Agreement will be paid in the second calendar year.  To the extent required to comply with Section 409A, a Change in Control will not be deemed to occur for purposes of this Agreement unless it is a “change in control event” as defined in Section 1.409A-3(i)(5)(i) of the Treasury Regulations.  Notwithstanding the foregoing or anything to the contrary in this Agreement, neither the Company nor any other Person will be liable to you by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted with respect to any of the payments under this Agreement, including by reason of the failure of this Agreement to satisfy the applicable requirements of Section 409A in form or in operation.  To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not affect amounts reimbursable or provided in any subsequent year and may not be liquidated or exchanged for any other benefit.

7.Assignment.  Neither the Company nor you may assign any rights or obligations under this Agreement, by operation of law or otherwise, without the prior written consent of the other, except that the Company may assign its rights and obligations under this Agreement without your consent to one of its Affiliates, and the Company will assign its rights and obligations under this Agreement in the event of a reorganization, consolidation, or merger involving the Company or any of its Affiliates in which the Company is not the surviving entity, or a transfer of all or substantially all of the Company’s assets or line of business to which your employment principally relates.  This Agreement shall inure to the benefit of and be binding upon you and the Company and your and its respective successors, executors, administrators, heirs and permitted assigns. 

8.Choice of Law.  This Agreement is a California contract and will be governed and construed in accordance with the laws of the State of California, without regard to any conflict of laws principles that would result in the applicable of the laws of any other jurisdiction.

9.Miscellaneous.  This Agreement is the entire agreement between you and the Company, and replaces all prior and contemporaneous communications, agreements, and understandings, whether written or oral, with respect to the subject matter described herein.  No modification or amendment of this Agreement will be valid unless such modification or amendment is agreed to in writing and signed by you and by a duly authorized officer of the Company.  

 

 

You acknowledge that you have been and are hereby advised of your right to consult an attorney before signing this agreement.

                                                        Sincerely, 

	
 
	
 
	
HABIT EMPLOYMENT, LP
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
  
	
 
	
By:
	
 
	
 /s/ Russell W. Bendel
	
 
	
 

	
  
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Name: Russell W. Bendel
	
 
	
 

	
 
	
 
	
Title:  Chief Executive Officer

 

 

 
	
 
	
 

ACCEPTED AND AGREED:

 

   /s/ Iwona Alter                                                         

Name: Iwona Alter

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