EMPLOYMENT AGREEMENT
This employment agreement is effective as of January 1, 1995 (the
"Effective Date"), by and between CARROLS CORPORATION (hereinafter "Employer"),
a corporation organized under the laws of Delaware and whose address for the
purposes of this agreement is 968 James Street, Syracuse, New York, 13217 and
Daniel T. Accordino, residing at 4617 Ridge Road, Cazenovia, New York 13235
("Employee").
W I T N E S E T H:
WHEREAS, Employee is presently employed by the Employer as its
President and Chief Operating Officer;
WHEREAS, the Employer desires to continue to employ the Employee in
such capacity and under all of the terms, provisions, and conditions set forth
herein;
WHEREAS, Employee is willing to accept such continued employment,
under all the terms, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and adequacy of which is mutually acknowledged, it is agreed by and
between the parties as follows:
1. Definitions
For purposes of this Agreement, unless the context requires
otherwise, the following words and phrases shall have the meanings indicated
below:
"Change of Control" shall mean:
(a) The acquisition (other than from the Employer) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act"), excluding for this
purpose any employee benefit plan of the Employer or its subsidiaries which
acquires beneficial ownership of voting securities of the Employer, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act), of 50% or more of either the then outstanding shares of common
stock or the combined voting power of the Employer's then outstanding voting
securities entitled to vote generally in the election of directors;
(b) Individuals who, as of the date hereof, constitute the
Board of Directors of the Employer (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors; provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption
of office is in connection with an actual or threatened election contest
relating to the election of Directors of the Employer, as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be
for purposes of this Agreement, considered as though such person were a member
of the Incumbent Board, or
(c) Approval by the stockholders of the Employer of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were the stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the Employer
or of the sale of all or substantially all of the assets of the Employer.
"Cause" shall mean the commission by the Employee of an act of fraud
against the Employer or any affiliate thereof or embezzlement intended to result
in personal enrichment of the Employee at the expense of the Employer; (2) the
unauthorized disclosure of information of the Employer which disclosure the
Employee knows or reasonably should have known could have the potential to
result in material damage to the Employer; (3) a breach of one or more of the
following duties to the Employer: (i) the duty of loyalty, (ii) the duty not to
take actions which would reasonably be viewed by the Employer as placing the
Employee's interest in a position adverse to the interest of the Employer, which
breach, if curable, is not remedied within thirty (30) days after the Employee's
receipt of written notice thereof provided, however, that the Employer need not
permit the Employee to cure any breach which has been the subject of a prior
written notice; or (iii) the duty not to engage in self-dealing with respect to
the Employer's assets, properties or business opportunities, which breach, if
curable, is not remedied within thirty (30) days after the Employee's receipt
of written notice thereof provided, however, that the Employer need not permit
the Employee to cure any breach which has been the subject of a prior written
notice; (4) a felony conviction of the Employee (or a plea of no locontendere
in lieu thereof); (5) misconduct as an employee of the Employer, including, but
not limited to, demonstrably willful and deliberate violation by the Employee
of written policies of the Employer or specific written directions of the Board
of Directors or superior officers of the Employer, which policies or directives
are not illegal, (do not involve illegal conduct) nor require the Employee to
violate reasonable business ethical standards; (6) the breach by the Employee
of any material provision of this Agreement, which breach, if curable, is not
remedied within thirty (30) days after the Employee's receipt of written notice
thereof provided, however, that the Employer need not permit the Employee to
cure any breach which has been the subject of a prior written notice; (7) an act
of gross misconduct in connection with the Employee's duties hereunder; or (8)
habitual or material neglect of the Employee's duties to the Employer (as
determined in good faith by the Board of Directors).
"Good Reason" shall mean (i) the material failure of the Employer to
comply with the provisions of this Agreement which failure shall not cease
promptly and in no event more than ten (10) days after the Employer's receipt
of written notice from the Employee objecting to such conduct; or (ii) any
purported termination by the Employer of the Employee's employment other than
as expressly permitted in this Agreement.
2. Representations and Warranties
(a) Employee represents and warrants that he is not subject to
any restrictive covenants or other agreements or legal restrictions in favor of
any person which would in any way preclude, inhibit, impair or limit his
employment by the Employer or the performance of his duties, as contemplated
herein.
3. Employment
(a) The Employer hereby employs Employee and Employee accepts
such employment as President and Chief Operating Officer of the Employer. As
its President and Chief Operating Officer, Employee shall render such services
to the Employer as are customarily rendered by the President and Chief Operating
Officer of comparable companies and as required by the articles and by-laws of
the Employer. Employee shall devote his best efforts to the performance of his
duties hereunder. Employee accepts such employment and, consistent with
fiduciary standards which exist between an employer and an employee shall
perform and discharge the duties that may be assigned to him from time to time
by the Employer in an efficient, trustworthy and businesslike manner. It is
specifically agreed that nothing in this Employment Agreement ("Agreement")
shall prohibit Employee from (i) serving on corporate, civic or charitable
boards or committees; (ii) engaging directly or indirectly, in activities with
other public or private companies or ventures; or (iii) making investments in
any capacity whatsoever, provided only that such activities or any of them do
not significantly impair Employee's performance of his duties for the Employer.
(b) During the term of Employment and for a period of two (2)
years after the termination of the Employee, Employee will not compete, either
directly or indirectly with Employer or any of its subsidiaries as an employee,
officer, consultant, independent contractor, partner or shareholder, if the
effect of such relationship is to materially impair the value of the Employer.
This shall not prevent Employee from investing as a passive investor in any
company in which he owns less than five percent (5%).
4. Place of Employment
During the Term, the Employee shall be entitled to an office and
to secretarial and other assistance at the Employer's offices. The Employee
shall render services where and as required by the Employer. In conformance
with the foregoing and not in limitation thereof, Employee agrees to take such
trips as shall be consistent with or reasonably necessary in connection with his
duties.
5. Term
(a) Subject to the provisions of Section 10 hereof, the term
of this Agreement shall be three (3) consecutive years commencing on January 1,
1995 and expiring on December 31, 1997 (the "Initial Term"). This Agreement
shall be automatically renewed for successive twelve (12) month periods on all
the remaining terms and conditions set forth herein, unless either party elects
not to renew this Agreement by giving written notice to the other at least
ninety (90) days before a scheduled expiration date. The Initial Term of this
Agreement together with all renewals and extensions thereof are collectively
referred to herein as the "Term."
6. Compensation
(a) As compensation for all services rendered and to be
rendered by Employee hereunder and the fulfillment by Employee of all of his
obligations herein, the Employer shall pay Employee a base salary (the "Base
Salary") at the rate of $250,000 for the first year of the Term payable in
accordance with the Employer's customary payroll practices. The Base Salary for
the second year of the Term ("Adjusted Base Salary") shall be the sum of the
Base Salary and the product of $250,000 multiplied by the percentage increase
in the consumer price index (as defined below, hereinafter "CPI Index") from
December, 1994 to December, 1995 which percentage increase shall be calculated
as follows: [(x minus y) divided by y] where (x) equals the CPI Index for
December, 1995 and (y) equals the CPI Index for December, 1994. The Base Salary
for the third year of the term shall be the sum of the Adjusted Base Salary and
the product of the Adjusted Base Salary multiplied by the percentage increase
in the CPI Index from December, 1995 to December, 1996 as calculated above
substituting 1996 for 1995 in (x) and 1995 for 1994 in (y).
By way of illustration, if the CPI Index for December 1995 is 120 and
the CPI Index for December, 1994 is 115, the percentage increase in the CPI
Index is 4.35% and the Base Salary is increased by $10,875 to $260,875 for
1996. If the CPI Index for December 1996 is 122, the percentage increase
(over the 1995 CPI Index) is 1.67% and the Adjusted Base Salary is
increased by $4,357 to $265,232.
The CPI Index shall be the Consumer Price Index as prepared by
the Bureau of Labor Statistics of the United States Department of Labor for All
Urban Wage Earners and Clerical Workers, All items (1982-84=100) for New York
City (the"Consumer Price Index"), or an equivalent measure of increase in the
cost of living if such Consumer Price Index is not then being issued.
(b) The Base Salary for the twelve (12) month period commencing
January 1, 1998 and each successive twelve (12) month period of the Term shall
be increased in accordance with the recommendation of the Compensation Committee
of the Board of Directors of the Employer.
(c) Employee will participate in the Executive Bonus Plan of
the Employer attached hereto as Exhibit A. Notwithstanding any provision
contained herein or in the Executive Bonus Plan to the contrary, no amendment
to the Executive Bonus Plan shall have a material adverse impact on the
Employee. If the Executive Bonus Plan is discontinued, the Employer agrees to
establish a plan which will provide similar potential benefits to the Employee.
(d) Employee will also be eligible to participate in all
phantom and/or actual stock option programs applicable to executive employees.
(e) The Employer shall deduct from the compensation described
in (a),(b),(c) and (d) above, any Federal, state or city withholding taxes,
social security contributions and any other amounts which may be required to be
deducted or withheld by the Employer pursuant to any Federal, state or
city
laws, rules or regulations.
(f) Any compensation otherwise payable to the Employee pursuant
to this Section in respect of any period during which the Employee is disabled
(as contemplated in Section 10) shall be reduced by any amounts payable to the
Employee for loss of earnings or the like under any insurance plan or policy the
premiums for which are paid for in their entirety by the Employer.
7. Business Expenses
(a) The Employer shall pay on behalf of Employee, all dues to
professional societies and other organizations as are customarily joined by
individuals holding the position of President and Chief Operating Officer of
businesses similar to the Employer. In addition, the Employer will require and
shall reimburse the Employee for his out of pocket cost of one complete physical
examination per fiscal year of the Term.
(b) The Employer agrees that the Employee is authorized to
incur reasonable expenses in the performance of his duties hereunder and agrees
that all reasonable expenses incurred by Employee in the discharge and
fulfillment of his duties for the Employer, as set forth in Section 3, will be
promptly reimbursed or paid by the Employer upon written substantiation signed
by Employee, itemizing said expenses and containing all applicable vouchers.
In addition, the Employee shall be entitled to receive prompt reimbursement for
all reasonable travel and entertainment expenses and the costs of attending
conferences and seminars, so long as such expenses relate to Employee's ability
to serve the best interests of the Employer.
8. Benefits and Insurance
(a) The Employer agrees that during the Term, the Employee
shall be insured under all insurance policies and shall receive all benefits
under all pension and welfare benefit plans (including, without limitation group
life, medical, major medical and disability insurance) that the Employer may
maintain and keep in force during the Term of the Agreement for the benefit of
the Employer's employees, subject to the terms, provisions and conditions of
such pension and welfare benefit plans or insurance and the agreements with
underwriters relating to same.
(b) A split dollar life insurance policy on the life of the
Employee shall be maintained providing a death benefit in the amount of One
Million Dollars ($1,000,000) payable to an irrevocable trust designated by the
Employee. The sum total of the Employer's outstanding premium payments shall
be returned to the Employer from the proceeds of any death benefit or from the
cash value of the policy, if surrendered during the Employee's lifetime. Any
amount in excess of the sum total of the Employer's premium payments shall be
paid to the irrevocable trust designated by the Employee. The Employer will not
cancel or allow such insurance to lapse during the term of the Employee's
employment by the Employer and thereafter, if the Employee is terminated by
reason of disability within the meaning of Section 10(f) during the period of
such disability, without the prior written consent of the Employee. Employee
will cooperate fully in the acquisition of such insurance policy, including
submitting to physical examinations and providing medical information
required
by the insurer.
(c) During the term of the Employee's employment and
thereafter, if the Employee is terminated by reason of disability in accordance
with Section 10(f), during the period of such disability, the Employer will pay
each and every premium on the split dollar life insurance policy obtained
pursuant to Section 8(b) on or before the due date for such premium and will
give Employee proof of such payment within fifteen (15) days of the date the
premium was due. If the Employer fails to supply such proof, Employee may pay
the premium and be reimbursed by the Employer for his payment. The policy shall
provide that it may be maintained by the trust following the termination of the
Employee's employment. All dividends on any such policy will be applied to the
payment of premiums.
9. Vacation
Employee shall be entitled to an aggregate of four (4) weeks
paid vacation during each year of the Term at time or times reasonably agreeable
to both the Employee and the Employer, it being understood that any portion of
such vacation not taken in such year shall not be available to be taken during
any other year.
10. Termination; Change of Control; Death; Disability
(a) Subject to the provisions of this Agreement, either the
Employer or the Employee may terminate this Agreement on the thirtieth (30th)
day after receipt of written notice by the other party hereto.
(b) If within six (6) months following a Change of Control
occurring during the Term, the employment of the Employee hereunder is
terminated without Cause, the Employee shall be paid: (1) his accrued but unpaid
Base Salary and vacation as of the date of termination; (2) a cash payment in
an amount equal to 2.99 multiplied by the average of the sum of the Base Salary
and the Annual Bonus paid or deferred in accordance with the Executive Bonus
Plan in the five calendar years prior to the date of termination (the "Five-Year
Compensation Average"); and (3) all amounts previously deferred under the
Executive Bonus Plan (together with any interest accrued thereon) and not yet
paid by the Employer.
(c) If the Employer (1) during the Term enters into a binding
written agreement to engage in a transaction which, if consummated, would result
in a Change of Control; (2) such transaction is consummated within six (6)
months after the last date of the Term; and (3) subsequent to entering into such
agreement the Employer terminates employment of the Employee without Cause, the
Employer shall pay to the Employee an amount equal to the payment set forth in
Section 10(b) hereof.
(d) If the Employee resigns without Good Reason or the Employer
terminates the employment of the Employee hereunder for Cause (except as
otherwise provided in Section 10), the Employer's sole obligation hereunder
shall be to pay to the Employee his accrued but unpaid Base Salary and vacation
pay as of the date of termination plus any compensation or bonus payments
previously deferred by the Employee under the Executive Bonus Plan
(together
with any interest accrued thereon) and not yet paid by the Employer. The
Employee shall have no further obligation to perform services for the Employer.
(e) If the Employer terminates employment of the Employee
hereunder without Cause, or the Employee terminates for Good Reason, the
Employer shall pay to the Employee (1) his accrued but unpaid Base Salary and
vacation as of the date of termination; (2) a cash payment in an amount equal
to 2.99 multiplied by the Employee's Five Year Compensation Average; and (3) all
amounts previously deferred by the Employee under the Executive Bonus Plan
(together with any interest accrued thereon) and not yet paid by the Employer.
(f) If the Employee becomes physically or mentally disabled
during the Term so that he is unable to perform the services required of him
pursuant to this Agreement for a period of six (6) successive months, or an
aggregate of six (6) months in any twelve (12) month period, the Employer may
give the Employee written notice of its intention to terminate the services of
the Employee hereunder. In such event, the Employee's employment with the
Employer shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Employee (the "Disability Effective Date") provided the
Employee shall not have returned to the performance of the Employee's duties.
Subject to the provisions of Section 6(f), in the event the Employee's
employment is terminated by reason of disability, the Employer's only
obligations hereunder shall be (1) to continue the Base Salary (at the rate in
effect on the Disability Effective Date) for a period of three (3) years from
the Disability Effective Date; (2) to pay a pro rata portion of the Annual Bonus
for the year in which the Employee's employment is terminated as and when such
amounts are due and payable under the term of the Executive Bonus Plan; (3) to
pay all amounts previously deferred under the Executive Bonus Plan together with
any interest accrued thereon) as prescribed by the Employee; and (4) to fully
vest the Employee in any stock option which has been granted previously to the
Employee.
(g) In the event of the Employee's death during the Term, the
Employer shall pay to his spouse, if he is survived by a spouse, or if not, to
the estate of the Employee, (1) the Employee's accrued and unpaid Base Salary
(at the rate in effect on the date of death) as of the date of death; (2) a pro
rata share of the Annual Bonus for the year of his death as and when such
amounts are due and payable under the term of the Executive Bonus Plan; and (3)
all amounts previously deferred under the Executive Bonus Plan (together with
any interest accrued thereon) and not yet paid by the Employer in the manner
prescribed by the executor of the Employee's estate. In the event of the
Employee's death during the Term, the Employee shall fully vest in any stock
option which has been granted previously to the Employee.
(h) If the Employer does not continue the Employee's employment
upon expiration of the Term, the sole obligation of the Employer hereunder shall
be to pay the Employee in a cash lump sum an amount equal to the Base Salary
actually paid to the Employee for the prior twelve (12) month period and any
amounts payable under the Executive Bonus Plan, as and when such amounts are due
and payable under the terms of the Executive Bonus Plan.
(i) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement or provided for the benefit of the Employee under any other plan or
agreement of or with the Employer (each such payment or benefit, a "Payment,"
and such payments and benefits collectively, the "Payments"), would be subject
to the excise tax imposed under Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties are hereinafter collectively referred to as the
"Excise Tax"), the Payments shall be reduced if and to the extent necessary so
that no Payment shall be subject to the Excise Tax. The Company shall reduce
or eliminate the Payments by first reducing or eliminating the payments due
under Sections 10(b), 10(c) or 10(e) hereof, then by reducing or eliminating any
other amounts payable in cash, and then by reducing or eliminating benefits
which are not payable in cash, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the date of
the determination.
11. Employee Covenant
For a period of two years following termination of this
Agreement, the Employee: (a) will not violate or cause the Employer to violate
the terms of any agreement, including any franchise agreement, which the
Employer is obligated under, except with the express written consent of the duly
empowered officer of the Employer or pursuant to an order of a court of
competent jurisdiction; and (b) divulge or use any confidential information the
effect of which would be injurious to the Employer without the prior written
consent of a duly empowered officer of the Employer. Employee shall have the
right to approve the provisions of any such franchise agreement which restricts
Employee's future employment. For a period of five years following termination
of this Agreement, the Employee will not solicit or employ any person, who was
employed by the Employer within six months prior to the termination of
Employee's employment, in any business in which Employee has a material
interest, direct or indirect, as an officer, partner, shareholder or beneficial
owner.
12. Binding Effect
(a) This Agreement shall inure to the benefit of and be binding
upon the Employer and its successors. The Employer will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of its assets to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place
or with or into which the Employer may consolidate or merge. Employee agrees
that this Agreement is personal to him and may not be assigned by him otherwise
than by will or laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.
13. Miscellaneous
(a) If any provision of this Agreement, or portion thereof,
shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and this Agreement shall be carried out as if any such invalid
or unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof
shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
(b) This Agreement, and all of the rights and obligations of
the parties in connection with the employment relationship established hereby
shall be construed and enforced in accordance with the laws of New York
applicable to contracts made and fully to be performed therein, and without
giving effect to any rules of conflicts of law.
(c) All notices, requests, demands, and other communications
provided for hereunder shall be in writing and shall be given or made when (i)
delivered personally; (ii) two (2) business days following mailing by first
class postage prepaid, registered or certified mail, return receipt requested,
to the party to be notified at its or his address set forth herein; or (iii) on
the date sent by telecopier, if the addressee has compatible receiving equipment
and provided the transmittal is made on a business day during the hours of 9:00
a.m. to 6:00 p.m. of the receiving party and if sent at other times, on the
immediately succeeding business day, or (iv) on the first business day
immediately succeeding delivery to an express overnight carrier for the next
business day delivery.
(d) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each party shall deliver
such further instruments and take such further action as may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement. This Agreement represents the entire understanding of the parties
with reference to the transaction set forth herein and neither this Agreement
nor any provisions thereof may be modified, discharged or terminated except by
an agreement in writing signed by the party against whom the enforcement of any
waiver, charge, discharge or termination is sought. Any waiver by either party
or a breach of any provision of this Agreement must be in writing and no waiver
of a particular breach shall operate as or be construed as waiver of any
subsequent breach thereof.
IN WITNESSETH WHEREOF, the parties hereto have executed and have
caused this Agreement to be executed as of the day and year first above written.
DATE:
DANIEL T. ACCORDINO
CARROLS CORPORATION
DATE: By:____________________