EXHIBIT B5
CARROLS HOLDINGS CORPORATION
STOCK OPTION AGREEMENT
(NONQUALIFIED STOCK OPTION)
THIS AGREEMENT, dated as of ___________, 1997 is made by and between
Carrols Holdings Corporation, a Delaware corporation (hereinafter called the
"Company") and Alan Vituli, an employee of Carrols Corporation (hereinafter
referred to as the "Optionee"). All capitalized terms herein shall have such
meanings as are ascribed to them in the Plan (as defined below) and in this
agreement (the "Agreement"), including those terms defined on Exhibit A hereto.
1. Grant of Option. The Company grants to the Optionee as of the
date hereof (the "Date of Grant") a nonqualified stock option (this "Option") to
purchase all or any part of the aggregate of 43,350 shares of common stock, $.01
par value per share, of Carrols Holdings Corporation ("Shares"), subject to all
of the terms and conditions of this Agreement and the Carrols Holdings
Corporation 1996 Long-Term Incentive Plan, as amended from time to time (the
"Plan"). As of the date hereof, the Carrols Corporation 1996 Long-Term Incentive
Plan (the "Prior Plan") is terminated and the nonqualified stock option granted
pursuant to the Prior Plan is surrendered.
2. Exercise Price and Period of Option.
(a) Subject to the terms and conditions of the Plan and this
Agreement, this Option (a) became exercisable on the Date of Grant with regard
to 15,300 Shares and (b) shall become exercisable (i) with regard to 5,610
Shares, on December 31, 1997; (ii) with regard to 5,610 Shares, on December 31,
1998; (iii) with regard to 5,610 Shares, on December 31, 1999; and (iv) with
regard to 11,220 Shares, on December 31, 2000. This Option has an exercise price
of $101.7646 per share (the "Exercise Price").
(b) Except as otherwise provided by the Committee, if Optionee's
employment with the Company terminates:
(i) due to death, Permanent Disability, for Good Reason or
without Cause, the portion of the Option which is not vested and exercisable on
the date on which Optionee ceases to be an employee shall vest and become
immediately exercisable in full and all vested and exercisable Options
(including Options that become vested and exercisable under this paragraph)
shall continue to be exercisable until the date of expiration of the Option
pursuant to Paragraph 3 of this Agreement;
(ii) without Good Reason, the portion of the Option that
is not vested and exercisable on the date on which Optionee ceases to be an
employee shall terminate and any vested Options shall continue to be exercisable
until the date of expiration of the Option pursuant to Paragraph 3 of this
Agreement; and
(iii) for Cause, the portion of the Option that is not
vested and exercisable shall terminate and any vested Options shall be forfeited
on the date the Company delivers notice of termination of employment for Cause
to the Optionee.
(c) In the event of a Change of Control during the term of the
Optionee's employment with Carrols Corporation, the portion of the Option that
is not vested shall vest and become exercisable in full on the date of such
Change of Control. As soon as practicable but in no event later than thirty (30)
days prior to the occurrence of a Change of Control, the Committee shall notify
the Optionee of such Change of Control. Upon a Change of Control that qualifies
as an Approved Sale (as defined in Paragraph 5) in which the outstanding common
stock of the Company is converted or exchanged for or becomes a right to receive
any cash, property or securities other than Illiquid Consideration (as defined
in Paragraph 5), (i) the Option shall become exercisable solely for the amount
of such cash, property or securities that the Optionee would have been entitled
to had the Option been exercised immediately prior to such event (ii) the
Optionee shall be given an opportunity to either (A) exercise the Option prior
to the consummation of the Approved Sale and participate in such sale as holders
of Stock or (B) upon consummation of the Approved Sale, receive in exchange for
such Option consideration equal to the amount determined by multiplying (1) the
same amount of consideration per share of Stock received by the holders of Stock
in connection with the Approved Sale less the exercise price per share of Stock
of such Option to acquire Stock by (2) the number of shares of Stock represented
by such Option; and (iii) to the extent the Option is not exercised prior to or
simultaneous with such Approved Sale, the Option shall be canceled.
(d) The Shares are subject to the Stockholders Agreement executed
in connection with the Stock Purchase Agreement dated February 25, 1997 among
the Company, Atlantic Restaurants, Inc., Bahrain International Bank (E.C.),
Madison Dearborn Capital Partners, L.P., and Madison Dearborn Capital Partners
II, L.P. (the "Stockholders Agreement").
3. Expiration of Option. Notwithstanding anything contained
herein to the contrary, this Option may not be exercised to any extent by
Optionee after the tenth anniversary of the Date of Grant.
4. Manner of Exercise.
(a) This Option shall be exercisable by delivery to the Secretary
of the Company of an executed written Notice and Agreement in the form attached
hereto as Exhibit B, or in such other form as may be required by the Company,
which shall set forth Optionee's election to exercise this Option, the number of
Shares being purchased and such other representations and agreements regarding
Optionee's investment intent and access to information as may be required by the
Company to comply with applicable securities laws.
(b) Such Notice and Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased (i) in cash
(including check, bank draft or money order); (ii) where approved by the
Committee in its sole discretion, by surrender of Shares of the Company owned by
the Optionee having a Fair Market Value equal to the Exercise Price; (iii) by
delivery of a promissory note as provided under the Plan; (iv) by any
combination of the foregoing
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where approved by the Committee in writing in its sole discretion; or (v) any
other method the Committee may approve in its sole discretion, subject to the
terms and conditions of the Plan.
(c) Prior to the issuance of the Shares upon exercise of this
Option, Optionee must pay or, in a manner acceptable to the Company, make
adequate provision to pay, any applicable federal, state or local withholding
obligations as determined by the Company.
(d) Provided that the foregoing Notice and Agreement and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall issue the Shares registered in the name of the Optionee, the Optionee and
the Optionee's spouse, or the Optionee's legal representative.
(e) Any exercisable portion of this Option or the entire Option,
if then wholly exercisable, may be exercised in whole or in part at any time
prior to the time when this Option becomes unexercisable under Paragraph 3;
provided, however, that any partial exercise shall be for whole Shares only.
(f) This Option may not be exercised unless such exercise is in
compliance with the Securities Act of 1933, as amended, and all applicable state
securities laws, as they are in effect on the date of exercise.
5. Sale of the Company
(a) If the Board and the holders of a majority of the Company's
Stock approve a Sale of the Company (the "Approved Sale"), the holders of Stock
shall consent to and raise no objections against the Approved Sale of the
Company, and if the Approved Sale of the Company is structured as a sale of
capital stock, the holders of Stock shall agree to sell their shares of Stock on
the terms and conditions approved by the Board and the holders of a majority of
the Company's Stock. The holders of Stock shall take all necessary and desirable
actions in connection with the consummation of the Approved Sale of the Company.
Notwithstanding the foregoing, in the event that the consideration to be
received by the holders of Stock in connection with the Approved Sale shall
include either (a) shares of common stock of a class which is not listed on a
national securities exchange or in the NASDAQ system and which is not entitled
to registration rights for sale in a registered public offering under the
Securities Act of 1933 or (b) shares of senior equity securities which do not
provide for a scheduled redemption or a redemption at the option of the holders
thereof, such holders shall not be required to sell their shares of Stock
pursuant to this Paragraph 5(a) (collectively, the "Illiquid Consideration").
(b) The obligations of the holders of Stock with respect to the
Approved Sale of the Company is subject to the satisfaction of the condition
that, upon the consummation of the Approved Sale, all of the holders of Stock
receive the same form and amount of consideration per share of Stock, or if any
holders of Stock are given an option as to the form and amount of consideration
to be received, all holders be given the same option.
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(c) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Stock shall at the
request of the Company, appoint a "purchaser representative" (as such term is
defined in Rule 501) reasonably acceptable to the Company. If any holder of
Stock appoints a purchaser representative designated by the Company, the Company
shall pay the fees of such purchaser representative. However, if any holder of
Stock declines to appoint the purchaser representative designated by the
Company, such holder shall appoint another purchaser representative (reasonably
acceptable to the Company), and such holder shall be responsible for the fees of
the purchaser representative so appointed.
(d) Participants and the other holders of Stock (if any) shall
bear their pro-rata share (based upon the number of shares sold) of the costs of
any sale of Stock pursuant to an Approved Sale to the extent such costs are
incurred for the benefit of all holders of Stock and are not otherwise paid by
the Company or the acquiring party. Costs incurred by Participants and the other
holders of Stock on their own behalf shall not be considered costs of the
transaction hereunder.
(e) The provisions of this Paragraph 5 shall terminate upon the
completion of a Qualified Public Offering.
(f) For purposes of this Paragraph 5, "Independent Third Party"
shall mean any Person who, immediately prior to the contemplated transaction,
does not own in excess of 5% of the Company's Stock on a fully-diluted basis (a
"5% Owner"); who is not controlling, controlled by or under control with any
such 5% Owner and who is not the spouse or descendent (by birth or adoption) of
any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other
Persons; "Person" shall mean an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof; "Qualified Public Offering"
shall mean the sale in an underwritten public offering registered under the
Securities Act of 1933 of Shares of the Company's Stock resulting in aggregate
gross proceeds to the Company of at least $50 million and a price per share of
not less than $108.2353 (as such amount is equitably adjusted for subsequent
stock splits, stock dividends and recapitalizations); and "Sale of the Company"
shall mean the sale of the Company to an Independent Third Party or affiliated
group of Independent Third Parties pursuant to which such party or parties
acquire (i) capital stock of the Company possessing the voting power to elect a
majority of the Company's board of directors (whether by merger, consolidation
or sale or transfer of the Company's capital stock) or (ii) all or substantially
all the Company's assets determined on a consolidated basis.
6. Compliance with Laws and Regulations. The issuance and
transfer of Shares shall be subject to compliance by the Company and the
Optionee with all applicable requirements of federal and state securities laws
and with all applicable requirements of any stock
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exchange on which the Company's shares may be listed at the time of such
issuance or transfer. Optionee understands that the Company is under no
obligation to register or qualify the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect such
compliance.
7. Nontransferability of Option. This Option may not be
transferred in any manner except (a) as determined by the Committee in its sole
discretion, or (b) pursuant to Paragraph 7(f) of the Plan.
8. Rights as Stockholder. The holder of the Option shall not be,
nor have any of the rights or privileges of, a stockholder of the Company with
respect to any shares purchasable upon the exercise of the Option or any portion
thereof, unless and until certificates representing such Shares shall have been
issued by the Company to such holder.
9. Consequences. Optionee shall be solely responsible for the
payment of any taxes due in connection with the Plan and this Option grant;
provided, however, that the Company may make such provisions as it may deem
appropriate for the withholding of any taxes which the Company determines it is
required to withhold in connection with the issuance, exercise or vesting of
this Option.
10. Administration. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee shall be final and
binding upon the Optionee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Option.
11. Notice. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Optionee shall be addressed to him
at the address given beneath his signature hereto. By a notice given pursuant to
this Paragraph 11, either party may hereafter designate a different address for
notices to be delivered. Any notice which is required to be given to the
Optionee shall, if the Optionee is deceased, be given to the Optionee's personal
representative. Any notice shall have been deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid, deposited (with
postage prepaid) in a post office or branch post office regularly maintained by
the United States Postal Service.
12. Dividends.
(a) In the event that the Company declares a dividend with
respect to any Shares subject to a vested portion of the Option, the Company
shall mail to Optionee a written notice at least ten (10) days prior to the
record date for such dividends.
(b) On any dividend payment date, the Exercise Price of any
unvested Options shall be reduced by the amount of any dividends that the
Optionee would have received had the
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Optionee held the Shares subject to the Option on the record date with respect
to such dividend, and in the event that the aggregate dividends declared on such
Shares exceeds the aggregate Exercise Price of the Option, the amount of such
excess, if any, shall be deposited in an interest bearing bank account
established by the Committee in the name of the Optionee. Any amount held in an
interest bearing bank account established under this Paragraph 12(b), or the pro
rata portion thereof in the event of a partial exercise of this Option, shall be
paid to the Optionee upon exercise of all or, if relevant, a portion of the
Option.
13. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by the Optionee or the Company forthwith to
the Committee, which shall review such dispute at its next regular meeting. The
resolution of such dispute by the Committee shall be final and binding on the
Company and on the Optionee.
14. Governing Document. This Agreement is in every respect
subject to the provisions of the Plan, as it may be amended from time to time.
The provisions of the Plan shall govern in the case of any inconsistency between
the Plan and this Agreement.
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15. Entire Agreement. The definitions attached hereto as Exhibit
A and the Plan and the Notice and Agreement attached hereto as Exhibit B are
incorporated herein by reference. This Agreement, including the definitions, the
Plan and the Notice and Agreement constitute the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the subject
matter hereof.
CARROLS HOLDINGS CORPORATION
By:------------------------------
Its:-----------------------------
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Exhibit B
to Carrols Holdings Corporation
Stock Option Agreement
of Alan Vituli
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan,
represents that Optionee has read and understands the terms and provisions
thereof, and accepts this Option subject to all the terms and provisions of the
Plan and this Agreement. Optionee acknowledges that there may be various tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax adviser prior to such exercise or disposition.
By:----------------------------------
Alan Vituli
Old Road, Windham, N.Y. 12496
-------------------------------------
Taxpayer Identification Number
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Exhibit A
to Carrols Holdings Corporation
Stock Option Agreement
of Alan Vituli
Definitions. As used in this Agreement, the following terms shall have the
following meanings:
"Cause" means, except as may otherwise be provided in a Participant's
employment agreement (if any) or in the Award Agreement, (i) the
commission by the Participant of a felony; (ii) the unauthorized
disclosure of confidential proprietary information of the Company or any
Subsidiary which disclosure the Participant knows or reasonably should
have known would be reasonably likely to result in material damage to
the Company or Subsidiary; (iii) the breach by the Participant of any
material provision of the Participant's employment agreement (if any),
which breach, if curable, is not remedied within thirty (30) days after
the Participant's receipt of written notice thereof provided, however,
that the Company need not permit the Participant to cure any breach
which has been the subject of a prior written notice; (iv) the
engagement in material self dealing in breach of fiduciary duties with
respect to the assets or properties of the Company or Subsidiary unless
disclosed to and approved by the disinterested members of the Board of
Directors; (v) an act of gross misconduct in connection with the
Participant's duties under his employment agreement (if any); or (vi)
chronic alcohol or drug abuse rendering Participant incapable of
carrying out his duties as determined in good faith by the Committee
continuing after the Participant is given a reasonable opportunity to
obtain medical or other appropriate treatment or rehabilitation.
"Good Reason" means (i) the material failure of the Company or a
Subsidiary to comply with the provisions of the Participant's employment
agreement, if any, which failure shall not cease promptly and in no
event more than thirty (30) days after receipt by the Company or, where
appropriate, a Subsidiary of written notice from the Participant
objecting to such conduct; (ii) any termination by the Company or
Subsidiary of the Participant's employment other than as expressly
permitted in the Participant's employment agreement, if any; or (iii)
the assignment to Participant of duties and responsibilities materially
inconsistent with those duties and responsibilities customarily assigned
to individuals holding positions similar to that of the Participant at a
company of comparable size to the Company or Subsidiary or the
substantial reduction by the Company or Subsidiary of Participant's
duties and responsibilities and, if curable, not remedied by the Company
or Subsidiary within 30 days after receipt of written notice.
"Permanent Disability" means the inability of a Participant due to
physical or mental disability to perform all of his duties with the
Company or Subsidiary pursuant to his employment agreement, if any, for
a period of six (6) successive months, or an aggregate of six (6) months
in any twelve (12) month period, as determined by the Committee upon the
basis of such evidence, including but not limited to independent medical
reports and data, as the Committee deems appropriate or necessary.
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