EXHIBIT 10.1
CARROLS HOLDINGS CORPORATION
1998 POLLO TROPICAL LONG-TERM INCENTIVE PLAN
1. Purpose
The purpose of this Plan is to further the growth and general prosperity of
Carrols Holdings Corporation (the "Company") by providing long-term
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incentives to officers and employees of the Company and any Subsidiaries of
the Company. The Company intends that the Plan will help attract, retain
and motivate officers and key employees of high caliber and good potential
and promote the alignment of the Participants' interests with that of the
Company's shareholders.
2. Definitions
As used in the Plan, the following words shall have the following meanings:
"Affiliate" of a Person other than an individual means any other Person,
directly or indirectly controlling, controlled by or under common control
with such Person or, with respect to any partnership, any partner thereof.
"Award" means an award made to a Participant pursuant to the Plan and
described in Paragraph 6, including, without limitation, an award of an
Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation
Right, Restricted Stock, Performance Units, Performance Shares, or Other
Stock-Based Awards or any combination of the foregoing.
"Award Agreement" means an agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to an
Award.
"Board" means the Board of Directors of the Company as constituted from
time to time.
"Cause" has the meaning determined by the Committee and set forth in the
applicable Participant's Award Agreement.
"Carrols Stock" means Carrols stock, par value $.01 per share, of the
Company, which is a series of common stock of the Company.
"Certificate of Amendment" means the Certificate of Amendment to the
Restated Certificate of Incorporation of the Company, filed with the
Secretary of State of the State of Delaware on November 3, 1999, as amended
from time to time.
"Change of Control" means:
(a) The acquisition (other than from the Company) by any person,
entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act, excluding for this purpose any
employee benefit plan of the Company or its subsidiaries which
acquires beneficial ownership of voting securities of the
Company, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act), of more than 50% of
either the Company's then outstanding shares of common stock or
the
combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of
directors; or
(b)(1) Individuals who are elected as members of the Board of
Directors of the Company (the "Incumbent Board") pursuant to the
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terms of the Stockholders Agreement executed in connection with
the Stock Purchase Agreement thereto (the "Stockholders
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Agreement") cease for any reason to constitute at least a
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majority of the Board; provided that any person becoming a
director on or after the effective date of the Stockholders
Agreement whose election, or nomination for election by the
Company'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 Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be for
purposes of the Plan, considered as though such person were a
member of the Incumbent Board; or
(b)(2) Notwithstanding the foregoing, Paragraph (b)(1) above shall not
apply to any change in the Incumbent Board during the period in
which the Stockholders Agreement is in effect and a majority of
the Board of the Company is designated or otherwise appointed to
serve on the Board under the provisions of such Stockholders
Agreement; or
(c) Approval and consummation of a reorganization, merger, or
consolidation, in each case, with respect to which persons who
were the stockholders of the Company 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 Company
or a Sale of Company or a Sale of the Pollo Tropical Group; or
(d) The Company ceases to own at least 50 percent of the Carrols
Corporation.
(e) A Change of Control shall not be deemed to have occurred as a
result of any purchase or acquisition of shares of capital stock
in the Company by Madison Dearborn Capital Partners, L.P. and its
affiliates, Madison Dearborn Capital Partners II, L.P. and its
affiliates, Atlantic Restaurants, Inc. and its affiliates, or any
combination thereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Compensation Committee of the Board or, if no
Committee shall have been appointed, the full Board.
"Employee" means any officer or other employee of the Company or any
Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" as of any date:
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(a) of Stock shall be deemed to equal: (i) if the Stock is publicly
traded, the average of the last reported sales prices of such
Stock for ten (10) consecutive trading days as officially reported
on the principal trading market on which the Stock is traded
ending on the second trading day prior to the date of
determination; or (ii) if the Stock is not publicly traded, the
value of a Share as determined in good faith by the Committee or
the Board of the Company on the advice of its independent
auditors; or
(b) of assets other than Stock shall equal such value as determined by
the Committee in its sole discretion.
"Immediate Family" means an individual's spouse and descendants (whether
natural or adopted) and any trust or partnership solely for the benefit of
the individual and/or the individual's spouse and/or descendants.
"Incentive Stock Option" means an option intended to be and designated as
an incentive stock option meeting the requirements of Section 422 of the
Code.
"Independent Third Party" means any Person who, immediately prior to a
contemplated transaction, does not own in excess of 5% of the Carrols 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.
"Nonqualified Stock Option" means an option that is not intended to be nor
designated as an Incentive Stock Option.
"Other Stock-Based Awards" means any Award other than a Stock Option, Stock
Appreciation Right, Restricted Stock, Performance Unit or Performance Share
that is valued by reference to or otherwise based upon the Stock.
"Participant" means an Employee who, as of any date, has been granted one
or more Awards under the Plan which are still outstanding (i.e., have not
been exercised, forfeited or terminated).
"Performance Goals" means, with respect to any Performance Period,
performance goals based on any of the following criteria and established by
the Committee prior to the beginning of such Performance Period or
performance goals based on any of the following criteria and established by
the Committee after the beginning of such Performance Period that meet the
requirements to be considered pre-established performance goals under
Section 162(m) of the Code: earnings or earnings growth; return on equity,
assets or investment; revenues; expenses; stock price; market share;
charge-offs; or reductions in non-performing assets or such other
performance indicators as determined by the Committee in its sole
discretion. Such Performance Goals may be particular to an Employee or the
division, department, branch, line of business, Subsidiary or other unit in
which the Employee works, or may be based on the performance of the Company
generally.
"Performance Period" means (when and if applicable) the period of time
designated by the Committee during which Performance Goals will be measured
in connection with an Award.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated
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organization and a governmental entity or any department, agency or
political subdivision thereof.
"Pollo Tropical Group" has the meaning set forth in the Certificate of
Amendment.
"Plan" means this Carrols Holdings Corporation 1998 Pollo Tropical Long-
Term Incentive Plan, as amended from time to time.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of 1933 of shares of Carrols
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).
"Sale of the Company" means the sale of the Company to an Independent Third
Party or affiliate group of Independent Third Parties pursuant to which
such party or parties acquire (a) capital stock of the Company possessing
the voting power to elect a majority of the Company's Board (whether by
merger, consolidation or sale or transfer of the Company's capital stock)
or (b) all or substantially all of the Company's assets determined on a
consolidated basis.
"Sale of the Pollo Tropical Group" means the sale by the Company of the
Pollo Tropical Group to an Independent Third Party or affiliate group of
Independent Third Parties pursuant to which such party or parties acquire
(a) all or substantially all of the assets of the Pollo Tropical Group
determined on a consolidated basis or (b) in the event all of the assets
and liabilities of the Pollo Tropical Group are held directly or indirectly
by a Subsidiary, capital stock of the Subsidiary possessing the voting
power to elect a majority of the Subsidiary's Board (whether by merger,
consolidation or sale or transfer of the Subsidiary's capital stock).
"Stock" or "Share" means the series of common stock, par value $.01 per
share, of the Company that has been designated as Pollo Tropical Stock
under the Certificate of Amendment, which may be authorized but unissued or
issued and reacquired.
"Stock Options" means the collective reference to Incentive Stock Options
and Nonqualified Stock Options.
"Subsidiary" means any corporation, other than the Company, in which the
Company has at least a fifty percent beneficial ownership interest.
3. Administration
(a) The Plan shall be administered by the Committee. None of the members
of the Committee shall be eligible to receive Awards under the Plan.
Members of the Committee shall be intended to qualify to administer
and make Awards under the Plan for purposes of Section 162(m) of the
Code and Rule 16b-3 (and any other applicable rule) promulgated under
Section 16(b) of the Exchange Act. The Committee may adopt its own
rules or procedures, and the action of a majority of the Committee,
taken at a meeting or taken without a meeting by a writing signed by
such majority, shall constitute action by the Committee. The
Committee shall have the power and authority to administer, construe
and interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and
administration shall be consistent with the basic purposes of the
Plan.
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(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Company its duties under the Plan subject to
such conditions and limitations as the Committee shall prescribe;
provided, however, that only the Committee may designate and make
Awards to Participants who are subject to Section 16 of the Exchange
Act and Section 162(m) of the Code.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company, and
the officers and directors of the Company shall be entitled to rely
upon the advice, opinions or valuations of any such persons. All
actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all
Participants, 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 Awards made under the Plan, and all members of the Committee
shall be fully protected by the Company with respect to any such
action, determination or interpretation.
4. Eligibility
The Committee, in its discretion, may grant Awards to any Employee, subject
to the provisions of the Plan. No Employee shall be entitled as a matter
of right to receive an Award, nor shall the grant of an Award entitle an
Employee to receive any future Award.
5. Award Agreement
The terms, conditions and limitations of each Award under the Plan shall be
determined by the Committee subject to the limitations provided for in
Paragraph 7 below, and shall be set forth in an Award Agreement, in a form
approved by the Committee, consistent, however, with the terms of the Plan;
provided, however, that such Award Agreement shall contain provisions
dealing with the treatment of Awards in the event of the termination, death
or disability of a Participant.
6. Awards
As the Committee may determine, the following types of Awards may be
granted under the Plan to eligible Employees, either alone, in combination
or on an alternative basis:
(a) Incentive Stock Options: These are options within the meaning of
Section 422 of the Code to purchase Stock. In addition to other
restrictions contained in the Plan, an option granted under this
Paragraph 6(a), (i) may not be exercised more than 10 years after
the date it is granted, (ii) may not have an option exercise price
less than the Fair Market Value of the Stock on the date the option
is granted, (iii) must otherwise comply with the requirements of
Section 422 of the Code, and (iv) must be designated as an
"Incentive Stock Option" by the Committee. To the extent the
aggregate Fair Market Value (determined as of the time the Incentive
Stock Option is granted) of the Stock with respect to which
Incentive Stock Options become exercisable for the first time by a
Participant during any calendar year under all plans of the Company
or any Subsidiary exceeds ONE HUNDRED THOUSAND DOLLARS ($100,000),
such options shall be treated as
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Nonqualified Stock Options.
(b) Nonqualified Stock Options: These are options to purchase Stock
which are not intended to be and are not designated by the Committee
as "Incentive Stock Options." At the time of the Award, the
Committee shall determine, and shall have included in the Award
Agreement or other Plan rules, the option exercise period, the
option exercise price, and such other conditions or restrictions as
may be appropriate. In addition to the other restrictions contained
in the Plan, an option granted under this Paragraph 6(b), (i) may
not be exercised more than 10 years after the date it is granted,
and (ii) may not have an option exercise price less than 100% of the
Fair Market Value of Stock on the date the option is granted.
Payment of the option exercise price for Stock Options granted
pursuant to Paragraphs 6(a) and 6(b) shall be made (i) in cash, (ii)
by delivering shares of Stock already owned by the Participant, or
(iii) by delivering a promissory note to the Company that is either
(A) unsecured and fully recourse against the Participant or (B)
nonrecourse but secured by the Stock being purchased by such
exercise and by other assets having a Fair Market Value equal to not
less than forty (40%) percent of the exercise price per share
(a "Nonrecourse Note") and, in either event, such note shall mature
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on the fifth anniversary date thereof and shall bear interest,
payable quarterly, at the Federal mid-term rate provided under
Section 1274(d) of the Code or (iv) by a combination of any of the
foregoing, in accordance with the terms of the Plan, the Award
Agreement, and any other applicable guidelines of the Committee. The
terms of the Nonrecourse Note shall provide that: (i) any dividends
received on Stock securing a Nonrecourse Note shall be applied
toward payment of the principal and accrued interest of the
Nonrecourse Note; and (ii) the Nonrecourse Note shall become
immediately due and payable upon the sale of the Stock securing the
Nonrecourse Note and the proceeds shall be applied to the payment of
the unpaid principal balance and accrued interest of the Nonrecourse
Note.
(c) Stock Appreciation Rights: These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a
Share on the date of exercise over (ii) the Fair Market Value on the
date of award or, if connected with a previously issued Stock
Option, the Fair Market Value at the time such previously issued
Stock Option was granted (the "base value"), multiplied by (iii) the
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number of Shares covered by the rights exercised, as determined by
the Committee. A Stock Appreciation Right granted under the Plan
may, but need not be, granted in tandem with a Stock Option under
Paragraphs 6(a) or 6(b). The Committee, in the Award Agreement or by
other Plan rules, may impose such restrictions or conditions on the
exercise of Stock Appreciation Rights as it deems appropriate, and
may terminate, amend, or suspend such Stock Appreciation Rights at
any time. No Stock Appreciation Right granted under the Plan may be
exercised more than 10 years after the date it is granted.
(d) Restricted Stock: Restricted Stock is Stock delivered to a
Participant with or without payment of consideration, subject to
such conditions, terms and restrictions (including performance-based
or employment-based vesting, forfeiture conditions and transfer
restrictions) on the Participant's right to transfer or sell such
Stock. The number of Shares of Restricted Stock and the restrictions
or conditions on such Shares shall be determined by the Committee,
in the Award Agreement or by other Plan rules, and the certificate
for the Restricted Stock shall bear evidence of the restrictions or
conditions.
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(e) Performance Shares and Performance Units: An Award of Performance
Shares or Performance Units shall entitle a Participant to receive
Stock or a cash payment specified by the Committee, depending upon
the attainment of certain Performance Goals that shall be specified
by the Committee, and may relate to the performance of the Company
or the Pollo Tropical Group or a combination thereof. At the time an
Award of such Shares or units is made, the Committee shall, in the
Award Agreement, determine the base value of the Award or specify a
formula for determining such value. Other than an Award intended to
qualify under Section 162(m) of the Internal Revenue Code, the
Committee may adjust previously established Performance Goals and
other terms and conditions of an Award at any time prior to the
determination of the payment amount, to reflect major unforeseen
events such as changes in laws, regulations or accounting policies
or procedures, mergers, acquisitions or divestitures or
extraordinary, unusual or non-recurring items or events.
Payment pursuant to an Award of Performance Shares or Performance
Units shall be made following the Committee's determination of the
extent to which the performance criteria were satisfied, and shall
be made in the form of stock, cash or a combination thereof, as the
Committee may determine. Payment shall be made as promptly as
practicable following the end of the Performance Period unless
deferred subject to such terms and conditions as may be prescribed
by the Committee.
(f) Other Stock-Based Awards: Other Stock-Based Awards may be granted to
such Employees as the Committee may select, at any time and from
time to time as the Committee shall determine. The Committee shall
have complete discretion in determining the number of Shares subject
to such Awards, the consideration for such Awards and the terms,
conditions and limitations pertaining to same including without
limitation, restrictions based upon the achievement of specified
business objectives, tenure, and other measurements of individual or
business performance, and/or restrictions under applicable federal
or state securities laws, and conditions under which same will
lapse. Such awards may include the issuance of Stock in payments of
amounts earned under other incentive compensation plans of the
Company. The terms, restrictions and conditions of the Award need
not be the same with respect to each Participant.
The Committee may, in its sole discretion, direct the Company to
issue Shares subject to such restrictive legends and/or stop
transfer instructions as the Committee deems appropriate.
7. Limitations and Conditions
(a) The number of Shares of Pollo Tropical Stock available for Awards
under the Plan shall be 100,000 or, if greater, such number of
Shares as approved by the Committee. The Shares available for Awards
under the Plan will be available for grant at an exercise price per
share as determined by the Committee. The number of Shares subject
to Awards under the Plan (including, but not limited to, Stock
Options and Stock Appreciation Rights) to any one Participant shall
not exceed 75,000 Shares. To the extent that any Award is canceled
or forfeited, or terminates, expires, or lapses for any reason, any
unissued Shares subject to such Award shall again be available for
grant under the Plan.
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(b) No Awards shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Awards made on or
before the expiration thereof may extend beyond such expiration.
(c) Nothing in the Plan shall interfere with or limit in any way the
right of the Company or any Subsidiary to terminate any
Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or
any Subsidiary.
(d) Deferral of Award payouts may be provided for, in the sole
discretion of the Committee, subject to such terms and conditions as
the Committee may specify in the Award Agreements.
(e) Participants shall not have any of the rights or privileges of
stockholders of the Company with respect to any Shares purchasable
in connection with any Award, unless and until certificates
representing such Shares have been issued by the Company to such
Participants.
(f) Except as otherwise provided in this Paragraph 7, no Award may be
sold, transferred, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution, and
shall be exercisable during a Participant's lifetime only by the
Participant or the Participant's legal representative. The
Participant may, if permitted by the Committee, transfer the Award,
other than Incentive Stock Options, without payment of
consideration, to a member of Participant's Immediate Family. Any
attempt at assignment, transfer, pledge or disposition of the Award
contrary to the provisions hereof or the levy of any execution,
attachment or similar process upon the Award other than as expressly
permitted in this Paragraph 6 shall be null and void and without
effect.
(g) No holder of Shares shall sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) any
interest in the Shares (a "Transfer"), except pursuant to a Public
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Sale or an Approved Sale (an "Exempt Transfer") or pursuant to this
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Paragraph 7; provided that in no event shall any Transfer of Shares
pursuant to this Paragraph 7 be made for any consideration other
than cash payable upon consummation of such Transfer or in
installments over time. For purposes hereof, "Public Sale" means any
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sale of Shares to the public pursuant to an offering registered
under the Securities Act of 1933, as amended.
(h) Prior to making any Transfer other than an Exempt Transfer, any
holder of Shares intending to make such a Transfer (the
"Transferring Stockholder") shall deliver written notice (the "Sale
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Notice") to the Company. The Sale Notice shall disclose in
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reasonable detail the identity of the prospective transferee(s), the
number of shares to be transferred (the "Specified Shares") and the
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terms and conditions of the proposed Transfer. No Transferring
Stockholder shall consummate any such Transfer until 45 days after
the Sale Notice has been delivered to the Company, unless the
parties to the Transfer have been finally determined pursuant to
this Paragraph 6 prior to the expiration of such 45-day period.
(i) The Company may elect to purchase all (but not less than all) of the
Specified Shares upon the same terms and conditions as those set
forth in the Sale Notice by delivering a written notice of such
election to the Transferring Stockholder within 30 days after the
Sale Notice has been delivered to the Company. If the Company
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has elected to purchase the Specified Shares, the purchase of such
Specified Shares shall be consummated as soon as is practicable after
the delivery of the election notice to the Transferring Stockholder.
If the Company has not elected to purchase all of the Specified
Shares, the Transferring Stockholder may transfer the Specified Shares
at a price and on terms no more favorable to the transferee(s) thereof
than those specified in the Sale Notice. Any Specified Shares not so
transferred by the Transferring Stockholder within 30 days shall be
reoffered to the Company pursuant to this Paragraph 7 prior to any
subsequent Transfer.
(j) The restrictions set forth in this Paragraph 7 shall not apply with
respect to any Transfer of Shares by any Person (i) in the case of any
individual, pursuant to applicable laws of descent and distributions
or among such individual's Immediate Family or (ii) in the case of a
Person other than an individual, among its Affiliates (collectively
referred to herein as "Permitted Transferees"); provided that the
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restrictions contained in this Paragraph 7 shall continue to be
applicable to the Shares after any such Transfer. Notwithstanding the
foregoing, no party hereto shall avoid the provisions of the Plan by
making one or more transfers to one or more Permitted Transferees and
then disposing of all or any portion of such party's interest in any
such Permitted Transferee.
(k) The restrictions on the Transfer of Shares set forth in this Paragraph
7 shall continue with respect to each Share until the date on which
such Share has been transferred in a Public Sale or an Approved Sale.
(l) No grant or Award related payout under the Plan shall be deemed
compensation for purposes of computing benefits or contributions under
any retirement plan of the Company or any Subsidiary and shall not
affect any benefits under any other benefit plan of any kind or any
benefit plan subsequently instituted under which the availability or
amount of benefits is related to level of compensation.
(m) No benefit or promise under the Plan shall be secured by any specific
assets of the Company or any Subsidiary, nor shall any assets of the
Company or any Subsidiary be designated as attributable or allocated
to the satisfaction of the Company's obligations under the Plan.
(n) Upon the conversion of Shares in connection with a public offering of
the Company's securities, other than a Qualified Public Offering, the
Participant must execute, become a party to and agree to be bound by
the Company's Stockholder's Agreement dated March 27, 1997 by and
among the Company, Madison Dearborn Capital Partners, L.P., Madison
Dearborn Capital Partners II, L.P., Atlantic Restaurants, Inc., Alan
Vituli and the Management Investors.
8. Option Terms
(a) The exercise period for a Stock Option, including any extension which
the Committee may from time to time decide to grant, shall not exceed
ten years from the date of grant.
(b) Except as otherwise provided by the Committee, a Stock Option shall
become exercisable with respect to 20% of the Shares commencing on the
first anniversary of the date of grant, with an additional 20%
becoming exercisable on each anniversary of the date of grant
thereafter; provided, in each case, that the Participant shall have
continuously remained in the active employment of the Company, or
where appropriate, a Subsidiary.
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(c) Except as otherwise provided by the Committee, if a Participant's
employment with the Company, or where appropriate, a Subsidiary
terminates, then the Stock Options held by the Participant shall have
the vesting and exercise terms as determined by the Committee and
provided in the applicable Participant's Award Agreement.
(d) Except as otherwise provided by the Committee, in the event that a
Participant ceases to be employed by the Company or any of its
Subsidiaries as a result of the Participant's termination for Cause
(the "Termination"), any and all Shares which the Participant has
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acquired upon the exercise of the Stock Options (the "Repurchase
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Shares"), shall be subject to repurchase (the "Repurchase Option") by
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the Company as follows:
(i) The purchase price for each Repurchase Share shall be the
lesser of (1) the exercise price paid for such Repurchase Share
(as proportionately adjusted for all subsequent stock splits,
stock dividends and other recapitalizations) and (2) the Fair
Market Value for such Repurchase Share.
(ii) The Board may elect to purchase all or any portion of the
Repurchase Shares by delivering written notice (the "Repurchase
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Notice") to the holder or holders of the Repurchase Shares within
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90 days after the Termination. The Repurchase Notice shall set
forth the number of Repurchase Shares to be acquired from such
holder of Repurchase Shares, the aggregate consideration to be
paid therefor and the time and place for the closing of the
transaction.
(iii) The closing of the purchase of the Repurchase Shares shall
take place on the date designated by the Company in the
Repurchase Notice, which date shall not be more than 60 days nor
less than 5 days after the delivery of such notice. The Company
shall pay for the Repurchase Shares by delivery of a check or
wire transfer of funds. The Company shall be entitled to receive
from the Participant customary representations and warranties
regarding the sale of the Repurchase Shares (including
representations and warranties regarding good title to such
shares, free and clear of any liens or encumbrances).
(iv) Notwithstanding anything to the contrary contained in the
Plan, all repurchases of Repurchase Shares by the Company shall
be subject to applicable restrictions contained in the Delaware
General Corporation Law and in the Company's and its
Subsidiaries' debt and equity financing agreements. If any such
restrictions prohibit the repurchase of Repurchase Shares
hereunder which the Company is otherwise entitled or required to
make, the time periods provided herein shall be suspended, and
the Company may make such repurchases as soon as it is permitted
to do so under such restrictions.
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9. Dividends and Dividend Equivalents
(a) The Committee may provide that Awards earn dividends or dividend
equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to an account established by the
Committee under the Plan in the name of the Participant. Any crediting
of dividends or dividend equivalents may be subject to such
restrictions and conditions as the Committee may establish, including
reinvestment in additional Shares or Share equivalents.
(b) In the event that any properties or assets attributed to the Pollo
Tropical Group (the "Pollo Transferred Property") are transferred (the
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"Pollo Property Transfer") to the Carrols Group from the Pollo
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Tropical Group (other than in connection with (i) a decrease in the
Number of Shares Issuable with Respect to the Inter-Group Interest (as
defined in the Certificate of Amendment), (ii) a dividend or
distribution on shares of Pollo Tropical Stock or (iii) all sale-
leaseback transactions with respect to real property of the Pollo
Tropical Group consummated prior to December 31, 1998), an amount
shall be credited to an account established by the Committee under the
Plan in the name of the Participant if the Participant is holding
unexercised Stock Options (the "Individual Account") at the time of
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such Pollo Property Transfer equal to the product of (x) the Fair
Value (as defined in the Certificate of Amendment) of the Pollo
Transferred Property on the date of such Pollo Property Transfer and
(y) a fraction, the numerator of which is equal to the number of
Shares issuable upon exercise of the Participant's unexercised Stock
Options, and the denominator of which is equal to (1) the Number of
Shares Issuable with Respect to the Inter-Group Interest plus (2) the
number of Shares currently outstanding.
(c) In the event that any properties or assets attributed to the Carrols
Group (the "Carrols Transferred Property") are transferred (the
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"Carrols Property Transfer") to the Pollo Tropical Group from the
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Carrols Group (other than in connection with an increase in the Number
of Shares Issuable with Respect to the Inter-Group Interest), an
amount shall be deducted from, or debited to, the Individual Account
at the time of such Carrols Property Transfer equal to the product of
(i) the Fair Value (as defined in the Certificate of Amendment) of the
Carrols Transferred Property on the date of such Carrols Property
Transfer and (ii) a fraction, the numerator of which is equal to the
number of Shares issuable upon exercise of a Participant's unexercised
Stock Options, and the denominator of which is equal to (x) the Number
of Shares Issuable with Respect to the Inter-Group Interest plus (y)
the number of Shares currently outstanding.
(d) The amount (as such amount may be adjusted from time to time pursuant
to Paragraphs 9(b) and 9(c), the "Participant Amount") maintained in a
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Participant's Individual Account (whether such amount is a positive or
negative balance) will be applied (as provided in Paragraph 9(e)) only
upon the (i) exchange of a Participant's Stock Options or (ii)
exercise by a Participant of any of his or her Stock Options in the
event (x) of a Change of Control, (y) that all of the properties and
assets attributed to the Pollo Tropical Group are transferred to a
wholly owned subsidiary of the Company and the Shares and/or Stock
Options are exchanged for shares of the capital stock of such
subsidiary and/or options to purchase shares of the capital stock of
such subsidiary or (z) of a firm commitment initial public offering
relating to the Carrols Stock and the Shares are exchanged for shares
of Carrols Stock (each, a "Triggering Event").
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(e) In the event (i) a Participant is entitled to receive consideration
(whether in the form of cash, property or other securities) upon the
consummation of a Triggering Event (as a result of the exercise of a
Participant's Stock Options) or (ii) a Participant's Stock Options to
purchase Shares are exchanged for options to purchase another security
upon the consummation of a Triggering Event, the aggregate value of
either the consideration per share to be received by a Participant as
a result of such Triggering Event (whether such consideration is
payable in cash, property or securities) or the securities underlying
the options which are issued or exchanged for a Participant's Stock
Options as a result of such Triggering Event, as the case may be,
shall be increased (where the Participant Amount is a positive number)
or decreased (where the Participant Amount is a negative number) by an
amount equal to the quotient of (x) the Participant Amount and (y) the
number of shares issuable upon the exercise of the outstanding Stock
Options, less (in the event the Exercise Price is not paid by the
Participant) the Exercise Price per share payable upon exercise of
such Stock Options.
(f) In the event a Participant's Stock Options expire or terminate, the
Participant Amount shall be either reduced (where the Participant
Amount is a positive number) or increased (where the Participant
Amount is a negative number), as the case may be, by an amount equal
to the product of (1) the Participant Amount and (2) a fraction, the
numerator of which is equal to the number of Shares which would have
been issuable upon the exercise of such expired or terminated Stock
Options, and the denominator of which is equal to the number of Shares
issuable upon exercise of all of the Participant's Stock Options
(including for such calculation the Shares which would have been
issuable upon the exercise of the expired or terminated Stock
Options). Other than as provided in this Paragraph 9, the Participant
shall have no rights whatsoever to receive the Participant Amount.
10. Transfers and Leaves of Absence
For purposes of the Plan, (a) the transfer of a Participant's employment
between the Company and any Subsidiary without an intervening period of
separation shall not be deemed a termination of employment, and (b) a
Participant who is granted in writing a leave of absence shall be deemed to
have remained in the employ of the Company or Subsidiary during such leave
of absence; provided, however, that no Awards may be granted to an Employee
while absent on such leave.
11. Adjustments
(a) In the event that a dividend shall be declared upon shares of Stock
that is payable in shares of Stock, the number of shares of Stock then
subject to any Award, the number of shares of Stock reserved for
issuance in accordance with the provisions of the Plan but not yet
covered by an Award and the number of shares set forth in Paragraph
7(a) shall be adjusted by adding to each share the number of shares
which would be distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders
entitled to receive such dividend.
(b) In the event that the outstanding shares of Stock shall be changed
into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination
of shares, sale of assets, merger or consolidation, then, there shall
be substituted for each share of Stock then subject
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to any Award, for each share of Stock reserved for issuance in
accordance with the provisions of the Plan but not yet covered by an
Award and for each share of Stock referred to in Paragraph 7(a), the
number and kind of shares of stock or other securities into which each
outstanding share of Stock shall be so changed or for which each such
share shall be exchanged.
(c) In the event that there shall be any change, other than as specified
in this Paragraph 11, in the number or kind of outstanding shares of
Stock, or of any stock or other securities into which Stock shall have
been changed into, or for which it shall have been exchanged, then, if
the Committee shall, in its sole discretion, determine that such
change equitably requires an adjustment in the number or kind of
shares then subject to any Award, the number or kind of shares
reserved for issuance in accordance with the provisions of the Plan
but not yet covered by an Award and the number or kind of shares
referred to in Paragraph 7(a), such adjustment shall be made by the
Committee and shall be effective and binding for all purposes of the
Plan and of Awards granted in accordance with the provisions of the
Plan.
(d) In the case of any substitution or adjustment in accordance with the
provisions of this Paragraph 11, the exercise price payable for each
share of Stock issuable under the Stock Option prior to such
substitution or adjustment shall be the exercise price for all shares
of stock or other securities which shall have been substituted for
such share or to which such share shall have been adjusted in
accordance with the provisions of this Paragraph 11.
(e) No adjustment or substitution provided for in this Paragraph 11 shall
require the Company to sell a fractional share under any Award. Any
fractional share resulting from an adjustment or substitution provided
for in this Paragraph 11 shall be rounded up to the nearest whole
share.
12. Change of Control
In the event of a Change of Control, any or all Stock Options and Stock
Appreciation Rights still outstanding shall, notwithstanding any contrary
terms of the Award Agreement, 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 Participant of such Change of Control. Upon
a Change of Control that qualifies as an Approved Sale (as defined in
Paragraph 13) 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
13), (i) the Stock Options and Stock Appreciation Rights shall become
exercisable solely for the amount of such cash, property or securities that
the Participant would have been entitled to had the Stock Options and Stock
Appreciation Rights been exercised immediately prior to such event; and
(ii) the Participant shall be given an opportunity to either (A) exercise
any Stock Options and Stock Appreciation Rights prior to the consummation
of the Approved Sale and participate in such sale as a holder of Stock or
(B) upon consummation of the Approved Sale, receive in exchange for such
Stock Options and Stock Appreciation Rights 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 Stock
Options and Stock Appreciation Rights to acquire Stock by (2) the number of
shares of Stock represented by such Stock Options and Stock Appreciation
Rights. Notwithstanding the foregoing, to the extent the Stock Options and
Stock Appreciation Rights are not
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exercised prior to or exchanged simultaneously with the consummation of
such Approved Sale in accordance with provisions (i) or (ii) herein, the
Stock Options and Stock Appreciation Rights shall be canceled.
13. Sale of the Company or Sale of the Pollo Tropical Group
(a) If (i) the Board and the holders of a majority of the Carrols Stock
approve a Sale of the Company or (ii) the Board and, if required by
applicable law, the holders of a majority of the Carrols Stock approve
a Sale of the Pollo Tropical Group (each an "Approved Sale"), the
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holders of Stock shall, if required by applicable law, consent to and
raise no objections against such Approved Sale and if such Approved
Sale is structured as a sale of capital stock, the holders of Stock
shall agree to sell their Stock on the terms and conditions approved
by the Board and, if required, the holders of a majority of the
Carrols Stock. The holders of Stock shall take all necessary and
desirable actions in connection with the consummation of an Approved
Sale of the Company or an Approved Sale of the Pollo Tropical Group.
Notwithstanding the foregoing, in the event that the consideration to
be received by the holders of Stock in connection with an Approved
Sale shall include either (x) 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 (y)
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 13(a) (collectively, the "Illiquid
--------
Consideration").
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(b) The obligations of the holders of Stock with respect to the Approved
Sale of the Company or an Approved Sale of the Pollo Tropical Group is
subject to the satisfaction of the condition that, upon the
consummation of such 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.
(c) If the Company enters into any negotiation or transaction involving
the issuance of securities of another party to the holders of the
Company's securities 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.
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(e) The provisions of this Paragraph 13 shall terminate upon the closing
of a Qualified Public Offering.
14. Amendment and Termination
(a) The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Awards as are
consistent with the Plan provided that, no such action shall modify
such Award in a manner adverse to the Participant without the
Participant's consent, except as such modification is provided for or
contemplated under the terms of the Award.
(b) The Committee may terminate, amend or modify the provisions of the
Plan (including any performance criteria or conditions which must be
achieved in order for an Employee to receive an Award or Awards,
subject to Paragraph 6(e)) at any time and from time to time;
provided, however, that an amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3,
Section 162(m) of the Code or any other law, regulation or stock
exchange requirement shall not be effective unless approved by the
requisite vote of stockholders. The termination, amendment or
modification of the Plan may be in response to changes in the Code,
the Exchange Act, national securities exchange regulations or for
other reasons deemed appropriate by the Committee.
(c) Notwithstanding anything herein to the contrary, in the event that the
Committee, in its sole discretion, determines that either (i) the
grant of an Award or (ii) the issuance of Stock in connection with an
Award hereunder, would result in the Company or any of its
Subsidiaries recognizing gain for federal or state income tax
purposes, the Committee shall have the right, in its sole discretion,
to amend, terminate, suspend or otherwise modify the Plan or any Award
hereunder in whole or in part in order to limit or eliminate such
adverse tax effect on the Company or any of its Subsidiaries;
provided, however, that the Committee shall in good faith use its best
efforts to put Participants in substantially the same economic
position as they would have been in had the provisions of this
subsection not been applicable.
15. Foreign Options and Rights
The Committee may make Awards to Employees who are subject to the laws of
nations other than the United States, which Awards may have terms and
conditions that differ from the terms thereof as provided elsewhere in the
Plan for the purpose of complying with foreign laws.
16. Withholding Taxes
The Company shall have the right to deduct from any cash payment made under
the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Company to deliver Shares upon the exercise of a Stock
Option or Stock Appreciation Right, upon payment of Performance Units or
Performance Shares, upon delivery of Restricted Stock or upon exercise,
settlement or payment of any Other Stock-Based Award, that the
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Participant pay to the Company such amount as may be requested by the
Company for the purpose of satisfying any liability for such withholding
taxes.
17. Indemnification
Each current or former member of the Committee, and of the Board, shall be
indemnified and held harmless by the Company against any loss, cost,
liability or expense that may be imposed upon, or reasonably incurred by
him or her in connection with or resulting from any claim, action, suit or
proceeding to which the member may be a party or in which the member may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by the member in settlement
thereof, with the Company's approval, or paid by the member in satisfaction
of any judgment in any such action, suit or proceeding against the member,
provided such member shall give the Company an opportunity, at its own
expense, to handle and defend the same before the member undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which the member may be entitled under the Company's
Certificate of Incorporation, as amended or By-laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
18. Successors
The terms of the Plan shall be binding upon the Company, its successors and
assigns and all transferees of Awards and/or Shares hereunder.
19. Requirement of Law
(a) The granting of Awards and the issuance of Shares under the Plan shall
be subject to all applicable laws, rules and regulations, and to such
approval by any governmental agencies or national securities exchanges
as may be required.
(b) In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
(c) To the extent that federal laws do not otherwise control, the Plan and
all Award Agreements, shall be construed in accordance with and
governed by the laws of the State of New York.
20. Effective Date and Termination Dates
The Plan, as amended and restated, shall be effective as of July 20, 1998
and shall terminate ten years later, subject to such earlier termination by
the Committee pursuant to Paragraph 14.
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