EXHIBIT B1
CARROLS HOLDINGS CORPORATION
UNVESTED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ___________, 1997 (the "Date of
Grant") is made by and between Carrols Holdings Corporation, a Delaware
corporation (hereinafter called the "Company") and ▇▇▇▇ ▇▇▇▇▇▇, an employee of
the Company (hereinafter referred to as the "Optionee"). Unless otherwise
defined herein or on Exhibit A hereto, which is incorporated herein by
reference, all capitalized terms used herein shall have the meanings assigned to
such terms in the Carrols Holdings Corporation 1996 Long-Term Incentive Plan, as
amended from time to time (the "Plan"); provided, however, that the Option
granted hereunder is not subject to or granted under the Plan.
1. Grant and Approval of Option. The Company hereby grants to the
Optionee a nonqualified stock option (the "Option") to purchase all or any part
of the aggregate of 29,480 shares of its $.01 par value common stock (the
"Shares"), subject to all of the terms and conditions of this agreement (the
"Agreement").
2. Exercise Price and Period of Option; Acceleration of Vesting.
(a) Effective as of the closing of the Stock Purchase Agreement
(the "Closing") and subject to the terms and conditions of this Agreement, this
Option shall become exercisable at an exercise price per share (the "Exercise
Price") of $101.7646 as follows: (i) 5,896 Shares will become exercisable on the
first anniversary date of the Closing; (ii) 5,896 Shares will become exercisable
on the second anniversary date of the Closing; (iii) 5,896 Shares will become
exercisable on the third anniversary date of the Closing; and (iv) 5,896 Shares
will become exercisable on the fourth anniversary date of the Closing; and (v)
the remaining 5,896 Shares will become exercisable on the fifth anniversary date
of the Closing.
(b) Except as otherwise provided by the Committee, if Optionee's
employment with the Company terminates:
(i) 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 shall
continue to be exercisable until the date of expiration of the Option pursuant
to Paragraph 3 of this Agreement;
(ii) on account of death or Permanent Disability, Optionee shall
(A) have the right to purchase such additional Shares to which the Optionee
would have been entitled had his employment continued through the first
anniversary date of the Closing following Optionee's date of termination of
employment on account of death or Permanent Disability (the "Termination Date")
and (B) have the right to purchase such additional Shares equal to the product
of (x) the number of shares which would have become exercisable on the second
anniversary date of the
Closing following the Termination Date multiplied by (y) a fraction where the
numerator equals the number of days elapsed since the anniversary date of the
Closing preceding the Termination Date and the denominator equals 365 days. In
the event of Optionee's death or Permanent Disability, all vested and
exercisable Options (including Options that become vested and exercisable under
this paragraph 2(b)(ii)) shall continue to be exercisable until the date of
expiration of the Option pursuant to Paragraph 3 of this Agreement;
(iii) 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 only be exercisable for a period of
forty-five (45) days after the Optionee's date of termination of employment
without Good Reason; and
(iv) 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 Securities 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.
-2-
4. Manner of Exercise.
(a) This Option shall be exercisable by delivery to the Secretary
of the Company of an executed written notice (the "Notice"), or such other form
as may be required by the Committee 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 Committee to comply with applicable
securities laws.
(b) Such Notice shall be accompanied by full payment of the
Exercise Price, if any, 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 to the Company that is either (A) unsecured and fully recourse
against the Optionee or (B) nonrecourse but secured by the Shares 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 (a "Nonrecourse Note")
and, in either event, such note shall mature 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 Internal Revenue Code of 1986, as amended;
(iv) by any combination of the foregoing, or any other method, where approved by
the Committee in writing in its sole discretion; or (v) by any other means
approved by the Committee. The terms of a 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 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. For purposes of this Agreement, "Fair Market Value" as of any
date (i) of Shares shall be deemed to equal: (A) if the Shares are publicly
traded, the average of the last reported sales price of such Shares for ten (10)
consecutive trading days as officially reported on the principal trading market
on which such Shares are traded ending on the second trading day prior to the
date of determination, or (B) if the Shares are not publicly traded, the value
of a Share as determined in good faith by the Committee or the Board of
Directors of the Company on the advice of its independent auditors; and (ii) of
assets other than Shares shall equal such value as determined by the Committee
in its sole discretion.
(c) Prior to the issuance of the Shares upon exercise of this
Option, Optionee must pay or, in a manner acceptable to the Committee, make
adequate provision to pay, any applicable federal, state or local withholding
obligations as determined by the Committee in accordance with applicable law.
(d) Promptly after receipt of any Notice and payment as provided
above, the Company shall issue the number of Shares set forth in such Notice,
registered in the name of the Optionee, the Optionee and the Optionee's spouse,
or the Optionee's legal representative.
-3-
(e) Any exercisable portion of this Option may be exercised in
whole or in part at any time prior to the time when this Option becomes
unexercisable under Paragraph 3 of this Agreement; 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.
(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.
-4-
(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 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. Except as may otherwise be
determined by the Company, this Option may not be sold, transferred, assigned or
otherwise alienated or hypothecated by the Optionee, other than by will or by
the laws of descent and distribution, and shall be exercisable during the
Optionee's lifetime only by the Optionee or the Optionee's legal representative.
The Optionee may, if permitted by state law or the rules and regulations
governing any exchange on which the Company's Shares are traded, transfer the
Option, without payment of consideration, to a member of the Optionee's
immediate family or to a trust or partnership whose
-5-
beneficiaries are members of the Optionee's immediate family. For purposes of
this Paragraph, the term "immediate family" shall include the Optionee's spouse,
children and grandchildren. Any attempt at assignment, transfer, pledge or
disposition of the Option contrary to the provisions hereof or the levy of any
execution, attachment or similar process upon the Option other than as expressly
permitted in this Paragraph 7 shall be null and void and without effect.
8. Rights as Stockholder. Other than as provided herein, 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. Withholding of Taxes. Whenever the Company proposes or is
required to deliver or transfer Shares in connection with the exercise of this
Option, the Company shall have the right to (a) require the recipient to remit
to the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Shares, or (b) take whatever action it
deems necessary to protect its interests with respect to tax liabilities.
10. Administration. The Committee shall have the power to
interpret this Agreement. 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 this Agreement or the Option.
11. Notice. Any notice to be given under the terms of this
Agreement to the Committee shall be addressed to the Committee, 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. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by the Optionee to the Committee for its
review. The resolution of such dispute by the Committee shall be final and
binding on the Company and on the Optionee.
13. Entire Agreement. This Agreement and the Notice constitute
the entire agreement of the parties and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
-6-
14. 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 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 14(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.
15. Adjustments. In the event of a reclassification,
recapitalization, merger, consolidation, reorganization, stock dividends, stock
split or reverse stock split, including, without limitation, a distribution of
the stock of a Subsidiary, combination or exchange of shares, the Committee
shall determine, in its discretion, the appropriate adjustments, if any, to the
number of Shares which may be issued under this Option and the exercise price of
this Option.
16. Amendment and Termination.
(a) The Committee shall have the authority to make such
amendments to the Option provided that no such action shall modify the Option in
a manner adverse to Optionee without Optionee's consent.
(b) The Committee may terminate, amend or modify the Option 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 Option
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.
17. Successors. The terms of the Option shall be binding upon the
Company and its successors and assigns.
18. Requirements of Law.
(a) In the event any provision of the Option shall be held
illegal or invalid for any reason, the illegality or invalidity shall not effect
the remaining parts of the Option, and the Option shall be construed and
enforced as if the illegal or invalid provision had not been included.
-7-
(b) To the extent that federal laws do not otherwise control, the
Option shall be construed in accordance with and governed by the laws of the
State of New York.
CARROLS HOLDINGS CORPORATION
By:
---------------------------------
Title:
---------------------------------
ACCEPTED AND AGREED TO:
By:
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-8-
Exhibit A
to Carrols Holdings Corporation
Unvested Stock Option Agreement
of ▇▇▇▇ ▇▇▇▇▇▇
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.
-9-
