EXHIBIT (C)(3)
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement"),
dated as of June 3, 1998, by and among Pollo Tropical, Inc., a Florida
corporation (the "Company"), Xxxxx X. Xxxxxx, an individual ("Xxxxxx"), and
Carrols Corporation, a Delaware corporation ("Carrols").
WITNESSETH
----------
WHEREAS, the Company and Carrols have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant
to which Carrols will make a tender offer at a price per share of at least
$11.00 per share (the "Offer") to acquire all of the outstanding shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), on a
fully diluted basis and, after the consummation of the Offer, the Company will
merge with and into Carrols (the "Merger");
WHEREAS, Xxxxxx owns shares of the Common Stock (the "Xxxxxx
Shares"), and has agreed to tender and sell the Xxxxxx Shares to Carrols in
the Offer pursuant to and subject to the terms and conditions of a Tender
Agreement, dated as of the date hereof (the "Tender Agreement"), among
Carrols, Xxxxxx and certain other shareholders of the Company party thereto;
and
WHEREAS, Xxxxxx is willing to enter into this Agreement in
consideration of (i) the Company and Carrols completing the transactions
contemplated by the Merger Agreement and the Tender Agreement and (ii) the
consideration described in Section 2 hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
Section 1. Non-Competition
(a) Xxxxxx agrees that during the period he is employed by the
Company and for a period of two years after the earlier of (A) the date Xxxxxx
ceases to be employed by the Company or (B) the date that Carrols pays for and
acquires any shares of the Common Stock pursuant to the Offer (each the
"Commencement Date"), he will not engage in or Participate In any business or
organization which engages in the business of owning, operating or franchising
quick service chicken-themed restaurants within the State of Florida and the
Commonwealth of Puerto Rico and Central America and South America, except that
in each case the provisions of this Section 1 will not be deemed breached
merely because Xxxxxx owns not more than 5% of the outstanding common stock or
other equity interests of a corporation, partnership or other entity, if, (i)
at the time of its acquisition by Xxxxxx such stock is listed on a national
securities exchange, is reported on Nasdaq, or is regularly traded in the
over-the-counter market by a member of a national securities exchange or (ii)
Xxxxxx' investment in such corporation, partnership or other entity is solely
a passive investment and Xxxxxx maintains not more than 5% of the voting
control of such corporation, partnership or other entity.
(b) As used in this Agreement, the term "Participate In" shall mean:
"directly or indirectly, for his own benefit or for, with, or through any other
person, firm, or corporation, own, manage, operate, control, loan money to, or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, employee, partner, consultant, agent or
independent contractor."
(c) During the period Xxxxxx is employed by the Company and for a
period of two years after the Commencement Date, (i) Xxxxxx will not attempt
to employ, offer employment to, directly or indirectly solicit or endeavor to
entice away from the Company or any of its subsidiaries or the business
operation of the Company as operated by Carrols or any of Carrols'
subsidiaries any of its respective employees or former employees (including,
without limitation, Xxxx Xxxxxxxx) and (ii) Xxxxxx will not directly or
indirectly employ any person who is an employee or former employee (including,
without limitation, Xxxx Xxxxxxxx) of the Company or any of its subsidiaries
or the business operation of the Company as operated by Carrols or any of
Carrols' subsidiaries; provided, that the terms of this Section 1(c) shall not
apply to (w) the solicitation or employment by Xxxxxx of any former employee
after the earlier of (A) the one year anniversary of the date of the cessation
of employment with the Company of such former employee, and (B) the second
anniversary of the Commencement Date, (x) the solicitation or employment by
Xxxxxx of not more than one restaurant manager at any time after the date that
is 18 months after consummation of the Merger, (y) the solicitation or
employment by Xxxxxx of Xxxx Xxxxxxxx; provided that Xxxxxxxx shall not
participate in any activity in connection with such employment by Xxxxxx
related to the identification of property to be used as a restaurant, or (z)
the solicitation or employment of Xxxxxx' current secretary. Notwithstanding the
foregoing, this Section 1(c) shall not apply to employees or former employees
(other than Xxxx Xxxxxxxx) who ceased to be employees prior to the date hereof.
(d) During the period Xxxxxx is employed by the Company and for a
period of five years after the Commencement Date, Xxxxxx will not disclose,
and will keep confidential, any trade secrets, confidential or proprietary
information of the Company and its subsidiaries not in the public domain
acquired by Xxxxxx while employed by the Company, including without
limitation, matters of a business nature, such as information about costs,
profits, markets, leases, agreements, financial information, technical and
production know-how, developments, inventions, processes, recipes or
administrative procedures; provided, however, that the provisions of this
Section 1(d) will not be breached if Xxxxxx is required by law to disclose
such confidential or proprietary information; provided, further, that in such
event Xxxxxx shall promptly notify Carrols of any such required disclosure.
Xxxxxx shall return all tangible evidence of such confidential information to
the Company prior to or at the termination of his employment.
(e) Since a breach of the provisions of this Section 1 could not
adequately be compensated by money damages, the Company and Carrols shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach or a threatened breach, and in either case
no bond or other security shall be required in connection therewith. Xxxxxx
agrees that the provisions of this Section 1 are necessary and reasonable to
protect Carrols or any of its subsidiaries in the conduct of its business. If
any restriction contained in this Section 1 shall be deemed to be invalid,
illegal, or unenforceable by reason of the extent, duration, or geographical
scope thereof, or otherwise, then the court making such determination shall
have the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby.
2
Section 2. Payment to Xxxxxx; Salary and Bonus; Use of Office.
(a) Carrols will pay to Xxxxxx the sum of Three Hundred Fifty
Thousand Dollars ($350,000), less any amounts paid, with the written consent
of Xxxxxx, by the Company to third parties designated by Xxxxxx. Such amount
shall be payable in cash within five (5) business days after the date that
Carrols pays for and acquires any shares of the Common Stock pursuant to the
Offer.
(b) In addition, Xxxxxx will be entitled to receive (i) in full his
current salary and benefits until the consummation of the Merger and (ii) a
bonus of Ninety Thousand Dollars ($90,000) in full satisfaction of any and all
obligations of the Company to pay Xxxxxx a bonus for the 1998 fiscal year,
such bonus to be payable within five (5) business days after the date that
Carrols pays for and acquires any shares of the Common Stock pursuant to the
Offer.
(c) Xxxxxx shall be entitled to the continued, uninterrupted use of
his current office at the Company's headquarters, located at 0000 X. Xxxxxxx
Xxxxx, 0xx Xxxxx, Xxxxx, Xxxxxxx 00000, until August 31, 1998.
Section 3. Amendment to Agreement.
This Agreement may not be modified or amended, nor any term hereof
waived, except by a writing signed by all of the parties to this Agreement.
Section 4. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of, the
parties hereto and their respective successors, heirs, legal representatives
and permitted assigns.
Section 5. Headings.
The captions and descriptive headings in this Agreement are inserted
for convenience only, do not constitute a part of this Agreement, and shall
not be taken into account in construing any of the provisions of this
Agreement.
Section 6. Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument.
Section 7. Notices.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (when
confirmed), sent by overnight courier (providing proof of delivery) or by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice in accordance with this Section
7:
3
If to Carrols:
Carrols Corporation
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxx,
Chairman and Chief Executive Officer
with a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to Xxxxx X. Xxxxxx:
Xxxxx X. Xxxxxx
00000 Xxxxxxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
With a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: C. Xxxxxxx Xxxxxx
If to the Company:
Pollo Tropical, Inc.
0000 X. Xxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: President
in each case, with a copy to:
Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
4
Section 8. Effectiveness; Termination.
This Agreement, and all rights and obligations of the parties
hereunder shall become effective only upon the closing of the Offer and shall
terminate if the Merger Agreement is terminated in accordance with its terms
prior to the closing of the Offer.
Section 9. Governing Law
This Agreement shall be governed and construed in accordance with the
laws of the State of Florida, without giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CARROLS CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and General Counsel
POLLO TROPICAL, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President/C.O.O.
/s/ Xxxxx X. Xxxxxx
---------------------------------------------
Xxxxx X. Xxxxxx
5
