Vice President, Marketing Employment Agreement

EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Employment Agreement") is made and entered into as of the 26th day of July, 1996 (the "Commencement Date"), by and between CHECKERS DRIVE-IN RESTAURANTS, INC., a Delaware corporation (the "Company"), and MICHAEL T. WELCH, an individual ("Employee").


W I T N E S S E T H


WHEREAS, the Company develops, produces, owns, operates and franchises quick-service "double drive-thru" restaurants under the name "Checkers" (such activities, together with all other activities of the Company and its subsidiaries, as conducted at or prior to the termination of this Employment Agreement, and any future activities reasonably related thereto which are contemplated by the Company and/or its subsidiaries at the termination of this Employment Agreement identified in writing by the Company to Employee at the date of such termination, are hereinafter referred to as the "Business Activities");


WHEREAS, the Company desires to employ Employee upon the terms and subject to the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the premises, the mutual promises, covenants and conditions herein contained and for other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:


Section 1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby accepts employment with the Company, all upon the terms and subject to the conditions set forth in this Employment Agreement.


Section 2. CAPACITY AND DUTIES. Employee is and shall be employed in the capacity of Vice President, Marketing, R & D of the Company and its subsidiaries and shall have such other duties, responsibilities and authorities as are assigned to him by the President so long as such additional duties, responsibilities and authorities are consistent with Employee's position and level of authority as Vice President, Marketing, R & D of the Company. Subject to the advice and general directions of the President, and except as otherwise herein provided, Employee shall devote substantially all of his business time, best efforts and attention to promote and advance the business of the Company and its subsidiaries and to perform diligently and faithfully all the duties, responsibilities and obligations of Employee to be performed by him under this Employment Agreement. Employee's duties shall include all of those duties being performed by Employee as of the date hereof.


During the Employment Period (as hereinafter defined), Employee shall not be employed in any other business activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage; provided, however, that this restriction shall not be construed as preventing Employee from investing his personal assets in a business which does not compete


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with the Company or its subsidiaries or with any other company or entity affiliated with the Company, where the form or manner of such investment will not require services of any significance on the part of Employee in the operation of the affairs of the business in which such investment is made and in which his participation is solely that of a passive investor or advisor.


Section 3. TERM OF EMPLOYMENT. The term of employment of Employee by the Company pursuant to this Employment Agreement shall be for the period (the "employment Period") commencing on the Commencement Date and ending on the one year anniversary of the Commencement Date, or such earlier date that Employee's employment is terminated in accordance with the provisions of this Employment Agreement; provided however, that the Employment Period shall automatically be extended for a successive one year period, with Employee's written consent, unless the Company gives Employee thirty (30) days written notice prior to the end of such year that it does not intend to extend the term of the Employment Period.


Section 4. PLACE OF EMPLOYMENT. Employee's principal place of work shall be located at the principal offices of the Company, currently located in Clearwater, Florida, provided that the principal offices of the Company may be moved from time to time in the discretion of the Board of Directors.


Section 5. COMPENSATION. During the Employment Period, subject to all the terms and conditions of this Employment Agreement and as compensation for all services to be rendered by Employee under this Employment Agreement, the Company shall pay to or provide Employee with the following:


Section 5.1. BASE SALARY. The Company shall pay to employee a base annual salary at the rate of One Hundred Twenty-Eight Thousand Two Hundred Sixty Dollars ($128,260.00) per year through the end of the term of the Agreement and any extensions thereof, payable at such intervals (at least monthly) as salaries are paid generally to other executive officers of the Company.


Section 5.2. BONUS. Employee shall be eligible to receive an annual cash bonus pursuant to the cash bonus plan adopted by the Company, and available generally to employees of similar position. The Company reserves the right to modify or eliminate the cash bonus plan at any time.


Section 5.3. VACATION AND OTHER BENEFITS. Employee shall be entitled to Two (2) weeks vacation during each calendar year. Vacation days not used may not be carried into subsequent years. The Company shall provide Employee with the other benefits specified on Exhibit 5.03 attached hereto.


Section 6. ADHERENCE TO STANDARDS. Employee shall comply with the written policies, standards, rules and regulations of the Company from time to time established for all executive officers of the Company consistent with Employee's position and level of authority.


Section 7. REVIEW OF PERFORMANCE. The President shall periodically review and evaluate the performance of Employee under this Employment Agreement with Employee.


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Section 8. EXPENSES. The Company shall reimburse Employee for all reasonable, ordinary and necessary expenses (including, but not limited to, automobile and other business travel and customer entertainment expenses) incurred by him in connection with his employment hereunder in accordance with the written policy and guidelines established by the Company for executive officers; provided, however, Employee shall render to the Company a complete and accurate accounting of all such expenses in accordance with the substantiation requirements of section 274 of the Internal Revenue Code of 1986, as amended (the "Code"), as a condition precedent to such reimbursement.


Section 9. TERMINATION WITH CAUSE BY THE COMPANY. This Employment Agreement may be terminated with Cause (as hereinafter defined) by the Company provided that the Company shall (i) give Employee the Notice of Termination (as hereinafter defined) and (ii) pay Employee his annual base salary through the Date of Termination (as hereinafter defined) at the rate in effect at the time the Notice of Termination is given plus any bonus or incentive compensation which has been earned or has become payable pursuant to the terms of any compensation or benefit plan as of the Date of Termination, but which have not yet been paid.


Section 10. TERMINATION WITHOUT CAUSE BY THE COMPANY OR FOR GOOD REASON BY EMPLOYEE. This Employment Agreement may be terminated by the Company (i) at the end of the Term of Employment, (ii) during the Term of Employment without cause as hereinafter defined, or (iii) by reason of the death or Disability Reason (as hereinafter defined) provided that the Company shall continue to pay to Employee (or the estate of Employee in the event of termination due to the death of employee) the compensation and other benefits described in Section 5 of this Employment Agreement, except for annual cash bonuses or incentive compensation for six (6) months from the Date of Termination. Employee's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. In the event of termination by the Company by reason of Employee's death or Disability, medical, hospitalization or disability benefits coverage comparable to that provided by the company during Employee's lifetime shall be provided to Employee, his spouse and dependents for twelve (12) months from the Date of Termination, and for eighteen (18) months from the Date of Termination with respect to medical and hospitalization benefits for the Employee and his family. The benefits provided under this Section 10 shall be no less favorable to Employee in terms of amounts, deductibles and costs to him, if any, than such benefits provided by the Company to him and shall not be interpreted so as to limit any benefits to which Employee, as a terminated employee of the Company, or his family may be entitled under the Company's life insurance, medical, hospitalization or disability plans following his Date of Termination or under applicable law.


In the event of Termination by the Employee for Good Reason, the Company shall continue to pay to Employee the compensation and other benefits described in Section 5 of this Employment Agreement, except for annual cash bonuses or incentive compensation for six (6) months from the Date of Termination, and shall continue to provide medical, hospitalization or disability benefits coverage to Employee, his spouse and dependents for twelve (12) months from the Date of Termination.


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In the event that within a period of one (1) year of a Change in Control, this Employment Agreement is terminated by the Company for any reason other than for cause (or the Company gives notice that it is not renewing the Employment Agreement pursuant to Section 3), the Company shall continue to pay to Employee the compensation and other benefits described in Section 5 of this Employment Agreement, except for annual cash bonuses or incentive compensation for twelve (12) months from the Date of Termination, and shall continue to provide medical, hospitalization or disability benefits coverage to Employee, his or her spouse and dependents for a period of eighteen (18) months from the Date of Termination.


Section 11. DEFINITIONS. In addition to the words and terms elsewhere defined in this Employment Agreement, certain capitalized words and terms used in this Employment Agreement shall have the meanings given to them by the definitions and descriptions in this Section 12 unless the context or use indicates another or different meaning or intent, and such definition shall be equally applicable to both the singular and plural forms of any of the capitalized words and terms herein defined. The following words and terms are defined terms under this Employment Agreement:


Section 11.1. "Disability" shall mean a physical or mental illness which, in the judgment of the company after consultation with the licensed physician attending Employee, impairs Employee's ability to substantially perform his duties under this Employment Agreement as an employee and as a result of which he shall have been absent from his duties with the Company on a full-time basis for six (6) consecutive months.


Section 11.2. A termination with "Cause" shall mean a termination of this Employment Agreement by reason of a good faith determination by the Board that Employee (i) failed to substantially perform his duties with this Company (other than a failure resulting from his incapacity due to physical or mental illness) after a written demand for substantial performance has been delivered to him by the Board, which demand specifically identifies the manner in which the Board believes he has not substantially performed his duties; (ii) has engaged in conduct the consequences of which are materially adverse to the company, monetarily or otherwise; or (iii) has materially breached the terms of this Employment Agreement. No act, or failure to act, on Employee's part shall be grounds for termination with Cause unless he has acted or failed to act with an absence of good faith or without a reasonable belief that his action or failure to act was in or at l ...