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EXHIBIT 10.35
EMPLOYMENT AGREEMENT
This Agreement is made as of the first day of August, 1996, between
Xxxxx'x Roadhouse, Inc., a Tennessee corporation (the "Company"), and Xxxxx X.
Xxxxx, Xx. ("Employee").
W I T N E S S E T H:
WHEREAS, the Company, which maintains its principal executive offices at
000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, owns and operates
casual dining restaurants under the name "Xxxxx'x Roadhouse;"
WHEREAS, the Company desires to employ Employee and Employee desires to
accept such employment by the Company subject to the terms and conditions
contained herein; and
WHEREAS, in serving as an employee of the Company, Employee will
participate in the use and development of confidential proprietary information
about the Company, its customers and suppliers, and the methods used by the
Company and its employees in competition with other companies, as to which the
Company desires to protect fully its rights;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Employee and Employee accepts
such employment with the Company, subject to the terms and conditions set forth
herein. Employee shall be employed as President and Chief Executive Officer of
the Company, shall perform all duties and services incident to such position,
and such other duties and services as may be prescribed by the Bylaws of the
Company or established by the Board of Directors of the Company from time to
time; provided, however, that without Employee's written consent, the duties
and services of Employee hereunder shall not be materially increased or altered
in a manner inconsistent with Employee's position and original duties
hereunder. During his employment hereunder, Employee shall devote his best
efforts and attention, on a full-time basis, to the performance of the duties
required of him as an employee of the Company.
2. Compensation. As compensation for services rendered by Employee
hereunder, Employee shall receive:
(a) An annual salary of $150,000, or such higher salary as
shall be approved unanimously by the Compensation Committee of the
Board of Directors, which salary shall be payable in arrears in
equal monthly installments, plus
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insurance and other benefits equivalent to the benefits provided
other executives of the Company, which are set forth in Appendix I
hereto;
(b) Three (3) weeks of compensated vacation time, to be taken
at any time during each year of the term of this Agreement;
(c) Bonus compensation to be determined in accordance with the
terms and conditions of the Company's Executive Bonus Plan; and
(d) Reimbursement for all reasonable expenses incurred by
Employee in the performance of his duties under this Agreement,
provided that Employee submits verification of such expenses in
accordance with the policies of the Company.
Prior to the end of each fiscal year of the Company, the Compensation
Committee or Board of Directors shall review with Employee his salary and
benefits payable hereunder. Any increases in salary or changes in fringe
benefits agreed upon by Employee and the Compensation Committee or the Board of
Directors at such annual review shall become effective the following month
unless otherwise agreed to by the Company and Employee.
3. Confidential Information and Trade Secrets.
3.1 Employee recognizes that Employee's position with the Company requires
considerable responsibility and trust, and, in reliance on Employee's loyalty,
the Company may entrust Employee with highly sensitive confidential, restricted
and proprietary information involving Trade Secrets and Confidential
Information.
3.2 For purposes of this Agreement, a "Trade Secret" is any scientific or
technical information, design, process, procedure, formula or improvement that
is valuable and not generally known to competitors of the Company.
"Confidential Information" is any data or information, other than Trade
Secrets, that is important, competitively sensitive, and not generally known by
the public, including, but not limited to, the Company's business plan,
training manuals, product development plans, pricing procedures, market
strategies, internal performance statistics, financial data, confidential
personnel information concerning employees of the Company, supplier data,
operational or administrative plans, policy manuals, and terms and conditions
of contracts and agreements. The terms "Trade Secret" and "Confidential
Information" shall not apply to information which is (i) made available to the
general public without restriction by the Company, (ii) obtained from a
third party by Employee in the ordinary course of Employee's employment by the
Company, or (iii) required to be disclosed by Employee pursuant to subpoena or
other lawful process, provided that Employee notifies the Company in a timely
manner to allow the Company to appear to protect its interests.
3.3 Except as required to perform Employee's duties hereunder, Employee
will not use or disclose any Trade Secrets or Confidential Information of the
Company during
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employment, at any time after termination of employment and prior to such time
as they cease to be Trade Secrets or Confidential Information through no act
of Employee in violation of this Agreement.
3.4 Upon the request of the Company and, in any event, upon the
termination of employment hereunder, Employee will surrender to the Company all
memoranda, notes, records, manuals or other documents pertaining to the
Company's business or Employee's employment (including all copies thereof).
Employee will also leave with the Company all materials involving any Trade
Secrets or Confidential Information of the Company. All such information and
materials, whether or not made or developed by Employee, shall be the sole and
exclusive property of the Company, and Employee hereby assigns to the Company
all of Employee's right, title and interest in and to any and all of such
information and materials.
4. Covenant Not to Compete.
4.1 Employee hereby covenants and agrees with the Company that during the
term hereof and for a period expiring 12 months after the termination or
expiration of this Agreement, Employee will not directly or indirectly (i)
operate, develop or own any interest (other than the ownership of less than 5%
of the equity securities of a publicly traded company other than the Company or
any entity controlling the Company) in any business which has significant
(viewed in relation to the business of the Company) activities relating to the
ownership, management or operation of, or consultation regarding a casual
dining restaurant of which steak sales constitute 35% or more of total
restaurant sales (a "Restaurant"); (ii) compete with the Company or its
subsidiaries and affiliates in the operation or development of any Restaurant
within the 48 contiguous states of the United States of America; (iii) be
employed by or consult with any business which owns, manages or operates a
Restaurant; (iv) interfere with, solicit, disrupt or attempt to disrupt any
past, present or prospective relationship, contractual or otherwise, between
the Company, or its subsidiaries or affiliates, and any customer, client,
supplier or employee of the Company, or its subsidiaries or affiliates; or (v)
solicit any present or known prospective management employee (including all
corporate officers and managers, all area or divisional directors and all
restaurant general managers) of the Company, or its subsidiaries or affiliates,
to leave their employment with the Company or its subsidiaries or affiliates,
or hire any management employee who was employed by the Company within six
months prior to the date of such hiring to work in any capacity; provided,
however, that this Section 4.1 shall not apply if Employee's employment
hereunder is terminated without cause prior to the expiration of the Agreement.
4.2 If a judicial determination is made that any of the provisions of this
Section 4 constitutes an unreasonable or otherwise unenforceable restriction
against Employee, the provisions of this Section 4 shall be rendered void only
to the extent that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, the parties hereto
hereby agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the territory or prohibited business activity
from the coverage of this Section 4 and to apply the provisions of this Section
4 to the remaining portion
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of the territory or the remaining business activities not so severed by such
judicial authority. Moreover, notwithstanding the fact that any provisions of
this Section 4 are determined not to be specifically enforceable, the Company
shall nevertheless be entitled to recover monetary damages as a result of the
breach of such provision by Employee. The time period during which the
prohibitions set forth in this Section 4 shall apply shall be tolled and
suspended as to Employee for a period equal to the aggregate quantity of time
during which Employee violates such prohibitions in any respect.
5. Specific Enforcement. Employee specifically acknowledges and agrees
that the restrictions set forth in Sections 3 and 4 hereof are reasonable and
necessary to protect the legitimate interests of the Company and that the
Company would not have entered into this Agreement in the absence of such
restrictions. Employee further acknowledges and agrees that any violation of
the provisions of Sections 3 or 4 hereof will result in irreparable injury to
the Company, that the remedy at law for any violation or threatened violation
of such Sections will be inadequate and that in the event of any such breach,
the Company, in addition to any other remedies or damages available to it at
law or in equity, shall be entitled to temporary injunctive relief before trial
from any court of competent jurisdiction as a matter of course and to permanent
injunctive relief without the necessity of proving actual damages.
6. Term. This Agreement shall continue for an initial period of three (3)
years from the date hereof, unless sooner terminated by either party in the
manner set forth herein. The date upon which this Agreement and Employee's
employment hereunder shall terminate, whether pursuant to the terms of this
Section or pursuant to any other provision of this Agreement shall hereafter be
referred to as the "Termination Date."
7. Termination Upon Cessation of Company's Operations or Death of the
Employee. In the event the Company ceases its operations (other than pursuant
to a Change in Control (as defined in Section 11.1)) or the Employee dies
during the term of this Agreement, this Agreement shall immediately terminate
and neither the Employee nor the Company shall have any further obligations
hereunder, except that (a) the Company shall continue to be obligated under
Section 2(a) hereof for any unpaid salary, bonus, unreimbursed expenses or
payments pursuant to Section 10 hereof owed to Employee or his estate that have
accrued but not been paid as of the Termination Date and (b) in the event of
death of the Employee during the term of this Agreement, the Company shall pay
to Employee's estate an amount equal to six months salary and all unvested
stock options shall become fully vested and immediately exercisable for a
period of nine months from the date of the death of Employee.
8. Termination by Employee. Employee may at any time terminate his
employment by giving the Company 90 days prior written notice of his intent to
terminate the Agreement. At the Termination Date, the Company shall have no
further obligation to Employee and Employee shall have no further rights or
obligations hereunder, except as set forth in Sections 3 and 4 above, and
except for the Company's obligation under Section 2(a) hereof for unpaid
salary, bonus or unreimbursed expenses that have accrued but have not been paid
as of the Termination Date.
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9. Termination for Cause. The Company shall have the right at any time to
terminate Employee's employment immediately for cause, which shall include any
of the following reasons:
(a) If Employee shall violate the provisions of Sections 3 or
4 of this Agreement, or shall fail to comply with any other
material term or condition of this Agreement or shall engage in any
material misconduct, neglect of duties or failure to act which
materially and adversely affects the business or affairs of the
Company; or
(b) If Employee shall commit (i) a felony or (ii) an act of
dishonesty, willful mismanagement, fraud or embezzlement against
the Company.
Employee's obligations under Sections 3 and 4 hereof shall survive the
termination of the Agreement pursuant to this Section 9. In the event
Employee's employment hereunder is terminated in accordance with this Section,
the Company shall have no further obligation to make any payments to Employee
hereunder except for unpaid salary, bonus or unreimbursed expenses that have
accrued but have not been paid as of the Termination Date.
10. Termination Without Cause. In the event that Company breaches this
Agreement or Employee is terminated without cause during the term hereof (which
shall not include a termination pursuant to Sections 7, 8, 9, 11 or 12), the
Company shall (a) pay Employee all bonuses and unreimbursed expenses owed to
Employee that have accrued but have not been paid as of the Termination Date;
(b) continue to pay to Employee, as severance compensation, his salary set
forth in Section 2(a) hereof for the greater of 12 months or the remaining term
of this Agreement; (c) continue to provide the insurance and other benefits
provided for in Section 2(a) hereof for the greater of 12 months or the
remaining term of this Agreement; and (d) pay Employee an amount which equals
the average monthly bonus earned by Employee in the two years immediately
preceding the Termination Date (as if such bonus was earned and paid on a
monthly basis) for the number of months for which severance compensation will
be paid pursuant to clause (b) above. In addition, in such event Employee's
unvested stock options shall become fully vested and immediately exercisable
for a period of 90 days from the Termination Date. If Employee is terminated
without cause, the provisions of Section 4 will be void and of no effect.
11. Termination Upon a Change in Control.
11.1 For purposes of this Agreement, a "Change in Control" shall mean (i)
the time that the Company first determines that any person and all other
persons who constitute a group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), have
acquired direct or indirect beneficial ownership (within the meaning of Section
13(d)(3) under the Exchange Act) of twenty percent (20%) or more of the
Company's outstanding securities, unless a majority of the Continuing
Directors, as hereinafter defined, approves the acquisition not later than ten
(10) business days after the
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Company makes that determination or (ii) the first day on which a majority of
the members of the Company's Board of Directors are not Continuing Directors.
11.2 For purposes of this Agreement, "Continuing Directors" shall mean, as
of any date of determination, any member of the Board of Directors of the
Company who (i) was a member of the Board of Directors on August 1, 1996, (ii)
has been a member of the Board of Directors for the two years immediately
preceding such date of determination or (iii) was nominated for election or
elected to the Board of Directors with the affirmative vote of a majority of
Continuing Directors who were members of the Board at the time of such
nomination or election.
11.3 In the event of a termination upon a Change in Control, Employee
shall immediately be paid all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than plan benefits which will be
paid in accordance with the applicable plan), any benefits under any plans of
the Company in which Employee is a participant to the full extent of Employee's
rights under such plans (including accelerated vesting of any awards granted to
Employee under the Company's 1995 Incentive Stock Plan), accrued vacation pay
and any appropriate business expenses incurred by Employee in connection with
his duties hereunder, all to the Termination Date,
and all severance compensation provided in Section 11.4, but no other
compensation or reimbursement of any kind.
11.4 In addition, Employee shall be paid as severance compensation his
base salary in monthly installments (at the rate payable at the time of such
termination) for the greater of 12 months or the remaining term of this
Agreement and any extensions hereof; provided, however, that if Employee is
employed by a new employer during such period, the severance compensation
payable to Employee during such period will be reduced by the amount of
compensation that Employee is receiving from the new employer. Employee is
under no obligation to mitigate the amount owed Employee pursuant to this
Section 11.4 by seeking other employment or otherwise. Notwithstanding
anything in this Section 11.4 to the contrary, Employee may in Employee's sole
discretion, by delivery of a notice to the Company within thirty (30) days
following a termination upon a Change in Control, elect to receive from the
Company a lump sum severance payment by bank cashier's check equal to the
present value of the flow of cash payments that would otherwise be paid to
Employee pursuant to this Section 11.4. Such present value shall be determined
as of the date of delivery of the notice of election by Employee and shall be
based on a discount rate equal to the interest rate on 90-day U.S. Treasury
bills, as reported in the Wall Street Journal (or similar publication), on the
date of delivery of the election notice. If Employee elects to receive a lump
sum severance payment, the Company shall make such payment to Employee within
ten (10) days following the date on which Employee notifies the Company of
Employee's election. In addition to the severance payment payable under this
Section 11.4, Employee shall be paid an amount which equals the average monthly
bonus earned by Employee in the two years immediately preceding the Termination
Date (as if such bonus was earned and paid on a monthly basis) for the number
of months for which severance compensation will be paid pursuant to the first
sentence of this Section 11.4. Employee shall also be entitled to an
accelerated vesting of any awards granted
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to Employee under the Company's 1995 Incentive Stock Plan. Employee shall
continue to accrue retirement benefits and shall continue to enjoy any benefits
under any plans of the Company in which Employee is a participant to the full
extent of Employee's rights under such plans, including any perquisites
provided under this Agreement, through the remaining term of this Agreement;
provided, however, that the benefits under any such plans of the Company in
which Employee is a participant, including any such perquisites, shall cease
upon re-employment by a new employer.
11.5 Notwithstanding anything else in this Agreement and solely in the
event of a termination upon a Change in Control, the amount of severance
compensation paid to Employee under this Section 11, but exclusive of any
payments to Employee in respect of any stock options then held by Employee (or
any compensation deemed to be received by Employee in connection with the
exercise of any stock options at any time), shall not include any amount the
Company is prohibited from deducting for federal income tax purposes by virtue
of Section 280G of the Internal Revenue Code or any successor provision.
12. Disability of Employee. If, on account of physical or mental
disability, Employee shall fail or be unable to perform his assigned duties in
any material respect for a period of 60 consecutive days, the Company shall pay
Employee his full salary as set forth in Section 2(a) hereof and shall provide
the insurance, bonus and other benefits of Section 2(a) for a period of six
months from the date such disability began or for such shorter period as
Employee is unable to perform his duties hereunder; provided, however, that
Employee's salary shall be reduced by any disability income paid to him
pursuant to any disability insurance policy maintained under this Agreement.
In the event Employee is unable to perform his duties hereunder after the
expiration of the six-month period, this Agreement shall automatically
terminate. Employee shall not be required to perform his obligations under
Section 1 hereof during any period of disability.
13. Assignment.
(a) The rights and benefits of Employee under this Agreement,
other than accrued and unpaid amounts due under Section 2(a)
hereof, are personal to him and shall not be assignable. Discharge
of Employee's undertakings in Sections 3 and 4 hereof shall be an
obligation of Employee's executors, administrators, or other legal
representatives or heirs.
(b) This Agreement may not be assigned by the Company except
to an affiliate of the Company, provided, however, that if the
Company shall merge or effect a share exchange with or into, or
sell or otherwise transfer substantially all its assets to, another
corporation, the Company shall assign its rights hereunder to that
corporation and cause such corporation to assume the Company's
obligations under this Agreement.
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14. Notices. Any notice or other communications under this Agreement
shall be in writing, signed by the party making the same, and shall be
delivered personally or sent by certified or registered mail, postage prepaid,
addressed as follows:
If to Employee: Xxxxx X. Xxxxx, Xx.
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Company: Xxxxx'x Roadhouse, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Chairman of the Compensation
Committee of the Board of Directors
With a copy to: X. Xxxxx Xxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx
0000 Xxxxxxxxx Xxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or to such other address as may hereafter be designated by either party hereto.
All such notices shall be deemed given on the date personally delivered or
mailed.
15. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Tennessee.
16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any
one or more of the provisions contained in this Agreement shall be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability for any such provisions in every other respect and of the
remaining provisions of this Agreement shall not be in any way impaired.
17. Modification. No waiver of modification of this Agreement or of any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith and no evidence
of any waiver or modification shall be offered or received in evidence of any
proceeding, arbitration or litigation between the parties hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid and the
parties further agree that the provisions of this section may not be waived
except as herein set forth.
18. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter contained herein. There are
no restrictions, promises, covenants or undertakings, other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect
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to such subject matter. This Agreement may not be changed except by a writing
executed by the parties.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement on the day and year first above written.
XXXXX'X ROADHOUSE, INC.
By: _____________________________
Title: Chairman of the Compensation
Committee of the Board of Directors
EMPLOYEE
_________________________________
Xxxxx X. Xxxxx, Xx.
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