[Execution Copy]
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into this
8th day of February, 1999, by and between SIZZLER INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and XXXXXXX X. XXXXXXX ("Executive").
WHEREAS, the Company desires to engage the services of Executive as its
President and Chief Executive Officer on the terms and conditions set forth
herein, and Executive desires to accept such employment with the Company;
NOW, THEREFORE, in consideration of the foregoing premises, the terms and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Employment and Duties. The Company hereby employs Executive as its
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President and Chief Executive Officer to perform such duties and functions as
shall be specified from time to time by the Company's Board of Directors (the
"Board"). During the term of this Agreement, Executive shall not be required
without his consent to undertake responsibilities not consistent with his
position as the Company's President and Chief Executive Officer. Executive
hereby accepts such employment and agrees to perform his duties pursuant to this
Agreement and to observe and comply with all lawful written policies and
practices of the Company as they now exist and as they may be duly and properly
adopted from time to time.
2. Base Salary. For all services to be rendered by Executive to the
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Company, Executive shall be paid a base salary at the rate of three hundred and
fifty thousand dollars ($350,000) per year. Executive's base compensation shall
be reviewed at least annually and may be increased at the discretion of the
Board, but during the term of this Agreement it may not be decreased below the
then-effective base salary. Executive's salary shall be paid on a regular
periodic basis in accordance with the normal payment pattern for executive
officers of the Company. The base salary payable under this Section 2 shall be
in addition to, and exclusive of, any payments to Executive from time to time
under bonus, incentive compensation or similar plans now in effect or which
hereafter may be adopted.
3. Performance Bonus. With respect to each full fiscal year of the
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Company during which Executive is employed by the Company pursuant to this
Agreement (each, a "Bonus Year"), Executive shall be entitlesd to earn a
performance bonus in accordance with the Company's standard bonus plan, a copy
of the current version of which is attached hereto as Exhibit A. The
calculation and payment to Executive of any performance bonus earned pursuant to
this Section 3 shall be made as soon as practicable in the fiscal year of the
Company immediately succeeding each Bonus Year following preparation of the
Company's annual financial statements for each such Bonus Year.
4. Stock Options. Executive shall participate in the Company's Amended
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and Restated 1997 Stock Option Plan (or such other stock option plan as may
hereafter be adopted to
provide for the grant of stock options to executive officers of the Company)
pursuant to which Executive is receiving a grant of options on the date hereof
to purchase 1,000,000 shares of the Company's Common Stock (the "Options"). The
exercise price payable by Executive to the Company upon exercise of the Options
shall be the closing price for shares of the Company's Common Stock on The New
York Stock Exchange on the business day prior to the grant of the Options on the
date of this Agreement. The said Options shall vest and become exercisable
periodically, beginning one year from the date of this Agreement with respect to
200,000 shares and an additional 200,000 shares on each annual anniversary date
thereafter. The form of stock option agreement between the Company and Executive
is attached hereto as Exhibit B.
5. Other Benefits.
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(a) Executive shall be entitled to such fringe benefits and perquisites
as are generally made available to executive officers of the Company and such
other fringe benefits as may be approved by the Board in the future for
executive officers of the Company.
(b) The Company shall furnish Executive with a motor vehicle of his
choice to use for business purposes in accordance with the Company's policies in
effect from time to time.
(c) Executive shall be entitled to a paid vacation each year of at least
four weeks subject to the present vacation policy of the Company with respect to
senior executives.
(d) The Company agrees to include Executive's name among nominees for
election to the Board, and will use its best efforts to ensure the election of
Executive to the Board throughout the term of this Agreement.
(e) The Company will provide Executive with, and pay the premiums on, a
policy of term life insurance providing a death benefit to Executive of $1
million (provided, however, that Executive is insurable at no more than 200% of
standard premium rates for his age category).
6. Reimbursement of Expenses. The Company shall pay or reimburse Executive
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for all reasonable business expenses incurred by Executive in connection with
the performance of his duties hereunder, provided that Executive furnishes to
the Company receipts and other appropriate documentation reasonably acceptable
to the Company evidencing such expenditures.
7. Performance of Duties. In consideration of the payments to be made to
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him hereunder, Executive agrees to devote his entire business time and attention
to the performance of his duties hereunder, to serve the Company diligently to
the best of his abilities and not to compete with the Company in any manner
whatsoever. Without limiting the generality of the foregoing, Executive shall
not, during the term of his employment by the Company, directly or indirectly
(whether for compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder or in any other
capacity, own, manage, operate, join, control or participate in the ownership,
management, operation or control of or furnish any capital to or be connected in
any manner with or provide any services as a consultant for any
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business which competes directly or indirectly with the restaurant business of
the Company as it may be conducted from time to time; provided, however, that
notwithstanding the foregoing, nothing contained in this Section 7 shall be
deemed to preclude Executive from owning not more than one percent (1%) of the
publicly-traded capital stock of an entity which is engaged in the restaurant
business. Executive may continue any civic, educational or charitable activities
in which he is now engaged and may serve on boards of directors of other
companies, if consistent with this Section 7 or if otherwise approved by the
Board.
8. Term and Termination
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(a) The initial term of Executive's employment with the Company
shall commence on the date hereof and shall continue until February 7, 2004 or
until (i) the initial term of this Agreement is extended by mutual written
agreement of the parties or (ii) termination otherwise occurs as contemplated by
this Section 8.
(b) In the event of Executive's death or in the event of
Executive's total disability for any consecutive four (4) month period during
the term of this Agreement, this Agreement shall terminate, and in such event
the sole right hereunder of Executive, Executive's surviving spouse or
Executive's legal representative, as the case may be, shall be to: (i) receive,
as the case may be, the base salary due Executive through the last day of the
month in which his death shall have occurred or through the last day of the four
month period of Executive's disability; (ii) have any and all previously accrued
bonuses or vested options vest in Executive or in his estate immediately, plus,
in the event of his disability, 50,000 Options which were otherwise unvested
shall vest and become exercisable with respect to each fiscal quarter Executive
was employed during the year in which he became disabled; and (iii) in the event
of termination by reason of disability, have the Company continue to maintain in
effect at its expense COBRA medical coverage for eighteen (18) months following
the date of disability termination.
(c) The Company may terminate this Agreement For Cause (as
defined herein) upon thirty (30) days prior to written notice to Executive. For
the purposes of this Agreement, the term "For Cause" shall mean: (i) Executive's
breach of his covenants contained in this Agreement; (ii) Executive's entry of a
plea of guilty or nolo contendere in a court of competent jurisdiction for any
crime involving moral turpitude or any felony punishable by imprisonment of his
conviction of any such offense; (iii) Executive's commission of any act of fraud
in connection with, or related to, his duties hereunder; or (iv) Executive's
willful misconduct, dishonesty or gross negligence in performance of his duties
as determined in good faith by the Company's Board. If, however, a termination
is made pursuant to either subsection (i) or (iv) of this Section 8(c),
Executive shall be entitled to a period of one month to correct and cure the
grounds for the termination to the reasonable satisfaction of the Company's
correct and cure the grounds for the termination to the reasonable satisfaction
of the Company's Board. Upon termination of Executive For Cause, this Agreement
shall immediately terminate, and Executive shall not be entitled to any further
rights or payments hereunder. Without limiting the generality of the foregoing,
Executive shall have no right on or after the date of such termination to any of
the benefits set forth in Section 5 hereof (other than payment for accrued
vacation, any payment of base salary pursuant to Section 2 (other than payment
for services
rendered prior to the date of such termination), any payment of a performance
bonus pursuant to Section 3 for the Bonus Year in which such termination occurs,
or any other benefit or payment of any kind whatsoever.
(d) The Company shall be entitled to terminate Executive's
employment without cause at any time upon thirty (30) days prior written notice,
provided, however, that (i) if the termination occurs prior to February 1, 2001,
the Company shall continue to make, for a period of two years from the date of
termination, base salary payments to Executive plus monthly payments of
one-twelfth of the average of the annual performance bonuses Executive actually
received from the Company during the last two fiscal years prior to his
termination; (ii) if the termination occurs on or after February 1, 2001, the
Company shall continue to make, for a period of one year from the date of
termination, base salary payments to Executive plus monthly payments of
one-twelfth of the average of the annual performance bonuses Executive actually
received from the Company during the last two fiscal years prior to his
termination; (iii) Executive shall be entitled to receive all appropriate COBRA
insurance benefits at the expense of the Company during an additional eighteen
(18) month period; (iv) in addition to Executive's right to exercise his vested
Options, he shall also be entitled (x) to exercise an additional 50,000 Options
for each fiscal quarter he remained employed by the Company in the year of his
termination under this Section 8(d) and (y) to receive a prorated portion of the
annual performance bonus which had accrued for his benefit through the end of
the last fiscal quarter he was employed; and (v) Executive shall not be required
or obligated to obtain other employment to mitigate the payments due to him
hereunder. It is expressly understood and agreed that the continuation of
payments of base salary to Executive as contemplated by this Section 8(d) shall
not constitute Executive to be considered to be an ongoing employee of the
Company.
(e) Executive shall be entitled to terminate this Agreement upon
thirty (30) days prior written notice to the Company if Just Grounds (as defined
herein) exist therefor. For the purposes of this Agreement, the term "Just
Grounds" shall mean: (i) a material breach by the Company of its covenants
contained in this Agreement; or (ii) a material reduction or expansion in the
scope of authority and duties and responsibilities assigned to Executive by the
Board which is inconsistent with Executive's serving in the capacity as the
Chief Executive Officer of the Company; or (iii) relocation of the Company's
principal executive offices to a location more than fifty (50) miles from its
present location shown in Section 12(f) below; or (iv) a Change in Control (as
defined herein) in the ownership of the Company. For the purposes of this
Agreement, a "Change in Control" shall be deemed to have occurred if any
"person" (as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly of securities of the
Company representing more than 50.1% of the voting power of the Company's then
outstanding securities as a result of purchases or acquisition of shares of the
Company's Common Stock which are not expressly approved by the Board. For
purposes of this Section 8(e), the Board expressly approving the 50.1% voting
power ownership must consist of individuals who for the previous consecutive
twelve (12) month period, constituted at least a majority of the Board. In the
event that Executive seeks to terminate this Agreement pursuant to either
subsection (i) or (ii) of this Section 8(e), the Company shall be entitled to a
period of one month to correct and cure the grounds for termination to the
reasonable satisfaction of Executive.
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Upon termination of Executive's employment pursuant to subsections (i),
(ii) or (iii) of this Section 8(e), Executive shall receive the compensation and
benefits which would be provided to him if the termination occurred under
Section 8(d) above. Upon termination of Executive's employment without cause or
his resignation upon Just Grounds at any time during the term of this Agreement
after a Change of Control has occurred of the type contemplated by subsection
(iv) of this Section 8(e), then (x) Executive shall receive a lump sum severance
payment equal to twice (A) the annual base salary then being paid to Executive
as contemplated by Section 2 hereof plus (B) the average performance bonus
earned by Executive during the Company's latest two fiscal years and (y) all of
the Options granted to Executive pursuant to Section 4 above shall be
accelerated and vested so that Executive shall be immediately entitled to
exercise all Options granted to him thereunder.
9. Confidentiality.
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(a) The Company and Executive recognize that during the course of
Executive's employment with the Company he will accumulate certain crucial
proprietary and confidential information and trade secrets used in the Company's
business and will become aware of certain crucial confidential and proprietary
information and trade secrets about the business, operations and prospects of
the Company, including, without limitation, confidential and proprietary
information regarding suppliers and employees of the Company, which constitute
valuable business assets providing the Company the opportunity to obtain an
advantage over competitors who do not know or use such information or have
access to it without the investment of considerable resources. Executive hereby
acknowledges and agrees that such information (the "Proprietary Information") is
confidential and proprietary and a trade secret of the Company.
(b) Executive agrees that he shall not, at any time subsequent to the
execution of this Agreement, whether during or after the term hereof, disclose,
divulge or make known, directly or indirectly, to any person, or otherwise use
or exploit, any Proprietary Information obtained by Executive at any time prior
to or subsequent to the execution of this Agreement, except to the extent
required by his performance of duties hereunder for the Company. Executive
agrees to disclose to the Company the identity and nature of any contacts with
any person or entity soliciting from Executive disclosure of any Proprietary
Information or soliciting Executive's involvement in any business venture
competitive with the Company. Executive shall not conceal from or fail to
disclose to the Company, or divert or exploit for his own personal profit or
that of others, any business opportunity or other opportunity to acquire an
interest in or a contractual relationship with any person or entity where such
person or entity is in the Company's line of business or where such contractual
relationship involves the acquisition of real estate and which would be
considered a feasible and advantageous opportunity or acquisition for the
Company. Upon termination of this Agreement, Executive will deliver to the
Company all tangible documentation and repositories of supplier and employee
lists, files, records of research, proposals, reports, memoranda, photographs,
business methods and techniques, computer software and programming, budgets and
other financial plans and information and other materials or records or writings
of any other type (including all copies thereof) made, used or obtained by, or
provided to, Executive, containing any Proprietary Information, whether obtained
prior to or subsequent to the execution of this Agreement.
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10. Non-Solicitation of Employees, Suppliers and Others. Executive
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agrees that during the period from the date of termination of this Agreement
until two (2) years after the termination of this Agreement he shall not solicit
any employee or supplier of the Company, and he shall not participate in any
endeavor or activity which would disrupt the Company's good business
relationships with the employees, suppliers and/or other persons engaged in
business or activities relating to the Company, and he shall not make any false,
deceptive or misleading statement or statements to any one or more of such
suppliers or such persons which would be likely to cause such disruption.
11. Arbitration.
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(a) Any controversy, claim or dispute between the parties
directly or indirectly concerning this Agreement or the breach hereof, or the
subject matter hereof (except in instances where only injunctive relief is
sought by the Company), shall be finally settled by arbitration held in Los
Angeles, California. The Company and Executive shall each select an arbitrator
from a panel of seven (7) arbitrators (the "Arbitration Pool") obtained by the
Company from the Federal Mediation and Conciliation Service within thirty (30)
days of receiving written notice form either party demanding any such
proceeding. Such two chosen arbitrators shall agree on a third arbitrator from
the Arbitration Pool within fifteen (15) days thereafter. In the event an
agreement has not been reached on the third arbitrator by the end of such
fifteen (15) day period, the third arbitrator shall be chosen by the American
Arbitration Association. The arbitration shall be held and a final decision
reached within thirty (30) days thereafter. The decision of a majority of the
three chosen arbitrators shall be final and conclusive on the parties, and there
shall be no appeal therefrom. A decision of the arbitrators may be enforced by
the prevailing party in a court of competent jurisdiction. All other issues in
connection with such arbitration shall be in accordance with the Rules of the
American Arbitration Association.
(b) The parties hereby agree that an action to compel
arbitration pursuant to this Agreement may be brought in any appropriate court
and in connection therewith the laws of the State of California shall control.
Application may also be made to such court for confirmation of any decision or
award of the arbitrators but only if necessary to effectuate such decision or
award. The parties hereto hereby consent to the jurisdiction of the arbitrators
and of such court and waive any objection to the jurisdiction of such
arbitrators or court.
12. Miscellaneous.
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(a) Executive represents and warrants to the Company that (i)
his is not now under any obligation of a contractual or other nature to any
person, firm or corporation which is inconsistent or in conflict with this
Agreement, or which would prevent, limit or impair in any way the performance by
him of his obligations hereunder and (ii) this Agreement constitutes the valid
and legally binding obligation of Executive enforceable in accordance with its
terms. The Company represents and warrants to Executive that the execution,
delivery and performance by the Company of this Agreement has been duly
authorized by the Board and constitutes a valid and legally binding obligation
of the Company enforceable in accordance with its terms.
(b) In the event that the Company sells or issues an aggregate of
more than 300,000 shares of its Common Stock in any consecutive twelve (12)
month period for a price per share which is either (i) less than the prevailing
per share closing market price on the date of issuance or (ii) less than the
exercise price of Executive's unexercised Options, then the exercise price
payable by Executive with respect to his unexercised Options shall be
appropriately adjusted so as to provide Executive with anti-dilution protection.
Specifically excepted from the provisions of this Section 12(b), however, shall
be sales of Common Stock of the Company upon exercise of stock options duly
granted under stock option plans of the Company.
(c) In the event that any amount or benefit that may be paid or
otherwise provided to Executive by the Company (collectively, "Covered
Payments"), is or may become subject to the tax imposed under Code Section 4999
("Excise Tax"), the Company will pay to Executive a "Reimbursement Amount,"
equal to the total of: (A) any Excise Tax on the Covered Payments, plus (B) any
Federal, state, and local income taxes, employment and excise taxes (including
the Excise Tax) on the Reimbursement Amount (but without reduction for any
Federal, state, or local income or employment taxes on such Covered Payments),
plus (C) the product of any deductions disallowed for Federal, state or local
income tax purposes because of the inclusion of the Reimbursement Amount in
Executive's adjusted gross income multiplied by the highest applicable marginal
rate of Federal, state, and local income taxation, respectively, for the
calendar year in which the Reimbursement Amount is to be paid. Notwithstanding
the foregoing, if the after-tax value of the Covered Payments Executive would
have netted after all taxes (federal, state and local income, employment and
excise taxes) had the present value of his total Covered Payments equalled 2.99
times his Base Amount (as defined under Code Section 280G(b)(2)) is equal to at
least 85 percent of the amount Executive would net after all taxes (federal,
state and local income, employment and excise taxes) had he received all Covered
Payments and the Reimbursement Amount, then no Reimbursement shall be paid and
the present value of his total Covered Payments shall be limited to 2.99 times
his Base Amount. For purposes of this Section 12(c), Executive shall be deemed
to pay (i) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Reimbursement Amount
is to be paid and (ii) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which such
Reimbursement Amount is to be paid, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income.)
(d) The waiver by either party of a breach of any provision of
this Agreement must be in writing and shall not operate or be construed as a
waiver of any subsequent breach thereof.
(e) This Agreement constitutes the entire Agreement of Executive
and the Company and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations between the
parties with respect to the subject matter hereof, and it may only be amended in
a writing duly signed by both parties.
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(f) Any and all notices referred to herein shall be
sufficiently furnished if in writing, and sent by registered or certified mail,
postage prepaid, or by facsimile transmission (but only if confirmation of
receipt is subsequently received by the sender either orally or in writing), or
by overnight courier (if such overnight courier guarantees next day delivery and
such notice is sent for delivery on a day on which such courier guarantees such
overnight delivery), to the respective parties at the following addresses or
such other address as either party may from time to time designate in writing
set forth in this Section 12(f):
The Company:
Sizzler International, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
Facsimile: (000) 000-0000
Executive: Xxxxxxx X. Xxxxxxx
00000 Xxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
(g) If any portion of this Agreement shall be invalid or
unenforceable for any reason, there shall be deemed to be made such minor
changes (and only such minor changes) in such provisions or portion as are
necessary to make it valid and enforceable. The invalidity or unenforceability
of any provision or portion of this Agreement shall not affect the validity or
enforceability of any other provisions or portions of this Agreement. If any
such unenforceable or invalid provision or provisions shall be rendered
enforceable and valid by changes in application law, then such provision or
provisions shall be deemed to read as they presently do in this Agreement
without change.
(h) The rights and obligations of the parties hereto shall inure
to and be binding upon the parties hereto and their respective heirs, successors
and assigns.
(i) The waiver by either party of a breach of a provision of
this Agreement shall not operate or be construed as a waiver of a subsequent
breach hereof.
(j) This Agreement is intended to and shall be governed by, and
interpreted under and construed in accordance with, the laws of the State of
California, without reference to any conflict of laws or principles.
(k) If any litigation, arbitration or any other proceeding is
instituted in connection with or related to this Agreement, the non-prevailing
party in such litigation, arbitration or other proceeding shall pay the
expenses, including, without limitation, the attorneys' fees and expenses of
investigation, of the prevailing party; provided, however, that the
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maximum amount for which the non-prevailing party shall be responsible under
this Section 12(k) shall be $100,000.
(1) The Company and Executive expressly agree that the provisions of
Sections 9, 10 and 11 shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE COMPANY: SIZZLER INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: Chairman of Board
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By:
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Its:
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EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
9
EXHIBIT A
SIZZLER INTERNATIONAL, INC.
FY 99 KEY MANAGEMENT INCENTIVE PLAN
Sizzler International Inc. has created the Key Management Incentive Plan to
motive those key management people who have the direct ability to influence
short and long-term results and to reward them for successful attainment of the
Company's objectives, goals, and strategies.
Eligibility
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Employees eligible to participate in the FY 99 Incentive Plan are those
designated on the FY 99 Incentive Plan structure schedules attached. The
percent of salary payable as an incentive award appears in the Bonus Percent
column. The Chief Executive Officer, with the approval of the Compensation
Committee of the Board of Directors, may amend the participant list or
percentage factors to meet special situations which may occur during the year.
Eligible employees terminating prior to the bonus payment will not be eligible
to receive the payment or any portion thereof.
If an eligible employee is employed by the Company and on the payroll at the
end of the fiscal year, but terminates prior to the time the incentive award is
determined and distributed, any incentive award earned and due, will be payable
to the employee as soon as possible.
Performance Factor
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Incentive awards will be earned based on the achievement of target earnings
before interest and taxes (EBIT). FY 99 Target EBIT is $13,323,000.
Payments
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Incentive awards will be paid out, at 25% of target bonus, with attainment of
90% ($11,990,700) of EBIT. Payments increase after 90% attainment of EBIT. Not
more than nine and one-half cents ($.095) of each incremental dollar increase in
target achievement over 100% will be added to the bonus pool. Participants will
share in those increases in the same proportion as they do at 100% target
attainment.
Administration of Plan
----------------------
This Plan is administered by the Administration Department at the direction of
the Chief Executive Officer and with the approval of the Compensation Committee.
SII
1999 Bonus Plan
Bonus Achievements
EBIT % of % of
Attained EBIT Target Target Bonus
--------- ----------- ------------
$11,990.7 90% 25%
$12,123.9 91% 30%
$12,257.2 92% 35%
$12,390.4 93% 40%
$12,523.6 94% 45%
$12,656.9 95% 50%
$12,790.1 96% 60%
$12,923.3 97% 70%
$13,056.5 98% 80%
$13,189.8 99% 90%
--------- ----------- ------------
$13,323.0 100% 100%
========= =========== ============
Plan Note: For all EBIT above the EBIT Budget Target of $13,323, 9.5 cents of
each incremental dollar will be added to the bonus pool, to be shared by the
plan participants in the same proportion as their share of the bonus pool paid
on 100% EBIT attainment.
SII
1999 Bonus Plan
Target Modifier
Bonus Target Participation Earnings Bonus Incremental Indicated
Salary Percent Bonus % Increment Pool @ 9.5% Bonus Bonus Modifier
-------- ------- -------- ------------- --------- ----------- ----------- -------- --------
X. Xxxxxx $167,200 35% $ 58,520 0.265 $500,000 $ 47,500 $ 12,606.35 $ 71,126 1.21542
X. Xxxxxxx $130,000 25% $ 32,500 0.147 $500,000 $ 47,500 $ 7,001.13 $ 39,501 1.21542
X. XxXxxxxx $122,700 15% $ 18,405 0.083 $500,000 $ 47,500 $ 3,964.80 $ 22,370 1.21542
X. Xxxxx $127,500 25% $ 31,875 0.145 $500,000 $ 47,500 $ 6,866.50 $ 38,741 1.21542
X. Xxxxxxxx $102,000 25% $ 25,500 0.116 $500,000 $ 47,500 $ 5,493.20 $ 30,993 1.21542
At Large $ 53,700 0% $ 53,700 0.244 $500,000 $ 47,500 $ 11,568.03 $ 65,268 1.21542
-------- ----------- --------
Total Standard Bonus $220,500 1.000 $500,000 $ 47,500 $ 47,500.00 $268,000
======== ===== ======== ======== =========== ========
SII
1999 Bonus Plan
Bonus Increments
Target % Percent Improvement over Target EBIT
-------- ------------------------------------
100.00% 101.88% 103.75% 105.63% 107.51% 109.38% 111.26% 113.14% 115.01% 116.89%
Target EBIT EBIT Improvement over Target - $250,000 Increments
----------- --------------------------------------------------
$13,323 $13,573 $13,823 $14,073 $14,323 $14,573 $14,823 $15,073 $15,323 $15,573
Target Bonus Bonus Pool - Target + Incremental @ 9.5%
------------ ----------------------------------------
$220,500 $244,250 $268,000 $291,750 $315,500 $339,250 $363,000 $386,750 $410,500 $434,250
Target
Bonus % Modifier to "At Target" Bonus
------- -----------------------------
100.00% 110.77% 121.54% 132.31% 143.08% 153.85% 164.63% 175.40% 186.17% 196.94%
EXHIBIT B
SIZZLER INTERNATIONAL, INC.
Stock Option Agreement
This Stock Option Agreement ("Agreement") is made and entered into this 8th
day of February, 1999, by and between SIZZLER INTERNATIONAL, INC., a Delaware
corporation (the "Company") and XXXXXXX X. XXXXXXX ("Option Holder").
RECITALS
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WHEREAS, the Board of Directors of the Company has adopted and the
stockholders of the Company have approved the Sizzler International, Inc. 1997
Employee Stock Incentive Plan (the "Plan"); and
WHEREAS, the Plan provides among other things for the grant of stock
options to key employees of the Company and its subsidiaries; and
WHEREAS, pursuant to the Plan, the Committee administering the Plan has
determined that it is to the advantage and best interest of the Company and its
stockholders to grant a stock option to Option Holder on the terms and
conditions set forth below as an inducement to join the Company as its President
and Chief Executive Officer and as an incentive to remain in the employ of the
Company during the term of this Agreement;
NOW, THEREFORE, the Company grants to Option Holder a stock option (the
"Option) to purchase one million (1,000,000) shares of the Company's Common
Stock, $.01 par value, at an option exercise price of $2.19 per share (which is
the closing price of shares of the Company's Common Stock on the New York Stock
Exchange on the last business day prior to the date of this Agreement), and
Option Holder hereby confirms acceptance of such Option which is expressly
subject to the following terms and conditions:
1. Term. The specified term of this Option shall be a period of ten (10)
----
years, commencing on the date of this Option.
2. Exercisability. The number of shares of the Company's Common Stock
--------------
which may be purchased under this Option is as follows:
On or after February 8, 2000, Option Holder may purchase up to 200,000
shares at $2.19 per share;
On or after February 8, 2001, Option Holder may purchase up to an
additional 200,000 shares at $2.19 per share;
On or after February 8, 2002, Option Holder may purchase up to an
additional 200,000 shares at $2.19 per share;
On or after February 8, 2003, Option Holder may purchase up to an
additional 200,000 shares at $2.19 per share; and
On or after February 8, 2004, Option Holder may purchase up to an
additional 200,000 shares at $2.19 per share.
All purchases of shares under this Option must be made before February
8, 2009.
3. Method of Exercise. This Option may be exercised only by Option Holder
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or his transferees by will or the laws of descent and distribution, or pursuant
to a Qualified Domestic Relations Order ("QDRO") as defined by the Code or title
I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
This Option may be exercised during its term by written notice thereof signed
and delivered by Option Holder (or permitted transferee) to the Secretary of
the Company at its office in the City of Los Angeles, State of California. Such
notice shall state the number of shares being purchased and shall be accompanied
by the option exercise price for such shares in full in cash or by cashier's
check. To the extent that it would not result in liability under Section 16 of
the Securities Exchange Act of 1934 ("1934 Act") (unless the Option Holder
consents to such liability and consents to disgorge any profits relating thereto
to the Company), the option exercise price may instead be paid, in whole or in
part, in any of the following forms:
(a) By the delivery of Common Shares, duly endorsed or accompanied
by a duly executed stock power, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any pledge,
commitment, lien, claim or other encumbrance, such shares to be valued on the
basis of the fair market value of such shares on the date of exercise, provided
that the Company is not then prohibited from purchasing or acquiring Common
Shares; and/or
(b) At the discretion of the Committee, by reducing the number of
Common Shares to be delivered to Option Holder upon such exercise (such
reduction to be valued on the basis of the aggregate fair market value,
determined on the date of exercise, of the additional Common Shares that would
otherwise have been delivered to Option Holder upon such exercise) provided that
the Company is not then prohibited from purchasing or acquiring Common Shares.
4. Nontransferability. Option Holder may not transfer this Option other
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than by will or by the laws of descent and distribution, or pursuant to a QDRO.
Except as provided herein, this Option shall not be sold, transferred, assigned,
conveyed, gifted, pledged, hypothecated or disposed of in any way, whether by
operation of law or otherwise, and shall not be subject to execution, attachment
or similar process.
5. Option Holder's Employment Agreement. This Option is expressly subject
------------------------------------
to the specific terms and conditions of the Option Holder's Employment Agreement
being executed on the date hereof.
6. Requirements of Law and of Stock Exchanges. The issuance of shares
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upon the exercise of this Option shall be subject to compliance with all of the
applicable requirements of
2
law with respect to the issuance and sale of such shares. In addition, the
Company shall not be required to issue or deliver any certificate or
certificates for such purchase upon exercise of this Option prior to the
admission of such shares to listing on notice of issuance on The New York Stock
Exchange or any other stock exchange on which shares of the Company's Common
Stock are then listed.
By accepting this Option, Option Holder represents and agrees for himself
and his permitted transferees that unless a registration statement under the
Securities Act of 1933 is in effect as to shares purchased upon any exercise of
this Option, any and all shares so purchased shall be acquired for investment
and not for sale or for distribution, and any notice of the exercise of any
portion of this Option delivered to the Company pursuant to paragraph 3 hereof
shall be accompanied by a representation and warranty in writing, signed by the
person entitled to exercise the same, that the shares are being so acquired in
good faith for investment and not for sale or distribution.
7. Notices. Any notice to be given to the Company shall be personally
_______
delivered to or addressed to the Secretary of the Company, at its principal
office, and any notice to be given to Option Holder shall be addressed to him at
the address given beneath his signature hereto, or at such other address as
Option Holder may hereafter designate in writing to the Company. Any notice to
the Company is deemed given when received by the Company. Any notice to Option
Holder is deemed given when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited, postage and registration or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States.
8. Payment of Income Taxes. If the Company is required to withhold an
_______________________
amount on account of any federal, state or local tax (including, without
limitation, any income, FICA, disability insurance, or employment tax) imposed
as a result of the exercise of the Option, Option Holder shall, concurrently
with such withholding, pay such amount to the Company in full in cash; provided,
however, that in the discretion of the Committee, and to the extent that it
would not result in liability under Section 16 of the 1934 Act (unless Option
Holder consents to such liability and consents to disgorge any profits, relating
thereto to the Company), the payment of such amount to the Company may be made,
in whole or in part:
(a) with Common Shares delivered by Option Holder concurrently with such
withholding, duly endorsed or accompanied by a duly executed stock power, which
delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, or other encumbrance
(such shares to be valued on the basis of the fair market value of such shares
on the date of such sale or exercise), provided that the Company is not then
prohibited from purchasing or acquiring Common Shares; and/or
(b) by reducing the number of Common Shares to be delivered to Option
Holder upon exercise of such Option (such reduction to be valued on the basis of
the aggregate fair market value (determined on the date of such exercise) of the
additional Common Shares that would otherwise have been delivered to Option
Holder upon exercise of such option), provided that the Company is not then
prohibited from purchasing or acquiring Common Shares.
9. Stock Option Plan. This Option is subject to all of the terms and
-----------------
conditions of the Company's 1997 Employee Stock Incentive Plan as the same shall
be amended from time to time in accordance with the terms thereof, but no such
amendment shall, without Option Holder's consent, adversely affect Option
Holder's rights under this Option. The interpretation and construction by the
Committee of the Plan, this Agreement, the Option, and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan, shall be final and binding upon Option Holder. All capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Plan.
10. Stockholder Rights. Option Holder shall be entitled to vote, receive
------------------
dividends, and be deemed the holder of Common Stock of the Company purchasable
hereunder only to the extent this Option shall have been duly exercised (in
whole or in part) to purchase such Common Stock in accordance with the
provisions of this Agreement.
11. Governing Law. This Agreement and the Option granted hereunder shall be
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construed and enforced in accordance with the laws of the State of Delaware
(except to the extent prempted by federal law).
IN WITNESS WHEREOF, the Company has granted and issued this Option, at
Culver City, California, on the day and year first above written.
SIZZLER INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
ACCEPTED:
/s/ Xxxxxxx X. Xxxxxxx
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"Option Holder"--Xxxxxxx X. Xxxxxxx
Address: 00000 Xxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
###-##-####
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Social Security Number
4
