MANAGEMENT CONTINUITY AGREEMENT
(as amended)
THIS MANAGEMENT CONTINUITY AGREEMENT (the "Agreement") between Xxxxxx
Restaurants, Inc., a Florida corporation (the "Corporation"), and
(the "Executive"), is hereby entered into as of
, 19 (the "date hereof").
WITNESSETH:
WHEREAS, the Corporation wishes to attract and retain well-qualified
executive and key personnel and to assure both itself and the Executive of
continuity of management in the event of any Change of Control (as defined in
Section 2) of the Corporation;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Operation of Agreement. The "Effective Date" of this Agreement shall be
the date during the Contract Period (as defined in Section 3) on which a Change
of Control occurs.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean an event during the Contract Period required to be reported
in response to Item 1(a) of the Current Report of a Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 0000 (xxx "Xxxxxxxx Xxx"); provided that, without limitation, such a
"Change of Control" shall be deemed to have occurred if: (i) a person, including
a "group" as defined in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner, directly or indirectly, of 20% or more of the combined voting
power of the Corporation's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Corporation; or (ii)
individuals who constitute the Board of Directors
of the Corporation as of the date hereof (the "Incumbent Board") cease for any
reason to constitute at least two-thirds thereof, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Corporation's stockholders, was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board shall be,
for purposes of this clause (ii), considered as though such persons were a
member of the Incumbent Board.
3. Contract Period. The "Contract Period" is the period commencing on the
date hereof and ending on the second anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (the date one year after the date hereof, and
each annual anniversary of such date, is hereinafter referred to as the "Renewal
Date"), the Contract Period shall be automatically extended so as to terminate
two years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Corporation shall give notice that the Contract Period shall not be so
extended subject however that any failure of the Corporation to give such notice
shall not limit or reduce in any manner the rights and benefits of the Executive
contained in this Agreement if a Change of Control has occurred during a
Contract Period and, in such event, notwithstanding that a Contract Period may
have ended, the rights and benefits of the Executive shall continue in full
force and effect until all obligations of the Corporation to the Executive under
this Agreement have been met and satisfied.
4. Certain Definitions.
(a) Cause. The Executive's employment may be terminated for Cause if a
majority of the Board of Directors, after the Executive shall have been afforded
a reasonable opportunity to appear in person before the Board of Directors and
to present such evidence as the Executive deems appropriate, determines that
Cause exists. For purposes of this Agreement, "Cause" means (i) an act or acts
of fraud or misappropriation on the Executive's part which result in or are
intended to result in
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his or her personal enrichment at the expense of the Corporation and which
constitute a criminal offense under State or Federal laws, (ii) conviction of a
felony, or (iii) a physical or mental disability which materially interferes
with the capacity of the Executive in fulfilling his or her responsibilities and
which will qualify the Executive for disability benefits from a
Corporation-sponsored plan.
(b) Good Reason. For purposes of this Agreement, "Good Reason" means
(i) without the express written consent of the Executive (A) the
assignment to the Executive of any duties inconsistent in any substantial
respect with the Executive's position, authority or responsibilities as in
effect during the 90-day period immediately preceding the Effective Date of
this Agreement, or (B) any other substantial adverse change in such
position (including titles), authority, or responsibilities; or
(ii) any failure by the Corporation to furnish the Executive with
compensation and benefits at a level equal to or exceeding those received
by the Executive from the Corporation during the 90-day period preceding
the Effective Date of this Agreement, including a failure by the
Corporation to maintain its policy of paying retirement and supplemental
savings plan benefits which would be payable under the retirement plan(s)
of the Corporation but for the limits imposed by the Employee Retirement
Income Security Act of 1974, as may be amended ("ERISA"), other than an
insubstantial and inadvertent failure remedied by the Corporation promptly
after receipt of notice thereof given by the Executive; or
(iii) the Corporation's requiring the Executive to be based or to
perform services at any office or location other than that at which the
Executive is based at the Effective Date of this Agreement, except for
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travel reasonably required in the performance of the Executive's
responsibilities; or
(iv) any failure by the Corporation to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 10(b); or
(v) any failure by the Corporation to deposit amounts which may become
payable to the Executive to the Trustee as contemplated by Section 8.
For purposes of this Section 4(b), any determination of "Good Reason" made
by the Executive shall be conclusive.
(c) Notice of Termination. Any termination by the Corporation for
Cause or by the Executive for Good Reason or otherwise shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 10(b). For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated (provided, however, that any Notice of Termination given by (i)
the Executive during a 30 day period commencing the first day and ending on
the 31st day after one year from the Effective Date, or (ii) by the
Corporation more than two years after the Effective Date, need not set
forth any such basis for termination) and (iii) if the termination date is
other than the date of receipt of such notice, specifies the termination
date (which date shall be not more than 15 days after the giving of such
notice).
(d) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be.
5. Obligations of the Corporation upon Termination.
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(a) Good Reason and other than for Cause Subject to the limitations of
Section 5(b), if:
(i) within two years after the Effective Date of this Agreement,
the Corporation shall terminate the Executive's employment for any
reason other than for Cause; or
(ii) within two years after the Effective Date of this Agreement,
the Executive shall terminate his employment for Good Reason:
(I) the Corporation shall pay to the Executive in a lump sum
in cash within 20 business days after the Date of Termination the
aggregate of the amounts determined pursuant to the following
clauses (A), (B) and (C) but reduced if required under the
provisions in Clause (D), as follows:
(A) if not theretofore paid, the Executive's Base
Salary through the Date of Termination at the rate in effect
at the time the Notice of Termination was given, plus a
bonus, determined in accordance with the provisions of the
following clause (B)(ii), for that fraction of the fiscal
year completed as of the date the Notice of Termination was
given; and
(B) three times the sum of (i) the Executive's annual
base salary at the rate in effect at the time the Notice of
Termination was given and (ii) an amount equal to the
highest bonus paid to the Executive by the Corporation or
its predecessor in any of the preceding three fiscal years;
and
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(C)during the period of three years following the Date
of Termination (this period of time from the Date of
Termination is hereinafter referred to as the "Unexpired
Period"), the Corporation shall continue to provide all
benefits which the Executive and/or his spouse is or would
have been entitled to receive under all present and
post-retirement medical, dental, vision, disability,
executive life, group life, accidental death and other
programs of the Corporation, including additional benefit
service under the applicable retirement plan of the
Corporation equal to the "Unexpired Period," in each case on
a basis providing the Executive or his spouse with benefits
at least equal to those provided by the Corporation for the
Executive under such plans and programs in effect at any
time during the 90-day period immediately preceding the
Effective Date of this Agreement, subject that (i) if an
Executive is terminated under the provisions of Section 5(a)
or Section 5(b), and at the Date of Termination the
Executive would not qualify for post-retirement benefits
under the plans and programs then in effect during such
90-day period for the reason that the Executive has not
reached his 55th birthday, the Executive shall nevertheless
be entitled to such benefits equal to the benefits such
Executive would have received if the Executive was of the
age of 55 at
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the Date of Termination; and (ii) the Executive and/or his
spouse, as the case may be, shall receive supplemental
periodic payments equal to retirement and savings plan
benefits which would be payable under the applicable
retirement plan of the Corporation but for limits imposed by
ERISA, calculated as if the Executive (a) had been employed
to the end of the Unexpired Period; (b) had retired at the
age he would have attained at the end of the Unexpired
Period; and (c) had earnings to the end of the Unexpired
Period at a rate equal to the rate of Executive's total
compensation for the calendar year prior to the Effective
Date of this Agreement.
(D) In the event that the Executive would otherwise
become entitled to any or all of the specified payments
under clauses (A), (B) or (C) of this Section 5(a)(i) or
under Section 5(b) or to any other payments or benefits to
be received by the Executive in connection with a Change of
Control of the Corporation or the Executive's termination of
employment (pursuant to the terms of any plan, stock option,
restricted stock, stock performance units, or other benefits
or arrangement or agreement with the Corporation, or any
person or entity whose actions result in a Change of Control
of the Corporation, or any person or entity affiliated with
the Corporation which together with the payments or
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benefits under Section 5(a) or Section 5(b) constitute the
"Total Payments" and such Total Payments (or any part
thereof) are "parachute payments" within the meaning of
section 280G(b)(2) of the Code, then all "excess parachute
payments" within the meaning of section 280G(b)(1) of the
Code which are subject to the Excise Tax, and/or any similar
tax that may hereafter be imposed by the federal or any
state or local government (the "Excise Tax"), shall be
reduced by an amount required to eliminate by a margin of
$1,000.00 any liability for the tax under Section 4999 of
the Code or any Excise tax. Such reduction shall first be
applied to the amount determined under Clause B and then
only to payments under Clauses A or C or the payments under
Section 5(b) SUBJECT that such reduction shall not cause (i)
the payment determined under Section 5(a) to be less than
the payment under Section 5(b) and (ii) that the payment
determined under Section 5(b) to be less than an amount
equal to six months "annual base salary" and one-half of the
"bonus" pursuant to Section 5(a)B. If the reduction would
cause the payment to be less than specified in the preceding
clause (i) or (ii), then an additional "gross up" amount
shall be paid to the executive for any liability for an
Excise Tax resulting from meeting the minimum payment called
for under
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clause (i) or (ii). The amounts, reductions and payments
including a "gross up" for an Excise Tax, pursuant to the
preceding shall be determined by the Corporation's
independent public accountants serving prior to the Change
of Control. If such accountants determine one or more
options which will meet the foregoing provisions the 20
business day period specified in paragraph 5(a)(iii)(l)
shall be extended and the Executive shall be fully advised
in writing thereof within 30 calendar days of a Change in
Control and the choice of any such option shall be the sole
prerogative of the Executive. The Executive shall thereupon
advise the Corporation in writing within such 30 days as to
the Option being chosen by the Executive and (i) such
decision shall be binding on the Corporation and (ii) the
payments called for shall be made by the Corporation to the
Executive within five business days.
(b) By the Executive in accordance with the second (i) of subparagraph
(c) of Section 4 (as amended) or by the Corporation more than two years
after the Effective Date. If the Executive in accordance with the second
(i) of subparagraph (c) of Section 4 (as amended) or, the Corporation more
than two years after the Effective Date for any reason other than cause,
shall cause the termination of the Executive's employment, the Executive
shall be entitled to receive the benefits specified under Clauses (A), (B),
and (C) of Section (5)(a) (1) except that the words "three times" in Clause
(B), "three years" and "thirty-six" in Clause (B) shall be substituted by
"one times", "one year" and "twelve" respectively.
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6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive deferred compensation or other plan or program provided by the
Corporation or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any employment, stock option, performance units or
other agreements with the Corporation or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Corporation or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program and shall not in any manner be included in
the determination of benefits calculated under Clauses (A) or (B) of Section
(a)(1).
7. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others or by any amounts
received by Executive from others. In no event shall the Executive be obligated
to seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. Subject to the
provisions of paragraph 8, the Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Corporation or others of the validity or enforceability of, or liability under
any provision of this Agreement or any guarantee of performance thereof, in each
case plus interest, compounded monthly, on the total unpaid amount determined to
be payable under this Agreement, such interest to be
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calculated on the basis of the "Prime Rate" as reported in the WALL STREET
JOURNAL during the period of such nonpayment plus 5%.
8. Trustee. The Corporation will establish a Supplemental Benefits Trust
(the "Trust") with Norwest Bank Minnesota, N.A. as Trustee to hold assets of the
Corporation under certain circumstances as a reserve for the discharge of the
Corporation's obligations under this Agreement and certain plans of deferred
compensation of the Corporation. In the event of a Change of Control as defined
in Section 2 hereof, the Corporation shall be obligated to immediately
contribute such amounts to the Trust as may be necessary to fully fund all
benefits payable under the Agreement. Executives shall have the right to demand
and secure specific performance of this provision. All assets held in the Trust
remain subject only to the claims of the Corporation's general creditors whose
claims against the Corporation are not satisfied because of the Corporation's
bankruptcy or insolvency (as those terms are defined in the Trust agreement).
The Executive does not have any preferred claim on, or beneficial ownership
interest in, any assets of the Trust before the assets are paid to the Executive
and all rights created under the Trust, as under this Agreement, are unsecured
contractual claims of the Executive against the Corporation. Except in the case
of a breach of fiduciary duty by the Trustee, (1) neither the Executive nor the
Executive's legal representatives, heirs or legatees shall have any claim or
right of action against the Trustee for the performance of its duties under the
Trust or the payment of the Corporation's obligations under this Agreement, and
(2) the Corporation shall not be liable for the payment of any legal fees or
expenses incurred by the Executive or his or her legal representatives, heirs or
legatees in pursuing any such action or claim against the Trustee.
In the event the funding of the Trust described in the preceding paragraph
does not occur, upon written demand by the Executive given at any time after a
Change of Control occurs, the Corporation shall deposit in trust with an
institutional trustee (the
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"Trustee") designated by the Executive in such demand amounts which may become
payable to the Executive pursuant to Section 5(a) or Section 5(b) with
irrevocable instructions to pay amounts to the Executive when due in accordance
with the terms of this Agreement. All charges of the Trustee shall be paid by
the Corporation. The Trustee shall be entitled to rely conclusively on the
Executive's written statement as to the fact that payments are due under this
Agreement and the amount of such payments. If the Trustee is not notified that
payments are due under this Agreement within two years and 60 days after receipt
of a deposit hereunder, all amounts deposited with the Trustees and earnings
with respect thereto shall be delivered to the Corporation on demand.
9. Successors. (a) This Agreement is personal to the Executive and without
the prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives, heirs and legatees.
(b) This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors. The Corporation shall require any successor to
all or substantially all of the business and/or assets of the Corporation,
whether directly or indirectly, by purchase, merger, consolidation, acquisition
of stock, or otherwise, by an agreement in form and substance satisfactory to
the Executive, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent as the Corporation would be required to
perform if no such succession had taken place.
10. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified
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otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications
If to the Executive:
------------------------
Xxxxxx Restaurants, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Corporation:
Xxxxxx Restaurants, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Corporation may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding with the Executive
with respect to the subject matter hereof.
(f) The employment of Executive by the Corporation may be terminated by
either the Executive or the Corporation at any time and for any reason. Nothing
contained in the Agreement shall affect such rights to terminate, provided,
however, that nothing in this Section 10(f) shall prevent the Executive from
receiving any
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amounts payable pursuant to Section 5(a) or Section 5(b) of this Agreement in
the event of a termination described in such Section 5(a) or 5(b).
11. Any dispute as to the terms or conditions of this Agreement or any
breach thereof, shall be subject to biding arbitration under the rules and
procedures of the American Arbitration Association. The arbitration shall be
held in Orlando, Florida and shall be decided by three arbitrators competent in
the subject of the dispute. Such proceeding shall be conducted under the rules
of commercial arbitration of the Association.
IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused these presents to be executed in its name on its behalf, and its
corporate seal to be hereunder affixed and attested by its secretary or
assistant secretary, all as of the day and year first above written.
XXXXXX RESTAURANTS, INC.
By
--------------------------------- ----------------------------------
Its
---------------------------------
ATTEST:
------------------------------------
Secretary
---------------------------
(Seal)
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