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EXHIBIT (c)(4)
Jillian's Entertainment Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
June [ ], 1997
Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter agreement is the Employment Agreement with you
referred to in Section 6.1(e) of the Agreement and Plan of Merger dated as of
June [ ], 1997 (the "Merger Agreement"), by and among Jillian's Entertainment
Holdings, Inc., a Delaware corporation ("Holdings"), Jillian's Entertainment
Acquisition Corporation, a Florida corporation and a wholly owned subsidiary of
Holdings ("Sub") and Jillian's Entertainment Corporation, a Florida corporation
("Jillian's"). As you know, subject to the terms and conditions of the Merger
Agreement, Sub will merge with and into Jillian's (the "Merger"), with
Jillian's to be the surviving entity (Jillian's, in its capacity as the
corporation surviving the Merger, is sometimes hereinafter referred to as the
"Company").
You currently serve as Chief Executive Officer of Jillian's
and this Employment Agreement is being entered into as inducement for Holdings,
Sub and Jillian's to consummate the Merger and the other transactions
contemplated by the Merger Agreement, for other good and valuable consideration
and to provide for your services to the Company following the Merger as
follows:
1. Position; Duties. You shall serve as Chief Executive
Officer of the Company. As such, you shall report to the Board of Directors of
the Company (and committees thereof) and shall have supervision and control
over, and responsibility for, the general management and operations of the
Company. You shall use your best efforts to perform these and such other duties
generally associated with your position as Chief Execu-
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June [ ], 1997
Page 2
tive Officer as are reasonably assigned by the Board of Directors of the
Company. The Company hereby agrees that, for so long as you serve as Chief
Executive Officer of the Company you shall also serve as a member of the Board
of Directors of the Company. You shall in good faith devote substantially all
of your time and efforts to the performance of your duties hereunder and shall
be permitted, from time to time as you determine, to change your residence and
to perform such duties from the city of your place of residence or elsewhere.
2. Term of Employment Agreement. The term of this Employment
Agreement shall begin as of the Effective Time (as defined in Section 1.2 of
the Merger Agreement) and end as of the close of business on the date which is
four years from the Effective Time, subject to earlier termination pursuant to
Paragraphs 4(a), (b), (c), (d) or (g).
3. Compensation and Benefits.
(a) Base Salary. Your base salary shall
be at the annual rate of $200,000, payable in accordance with the Company's
normal pay practices. The Company acknowledges that as of May 31, 1997 you had
accrued salary in the amount of $333,333.00 and that you will accrue salary at
the rate of $16,667.00 per month until the Effective Time. The Company
anticipates that such accrued salary will be paid to you when reasonably
practicable given the financial condition of the Company as determined by the
Board of Directors of the Company.
(b) Bonus; Options. In addition to your
base salary, you shall be entitled to receive such bonus as the Board of
Directors of the Company may, in its sole discretion, award you. You will also
receive such options to purchase shares of common stock, par value $.001 per
share, of Holdings as are set forth in the Purchase Agreement dated as of June
[ ], 1997, by and among Holdings, X.X. Childs Equity Partners, L.P. and the
other signatories thereto, upon the terms and subject to the conditions set
forth therein.
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June [ ], 1997
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(c) Other. You shall be entitled to
reimbursement for all reasonable expenses incurred in the performance of your
duties hereunder in accordance with the policies of the Company with respect to
expenses of its senior executives. You shall be entitled to participate in and
receive benefits under the employee benefit plans and arrangements made
available to the Company's senior executives. You shall be entitled to four
weeks of vacation per year at full compensation, to be taken at such times and
intervals as you shall determine, consistent with your duties as Chief
Executive Officer of the Company.
4. Termination.
(a) Death. This Employment Agreement
shall terminate upon your death. Upon such termination, the Company shall
continue to pay to your estate (or as you or your estate shall direct) your
base salary for six months following the Date of Termination (as defined in
Paragraph 4(e)).
(b) Disability. This Employment Agree-
ment may be terminated by the Company by written notice to you if you are
unable to fully perform your duties hereunder for a period of 90 days during
any period of 12 consecutive months by reason of a medically determinable
illness or injury (a "Disability"). Upon such termination, the Company shall
continue to pay you your base salary for six months following the Date of
Termination.
(c) Cause. This Employment Agreement may
be terminated by the Company by written notice to you for Cause (as defined in
this Paragraph 4(c)). The Company shall have Cause to terminate this Employment
Agreement for one or more of the following reasons: (i) disregard of lawful
instructions of the Board of Directors of the Company relating to the business
or affairs of the Company (the Company having given written notice thereof and
the employee having failed to comply, as promptly as is reasonably practicable,
with such instructions upon receipt of such notice), (ii) dishonesty or willful
misconduct injurious to the Company, whether monetarily or
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Page 4
otherwise, of a material nature, (iii) conviction of a felony or any crime
involving moral turpitude, (iv) habitual drunkenness or drug abuse or (v)
excessive absenteeism not related to your Disability. Upon such termination,
the Company shall continue to pay you your base salary through the Date of
Termination.
(d) Without Cause. This Employment
Agreement may be terminated by the Company by written notice to you without
Cause. Upon such termination, the Company shall continue to pay you your base
salary through the date which is four years from the Effective Time.
(e) Date and Effect of Termination. The
date of termination of this Employment Agreement shall be, (i) in the case of
Paragraph 4(a), the date of your death, (ii) in the case of Paragraphs 4(b),
(c) or (d), the date specified in the Company's notice to you of such
termination or (iii) in the case of Paragraph 4(g), the date of your notice to
the Company of such termination (in each case, the "Date of Termination"). Upon
any termination of this Employment Agreement pursuant to this Paragraph 4, you
shall not be entitled to any further payments or benefits of any nature
pursuant to this Employment Agreement, or as a result of such termination or
election, except as specifically provided for in this Employment Agreement, in
the Company's 1997 Non-Qualified Stock Option Plan or any Option Agreement to
which you are a party thereunder, or as may be required by law.
(f) Other Employment. Notwithstanding
anything in this Employment Agreement to the contrary, if this Employment
Agreement is terminated by the Company pursuant to Paragraph 4(d) or (g), and
if prior to the date which is four years from the Effective Time you find other
employment, your salary due after termination shall be reduced by the value of
your compensation in your new employment through the date which is four years
from the Effective Time; provided, however, that your salary due after
termination shall not be reduced by compensation that you receive from entities
in which you have an ownership interest as of the date hereof, as set forth on
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June [ ], 1997
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Schedule 1 hereto, in exchange for the performance of duties substantially
similar to those performed by you for such entities as of the date hereof.
(g) Change in Control. Notwithstanding
any provision herein to the contrary, you shall have the right to terminate
this Employment Agreement by written notice received by the Company within 30
days following a Change in Control (as defined below) of the Company or
Holdings. Upon such termination, the Company shall continue to pay you your
base salary through the Date of Termination. In the event that this Employment
Agreement is terminated by the Company without Cause within three months
following a Change in Control of the Company or Holdings, the Company shall
continue to pay you your base salary through the date which is four years from
the Effective Time; provided, however, that if, in such Change in Control, you
are given the opportunity (regardless of whether you exercise such opportunity
in whole, in part or not at all) to sell or dispose of, on the same terms as
afforded other selling equity holders, all of the shares of common stock then
held by you in Holdings, then the Company shall have no obligation to continue
to pay you any salary pursuant to this Paragraph 4(g) or otherwise. For
purposes of this Paragraph 4(g), a "Change in Control" shall be deemed to have
occurred if any person, or any two or more persons acting as a group, and all
affiliates of such person or persons (a "Group"), who prior to such time owned
less than fifty percent (50%) of the then outstanding capital stock of the
Company or Holdings, shall acquire such additional shares of the Company's or
Holdings' capital stock in one or more transactions or series of transactions,
and after such transaction or transactions such Group and its affiliates
beneficially own fifty percent (50%) or more of the Company's or Holdings'
outstanding capital stock.
5. Confidentiality. You agree that during the term of this
Employment Agreement and thereafter you will maintain the confidentiality of
all confidential information of the Company (including, without limitation,
all trade secrets, customer lists, business plans, budgets, forecasts and any
other knowledge, information
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or materials concerning the products, services, research and development,
business concepts, marketing, pricing or financial matters of the Company)
learned by you in connection with the performance of your duties hereunder or
with Jillian's prior hereto, unless (a) any such information becomes generally
available to the public other than as a result of disclosure by you, (b) you
are requested or required (by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any such information, in which case you will promptly
notify the Company of such request or requirement, so that the Company may seek
an appropriate protective order, and cooperate with the Company, at its
expense, in seeking such an order, (c) such information is being disclosed by
you to members of the senior management of Jillian's Billiard Club, Inc.
("Jillian's Boston") in furtherance of the business of Jillian's Boston or (d)
such information consists only of general business knowledge, concepts or
similar information (but not trade secrets, customer lists, business plans and
the like specifically related to the Company) and is being disclosed by you to
members of the senior management of another entertainment facility, restaurant,
bar or nightclub in which you have an ownership interest (provided that you are
not in violation of any of the provisions of Paragraph 6 hereof at the time of
such disclosure and will not be in violation of any of the provisions of
Paragraph 6 hereof as a result of such disclosure). You further agree that you
will use such confidential information only in connection with the performance
of your duties as described herein.
6. Non-competition. During the period from and after the
Effective Time to and including the latest of: (a) the date four years from the
Effective Time; or (b) the date two years after the Date of Termination (or
date of resignation) as a result of your resignation or your termination by the
Company with Cause; or (c) the date one year after the Date of Termination
relating to your termination by the Company without Cause (the applicable
period being referred to herein as the "Prohibition Period"), you will not,
directly or indirectly, own, operate or invest in any billiards club or
entertainment
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facility that primarily features billiards or other indoor games, including an
entertainment facility that includes a restaurant but not a facility that is
primarily a restaurant, bar or nightclub; provided, however, that activities
relating to (i) the business of Jillian's Boston at its current location or
(ii) the business of Jillian's Boston at such other location, within a two mile
radius of its current location, to which Jillian's Boston may move, shall not
constitute a violation of this Paragraph 6; and further provided that any
investment by you in a public company resulting in an ownership interest of
less than one percent shall not itself constitute a violation of this Paragraph
6.
7. Non-solicitation. During the Prohibition Period, you will
not, directly or indirectly, hire, recruit, solicit, entice or in any other
manner persuade or attempt to persuade any employee, independent contractor,
dealer, supplier, client or customer of the Company or any of its subsidiaries
to discontinue his or her position or relationship or violate any agreement
with the Company or any of its subsidiaries as employee, independent
contractor, dealer, supplier, client or customer, respectively, except with the
prior written consent of the Board of Directors of the Company, which consent
shall be given at the sole discretion of the Board.
8. Equitable Relief. You: (a) acknowledge that any breach or
attempted breach of the provisions of any of Paragraphs 5, 6 or 7 will cause
immediate and irreparable harm to the Company and that a remedy at law for any
such breach or attempted breach shall be inadequate; (b) agree that the Company
shall be entitled to an injunction before trial, specific performance and such
other legal or equitable remedies as may be available to it with respect to any
such breach or attempted breach; and (c) agree to waive any requirements for
the securing or posting of any bond in connection with the obtaining of any
such injunctive or equitable relief.
9. Life Insurance. The Company may, at its discretion, and at
any time after the Effective Time, apply for and procure, as owner and for its
own benefit, and at its own expense, insurance on your life, in such
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amount and in such form or forms as the Company may determine. You shall have
no right or interest whatsoever in such policy or policies, but you agree that
you will, at the request of the Company, submit yourself to such medical
examinations, supply such information and execute and deliver such documents as
may be required by the insurance company or companies to which the Company has
applied for such insurance.
10. Successors; Assigns; Amendment; Notice. This Employment
Agreement shall be binding upon and shall inure to the benefit of the Company
and its successors. This Employment Agreement shall be binding upon you and
shall inure to the benefit of your heirs, executors, administrators and legal
representatives, but shall not be assignable by you. This Employment Agreement
may be amended or altered only by the written agreement of the Company and you.
All notices or other communication permitted or required under this Employment
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand, by facsimile transmission or mailed (certified or registered
mail, postage prepaid, return receipt requested) to you or the Company at the
respective addresses on the first page of this Employment Agreement, or such
other address as shall be furnished in writing by you or the Company to the
other.
11. Entire Agreement. This Employment Agreement embodies the
entire agreement and understanding between you and the Company with respect to
the subject matter hereof and supersedes all such prior agreements and
understandings.
12. Severability. If any term, provision, covenant or
restriction of this Employment Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Employment Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
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13. Governing Law. This Employment Agreement shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Massachusetts applicable to contracts under seal made and to be
performed in such Commonwealth without giving effect to the principles of
conflicts of laws thereof.
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If you accept and agree to the foregoing, please signify by
signing and returning a counterpart of this letter, whereupon this letter will
become a binding Employment Agreement between you and the Company as of the
Effective Time.
Very truly yours,
JILLIAN'S ENTERTAINMENT CORPORATION
By:
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief
Operating Officer
Accepted and agreed to:
--------------------------------
Xxxxxx X. Xxxxxx
