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EXHIBIT 10(u)
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of
February 15, 2000 between Buffets, Inc., a Minnesota corporation (the
"Company"), and Xxx X. Xxxxxx (the "Executive").
RECITALS
A. The Executive is a key member of the management of the Company and
has devoted substantial skill and effort to the affairs of the Company.
B. It is desirable and in the best interests of the Company and its
shareholders to continue to obtain the benefits of the Executive's services and
attention to the affairs of the Company.
C. It is desirable and in the best interests of the Company and its
shareholders to provide inducement for the Executive to remain in the service of
the Company in the event of any proposed or anticipated change in control of the
Company and to remain in the service of the Company in order to facilitate an
orderly transition in the event of a change in control of the Company.
D. It is desirable and in the best interests of the Company and its
shareholders that the Executive be in a position to make judgments and advise
the Company with respect to proposed changes in control of the Company without
regard to the possibility that the Executive's employment may be terminated
without compensation in the event of certain changes in control of the Company.
E. The Executive desires to be protected in the event of certain
changes in control of the Company.
F. For the reasons set forth above, the Company and the Executive
desire to enter into this Agreement.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual
agreements contained herein, the Company and the Executive agree as follows:
1. Employment. The Executive shall remain in the employ of the
Company for the Term of this Agreement, and during the Term the Executive shall
have such title, duties, responsibilities and authority, and receive such
remuneration and fringe benefits, as the Board of Directors of the Company shall
from time to time provide for the Executive; provided, however, that either the
Executive or the Company may terminate the employment of the
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Executive at any time before the expiration of the Term, with or without Cause,
upon at least 30 days' prior written notice to the other party, subject to the
right of the Executive to receive any payment and other benefits that may be due
under Section 3.
2. Events. No amounts or benefits shall be payable or provided for
pursuant to this Agreement unless an Event shall have occurred during the Term
of this Agreement.
(a) Each of the following shall be deemed an "Event" for purposes
of this Agreement:
(1) Any "person" (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended, or any successor
statute thereto (the "Exchange Act")) acquires or becomes a
"beneficial owner" (as defined in Rule 13d-3 or any successor rule
under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power
of the Company's then-outstanding securities entitled to vote
generally in the election of directors ("Voting Securities") or
30% or more of the then-outstanding shares of common stock of the
Company ("Common Stock"), provided, however, that the following
shall not constitute an Event pursuant to this Section 2(a)(1):
(A) any acquisition or beneficial ownership by the
Company or a subsidiary of the Company;
(B) any acquisition or beneficial ownership by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or one or more of its subsidiaries;
(C) any acquisition or beneficial ownership by any
corporation (including an acquisition in a transaction of the
nature described in Section 2(a)(3)) with respect to which,
immediately following such acquisition, more than 70%,
respectively, of (i) the combined voting power of the
Company's then-outstanding Voting Securities and (ii) the
Common Stock is then beneficially owned, directly or
indirectly, by all or substantially all of the persons who
beneficially owned Voting Securities and Common Stock,
respectively, of the Company immediately before such
acquisition in substantially the same proportions as their
ownership of such Voting Securities and Common Stock, as the
case may be, immediately before such acquisition;
(2) Continuing Directors shall not constitute a majority of
the members of the Board of Directors of the Company. For purposes
of this
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Section 2(a)(2), "Continuing Directors" are the following: (A)
individuals who, on the date hereof, are directors of the Company,
(B) individuals elected as directors of the Company after the date
hereof for whose election proxies shall have been solicited by the
Board of Directors of the Company or (C) individuals elected or
appointed by the Board of Directors of the Company to fill
vacancies on the Board of Directors of the Company caused by death
or resignation (but not by removal) or to fill newly created
directorships, provided that "Continuing Directors" shall not
include individuals whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the threatened election or removal of directors (or other actual
or threatened solicitation of proxies or consents) by or on behalf
of any person or group other than the Board of Directors of the
Company;
(3) Approval by the shareholders of the Company of a
reorganization, merger, statutory share exchange or consolidation
of the Company (other than a reorganization, merger, statutory
share exchange or consolidation with a subsidiary of the Company),
unless immediately following such reorganization, merger,
statutory share exchange or consolidation all or substantially all
of the persons who were the beneficial owners, respectively, of
Voting Securities and Common Stock immediately before such
reorganization, merger, statutory share exchange or consolidation
beneficially own, directly or indirectly, more than 70% of,
respectively, (A) the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors and (B) the then-outstanding shares of
common stock of the corporation resulting from such
reorganization, merger, statutory share exchange or consolidation
in substantially the same proportions as their ownership,
immediately before such reorganization, merger, statutory share
exchange or consolidation, of the Voting Securities and Common
Stock, as the case may be;
(4) (A) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company or (B) the sale
or other disposition of all or substantially all of the assets of
the Company (in one or a series of transactions), other than to a
corporation with respect to which, immediately following such sale
or other disposition, more than 70% of, respectively, (i) the
combined voting power of the then-outstanding voting securities of
such corporation entitled to vote generally in the election of
directors and (ii) the then-outstanding shares of common stock of
such corporation is then beneficially owned, directly or
indirectly, by all or substantially all of the persons who were
the beneficial owners, respectively, of the Voting Securities and
Common Stock immediately before such sale or other disposition in
substantially the same proportions as their ownership, immediately
before such
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sale or other disposition, of the Voting Securities and Common
Stock, as the case may be;
(5) The Company enters into a letter of intent, an agreement
in principle or a definitive agreement relating to an Event
described in Section 2(a)(1), 2(a)(2), 2(a)(3) or 2(a)(4) that
ultimately results in such an Event, or a tender or exchange offer
or proxy contest is commenced that ultimately results in an Event
described in Section 2(a)(1) or 2(a)(2); or
(6) There shall be an involuntary termination or
Constructive Involuntary Termination of employment of the
Executive, and the Executive reasonably demonstrates that such
event (A) was requested by a party (other than the Board of
Directors of the Company) that had previously taken other steps
reasonably calculated to result in an Event described in Section 2
(a)(1), 2(a)(2), 2(a)(3) or 2(a)(4) and that ultimately results in
an Event described in any such Section, or (B) otherwise arose in
connection with or in anticipation of an Event described in any
such Section that ultimately occurs.
Notwithstanding anything stated in this Section 2(a), an Event shall
not be deemed to occur with respect to the Executive if (x) the
acquisition or beneficial ownership of the 30% or greater interest
referred to in Section 2(a)(1) is by the Executive or by a group,
acting in concert, that includes the Executive (provided that if the
acquisition is by a group, the Executive must acquire or own
beneficially 10% or greater of the interest referred to in Section
2(a)(i)) or (y) a majority of the combined voting power of the
then-outstanding voting securities (or voting equity interests) of the
surviving corporation or of any corporation (or other entity) acquiring
all or substantially all of the assets of the Company shall,
immediately after a reorganization, merger, consolidation or
disposition of assets referred to in Section 2(a)(3) or 2(a)(4), be
beneficially owned, directly or indirectly, by the Executive or by a
group, acting in concert, that includes the Executive (provided that if
the acquisition is by a group, the Executive must beneficially own at
least 10% of the surviving corporation or such other corporation).
(b) For purposes of this Agreement, a "subsidiary" of the
Company includes any entity of which securities or other ownership
interests having general voting power to elect a majority of the board
of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company.
3. Payments and Benefits. If an Event occurs during the Term of this
Agreement, then the Executive shall be entitled to receive from the Company or
its successor (which includes any person acquiring all or substantially all of
the assets of the Company) a cash payment and other benefits on the following
basis (unless the Executive's employment by the Company is terminated
voluntarily or involuntarily before the occurrence of the earliest Event
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to occur (the "First Event"), in which case the Executive shall be entitled to
no payment or benefits under this Section 3):
(a) If at the time of, or at any time after, the occurrence of
the First Event and before the end of the Transition Period, the
employment of the Executive with the Company is voluntarily or
involuntarily terminated for any reason (unless such termination is a
voluntary termination by the Executive other than a Constructive
Involuntary Termination or is on account of the death or Disability of
the Executive or is a termination by the Company for Cause), the
Executive (or the Executive's legal representative, as the case may
be), subject to the limitations set forth in Sections 3(e) and 3(g),
(1) shall be entitled to receive from the Company or its
successor, upon such termination of employment with the Company or
its successor, a cash payment in an amount equal to three times
the sum of (A) the Executive's then-current annual base salary and
(B) the greater of (i) the Executive's annualized then-current
year's bonus or (ii) the Executive's annual bonus in the year
prior to the then-current year, such payment to be made to the
Executive by the Company or its successor in a lump sum at the
time of such termination of employment; and
(2) shall be entitled for three years after the termination
of the Executive's employment with the Company to participate in
any health, disability and life insurance plan or program in which
the Executive was entitled to participate immediately before the
First Event as if he were an employee of the Company during such
three-year period; provided however, that if the Executive's
participation in any such health, disability or life insurance
plan or program of the Company is barred, the Company, at its sole
cost and expense, shall arrange to provide the Executive with
benefits substantially similar to those that the Executive would
be entitled to receive under such plan or program as if he were
not barred from participation.
(b) The payments provided for in this Section 3 shall be in
addition to any salary or other remuneration otherwise payable to the
Executive on account of employment by the Company or one or more of its
subsidiaries or its successor (including any amounts received before
such termination of employment for personal services rendered after the
occurrence of the First Event) but shall be reduced by any severance
pay which the Executive receives from the Company, its subsidiaries or
its successor under any other policy or agreement of the Company in the
event of involuntary termination of Executive's employment.
(c) The Company shall also pay to the Executive all legal fees
and expenses incurred by the Executive as a result of such termination,
including all such fees and
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expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement.
(d) If at any time from the date of the First Event until the
end of the Transition Period,
(1) the Executive shall not be given substantially
equivalent or greater title, duties, responsibilities and
authority, in each case as compared with the Executive's status
immediately before the First Event, other than for Cause or on
account of Disability;
(2) the Executive's annual base salary or bonus formula
shall be reduced from the Executive's annual base salary or bonus
formula in effect immediately before the First Event;
(3) the Company shall fail to provide the Executive with
benefits under the Company's pension, profit sharing, retirement,
life insurance, medical, health and accident, disability, bonus
and incentive plans and other employee benefit plans and
arrangements that in the aggregate for all such plans and
arrangements are at least as favorable to the Executive as those
benefits covering the Executive immediately before the First Event
or shall fail to provide the Executive with at least the number of
paid vacation days to which the Executive was entitled immediately
before the First Event;
(4) the Company shall have failed to obtain assumption of
this Agreement by any successor as contemplated by Section 5(b)
hereof;
(5) the Company shall require the Executive to relocate to
any place other than a location within 30 miles of the location at
which the Executive performed his primary duties immediately
before the First Event or, if the Executive performed such duties
at the Company's principal executive offices, the Company shall
relocate its principal executive offices to any location other
than a location within 30 miles of the location of the principal
executive offices immediately before the First Event; or
(6) the Company shall require that the Executive travel on
Company business to a substantially greater extent than required
immediately before the First Event;
then a termination of employment with the Company by the Executive thereafter
shall constitute a "Constructive Involuntary Termination."
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(e) Notwithstanding any provision of this Agreement to the
contrary, except the last sentence of this Section 3(e), if the
lump-sum cash payment due and the other benefits to which the Executive
shall become entitled under Section 3(a), either alone or together with
other payments in the nature of compensation to the Executive that are
contingent on a change in the ownership or effective control of the
Company or in the ownership of a substantial portion of the assets of
the Company or otherwise, would constitute a "parachute payment" as
defined in Section 280G of the Code or any successor provision thereto,
such lump-sum payment and/or such other benefits and payments shall be
reduced (but not below zero) to the largest aggregate amount as will
result in no portion thereof being subject to the excise tax imposed
under Section 4999 of the Code (or any successor provision thereto) or
being non-deductible to the Company for federal income tax purposes
pursuant to Section 280G of the Code (or any successor provision
thereto). The Executive in good faith shall determine the amount of any
reduction to be made pursuant to this Section 3(e) and shall select
from among the foregoing benefits and payments those which shall be
reduced. No modification of, or successor provision to, Section 280G or
Section 4999 after the date of this Agreement shall, however, reduce
the benefits to which the Executive would be entitled under this
Agreement in the absence of this Section 3(e) to a greater extent than
they would have been reduced if Section 280G and Section 4999 had not
been modified or superseded after the date of this Agreement,
notwithstanding anything to the contrary provided in the first sentence
of this Section 3(e).
(f) The Executive shall not be required to mitigate the amount
of any payment or other benefit provided for in this Section 3 by
seeking other employment or otherwise, nor (except as specifically
provided in Section 3(a)(2) or 3(b)) shall the amount of any payment or
other benefit provided for in this Section 3 be reduced by any
compensation earned by the Executive as the result of employment by
another employer after termination, or otherwise.
(g) Notwithstanding any other term of this Agreement, if (1)
an Event has not yet occurred, (2) the Board of Directors of the
Company desires to cause the Company to effect a transaction that will
qualify as a pooling-of-interests transaction (a "Pooling Transaction")
and (3) the independent certified public accountants for the Company
advise the Board of Directors that they will be unable to render an
opinion that such transaction will be treated as a Pooling Transaction
solely because of the payments provided for in this Agreement (or in
similar agreements with other employees of the Company), then the
Executive agrees that upon the happening of any Event in connection
with such Pooling Transaction he shall not be entitled to any payments
under this Agreement as a result of such Event to the extent such
payments would in the opinion of the Company's independent certified
public accountants prevent them from providing the Company with a
favorable opinion with respect to the treatment of the desired
transaction as a Pooling Transaction.
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(h) The obligations of the Company under this Section 3 shall
survive the termination of this Agreement.
4. Definition of Certain Additional Terms.
(a) "Cause" means, and is limited to, (1) willful and gross
neglect of his duties by the Executive or (2) an act or acts committed
by the Executive constituting a felony and substantially detrimental to
the Company or its reputation.
(b) "Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
(c) "Disability" means the Executive's absence from his duties
with the Company on a full-time basis for 180 consecutive business days
as a result of the Executive's incapacity due to physical or mental
illness, unless within 30 days after written notice pursuant to Section
1 is given following such absence the Executive shall have returned to
the full-time performance of his duties.
(d) "Including" means "including without limitation."
(e) Other than in Section 2(a), "person" means an individual,
partnership, corporation, limited liability company, estate, trust or
other entity.
(f) "Transition Period" means the three-year period commencing
on the date of the earliest to occur of an Event described in Section
2(a)(1), 2(a)(2), 2(a)(3) or 2(a)(4) (the "Commencement Date") and
ending on the third anniversary of the Commencement Date.
5. Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the successors, legal representatives and assigns of the
parties hereto; provided, however, that the Executive may not assign,
pledge or otherwise dispose of or transfer any interest in this
Agreement or any payments hereunder, whether directly or indirectly or
in whole or in part, without the written consent of the Company or its
successor.
(b) The Company will require any successor (whether direct or
indirect, by purchase of a majority of the outstanding voting stock of
the Company or all or substantially all of the assets of the Company,
or by merger, statutory share exchange, consolidation or otherwise), by
agreement in form and substance satisfactory to the Executive, to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain
such agreement
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before the effectiveness of any such succession (other than in the case
of a merger, statutory share exchange or consolidation) shall be a
breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms
as the Executive would be entitled hereunder if the Executive
terminated his employment on account of a Constructive Involuntary
Termination, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed
the date of termination. As used in this Agreement, "Company" means the
Company as defined above and any successor to its business and/or
assets as aforesaid that is required to execute and deliver the
agreement provided for in this Section 5(b) or that otherwise becomes
bound by this Agreement by operation of law.
6. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Minnesota, without giving effect to choice-of-law
principles.
7. Notices. All notices, requests and demands given to or made
pursuant hereto shall be in writing and shall be delivered or mailed to any such
party at its address as follows:
(a) In the case of the Company:
Buffets, Inc.
00000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
(b) In the case of the Executive:
Xxx X. Xxxxxx
00000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000-0000
Either party may, by notice hereunder, designate a changed address. Any notice,
if mailed properly addressed, postage prepaid, registered or certified mail,
shall be deemed to have been given on the registered date or that date stamped
on the certified mail receipt.
8. Severability; Severance. If any portion of this Agreement is held
to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the other portions of this Agreement and the
remaining portions hereof shall remain in full force and effect, and any court
of competent jurisdiction may so modify the objectionable provision so as to
make it valid and enforceable. If any benefits to the Executive provided in this
Agreement are held to be unavailable to the Executive as a matter of law, the
Executive shall be entitled to severance benefits from the Company, in the event
of an involuntary termination or Constructive Involuntary Termination of
employment of the Executive (other than a
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termination on account of the death or Disability of the Executive or a
termination for Cause) during the term of this Agreement occurring at the time
of or following the occurrence of an Event, at least as favorable to the
Executive (when taken together with the benefits under this Agreement that are
actually received by the Executive) as the most advantageous benefits made
available by the Employer to employees of comparable position and seniority to
the Executive during the five-year period before the First Event.
9. Term. The "Term" of this Agreement shall begin on the date hereof
and shall end on the later of (a) December 31, 2005, provided that such period
shall be automatically extended for successive one-year terms thereafter until
notice of termination is given by the Company or the Executive at least 60 days
before December 31, 2005 or the one-year extension period then in effect, as the
case may be, or (b) if the Commencement Date occurs on or before December 31,
2005 (or before the end of the extension year then in effect as provided for in
clause (a) of this Section), the third anniversary of the Commencement Date.
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In Witness Whereof, the parties have executed this Agreement as of the
date first written above.
BUFFETS, INC.
By:
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Its:
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EXECUTIVE
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Xxx X. Xxxxxx
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