EL CHICO RESTAURANTS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of November
28, 1994, between El Chico Restaurants, Inc., a Texas corporation with
its principal executive offices at 00000 Xxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxx (the
"Employee") who resides at 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
W I T N E S S E T H:
WHEREAS, on November 10, 1994, the Company and the Employee entered
into a letter of intent outlining the Company's offer of employment to
the Employee; and
WHEREAS, the Employee and the Company desire to finalize the terms
of the employment of the Employee with the Company;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and subject to the terms and conditions hereinafter set
forth, the parties hereto agree as follows:
1. DEFINITIONS.
In addition to the words and terms elsewhere defined in this
Agreement, the following words and terms as used herein shall have the
following meanings, unless the context or use indicates a different
meaning:
"Cause" means (a) any act by the Employee that is materially
adverse to the best interests of the Company and which, if the
subject of a criminal proceeding, could result in a criminal
conviction for a felony or (b) the failure by the Employee to
substantially perform his duties hereunder, which duties are within
the control of the Employee (other than the failure resulting from
the Employee's incapacity due to physical or mental illness);
provided, however, that the Employee shall not be deemed to be
terminated for Cause under this subsection (b) unless and until (1)
after the Employee receives written notice from the Company
specifying with reasonable particularity to the actions of Employee
that constitute a violation of this subsection (b) and (2) within
a period of 30 days after receipt of such notice (and during which
the violation is within the control of the Employee), Employee fails
to reasonably and prospectively cure such violation.
"Good Reason" means the occurrence of a Triggering Event (as
defined below) and (a) without his prior written concurrence, the
Employee is assigned any duties or responsibilities that are
inconsistent with his positions, duties, responsibilities or status
at the commencement of the term of this Agreement, or his reporting
responsibilities or titles in effect at such time are materially
changed, (b) the Employee's total compensation is reduced or any
other failure by the Company to comply with Section 4 hereof, or
(c) any change in any employee benefit plans or arrangements in
effect on the date hereof in which the Employee participates
(including without limitation any pension and retirement plan,
savings and profit sharing plan, or life, medical or disability
insurance plan), which would materially adversely affect the
Employee's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the
Company and does not result in a proportionately greater reduction
in the rights of or benefits to the Employee as compared to any
other executive officer of the Company.
"Triggering Date" means the date of a Triggering Event.
"Triggering Event" means an event of a nature that would be
required to be reported by the Company in response to Item 6(d) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such an event shall be deemed to have
occurred if (a) any person or group (as such terms are used in
Section 13(d) and 14(d) of the Exchange Act) is or 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 35% of the combined voting power of the Company's then
outstanding securities, or (b) there are serving as directors two
or more persons who were elected as members of the Board of
Directors and were not nominated by management or the Board of
Directors of the Company to serve on the Board of Directors of the
Company, or (c) the Company is merged or consolidated with another
person or entity and as a result of such merger or consolidation
less than 51% of the outstanding voting securities of the surviving
or resulting person or entity are owned in the aggregate by the
former shareholders of the Company, excluding for purposes of such
calculation the voting securities of the Company owned by a party
to such merger or consolidation of affiliates (within the meaning
of the Exchange Act) of such party, as the same existed immediately
prior to such merger or consolidation, or (d) the Company sells all
or substantially all of its assets to another person or entity
which is not a direct or indirect wholly owned subsidiary of the
Company.
2. EMPLOYMENT.
The Company hereby employs the Employee and the Employee hereby
accepts employment on the terms and conditions set forth herein.
3. TERM.
Subject to the provisions of termination as provided in Section 9
of this Agreement, the terms of the Employee's employment with the
Company shall commence on November 28, 1994 and shall terminate on
November 28, 1997, unless sooner terminated as provided for herein.
4. SALARY.
(a) For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee a base salary of $250,000
per year, payable bi-monthly in accordance with the Company's customary
payroll practices. Such base salary shall be reviewed annually by the
Board of Directors of the Company. Any increase in base salary pursuant
to this paragraph shall become the new base salary. In addition, the
Employee shall receive a car allowance of $600 per month.
(b) The Employee shall be entitled to receive an annual bonus
following each year of employment during the term hereof of up to 55% of
the Employee's base salary, based on such prior fiscal year's net income
and the attainment of financial objectives established by the Employee
and approved by the Board of Directors. The first such bonus shall be
payable during fiscal 1996 based upon the attainment of financial
objectives during fiscal 1995.
(c) The Employee shall be entitled to participate in or receive
benefits under any employee benefit or bonus plan or arrangement
(collectively referred to as "Benefits") made available by the Company
in the future to its executive officers and key management personnel,
subject to and on a basis consistent with the terms, conditions and
overall administration of such plan or arrangement. Nothing paid to the
Employee under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary
payable to the Employee pursuant to Section 4(a).
5. DUTIES.
The Employee shall serve as the President and Chief Executive
Officer of the Company and shall continue to be engaged in an Executive
capacity with the Company to supervise and direct the activities and to
maintain the public relations and goodwill of the Company. The precise
services of the Employee may be extended or curtailed from time to time
at the direction of the Board of Directors of the Company and the
Employee shall report to the Board of Directors. Additionally, the
Employee shall serve as a member of the Board of Directors of the
Company, subject to reelection by the shareholders of the Company.
6. EXTENT OF SERVICES AND SITUS.
The Employee shall devote such time, attention, and energy to the
business and affairs of the Company as are necessary to the performance
and discharge of the duties assigned to Employee under this Agreement.
Employee shall not during the term of his employment under this Agreement
engage in any other business activity that could constitute a conflict
of interest, whether or not such business activity is pursued for gain,
profit, or other pecuniary advantage. This shall not be construed as
preventing the Employee from managing his current investments or
investing his assets in such form or manner as will not require any
services on the part of the Employee in the operation and the affairs of
the companies in which such investments are made. On or after the
Triggering Date, the Employee shall not be required to change the situs
of his employment from his permanent place of employment immediately
prior to the Triggering Date.
7. DISABILITY.
If the Employee is unable to perform his services by reason of
illness or incapacity for a continuous period in excess of six months,
unless otherwise required by the provisions of Section 10 or 23 of this
Agreement, compensation otherwise payable by the Company shall cease and
any future payments to the Employee shall be subject to the terms and
provision of long-term disability insurance coverage, if any, maintained
by the Company. Notwithstanding anything herein to the contrary, the
Board of Directors of the Company may terminate the Employee's employment
with the Company under this Agreement at any time after the Employee
shall be absent from his employment, for whatever reason, for a
continuous period of more than six months, and, except for any
obligations of the Company under Sections 10, 23, and 26 of this
Agreement, all other obligations of the Company hereunder shall cease
upon such termination.
8. COMPENSATION AFTER DEATH.
If the Employee dies during the term of his employment, the Company
shall pay to such person as the Employee shall designate in a notice
filed with the Company, or, if no such person shall be designated, to his
estate as a lump sum death benefit, his base salary that would otherwise
be payable to the employee at the time of his death, in equal semi-monthly
installments of the first and fifteenth day of each month, for
a period of twelve (12) months, in addition to any payments the
Employee's spouse, beneficiaries, or estate may be entitled to receive
pursuant to any pension or employee benefit plan or life insurance policy
that may be maintained by the Company, and such payments shall fully
discharge the Company's obligation hereunder.
9. TERMINATION.
9.1 Termination Prior to the Triggering Date.
(a) Upon 30 days' prior written notice to the Employee and
prior to the Triggering Date, the Company may terminate the
Employee's employment with the Company under this Agreement with
cause and, subject to the provisions of Sections 23 and 26 hereof,
with no liability on its part for further payments after the
termination date to the Employee by the affirmative vote of two-thirds
of the members of the Board of Directors of the Company.
(b) Upon 30 days prior written notice to the Employee and
prior to the Triggering Date, the Company may terminate the
Employee's employment with the Company under this Agreement without
Cause and, subject to the provisions of Sections 23 and 26 hereof,
with no liability other than the obligation to pay the base salary
for one year from the date of notice.
(c) Prior to the Triggering Date, the Employee may
terminate his employment with the Company under this Agreement by
giving 30 days' prior written notice of his desire to the Board of
Directors of the Company and receiving an affirmative vote of
two-thirds of the members of the Board of Directors of the Company.
The Employee will continue to receive his base salary and Benefits
through the date of termination with no liability on the part of
the Company for further payments to the Employee, subject to the
provision of Sections 23 and 26 hereof.
(d) In voting upon such termination described in Section
9.1(a) or (c), if the Employee is also a member of the Board of
Directors of the Company, then he may not vote on such termination,
and the total number of members of the Board of Directors will be
reduced by one for purposes of voting on such termination.
9.2 Termination After the Triggering Date.
(a) On or after the Triggering Date and irrespective of
whether or not the Employee has given notice of termination of
employment pursuant to Section 9.2(c), the Company may terminate
the Employee's employment with the Company under this Agreement
only for Cause and, subject to the provisions of Sections 23 and
26 hereof, with no liability on its part for further payments to
the Employee by the affirmative vote of two-thirds of the members
of the Board of Directors of the Company. In voting upon such
termination, if the Employee is also a member of the Board of
Directors of the Company, then he may not vote on such termination,
and the total number of members of the Board of Directors will be
reduced by one for purposes of voting on such termination.
(b) On or after the Triggering Date and irrespective of
whether or not the Employee has given notice of termination of
employment pursuant to Section 9.2(c), if the Employee's employment
with the Company is terminated without Cause or if Employee
terminates his employment with the Company for Good Reason (which
the Employee is hereby given the right to do on 30 days prior
written notice), the Employee will continue to accrue and receive
his base salary and Benefits through the date of termination and
will be entitled to receive the benefits provided for under Section
10 hereof.
(c) On or after the Triggering Date, the Employee may, in
his sole and absolute discretion and without any prior approval by
the Board of Directors of the Company, and upon 12 months' prior
written notice to the Company, terminate his employment with the
Company under this Agreement for any reason whatsoever. If the
Employee's employment with the Company under this Agreement is
terminated pursuant to this Section 9.2(c) and subject in all
respects to the provisions of Section 9.2(a) and (b), the Employee
will continue to accrue and receive his base salary and Benefits
through the date of termination and will be entitled to receive the
benefits provided for under Section 10 hereof. No termination of
the Employee's employment with the Company pursuant to Section
9.2(b) or (c) shall in any way terminate the Company's obligations
under Section 23 and 26 of this Agreement.
10. COMPENSATION AFTER CERTAIN TERMINATIONS.
If the Employee's employment with the Company is terminated
(whether such termination is by the Employee or by the Company) at any
time on or within three years after the Triggering Date for any reason
other than (a) termination by the Company for Cause, (b) the Employee
having reached the age of 65, or (c) the Employee's death, then, within
five days after the date of such termination, the Company shall pay the
Employee a lump sum amount in such equal to 2.0 times the Employee's
annualized includable compensation (within the meaning of Section
280G(d)(1) of the Internal Revenue Code of 1986, as amended) from the
Company during the period consisting of the five full taxable years of
the Employee ending immediately prior to the year in which the Triggering
Date occurred (or such portion of such period during which the Employee
was an employee of the Company).
11. TRANSFER OF ASSETS TO IRREVOCABLE TRUST.
On the Triggering Date or as soon thereafter as the Company knows
of the occurrence of a Triggering Event, the Company shall transfer cash
to the Irrevocable Trust created by the Irrevocable Trust Agreement, an
executed copy of which is attached hereto as Exhibit A, in an amount no
less than the total amount which would be payable to the Employee
pursuant to Section 10 of this Agreement as if the Employee's employment
terminated on the Triggering Date. The Company shall take whatever steps
are necessary to maintain the trust established pursuant to the
Irrevocable Trust Agreement and shall comply with the terms of the
Irrevocable Trust Agreement both before and after the Triggering Date and
until the Irrevocable Trust terminates by its own terms. The employee
has the right to enforce the provisions of this paragraph through
specific performance.
12. MITIGATION.
The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this
Agreement be reduced by any compensation earned by the Employee as the
result of employment by another employer after the date of termination
of Employee's employment with the Company, or otherwise.
13. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, agreements, and understandings
relating to such subject matter, and may be modified or amended only by
an instrument in writing signed by the parties hereto.
14. LAW TO GOVERN.
This Agreement is executed and delivered in the State of Texas and
shall be governed, construed, and enforced in accordance with the laws
of the State of Texas.
15. ASSIGNMENT.
This Agreement is personal to the parties, and neither this
Agreement nor any interest herein may be assigned (other than by will or
by the laws of descent and distribution) without the prior written
consent of the parties hereto nor be subject to alienation, anticipation,
sale, pledge, encumbrance, execution, levy, or other legal process of any
kind against the Employee or any of his beneficiaries or any other
person. Notwithstanding the foregoing, but subject to satisfaction of
the Company's obligation to fund the Irrevocable Trust as provided in
Section 11, the Company shall be permitted to assign this Agreement to
any corporation or other business entity succeeding to substantially all
of the business and assets of the Company by merger, consolidation, sale
of assets, or otherwise, but only if by written agreement the Company's
successor assumes in full all of the Company's obligations under this
Agreement. From and after assignment of this Agreement by the Company
in accordance with the foregoing provisions, a Triggering Event shall be
deemed to have occurred. Failure by the Company to obtain such
assumption prior to the effectiveness of such succession shall be a
breach of this Agreement and shall entitle the Employee to immediately
receive compensation under this Agreement from the Company and from the
Company's successor in the same aggregate amount and on the same terms
as he would be entitled to hereunder if he had voluntarily terminated his
employment with the Company for Good Reason after the Triggering Date,
and, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Triggering Date.
16. BINDING AGREEMENT.
Subject to the provisions of Section 15 of this Agreement, this
Agreement shall be binding upon and shall inure to the benefit of the
Company and the Employee and their respective representatives,
successors, and assigns.
17. REFERENCES AND GENDER.
All references to "Sections" contained herein are, unless
specifically indicated otherwise, references to sections and subsections
of this Agreement. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender shall
include each other gender where appropriate.
18. WAIVER.
No waiver of any right under this Agreement shall be deemed
effective unless the same is set forth in writing and signed by the party
giving such waiver, and no waiver of any right shall be deemed to be a
waiver of any such right in the future.
19. NOTICES.
Except as may be otherwise specifically provided in this Agreement,
all notices required or permitted hereunder shall be in writing and will
be deemed to be delivered when deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the parties at the respective addresses set forth herein,
or at such other addresses as may have theretofore been specified by
written notice delivered in accordance herewith.
20. OTHER INSTRUMENTS.
The parties hereto covenant and agree that they will execute such
other and further instruments and documents as are or may become
necessary or convenient to effectuate and carry out the terms of this
Agreement.
21. HEADINGS.
The headings used in this Agreement are used for reference purposes
only and do not constitute substantive matter to be considered in
construing the terms of this Agreement.
22. INVALID PROVISION.
Any clause, sentence, provision, section, subsection, or paragraph
of this Agreement held by a court of competent jurisdiction to be
invalid, illegal, or ineffective shall not impair, invalidate, or nullify
the remainder of this Agreement, but the effect thereof shall be confined
to the clause, sentence, provision, section, subsection, or paragraph so
held to be invalid, illegal, or ineffective.
23. RIGHTS UNDER PLANS AND PROGRAMS.
Anything in this Agreement to the contrary notwithstanding, no
provision of this Agreement is intended, nor shall it be construed, to
reduce or in any way restrict any benefit to which the Employee may be
entitled under any agreement, plan, arrangement or program providing
benefits for the Employee, except as provided in the terms and conditions
of the said specific programs and benefits.
24. MULTIPLE COPIES.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which shall together
constitute one and the same instrument. The terms of this Agreement
shall become binding upon each party from and after the time that he or
it executed a copy hereof. In like manner, from and after the time that
any party executes a consent or other document, such consent or other
document shall be binding upon such parties.
25. WITHHOLDING OF TAXES.
The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or government regulation or ruling.
26. LEGAL FEES AND EXPENSES.
The Company shall pay and be responsible for all legal fees and
expenses which the Employee may incur as a result of the Company's
failure to perform under this Agreement or as a result of the Company or
any successor contesting the validity or enforceability of this
Agreement.
27. SET OFF OR COUNTERCLAIM.
Except with respect to any claim against or dept or other
obligation of the Employee properly recorded on the books and records of
the Company prior to the Triggering Date, there shall be no right of set
off or counterclaim against, or delay in, any payment by the Company to
the Employee or his beneficiaries provided for in this Agreement in
respect of any claim against or debt or other obligation of the Employee,
whether arising hereunder or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
EL CHICO RESTAURANTS, INC.
By: /s/ Xxxx X. Xxxxxxx
Print Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
EMPLOYEE
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
