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SEVERANCE COMPENSATION AGREEMENT dated as of September 16, 1996, between
O'Charley's Inc., a Tennessee corporation (the "Company"), and Xxxxxxx X. Xxxxx
(the "Executive").
The Company's Board of Directors has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of certain
members of the Company's senior management, including the Executive, to their
assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a change in control of the Company.
This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change In Control of the Company (as defined herein).
1. TERM. This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the
earliest of (i) three years from the date hereof if a Change in Control of the
Company has not occurred within such three-year period; (ii) the termination of
the Executive's employment with the Company based on death, Disability (as
defined in Section 3(b)), Retirement (as defined in Section 3(c)) or Cause (as
defined in Section 3(d)) or by the Executive other than for Good Reason (as
defined in Section 3(e)); and (iii) eighteen months from the date of a Change in
Control of the Company if the Executive has not terminated his employment for
Good Reason as of such time.
2. CHANGE IN CONTROL. No compensation shall be payable under this Agreement
unless and until (a) there shall have been a Change in Control of the Company,
while the Executive is still an employee of the Company and (b) the Executive's
employment by the Company thereafter shall have been terminated in accordance
with Section 3. For purposes of this Agreement, a Change in Control means the
happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, other than the Company, a
wholly-owned subsidiary thereof, any employee benefit plan of the Company
or any of its Subsidiaries becomes the beneficial owner of the Company's
securities having 30% or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an issuance of
securities initiated by the Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions less
than a majority of the combined voting power of the then outstanding
securities of the Company or any successor corporation or entity entitled
to vote generally in the election of the directors of the Company or such
other corporation or entity after such transaction are held in the
aggregate by the holders of the Company's securities entitled to vote
generally in the election of directors of the Company immediately prior to
such transaction; or
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(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each director of
the Company first elected during such period was approved by a vote of at
least two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. (a) If a Change in Control of
the Company shall have occurred while the Executive is still an employee of the
Company, the Executive shall be entitled to the compensation provided in Section
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by the Executive or by the Company unless such termination is as a result of (i)
the Executive's death; (ii) the Executive's Disability (as defined in Section
(3)(b) below); (iii) the Executive's Retirement (as defined in Section 3(c)
below); (iv) the Executive's termination by the Company for Cause (as defined in
Section 3(d) below); or (v) the Executive's decision to terminate employment
other than for Good Reason (as defined in Section 3(e) below).
(b) DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
with the Company on a full-time basis for six months and within 30 days after
written notice of termination is thereafter given by the Company the Executive
shall not have returned to the full-time performance of the Executive's duties,
the Company may terminate this Agreement for "Disability."
(c) RETIREMENT. The term "Retirement" as used in this Agreement shall mean
termination by the Company or the Executive of the Executive's employment based
on the Executive's having reached age 65 or such other age as shall have been
fixed in any arrangement established with the Executive's consent with respect
to the Executive.
(d) CAUSE. The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement only, the Company shall have "Cause" to terminate
the Executive's employment hereunder only on the basis of fraud,
misappropriation or embezzlement on the part of the Executive. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the membership of the Company's Board of Directors (excluding
the Executive) at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth in the second sentence of this Section 3(d) and specifying the
particulars thereof in detail.
(e) GOOD REASON. The Executive may terminate the Executive's employment for
Good Reason at any time during the term of this Agreement. For purposes of this
Agreement "Good Reason" shall mean any of the following (without the Executive's
express written consent):
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(i) the assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and
status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal of
the Executive from or any failure to reelect the Executive to any of such
positions, except in connection with the termination of his employment for
Disability, Retirement or Cause or as a result of the Executive's death or
by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary as in
effect on the date hereof or as the same may be increased from time to time
during the term of this Agreement;
(iii) a relocation of the Company's principal executive offices to a
location outside of Nashville, Tennessee, or the Executive's relocation to
any place other than the location at which the Executive performed the
Executive's duties prior to a Change in Control of the Company, except for
required travel by the Executive on the Company's business to an extent
substantially consistent with the Executive s business travel obligations
at the time of a Change in Control of the Company;
(iv) any material breach by the Company of any provision of this
Agreement;
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
(vi) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f), and for purposes of this Agreement, no such
purported termination shall be effective.
(f) NOTICE OF TERMINATION. Any termination by the Company pursuant to
Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which 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. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (a) if this
Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period) or (b) if the Executive's
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employment is terminated by the Company for any other reason, the date on which
a Notice of Termination is given.
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT. (a) If the
Company shall terminate the Executive's employment following a Change in Control
other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall
terminate his employment following a Change in Control for Good Reason, then the
Company shall pay to the Executive as severance pay in a lump sum, in cash, on
the fifth day following the Date of Termination, an amount equal to the sum of
(i) three times the average of the aggregate annual salary paid to the Executive
by the Company during the three calendar years preceding the Change in Control
of the Company and (ii) three times the highest bonus compensation paid to the
Executive for any of the three calendar years preceding the Change in Control of
the Company; provided, however, that if the lump sum severance payment under
this Section 4, either alone or together with other payments which the Executive
has the right to receive from the Company, would constitute a "parachute
payment" (as defined in Section 28OG of the Internal Revenue Code of 1986, as
amended (the "Code")), such lump sum severance payment shall be reduced to the
largest amount as will result in no portion of the lump sum severance payment
under this Section 4 being subject to the excise tax imposed by Section 4999 of
the Code.
(b) In addition to the lump sum payment provided in Section 4(a), if the
Company shall terminate the Executive's employment following a Change in Control
other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall
terminate his employment following a Change in Control for Good Reason, then the
Company shall provide to the Executive health insurance equivalent to that
provided to the Executive immediately prior to termination for a period of two
years following the Date of Termination.
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL
RIGHTS. (a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan, incentive plan or stock
option plan, employment agreement or other contract, plan or arrangement.
6. SUCCESSOR TO THE COMPANY. (a) The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
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Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement
and shall entitle the Executive to terminate the Executive's employment for Good
Reason. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. If at any time during the term of this
Agreement the Executive is employed by any corporation a majority of the voting
securities of which is then owned by the Company, "Company" as used in Sections
3, 4, 11 and 12 hereof shall in addition include such employer. In such event,
the Company agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
O'Charley's Inc.
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
If to the Executive:
Xxxxxxx X. Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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8. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.
9. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Executive may incur as a result of the Company's contesting
the validity, enforceability or the Executive's interpretation of, or
determinations under, this Agreement.
12. CONFIDENTIALITY. The Executive shall retain in confidence any and all
confidential information known to the Executive concerning the Company and its
business so long as such information is not otherwise publicly disclosed. The
provisions of this Section 12 are not intended to restrict the ability of the
Executive following termination of employment for any reason to engage in any
business which is, directly or indirectly, competitive with the business
conducted by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
O'CHARLEY'S INC.
By: /s/ A. Xxxx Xxxxxxxx
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Name: A. Xxxx Xxxxxxxx
Title: Chief Financial Officer
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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