February 9, 2000
PERSONAL AND CONFIDENTIAL
[Name and Address]
Dear ______________:
This letter agreement replaces in its entirety the letter agreement dated
December 3, 1997 (along with the Addendum thereto) between _______________ (the
"Executive") and Flagstar Corporation, a predecessor corporation to Advantica
Restaurant Group, Inc. (the "Company"), and is entered into as an inducement to
the Executive to continue in the employ of the Company.
1. Leadership Bonus. In addition to the other salary or bonus payments
and benefits to which the Executive is otherwise entitled in ____ capacity as
__________________, the Executive shall receive the payments set forth on
Schedule A (the "Leadership Bonus") provided the Executive continues to be
employed by the Company (or a subsidiary thereof) as of the accrual date
indicated on Schedule A. Each such payment shall be due and payable to the
Executive on or before fifteen (15) days following the corresponding accrual
date. Any unaccrued portion of such Leadership Bonus shall be forfeited upon
termination of the Executive's employment for Cause, as defined herein, or upon
the voluntary termination of employment by the Executive. If the Executive's
employment is terminated by the Company for any reason other than for Cause, the
Executive shall be entitled to receive any unaccrued portion of such Leadership
Bonus at the "minimum" level for each such unaccrued portion as set forth on
Schedule A at the time of payment of the Severance Payment set forth in Section
2 hereof. For purposes of this letter agreement, "Cause" shall mean (a) the
Executive's habitual neglect of his material duties, (b) an act or acts by the
Executive, or any omission by him, constituting a felony, for which the
Executive has entered a guilty plea or confession to, or of which the Executive
has been convicted, (c) the Executive's failure to follow any lawful directive
of the Board or Chief Executive Officer ("CEO") consistent with the Executive's
position and duties, (d) an act or acts of fraud or dishonesty by the Executive
which results or is intended to result in financial or economic harm to the
Company, or (e) breach of a material provision of this letter agreement by the
Executive; provided that the Company shall give the Executive (x) written notice
specifying the nature of the alleged Cause, and, with respect to Clauses (a),
(c) and (e), (y) a reasonable
opportunity to appear before the Board or CEO to discuss the matter, and (z) a
reasonable opportunity to cure any such alleged Cause.
2. Severance Payment. In the event (A) the Company terminates the
Executive for any reason other than Cause, as defined in Section 1 above; or (B)
if the Executive elects to terminate his/her employment with the Company because
(i) the Company has taken an action which reduces the Executive's base salary or
which causes the Executive to no longer have the responsibilities referenced in
Section 1 of this letter agreement; or (ii) the Executive is required by the
Company to relocate a distance of more than 100 miles from the current company
headquarters in Spartanburg, SC, the Executive shall receive a single, lump sum
severance payment, within five (5) days of termination, in an amount equal to
the sum of (a) 200% of the Executive's then current base pay (in no event less
than $300,000); (b) 200% of the Executive's target bonus for the year in which
the termination occurs (provided that the amount of such target bonus shall not
be less than 65% of the Executive's then current base salary); (c) a lump sum
amount equal to the value of 200% of the annual car allowance to which the
Executive is entitled in the year in which termination occurs (provided that the
amount of such annual car allowance shall not be less than $13,200); (d) an
amount (grossed up at a total of 45% for federal, state and local income taxes)
equal to (i) the Company's then actual benefit credits for an eighteen (18)
month period and (ii) all vested retirement benefits under the non-qualified
pension plan ( the "Select Advantica Management Supplemental Plan"); and (e) an
amount equal to any accrued but unused vacation days (collectively the
"Severance Payment"). Such Severance Payment shall be made to Executive within
five (5) business days following any such termination. The Executive will also
be entitled to receive career placement advice and counseling at the Company's
expense for a period of eighteen (18) months. Further, should such an event of
termination of the Executive's employment occur, the Executive shall not be
required to seek other employment to mitigate damages, and any income earned by
the Executive from other employment or self-employment shall not be offset
against any obligations of the Company to the Executive under this letter
agreement.
3. Stock Options. The Executive shall immediately become one hundred
percent (100%) vested in, and eligible to exercise, all stock options that have
been granted to him/her by the Company in the event of (a) actual or
constructive termination of the Executive without Cause as described in Sections
1 and 2 above; (b) a dissolution or liquidation of the Company; (c) a sale of
all or substantially all of the Company's assets; (d) a merger or consolidation
involving the Company in which the Company is not the surviving corporation; (e)
a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of common stock receive
securities of another corporation and/or other property, including cash; or (f)
a tender offer for at least a majority of the outstanding common stock of the
Company. Further, the Executive shall have the right to exercise any or all such
vested options for the lesser of thirty-six (36) months or the remaining term of
such option grant.
4. Subsidiary Guaranties. The Company's payment obligations herein
in respect of the Retention Bonus, the change of Control Benefit and the
Severance Payment shall be unconditionally guaranteed by the Company's
subsidiaries, Denny's Inc. and DFO, Inc., such subsidiaries being among
the principal operating subsidiaries receiving the benefits of the Executive's
continuing employment with the Company. Such subsidiary guaranties shall be
"guaranties of payment" and not "guaranties of collection."
Nothing herein shall be deemed to modify in any respect the right of
the Company to terminate the services of the Executive in accordance with the
terms of the Company policies now or hereafter in effect.
If you are in agreement with these terms, please sign one copy of this
letter and return it to Xxxxxxx Xxxx.
Sincerely,
Xxxxx X. Xxxxxxx
Chairman, Chief Executive Officer
And President
cc: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Agreed and accepted:
_____________________________ _______________________, 2000
By authority duly obtained as of the date first above written, the
undersigned, Denny's Inc. and DFO, Inc., indirect subsidiaries of the Company,
hereby jointly and severally guarantee the payment by the Company to the
Executive of the Retention Bonus, the change of Control Benefit, and the
Severance Payment as provided above. In providing such guaranty, each such
guarantor acknowledges that it is receiving and will receive substantial and
meaningful benefits and services from the Executive's continued employment with
the Company. Each such guaranty shall be a guaranty of payment and not of
collection.
Denny's, Inc. DFO, Inc.
By: ______________________________ By: ________________________________
Schedule A
Recognizing the vital role you will play in the success of this enormous
strategic undertaking, we have implemented a new two-year Officer Leadership
Incentive Program that provides for generous cash awards with significant upside
potential.
Under this new program you will receive the following cash awards if you are
actively employed (or on an approved leave of absence) on the award dates set
forth below.
Award Date Minimum Award Amount
---------- --------------------
July 31, 2000 $ 40,000
January 31, 2001 $ 50,000
July 31, 2001 $ 60,000
January 31, 2002 $ 100,000
---------
Total $ 250,000
This is the minimum amount to be paid; there is also a large upside potential.
You will receive the greater of the dollar amounts listed above, or the cash
value of the number of shares of the company's common stock shown below.
Award Date Number of Shares of Company Stock
---------- ---------------------------------
July 31, 2000 20,000
January 31, 2001 25,000
July 31, 2001 30,000
January 31, 2002 50,000
Example: On July 31, 2000, the company's common stock closes at $1.75.
You will receive the greater of $40,000 or the value of 20,000
shares of common stock (20,000 x $1.75 = $35,000). This means
you will receive the minimum cash award of $40,000.
On January 31, 2001, the stock closes at $3.00. You
will receive the greater of $50,000 or the value of 25,000
shares of common stock (25,000 x $3.00 = $75,000). Since the
value of the stock is greater than the minimum award amount,
you will receive $75,000, the value of the stock, in cash.
The same calculation will occur on the final two
award dates. Each time we will determine the value of the
stock amounts listed above, and you will receive the greater
of the minimum award or the stock's then value. In either
event the award will be paid in cash. You will be responsible
for any taxes due on these awards, the awards are not eligible
for deferral into the 401(k) and ASSP, nor do they count under
the pension plan.
