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Exhibit 10 (a)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
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THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made
and entered into as of November 24, 1998 between Xxxxxx'x Restaurants, Inc., an
Ohio corporation (the "Corporation"), and Xxxxx X. Xxxxx ("Xxxxx").
W I T N E S S E T H:
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WHEREAS, the Corporation and Xxxxx are parties to that certain
Employment Agreement dated as of May 8, 1995 pursuant to which the Corporation
agrees to employ Xxxxx and Xxxxx agrees to serve the Corporation (the
"Agreement"); and
WHEREAS, the Corporation and Xxxxx mutually desire to amend in part the
Agreement, as further specified in this Amendment;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and Xxxxx agree as follows:
A. Amendment. Paragraph 5(b) and Paragraph 5(c) of the Agreement are
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hereby amended, effective as of the date of this Amendment, to read in their
entirety as follows:
(b) Incentive Compensation. In addition to the compensation
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provided in the foregoing subparagraph (a), the Corporation shall pay
Xxxxx Incentive Compensation for each year in which the pre-tax
earnings of the Corporation equal or exceed four percent (4%) of the
Corporation's sales for such year. Pre-tax earnings and sales shall be
the amounts reported to shareholders in the Corporation's annual report
(exclusive of any amounts included in sales and/or earnings arising out
of the Corporation's investment in the Cincinnati Reds), but pre-tax
earnings shall be computed without taking this Incentive Compensation
into consideration. The amount of the Incentive Compensation shall be:
(i) one and one-half percent (1.5%) of the Corporation's pre-tax
earnings (as determined above) if such pre-tax earnings equal or exceed
four percent (4%) (but are less than five percent (5%)) of the
Corporation's sales for such year (provided however that the amount of
Incentive Compensation shall be reduced if necessary so that the
Corporation's pre-tax earnings, after reduction for Incentive
Compensation, shall not be less than four percent (4%) of the
Corporation's sales for such year); and (ii) three percent (3%) of the
Corporation's pre-tax earnings (as determined above) to the extent that
such pre-tax earnings equal or exceed five percent (5%) of the
Corporation's sales for such year (provided however that the amount of
Incentive Compensation shall be reduced if necessary to one and
one-half percent (1.5%) of such pre-tax earnings only to the extent
that payment the Incentive Compensation reduces the Corporation's
pre-tax earnings below five percent (5%) of the Corporation's sales for
such year and provided further that the amount of Incentive
Compensation shall be further reduced if necessary so that the
Corporation's pre-tax earnings, after reduction for Incentive
Compensation, shall not be less than four percent (4%) of the
Corporation's sales for such year). Eighty percent (80%) of such
Incentive Compensation shall be paid in cash and twenty percent (20%)
shall be paid in shares of the Corporation's common stock. The number
of shares allocated to Xxxxx shall be determined by dividing the amount
of Incentive Compensation to be paid in shares by the "Average Value"
of the Corporation's common shares during the year for which the
Incentive Compensation has been earned. The "Average Value" of the
Corporation's shares for any year shall be the mean between the highest
price at which shares were traded during such year and the lowest
price. Example: In the fiscal year beginning May __, 1998, the
Corporation has sales of $160,000,000 and pre-tax earnings (before
calculation of Xxxxx'x Incentive Compensation) of $8,200,000. Since
earnings exceed four percent (4%) of sales, Xxxxx has earned Incentive
Compensation, and since earnings
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Exhibit 10(a)
exceed five percent (5%) of sales, Xxxxx has earned Incentive
Compensation on that portion of earnings exceeding five percent (5%) of
sales at the higher rate of three percent (3%) of the Corporation's
pre-tax earnings. Three percent (3%) of pre-tax earnings equals
$246,000. However, if Xxxxx is paid $246,000 it will reduce pre-tax
earnings below five percent (5%) of sales. Xxxxx'x Incentive
Compensation at the higher three percent (3%) of the Corporation's
pre-tax earnings rate is limited to $200,000. The remaining balance of
$46,000 which would reduce the Corporation's pre-tax earnings below
five percent (5%) of sales is paid at one-half the higher rate (i.e.,
one and one-half percent (1.5%) rather than three percent (3%)) and
therefore reduces such remaining balance payable to Xxxxx to $23,000.
As a result, Xxxxx'x Incentive Compensation totals $223,000 (the sum of
$200,000 and $23,000). Since payment of $223,000 to Xxxxx does not
result in the Corporation's pre-tax earnings falling below four percent
(4%) of sales (i.e., $6,400,000), the full $223,000 is due to Xxxxx.
Eighty percent (80%) or $178,400 is payable in cash. Twenty percent
(20%) or $44,600 is payable in the Corporation's shares. During the
fiscal year beginning May __, 1998 the Corporation's shares traded at a
high price of $20 and a low price of $10. The mean price is $15 per
share. Xxxxx therefore receives an award of 2,973 shares ($44,600
divided by $15 per shares = 2,973 shares).
The shares granted as Incentive Compensation will not be
registered under the Securities Act of 1933, as amended, and each stock
certificate will bear the following legend or one similar thereto: "The
shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
(c) Stock Options. In any year in which Xxxxx earns Incentive
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Compensation, the Corporation shall also grant stock options to him.
The number of options awarded shall be calculated as the total amount
of Xxxxx'x Incentive Compensation divided by the "Average Value" of the
Corporation's shares as determined in paragraph 5(b), multiplied by
two. The exercise price of the options shall be the market price of the
Corporation's shares on the date of the options are granted. The
options shall expire ten (10) years from the date of grant. All options
shall be granted under the Xxxxxx'x Restaurants, Inc. 1993 Stock Option
Plan or any successor plan and shall be subject to all the terms and
conditions contained therein. In the event that in any year the
Corporation does not have a stock option plan in force, no grant of
options shall be made under this provision. If in any year there are
insufficient authorized ungranted options under the then existing stock
option plan, the grant to Xxxxx shall not exceed the number of
available ungranted options. Example: using the same facts as contained
in paragraph 5(b), the Corporation would xxxxx Xxxxx options to
purchase 29,732 shares (223,000 divided by $15 = 14,866 x 2 = 29,732).
The exercise price would be the market price of the Corporation's stock
on the date of grant.
B. Miscellaneous. As amended by this Amendment, the Agreement shall
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remain in full force and effect, and all references to the Agreement shall mean
the Agreement, as amended hereby.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
executed in its corporate name by Xxxxxx X. Xxxxxxxx, its Vice President, Human
Resources, thereunto duly authorized by its Board of Directors, and Xxxxx X.
Xxxxx has executed this Amendment, each as of the date first set forth above.
XXXXXX'X RESTAURANTS, INC.
By: Xxxxxx'x Restaurants, Inc.
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Name: /s/ Xxxxxx X Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Title: Vice President - Human Resources
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/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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