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EXHIBIT 10(t)
EMPLOYMENT AGREEMENT FOR XXXXX XXXXXX
This Employment Agreement ("Agreement") is entered into as of January 1, 1996,
by and between Xxxxx Xxxxxx ("Executive") and Family Restaurants, Inc., a
Delaware corporation ("FRI"), Chi-Chi's, Inc., a Delaware corporation
("Chi-Chi's"), and El Torito Restaurants, Inc., a Delaware corporation ("El
Torito") (FRI, Chi-Chi's and El Torito are hereinafter collectively referred to
as "the Company"). Whereas the Company desires to obtain the services of
Executive, and whereas the Executive desires to be employed by the Company upon
the following terms and conditions, the parties agree as follows:
1. POSITION AND DUTIES
Executive will hold the positions and titles of President and Chief Executive
Officer ("CEO") of FRI, CEO of Chi-Chi's and CEO of El Torito from the date of
this Agreement and for the period of time specified in this Agreement. As the
President and CEO of FRI, Executive reports to the Board of Directors of FRI
and will assist the Board in developing and implementing FRI's ongoing business
strategy and objectives, including those of its subsidiaries, El Torito and
Chi-Chi's. The Executive may have additional powers and duties as prescribed
from time to time by the Board.
Executive agrees to devote all of his business time, skill, attention, and best
efforts to the Company's business and to discharge and fulfill the
responsibilities assigned to him by the Company during his employment under
this Agreement. Executive further agrees that he will not render services to
any other person or entity without the prior written consent of the Company,
and that he will not engage in any activity which conflicts or interferes with
the performance of the duties and responsibilities of his position. Unless a
conflict of interest occurs, as determined by the Board, Executive shall be
allowed to serve as a member of the Board of Directors of at least one other
company.
2. TERM OF EMPLOYMENT
This Agreement covers the Executive's employment with the Company from the date
of this Agreement through a period ending on the third anniversary of the date
of this Agreement ("Period of Employment"), or such earlier termination date as
provided for in Section 5 below.
3. LOCATION
Executive will be based at the Company's executive offices in Irvine,
California, and will be expected to travel to the Company's offices and
restaurants at other locations as needed for the performance of his duties and
responsibilities.
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4. COMPENSATION AND BENEFITS
(a) Salary
During the Period of Employment, in consideration of services to be rendered,
Executive will be paid a salary of not less than $400,000 per year through the
end of fiscal year 1996, to be earned and paid in equal bi-weekly installments,
less any deductions required by law, pursuant to the procedures regularly
established by the Company. Upon the attainment of $40,000,000 in Earnings
Before Interest, Taxes, Depreciation, and Amortization ("EBITDA," as defined in
the Company's SEC filings) in the 1997 or any subsequent fiscal year,
Executive's base salary shall increase to $500,000 per year, effective as of
January 1 of the year immediately following the fiscal year in which the EBITDA
target was met. Furthermore, Executive may be eligible for other periodic
increases in base salary as determined by the Board in its sole and absolute
discretion.
(b) Annual Incentive Compensation
During the Period of Employment, the Executive will participate in the
Company's Management Incentive Compensation Plan (the "Plan") as currently
established and as modified from time to time. Under the terms of the current
Plan, Executive's annual incentive award is based upon one or more performance
measures, such as Company sales performance, Company EBITDA performance, and
personal objectives. Executive will have an annual target incentive equal to
80% of his annual base salary. Actual incentives payable will be determined by
the terms of the Plan or successor plans. The Company reserves the right to
modify, amend, or discontinue the Plan at any time; however, if the Plan is
discontinued, it is expected that a comparable annual incentive plan, as agreed
to by the Executive and the Company, will be implemented in its place.
c) Long Term Incentive Compensation
The Executive will be eligible to participate in the Company's long term
incentive plan ("VCU Plan") which is currently under development. It is
anticipated that Participants' performance will be measured based on the value
created by increases in FRI's EBITDA. Awards under the VCU Plan will be
communicated and agreed to in a separate agreement and will be governed by the
terms of the VCU Plan, except that in the case of termination "By the Company
Without Cause" or for "Good Reason" this Agreement will govern VCU payments.
(d) Benefits
During the Period of Employment, Executive will be entitled to participate in
the Company's standard medical, dental, life, accident, disability, retirement
plans, QRC privileges, and similar plans as shall be generally available to
executive employees of the Company from time to time.
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(e) Vacation
During the Period of Employment, the Executive will receive Company paid
vacation time off in accordance with the Company's policies and procedures, as
may be amended from time to time, and which currently provide Executive with
four (4) weeks vacation per year.
(f) Car Allowance
During the Period of Employment, the Company will provide Executive with a car
allowance in accordance with the Company's policies and procedures, as may be
amended from time to time, and which currently provide Executive with an
allowance of Twelve Thousand Dollars ($12,000.00) per year.
(g) Expenses
During the Period of Employment, the Company will reimburse Executive for
travel, lodging, entertainment, and other reasonable business expenses incurred
by him in the performance of his duties in accordance with the Company's
general policies, as may be amended from time to time.
5. TERMINATION OF EMPLOYMENT
The Period of Employment shall terminate:
(a) By Death or Disability
Employment will terminate automatically upon the death of Executive or when
Executive begins to receive benefits under the Company's Long Term Disability
Plan. In such cases, the Company will pay the Executive or his Estate:
(i) the salary to which he is entitled through the date of termination;
(ii) a pro rata portion of the Executive's annual incentive award, if any,
to which he is entitled through the date of termination; and,
(iii) the value of VCU awards, determined as follows. If termination
occurs on or before December 1, 1997, the Company will pay a pro rata amount of
the value of all VCU awards determined under the terms of the VCU Plan. If
termination occurs after December 1, 1997, all VCU awards will be valued and
paid in full.
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
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(b) By the Company for Cause
The Company may terminate, without liability, the Period of Employment for
Cause as defined below at any time and without notice. In such event, the
Company will pay the Executive the salary and benefits to which he is entitled
through the date of termination and thereafter the Company's obligations will
cease. The Executive will not be entitled to any annual incentive award (VCU
payments) or long term incentive award for the period in which Termination for
Cause occurs.
Termination shall be for Cause if the Executive:
(i) willfully breaches significant and material duties he is required to
perform or any of the material terms and conditions of this Agreement;
(ii) commits a material act of fraud, dishonesty, misrepresentation or
other act of moral turpitude;
(iii) is convicted of a felony, whether or not committed during the Period
of Employment or in the course of employment hereunder;
(iv) exhibits gross negligence in the performance of his duties, including,
without limitation, the refusal to perform or carry out the resolutions or
directives of the Board of Directors of the Company that are enacted by
majority vote;
(v) is ordered removed from employment with the Company by a regulatory or
other governmental agency pursuant to applicable law.
(c) By the Company Without Cause
The Company may, upon two weeks' written notice, terminate the employment of
the Executive, at any time, for any reason, with or without Cause and without
liability. If employment is terminated by the Company as described in the
preceding sentence:
(i) The Company will pay the Executive his base salary at the rate in
effect at the time of termination for the remainder of the Period of Employment
or one year from the date of termination, whichever is greater;
(ii) If termination occurs in 1996, the Company shall pay to Executive his
maximum annual incentive award(s) for the remainder of the Period of
Employment. If termination occurs after December 31, 1996, the Company shall
pay the Executive annual incentive award amounts equal to the amount of annual
incentive earned by the Executive in the previous fiscal year for the remainder
of the Period of Employment or for one year, whichever is greater; and,
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(iii) The value of VCU awards will be determined as follows. If
termination occurs on or before December 1, 1997, the Company will pay a pro
rata amount of the value of all VCU awards as determined under the terms of the
VCU Plan. If termination occurs after December 1, 1997, all VCU awards will be
valued and paid in full.
The Company will continue to cover the Executive in the Company's benefit
programs through the end of Period of Employment or one year from the date of
termination, whichever is greater. The Company may elect, in its sole and
absolute discretion, to pay severance payments in a lump sum equal to the
present value of the future monthly payments (assuming an 8% discount rate),
including amounts necessary to reimburse the Executive for participation in the
Company's benefit plans under the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA").
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
(d) Voluntary Termination
The Executive may terminate employment at any time by giving the Company one
month's advance written notice of such termination. In this event, the Company
will pay the salary and benefits to which the Executive is entitled through the
end of the notice period, and thereafter the Company's obligations under this
Agreement will cease. The Executive will not be entitled to any annual
incentive or long term incentive grant (VCU Plan) for the year in which he
terminates his employment.
(e) Termination for "Good Reason"
The Executive may also terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean:
(i) any assignment to the Executive of duties other than those contemplated
by this Agreement or in accordance with those typically assumed by a President
and CEO or which represent a material reduction in the scope and authority of
Executive's position;
(ii) a Company required relocation of Executive's principal place of work
which requires an increase in Executive's normal commute of more than 50 miles
which is not agreed to by Executive; or,
(iii) any reduction in salary below $400,000 per year which is not agreed
to by Executive.
If Executive terminates employment for "Good Reason," the Company will pay the
Executive:
(iv) his base salary at the rate in effect at the time of termination for
the remainder of the Period of Employment or one year from the date of
termination, whichever is greater;
(v) If termination occurs in 1996, the Company shall pay to Executive his
maximum annual
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incentive award(s) for the remainder of the Period of Employment. If
termination occurs after December 31, 1996, the Company shall pay the Executive
annual incentive award amounts equal to the amount of annual incentive earned
by the Executive in the previous fiscal year for the remainder of the Period of
Employment or for one year, whichever is greater;
(vi) the value of VCU awards, determined as follows. If termination occurs
on or before December 1, 1997, the Company will pay a pro rata amount of the
value of all VCU awards as determined under the terms of the VCU Plan. If
termination occurs after December 1, 1997, all VCU awards will be valued and
paid in full.
The Company will continue to cover the Executive in the Company's benefit
programs through the end of the Period of Employment or one year from the date
of termination, whichever is greater. The Company may elect, in its sole and
absolute discretion, to pay severance payments in a lump sum equal to the
present value of the future monthly payments (assuming an 8% discount rate),
including amounts necessary to reimburse the Executive for participation in the
Company's benefit plans under the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA").
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
(f) Termination Obligations
Executive acknowledges and agrees that all personal property and equipment
furnished to or prepared by the Executive in the course of or incidental to his
employment belong to the Company and shall be promptly returned to the Company
upon termination of employment by Executive of the Company with or without
Cause or Good Reason. Executive further acknowledges and agrees that all
confidential materials and documents, whether written or contained in computer
files, diskettes, or any other media, remain the property of the Company, shall
be promptly returned to the Company upon termination of employment, and shall
not retain any copies or duplicates or originals of such documents or materials
in any format unless the Company agrees in writing to permit such retention.
6. PROPRIETARY INFORMATION
Executive acknowledges that he has had access to proprietary information, trade
secrets, and confidential material of the Company including, without
limitation, information regarding the Company's business, operations, trade
secret and other proprietary, confidential information, lending and
distribution processes, and other management and financial information.
Executive agrees, without limitation in time or until such information shall
become public other than by Executive's unauthorized disclosure, to maintain
the confidentiality of such information and refrain from divulging, disclosing,
or otherwise using said confidential information to the detriment of the
Company or its subsidiaries, affiliates, successors or assigns, or for any
other purpose.
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7. ASSIGNMENT
The Executive's rights and obligations under this Agreement may not be
assigned, and any attempted assignment shall be null and void. The Company may
assign this Agreement, but only to a successor or affiliated organization.
8. NOTICES
All notices referred to in this Agreement shall be in writing and delivered to
the Company at its principal address, 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, or to the Executive at 00000 Xxx X'Xxxxxxx Xxxxx, Xxxxx,
Xxxxxxxxxx 00000.
9. ENTIRE AGREEMENT
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of the Executive
by the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement
shall constitute the complete and exclusive statement of its terms, and that no
extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
10. AMENDMENTS AND WAIVERS
This Agreement may not be modified, amended, or terminated except in writing,
signed by the Executive and by a duly authorized representative of the Company
other than the Executive. No failure to exercise and no delay in exercising
any right, remedy, or power hereunder shall operate as a waiver thereof.
11. SEVERABILITY AND ENFORCEMENT
If any provision of this Agreement shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Agreement shall remain in full force and effect.
12. GOVERNING LAW
This Agreement shall be interpreted and construed in compliance with the laws
of the State of California, unless a superseding Federal law is applicable.
13. ARBITRATION
The parties agree that any disputes that may arise in connection with, arising
out of or relating to this Agreement, or any dispute that relates in any way,
in whole or in part, to Executive's employment with
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the Company, the termination of that employment or any other dispute by and
between the parties or their successors or assigns, will be submitted to
binding arbitration in Los Angeles, California, according to the rules and
procedures of the American Arbitration Association and California Code of Civil
Procedure Section 1283.05. The parties agree that each will bear his or its own
attorney's fees and costs in connection with any such arbitration and each
party will pay half of any costs associated with the arbitration. This
arbitration obligation extends to any and all claims that may arise by and
between the parties or their successors, assigns or affiliates, and expressly
extends to, without limitation, claims or causes of action for wrongful
termination, impairment of ability to compete in the open labor market, breach
of an express or implied contract, breach of any collective bargaining
agreement, breach of the covenant of good faith and fair dealing, breach of
fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of
emotional distress, disability, loss of earning, and claims under the
California or Colorado constitutions, the United States Constitution, and
applicable state and federal fair state labor statutes and regulations,
including, but not limited to, the Civil Rights Act of 1964, as amended, the
Fair Labor Standards Acts, as amended, the Americans With Disabilities Act of
1990, the Rehabilitation Act of 1973, as amended, the Employee Retirement
Income Security Act of 1974, as amended, and the Age Discrimination in
Employment Act of 1967.
In witness whereof, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer.
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Xxxxx Xxxxxx
Family Restaurants, Inc. El Torito Restaurants, Inc.
By:_______________________________ By:_________________________
Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx,
Xx. Senior Vice President and CFO Vice President
Chi-Chi's, Inc.
By:_______________________________
Xxxxxx X. Xxxxxxx, Xx.
Vice President
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