EL CHICO RESTAURANTS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of August 7,
1997, 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 Xxxxxxxx X. Xxxxx (the "Employee") who
resides at 0000 Xxx Xxxxx Xxxxx, Xxxxx, Xxxxx 00000.
W I T N E S S E T H:
WHEREAS, on January 1, 1996, the Company and the Employee entered into
discussions 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 8 of
this Agreement, the terms of the Employee's employment with the Company
shall commence on January 1, 1997 and shall terminate on November 28, 1998,
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 $168,000 per year,
payable bi-weekly 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.
(b) The Employee shall be entitled to receive an annual bonus
following each year of employment during the term hereof of up to 52.5% of
the Employee's base salary, based on the attainment of financial objectives
established by the Company and approved by the Board of Directors. The
first such bonus shall be payable during fiscal 1998 based upon the
attainment of financial objectives during fiscal 1997.
(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 Chief Financial Officer of the Company
and shall continue to be engaged in an Executive capacity with the Company
to supervise and direct the financial activities and to maintain the public
relations and goodwill of the Company. The precise services of the Employee
may be reasonably extended or curtailed from time to time by the Board of
Directors of the Company, and the Employee shall report to the President and
Chief Executive Officer.
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 reasonably 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 9 or 22 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 9, 22,
and 25 of this Agreement, all other obligations of the Company hereunder
shall cease upon such termination.
8. TERMINATION.
8.1 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 22 and 25 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 22 and 25 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 22 and 25 hereof.
(d) In voting upon such termination described in Section 8.1(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.
8.2 Termination On or 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 8.2(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 22 and 25 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 8.2(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 9 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 8.2(c) and subject in
all respects to the provisions of Section 8.2(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 9 hereof. No termination of the Employee's employment with
the Company pursuant to Section 8.2(b) or (c) shall in any way terminate the
Company's obligations under Section 22 and 25 of this Agreement.
9. 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 (two) times the Employee's annualized includable
compensation (within the meaning of Section 28OG(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).
10. 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 9 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.
11. 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.
12. 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.
13. 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.
14. 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 10, 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.
15. BINDING AGREEMENT.
Subject to the provisions of Section 14 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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. SET OFF OR COUNTERCLAIM.
Except with respect to any claim against or debt 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/ Xxxxxxx X. Xxxxx
Print Name: XXXXXXX X. XXXXX
Title: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
EMPLOYEE
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
