EXHIBIT 10.47
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
BETWEEN FLAGSTAR COMPANIES, INC. AND XXXXX X. XXXXXXX
This Second Amendment to Employment Agreement ("Amendment") is made and
entered into as of December 31, 1996 between Flagstar Companies, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive entered into an Employment
Agreement dated as January 10, 1995 (the "Agreement");
WHEREAS, the Company and the Executive desire to extend the term of the
Executive's employment under the Agreement and the Company desires to provide
the Executive with additional incentives to continue in the employ of the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the parties agree as follows:
1. The first two sentences of section 1 of the Agreement are
amended and restated in their entirety to provide as follows:
"The Company agrees to employ the Executive from the first day
following the Executive's termination of his employment with
his prior employer (the "Commencement Date") until the close
of business on January 31, 1999, unless his employment is
earlier terminated pursuant to section 5. (The Executive's
period of employment under this Agreement, whether ending on
January 31, 1999 or earlier pursuant to section 5 is
hereinafter referred to as the "Employment Term," and each
twelve consecutive month period or portion thereof beginning
on the Commencement
Date and each anniversary thereof during the Employment Term
is hereinafter referred to as a "Contract Year.")"
2. Subsection (a) of section 3 of the Agreement is amended and
restated in its entirety to provide as follows:
"Base Compensation. During the Employment Term the Company
shall pay the Executive an annual base salary (the "Base
Salary") as compensation for his employment, in equal
installments and at least twice in each calendar month. The
Base Salary shall be at the annual rate of $950,000 for the
first Contract Year; $1,000,000 for the second Contract Year;
$1,050,000 for the third Contract Year; and $1,100,000 for the
fourth Contract Year."
3. New subsections (i), (j) and (k) are added to section 3 of the
Agreement after subsection (h) thereof, which new subsections shall provide as
follows:
"(i) 1996 Bonus. On January 7, 1997, the
Company shall pay the Executive an Annual Bonus for calendar
year 1996 in the amount of $100,000.
(j) Extension Bonus. Upon execution of this
Amendment, as a bonus for agreeing to extend the Employment
Term, the Company shall forgive in full its advance of
$325,000 of the Executive's 1996 Base Salary made on March 26,
1996.
(k) Retention Bonuses. On January 7, 1997, as a
retention bonus relating to services to be performed during
the year ending on December 31, 1997, the Company shall pay
the Executive $1,550,000. If the Executive is employed by the
Company on January 1, 1998 or if prior to January 1, 1998 (i)
the Executive's employment with the Company is terminated by
the Company without Cause or (ii) the Executive terminates his
employment with the Company under the circumstances described
in clause (A) of subsection (c)(iv) of section 5, on January
2, 1998 the Company shall pay the Executive a retention bonus,
relating to services to be
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performed during the year ending on December 31, 1998, in the
amount of $2,000,000; if the Executive's employment is
terminated during said period by reason of the Executive's
death or Permanent Disability, the amount of such retention
bonus shall be $1,000,000, which shall be paid on January 2,
1998. If the Executive is employed by the Company on January
1, 1999 or if after January 1, 1998 and prior to January 1,
1999 (i) the Executive's employment with the Company is
terminated by the Company without Cause or (ii) the Executive
terminates his employment with the Company under the
circumstances described in clause (A) of subsection (c)(iv) of
section 5, on January 2, 1999 the Company shall pay the
Executive a retention bonus, relating to services to be
performed during the year ending on December 31, 1999, in the
amount of $3,000,000; if the Executive's employment is
terminated during said period by reason of the Executive's
death or Permanent Disability, the amount of such retention
bonus shall be $1,500,000, which shall be paid on January 2,
1999. The Company's obligation to pay the Executive the
retention bonuses specified in this subsection (k) shall be
guaranteed by Denny's Restaurants, Inc. ("Denny's") pursuant
to the form of Guaranty and Security Agreement (the "Security
Agreement") attached hereto as Appendix "A". The Company shall
cause Denny's to execute and deliver the Security Agreement
and to establish and fund the Security Account referred to in
the Security Agreement with a bank reasonably acceptable to
the Executive by no later than January 20, 1997. On or before
January 20, 1997, Xxxxxx & Xxxxxxx shall deliver its opinion,
in a form which is reasonably satisfactory to the Executive,
with respect to the validity and perfection of the security
interest contemplated by the Security Agreement. None of the
retention bonuses provided for in this subsection (k) shall be
subject to forfeiture by the Executive for any reason after
the date the
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Executive has become entitled to receive each such bonus
pursuant to the provisions of this subsection (k)."
4. A new subsection (b)(v) is added to section 5 of the Agreement after
subsection (b)(iv) thereof, which new subsection shall provide as follows:
"(v) Notwithstanding subsection (b)(iv), in the event of a
Change in Control of the Company during the Employment Term,
during the period commencing on the effective date of the
Change in Control and ending six months thereafter, the
Executive may elect to tender his resignation to the Company
and upon the effective date of such termination of employment
the Company shall pay the Executive a lump sum payment equal
to 299% of the sum of (x) the Executive's Base Salary for the
twelve month period immediately preceding the date of
termination and (y) a targeted bonus amount equal to 75% of
such Base Salary. In addition, (A) the Executive and/or his
Family shall be entitled until the earlier of (x) the second
anniversary of the date of such termination of employment or
(y) the commencement of coverage of the Executive and/or his
Family by another group medical benefits plan providing
substantially comparable benefits to the Welfare Benefits and
which does not contain any pre-existing condition exclusions
or limitations, to receive and participate in the Welfare
Benefits in addition to any continuation coverage which the
Executive and/or his Family is entitled to elect under Section
4980B of the Code, (B) the Option shall be vested and
exercisable as of the effective date of such termination and
(C) the Restricted Stock shall be 100% vested on the effective
date of such termination. The foregoing payments and benefits
shall also be provided to the Executive if the Executive's
employment with the Company is terminated by the Company
without Cause or the Executive terminates his employment with
the Company under the circumstances described in clause (A) of
subsection (c)(iv) of section 5 during the
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period commencing on the effective date of such Change in
Control and ending six months thereafter."
5. Subsection (a)(iii) of section 5 is amended and restated in
its entirety to provide as follows:
"(iii) the close of business on the date on which the Company
gives the Executive written notice of the Company's
termination of his employment as a "Termination without Cause"
(as defined in subsection (c)) or the close of business on the
effective date of a termination of the Executive's employment
with the Company pursuant to clauses (A) through (D) of
subsection (c)(iv) of section 5;"
6. Clause (B) of subsection (b)(iii) of section 5 is amended by
inserting the following words at the beginning of such clause: "not later than
90 days after such termination,".
7. Subsection (c)(ii) of section 5 is amended and restated in its
entirety to provide as follows:
"(ii) A "Change in Control of the Company" shall occur on
the date on which designees of TW Associates, L.P. and KKR
Partners II, L.P. (collectively, "KKR") no longer constitute a
majority of the Board."
8. Clause (A) of subsection (c)(iv) of section 5 is amended and
restated in its entirety to provide as follows:
"(A) upon (i) the failure of Denny's to execute and deliver
the Security Agreement and to establish and fund the Security
Account referred to in the Security Agreement with a bank
reasonably acceptable to the Executive by no later than
January 20, 1997, (ii) the occurrence of an Event of Default
under the Security Agreement or (iii) 10 days' prior written
notice from the Executive of his voluntary termination of his
employment with the Company following a breach by the Company
of a material provision of this Agreement or of the Security
Agreement or a change by the
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Company of the Executive's title or duties as Chairman of the
Board and Chief Executive Officer of the Company without the
Executive's consent, which breach or change the Company does
not correct within 30 days or such longer reasonable amount of
time required to correct such breach or change, not to exceed
90 days, after the Executive notifies the Board in writing of
the action or omission which the Executive believes
constitutes such a breach or change;"
9. Subsection (e) of section 5 is amended and restated in its
entirety to provide as follows:
"(e) In the event of any termination of the Executive's
employment by the Company or by the Executive under the
circumstances described in clauses (A) through (D) of
subsection (c)(iv), 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 Agreement."
10. The Executive and the Company each represent and warrant to the
other that he or it has the authorization, power and right to deliver, execute,
and fully perform his or its obligations under this Agreement in accordance with
its terms.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first written above.
Flagstar Companies, Inc.
By /s/ Xxxxxx X. Xxxxxx
________________________
Title:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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