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Exhibit 10.3
EMPLOYMENT AGREEMENT
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This Agreement is made and entered into effective this 27th
day of June, 1995, between Skyline Chili, Inc., an Ohio
corporation (the "Company"), and Xxxxxx X. Xxxxxxx, an officer of
the Company (the "Employee").
WHEREAS, the Employee is an at-will employee of the Company;
and
WHEREAS, in order to provide the Employee with additional
incentive and motivation to contribute to the Company's future
growth and continued success, the Company has determined to
provide the Employee with severance benefits if the Employee's
employment is terminated under certain circumstances.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Company and the Employee agree as follows:
1. TERM. This Agreement shall be effective as of the date
hereof and shall terminate on June 27, 1998.
2. TERMINATION OF EMPLOYMENT.
(a) If the Employee's employment with the Company is
terminated by the Company "Without Cause," as hereinafter
defined, the Employee shall be entitled to the severance benefits
described in Paragraph 3 of this Agreement. For purposes of this
Agreement, the termination of the Employee's employment by the
Company for any of the following reasons or in connection with
any of the following events shall constitute a termination
Without Cause:
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(i) the termination of the Employee's employment
by the Company in connection with a "Change-In-Control
Transaction," as hereinafter defined; or
(ii) the termination of the Employee's employment
by the Company for any other reason, other than the Employee's
death or permanent disability or a termination "With Cause," as
hereinafter defined.
(b) For purposes of this Agreement, the occurrence of any one of the
following events shall constitute a Change-In-Control Transaction:
(i) the sale by the Company of all or
substantially all of the Company's assets to a single purchaser
or to a group of associated purchasers;
(ii) the sale, exchange or other disposition, in
one transaction or a related series of transactions, of fifty
percent (50%) or more of the outstanding shares of the Company;
(iii) a bona fide decision by the Company to
terminate its business and liquidate its assets; or
(iv) the merger or consolidation of the Company in
a transaction in which the shareholders of the Company receive or
hold less than fifty percent (50%) of the outstanding voting
shares of the continuing or new corporation.
The termination of the Employee's employment with the
Company or any successor business entity, for any reason other
than the Employee's death or disability, within six months prior
to or within one year after a Change-In-Control Transaction,
shall be rebutably presumed to be a termination of employment in
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connection with a Change-In-Control Transaction as defined in
this Paragraph 2(b).
(c) For purposes of this Agreement, termination of the
Employee's employment "With Cause" shall mean a decision by the
Company's Management or Board of Directors to terminate
employment based upon the occurrence of one or more of the
following events: (i) the Employee's conviction of or having
entered a plea of guilty or no contest to (A) a felony, or (B)
any other crime which has a material adverse effect on the
Company, (ii) the Employee materially breaching or neglecting his
duties or responsibilities to the Company, (iii) the Employee
engaging in willful or material misconduct in connection with the
performance of his duties or responsibilities to the Company, or
(iv) the Employee engaging in any other improper conduct which
has a material adverse effect on the Company such as would make
his continued employment by the Company prejudicial to the best
interests of the Company.
(d) For purposes of this Agreement, the term "Company"
shall include any business entity which purchases or otherwise
acquires substantially all of the Company's business and assets.
(3) SEVERANCE BENEFITS. If the Employee's employment with
the Company is terminated by the Company Without Cause, the
Company shall pay or provide the Employee with the following
severance benefits (collectively the "Severance Benefits"):
(a) The Employee's then current annual base salary
shall be continued for a period of one year after the effective
date of the termination of the Employee's employment (the
"Effective Termination Date"). Such payments shall be paid
monthly in arrears.
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(b) The Employee shall be paid a cash amount equal to
a pro rata share of the annual bonus, if any, that the Employee
would have received under the terms of the annual bonus plan
being maintained by the Company for the fiscal year in which the
Effective Termination Date occurs. The total annual bonus the
Employee would have received shall be determined in the same
manner and paid at the same time it would have been determined
and paid if the Employee had continued his employment with the
Company, except the total annual bonus shall be based solely upon
the achievement of Company objectives and not on achievement of
the Employee's personal management objectives. The pro rata
share of the total annual bonus to be paid to the Employee
pursuant to this Agreement shall be determined based upon the
number of days the Employee was employed by the Company during
the fiscal year through the Effective Termination Date.
(c) The Employee shall be paid a cash amount equal to
a pro rata share of the supplemental bonus, if any, that the
Employee would have received under the terms of the long-term
supplemental bonus plan being maintained by the Company for the
fiscal year in which the Effective Termination Date occurs. The
total supplemental bonus the Employee would have received shall
be determined in the same manner it would have been determined if
the Employee had continued his employment with the Company,
except the total supplemental bonus shall be equal to the lesser
of the Employee's individual share of the supplemental bonus
pool: (i) at the end of the most recently completed accounting
period prior to the Effective Termination Date, or (ii) at the
end of the fiscal year in which the Effective Termination Date
occurs. The pro rata share of the total supplemental bonus to be
paid to the Employee pursuant to this Agreement shall be
determined based upon the number of days the Employee was
employed by the Company from the beginning of the period covered
by the long-term supplemental bonus plan through the Effective
Termination Date. The cash amount required by this Paragraph
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3(c) shall be paid at the same time as the amount described in
Paragraph 3(b).
(d) The termination date of any options to purchase
shares of the Company's common stock held by the Employee on the
Effective Termination Date shall be extended for a period of one
year after the Effective Termination Date.
(e) For a period of one year after the Effective
Termination Date, the Company shall pay directly, or shall
reimburse the Employee for the actual costs of continuing
coverage for the Employee and his dependents under the
comprehensive medical and health plan maintained by the Company
for the benefit of the Company's officers and employees
generally, pursuant to the provisions of the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"). The Company and the
Employee agree to cooperate and to execute such notices,
elections, and other forms or documentation as may be necessary
to continue such comprehensive medical and health coverage under
COBRA. If the Employee and his dependents are determined, for
reasons beyond the control of the Company, to be ineligible to
receive continued coverage under COBRA, the Employee may obtain,
to the extent available, individual health insurance coverage,
for a period of one year after the Effective Termination Date,
for himself and his dependents, providing substantially the same
benefits and the Company shall reimburse him for the cost of such
individual coverage up to a maximum of $2,000.00.
4. CONSULTING OBLIGATION AND TAX TREATMENT OF SEVERANCE
BENEFITS. In consideration for the Severance Benefits and during
the one year period following the Effective Termination Date, the
Employee shall render such services of an advisory or
consultative nature to the Company as the Company may reasonably
request or direct, taking into consideration the demands of any
future employment or business relationships entered into by the
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Employee. If the Employee is unable to render such advisory or
consultative services due to his death, disability or other
reasons beyond his control, the Severance Benefits described in
Paragraph 3 of this Agreement shall continue to be provided,
without deduction or set-off, to either the Employee or his
estate. The cash payments and related Severance Benefits
provided for in Paragraph 3 shall be made to the Employee as a
severance benefit in recognition of services to the Company and
in connection with his services as an independent contractor
consultant to the Company (if such services are requested). The
Employee shall be solely responsible for and shall pay all
federal, state and local taxes, charges and contributions imposed
or assessed in connection with the cash payments and related
Severance Benefits provided for in Paragraph 3, including
estimated income and self-employment taxes.
5. SEVERANCE BENEFITS CONDITIONED UPON EMPLOYEE RELEASE.
The Company's obligation to provide the Severance Benefits
described in Paragraph 3 shall be specifically conditioned upon:
(a) the Employee providing the Company with a written
release, in form and substance satisfactory to the Company, in
which the Employee releases and discharges the Company and its
affiliates, directors, officers, employees, successors and
assigns from any and all debts, claims, demands, damages, actions
and causes of action whatsoever, whether in law or in equity
which the Employee has or may have in any capacity against such
persons;
(b) the Employee reaffirming in a written agreement,
in form and substance satisfactory to the Company, that he will
never use or disclose any of the Company's confidential
information or trade secrets; and
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(c) the Employee reaffirming or entering into a
written non-compete agreement, in form and substance satisfactory
to the Company, providing that for a period of two (2) years
after the Effective Termination Date, the Employee will not,
without the prior written consent of the Company, directly or
indirectly, for himself, or on behalf of or in conjunction with,
any person, corporation, partnership or other business entity:
(1) own, manage, operate, control, invest in, be
employed by, participate in, or be connected in any manner with
any business that develops, franchises, owns or operates
restaurants that sell primarily chili, hot dogs with chili,
chili-spaghetti, or related products, or that manufactures and
sells primarily chili, chili-spaghetti, or related frozen grocery
products (including but not limited to any of the business
organizations or entities listed on Exhibit A attached to this
Agreement, or any affiliate, franchisee, licensee or successor
thereof) in any state in which the Company, its affiliates or its
franchisees are operating restaurants, or in which the Company's
frozen grocery products are sold; provided, however, nothing
contained in this Agreement will be construed as restricting or
prohibiting the Employee from: (i) engaging in any restaurant or
food business not primarily involving the production or sale of
chili; or (ii) investing in any business not managed or
controlled by the Employee if an equity security of the business
is registered under the Securities Exchange Act of 1934;
(2) divert or attempt to divert any business of
the Company, its affiliates, or its franchisees, of the kinds or
types engaged in by the Company, its affiliates, or its
franchisees to any competitor; or
(3) seek to employ any person who is at that time
or has been within the six (6) month period prior to that time
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employed by the Company or its affiliates, or induce such a
person to leave his or her employment.
6. Termination of Employment Generally.
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(a) Nothing in this Agreement is intended or shall be
construed to alter the "at-will" employment relationship between
the Company and the Employee. The Employee shall have the right
to terminate his employment with the Company at any time. The
Company shall have the right to terminate the Employee's
employment With Cause or Without Cause at any time.
(b) Upon the termination of the Employee's employment
by the Company With Cause or by reason of the Employee's death or
disability, or upon the Employee voluntarily terminating his
employment with the Company, all obligations of the Company to
the Employee shall terminate and the Employee shall not be
entitled to any Severance Benefits, additional salary, salary
continuation, bonus, fringe benefits, severance pay or other
compensation, except: (i) for accumulated vacation and paid
leave time, or (ii) as provided in any separate agreement or
employee benefit plan which by its terms specifically provides
for post-termination or severance benefits.
7. Miscellaneous.
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(a) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and
the other writings and agreements referred to herein or delivered
in connection herewith contain the entire understanding of the
parties with respect to its subject matter and supersede any
prior understandings or oral or written agreements between the
parties. This Agreement may be modified or amended only by a
written instrument duly executed by the parties hereto.
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(b) HEADINGS. The paragraph or subparagraph headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the interpretation of this Agreement.
(c) BINDING EFFECT. This Agreement shall be binding
upon, shall inure to the benefit of, and shall be enforceable by
the Company and its successors or assigns, and by the Employee
and his heirs, executors, personal representatives, successors
and assigns.
(d) CHOICE OF LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Ohio.
(e) SEVERABILITY. If any provision of this Agreement,
or the application of any such provision to any person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to any person or
circumstance other than those to which it is held invalid, shall
not be affected thereby.
(f) COUNTERPARTS. This Agreement may be executed in
one or more counterpart copies, each of which when fully executed
and delivered, shall be considered an original, but all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
SKYLINE CHILI, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
_____________________________
Its: Chairman of the Board
____________________________
/s/ Xxxxxx X. Xxxxxxx
_________________________________
Xxxxxx X. Xxxxxxx
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EXHIBIT A
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The Chili Company
Chili Time
Gold Star Chili
Empress Chili
Xxxxx Chili
