EXHIBIT 10.1
SEVERANCE AND CONSULTING AGREEMENT
AND GENERAL RELEASE
THIS SEVERANCE AGREEMENT AND GENERAL RELEASE ("Agreement") is made and
entered into this 6th of July 2006, by and between XXXXXX X. XXXXX, XX.
(hereinafter referred to as "Xx. Xxxxx") and O'CHARLEY'S INC. and its
subsidiaries and related entities (hereinafter collectively referred to as
"O'Charley's").
WITNESSETH:
WHEREAS, Xx. Xxxxx currently serves as President, Commissary Operations --
O'Charley's and has expressed his desire to resign his position as such
effective June 30, 2006 (the "Effective Date");
WHEREAS, O'Charley's has expressed its willingness to accept Xx. Xxxxx'x
resignation upon the following terms and conditions; and
WHEREAS, after a period of negotiations between them, the parties have
reached an agreement by which Xx. Xxxxx will resign as of the Effective Date.
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
1. The recitals set forth above are true and accurate, and by signing this
Agreement, Xx. Xxxxx hereby resigns his employment with O'Charley's,
effective upon the Effective Date. Between the date of this Agreement and
the Effective Date, Xx. Xxxxx will continue to serve at the direction of
O'Charley's Chief Executive Officer. During such time, Xx. Xxxxx will
continue to receive his base salary as currently in effect.
Notwithstanding the foregoing, from the Effective Date until February 28,
2007 (the "Consulting Period"), Xx. Xxxxx shall serve as a consultant to
O'Charley's Inc. with respect to the business and operations of the
O'Charley's commissary and supply chain; provided, however, Xx. Xxxxx shall
in no case be deemed to be an employee of O'Charley's but instead shall
serve as an independent contractor for all purposes. Xx. Xxxxx agrees to
make himself available for consulting upon the reasonable request of
O'Charley's by telephone or in person, during normal business hours;
provided, however, in no event shall Xx. Xxxxx be required to perform more
than three days per month in service as a consultant to O'Charley's during
the Consulting Period. In connection with the services to be rendered by
Xx. Xxxxx to X'Xxxxxxx'x under this paragraph 1 (the "Services"), Xx. Xxxxx
will not, without the consent or direction of O'Charley's, act or attempt
to act or represent himself, directly or by implication, as an agent of
O'Charley's or in any manner assume or create, or attempt to create, any
obligation on behalf of, or in the name of O'Charley's. In the event
O'Charley's requests Xx. Xxxxx to incur any expenses in connection with the
Services, O'Charley's agrees to pay, in accordance with O'Charley's normal
reimbursement policies, all reasonable expenses actually incurred by Xx.
Xxxxx in connection with providing the Services, including without
limitation,
travel, meals and lodging expenses, in accordance with O'Charley's'
then-current policies for reimbursement of business expenses.
The cash and other consideration paid to Xx. Xxxxx under paragraph 9 shall
constitute sufficient consideration for the Services pursuant to this
paragraph 1 for the covenants and agreements contained herein, including
the release contained in paragraph 5 and the Restrictive Agreements
contained in paragraphs 6, 7 and 8. O'Charley's shall have no other
compensation obligations to Xx. Xxxxx with respect to the Services.
2. This Agreement is not and shall not be construed as an admission by
O'Charley's of any fact or conclusion of law. Without limiting the general
nature of the previous sentence, this Agreement shall not be construed as
an admission that O'Charley's, its subsidiaries, related entities, or any
of its or their officers, directors, managers, agents, or employees have
violated any law or regulation or have violated any contract, express or
implied.
3. Xx. Xxxxx represents and warrants that he has not filed any complaint(s) or
charge(s) against O'Charley's with the Equal Employment Opportunity
Commission or the state commission empowered to investigate claims of
employment discrimination, the United States Department of Labor, the
Office of Federal Contract Compliance Programs, or with any other local,
state or federal agency or court, and that if any such agency or court
assumes jurisdiction of any complaint(s) or charge(s) against O'Charley's
on behalf of Xx. Xxxxx, Xx. Xxxxx will request such agency or court to
withdraw from the matter, and Xx. Xxxxx will refuse any benefits derived
therefrom. This Agreement will not affect Xx. Xxxxx'x right to hereafter
file a charge with or otherwise participate in an investigation or
proceeding conducted by the Equal Employment Opportunity Commission
regarding matters which arose after the Effective Date and which are not
the subject of this Agreement.
4. Xx. Xxxxx represents and agrees that he is fully aware of his rights and is
advised to discuss any and all aspects of this Agreement with his attorney,
that Xx. Xxxxx has consulted with his attorney regarding this Agreement, or
has chosen voluntarily not to do so, that he has carefully read and fully
understands all of the provisions of this Agreement, and that, in
consideration of the provisions hereof, Xx. Xxxxx agrees to enter into this
Agreement. Xx. Xxxxx represents and acknowledges that prior to the
execution of this Agreement, he has been provided a period of twenty-one
(21) days within which to consider the Agreement.
5. Xx. Xxxxx hereby irrevocably and unconditionally releases, acquits and
forever discharges O'Charley's and its subsidiaries and related entities
and each of its respective shareholders, successors, assigns, agents,
directors, officers, employees, representatives, and attorneys, and all
persons or entities acting by, through, under or in concert with any of
them (collectively, the "Released Parties"), or any of them, from any and
all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorney's
fees and costs actually incurred), of any nature whatsoever, known or
unknown ("Claims"), which Xx. Xxxxx now has, owns, holds, or claims to
have, own, or hold, or which Xx. Xxxxx at any time heretofore had, owned,
or held, or claimed to
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have, own, or hold. Such Claims include those under local, state or federal
law, Executive Order, or at common law including, but not limited to, the
Age Discrimination in Employment Act. This provision does not include the
release of future charges before the Equal Employment Opportunity
Commission regarding matters which arose after the Effective Date and which
are not the subject of this Agreement. This provision further does not
include the release of Claims with respect to any vested benefits under a
plan governed by the Employee Retirement Income Security Act or any Claim
related to the rights and benefits granted by the express terms of this
Agreement.
6. Xx. Xxxxx agrees that he will not, without O'Charley's prior written
consent, for a period beginning on the Effective Date and ending on June
30, 2007, directly or indirectly, (i) solicit to hire or hire (or cause to
leave the employ of O'Charley's) any salaried employee of O'Charley's or
its subsidiaries other than Xxxxxx Xxxxx or (ii) for himself or through, on
behalf of or in conjunction with any person, persons or entity, own,
consult with, maintain, operate, engage in, be employed by or have any
financial or beneficial interest in (other than as a holder of not more
than one percent of the outstanding stock of any corporation, which stock
is publicly traded), advise, assist or make loans to, any business with
greater than five separate units, that is of a character and concept
similar to, and within 25 miles of an existing or planned O'Charley's,
Ninety-Nine Restaurant & Pub or Stoney River Legendary Steaks restaurant.
Nothing herein shall prohibit Xx. Xxxxx from being a passive investor in a
restaurant or restaurant chain so long as Xx. Xxxxx does not take an active
role in the management or operations of such restaurant or restaurant chain
during the term of the Restrictive Agreements (as hereinafter defined). The
agreements set forth in this paragraph 6, together with those contained in
paragraph 7 are sometimes hereinafter collectively referred to as the
"Restrictive Agreements."
7. Xx. Xxxxx also recognizes that, as President, Commissary Operations --
O'Charley's he has had access to, was provided in detail with, and used
throughout his employment with O'Charley's, certain confidential and
proprietary business information. Such information includes but is not
limited to business strategy, pricing information, branding strategy,
budgets, site location, vendor information, market analysis and evaluation,
and other such proprietary and confidential business information as defined
under Tennessee law as a trade secret (hereinafter "Confidential and
Proprietary Business Information"). Xx. Xxxxx agrees that, without
O'Charley's prior written consent, he will not divulge, disclose, publish
or disseminate in any manner, directly or indirectly, any such Confidential
and Proprietary Business Information to any other person or entity.
8. Xx. Xxxxx agrees that the Restrictive Agreements are reasonable and
supported by adequate consideration, which but for his agreement herein,
Xx. Xxxxx would not be entitled to receive. Xx. Xxxxx further agrees that
the Restrictive Agreements are necessary for the protection of O'Charley's,
its business and its employees, and properly balance his personal interest
in future employment and the various interests related to O'Charley's, its
business and its employees. Xx. Xxxxx further agrees that if he breaches
any of the Restrictive Agreements, such breach likely will not have an
adequate remedy at law and that O'Charley's shall be entitled, in addition
to all other legal remedies available to it, to cease making the payments
provided under paragraph 9, recover any payments previously made under
paragraph 9 and apply to and obtain from a court of
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competent jurisdiction an injunction against any violation thereof with the
prevailing party entitled to recover all costs of such action, including
reasonable attorneys' fees. These rights and remedies shall be cumulative
and not alternative.
9. Following the Effective Date, O'Charley's will provide to Xx. Xxxxx the
following, from which payments O'Charley's will make applicable legal
withholdings:
(a) The aggregate sum of $242,460, payable as follows: (i) $158,531.46,
payable weekly at the rate of $4,662.69 commencing on the Effective
Date and (ii) $83,928.54, payable in a lump sum on February 28, 2007.
(b) An amount equal to the sum of (i) one-half of the bonus payment, if
any, that Xx. Xxxxx would have been owed with respect to the 2006
fiscal year had he continued to be employed by O'Charley's (payable
when such bonus payment would actually have been paid in accordance
with O'Charley's compensation policies).
(c) If Xx. Xxxxx elects to continue health insurance coverage pursuant to
his "COBRA" right after the Effective Date, O'Charley's will pay the
premiums for such coverage until February 28, 2007, and a lump sum
amount on February 28, 2007 equal to the sum of the premiums for such
coverage from March 1, 2007 through June 30, 2007.
10. Attached as Schedule A is a listing of all stock options and restricted
stock awards held by Xx. Xxxxx as of the Effective Date. Xx. Xxxxx agrees
that Schedule A accurately reflects all equity awards and their respective
terms held by him as of the date hereof and which are vested, unvested or
exercisable in whole or in part on the Effective Date. All such awards were
granted pursuant to the terms of the O'Charley's 2000 Stock Incentive or
the O'Charley's 1990 Stock Option Plan (collectively, the "Plans"). Upon
the Effective Date, each of the stock options and all shares of restricted
stock which are not exercisable or vested as of the Effective Date shall
terminate or be forfeited on such date; provided, however, that the
Restricted Stock Award dated February 24, 2006 shall be amended to provide
that it shall continue to vest through the Consulting Period. Each of the
stock options may be exercised to the extent exercisable on the Effective
Date for the lesser of three months from the Effective Date or the balance
of such stock option's term.
11. Xx. Xxxxx represents that he has not heretofore assigned or transferred, or
purported to assign or transfer to any person or entity, any claim or any
portion thereof or interest therein.
12. Xx. Xxxxx represents and acknowledges that in executing this Agreement he
does not rely and has not relied upon any other representation or statement
made by any of the Released Parties or by any of the Released Parties'
agents, representatives or attorneys, except as set forth herein, with
regard to the subject matter, basis or effect of this Agreement.
13. This Agreement shall be binding upon O'Charley's, Xx. Xxxxx and upon Xx.
Xxxxx'x heirs, administrators, representatives, executors, successors, and
assigns, and shall inure
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to the benefit of the Released Parties and each of them, and to their
heirs, administrators, representatives, executor, successors and assigns.
14. This Agreement shall in all respects be interpreted, enforced and governed
under the laws of the State of Tennessee. If either party files suit to
enforce the terms of this Agreement, the prevailing party shall be entitled
to its reasonable attorneys' fees and costs.
15. Xx. Xxxxx shall have seven (7) days following the execution of this
Agreement during which to revoke the Agreement. This Agreement shall become
effective and irrevocable only after the seven (7) day period has expired
and only absent a timely and effective revocation.
16. Should any provision of this Agreement be declared or be determined by any
court to be illegal or invalid, the validity of the remaining parts, terms,
or provisions shall not be affected thereby and said illegal or invalid
part, term or provision shall be deemed not to be a part of this Agreement.
17. This Agreement sets forth the entire agreement between the parties hereto.
O'CHARLEY'S INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Chief Accounting Officer and
Corporate Controller
XXXXXX X. XXXXX, XX.
/s/ Xxxxxx X. Xxxxx, Xx.
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Date: July 6, 2006
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SCHEDULE A
LIST OF EQUITY AWARDS
NUMBER OF
SHARES SUBJECT SHARES NUMBER OF SHARES
EXERCISE TO AWARD ON UNVESTED ON VESTED/EXERCISABLE ON
TYPE OF AWARD GRANT DATE PRICE EFFECTIVE DATE EFFECTIVE DATE EFFECTIVE DATE
------------- ---------- -------- -------------- -------------- ---------------------
Stock Option 2/19/2003 $ 21.19 11,220 0 11,220
Stock Option 2/15/2000 $11.875 15,000 7,050 7,950
Stock Option 2/17/1999 $ 15.25 20,000 0 20,000
Restricted Stock Award 2/24/2006 N/A 7,303 7,303 0(1)
Restricted Stock Award 1/21/2005 N/A 8,241 8,241 0
Restricted Stock Award 5/12/2004 N/A 7,416 7,416 0
Restricted Stock Award 2/19/2003 N/A 5,610 5,610 0
Restricted Stock Award 2/13/2002 N/A 5,196 0 1,732
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(1) The Restricted Stock Award dated February 24, 2006 shall be amended to
provide that it shall continue to vest through the Consulting Period
resulting in an aggregate of 2,334 shares being vested pursuant to the
award.
