October 8, 1999
Xx. Xxxxx Xxxxxxx
Executive Vice President & COO
Xxxxx'x Roadhouse, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Re: Employee Retention Agreement
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Dear Xx. Xxxxxxx:
The Board of Directors of the CBRL Group, Inc. recognizes the
contribution that you have made to CBRL Group, Inc. or one of its direct or
indirect subsidiaries (collectively, the "Company") and wishes to ensure your
continuing commitment to the Company and its business operations.
Accordingly, in exchange for your continuing commitment to the Company, and
your energetic focus on continually improving operations, the Company
promises you the following benefits if your employment with the Company is
terminated in certain circumstances:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings which are equally applicable to both the singular and
plural forms of the terms defined:
1.1 "CAUSE" means any one of the following:
(a) personal dishonesty;
(b) willful misconduct;
(c) breach of fiduciary duty; or
(d) conviction of any felony or crime involving moral
turpitude.
1.2 "CHANGE IN CONTROL" means: (a) that after the date of this
Agreement, a person becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding voting securities, unless that
acquisition was approved by a vote of at least 2/3 of the directors in office
immediately prior to the acquisition; (b) that during any period of 2
consecutive years following the date of this Agreement, individuals who at
the beginning of the period constitute members of the Board of Directors of
the Company cease for any reason to constitute a majority of the Board unless
the election, or the nomination for election by the Company's shareholders,
of each new director was approved by a vote of at least 2/3 of the directors
then still in office who were directors at the beginning of the 2-year
period; (c) a merger, consolidation or reorganization of the Company (but
this provision does not apply to a recapitalization or similar financial
restructuring which does not involve a material change in ownership of equity
of the Company and which does not result in a
change in membership of the Board of Directors); or (d) a sale of all or
substantially all of the Company's assets. It is specifically agreed that a
sale, merger, spin-off or other disposition by the Company of Xxxxx'x
Roadhouse, Inc. as an entire business unit does not constitute a Change in
Control.
1.3 "CHANGE IN CONTROL PERIOD" means a 2-year year period
beginning the day after a Change in Control occurs.
1.4 "CHANGE IN DUTIES OR COMPENSATION" means any one of: (a) a
material change in your duties and responsibilities for the Company (without
your consent) from those duties and responsibilities for the Company in
effect at the time a Change in Control occurs, which change results in the
assignment of duties and responsibilities inferior to your duties and
responsibilities at the time such Change in Control occurs (it being
understood and acknowledged by you that a Change in Control that results in
two persons of which you are one having similar or sharing duties and
responsibilities shall not be a material change in your duties and
responsibilities); (b) a reduction in your salary or a material change in
benefits (excluding discretionary bonuses), from the salary and benefits in
effect at the time a Change in Control occurs; or (c) a change in the
location of your work assignment from your location at the time a Change in
Control occurs to any other city or geographical location that is located
further than 50 miles from that location.
2. TERMINATION OF EMPLOYMENT; SEVERANCE. Your immediate supervisor or
the Company's Board of Directors may terminate your employment, with or
without cause, at any time by giving you written notice of your termination,
such termination of employment to be effective on the date specified in the
notice. You also may terminate your employment with the Company at any time.
The effective date of termination (the "Effective Date") shall be the last
day of your employment with the Company, as specified in a notice by you, or
if you are terminated by the Company, the date that is specified by the
Company in its notice to you. The following subsections set forth your
rights to severance in the event of the termination of your employment in
certain circumstances by either the Company or you. Section 5 also sets forth
certain restrictions on your activities if your employment with the Company
is terminated, whether by the Company or you. That section shall survive any
termination of this Agreement or your employment with the Company.
2.1 TERMINATION BY THE COMPANY FOR CAUSE. If you are terminated
for Cause, the Company shall have no further obligation to you, and your
participation in all of the Company's benefit plans and programs shall cease
as of the Effective Date. In the event of a termination for Cause, you shall
not be entitled to receive severance benefits described in Section 3.
2.2 TERMINATION BY THE COMPANY WITHOUT CAUSE OTHER THAN DURING
A CHANGE IN CONTROL PERIOD. If your employment with the Company is
terminated by the Company without Cause at a time other than during a Change
in Control Period, you shall be entitled to only those severance benefits
provided by the Company's severance policy or policies then in effect. You
shall not be entitled to receive benefits pursuant to Section 3 of this
Agreement.
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2.3 TERMINATION BY THE COMPANY WITHOUT CAUSE DURING A CHANGE IN
CONTROL PERIOD. If your employment with the Company is terminated by the
Company without Cause during a Change in Control Period, you shall be
entitled to receive Benefits pursuant to Section 3. A termination within 90
days prior to a Change in Control which occurs solely in order to make you
ineligible for the benefits of this Agreement shall be considered a
termination without Cause during a Change in Control Period.
2.4 TERMINATION BY YOU FOR CHANGE IN DUTIES OR COMPENSATION
DURING A CHANGE IN CONTROL PERIOD. If during a Change in Control Period
there occurs a Change in Duties or Compensation you may terminate your
employment with the Company at any time within 30 days after the occurrence
of the Change in Duties or Compensation, by giving to the Company not less
than 120 nor more than 180 days notice of termination. During the notice
period that you continue to work, any reduction in your Compensation will be
restored. At the option of the Company, following receipt of this notice, it
may: (a) change or cure, within 15 days, the condition that you claim has
caused the Change in Duties or Compensation, in which case, your rights to
terminate your employment with the Company pursuant to this Section 2.4 shall
cease (unless there occurs thereafter another Change in Duties or
Compensation) and you shall continue in the employment of the Company
notwithstanding the notice that you have given; (b) allow you to continue
your employment through the date that you have specified in your notice; or
(c) immediately terminate your employment pursuant to Section 2.3. If you
terminate your employment with the Company pursuant to this Section 2.4, you
shall be entitled to receive Benefits pursuant to Section 3. Your failure to
provide the notice required by this Section 2.4 shall result in you having no
right to receive any further compensation from the Company except for any
base salary or vacation earned but not paid, plus any bonus earned and
accrued by the Company through the Effective Date.
3. SEVERANCE BENEFITS. If your employment with the Company is
terminated as described in Section 2.3 or 2.4, you shall be entitled to the
benefits specified in subsections 3.1, 3.2, and 3.3 (the "Benefits") for the
period of time set forth in the applicable section.
3.1 SALARY PAYMENT OR CONTINUANCE. You will be paid a single
lump sum payment in an amount equal to 2.99 times the average of your annual
base salary and any bonus payments for the 3 years immediately preceding the
Effective Date. The determination of the amount of this payment shall be
made by the Company's actuaries and benefit consultants and, absent manifest
error, shall be final, binding and conclusive upon you and the Company.
3.2 CONTINUATION OF BENEFITS. During the 2 years following the
Effective Date (the "Severance Period") that results in benefits under this
Article 3, you shall continue to receive the medical, prescription, dental,
employee life and group life insurance benefits at the levels to which you
were entitled on the day preceding the Effective Date, or reasonably
equivalent benefits, to the extent continuation is not prohibited or limited
by applicable law. In no event shall substitute plans, practices, policies
and programs provide you with benefits which are less favorable, in the
aggregate, than the most favorable of those plans, practices, policies and
programs in effect for you at any time during the 120-day period immediately
preceding the Effective Date. However, if you become reemployed with another
employer and are eligible to receive medical or other welfare
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benefits under another employer-provided plan, Company payments for these
medical and other welfare benefits shall cease.
4. EFFECT OF TERMINATION ON STOCK OPTIONS AND RESTRICTED STOCK. In the
event of any termination of your employment, all stock options and restricted
stock held by you that are vested prior to the Effective Date shall be owned
or exercisable in accordance with their terms; all stock options held by you
that are not vested prior to the Effective Date shall lapse and be void;
however, if your employment with the Company is terminated as described in
Sections 2.3 or 2.4, then, if your option or restricted stock grants provide
for immediate vesting in the event of a Change in Control, the terms of your
option or restricted stock agreement shall control. If your option or
restricted stock agreement does not provide for immediate vesting, you shall
receive, within 30 days after the Effective Date, a lump sum cash
distribution equal to: (a) the number of shares of the Company's ordinary
shares that are subject to options or restricted stock grants held by you
that are not vested as of the Effective Date multiplied by (b) the difference
between: (i) the closing price of a share of the Company's ordinary shares on
the NASDAQ National Market System as reported by The Wall Street Journal as
of the day prior to the Effective Date (or, if the market is closed on that
date, on the last preceding date on which the market was open for trading),
and (ii) the applicable exercise prices or stock grant values of those
non-vested shares.
5. DISCLOSURE OF INFORMATION. You recognize and acknowledge that, as
a result of your employment by the Company, you have or will become familiar
with and acquire knowledge of confidential information and certain trade
secrets that are valuable, special, and unique assets of the Company. You
agree that all that confidential information and trade secrets are the
property of the Company. Therefore, you agree that, for and during your
employment with the Company and continuing following the termination of your
employment for any reason, all confidential information and trade secrets
shall be considered to be proprietary to the Company and kept as the private
records of the Company and will not be divulged to any firm, individual, or
institution, or used to the detriment of the Company. The parties agree that
nothing in this Section 6 shall be construed as prohibiting the Company from
pursuing any remedies available to it for any breach or threatened breach of
this Section 6, including, without limitation, the recovery of damages from
you or any person or entity acting in concert with you.
6. GENERAL PROVISIONS.
6.1 OTHER PLANS. Nothing in this Agreement shall affect your
rights during your employment to receive increases in compensation,
responsibilities or duties or to participate in and receive benefits from any
pension plan, benefit plan or profit sharing plans except plans which
specifically address benefits of the type addressed in Sections 3 and 4 of
this Agreement. In addition, you are a party to a written employment
agreement with the Company or an affiliate, and it is the intention of the
parties to this Agreement that you will enjoy the maximum benefits provided
in circumstances of a Change in Control in either of those documents.
Therefore, we specifically agree that whenever the terms and conditions of
this Agreement and your employment agreement conflict, the terms and
conditions which maximize your benefits resulting from a
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Change in Control will be effective. Where one document is silent, the
provisions of the other document will be effective.
6.2 DEATH DURING SEVERANCE PERIOD. If you die during the
Severance Period, any Benefits remaining to be paid to you shall be paid to
the beneficiary designated by you to receive those Benefits (or in the
absence of designation, to your surviving spouse or next of kin).
6.3 NOTICES. Any notices to be given under this Agreement may be
effected by personal delivery in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be
addressed to the parties at the addresses appearing on the first page of this
Agreement (to the attention of the Secretary in the case of notices to the
Company), but each party may change the delivery address by written notice in
accordance with this Section 7.3. Notices delivered personally shall be
deemed communicated as of actual receipt; mailed notices shall be deemed
communicated as of the second day following deposit in the United States Mail.
6.4 ENTIRE AGREEMENT. This Agreement supersedes all previous oral
or written agreements, understandings or arrangements between the Company and
you regarding a termination of your employment with the Company or a change
in your status, scope or authority and the salary, benefits or other
compensation that you receive from the Company as a result of the termination
of your employment with the Company (the "Subject Matter"), all of which are
wholly terminated and canceled. This Agreement contains all of the covenants
and agreements between the parties with respect to the Subject Matter. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made with respect to
the Subject Matter by any party, or anyone acting on behalf of any party,
which are not embodied in this Agreement. Any subsequent agreement relating
to the Subject Matter or any modification of this Agreement will be effective
only if it is in writing signed by the party against whom enforcement of the
modification is sought.
6.5 PARTIAL INVALIDITY. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.
6.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, and it shall
be enforced or challenged only in the courts of the State of Tennessee.
6.7 WAIVER OF JURY TRIAL. The Company and you expressly waive
any right to a trial by jury in any action or proceeding to enforce or defend
any rights under this Agreement, and agree that any such action or proceeding
shall be tried before a court and not a jury. You irrevocably waive, to the
fullest extent permitted by law, any objection that you may have now or
hereafter to the specified venue of any such action or proceeding and any
claim that any such action or proceeding has been brought in an inconvenient
forum.
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6.8 MISCELLANEOUS. Failure or delay of either party to insist
upon compliance with any provision of this Agreement will not operate as and
is not to be construed to be a waiver or amendment of the provision or the
right of the aggrieved party to insist upon compliance with the provision or
to take remedial steps to recover damages or other relief for noncompliance.
Any express waiver of any provision of this Agreement will not operate, and
is not to be construed, as a waiver of any subsequent breach, irrespective of
whether occurring under similar or dissimilar circumstances. You may not
assign any of your rights under this Agreement. The rights and obligations
of the Company under this Agreement shall benefit and bind the successors and
assigns of the Company. The Company agrees that if it assigns this Agreement
to any successor company, it will ensure that its terms are continued.
6.9 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
a. The Company will pay you an amount (the "Additional
Amount") equal to the excise tax under the United States Internal Revenue
Code of 1986, as amended (the "Code"), if any, incurred by you by reason of
the payments under this Agreement and any other plan, agreement or
understanding between you and the Company or its parent, subsidiaries or
affiliates (collectively, "Separation Payments") constituting excess
parachute payments under Section 280G of the Code (or any successor
provision). In addition, the Company will pay an amount equal to all excise
taxes and federal, state and local income taxes incurred by you with respect
to receipt of the Additional Amount. All determinations required to be made
under this Section 6.9 including whether an Additional Amount is required and
the amount of any Additional Amount, will be made by the independent auditors
engaged by the Company immediately prior to the Change in Control (the
"Accounting Firm"), which will provide detailed supporting calculations to
the Company and you. In computing taxes, the Accounting Firm will use the
highest marginal federal, state and local income tax rates applicable to you
and will assume the full deductibility of state and local income taxes for
purposes of computing federal income tax liability, unless you demonstrate
that you will not in fact be entitled to such a deduction for the year of
payment.
b. The Additional Amount, computed assuming that all of
the Separation Payments constitute excess parachute payments as defined in
Section 280G of the Code (or any successor provision), will be paid to you at
the time that the payments made pursuant to Section 3.1 is made unless the
Company, prior to the Severance Period, provides you with an opinion of the
Accounting Firm that you will not incur an excise tax on part or all of the
Separation Payments. That opinion will be based upon the applicable
regulations under Sections 280G and 4999 of the Code (or any successor
provisions) or substantial authority within the meaning of Section 6662 of
the Code. If that opinion applies only to part of the Separation Payments,
the Company will pay you the Additional Amount with respect to the part of
the Separation Payments not covered by the opinion.
c. The amount of the Additional Amount and the
assumptions to be utilized in arriving at the determination, shall be made by
the Company's Accounting Firm, whose decision shall be final and binding upon
both you and the Company. You must notify the
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Company in writing no later than 30 days after you are informed of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Additional Amount. You must also cooperate
fully with the Company and give the Company any information reasonably
requested relating to the claim, and take all action in connection with
contesting the claim as the Company reasonably requests in writing from time
to time.
If all of the terms and conditions in this Agreement are agreed to
by you, please signify your agreement by executing the enclosed duplicate of
this letter and returning it to us. At the date of your return, this letter
shall constitute a fully enforceable Agreement between us.
CBRL GROUP, INC.
By: /s/Xxx X. Xxxxx
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Xxx X. Xxxxx
Title: Chairman & CEO
XXXXX'X ROADHOUSE, INC.
By: /s/Xxxxx X. XxXxxxxx
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Xxxxx X. XxXxxxxx
Title: Sr. Vice President Finance, CFO
The foregoing is fully agreed to and accepted by:
Company Employee's Signature: /s/Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President & COO
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