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Exhibit 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (herein the "Agreement") is made as of the 3rd
day of April, 2000, by and between XXXX & BUSTER'S, INC. (the "Corporation") and
Xxxxx X. Xxxxxx (the "Employee").
RECITALS
A. The Corporation has offered continued employment to Employee for what
it believes to be a reasonable compensation package in light of the required
duties, responsibilities and restrictions. Employee has accepted such offer of
continued employment subject to the terms set forth herein.
B. The Corporation and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
continued employment of Employee by the Corporation.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual premises and the
covenants and promises contained herein, as well as good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Corporation and Employee hereby agree as follows:
1. Employment. The Corporation hereby employs, engages and hires Employee,
and Employee hereby accepts such employment and agrees to such hiring and
engagement, upon the terms and conditions hereinafter set forth.
2. Duties. Employee shall be employed as Co-Chief Executive Officer and
Chief Operating Officer of the Corporation for the entire term of his employment
as set forth in this Agreement and shall faithfully and to the best of his
abilities perform the following duties:
2.1 Employee shall have supervisory and oversight responsibility for
the Corporation. He shall have active management of the business and affairs of
the Corporation. He shall see that all orders and resolutions of the Board of
Directors of the Corporation (herein "Board of Directors") are carried into
effect.
2.2 Employee shall, when authorized by the Board of Directors, when
required by law or when the ordinary conduct of the Corporation's business
requires, execute, in the name of the Corporation, such contracts, documents,
papers or instruments on behalf of the Corporation to further its operations and
business interests.
2.3 Employee shall perform such other duties and responsibilities as
may be prescribed from time to time by the Board of Directors. Such other
executive duties or
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responsibilities shall be consistent with the duties of the office of Co-Chief
Executive Officer and Chief Operating Officer.
Employee shall devote substantially all of his time and attention to the
Corporation's business and affairs to carry out such responsibilities and shall
not engage in any active management role or own, directly or indirectly, more
than a ten percent (10%) interest in any other business activity except as
authorized by the Board of Directors.
3. Term. The initial term of the employment of Employee by the Corporation
pursuant to this Agreement shall begin on the date hereof and shall continue for
an initial period of one year, unless sooner terminated as hereinafter provided.
Unless terminated as hereinafter provided, the term of this Agreement shall be
continually renewed after the initial term on a rolling one year basis such that
at any point in time there shall always be a period of one year remaining on the
term of this Agreement.
4. Compensation.
4.1 Pre-termination. The Corporation shall pay Employee a salary
(payable in accordance with the Corporation's usual payment practices, but not
less frequently than monthly) for his services under this Agreement beginning at
an annual rate from the date hereof of Four Hundred Thousand Dollars
($400,000.00). Employee's annual salary may not be decreased but may be adjusted
upward at any time by the Board of Directors of the Corporation. Compensation to
Employee hereunder shall be prorated for any partial employment period. Employee
shall also participate in the executive incentive bonus plan and in any other
bonus arrangement mutually agreed between Employee and Corporation.
4.2 Post-termination. Upon each of the first ten (10) anniversary
dates of the termination of this Agreement, Corporation shall pay to Employee,
or Employee's estate in the event of Employee's death, the sum of One Hundred
Thousand Dollars ($100,000.00). In exchange therefor, Employee, on behalf of
himself and his heirs, grants to Corporation the right to use the personal
identity of Employee in connection with the Corporation's marketing concept for
such ten year period. The provisions of this Paragraph 4.2 shall be treated as
if deleted from this Agreement if Employee's employment is terminated for Cause
pursuant to Paragraph 7.3.
5. Benefits. In addition to the compensation provided in Paragraph 4,
Corporation shall provide Employee with the benefits described herein. The
amounts provided are a minimum and shall not be reduced during the term hereof,
but may be increased by the Board of Directors or the Compensation Committee
appointed by the Board of Directors.
5.1 Automobile. During the term of this Agreement, the Corporation
shall provide an automobile allowance to Employee of Fifteen Thousand Dollars
($15,000.00) per fiscal year (with a pro rated amount for any partial fiscal
year).
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5.2 Vacations, Holidays, Etc. During the term of this Agreement,
Employee shall be entitled to six (6) weeks vacation per calendar year. Unused
vacation periods may not be carried over to subsequent years.
5.3 Health Insurance and Death Benefits. Employee shall be provided
group medical and life insurance comparable to the standard medical and life
insurance coverage afforded other senior executive officers of the Corporation.
The Corporation shall also provide Employee with an allowance of Seven Thousand
Five Hundred Dollars ($7,500.00) per fiscal year (with a pro rata amount for any
partial fiscal year) for his use in purchasing additional insurance coverage for
medical, dental, hospitalization and death benefits or in payment of any
uninsured expenses or deductible payments not covered by the medical insurance
provided hereunder.
5.4 Disability Insurance. Employee shall be provided group
disability insurance comparable to the standard disability insurance coverage
afforded other senior executive officers of the Corporation. The Corporation
shall also provide Employee with an allowance of Four Thousand Five Hundred
Dollars ($4,500.00) per fiscal year (with a pro rated amount for any partial
fiscal year) to purchase disability insurance.
5.5 Reimbursement of Expenses. Upon submission of appropriate
receipts and other documents, the Corporation shall reimburse Employee for the
reasonable business expenses (other than automobile expenses) incurred by
Employee in fulfilling his duties hereunder.
5.6 Other Benefits. The Corporation shall provide to Employee such
benefits, other than those benefits expressly provided for in this Agreement,
which are generally made available to other senior executive officers of the
Corporation.
6. Non-Compete Agreement.
6.1 Covenant. Employee agrees not to engage in or become an employee
of or consultant or adviser of or have any direct or indirect interest in any
other person, firm, corporation or other entity engaged in, any business
activities directly competitive with the business of the Corporation or any of
its subsidiaries or licensees during the term of his employment by the
Corporation and for a period of six (6) months thereafter. The period of time
under which the Employee is to be bound by this covenant is hereinafter referred
to as the "Non-Compete Period". This restriction shall be applicable with
respect to each and every county and metropolitan area in the United States and
each country in which a licensee is located. Nothing contained in this Paragraph
6.1 shall restrict Employee from operating a restaurant and/or bar, provided,
however, such restaurant and/or bar may not use or operate under any service
xxxx or trade name similar to "Xxxx & Buster's".
6.2 Employees. During the Non-Compete Period, Employee will not
knowingly seek to induce any employee of the Corporation or any of its
affiliates to leave his or her employment.
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7. Termination. The employment of Employee hereunder shall terminate prior
to the expiration of the term of employment set forth in Paragraph 3 above upon
the happening of any one of the following events:
7.1 Death. The death of Employee.
7.2 Disability. The giving of written notice by the Corporation to
Employee of the termination of the employment of Employee upon the disability of
Employee. For purposes of this Paragraph, "disability of Employee" shall mean
the inability of Employee, due to illness, accident or any other physical or
mental incapacity, to perform the services provided for hereunder for a period
of one hundred eighty (180) consecutive calendar days. The inability of Employee
to perform the services provided for hereunder due to his illness, accident or
any other physical or mental incapacity shall not constitute a basis for
discharge under Paragraph 7.4 of this Agreement except to the extent there is
also a basis for discharge under this Paragraph 7.2.
7.3 Cause. The giving of written notice by the Corporation to
Employee of the termination of the employment of Employee for cause. For
purposes of this Paragraph, "cause" shall mean: (i) a material violation of
Corporation policy or a material breach by the Employee of the Employee's
obligations under Paragraph 2 (other than as a result of incapacity due to
physical or mental illness) that is demonstrably willful and deliberate on the
Employee's part, committed in bad faith or without reasonable belief that the
action or inaction that constitutes such breach is in the best interests of the
Corporation, and, if subject to being effectively remedied, is not remedied in a
reasonable period of time after receipt of written notice from the Corporation
specifying such breach or violation; or (ii) the conviction of the Employee of a
felony involving moral turpitude. Upon Employee's termination pursuant to the
foregoing provisions of this Paragraph 7, the Corporation shall promptly pay to
Employee (or his estate, heirs or personal representatives), the full amount of
his compensation and benefits accrued through the termination date.
7.4 Without Cause. The Corporation may also terminate the employment
of Employee hereunder for any other reason upon at least ninety (90) days
written notice prior to the expiration of the initial term or any additional one
year term provided in Paragraph 3; provided that upon Employee's termination by
the Corporation for any reason other than those set forth in Paragraphs 7.1,
7.2, or 7.3, (a "Termination Without Cause"), the Corporation shall, until the
Final Payment Date (as hereinafter defined) (i) continue to pay Employee his
then current salary pursuant to Paragraph 4 and (ii) pay Employee the greater
of: (a) the maximum bonus payable to Employee under the executive incentive plan
in effect ninety days prior to such termination, or (b) sixty percent (60%) of
the annual salary then in effect, and (iii) provide the benefits described in
Paragraphs 5.1, 5.3 and 5.4 or their economic equivalent on a pre-tax basis. The
Final Payment Date shall be two years after the date of such termination. Upon
Employee's termination pursuant to this Subparagraph 7.4, the Corporation within
thirty (30) days shall pay in a lump sum to Employee (or his estate, heirs or
personal representative) the full amount of his compensation and benefits
computed through the Final Payment Date.
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7.5 Removal from Board of Directors. If, at any time during the term
of this Agreement, Employee is removed from the Board of Directors of the
Corporation or at the expiration of his term as a director is not renominated to
serve as a director of the Corporation by the Board of Directors of the
Corporation (or by any nominating committee of the Board of Directors), and the
cause of such removal or failure to nominate is not the result of Employee's
unwillingness to serve as a director of the Corporation or any reason set forth
in Paragraphs 7.1, 7.2, or 7.3, then Employee may elect to terminate his
employment hereunder and such termination shall be deemed a Termination Without
Cause.
7.6 By Employee. Employee may elect to terminate his employment
hereunder at any time upon at least ninety (90) days written notice prior to the
expiration of the initial term or any additional one year term provided in
Paragraph 3.
8. Return of Property. Each party shall promptly deliver to the other all
of the other's property in its possession after termination of this Agreement.
9. Previous Employment Agreement. The Employment Agreement dated June 16,
1995 between Employee and Corporation (the "Previous Employment Agreement")
shall terminate upon effectiveness of this Agreement.
10. Maintenance of Employee's Domicile. Employee shall not be required to
relocate his personal residence in order to fulfill his duties under this
Agreement without his prior consent. If the Corporation requires Employee to
relocate his personal residence without the consent of Employee, Employee may
terminate his employment hereunder and such termination shall be deemed a
Termination Without Cause.
11. Damages and Irreparable Injury. In the event of a breach of this
Agreement by either the Corporation or Employee resulting in damages to the
other party, that party may recover from the party breaching the Agreement any
and all damages that may be sustained. In the event of a breach of Paragraphs 6
or 12, Employee acknowledges that such a breach may result in irreparable injury
and damage to the Corporation that would be difficult, if not impossible, to
determine with certainty and specificity, that the Corporation would have no
adequate remedy at law therefor and that the Corporation may thereupon (a)
obtain such preliminary, temporary or permanent mandatory or restraining
injunctions, orders or decrees as are necessary to protect the Corporation
against, or on account of, any such breach and (b) obtain any other relief
against Employee (including damages) as may be provided by law or in equity.
12. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Employee during the Employee's employment by the Corporation or
any of its affiliated companies and which shall not be or have become public
knowledge (other than by acts by the Employee or representatives of the Employee
in violation of this Agreement). After termination
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of the Employee's employment with the Corporation, the Employee shall not,
without the prior written consent of the Corporation or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Corporation and those designated by
it. In no event shall an asserted violation of the provisions of this Paragraph
12 constitute a basis for deferring or withholding any amounts otherwise payable
to the Employee under this Agreement.
13. Indemnity of Employee. The Corporation shall indemnify and hold
Employee harmless for all losses, claims, damages, causes of action and
judgments (herein "Losses") sustained by Employee as a direct result of the
discharge of his duties required by this Agreement; provided, however, such
indemnification shall not cover Losses sustained by Employee as a result of
Employee's gross negligence, willful misconduct, fraud or dishonesty.
14. Miscellaneous.
14.1 Waiver. The waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.
14.2 Headings. Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.3 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
14.4 Assignment. Neither this Agreement, nor any of the rights or
obligations of either party hereunder, may be assigned in whole or in part,
except with the written consent of the other party; provided, however, that all
or any part of the Corporation's right and obligations hereunder may be assigned
by the Corporation without the consent of Employee to any affiliate or, if the
business or assets of the Corporation are sold to a third party, to such third
party, subject to the rights of Employee set forth herein above concerning
Employee's option for termination.
14.5 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs, and necessary
disbursements in addition to any other relief to which he may be entitled.
14.6 Invalid Provision. If a court of competent jurisdiction
determines that any restriction contained in this Agreement is void, illegal or
unenforceable, the other provisions shall remain in full force and effect and
the provision held to be void, illegal or unenforceable shall be limited so that
it shall remain in effect to the extent permissible by law.
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14.7 Modification. No modification, amendment, change or discharge
of any term or provision of this Agreement shall be valid or binding unless the
same is in writing and signed by all the parties hereto.
14.8 Entire Agreement. Except as otherwise provided in this
Subparagraph 14.8, this Agreement constitutes the entire agreement and
understanding of the parties on the subject hereof and supersede all prior
written and/or oral agreements, representations and understandings related to
the subject matter hereof.
This Agreement is entered into at the same time as an agreement styled Executive
Retention Agreement ("ERA") between Corporation and Employee. Under the terms of
the ERA, the ERA becomes effective upon a "Change of Control" as that term is
defined in the ERA. Once the ERA becomes effective and until such time as it
ceases to be effective, the ERA shall have precedence over this Agreement in
defining the rights and duties of Corporation and Employer; provided, further
for clarification, it is not intended that Employee will receive duplicate
economic benefits during the time the ERA is effective. The terms of this
Agreement not inconsistent with the ERA, including, but not limited to the
provisions of Subparagraph 4.2, shall continue to apply. After the ERA ceases to
be effective, all terms of this Agreement shall again be effective, unless this
Agreement is otherwise terminated.
14.9 Notice. Any notice which either party may wish to give to the
other party hereunder shall be deemed to have been given when delivered
personally or by commercial courier or three days after being deposited in the
mail, certified and with proper postage prepaid, if addressed as follows:
To the Corporation:
Xxxx & Buster's, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn.: General Counsel
To Employee:
Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address as the parties may designate for themselves from time
to time by written notice to the other party given in the aforesaid manner.
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14.10 Binding Effect. The provisions hereof shall be binding upon
and shall inure to the benefit of Employee, his heirs and personal
representatives.
14.11 Affiliate. The term "affiliate" or "affiliates" as used herein
shall mean any person, partnership or entity which, directly or indirectly
through one or more intermediaries, is controlled by, controls, or is under
common control with the person or entity specified.
14.12 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflict of laws.
EXECUTED this ____ day of May, 2000.
THE CORPORATION:
XXXX & BUSTER'S, INC., a Missouri corporation
By: ____________________________________
Name: ____________________________________
Title:____________________________________
EMPLOYEE:
___________________________________________
Name: Xxxxx X. Xxxxxx
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EXECUTIVE RETENTION AGREEMENT
TABLE OF CONTENTS
Section Page
------- ----
Table of Contents............................................. 1
1. Certain Definitions........................................... 2
2. Control....................................................... 3
3. Employment Period............................................. 6
4. Terms of Employment........................................... 7
5. Termination of Employment..................................... 12
6. Obligations of the Company upon Termination................... 16
7. Non-exclusivity of Rights..................................... 20
8. Full Settlement; Resolution of Disputes....................... 21
9. Limitation on Termination Payment............................. 24
10. Confidential Information...................................... 26
11. Successors.................................................... 27
12. Miscellaneous................................................. 28
Executive Retention Agreement Page 1
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EXECUTIVE RETENTION AGREEMENT
AGREEMENT by and between Xxxx & Buster's, Inc. (the "COMPANY"), and Xxxxx
X. Xxxxxx, (the "EXECUTIVE"), dated as of the 3rd day of April, 2000.
The Compensation Committee of the Company, (the "COMMITTEE"), has
determined that it is in the best interests of the Company and its owners to
assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of Xxxx & Buster's, Inc. (the "CORPORATION"). The
Committee believes it is imperative to minimize distraction of the Executive
resulting from personal uncertainties and risks created by a pending or
threatened Change of Control, to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control that satisfy the compensation and
benefits expectations of the Executive and are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Committee
has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "EFFECTIVE DATE" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a Change
of Control occurs and if the Executive's employment with the Company is
terminated by the Company within ninety (90) days prior to the date on which the
Change of Control occurs, then for all purposes of this
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Agreement the "EFFECTIVE DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "RENEWAL DATE"), the Change of Control
Period shall be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control Period shall not
be so extended.
2. Control. For the purpose of this Agreement, a "CHANGE OF CONTROL" shall
mean:
(a) Acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of common stock of the Corporation (the
"OUTSTANDING COMMON STOCK") or (ii) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of its directors (the "OUTSTANDING VOTING SECURITIES"); provided,
however, that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Corporation (excluding an
acquisition by virtue of the exercise of a conversion privilege), (ii) any
acquisition by the Corporation, (iii) any acquisition
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by any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation or (iv) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of subsection (c) of this
Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board of Directors said Corporation (the
"BOARD"); provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14.A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than 50% of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 50% of the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or
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indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as their ownership
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Common Stock and Outstanding Voting Securities, as the case may be;
(ii) no Person (excluding the Corporation, any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 30% or more of the Outstanding Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 30%
or more of the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors; and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Corporation of (i) a complete
liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation with respect to which, following such sale or other
disposition, (A) more than 50% of the then outstanding shares of common stock of
such corporation and more than 50% of the combined voting
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power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership immediately
prior to such sale or other disposition of the Outstanding Common Stock or
Outstanding Voting Securities, as the case may be; (B) no Person (excluding the
Corporation and any employee benefit plan (or related trust) of the Corporation
or such corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 30% or more of the
Outstanding Common Stock or Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 30% or more of the then outstanding
shares of common stock of such corporation or 30% or more of the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors; and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of the
Corporation.
3. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the Effective Date and ending on the first anniversary of
such date (the "EMPLOYMENT PERIOD"). Employment by one or more of the affiliated
companies, as hereinafter defined, shall be
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considered employment by the Company.
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be consistent in all material respects with
the most significant of those held, exercised or assigned at any time during the
90-day period immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office that is the headquarters
of the Company and is less than 25 miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities to the Company. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such
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activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not hereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment period, the Executive
shall receive an annual base salary ("ANNUAL BASE SALARY"), which shall be paid
in equal installments on a monthly basis, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by the Company and
its affiliated companies during the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually and shall be increased at
any time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business to
other peer executives of the Company and its affiliated companies. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "AFFILIATED COMPANIES" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "ANNUAL BONUS") in cash at least equal to the
greater of: (a) the maximum bonus that the Executive could have been paid
pursuant to the executive incentive bonus plan in effect
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ninety (90) days prior to the Effective Date and (b) sixty percent (60%) of the
Annual Base Salary then in effect. Each such Annual Bonus shall be paid no later
than the end of the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) Special Bonus. In addition to Annual Base Salary and
Annual Bonus payable as herein above provided, if the Executive remains employed
with the Company and its affiliated companies through the first anniversary of
the Effective Date, the Company shall pay to the Executive a special bonus (the
"SPECIAL BONUS") in recognition of the Executive's services during the crucial
one-year transition period following the Change of Control. Such Special Bonus
shall be an amount in cash equal to the sum of (A) the Executive's Annual Base
Salary and (B) the Annual Bonus paid or payable, including by reason of any
deferral, to the Executive (and annualized for any fiscal year consisting of
less than twelve full months or for which the Executive has been employed for
less than twelve full months) for the most recently completed fiscal year during
the Employment Period. The Special Bonus shall be paid no later than 30 days
following the first anniversary of the Effective Date.
(iv) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies. Such plans, practices, policies and programs shall provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, if any), savings opportunities and
retirement benefit
Executive Retention Agreement Page 9
18
opportunities, in each case, as favorable as the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies. Such
plans, practices, policies and programs shall provide the Executive with
benefits that are, in each case, as favorable, as the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 90- day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
Executive Retention Agreement Page 10
19
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date, or if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(viii) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company or its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(ix) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
Executive Retention Agreement Page 11
20
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "DISABILITY
EFFECTIVE DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's full-time duties with the Company for 180
consecutive calendar days as a result of incapacity due to mental or physical
illness that is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "CAUSE"
shall be determined by the Committee in exercise of good faith and reasonable
judgment and shall mean (i) a material violation of Company policy or a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) that is
demonstrably willful and deliberate on the Executive's part, committed
Executive Retention Agreement Page 12
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in bad faith or without reasonable belief that the action or inaction that
constitutes such breach is in the best interests of the Company, and, if subject
to being effectively remedied, is not remedied in a reasonable period of time
after receipt of written notice from the Company specifying such breach or
violation ("NOTE OF BREACH"); or (ii) the conviction of the Executive of a
felony involving moral turpitude.
If Company delivers a Notice of Breach to Executive describing the
situation to be remedied and Executive fails to remedy such violation or breach
within a reasonable period of time (as determined in the Notice of Breach), a
Notice of Termination delivered to the Executive subsequent to the Notice of
Breach shall become effective retroactively back to the date of delivery of the
Notice of Breach to the Executive.
(c) Good Reason. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following:
(i) the assignment to the Executive of any duties, authority or
responsibilities materially inconsistent with the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities with the most significant of those held, exercised or
assigned at any time during the 90-day period immediately preceding the
Effective Date (excluding those duties that are only for the purpose of
effecting the Change of Control) or any other action by the Company that results
in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated action that is insubstantial or
inadvertent and that is remedied by the Company promptly after receipt of
Executive Retention Agreement Page 13
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notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated failure that is insubstantial
or inadvertent failure and that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B);
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
(v) any failure by the Company to obtain a satisfactory
agreement from any successor to the Company to assume and agree to perform the
Company's obligations under this Agreement, as contemplated in Section 11(c)
herein;
(vi) the Company requiring the Executive to engage in excessive
travel in comparison to travel required during the 90-day period immediately
preceding the Effective Date; or
(vii) a substantial change in organizational reporting
relationships as compared to the 90-day period immediately preceding the
Effective Date that will have a significant impact on the status, offices,
titles and reporting requirements of the Executive.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b).
For purposes of this Agreement, a
Executive Retention Agreement Page 14
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"NOTICE OF TERMINATION" means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
of such notice. The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance that supports a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from later asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder. The Company may not terminate the Executive's employment for Cause
after the Executive has delivered a Notice of Termination for Good Reason; nor
may the Executive terminate employment with Company for Good Reason after
Company has delivered a Notice of Termination to the Executive.
(e) Date of Termination. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination; and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case
may be.
Executive Retention Agreement Page 15
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6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. The sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Annual Bonus and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) the Special Bonus, if due to the
Executive pursuant to Section 4(b)(iii), to the extent not theretofore paid and
(4) any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), (3) and (4) shall be hereinafter referred to as the "ACCRUED
OBLIGATIONS"); and
B. The amount (such amount shall be hereinafter referred
to as the "SEVERANCE AMOUNT") equal to two times the sum of (x) the Executive's
Annual Base Salary and (y) the Annual Bonus; provided, however, that if the
Special Bonus has not been paid to the Executive, such amount shall be increased
by the amount of the Special Bonus; and, provided further, that such amount
shall be reduced by the present value (determined as provided in Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the "CODE")) of any
other amount of severance relating to salary or bonus continuation to be
Executive Retention Agreement Page 16
25
received by the Executive upon termination of employment of the Executive under
any severance plan, policy or arrangement of the Company; and
C. A separate lump-sum supplemental retirement benefit
(the amount of such benefit shall be hereinafter referred to as the
"SUPPLEMENTAL RETIREMENT AMOUNT") equal to the difference between (1) the amount
payable under any Company retirement plan (or any successor plan thereto) (the
"RETIREMENT PLAN"), of which the Executive was a participant, and any
supplemental and/or excess retirement plan of the Company and its affiliated
companies providing benefits for the Executive (the "SERP") that the Executive
would receive if the Executive's employment continued at the compensation level
provided for in Sections 4(b)(i) and 4(b)(ii) for the remainder of the
Employment Period plus two years, assuming for this purpose that all accrued
benefits are fully vested, and (2) the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP; and
(ii) For the remainder of the Employment Period plus two years,
or such longer period as any plan, program, practice or policy may provide, the
Company shall continue benefits (or pay the pre-tax economic equivalent) to the
Executive and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Sections 4(b)(v) and 4(b)(vii) if the Executive's
employment had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies as
in effect and applicable generally to other peer executives and their families
during the 90- day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in
Executive Retention Agreement Page 17
26
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility (such continuation of such benefits for the applicable period herein
set forth shall be hereinafter referred to as "WELFARE BENEFIT CONTINUATION".
For purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period; and
(iii) To the extent not theretofore paid or provided, for the
remainder of the Employment Period plus two years, or such longer period as any
plan, program, practice or policy may provide, the Company shall timely pay or
provide to the Executive and/or the Executive's family any other amounts or
benefits (or the pre-tax economic equivalent) required to be paid or provided or
which the Executive and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies as in effect
and applicable generally to other peer executives of the Company and its
affiliated companies and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and benefits
shall be hereinafter referred to as the "OTHER BENEFITS").
Executive Retention Agreement Page 18
27
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during, the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of Accrued Obligations (which
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Death Benefits (as defined below)) and (ii) payment to the
Executive's estate or beneficiary, as applicable, in a lump-sum in cash within
30 days of the Date of Termination of an amount equal to (A) the sum of the
Severance Amount and the Supplemental Retirement Amount reduced, but not below
zero, by (B) the present value (determined as provided in Section 280G(d)(4) of
the Code) of any cash amount to be received by the Executive or the Executive's
family as a death benefit pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies, but not including any
proceeds of life insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which shall be paid in any
event as an Other Benefit) (the benefits included in this clause (B) shall be
hereinafter referred to as the "DEATH BENEFITS").
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (which shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment of
provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Disability Benefits, as defined below) and (ii) payment to the
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Executive in a lump sum in cash within 30 days of the Date of Termination of an
amount equal to (A) the sum of the Severance Amount and the Supplemental
Retirement Amount reduced, but not below zero, by (B) the present value
(determined as provided in Section 280G(d)(4) of the Code) of any cash amount to
be received by the Executive as a disability benefit pursuant to the terms of
any plan, policy or arrangement of the Company and its affiliated companies, but
not including any proceeds of disability insurance covering the Executive to the
extent paid for directly or on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "DISABILITY BENEFITS").
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive Annual Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid. If the Executive terminates employment
during the Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Except as provided in Sections 6(a)(ii), 6(b)
and 6(c), nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its
Executive Retention Agreement Page 20
29
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced if the Executive obtains other
employment.
(b) Parties recognize that there may be disputes between them as to
whether the circumstances of the Executive's termination are covered by Section
6(a), (b) or (c) as the Executive and/or the Executive's family may contend or
are covered by Section 6(d) as Company may contend. In the event of such a
dispute, there may be a need for a binding ruling by a neutral decision maker.
In such an event, the following shall apply:
(i) If the Executive delivers a Notice of Termination to
Company based on Section 6(a), (b) or (c), Company must pay the benefits
provided in Section 6 unless
Executive Retention Agreement Page 21
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Company commences arbitration to resolve the dispute within 30 days of the
receipt of a Notice of Termination by the Executive. Failure to commence
arbitration within the time stated is deemed an admission by Company of the
Executive's reason for termination.
(ii) If Company delivers a Notice of Termination based on
Section 6(d), Executive and/or Executive's family must commence arbitration to
dispute the terms of such termination. Failure to commence arbitration within 60
days of the receipt of a Notice of Termination from Company is deemed an
admission by the Executive of termination pursuant to Section 6(d).
(iii) Arbitration shall be conducted before a panel of three
(3) arbitrators sitting in a location selected by the Executive within fifty
(50) miles from the location of his job with the Company, in accordance with the
rules of the American Arbitration Association then in effect. One arbitrator
shall be selected by the Company. One arbitrator shall be selected by the
Executive. The third arbitrator shall be selected by the two arbitrators
selected by the Company and the Executive. Judgment may be entered on the award
of the arbitrators in any court having proper jurisdiction, and such shall
constitute the final, nonappealable decision.
(iv) Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), including all costs of arbitration, plus in each case interest on
any
Executive Retention Agreement Page 22
31
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(v) During the pendency of a dispute resolution, Company shall
proceed to pay Annual Base Salary and Annual Bonus (referred to collectively as
"CONTINUATION BENEFITS") to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, as though no such termination had occurred.
(A) If it is determined that the Executive's contention
that Section 6(a), (b) or (c) was applicable, no portion of the Continuation
Benefits will be recoverable by Company, nor shall any portion of such be
credited towards the benefits due (per Section 6) to the Executive. If such a
contention is not sustained by the arbitration panel, all Continuation Benefits
are recoverable by Company, plus interest at the rate of interest that Company
could have earned on amounts paid for such Continuation Benefits.
(B) If it is determined that Company's contention that
Section 6(d) was applicable is found to be incorrect, none of the Continuation
Benefits shall be credited to the benefits due (per Section 6) to the Executive.
If, however, Company's contention that Section 6(d) was applicable is found to
be correct, all amounts paid by Company as Continuation Benefits shall be
recoverable from Executive plus interest at the rate of interest that Company
could have earned on the amounts paid for such Continuation Benefits.
(C) If the Executive does not make payment of the
Continuation Benefits and accrued interest due to Company within 60 days
following the resolution of the dispute for any amounts recoverable by Company,
interest (on the total amount due) shall be due at the lesser of:
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(1) The rate published as the Prime Rate in the
Wall Street Journal plus one percentage point
on the date of receipt of the Notice of
Termination; or
(2) The maximum amount of interest allowed by law.
(D) If the Company does not pay any amount due to the Executive
hereunder within the time provided, then in addition to such amount, Company
shall pay Executive an amount of interest (on the total amount due) at the
lesser of:
(1) The rate published as the Prime Rate in the Wall
Street Journal plus one percentage point on the
date such payment is due; or
(2) The maximum amount of interest allowed by law.
9. Limitation on Termination Payment.
(a) Determination of Termination Payment Limit. Notwithstanding any
other provision of this Agreement, if any portion of the Severance Amount or any
other payment under this Agreement, or under any other agreement with or plan of
the Company (in the aggregate "TOTAL PAYMENTS") would constitute an Excess
Parachute Payment, then the payments to be made to the Executive under this
Agreement shall be reduced such that the value of the aggregate Total Payments
that the Executive is entitled to receive shall be one dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to the
tax imposed by Section 4999 of the Code, or which the Company may pay without
loss of deduction under Section 280G(a) of the Code. However, the payments to be
made to the Executive under this Agreement shall be reduced if and only if so
reducing the
Executive Retention Agreement Page 24
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payments results in the Executive receiving a greater net Severance Amount than
he would have received had a reduction not occurred and an excise tax been paid
pursuant to Code Section 4999. For purposes of this Agreement, the terms "EXCESS
PARACHUTE PAYMENT" and "PARACHUTE PAYMENTS" shall have the meanings assigned to
them in Section 280G of the Code, and such Parachute Payments shall be valued as
provided therein.
(b) Procedure for Establishing Limitation on Termination Payment.
Within sixty (60) days following delivery of the Notice of Termination or notice
by the Company to the Executive of its belief that there is a payment or benefit
due the Executive which will result in an "Excess Parachute Payment", the
Executive and the Company, at the Company's expense, shall obtain the opinion of
such legal counsel, which need not be unqualified, as the Executive may choose,
which sets forth: (i) the amount of the Executive's "Annualized Includible
Compensation For The Base Period" (as defined in Code Section 280G(d)(1)); (ii)
the present value of the Total Payments; and (iii) the amount and present value
of any Excess Parachute Payment. The opinion of such legal counsel may be
supported by the opinion of a certified public accounting firm and, if
necessary, a firm of recognized executive compensation consultants. Such opinion
shall be binding upon the Company and the Executive. In the event that such
opinion determines that there would be an Excess Parachute Payment, the
Severance Amount hereunder or any other payment determined by such counsel to be
includible in Total Payments shall be reduced or eliminated so that under the
basis of calculations set forth in such opinion, there will be no Excess
Parachute Payment. The provisions of this Section 9(b), including the
calculations, notices, and opinion provided for herein shall be based upon the
conclusive presumption that: (i) the compensation and benefits provided for
herein; and (ii)
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any other compensation earned prior to the Effective Date of termination by the
Executive pursuant to the Company's compensation programs (if such payments
would have been made in the future in any event, even though the timing of such
payment is triggered by the Change-of-Control), are reasonable.
(c) Subsequent Imposition of Excise Tax. If, notwithstanding
compliance with the provisions of Sections 9(a), and 9(b) herein, it is
ultimately determined by a court or pursuant to a final determination by the
Internal Revenue Service that any portion of the Total Payments is considered to
be a Parachute Payment, subject to excise tax under Section 4999 of the Code,
which was not contemplated to be a Parachute Payment at the time of payment (so
as to accurately determine whether a limitation benefit to the Executive, as
provided in Section 9(b) hereof), the Executive shall be entitled to receive a
lump sum cash payment sufficient to place the Executive in the same net
after-tax position, computed by using the Special Tax Rate (as such term is
defined below), that the Executive would have been in had such payment not been
subject to such excise tax, and had the Executive not incurred any interest
charges or penalties with respect to the imposition of such excise tax. For
purposes of this Agreement, the "SPECIAL TAX RATE" shall be the highest
effective federal and state marginal tax rates applicable to the Executive in
the year in which the payment contemplated under this Section 9 is made.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
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35
its affiliated companies and which shall not be or have become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law,
or otherwise.
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(d) Failure of the Company to obtain such assumption and agreement
prior to the effective date of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if he had terminated his employment with the Company voluntarily for
Good Reason. For the purpose of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the Date of Termination.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to the Company:
Xxxx & Buster's, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention:
General Counsel
or to such other address as either party shall have furnished to the other in
writing in
Executive Retention Agreement Page 28
37
accordance herewith. Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)- (v), shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that this Agreement is
entered into at the same time as an agreement styled Employment Agreement
between Executive and Company. Once this Agreement becomes effective upon a
Change of Control, and until such time as it ceases to be effective, this
Agreement shall have precedence over the Employment Agreement in defining the
rights and duties of Executive and Company.
(g) No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by an authorized member of the
Committee, or by the respective parties' legal representatives and successors.
Executive Retention Agreement Page 29
38
(h) Simultaneously with the execution of this Agreement, the Company
is executing that certain agreement styled "Xxxx & Buster's, Inc. Executive
Retention Agreement Trust". The Company covenants with Executive to: (i) procure
the execution by Wachovia Bank of North Carolina, N.A., as Trustee pursuant to
such agreement; and (ii) make all payments required of the Company pursuant to
such agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Committee, the Company has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
_______________________________________
Xxxxx X. Xxxxxx
Xxxx & Buster's, Inc.
By: _______________________________
Its: _______________________________
Executive Retention Agreement Page 30
39
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (herein the "Agreement") is made as of the 3rd
day of April, 2000, by and between XXXX & BUSTER'S, INC. (the "Corporation") and
Xxxxx X. Xxxxxxxxx (the "Employee").
RECITALS
A. The Corporation has offered continued employment to Employee for what
it believes to be a reasonable compensation package in light of the required
duties, responsibilities and restrictions. Employee has accepted such offer of
continued employment subject to the terms set forth herein.
B. The Corporation and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
continued employment of Employee by the Corporation.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual premises and the
covenants and promises contained herein, as well as good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Corporation and Employee hereby agree as follows:
1. Employment. The Corporation hereby employs, engages and hires Employee,
and Employee hereby accepts such employment and agrees to such hiring and
engagement, upon the terms and conditions hereinafter set forth.
2. Duties. Employee shall be employed as Co-Chief Executive Officer and
President of the Corporation for the entire term of his employment as set forth
in this Agreement and shall faithfully and to the best of his abilities perform
the following duties:
2.1 Employee shall have supervisory and oversight responsibility for
the Corporation. He shall have active management of the business and affairs of
the Corporation. He shall see that all orders and resolutions of the Board of
Directors of the Corporation (herein "Board of Directors") are carried into
effect.
2.2 Employee shall, when authorized by the Board of Directors, when
required by law or when the ordinary conduct of the Corporation's business
requires, execute, in the name of the Corporation, such contracts, documents,
papers or instruments on behalf of the Corporation to further its operations and
business interests.
2.3 Employee shall perform such other duties and responsibilities as
may be prescribed from time to time by the Board of Directors. Such other
executive duties or
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responsibilities shall be consistent with the duties of the office of Co-Chief
Executive Officer and President.
Employee shall devote substantially all of his time and attention to the
Corporation's business and affairs to carry out such responsibilities and shall
not engage in any active management role or own, directly or indirectly, more
than a ten percent (10%) interest in any other business activity except as
authorized by the Board of Directors.
3. Term. The initial term of the employment of Employee by the Corporation
pursuant to this Agreement shall begin on the date hereof and shall continue for
an initial period of one year, unless sooner terminated as hereinafter provided.
Unless terminated as hereinafter provided, the term of this Agreement shall be
continually renewed after the initial term on a rolling one year basis such that
at any point in time there shall always be a period of one year remaining on the
term of this Agreement.
4. Compensation.
4.1 Pre-termination. The Corporation shall pay Employee a salary
(payable in accordance with the Corporation's usual payment practices, but not
less frequently than monthly) for his services under this Agreement beginning at
an annual rate from the date hereof of Four Hundred Thousand Dollars
($400,000.00). Employee's annual salary may not be decreased but may be adjusted
upward at any time by the Board of Directors of the Corporation. Compensation to
Employee hereunder shall be prorated for any partial employment period. Employee
shall also participate in the executive incentive bonus plan and in any other
bonus arrangement mutually agreed between Employee and Corporation.
4.2 Post-termination. Upon each of the first ten (10) anniversary
dates of the termination of this Agreement, Corporation shall pay to Employee,
or Employee's estate in the event of Employee's death, the sum of One Hundred
Thousand Dollars ($100,000.00). In exchange therefor, Employee, on behalf of
himself and his heirs, grants to Corporation the right to use the personal
identity of Employee in connection with the Corporation's marketing concept for
such ten year period. The provisions of this Paragraph 4.2 shall be treated as
if deleted from this Agreement if Employee's employment is terminated for Cause
pursuant to Paragraph 7.3.
5. Benefits. In addition to the compensation provided in Paragraph 4,
Corporation shall provide Employee with the benefits described herein. The
amounts provided are a minimum and shall not be reduced during the term hereof,
but may be increased by the Board of Directors or the Compensation Committee
appointed by the Board of Directors.
5.1 Automobile. During the term of this Agreement, the Corporation
shall provide an automobile allowance to Employee of Fifteen Thousand Dollars
($15,000.00) per fiscal year (with a pro rated amount for any partial fiscal
year).
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41
5.2 Vacations, Holidays, Etc. During the term of this Agreement,
Employee shall be entitled to six (6) weeks vacation per calendar year. Unused
vacation periods may not be carried over to subsequent years.
5.3 Health Insurance and Death Benefits. Employee shall be provided
group medical and life insurance comparable to the standard medical and life
insurance coverage afforded other senior executive officers of the Corporation.
The Corporation shall also provide Employee with an allowance of Seven Thousand
Five Hundred Dollars ($7,500.00) per fiscal year (with a pro rata amount for any
partial fiscal year) for his use in purchasing additional insurance coverage for
medical, dental, hospitalization and death benefits or in payment of any
uninsured expenses or deductible payments not covered by the medical insurance
provided hereunder.
5.4 Disability Insurance. Employee shall be provided group
disability insurance comparable to the standard disability insurance coverage
afforded other senior executive officers of the Corporation. The Corporation
shall also provide Employee with an allowance of Four Thousand Five Hundred
Dollars ($4,500.00) per fiscal year (with a pro rated amount for any partial
fiscal year) to purchase disability insurance.
5.5 Reimbursement of Expenses. Upon submission of appropriate
receipts and other documents, the Corporation shall reimburse Employee for the
reasonable business expenses (other than automobile expenses) incurred by
Employee in fulfilling his duties hereunder.
5.6 Other Benefits. The Corporation shall provide to Employee such
benefits, other than those benefits expressly provided for in this Agreement,
which are generally made available to other senior executive officers of the
Corporation.
6. Non-Compete Agreement.
6.1 Covenant. Employee agrees not to engage in or become an employee
of or consultant or adviser of or have any direct or indirect interest in any
other person, firm, corporation or other entity engaged in, any business
activities directly competitive with the business of the Corporation or any of
its subsidiaries or licensees during the term of his employment by the
Corporation and for a period of six (6) months thereafter. The period of time
under which the Employee is to be bound by this covenant is hereinafter referred
to as the "Non-Compete Period". This restriction shall be applicable with
respect to each and every county and metropolitan area in the United States and
each country in which a licensee is located. Nothing contained in this Paragraph
6.1 shall restrict Employee from operating a restaurant and/or bar, provided,
however, such restaurant and/or bar may not use or operate under any service
xxxx or trade name similar to "Xxxx & Buster's".
6.2 Employees. During the Non-Compete Period, Employee will not
knowingly seek to induce any employee of the Corporation or any of its
affiliates to leave his or her employment.
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7. Termination. The employment of Employee hereunder shall terminate prior
to the expiration of the term of employment set forth in Paragraph 3 above upon
the happening of any one of the following events:
7.1 Death. The death of Employee.
7.2 Disability. The giving of written notice by the Corporation to
Employee of the termination of the employment of Employee upon the disability of
Employee. For purposes of this Paragraph, "disability of Employee" shall mean
the inability of Employee, due to illness, accident or any other physical or
mental incapacity, to perform the services provided for hereunder for a period
of one hundred eighty (180) consecutive calendar days. The inability of Employee
to perform the services provided for hereunder due to his illness, accident or
any other physical or mental incapacity shall not constitute a basis for
discharge under Paragraph 7.4 of this Agreement except to the extent there is
also a basis for discharge under this Paragraph 7.2.
7.3 Cause. The giving of written notice by the Corporation to
Employee of the termination of the employment of Employee for cause. For
purposes of this Paragraph, "cause" shall mean: (i) a material violation of
Corporation policy or a material breach by the Employee of the Employee's
obligations under Paragraph 2 (other than as a result of incapacity due to
physical or mental illness) that is demonstrably willful and deliberate on the
Employee's part, committed in bad faith or without reasonable belief that the
action or inaction that constitutes such breach is in the best interests of the
Corporation, and, if subject to being effectively remedied, is not remedied in a
reasonable period of time after receipt of written notice from the Corporation
specifying such breach or violation; or (ii) the conviction of the Employee of a
felony involving moral turpitude. Upon Employee's termination pursuant to the
foregoing provisions of this Paragraph 7, the Corporation shall promptly pay to
Employee (or his estate, heirs or personal representatives), the full amount of
his compensation and benefits accrued through the termination date.
7.4 Without Cause. The Corporation may also terminate the employment
of Employee hereunder for any other reason upon at least ninety (90) days
written notice prior to the expiration of the initial term or any additional one
year term provided in Paragraph 3; provided that upon Employee's termination by
the Corporation for any reason other than those set forth in Paragraphs 7.1,
7.2, or 7.3, (a "Termination Without Cause"), the Corporation shall, until the
Final Payment Date (as hereinafter defined) (i) continue to pay Employee his
then current salary pursuant to Paragraph 4 and (ii) pay Employee the greater
of: (a) the maximum bonus payable to Employee under the executive incentive plan
in effect ninety days prior to such termination, or (b) sixty percent (60%) of
the annual salary then in effect, and (iii) provide the benefits described in
Paragraphs 5.1, 5.3 and 5.4 or their economic equivalent on a pre-tax basis. The
Final Payment Date shall be two years after the date of such termination. Upon
Employee's termination pursuant to this Subparagraph 7.4, the Corporation within
thirty (30) days shall pay in a lump sum to Employee (or his estate, heirs or
personal representative) the full amount of his compensation and benefits
computed through the Final Payment Date.
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7.5 Removal from Board of Directors. If, at any time during the term
of this Agreement, Employee is removed from the Board of Directors of the
Corporation or at the expiration of his term as a director is not renominated to
serve as a director of the Corporation by the Board of Directors of the
Corporation (or by any nominating committee of the Board of Directors), and the
cause of such removal or failure to nominate is not the result of Employee's
unwillingness to serve as a director of the Corporation or any reason set forth
in Paragraphs 7.1, 7.2, or 7.3, then Employee may elect to terminate his
employment hereunder and such termination shall be deemed a Termination Without
Cause.
7.6 By Employee. Employee may elect to terminate his employment
hereunder at any time upon at least ninety (90) days written notice prior to the
expiration of the initial term or any additional one year term provided in
Paragraph 3.
8. Return of Property. Each party shall promptly deliver to the other all
of the other's property in its possession after termination of this Agreement.
9. Previous Employment Agreement. The Employment Agreement dated June 16,
1995 between Employee and Corporation (the "Previous Employment Agreement")
shall terminate upon effectiveness of this Agreement.
10. Maintenance of Employee's Domicile. Employee shall not be required to
relocate his personal residence in order to fulfill his duties under this
Agreement without his prior consent. If the Corporation requires Employee to
relocate his personal residence without the consent of Employee, Employee may
terminate his employment hereunder and such termination shall be deemed a
Termination Without Cause.
11. Damages and Irreparable Injury. In the event of a breach of this
Agreement by either the Corporation or Employee resulting in damages to the
other party, that party may recover from the party breaching the Agreement any
and all damages that may be sustained. In the event of a breach of Paragraphs 6
or 12, Employee acknowledges that such a breach may result in irreparable injury
and damage to the Corporation that would be difficult, if not impossible, to
determine with certainty and specificity, that the Corporation would have no
adequate remedy at law therefor and that the Corporation may thereupon (a)
obtain such preliminary, temporary or permanent mandatory or restraining
injunctions, orders or decrees as are necessary to protect the Corporation
against, or on account of, any such breach and (b) obtain any other relief
against Employee (including damages) as may be provided by law or in equity.
12. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Employee during the Employee's employment by the Corporation or
any of its affiliated companies and which shall not be or have become public
knowledge (other than by acts by the Employee or representatives of the Employee
in violation of this Agreement). After termination
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44
of the Employee's employment with the Corporation, the Employee shall not,
without the prior written consent of the Corporation or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Corporation and those designated by
it. In no event shall an asserted violation of the provisions of this Paragraph
12 constitute a basis for deferring or withholding any amounts otherwise payable
to the Employee under this Agreement.
13. Indemnity of Employee. The Corporation shall indemnify and hold
Employee harmless for all losses, claims, damages, causes of action and
judgments (herein "Losses") sustained by Employee as a direct result of the
discharge of his duties required by this Agreement; provided, however, such
indemnification shall not cover Losses sustained by Employee as a result of
Employee's gross negligence, willful misconduct, fraud or dishonesty.
14. Miscellaneous.
14.1 Waiver. The waiver by either party of a breach of any provision
of this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.
14.2 Headings. Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.3 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
14.4 Assignment. Neither this Agreement, nor any of the rights or
obligations of either party hereunder, may be assigned in whole or in part,
except with the written consent of the other party; provided, however, that all
or any part of the Corporation's right and obligations hereunder may be assigned
by the Corporation without the consent of Employee to any affiliate or, if the
business or assets of the Corporation are sold to a third party, to such third
party, subject to the rights of Employee set forth herein above concerning
Employee's option for termination.
14.5 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs, and necessary
disbursements in addition to any other relief to which he may be entitled.
14.6 Invalid Provision. If a court of competent jurisdiction
determines that any restriction contained in this Agreement is void, illegal or
unenforceable, the other provisions shall remain in full force and effect and
the provision held to be void, illegal or unenforceable shall be limited so that
it shall remain in effect to the extent permissible by law.
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45
14.7 Modification. No modification, amendment, change or discharge
of any term or provision of this Agreement shall be valid or binding unless the
same is in writing and signed by all the parties hereto.
14.8 Entire Agreement. Except as otherwise provided in this
Subparagraph 14.8, this Agreement constitutes the entire agreement and
understanding of the parties on the subject hereof and supersede all prior
written and/or oral agreements, representations and understandings related to
the subject matter hereof.
This Agreement is entered into at the same time as an agreement styled Executive
Retention Agreement ("ERA") between Corporation and Employee. Under the terms of
the ERA, the ERA becomes effective upon a "Change of Control" as that term is
defined in the ERA. Once the ERA becomes effective and until such time as it
ceases to be effective, the ERA shall have precedence over this Agreement in
defining the rights and duties of Corporation and Employer; provided, further
for clarification, it is not intended that Employee will receive duplicate
economic benefits during the time the ERA is effective. The terms of this
Agreement not inconsistent with the ERA, including, but not limited to the
provisions of Subparagraph 4.2, shall continue to apply. After the ERA ceases to
be effective, all terms of this Agreement shall again be effective, unless this
Agreement is otherwise terminated.
14.9 Notice. Any notice which either party may wish to give to the
other party hereunder shall be deemed to have been given when delivered
personally or by commercial courier or three days after being deposited in the
mail, certified and with proper postage prepaid, if addressed as follows:
To the Corporation:
Xxxx & Buster's, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn.: General Counsel
To Employee:
Xxxxx X. Xxxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
or to such other address as the parties may designate for themselves from time
to time by written notice to the other party given in the aforesaid manner.
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46
14.10 Binding Effect. The provisions hereof shall be binding upon
and shall inure to the benefit of Employee, his heirs and personal
representatives.
14.11 Affiliate. The term "affiliate" or "affiliates" as used herein
shall mean any person, partnership or entity which, directly or indirectly
through one or more intermediaries, is controlled by, controls, or is under
common control with the person or entity specified.
14.12 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflict of laws.
EXECUTED this ____ day of May, 2000.
THE CORPORATION:
XXXX & BUSTER'S, INC., a Missouri corporation
By: ____________________________________
Name: ____________________________________
Title:____________________________________
EMPLOYEE:
__________________________________________
Name: Xxxxx X. Xxxxxxxxx
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EXECUTIVE RETENTION AGREEMENT
TABLE OF CONTENTS
Section Page
------- ----
Table of Contents................................................ 1
1. Certain Definitions.............................................. 2
2. Control.......................................................... 3
3. Employment Period................................................ 6
4. Terms of Employment.............................................. 7
5. Termination of Employment........................................ 12
6. Obligations of the Company upon Termination...................... 16
7. Non-exclusivity of Rights........................................ 20
8. Full Settlement; Resolution of Disputes.......................... 21
9. Limitation on Termination Payment................................ 24
10. Confidential Information......................................... 26
11. Successors....................................................... 27
12. Miscellaneous.................................................... 28
Executive Retention Agreement Page 1
48
EXECUTIVE RETENTION AGREEMENT
AGREEMENT by and between Xxxx & Buster's, Inc. (the "COMPANY"), and Xxxxx
X. Xxxxxxxxx, (the "EXECUTIVE"), dated as of the 3rd day of April, 2000.
The Compensation Committee of the Company, (the "COMMITTEE"), has
determined that it is in the best interests of the Company and its owners to
assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of Xxxx & Buster's, Inc. (the "CORPORATION"). The
Committee believes it is imperative to minimize distraction of the Executive
resulting from personal uncertainties and risks created by a pending or
threatened Change of Control, to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control that satisfy the compensation and
benefits expectations of the Executive and are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Committee
has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "EFFECTIVE DATE" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a Change
of Control occurs and if the Executive's employment with the Company is
terminated by the Company within ninety (90) days prior to the date on which the
Change of Control occurs, then for all purposes of this
Executive Retention Agreement Page 2
49
Agreement the "EFFECTIVE DATE" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CHANGE OF CONTROL PERIOD" shall mean the period commencing
on the date hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "RENEWAL DATE"), the Change of Control
Period shall be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control Period shall not
be so extended.
2. Control. For the purpose of this Agreement, a "CHANGE OF CONTROL" shall
mean:
(a) Acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of common stock of the Corporation (the
"OUTSTANDING COMMON STOCK") or (ii) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of its directors (the "OUTSTANDING VOTING SECURITIES"); provided,
however, that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Corporation (excluding an
acquisition by virtue of the exercise of a conversion privilege), (ii) any
acquisition by the Corporation, (iii) any acquisition
Executive Retention Agreement Page 3
50
by any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation or (iv) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of subsection (c) of this
Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board of Directors said Corporation (the
"BOARD"); provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14.A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) more than 50% of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 50% of the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or
Executive Retention Agreement Page 4
51
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as their ownership
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Common Stock and Outstanding Voting Securities, as the case may be;
(ii) no Person (excluding the Corporation, any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 30% or more of the Outstanding Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 30%
or more of the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors; and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation with respect to which, following such sale or other
disposition, (A) more than 50% of the then outstanding shares of common stock of
such corporation and more than 50% of the combined voting
Executive Retention Agreement Page 5
52
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership immediately
prior to such sale or other disposition of the Outstanding Common Stock or
Outstanding Voting Securities, as the case may be; (B) no Person (excluding the
Corporation and any employee benefit plan (or related trust) of the Corporation
or such corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 30% or more of the
Outstanding Common Stock or Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 30% or more of the then outstanding
shares of common stock of such corporation or 30% or more of the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors; and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of the
Corporation.
3. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the Effective Date and ending on the first anniversary of
such date (the "EMPLOYMENT PERIOD"). Employment by one or more of the affiliated
companies, as hereinafter defined, shall be
Executive Retention Agreement Page 6
53
considered employment by the Company.
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be consistent in all material respects with
the most significant of those held, exercised or assigned at any time during the
90-day period immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office that is the headquarters
of the Company and is less than 25 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities to the Company. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such
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activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not hereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment period, the Executive
shall receive an annual base salary ("ANNUAL BASE SALARY"), which shall be paid
in equal installments on a monthly basis, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by the Company and
its affiliated companies during the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually and shall be increased at
any time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business to
other peer executives of the Company and its affiliated companies. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "AFFILIATED COMPANIES" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "ANNUAL BONUS") in cash at least equal to the
greater of: (a) the maximum bonus that the Executive could have been paid
pursuant to the executive incentive bonus plan in effect
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ninety (90) days prior to the Effective Date and (b) sixty percent (60%) of the
Annual Base Salary then in effect. Each such Annual Bonus shall be paid no later
than the end of the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) Special Bonus. In addition to Annual Base Salary and
Annual Bonus payable as herein above provided, if the Executive remains employed
with the Company and its affiliated companies through the first anniversary of
the Effective Date, the Company shall pay to the Executive a special bonus (the
"SPECIAL BONUS") in recognition of the Executive's services during the crucial
one-year transition period following the Change of Control. Such Special Bonus
shall be an amount in cash equal to the sum of (A) the Executive's Annual Base
Salary and (B) the Annual Bonus paid or payable, including by reason of any
deferral, to the Executive (and annualized for any fiscal year consisting of
less than twelve full months or for which the Executive has been employed for
less than twelve full months) for the most recently completed fiscal year during
the Employment Period. The Special Bonus shall be paid no later than 30 days
following the first anniversary of the Effective Date.
(iv) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies. Such plans, practices, policies and programs shall provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, if any), savings opportunities and
retirement benefit
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56
opportunities, in each case, as favorable as the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies. Such
plans, practices, policies and programs shall provide the Executive with
benefits that are, in each case, as favorable, as the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 90- day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
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effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date, or if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(viii)Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company or its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(ix) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
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5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "DISABILITY
EFFECTIVE DATE"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "DISABILITY" shall mean the absence of
the Executive from the Executive's full-time duties with the Company for 180
consecutive calendar days as a result of incapacity due to mental or physical
illness that is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "CAUSE"
shall be determined by the Committee in exercise of good faith and reasonable
judgment and shall mean (i) a material violation of Company policy or a material
breach by the Executive of the Executive's obligations under Section 4(a) (other
than as a result of incapacity due to physical or mental illness) that is
demonstrably willful and deliberate on the Executive's part, committed
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in bad faith or without reasonable belief that the action or inaction that
constitutes such breach is in the best interests of the Company, and, if subject
to being effectively remedied, is not remedied in a reasonable period of time
after receipt of written notice from the Company specifying such breach or
violation ("NOTE OF BREACH"); or (ii) the conviction of the Executive of a
felony involving moral turpitude.
If Company delivers a Notice of Breach to Executive describing the
situation to be remedied and Executive fails to remedy such violation or breach
within a reasonable period of time (as determined in the Notice of Breach), a
Notice of Termination delivered to the Executive subsequent to the Notice of
Breach shall become effective retroactively back to the date of delivery of the
Notice of Breach to the Executive.
(c) Good Reason. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "GOOD REASON" shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following:
(i) the assignment to the Executive of any duties, authority
or responsibilities materially inconsistent with the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities with the most significant of those held, exercised or
assigned at any time during the 90-day period immediately preceding the
Effective Date (excluding those duties that are only for the purpose of
effecting the Change of Control) or any other action by the Company that results
in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated action that is insubstantial or
inadvertent and that is remedied by the Company promptly after receipt of
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notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated failure that is insubstantial
or inadvertent failure and that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B); (iv) any
purported termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement; (v) any failure by the Company to
obtain a satisfactory agreement from any successor to the Company to assume and
agree to perform the Company's obligations under this Agreement, as contemplated
in Section 11(c) herein;
(vi) the Company requiring the Executive to engage in
excessive travel in comparison to travel required during the 90-day period
immediately preceding the Effective Date; or
(vii) a substantial change in organizational reporting
relationships as compared to the 90-day period immediately preceding the
Effective Date that will have a significant impact on the status, offices,
titles and reporting requirements of the Executive.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b).
For purposes of this Agreement, a
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"NOTICE OF TERMINATION" means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
of such notice. The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance that supports a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from later asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder. The Company may not terminate the Executive's employment for Cause
after the Executive has delivered a Notice of Termination for Good Reason; nor
may the Executive terminate employment with Company for Good Reason after
Company has delivered a Notice of Termination to the Executive.
(e) Date of Termination. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination; and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case
may be.
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6. Obligations of the Company upon Termination.
(a) Good Reason; Other than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. The sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Annual Bonus and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) the Special Bonus, if due to the
Executive pursuant to Section 4(b)(iii), to the extent not theretofore paid and
(4) any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), (3) and (4) shall be hereinafter referred to as the "ACCRUED
OBLIGATIONS"); and
B. The amount (such amount shall be hereinafter
referred to as the "SEVERANCE AMOUNT") equal to two times the sum of (x) the
Executive's Annual Base Salary and (y) the Annual Bonus; provided, however, that
if the Special Bonus has not been paid to the Executive, such amount shall be
increased by the amount of the Special Bonus; and, provided further, that such
amount shall be reduced by the present value (determined as provided in Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the "CODE")) of any
other amount of severance relating to salary or bonus continuation to be
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received by the Executive upon termination of employment of the Executive under
any severance plan, policy or arrangement of the Company; and
C. A separate lump-sum supplemental retirement benefit
(the amount of such benefit shall be hereinafter referred to as the
"SUPPLEMENTAL RETIREMENT AMOUNT") equal to the difference between (1) the amount
payable under any Company retirement plan (or any successor plan thereto) (the
"RETIREMENT PLAN"), of which the Executive was a participant, and any
supplemental and/or excess retirement plan of the Company and its affiliated
companies providing benefits for the Executive (the "SERP") that the Executive
would receive if the Executive's employment continued at the compensation level
provided for in Sections 4(b)(i) and 4(b)(ii) for the remainder of the
Employment Period plus two years, assuming for this purpose that all accrued
benefits are fully vested, and (2) the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP; and
(ii) For the remainder of the Employment Period plus two
years, or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits (or pay the pre-tax economic
equivalent) to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Sections 4(b)(v) and 4(b)(vii) if
the Executive's employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies as in effect and applicable generally to other peer
executives and their families during the 90- day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
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effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility (such continuation of such benefits for the applicable period herein
set forth shall be hereinafter referred to as "WELFARE BENEFIT CONTINUATION".
For purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period; and
(iii) To the extent not theretofore paid or provided, for the
remainder of the Employment Period plus two years, or such longer period as any
plan, program, practice or policy may provide, the Company shall timely pay or
provide to the Executive and/or the Executive's family any other amounts or
benefits (or the pre-tax economic equivalent) required to be paid or provided or
which the Executive and/or the Executive's family is eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies as in effect
and applicable generally to other peer executives of the Company and its
affiliated companies and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts
and benefits shall be hereinafter referred to as the "OTHER BENEFITS").
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(b) Death. If the Executive's employment is terminated by reason
of the Executive's death during, the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of Accrued Obligations (which
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Death Benefits (as defined below)) and (ii) payment to the
Executive's estate or beneficiary, as applicable, in a lump-sum in cash within
30 days of the Date of Termination of an amount equal to (A) the sum of the
Severance Amount and the Supplemental Retirement Amount reduced, but not below
zero, by (B) the present value (determined as provided in Section 280G(d)(4) of
the Code) of any cash amount to be received by the Executive or the Executive's
family as a death benefit pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies, but not including any
proceeds of life insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which shall be paid in any
event as an Other Benefit) (the benefits included in this clause (B) shall be
hereinafter referred to as the "DEATH BENEFITS").
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for (i) payment of Accrued Obligations (which shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination) and
the timely payment of provision of the Welfare Benefit Continuation and Other
Benefits (excluding, in each case, Disability Benefits, as defined below) and
(ii) payment to the
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Executive in a lump sum in cash within 30 days of the Date of Termination of an
amount equal to (A) the sum of the Severance Amount and the Supplemental
Retirement Amount reduced, but not below zero, by (B) the present value
(determined as provided in Section 280G(d)(4) of the Code) of any cash amount to
be received by the Executive as a disability benefit pursuant to the terms of
any plan, policy or arrangement of the Company and its affiliated companies, but
not including any proceeds of disability insurance covering the Executive to the
extent paid for directly or on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "DISABILITY BENEFITS").
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive Annual Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid. If the Executive terminates employment
during the Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Except as provided in Sections 6(a)(ii),
6(b) and 6(c), nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its
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affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced if the Executive obtains other
employment.
(b) Parties recognize that there may be disputes between them as to
whether the circumstances of the Executive's termination are covered by Section
6(a), (b) or (c) as the Executive and/or the Executive's family may contend or
are covered by Section 6(d) as Company may contend. In the event of such a
dispute, there may be a need for a binding ruling by a neutral decision maker.
In such an event, the following shall apply:
(i) If the Executive delivers a Notice of Termination to
Company based on Section 6(a), (b) or (c), Company must pay the benefits
provided in Section 6 unless
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Company commences arbitration to resolve the dispute within 30 days of the
receipt of a Notice of Termination by the Executive. Failure to commence
arbitration within the time stated is deemed an admission by Company of the
Executive's reason for termination.
(ii) If Company delivers a Notice of Termination based on
Section 6(d), Executive and/or Executive's family must commence arbitration to
dispute the terms of such termination. Failure to commence arbitration within 60
days of the receipt of a Notice of Termination from Company is deemed an
admission by the Executive of termination pursuant to Section 6(d).
(iii) Arbitration shall be conducted before a panel of three
(3) arbitrators sitting in a location selected by the Executive within fifty
(50) miles from the location of his job with the Company, in accordance with the
rules of the American Arbitration Association then in effect. One arbitrator
shall be selected by the Company. One arbitrator shall be selected by the
Executive. The third arbitrator shall be selected by the two arbitrators
selected by the Company and the Executive. Judgment may be entered on the award
of the arbitrators in any court having proper jurisdiction, and such shall
constitute the final, nonappealable decision.
(iv) Company agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), including all costs of arbitration, plus in each case interest on
any
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delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(v) During the pendency of a dispute resolution, Company shall
proceed to pay Annual Base Salary and Annual Bonus (referred to collectively as
"CONTINUATION BENEFITS") to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, as though no such termination had occurred.
(A) If it is determined that the Executive's contention
that Section 6(a), (b) or (c) was applicable, no portion of the Continuation
Benefits will be recoverable by Company, nor shall any portion of such be
credited towards the benefits due (per Section 6) to the Executive. If such a
contention is not sustained by the arbitration panel, all Continuation Benefits
are recoverable by Company, plus interest at the rate of interest that Company
could have earned on amounts paid for such Continuation Benefits.
(B) If it is determined that Company's contention
that Section 6(d) was applicable is found to be incorrect, none of the
Continuation Benefits shall be credited to the benefits due (per Section 6) to
the Executive. If, however, Company's contention that Section 6(d) was
applicable is found to be correct, all amounts paid by Company as Continuation
Benefits shall be recoverable from Executive plus interest at the rate of
interest that Company could have earned on the amounts paid for such
Continuation Benefits.
(C) If the Executive does not make payment of the
Continuation Benefits and accrued interest due to Company within 60 days
following the resolution of the dispute for any amounts recoverable by Company,
interest (on the total amount due) shall be due at the lesser of:
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(1) The rate published as the Prime Rate in the
Wall Street Journal plus one percentage point
on the date of receipt of the Notice of
Termination; or
(2) The maximum amount of interest allowed by law.
(D) If the Company does not pay any amount due to the
Executive hereunder within the time provided, then in addition to such amount,
Company shall pay Executive an amount of interest (on the total amount due) at
the lesser of:
(1) The rate published as the Prime Rate in the Wall
Street Journal plus one percentage point on the
date such payment is due; or
(2) The maximum amount of interest allowed by law.
9. Limitation on Termination Payment.
(a) Determination of Termination Payment Limit. Notwithstanding any
other provision of this Agreement, if any portion of the Severance Amount or any
other payment under this Agreement, or under any other agreement with or plan of
the Company (in the aggregate "TOTAL PAYMENTS") would constitute an Excess
Parachute Payment, then the payments to be made to the Executive under this
Agreement shall be reduced such that the value of the aggregate Total Payments
that the Executive is entitled to receive shall be one dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to the
tax imposed by Section 4999 of the Code, or which the Company may pay without
loss of deduction under Section 280G(a) of the Code. However, the payments to be
made to the Executive under this Agreement shall be reduced if and only if so
reducing the
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payments results in the Executive receiving a greater net Severance Amount than
he would have received had a reduction not occurred and an excise tax been paid
pursuant to Code Section 4999. For purposes of this Agreement, the terms "EXCESS
PARACHUTE PAYMENT" and "PARACHUTE PAYMENTS" shall have the meanings assigned to
them in Section 280G of the Code, and such Parachute Payments shall be valued as
provided therein.
(b) Procedure for Establishing Limitation on Termination Payment.
Within sixty (60) days following delivery of the Notice of Termination or notice
by the Company to the Executive of its belief that there is a payment or benefit
due the Executive which will result in an "Excess Parachute Payment", the
Executive and the Company, at the Company's expense, shall obtain the opinion of
such legal counsel, which need not be unqualified, as the Executive may choose,
which sets forth: (i) the amount of the Executive's "Annualized Includible
Compensation For The Base Period" (as defined in Code Section 280G(d)(1)); (ii)
the present value of the Total Payments; and (iii) the amount and present value
of any Excess Parachute Payment. The opinion of such legal counsel may be
supported by the opinion of a certified public accounting firm and, if
necessary, a firm of recognized executive compensation consultants. Such opinion
shall be binding upon the Company and the Executive. In the event that such
opinion determines that there would be an Excess Parachute Payment, the
Severance Amount hereunder or any other payment determined by such counsel to be
includible in Total Payments shall be reduced or eliminated so that under the
basis of calculations set forth in such opinion, there will be no Excess
Parachute Payment. The provisions of this Section 9(b), including the
calculations, notices, and opinion provided for herein shall be based upon the
conclusive presumption that: (i) the compensation and benefits provided for
herein; and (ii)
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any other compensation earned prior to the Effective Date of termination by the
Executive pursuant to the Company's compensation programs (if such payments
would have been made in the future in any event, even though the timing of such
payment is triggered by the Change-of-Control), are reasonable.
(c) Subsequent Imposition of Excise Tax. If, notwithstanding
compliance with the provisions of Sections 9(a), and 9(b) herein, it is
ultimately determined by a court or pursuant to a final determination by the
Internal Revenue Service that any portion of the Total Payments is considered to
be a Parachute Payment, subject to excise tax under Section 4999 of the Code,
which was not contemplated to be a Parachute Payment at the time of payment (so
as to accurately determine whether a limitation benefit to the Executive, as
provided in Section 9(b) hereof), the Executive shall be entitled to receive a
lump sum cash payment sufficient to place the Executive in the same net
after-tax position, computed by using the Special Tax Rate (as such term is
defined below), that the Executive would have been in had such payment not been
subject to such excise tax, and had the Executive not incurred any interest
charges or penalties with respect to the imposition of such excise tax. For
purposes of this Agreement, the "SPECIAL TAX RATE" shall be the highest
effective federal and state marginal tax rates applicable to the Executive in
the year in which the payment contemplated under this Section 9 is made.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
Executive Retention Agreement Page 26
73
its affiliated companies and which shall not be or have become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "COMPANY" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of law,
or otherwise.
Executive Retention Agreement Page 27
74
(d) Failure of the Company to obtain such assumption and agreement
prior to the effective date of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if he had terminated his employment with the Company voluntarily for
Good Reason. For the purpose of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the Date of Termination.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxx X. Xxxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
If to the Company:
Xxxx & Buster's, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention:
General Counsel
or to such other address as either party shall have furnished to the other in
writing in
Executive Retention Agreement Page 28
75
accordance herewith. Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)- (v), shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that this Agreement is
entered into at the same time as an agreement styled Employment Agreement
between Executive and Company. Once this Agreement becomes effective upon a
Change of Control, and until such time as it ceases to be effective, this
Agreement shall have precedence over the Employment Agreement in defining the
rights and duties of Executive and Company.
(g) No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by an authorized member of the
Committee, or by the respective parties' legal representatives and successors.
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76
(h) Simultaneously with the execution of this Agreement, the Company
is executing that certain agreement styled "Xxxx & Buster's, Inc. Executive
Retention Agreement Trust". The Company covenants with Executive to: (i) procure
the execution by Wachovia Bank of North Carolina, N.A., as Trustee pursuant to
such agreement; and (ii) make all payments required of the Company pursuant to
such agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Committee, the Company has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.
_______________________________________________
Xxxxx X. Xxxxxxxxx
Xxxx & Buster's, Inc.
By: ________________________________________
Its: ________________________________________
Executive Retention Agreement Page 30
