EMPLOYMENT AGREEMENT
EXHIBIT
10.5
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into on the 15th day of
September, 2004 by and between CNL Restaurant Capital GP Corp. (f/k/a CNL
Franchise Network GP Corp.), a Delaware corporation (the “Company”), and Xxxxxxx
X. Xxxxxxxxxx (“Executive”).
Preliminary
Statement
WHEREAS,
the Company is the general partner of CNL Restaurant Capital LP, a Delaware
limited partnership ("Xxxxx"); and
WHEREAS,
the Company desires to employ or continue to employ Executive, and Executive
desires to be employed by the Company; and
WHEREAS
the Company and Executive desire to enter into this Agreement which sets forth
the terms and conditions of Executive’s employment;
NOW,
THEREFORE, in consideration of the mutual covenants set forth below, the Company
and Executive agree as follows:
1. Employment.
The
Company hereby employs Executive, and Executive agrees to serve the Company,
on
the terms and conditions set forth, below. Except as otherwise provided in
this
Agreement, Executive’s employment shall be subject to the employment policies
and practices of the Company in effect from time to time during the Term of
Executive’s employment.
2. Term
of Agreement.
The
term of Executive’s employment pursuant to this Agreement shall commence on
September 1, 2002 and shall continue in effect for a period of three (3) years
and four (4) months to and including December 31, 2005, unless terminated sooner
in accordance with Section 5 below. Thereafter, this Agreement may renew for
additional one-year terms, upon written notice by the Company to Executive
no
later than sixty (60) days prior to the termination date of any such term,
unless terminated sooner in accordance with Section 5 below. (The natural
termination date of the initial term or any successive term of this Agreement
shall be referred to as the “Termination Date.”)
3. Position
and Duties.
Executive shall serve as the Executive Vice President of the Company and
President of CNL Advisory Services, and he shall have such duties, authority
and
responsibilities as are normally associated with and appropriate for such
position. Executive shall devote substantially all of his working time and
efforts to the business and affairs of the Company, except that Executive may
perform personal or charitable activities which do not interfere with
Executive’s employment duties.
4. Compensation
and Related Matters.
4.1. Base
Salary.
During
the term of this Agreement, the Company shall pay to Executive a Base Salary
at
an annual rate as specified in Attachment "A" to this Agreement (“Base
Salary”). Base Salary shall be paid in equal installments in accordance with the
Company’s usual and customary payroll practices, but not less frequently than
monthly. The Base Salary may be increased each year in an amount approved by
the
Company's Board of Directors.
4.2. Bonus
and Additional Compensation.
Executive will be entitled to an annual bonus and long-term compensation as
set
forth in Attachment “A”.
4.3. Benefit
Plans and Arrangements.
Executive shall be entitled to participate in and to receive benefits under
all
existing and future employee benefit plans, perquisites and fringe benefit
programs of the Company that are provided to other similarly situated executives
of the Company, on terms no less favorable than those provided to such other
executives, to the extent Executive is eligible under the terms of such plans
or
programs.
4.4. Expenses.
The
Company shall promptly reimburse Executive for all reasonable and customary
expenses incurred by Executive in performing services for the Company, including
all expenses of travel while away from home on business or at the request of
and
in the service of the Company, provided that such expenses are incurred and
accounted for by Executive in accordance with the policies and procedures
established by the Company.
4.5. Paid
Time Off.
Executive shall be entitled to no fewer than twenty-five (25) days of paid
time
off (PTO) per year, to be accrued and carried over from year to year in
accordance with the then current Company policy as applicable to similarly
situated executives of the Company.
5. Termination.
The
term of Executive’s employment pursuant to this Agreement may be terminated
under the following circumstances:
5.1. Death.
The
term of Executive’s employment shall terminate upon his death.
5.2. Disability.
The
Company may terminate the term of Executive’s employment as a result of
Executive’s Disability (as hereinafter defined). In the event the Executive is
covered by a group, long-term disability income policy provided and paid for
by
the Company, then “Disability” shall mean Executive is determined by such group,
long-term disability insurance company to be disabled and eligible for long
term
disability income under the terms of such policy. In the event Executive is
not
covered by any such group, long-term disability income policy, then “Disability”
shall mean Executive is unable, by reason of illness or other physical or mental
incapacity or limitation, to perform the duties of his employment with the
Company, which inability continues for at least one hundred twenty (120)
consecutive days, or for shorter periods aggregating one hundred twenty (120)
days during any consecutive twelve (12) month period.
5.3. By
Company for Cause.
The
Company may terminate the term of Executive’s employment for “Cause” upon
written notice to Executive. For purposes of this Agreement, the Company shall
have “Cause” to terminate Executive’s employment upon any of the following
events:
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(i)
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Executive’s
continued failure to perform or his habitual neglect of his duties
other
than due to Executive’s death or Disability (as such term is defined in
section 5.2 above);
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(ii)
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Executive’s
conviction of, plea of nolo contendre to, or indictment for (which
indictment is not discharged or otherwise resolved within twelve
(12)
months) any felony, or any crime involving moral turpitude, or any
crime
which is likely to result in material injury to the
Company;
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(iii)
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Executive’s
breach of a fiduciary duty relating to the Executive’s employment with the
Company, including but not limited to an act of fraud, theft or
dishonesty; or
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(iv)
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Executive’s
material breach of this Agreement;
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Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for Cause
under clause (i) or (iv) unless the Company provided reasonable written notice
to the Executive setting forth the reasons for the Company’s intention to
terminate for Cause, and Executive failed within thirty (30) days to cure the
event or deficiency set forth in the written notice.
5.4. By
Company Without Cause.
The
Company may terminate the term of Executive’s employment other than for Cause,
death or Disability at any time upon sixty (60) days prior written notice to
Executive.
5.5. By
Executive for Good Reason.
Executive may terminate the term of his employment for “Good Reason” upon
written notice to the Company. For purposes of this Agreement, “Good Reason”
shall include the following events unless otherwise consented to by
Executive:
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(i)
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The
assignment to Executive of any duties materially inconsistent with
Executive’s position, duties, responsibilities and status within the
Company;
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(ii)
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A
material reduction in Executive’s reporting responsibilities not
pertaining to Executive’s failure to properly perform the material duties
of his position with the Company, which failure has been noted in
Executive’s personnel file and communicated to Executive in writing prior
to such reduction in reporting
responsibilities;
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(iii)
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A
reduction in the Base Salary of Executive not pertaining to Executive’s
failure to properly perform the material duties of his position with
the
Company, which failure has been noted in Executive’s personnel file and
communicated to Executive in writing prior to such reduction in Base
Salary;
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(iv)
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A
requirement by the Company that Executive’s work location be moved more
than fifty (50) miles of the Company’s principal place of business in
Orlando, Florida;
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(v)
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The
Company’s material breach of this
Agreement;
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(vi)
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A
"change in control" (as defined below) of the Company
occurs;
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(vii)
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The
Company’s failure to obtain an agreement from any successor to the
business of the Company by which the successor assumes and agrees
to
perform this Agreement; or
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(viii)
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A
purchaser of the Company assigns this Agreement to another person
or
entity without Executive's written
consent.
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Notwithstanding
the foregoing, Executive shall not be deemed to have terminated his employment
for Good Reason under clause (i), (ii), (iii), (iv) or (v), unless Executive
provided reasonable written notice to the Company setting forth the reasons
for
Executive’s intention to resign for Good Reason, and the Company failed within
thirty (30) days to cure the event or deficiency set forth in the written
notice.
For
purposes of this Section 5.5, a “change in control” means that an act specified
in Sections 5.5(i) through 5.5(v) of the Agreement occurs and,
within
two (2) years of that act, one of the following events also occurs: (A) the
closing of any sale by Xxxxx or CNL Restaurant Capital Corp. (f/k/a CNL
Franchise Network Corp.), a Delaware corporation ("CRCC"), of all or
substantially all of its assets to an acquiring person or entity that is not
an
affiliate of the Company, Xxxxx, CRCC, or CNL Restaurant Properties, Inc. (f/k/a
CNL American Properties Fund, Inc.), a Maryland corporation (“CNLRP”); (B) the
closing of any sale by CNLRP of all or a majority of the shares of stock of
CRCC
that it owns to an acquiring person or entity that is not an affiliate of the
Company, Xxxxx, CRCC, CNLRP or Xxxxx X. Xxxxxx, Xx. (collectively, the “CNLRP
Group”); or (C) the closing of any sale by the holders of common stock of CNLRP
of an amount of common stock that equals or exceeds a majority of the shares
of
common stock of CNLRP immediately prior to such closing to a person or entity
that is not an affiliate of the CNLRP Group such that the holders of such common
stock immediately prior to the closing are not the holders of a majority of
the
ordinary voting securities of CNLRP after the closing.
6. Compensation
in the Event of Termination.
Upon
the termination of this Agreement, the Company shall pay Executive compensation
as set forth below:
6.1. By
Company Without Cause; By Executive for Good Reason.
In the
event that Executive’s employment is terminated by the Company without Cause, or
by the Executive for Good Reason, the Company shall pay the Executive a cash
payment equal to two (2) times the Executive’s Base Salary, which is in effect
on the date of the Executive’s termination (the “Severance Payment”). The
Severance Payment shall be made payable in equal installments over a twenty-four
(24) month period in accordance with the Company’s usual and customary payroll
practices, commencing on the first payday following Executive’s termination.
Notwithstanding the foregoing, in the event Executive terminates his employment
due to a "change in control" (as defined in Section 5.5 above) the Company
shall
pay to Executive within thirty (30) days of the date of termination a lump
sum
cash payment equal to one (1) times Executive's Base Salary in effect on the
date of Executive's termination in addition to any other payments to which
Executive would otherwise be entitled under the terms of this Agreement. Within
thirty (30) days of the date of termination of Executive’s employment, the
Company shall also pay Executive a lump sum equal to the sum of: (a) any accrued
but unpaid Base Salary and PTO due Executive as of the date of termination
of
employment; and (b) reimbursements for appropriately submitted expenses which
have been incurred, but have not been paid by the Company, as of the date of
termination. In addition, any (i) common or preferred stock, (ii) partnership
or
member interest, (iii) other equity interest, (iv) stock or equity option,
(v)
phantom stock compensation, or (vi) other incentive or deferred compensation
under any Company stock bonus plan, phantom stock plan, stock option plan,
or
other deferred compensation plan that is subject to vesting or restriction
(other than a right of first refusal), shall become immediately vested, but
the
originally selected distribution option under the deferred compensation plan
shall govern; and to the extent an option is exercisable, it shall remain
exercisable for the lesser of ninety (90) days or the balance of the term of
the
option. Notwithstanding this paragraph, all distribution under the deferred
compensation plan shall be in accordance with the existing plan.
6.2. By
Company for Cause; By Executive Without Good Reason.
In the
event that the Company terminates Executive’s employment for Cause, or Executive
terminates his employment without Good Reason, all compensation or benefits
to
which Executive may otherwise be entitled to shall cease on the date of
termination, except for (i) any accrued but unpaid Base Salary due Executive
as
of the date of termination of employment, and (ii) reimbursements for
appropriately submitted expenses which have been incurred, but have not been
paid by the Company, as of the date of termination.
6.3. Death
or Disability.
In the
event that the Company terminates Executive’s employment due to his death or
Disability, the Company shall pay the Executive or his estate a lump sum equal
to twelve (12) months of Executive’s Base Salary, payable within thirty (30)
days of Executive’s termination. This payment shall be in addition to, rather
than in lieu of, the entitlement of Executive or his estate to any other
insurance or benefit proceeds as a result of his death or
Disability.
6.4. Natural
Termination.
In the
event that Executive’s employment by the Company pursuant to this Agreement
naturally terminates on the Termination Date, all compensation or benefits
to
which Executive may otherwise be entitled to shall cease on the Termination
Date, except for (i) any accrued but unpaid Base Salary and PTO, if any, due
Executive as of the Termination Date, and (ii) reimbursements for appropriately
submitted expenses which have been incurred, but have not been paid by the
Company, as of the Termination Date; provided, however, that at the election
of
the Company in its sole and absolute discretion and upon written notice to
the
Executive on or prior to the Termination Date, the Company shall pay the
Executive a cash payment equal to two (2) times the Executive’s Base Salary
which is in effect on the Termination Date, which cash payment shall be made
payable over a twenty-four (24) month period in equal installments in accordance
with the Company’s usual and customary payroll practices, commencing on the
first payday following the Termination Date (the “Optional Severance
Pay”).
7. Non-Competition,
Non-Solicitation and Confidentiality.
7.1. Covenant
Not to Compete.
While
employed by the Company or any affiliate of the Company and for a period of
twenty-four (24) months thereafter, Executive shall not, directly or indirectly,
for compensation or otherwise, engage in or have any interest in any sole
proprietorship, partnership, corporation, company, business or any other person
or entity (whether as an employee, officer, corporation, business or any holder
creditor, consultant or otherwise) that, directly or indirectly, competes in
the
same business sectors as the business enterprises in which CNLRP (as defined
in
Section 5.5 above) or any of its subsidiaries, partners, or affiliates in (or
which come into) existence during the term hereof (collectively, the "Benefited
Persons"), are now or during Executive’s employment become engaged in any and
all states in which CNLRP or any other Benefited Person conducts such business
while Executive is employed by the Company or a subsidiary of the Company;
provided, however, Executive may continue to hold CNLRP securities or acquire,
solely as an investment, shares of capital stock or other equity securities
of
any company which are traded on any national securities exchange or are
regularly quoted in the over-the-counter market, so long as Executive does
not
control, acquire a controlling interest in, or become a member of a group which
exercises direct or indirect control of more than five percent (5%) of any
class
of capital stock of such corporation. Notwithstanding the foregoing, in the
event that Executive’s employment by the Company naturally terminates on the
Termination Date and the Company elects not to pay Executive the Optional
Severance Pay pursuant to Section 6.4 above, then the prohibitions contained
in
this Section 7.1 shall terminate on the Termination Date.
7.2. Nonsolicitation
of Clients.
While
employed by the Company or any affiliate of the Company and for a period of
twenty-four (24) months thereafter, Executive shall not, directly or indirectly,
for himself or for any other person, firm, corporation, partnership, company,
association or other entity, solicit, attempt to contract with, or enter into
a
contractual relationship of any kind pertaining to any aspect of the development
or lease of real property, with any person or entity with which the Company
or
any affiliate of the Company, had any contractual relationship or engaged in
negotiations toward a contract in the previous twenty-four (24) months.
7.3. Nonsolicitation
of Employees.
While
employed by the Company or any affiliate of the Company and for a period of
twenty-four (24) months thereafter, Executive shall not directly or indirectly,
for himself or for any other person, firm, corporation, partnership, company,
association or other entity, solicit, attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Company
or
any Benefited Person, unless such employee or former employee has not been
employed by the Company or other Benefited Person for a period in excess of
six
(6) months.
7.4. Nondisparagement.
While
employed by the Company or any affiliate of the Company and after Executive’s
employment terminates, Executive shall not disparage, denigrate or comment
negatively upon, either orally or in writing, the Company, any other Benefited
Person, or any of their officers or directors, to or in the presence of any
person or entity unless compelled to act by a valid subpoena or other legal
mandate; provided, however, if Executive receives such a subpoena or other
legal
mandate he shall provide the Company with written notice of same at least five
(5) business days prior to the date on which Executive is required to make
the
disclosure. The Company likewise shall not disparage, denigrate or comment
negatively upon, either orally or in writing, the Executive to any prospective
employer or third party after Executive’s employment terminates unless compelled
to do so by subpoena or other legal mandate; provided however, if the Company
receives such a subpoena or other legal mandate it shall provide Executive
with
written notice of same at least five (5) business days prior to the date on
which the Company is required to make the disclosure.
7.5. Confidentiality.
While
employed by the Company or any affiliate of the Company and after Executive’s
employment terminates, Executive shall keep secret and retain in strictest
confidence, and shall not use for his benefit or the benefit of others, except
in connection with the business affairs of the Company or the other Benefited
Persons, all information relating to the business of the Company or any of
the
other Benefited Persons, including, without limitation, information concerning
the financial condition, prospects, methods of doing business, marketing and
promotion of services, disclosed to or known by the Executive as a consequence
of his employment by the Company or any affiliate of the Company, which
information is not generally known or otherwise obtainable in the public
domain.
8. Tangible
Items.
All
files, records, documents, manuals, books, forms, reports, memoranda, studies,
data, calculations, recordings, or correspondence, in whatever form they may
exist, and all copies, abstracts and summaries of the foregoing, and all
physical items related to the business of the Company or any other Benefited
Person, whether of a public nature or not, and whether prepared by Executive
or
not, are and shall remain the exclusive property of the Company or any other
Benefited Person, and shall not be removed from their premises, except as
required in the course of Executive’s employment by the Company, without the
prior written consent of the Company. Such items shall be promptly returned
by
Executive on the termination of Executive’s employment with the Company or at
any earlier time upon the request of the Company.
9. Remedies.
9.1. Injunctive
Relief.
The
Company and Executive acknowledge and agree that a breach by Executive or the
Company of any of the covenants contained in Section 7 of this Agreement
will cause irreparable harm and damage to the Executive, on the one hand, or
the
Company and/or any other Benefited Person on the other hand, the monetary amount
of which may be virtually impossible to ascertain. Accordingly, the Company,
any
other Benefited Person or the Executive, if affected by any such breach, shall
be entitled to an injunction from any court of competent jurisdiction enjoining
and restraining any violation of said covenants by the Company, any other
Benefited Person, or Executive or any of his affiliates, associates, partners
or
agents, either directly or indirectly, as the case may be, and that such right
to injunction shall be cumulative and in addition to other remedies Executive,
the Company or such other Benefited Person may possess. In addition, Executive
acknowledges that in the event of his breach of any of the provisions of
Section 7 of this Agreement, in addition to any other remedies the Company
may have, the Company may cease making the balance of the payments specified
in
Section 6.1 and recover in full from Executive any such payments previously
made.
9.2. Arbitration.
Except
with regard to Section 9.1, all disputes between the parties concerning the
performance, breach, construction or interpretation of this Agreement, or in
any
manner arising out of this Agreement, shall be submitted to binding arbitration
in accordance with the rules of the American Arbitration Association, which
arbitration shall be carried out in the manner set forth below:
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(i)
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Within
fifteen (15) days after written notice by one party to the other
party of
its demand for arbitration, which demand shall set forth the name
and
address of its designated arbitrator, the other party shall select
its
designated arbitrator and so notify the demanding party. Within fifteen
(15) days thereafter, the two arbitrators so selected shall select
the
third arbitrator. The dispute shall be heard by the arbitrators within
ninety (90) days after selection of the third arbitrator. The decision
of
any two arbitrators shall be binding upon the parties. Should any
party or
arbitrator fail to make a selection, the American Arbitration Association
shall designate such arbitrator upon the application of either party.
The
decision of the arbitrators shall be final and binding upon the Company,
its successors and assigns and
Executive.
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(ii)
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The
arbitration proceedings shall take place in Orlando, Orange
County, Florida
and the judgment and determination of such proceedings shall be binding
on
all parties. Judgment upon any award rendered by the arbitrators
may be
entered into any court having competent jurisdiction without any
right of
appeal.
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(iii)
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Each
party shall pay its or his own expenses of arbitration, and the expenses
of the arbitrators and the arbitration proceeding shall be shared
equally.
However, if in the opinion of a majority of the arbitrators, any
claim or
defense was unreasonable, the arbitrators may assess, as part of
their
award, all or any part of the arbitration expenses of the other party
(including reasonable attorneys’ fees) and of the arbitrators and the
arbitration proceeding.
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10. Severability.
The
Company and Executive agree that if, in any action before any court or agency
legally empowered to enforce this Agreement, any term, restriction, covenant,
or
promise is found to be unreasonable or otherwise unenforceable, then such term,
restriction, covenant, or promise shall be deemed modified to the extent
necessary to make it enforceable.
11. Notice.
For
purposes of this Agreement, notices, demands and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when received if delivered in person or by overnight courier,
or
if mailed by United States certified mail, return receipt requested, postage
prepaid, to the following addresses:
If
to
Executive:
Xxxxxxx
X. Xxxxxxxxxx
0000
Xxxxxxxxxx Xxxx
Xxxxxx
Xxxx, Xxxxxxx 00000
If
to
Company:
CNL
Restaurant Capital GP Corp.
000
Xxxxx
Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Chief Executive Officer
Either
party may change its address for notices in accordance with this Section 11
by
providing written notice of such change to the other party.
12. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Florida.
13. Benefits;
Binding Effect; Assignment.
This
Agreement shall be for the benefit of and binding upon the parties and their
respective heirs, personal representatives, legal representatives, successors
and permitted assigns. Neither party may assign this Agreement without the
prior
written consent of the other party.
14. Entire
Agreement.
This
Agreement, including its incorporated Attachment "A", constitutes the
entire agreement between the parties, and all prior understandings, agreements
or undertakings between the parties concerning Executive’s employment or the
other subject matters of this Agreement are superseded in their entirety by
this
Agreement.
[SIGNATURE
PAGE TO FOLLOW]
1
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
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“Executive”
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Witness
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/s/
XXXXXXX X. XXXXXXXXXX
Xxxxxxx
X. Xxxxxxxxxx
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“Company”
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CNL
Restaurant Capital GP Corp.
(f/k/a
CNL Franchise Network GP Corp.),
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a
Delaware corporation
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Witness
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By:/s/
XXXXXX X. XXXXXXXXXX
Xxxxxx
X. XxXxxxxxxx
President
& Chief Executive Officer
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10
EMPLOYMENT
AGREEMENT OF XXXXXXX X. XXXXXXXXXX
ATTACHMENT
“A”
1. Base
Salary:
During
the term of employment, the Company shall pay to Executive a base salary of
$250,000.00 per year.
2.
Annual
Bonus Compensation:
Executive may receive annual bonus compensation targeted at fifty percent (50%)
of Executive’s Base Salary with a maximum annual bonus of one hundred percent
(100%) of Executive’s Base Salary.
3. Long-Term
Compensation:
Executive is currently participating in a long-term incentive plan, and would
be
eligible to participate in additional plans as
applicable.
