EXHIBIT 10.3
XXXXXXXX'X INTERNATIONAL, INC.
CHANGE IN CONTROL AND
NONCOMPETE AGREEMENT
This Agreement is between XXXXXXXX'X INTERNATIONAL, INC. ("AII"), and
_______________ ("you"). This Agreement is dated ________________.
The terms of this Agreement are set forth in the following questions
and answers.
What do "AII" and "Company" mean? "AII" means Xxxxxxxx'x International,
Inc. "Company" means AII and all of its wholly-owned subsidiaries or
subsidiaries of subsidiaries now or hereafter in existence.
What is the purpose of this Agreement? The Company wants to encourage
continuity of management and to protect its management personnel against
financial hardship in the event of a change in control by offering the "Change
in Control Benefits." The Company also wants to specify your obligations to the
Company with respect to non-competition, non-solicitation, confidential
information and discoveries (your "Obligations"). You are willing to agree to
Your Obligations in exchange for the Company's promise to provide the Change in
Control Benefits if a "change in control" were to occur.
CHANGE IN CONTROL BENEFITS:
What must happen before I'm eligible for "change in control" benefits?
All of the following must occur:
o Both you and AII must have signed this Agreement
o A "change in control" must occur
What does "change in control" mean?" "Change in Control" means any
one of the following:
> continuing Directors no longer constitute at least 2/3 of
AII's board of directors (the "Board of Directors"); or
> any person or group of persons (as defined in Rule 13d-5
under the Securities Exchange Act of 1934 (the "Exchange
Act")), together with its affiliates, become the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of thirty percent (30%) or more of
AII's then outstanding common stock or thirty percent (30%)
or more of the combined voting power of AII's then
outstanding securities (calculated in accordance with Section
13(d)(3) or 14(d) of the Exchange Act) entitled generally to
vote for the election of AII's directors; or
> the merger or consolidation of AII with any other
corporation, the sale of substantially all of the assets of
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AII or the liquidation or dissolution of AII, unless, in the
case of a merger or consolidation, the then Continuing
Directors in office immediately prior to such merger or
consolidation will constitute at least 2/3 of the Board of
Directors of the surviving corporation of such merger or
consolidation and any parent (as such term is defined in Rule
12b-2 under the Exchange Act) of such corporation; or
> at least 2/3 of the then Continuing Directors in office
immediately prior to any other action proposed to be taken by
AII's stockholders or by AII's Board of Directors determine
that such proposed action, if taken, would constitute a
change in control of the Corporation and such action is
taken.
"Continuing Director" means any individual who either (i) was a
member of AII's Board of Directors (a "Director") on the date
hereof, or (ii) was designated (as of the day of initial election
as a Director) as a continuing Director by a majority of the then
Continuing Directors.
What if control of only a subsidiary changes? No Change in Control
Benefits will be available even if you work for the affected
subsidiary. Change in control benefits will be offered only if
there were to be a change in the control of AII.
o Your employment with the Company (or its successor) must terminate
within 18 months following the "change in control" and it must
terminate in one of two ways:
Either:
> by the Company or its successor without "cause"
What is "cause"?
>> The Executive is convicted of - or pleads no contest /
nolo contendre to - any felony or any criminal offense
involving fraud; or
>> The Executive is determined by a government agency or
court to have violated this Agreement or any applicable
local, state or federal employment law, including, but
not limited to, any anti-discrimination law.
Or:
> Or by you for "good reason" at a time when "cause" does not
exist.
What is "good reason"? The Company (or its successor) -
>> reduces your compensation or benefits as in effect prior
to the change in control; or
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>> requires you to relocate more than 50 miles from the
metropolitan area in which you worked prior to the
Change in Control; or
>> reduces your responsibilities.
If I believe I have "good reason" to quit, must I notify AII
(or its successor)? Yes. The Company (or its successor) must
receive written notice from you that describes the basis for
"good reason" within 30 days after the event that constitutes
"good reason". Will the Company (or its successor) have a
right to fix it by eliminating the circumstances that
constitute "good reason"? Yes. The fix must occur within 10
days after receipt of notice from you. If it is fixed, you
may not quit for "good reason."
What are the "change in control" benefits? The following benefits will
apply if, and only if, you become "eligible" for "change in control" benefits:
o Bonus:
How much?
> First, determine the sum of:
>> your annual base salary in effect before the change in
control, plus
>> the greater of - (i) your average bonus for the three
fiscal years preceding the change in control, or (ii)
your target bonus for the fiscal year in which your
employment terminates.
> Second, divide that sum by 12.
> Third, multiply the result by 20 (or by 24, if you are a
member of the Company's "Senior Team" at the time of the
change in control, as determined by the Company immediately
prior to the change in control, in its sole and absolute
discretion).
How will this be paid? Lump sum, in cash.
When will it be paid? By the next payroll processing date that
occurs at least five business days after you terminate employment.
o Company payment of Health Plan premiums:
How much? All of the premiums.
What if my spouse/domestic partner and/or eligible dependent child
are covered? The Company (or its successor) pays all of the
premium.
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For how long? 20 months (or 24 months, if you are a member of the
Company's "Senior Team" at the time of the change in control, as
determined by the Company immediately prior to the change in
control, in its sole and absolute discretion).
Under what plan? The AII Executive Health Plan or substantially
similar coverage.
o Immediate vesting of stock options and restricted shares:
Does this apply to all of my options and restricted shares? Yes,
except of course this benefit does not apply to any option that
has expired and any restricted shares that have been forfeited
prior to you becoming eligible for Change in Control Benefits.
What does "immediate vesting" mean? Upon becoming eligible for
Change in Control Benefits:
> any options to which this benefit applies will become
exercisable, and
> the forfeiture and prohibited sale and transfer restrictions
on restricted shares to which this benefit applies will
lapse.
Will exercisability of options be extended? No. Unless
"retirement" benefits apply (see below), termination of
exercisability of options will be governed by each option's award
agreement.
Will the terms of my awards and the applicable plan control all
terms other than the specific benefits of this Agreement? Yes. For
example, if the award or option plan provides that the Company may
purchase an option from you upon the occurrence of a change in
control, then that right will continue to apply.
Can termination by the Company without cause or termination by me for
good reason entitle me to retirement benefits? Yes. If the termination of your
employment that entitles you to Change in Control Benefits occurs under
circumstances that constitute "retirement" under the AII Executive Retirement
Plan, you will receive retirement benefits in addition to Change in Control
Benefits.
o In order for this to apply, must I "retire" at the time of my
termination? Yes, you must satisfy the conditions to "retire"
under the AII Executive Retirement Plan by the time of the
termination of employment that makes you eligible for Change in
Control Benefits.
Do I have to satisfy all of the retirement conditions? No, the
notice and voluntary termination requirements will not apply and
the Company (or its successor) must give you at least ten days to
sign the "release" and "Noncompete Agreement" as those terms are
described in the AII Executive Retirement Plan.
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o What additional benefits will I receive?
> Retiree health: Your benefit will be as described in the AII
Executive Retirement Plan, except that in accordance with
this Agreement you will not be required to pay any premium
for the first [20 or 24] months of coverage.
> Options and Restricted Shares:
>> Vesting: The Change in Control Benefits will apply
because they are more favorable.
>> Option exercisability: The extension of exercisability
under the Retirement Plan will apply because it is more
favorable.
What if the Company exercises any right it may have to
purchase my options upon a change in control? If your option
award agreement or the option plan permit the Company to
purchase the option and that occurs, extended exercisability
will not apply.
> Bonuses:
Will I receive both a change in control bonus and the bonuses
set forth in the Executive Retirement Plan? Yes.
> Other Executive Retirement Benefits:
Will the other Executive Retirement Plan benefits be provided
in addition to the Change in Control Benefits? Yes.
o Does "retirement" constitute "good reason" to terminate my
employment after a change in control? No.
o Do the Executive Retirement Plan "promises" by me apply after a
change in control? Yes, if you receive the Executive Retirement
Plan's benefits, then you must keep the promises.
o Can my Change in Control Benefits be "cut back"? Yes. If the
Change in Control Benefits would create an excess parachute
payment, as that term is defined in Section 280G of the Internal
Revenue Code (the "Code"), then you shall receive either (i) the
Change in Control Benefits, or (ii) the Change in Control Benefits
reduced to an amount equal to one dollar ($1) less than the
maximum amount allowed under the Code without creating an excess
parachute payment, whichever amount results in the greater
after-tax payment to you.
Who will decide which benefit(s) to cut back and how to do that?
The Company.
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YOUR OBLIGATIONS: By signing this Agreement, you agree to fulfill the
following Obligations:
Confidentiality/Trade Secrets:
o What is my Obligation? You must use your best efforts and exercise
utmost diligence to protect and safeguard the trade secrets and
confidential and proprietary information of the Company.
o What are examples of "trade secrets and confidential and
proprietary information"? The identity of the Company's customers
and suppliers, its arrangements with customers and suppliers, and
its technical and financial data, records, compilations of
information, processes, procedures, recipes and specifications
relating to its customers, suppliers, products and services, new
products and product testing, discoveries, ideas, trade secrets,
computer software, training programs and techniques, research and
development of new concepts, operating procedures and "know-how",
marketing and advertising techniques and plans, customer research,
strategic plans, pricing policies, restaurant sales and margin
information, financial, business and operational information and
reports and other financial information about the Company or its
business.
o May I disclose trade secrets or confidential or proprietary
information? No.
Are there exceptions? Yes, disclosures required in the course of
your employment with the Company or by law.
o May I use trade secrets or confidential or proprietary information
for my own benefit or for the benefit of another? No, you may not
do so either directly or indirectly.
o Must I deliver such information to the Company upon termination of
employment? Yes. Files, records, documents, drawings,
specifications, memoranda, notes, or other documents relating to
the business of the Company, whether prepared by you or otherwise
coming into your possession, shall be the exclusive property of
the Company and shall be delivered to the Company and not retained
by you.
May the Company require that I deliver this information at
anytime? Yes.
o During what period am I obligated by this? Both during the term of
your employment by the Company and thereafter.
Discoveries:
o What is my Obligation? You will fully inform the Company of and
disclose to the Company all "discoveries."
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o What are "discoveries"? All inventions, designs, improvements,
discoveries, and processes that you have now or may hereafter have
during your employment with the Company and that pertain or relate
to the business of the Company or to any experimental work,
products, services, or processes of the Company in progress or
planned for the future, whether conceived by you alone or with
others, and whether or not conceived during regular working hours
or in conjunction with the use of any Company assets.
o Do all "discoveries" belong to the Company? Yes, all discoveries
shall be the exclusive property of the Company whether or not
patent or trademark applications are filed thereon. You agree that
you shall never at any time during or after termination of
employment have or claim any right, title or interest in any
copyright, trademark, trade name, or other intellectual property
or any confidential information belonging to or used by the
Company.
o Am I required to assist the Company to establish its rights? Yes.
You shall execute all necessary papers, maintain adequate and
current records and otherwise provide assistance, at the Company's
expense, during and after employment, to enable the Company to
obtain for itself or its nominee patents, copyrights, trademarks,
registrations or other legal protection for such intellectual
property and protect the same against infringement by others. If
such assistance takes place after your employment is terminated,
then you shall be paid by the Company at an hourly rate determined
based on fifty percent (50%) of your existing salary at the date
of termination divided by 2500 for any time actually spent in
rendering such assistance at the request of the Company.
o What is "intellectual property? "Intellectual property" shall
include, without limitation, patents, trademarks, copyrights,
trade secrets, invention, discoveries and other business
information that is not publicly known.
o During what period am I obligated by this? Both during the term of
your employment by the Company and thereafter.
Non-competition:
o What is my Obligation? You will not, without the prior written
consent of the Board, directly or indirectly, as an employee,
employer, consultant, agent, principal, partner, shareholder,
corporate officer, director, or through any other kind of
ownership (other than ownership of securities of publicly held
corporations of which you own less than one percent 1% of any
class of outstanding securities) or in any other representative or
individual capacity, engage in or render any services to any
business in North America [revise geographic scope as appropriate]
engaged in the casual dining restaurant industry, or in any other
segment of the restaurant industry in which the Company or any
subsidiary of the Company may become involved after the date
hereof and prior to the date of your termination of employment.
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o What is the "casual dining restaurant industry"? For purposes of
this Agreement "casual dining restaurant industry" consists of
"sit down" restaurants serving alcoholic beverages, with a per
guest average guest check within the United States of under $20.00
(adjusted upward each year to recognize Company menu price
increases).
o During what period am I obligated by this? During the period of
your employment and until the first anniversary of your
termination of employment.
Nonsolicitation:
o What is my Obligation? You will not, either directly or
indirectly, for yourself or for any third party, solicit, induce,
recruit, or cause another person in the employ of the Company to
terminate his/her employment for the purpose of joining,
associating, or becoming employed with any business or activity
that is engaged in the casual dining restaurant industry or any
other segment of the restaurant industry in which the Company may
become involved after the date hereof and prior to the date of any
termination of employment.
o During what period am I obligated by this? During the term of your
employment and until the first anniversary of your termination of
employment.
Enforcement of your Obligations:
o Are there exceptions to the Obligations? Yes.
> If you voluntarily terminate your employment following a
change in control and you are not eligible for Change in
Control Benefits, then you are not bound by the Obligations
of this Agreement after your termination date.
> If no change in control has occurred and your employment is
terminated by the Company without cause (as defined in this
agreement), then you are not bound by the obligations, unless
the Company pays to you severance benefits equal to the
amount you would have received under the Company's severance
policy if your job had been eliminated. This provision does
not apply if you terminate your employment, even if you do so
for good reason.
o May the Company force me to comply with my Obligations? Yes. You
agree that the remedy at law for the breach of any such covenant
is inadequate and injunctive relief and specific performance shall
be available to prevent the breach or any threatened breach of
your Obligations. The Company may exercise all of the following
rights and will not be barred from exercising one right due to
exercise of another right: its remedies at law and its rights to
an injunction and specific performance.
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o May I avoid my Obligations if I have a claim against the Company?
No. The existence of any claim or cause of action by you against
the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company
of your Obligations.
o Will my Obligations be enforced to the maximum extent allowed?
Yes. You agree that your Obligations are reasonable in content and
scope and are given by you for adequate consideration. You further
acknowledge and agree that, if any court of competent jurisdiction
or other appropriate authority shall disagree with our foregoing
agreement as to reasonableness, then such court or other authority
shall reform or otherwise amend your Obligations as reason
dictates.
GENERAL PROVISIONS
Arbitration:
o Is arbitration required? Yes. Any dispute or claim arising out of
or relating to this Agreement shall be settled by arbitration in
Xxxxxxx County, Kansas by one arbitrator in accordance with the
then current "National Rules for the Arbitration of Employment
Disputes" of the American Arbitration Association, and judgment
upon any award rendered therein may be entered in any court having
proper jurisdiction.
o How will that be done if a dispute arises before the occurrence of
a Change in Control? The Company shall bear the full cost of any
arbitration, including the expenses and attorney's fees incurred
by you related thereto and including any actions taken by either
party to appeal or enforce the judgment rendered therein,
regardless of the outcome of such arbitration, and the Company
shall not be entitled to use any lawyer who is a Company employee
to represent it in any dispute or arbitration related hereto.
Notwithstanding the foregoing, if the Company refuses to arbitrate
such a dispute and the same is submitted to a court for
resolution, the Company shall pay all attorney's fees and expenses
as incurred by you in enforcing this Agreement, in addition to any
such fees and expenses incurred by the Company. Conversely, if you
refuse to arbitrate such a dispute and the same is submitted to a
court for resolution, the Company shall not be obligated to pay
your attorney's fees or expenses. Provided however, in no event
shall the attorney's fees to be paid by the Company on behalf of
you exceed $25,000.
o How will that be done if a dispute arises after the occurrence of
a Change in Control? Each party shall bear its own costs and
expenses, including attorneys' fees, related to the dispute or
claim and the parties shall share equally the costs and fees of
the arbitrator; provided, however, that the arbitral award or any
court rendered judgment may include a finding that one party
substantially prevailed in the proceeding and, if so, such
prevailing party may be awarded a judgment (in addition to any
other judgment awarded to such party) for all or any part of its
costs and expenses, including attorney's fees and its portion of
the costs and fees of the arbitrator.
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Mitigation:
o Must I attempt to become employed if I become entitled to change
in control benefits? No. You shall have no duty to attempt to
mitigate the level of benefits payable by the Company to you
hereunder and the Company shall not be entitled to set off against
the amounts payable hereunder any amounts received by you from any
other source, including any subsequent employer.
Governing law:
o What law will govern this Agreement? The laws of the State of
Kansas.
Termination:
o May this Agreement be terminated? This Agreement shall remain in
effect for a period of three (3) years from and after the date
hereof and shall be automatically extended thereafter for
additional terms of one (1) year each, unless either party has
provide written notice to the other of the termination hereof
sixty (60) days prior to the end of the then applicable term.
o What if a change in control occurs? This Agreement shall not
terminate or be terminable until eighteen (18) months after the
effective date of the change in control and this Agreement may not
be terminated after such eighteen (18) month period if your
employment with the Company terminated during such 18 month period
either by you for Good Reason at a time when circumstances
constituting Cause do not exist or by the Company without Cause.
o Do my Obligations survive termination? Your "confidentiality" and
"discoveries" Obligations will survive any termination of this
Agreement. [Xxxxx: should noncompete and nonsolicitation survive
for one year after termination by executive?]
Revisions to make Agreement enforceable:
o What happens if any provision of this Agreement is held to be
illegal, invalid, or unenforceable? Such provision shall be fully
severable and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or
uneforceable provision there shall be added automatically as a
part of this Agreement a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible
and still be legal, valid or enforceable.
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Entire Agreement:
o Is this the entire Agreement? Yes. This Agreement sets forth the
entire understanding of the parties, other than with respect to
any stock option or restricted shares award agreements entered
into prior to January 1, 2004 (an "Existing Award"). No terms,
conditions, warranties, other than those contained herein, and no
amendments or modifications hereto shall be binding unless made in
writing and signed by the parties hereto.
o Does this Agreement supersede any other agreement? Yes. This
Agreement supersedes all prior agreements or understandings (other
than Existing Awards), whether written or oral, with respect to
change in control, non-compete, non-solicitation, confidentiality,
discoveries, and termination or severance benefits payable by the
Company to you; provided, however, that this Agreement shall not
supersede any ability you may have to receive severance benefits
under any Company severance plan or policy that applies to Company
associates generally.
Binding effect:
o Does this Agreement bind successors? Yes. This Agreement shall
extend to and be binding upon and inure to the benefit of the
parties hereto, their respective heirs, representatives,
successors and assigns.
Waiver:
o What happens if a provision is not promptly enforced? The failure
of either party to insist on the performance of any of the terms
or conditions of this Agreement, shall not be construed as a
waiver or a relinquishment of any such provision. The waiver by
either party hereto of a breach of any term or provision of this
Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision by any party or of the
breach of any other term or provision of this Agreement.
Counterparts:
o May this Agreement be signed in counterparts? Yes, and each
counterpart shall be deemed an original, and together the
counterparts shall constitute one and the same instrument.
Notices:
o How may notices be given? Any notices to be given hereunder by
either party to the other may be effected either by personal
delivery in writing or mail, registered or certified, postage
prepaid, with return receipt requested. Mailed notices shall be
addressed as follows:
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a. If to the Company:
Xxxxxxxx'x International, Inc.
0000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Attn: General Counsel
b. If to the Executive:
[Executive/address]
o How may addresses for notice be changed? Either party may change
its address for notice by giving notice as set forth immediately
above.
Assignment:
o May this Agreement be assigned? Not by you, but the Company may
assign this Agreement to any successor in interest to the
business, or part thereof, of the Company.
Nonconflicting agreements:
o By signing this Agreement, am I agreeing that I do not have any
conflicting commitments? Yes. You hereby represent to the Company
(1) there are no restrictions, agreements, or understandings
whatsoever to which you are a party that would prevent or make
unlawful your execution or performance of this Agreement; and (2)
your execution of this Agreement does not constitute a breach of
any contract, agreement, or understanding, oral or written, to
which you are a party or by which you are bound.
Disclosure of Agreement:
o May the Company disclose this Agreement? Yes. For example, in the
event the Company has reason to believe this Agreement has or may
be breached, you acknowledge and consent that this Agreement may
be disclosed by the Company, without risk of liability, to a
current or prospective employer of you or other business entity.
Adequate Consideration:
o By signing below, do I agree that my rights to severance benefits,
both before and after the occurrence of a change in control, are
adequate consideration for my commitment to fulfill my
obligations, including (but not limited to) the noncompete
obligation? Yes.
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written above.
YOU: XXXXXXXX'X INTERNATIONAL, INC.
_______________________________ By: _____________________________________
Title:___________________________________
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