August 12, 2006 Terry A. Maxwell Re: Employee Retention Agreement Dear Terry:
Exhibit
10.3
August
12, 2006
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Dear
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The
Board
of Directors of the CBRL Group, Inc. recognizes the contribution that you have
made to CBRL Group, Inc. or one of its direct or indirect subsidiaries
(collectively, the "Company") and wishes to ensure your continuing commitment
to
the Company and its business operations. Accordingly, in exchange for your
continuing commitment to the Company, and your energetic focus on continually
improving operations, the Company promises you the following benefits if your
employment with the Company is terminated in certain circumstances:
1. DEFINITIONS.
As used
in this Agreement, the following terms have the following meanings which are
equally applicable to both the singular and plural forms of the terms
defined:
1.1 "Cause"
means
any one of the following:
(a) personal
dishonesty;
(b) willful
misconduct;
(c) breach
of
fiduciary duty; or
(d) conviction
of any felony or crime involving moral turpitude.
1.2 "Change
in Control"
means:
(a) that after the date of this Agreement, a person becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 20%
or
more of the combined voting power of the Company's then outstanding voting
securities, unless that acquisition was approved by a vote of at least 2/3
of
the directors in office immediately prior to the acquisition; (b) that during
any period of 2 consecutive years following the date of this Agreement,
individuals who at the beginning of the period constitute members of the Board
of Directors of the Company cease for any reason to constitute a majority of
the
Board unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least 2/3 of
the
directors then still in office who were directors at the beginning of the 2-year
period; (c) a merger, consolidation or reorganization of the Company (but this
provision does not apply to a recapitalization or similar financial
restructuring which does not involve a material change in ownership of equity
of
the Company and which does not result in a change in membership of the Board
of
Directors); or (d) a sale of all or substantially all of the Company’s
assets.
1.3 "Change
in Control Period"
means a
2-year year period beginning the day after a Change in Control
occurs.
1.4 "Change
in Duties or Compensation"
means
any one of: (a) a material change in your duties and responsibilities for the
Company (without your consent) from those duties and responsibilities for the
Company in effect at the time a Change in Control occurs, which change results
in the assignment of duties and responsibilities inferior to your duties and
responsibilities at the time such Change in Control occurs (it being understood
and acknowledged by you that a Change in Control that results in two persons
of
which you are one having similar or sharing duties and responsibilities shall
not be a material change in your duties and responsibilities); (b) a reduction
in your salary or a material change in benefits (excluding discretionary
bonuses), from the salary and benefits in effect at the time a Change in Control
occurs; or (c) a change in the location of your work assignment from your
location at the time a Change in Control occurs to any other city or
geographical location that is located further than 50 miles from that
location.
2. TERMINATION
OF EMPLOYMENT; SEVERANCE.
Your
immediate supervisor or the Company's Board of Directors may terminate your
employment, with or without cause, at any time by giving you written notice
of
your termination, such termination of employment to be effective on the date
specified in the notice. You also may terminate your employment with the Company
at any time. The effective date of termination (the "Effective Date") shall
be
the last day of your employment with the Company, as specified in a notice
by
you, or if you are terminated by the Company, the date that is specified by
the
Company in its notice to you. The following subsections set forth your rights
to
severance in the event of the termination of your employment in certain
circumstances by either the Company or you. Section 5 also sets forth certain
restrictions on your activities if your employment with the Company is
terminated, whether by the Company or you. That section shall survive any
termination of this Agreement or your employment with the Company.
2.1 Termination
by the Company for Cause.
If you
are terminated for Cause, the Company shall have no further obligation to you,
and your participation in all of the Company's benefit plans and programs shall
cease as of the Effective Date. In the event of a termination for Cause, you
shall not be entitled to receive severance benefits described in Section
3.
2.2 Termination
by the Company Without Cause Other Than During a Change in Control
Period.
If your
employment with the Company is terminated by the Company without Cause at a
time
other than during a Change in Control Period, you shall be entitled to only
those severance benefits provided by the Company's severance policy or policies
then in effect. You shall not be entitled to receive benefits pursuant to
Section 3 of this Agreement.
2.3 Termination
by the Company Without Cause During a Change in Control
Period.
If your
employment with the Company is terminated by the Company without Cause during
a
Change in Control Period, you shall be entitled to receive Benefits pursuant
to
Section 3. A
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termination
within 90 days prior to a Change in Control which occurs solely in order to
make
you ineligible for the benefits of this Agreement shall be considered a
termination without Cause during a Change in Control Period.
2.4 Termination
By You For Change in Duties or Compensation During a Change in Control
Period.
If
during a Change in Control Period there occurs a Change in Duties or
Compensation you may terminate your employment with the Company at any time
within 30 days after the occurrence of the Change in Duties or Compensation,
by
giving to the Company not less than 120 nor more than 180 days notice of
termination. During the notice period that you continue to work, any reduction
in your Compensation will be restored. At the option of the Company, following
receipt of this notice, it may: (a) change or cure, within 15 days, the
condition that you claim has caused the Change in Duties or Compensation, in
which case, your rights to terminate your employment with the Company pursuant
to this Section 2.4 shall cease (unless there occurs thereafter another Change
in Duties or Compensation) and you shall continue in the employment of the
Company notwithstanding the notice that you have given; (b) allow you to
continue your employment through the date that you have specified in your
notice; or (c) immediately terminate your employment pursuant to Section 2.3.
If
you terminate your employment with the Company pursuant to this Section 2.4,
you
shall be entitled to receive Benefits pursuant to Section 3. Your failure to
provide the notice required by this Section 2.4 shall result in you having
no
right to receive any further compensation from the Company except for any base
salary or vacation earned but not paid, plus any bonus earned and accrued by
the
Company through the Effective Date.
3. SEVERANCE
BENEFITS.
If your
employment with the Company is terminated as described in Section 2.3 or 2.4,
you shall be entitled to the benefits specified in subsections 3.1, 3.2, and
3.3
(the "Benefits") for the period of time set forth in the applicable section.
3.1 Salary
Payment or Continuance.
You will
be paid a single lump sum payment in an amount equal to 2.00 times the average
of your annual base salary and any bonus payments for the 3 years immediately
preceding the Effective Date. The determination of the amount of this payment
shall be made by the Company's actuaries and benefit consultants and, absent
manifest error, shall be final, binding and conclusive upon you and the
Company.
3.2 Continuation
of Benefits.
During
the 2 years following the Effective Date (the “Severance Period”) that results
in benefits under this Article 3, you shall continue to receive the medical,
prescription, dental, employee life and group life insurance benefits at the
levels to which you were entitled on the day preceding the Effective Date,
or
reasonably equivalent benefits, to the extent continuation is not prohibited
or
limited by applicable law. In no event shall substitute plans, practices,
policies and programs provide you with benefits which are less favorable, in
the
aggregate, than the most favorable of those plans, practices, policies and
programs in effect for other active employees who are similarly situated to
the
position / responsibilities you held immediately preceding the Effective Date.
However, if you become re-employed with another employer and are eligible to
receive medical or other welfare benefits under another employer-provided plan,
Company payments for these medical and other welfare benefits shall
cease.
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4. EFFECT
OF TERMINATION ON STOCK OPTIONS AND RESTRICTED STOCK.
In the
event of any termination of your employment, all stock options and restricted
stock held by you that are vested prior to the Effective Date shall be owned
or
exercisable in accordance with their terms; all stock options held by you that
are not vested prior to the Effective Date shall lapse and be void; however,
if
your employment with the Company is terminated as described in Sections 2.3
or
2.4, then, if your option or restricted stock grants provide for immediate
vesting in the event of a Change in Control, the terms of your option or
restricted stock agreement shall control. If your option or restricted stock
agreement does not provide for immediate vesting, you shall receive, within
30
days after the Effective Date, a lump sum cash distribution equal to: (a) the
number of shares of the Company's ordinary shares that are subject to options or
restricted stock grants held by you that are not vested as of the Effective
Date
multiplied by (b) the difference between: (i) the closing price of a share
of
the Company's ordinary shares on the NASDAQ National Market System as reported
by The Wall Street Journal as of the day prior to the Effective Date (or, if
the
market is closed on that date, on the last preceding date on which the market
was open for trading), and (ii) the applicable exercise prices or stock grant
values of those non-vested shares.
5. DISCLOSURE
OF INFORMATION.
You
recognize and acknowledge that, as a result of your employment by the Company,
you have or will become familiar with and acquire knowledge of confidential
information and certain trade secrets that are valuable, special, and unique
assets of the Company. You agree that all that confidential information and
trade secrets are the property of the Company. Therefore, you agree that, for
and during your employment with the Company and continuing following the
termination of your employment for any reason, all confidential information
and
trade secrets shall be considered to be proprietary to the Company and kept
as
the private records of the Company and will not be divulged to any firm,
individual, or institution, or used to the detriment of the Company. The parties
agree that nothing in this Section 6 shall be construed as prohibiting the
Company from pursuing any remedies available to it for any breach or threatened
breach of this Section 6, including, without limitation, the recovery of damages
from you or any person or entity acting in concert with you.
6. GENERAL
PROVISIONS.
6.1 Other
Plans.
Nothing
in this Agreement shall affect your rights during your employment to receive
increases in compensation, responsibilities or duties or to participate in
and
receive benefits from any pension plan, benefit plan or profit sharing plans
except plans which specifically address benefits of the type addressed in
Sections 3 and 4 of this Agreement.
6.2 Death
During Severance Period.
If you
die during the Severance Period, any Benefits remaining to be paid to you shall
be paid to the beneficiary designated by you to receive those Benefits (or
in
the absence of designation, to your surviving spouse or next of
kin).
6.3 Notices.
Any
notices to be given under this Agreement may be effected by personal
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delivery
in writing or by mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the parties at the
addresses appearing on the first page of this Agreement (to the attention of
the
Secretary in the case of notices to the Company), but each party may change
the
delivery address by written notice in accordance with this Section 7.3. Notices
delivered personally shall be deemed communicated as of actual receipt; mailed
notices shall be deemed communicated as of the second day following deposit
in
the United States Mail.
6.4 Entire
Agreement.
This
Agreement supersedes all previous oral or written agreements, understandings
or
arrangements between the Company and you regarding a termination of your
employment with the Company or a change in your status, scope or authority
and
the salary, benefits or other compensation that you receive from the Company
as
a result of the termination of your employment with the Company (the "Subject
Matter"), all of which are wholly terminated and canceled. This Agreement
contains all of the covenants and agreements between the parties with respect
to
the Subject Matter. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise,
have
been made with respect to the Subject Matter by any party, or anyone acting
on
behalf of any party, which are not embodied in this Agreement. Any subsequent
agreement relating to the Subject Matter or any modification of this Agreement
will be effective only if it is in writing signed by the party against whom
enforcement of the modification is sought.
6.5 Partial
Invalidity.
If any
provision in this Agreement is held by a court of competent jurisdiction to
be
invalid, void, or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any
way.
6.6 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Tennessee, and it shall be enforced or challenged only in the courts
of
the State of Tennessee.
6.7 Waiver
of Jury Trial.
The
Company and you expressly waive any right to a trial by jury in any action
or
proceeding to enforce or defend any rights under this Agreement, and agree
that
any such action or proceeding shall be tried before a court and not a jury.
You
irrevocably waive, to the fullest extent permitted by law, any objection that
you may have now or hereafter to the specified venue of any such action or
proceeding and any claim that any such action or proceeding has been brought
in
an inconvenient forum.
6.8 Miscellaneous.
Failure
or delay of either party to insist upon compliance with any provision of this
Agreement will not operate as and is not to be construed to be a waiver or
amendment of the provision or the right of the aggrieved party to insist upon
compliance with the provision or to take remedial steps to recover damages
or
other relief for noncompliance. Any express waiver of any provision of this
Agreement will not operate, and is not to be construed, as a waiver of any
subsequent breach, irrespective of whether occurring under similar or dissimilar
circumstances. You may not assign any of your rights under this Agreement.
The
rights and obligations of the Company under this Agreement shall benefit and
bind the successors and assigns
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of
the Company. The Company agrees that if it assigns this Agreement to any
successor company, it will ensure that its terms are continued.
6.9 Certain
Additional Payments by the Company.
a. The
Company will pay you an amount (the “Additional Amount”) equal to the excise tax
under the United States Internal Revenue Code of 1986, as amended (the “Code”),
if any, incurred by you by reason of the payments under this Agreement and
any
other plan, agreement or understanding between you and the Company or its
parent, subsidiaries or affiliates (collectively, “Separation Payments”)
constituting excess parachute payments under Section 280G of the Code (or any
successor provision). In addition, the Company will pay an amount equal to
all
excise taxes and federal, state and local income taxes incurred by you with
respect to receipt of the Additional Amount. All determinations required to
be
made under this Section 6.9 including whether an Additional Amount is required
and the amount of any Additional Amount, will be made by the independent
auditors engaged by the Company immediately prior to the Change in Control
(the
“Accounting Firm”), which will provide detailed supporting calculations to the
Company and you. In computing taxes, the Accounting Firm will use the highest
marginal federal, state and local income tax rates applicable to you and will
assume the full deductibility of state and local income taxes for purposes
of
computing federal income tax liability, unless you demonstrate that you will
not
in fact be entitled to such a deduction for the year of payment.
b. The
Additional Amount, computed assuming that all of the Separation Payments
constitute excess parachute payments as defined in Section 280G of the Code
(or
any successor provision), will be paid to you at the time that the payments
made
pursuant to Section 3.1 is made unless the Company, prior to the Severance
Period, provides you with an opinion of the Accounting Firm that you will not
incur an excise tax on part or all of the Separation Payments. That opinion
will
be based upon the applicable regulations under Sections 280G and 4999 of the
Code (or any successor provisions) or substantial authority within the meaning
of Section 6662 of the Code. If that opinion applies only to part of the
Separation Payments, the Company will pay you the Additional Amount with respect
to the part of the Separation Payments not covered by the opinion.
c. The
amount of the Additional Amount and the assumptions to be utilized in arriving
at the determination, shall be made by the Company’s Accounting Firm, whose
decision shall be final and binding upon both you and the Company. You must
notify the Company in writing no later than 30 days after you are informed
of
any claim by the Internal Revenue Service that, if successful, would require
the
payment by the Company of the Additional Amount. You must also cooperate fully
with the Company and give the Company any information reasonably requested
relating to the claim, and take all action in connection with contesting the
claim as the Company reasonably requests in writing from time to
time.
If
all of
the terms and conditions in this Agreement are agreed to by you, please signify
your
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agreement
by executing the enclosed duplicate of this letter and returning it to us.
At
the date of your return, this letter shall constitute a fully enforceable
Agreement between us.
CBRL
GROUP,
INC.
By:
/s/
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Chairman,
President
& Chief Executive Officer
The
foregoing is fully agreed to and accepted by:
Date:
August 14, 2006
Employee's
Signature:
/s/
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Please
Print or Type Name:
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Please
Print or Type Title:
Senior Vice President Retail Operations of Cracker Barrel Old Country Store,
Inc.
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