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EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This is an agreement (the "Agreement") between Ground Round
Restaurants, Inc. (the "Company" or "Ground Round") a New York corporation with
its principal place of business at 00 Xxxxxxxxx Xxxx Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx and Xxxxxxx X. Xxxx (the "Employee"), with a business address of
00 Xxxxxxxxx Xxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, effective as of
September 1, 1996 (the "Effective Date").
In consideration of the promises and mutual covenants contained herein,
the parties agree as follows:
1. Employment.
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From and after the Effective Date, for and during the term, and subject
to the further conditions of this Agreement, Employee shall be employed
in the capacity of Senior Vice President, Chief Financial Officer and
Treasurer of Company and its affiliates and subsidiaries and perform
all duties that may reasonably be required of him as Senior Vice
President, Chief Financial Officer and Treasurer or as may be assigned
by the Chairman, President and Chief Executive Officer (the "Chairman")
and/or the Board of Directors (the "Board") of the Company. Employee
shall report to the Chairman and shall be subject to his discretion and
control.
The location for such employment shall be at the corporate offices of
the Company.
Employee shall devote substantially all of his business time and his
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and to the
ethical discharge of his duties and responsibilities under this
Agreement. Employee shall not engage in any other business activity or
serve in any industry, trade, professional, governmental or academic
position during the term of employment, except for the following:
managing the personal business affairs of Employee; and as may
otherwise be expressly approved in writing in advance by the Chairman.
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2. Term.
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Company shall employ Employee for an initial term commencing on the
Effective Date and ending September 30, 1997 unless Employee's
employment is sooner terminated pursuant to the provisions of this
Agreement. The initial term shall be automatically extended for
successive one year terms, not to go beyond September 30, 1999, unless
at least 90 days prior to the expiration of the original or extended
term either party shall advise the other in writing that it wishes to
terminate this Agreement as of the end of the original or that extended
term (the original and any extended term shall hereinafter be
collectively referred to as the "Employment Period").
3. Compensation and Benefits.
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(a) Base Salary.
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During the Employment Period, the Company shall pay the
Employee base salary (the "Base Salary") at a rate of no less
than Fourteen Thousand Five Hundred and Eighty- Three Dollars
and Thirty-Three Cents ($14,583.33) per month (the "Base
Rate"), prorated for any partial period. On or about October
of each fiscal year of the Company, the Employee and the
Company shall commence good faith negotiations regarding an
adjustment to the Employee's Base Salary; provided, that
during the Employment Period, the Company shall not pay the
Employee a Base Salary that is less than the Base Rate. Base
Salary shall be payable in accordance with the payroll
practices of the Company for its executive.
(b) Bonus.
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Employee shall be eligible to receive during the term of this
Agreement commencing in the Company's 1996 fiscal year, and
shall be paid within thirty (30) days of the annual audit of
the Company, if the calculations mandate such payment, a bonus
as provided in the Corporate Office Incentive Plan, and
subject to its terms and conditions. For fiscal 1996, Employee
is eligible to receive a pro rata share of any bonus earned to
reflect the number of days worked by Employee in such year.
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For fiscal 1997 only, if the applicable Corporate Incentive
Plan does not compensate Employee with at least Seventy-Five
Thousand Dollars ($75,000) (the "1997 guaranteed minimum
bonus"), the Company agrees to pay the Employee an additional
amount so that the total bonus received by the Employee is not
less than the 1997 guaranteed minimum bonus. In order to
receive a bonus that is greater than the 1997 guaranteed
minimum bonus, Employee must be employed on the date the 1997
bonus checks are distributed. Company and Employee agree that
the 1997 Corporate Office Incentive Plan and any future bonus
plans may be different than the 1996 Corporate Office
Incentive Plan.
(c) Stock Options.
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The Company shall grant to Employee, on the Effective Date, a
stock option to purchase Fifty Thousand (50,000) shares of
common stock of the Company in accordance with the terms of
the Company's Amended and Restated 1989 Stock Option Plan and
the 1992 Equity Incentive Plan. The price at which shares of
Common Stock may be purchased pursuant to the option shall be
the closing price, as of August 30, 1996, of a share of the
Company's common stock as listed on NASDAQ. The option shall
become exercisable in equal installments over a three-year
period, with the first installment being exercisable on August
29, 1997.
Promptly after the grant of the Option, the Company and
Employee shall execute and deliver to each other a Stock
Option Agreement evidencing the Option and the terms thereof
(the "Stock Option Agreement"). It is understood and agreed
that the Option shall be granted and governed in accordance
with the terms of the Plans and the rules and regulations of
the Securities and Exchange Commission.
(d) Benefits.
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Except as otherwise provided herein, Employee shall be
entitled to receive the fringe benefits normally provided by
the Company to senior executives and in accordance with the
terms of each Plan or document which controls
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such benefit (including but not limited to life insurance
coverage, medical and dental insurance, travel and accident
insurance, Long-Term Disability coverage, Executive Health
examination on an annual basis, participation in Company's
non-qualified Deferred Compensation Plan, stock options and
other benefits during the term of this Agreement). Employee
shall be entitled to the use of a company automobile in
accordance with the Company's Automobile Policy, and which the
Company shall insure and maintain, or to a car allowance which
the Company shall insure the automobile in accordance with
Company policy. The Employee's participation shall be subject
to the terms of the applicable plan documents, generally
applicable company policies and appropriate discretion of the
Board or any administrative committee contemplated by such
plans.
(e) Vacation.
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During the Employment Period, Employee shall be entitled to
vacation (prorated for partial calendar years), subject to the
reasonable business needs of the Company and in accordance
with the terms of the Company's Vacation Policy.
(f) Relocation.
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If Employee relocates to the Commonwealth of Massachusetts,
the Company agrees to reimburse Employee for reasonable and
ordinary expenses which are covered under the Company's
Employee Relocation Policy and in accordance with the terms of
the Policy.
(g) Living Expenses.
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The Company shall provide reasonable temporary living and
subsistence expenses in the Boston area and will provide
airfare, on a weekly basis for visits to the Cleveland, Ohio
area and the in-house Company travel agent shall make all
travel arrangements. Employee and Company agree to review
these living and travel provisions on a periodic basis, but no
later than September 1, 1997.
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(h) Certain Expenses.
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The Company shall pay or reimburse the Employee for all
reasonable, customary business expenses incurred or paid by
the Employee in the performance of the duties and
responsibilities of his position and to such reasonable
substantiation and documentation as may be required by the
Company.
4. Termination of Employment.
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(a) Death.
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If the Employee dies during the Employment Period, the Company
shall have no further obligations under this Agreement other
than to pay to the Employee's estate Base Salary through the
end of the calendar month of his death and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy, including a prorata share of the 1997
guaranteed minimum bonus to reflect the number of days worked
by Employee in the 1997 fiscal year.
(b) Disability.
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The Company may terminate the Employee's employment by written
notice in the event that, for any reason, he becomes disabled,
either physically or psychologically, or is unable to perform
substantially all of his essential duties and responsibilities
under this Agreement for One Hundred Eighty (180) days during
any period of three hundred and sixty-five (365) consecutive
days. In the event of such a termination, the Company shall
have no further obligations under this Agreement other than to
pay to the Employee Base Salary through the end of the
calendar month of his termination and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy, including a prorata share of the 1997
guaranteed minimum bonus to reflect the number of days worked
by Employee in the 1997 fiscal year.
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The Employee shall at the request of the Company, submit to a
medical examination by a physician selected by the Company, to
whom the Employee or his duly appointed guardian has no
reasonable objection, to determine whether the Employee is
disabled. Such determination shall be conclusive. If the
Employee fails to submit to such medical examination, the
Company's determination of the Employee's disability shall be
conclusive.
Paragraph 4(b) shall be interpreted and applied in accordance
with the Americans with Disabilities Act, including but not
limited to, the obligation to provide reasonable
accommodations as specified under such Act.
(c) Termination by the Company for Cause.
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The Company may terminate the Employee's employment hereunder
for Cause at any time upon written notice setting forth in
reasonable detail the nature of the Cause. The following, as
determined by the Chairman in his reasonable judgment, will
constitute Cause:
(i) The Employee's failure to perform his duties and
responsibilities to the Company; a breach of
fiduciary duty; any willful misconduct by the
Employee which injures the Company (monetarily or
otherwise) or the Employee's gross negligence in the
performance of his duties and responsibilities; or
(ii) fraud, embezzlement or other dishonesty by the
Employee with respect to the Company; or
(iii) the Employee's conviction of, or plea of nolo
contendere to, a felony or other crime involving
moral turpitude;
(iv) any material breach of this Agreement; and
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(v) any form of misconduct as described in the Company's
current Termination Policy under I.B. 4 of such
policy.
Upon termination of the Employee's employment for Cause, the
Company shall have no further obligations under this Agreement
other than to pay to the Employee any Base Salary through the
date of termination, and any other amounts that have been
earned in accordance with the applicable Company policy, but
has not been paid, but specifically excluding any bonus
payment stated in paragraph 3(b).
(d) Termination by the Company Other Than for Cause
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The Company may terminate the Employee's employment hereunder,
other than for Cause, at any time upon written notice, as
defined in the Company's current Termination Policy. In the
event of such termination, the Company shall do the following:
(i) Pay to Employee his Base Salary through the date of
termination, plus a prorata share of the 1997
guaranteed minimum bonus based on the number of days
worked by Employee in the 1997 fiscal year.
(ii) Pay to the Employee severance equal to the greater of
(i) six (6) months of Employee's monthly Base Salary
or (ii) the amount of Base Salary the Employee would
have received between the date of termination and
September 30, 1997. Said severance shall be
considered as severance under the Company's Severance
Pay Plan and paid to Employee in accordance with such
Plan.
(iii) Pay to Employee any other bonus or compensation
hereunder in accordance with the applicable Company
plan or policy.
The Company shall have no other obligations under this
Agreement.
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(e) Termination by the Executive.
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(i) If the Employee terminates his employment during the
Employment Period because the Employee resigns, the
Company shall pay Employee the Base Salary through
the date of termination and any other bonus or
compensation in accordance with the applicable
Company plan or policy.
(ii) If the Employee terminates his employment with the
Company for any other reason, in addition to its
other rights and remedies, the Company shall have no
further obligations under this Agreement other than
to pay to the Employee any Base Salary through the
date of termination and any other bonus or
compensation in accordance with the applicable
Company plan or policy.
(f) Stock Options.
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Upon termination, death or disability, as such terms are
defined in paragraph 4, the Employee's rights with respect to
any stock options then held shall be governed by the Plan(s)
and/or any applicable documents under which such options were
awarded.
(g) Severance.
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Upon termination, death or disability, Employee shall be
entitled to receive any applicable severance payments under
the Company's Severance Pay Plan, subject to the terms and
conditions of such Plan.
(h) Deferred Compensation.
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Upon termination, death or disability, the Company will
distribute the entire amount credited to Employee's account
under the Company's non-qualified Deferred Compensation Plan,
subject to the terms and conditions of such Plan.
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5. D & O Liability Insurance.
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The Employee shall be covered in his capacity as an officer of the
Company under the Company's directors and officers liability insurance
policy. The cost of such coverage shall be borne by the Company.
6. Nondisclosure.
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During the Employment Period, the Employee may become aware of
information which is nonpublic, confidential or proprietary in nature
with respect to the Company or with respect to other companies,
persons, entities, ventures or business opportunities in which the
Company has, or, if it were disclosed to the Company, the Company might
have, an interest ("Confidential Information"). During the Employment
Period and thereafter, all Confidential Information will be kept
strictly confidential by the Employee and the Employee shall not: (a)
copy, reproduce, distribute or disclose any Confidential Information to
any third party except in the course of his employment by the Company;
(b) use any Confidential Information for any purpose other than in
connection with his employment by the Company; or (c) use any
Confidential Information in any way that is detrimental to the Company.
Confidential Information shall not include information which the
Employee can demonstrate: (a) is or becomes generally available to the
public other than by breach by the Employee of his agreement herein;
(b) is required to be disclosed by the Employee after due notice to the
Company, pursuant to obligations under law, regulation or court order;
or (c) was prior to the Effective Date, or thereafter becomes, known to
the Employee on a nonconfidential basis.
Upon termination of the Employee's employment, he shall immediately
return at Company's expense or destroy on request of Company's Counsel
all Confidential Information, including all notes, copies,
reproductions, summaries, analyses, or extracts thereof, then in his
possession. Such return or destruction shall not abrogate the
continuing obligations of the Employee under this Agreement.
In the event that the Employee is requested or required (by
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, he shall provide the Company with prompt written notice
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so that it may seek a protective order or other appropriate remedy. In
the event such protection or other remedy is not obtained, the Employee
shall furnish only that portion of the Confidential Information which
he is advised by counsel agreed to by Company and Employee, at
Company's expense, is legally required and shall exercise best efforts
to obtain assurance that confidential treatment will be accorded to
such Confidential Information, but in no event shall Employee be
required to withhold such Confidential Information if incarceration of
Employee may result.
The Employee agrees that until the expiration of two (2) years from the
date of termination of his employment by the Company, regardless of the
reason for termination, he will not without the prior written approval
of the Company (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities, assets or
property of the Company or any of its subsidiaries, whether such
agreement or proposal is with the Employee or with a third party, other
than shares of common stock he is entitled to acquire under the terms
of this Agreement or the Stock Option Plan or Equity Incentive Plan, or
by inheritance, (ii) propose to enter into, directly or indirectly, any
merger or other business combination involving the Company or any of
its subsidiaries, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" or "proxies" (as such terms are used
in the proxy rules of the Securities and Exchange Commission) to vote,
or seek to advise or influence any person with respect to the voting
of, any voting securities of the Company or any of its subsidiaries,
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
with respect to any voting securities of the Company or any of its
subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or
policies of the Company, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing or (vii) advise, encourage,
provide assistance (including financial assistance) to or hold
discussions with any other persons in connection with any of the
foregoing. Employee may vote any stock owned by Employee, either
directly or indirectly, in any manner Employee chooses, as long as such
voting right does not violate any securities laws.
The Employee hereby acknowledges that he is aware that the securities
laws prohibit any person who has material, nonpublic information
concerning the Company from purchasing or selling securities of the
Company or from communicating such information to
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any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell securities.
The obligations of the Employee stated in this paragraph shall, except
where expressly limited as to time, continue without limit as to time
and without regard to the employment status of the Employee.
7. Payments.
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The Company shall have the right to cause all payments pursuant to this
Agreement to be made by The Ground Round, Inc. ("TGRI") and to cause
TGRI to provide all benefits required hereunder, which benefits shall
be those normally provided by TGRI to senior executives of TGRI or the
Company.
8. Withholding.
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All payments made by the Company under this Agreement shall be reduced
by any tax or other amounts required to withheld by the Company under
applicable law.
9. Assignment.
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Except as provided in this paragraph, neither the Company nor the
Employee may make any assignment of this Agreement or any interest
herein, by operation of law or otherwise, without the prior written
consent of the other. The Company may without the consent of the
Employee assign its rights and obligations under this Agreement to any
wholly-owned subsidiary of the Company or to any corporation or other
business entity into which the Company has merged or with which it has
consolidated or which has acquired substantially all of the Company's
assets, provided that no such assignment shall relieve the Company of
its obligations under this Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and the Employee, their
respective successors, executors, administrators, heirs and permitted
assigns.
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10. Conflicting Agreement.
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The Employee hereby represents and warrants that the execution of this
Agreement and the performance of the obligations hereunder will not
breach or be in conflict with any other agreement to which Employee is
a party or is bound and that Employee is not now subject to any
covenants against competition or similar covenants that would affect
the performance of Employee's obligations hereunder.
11. Entire Agreement.
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This Agreement constitutes the entire agreement between the parties and
supersedes all prior communications, agreements, representations and
understandings, written or oral, express or implied, with respect to
the terms and conditions of the Employee's employment.
12. Amendment.
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This Agreement may be amended or modified only by a written instrument
signed by the Employee and by such officer as may be specifically
designated and authorized by the Board.
13. Governing Law.
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This is a Massachusetts contract and shall be construed and enforced
under and be governed in all respects by the law of the Commonwealth of
Massachusetts without regard to principles of conflicts of laws.
14. Notice.
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For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed
to have been duly given when delivered by hand, telecopied (receipt
acknowledged) or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that
all notices to Company shall be directed to the attention of the
Chairman with a copy to the Secretary of Company, or to such other
address as either party may have furnished to the other in writing in
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accordance herewith, except that notices of change of address shall be
effective only upon receipt.
15. Validity,
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The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. No
waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the time or at any
prior or subsequent time. The provisions of paragraph 6 shall survive
the termination or expiration of this Agreement regardless of the
reasons therefor. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Employee, as of the date first above written.
GROUND ROUND RESTAURANTS, INC.
By:
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Xxxxxx X. Xxxxxxx
Chairman, President and
Chief Executive Officer
XXXXXXX X. XXXX
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