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EXHIBIT 10.24
SEVERANCE AGREEMENT
This Agreement is made and entered into this 31st day of July, 1997
(hereinafter the "Date of this Agreement") by and between Skyline Chili, Inc.,
an Ohio corporation (hereinafter the "Company") and Xxxxxx X. Xxxxxxx
(hereinafter "Employee").
WHEREAS, Employee's employment with the Company was terminated effective
July 10, 1997 (the "Effective Termination Date").
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Employee agree as
follows:
1. SEVERANCE AND CONSULTING PAYMENTS
(a) Subject to the provisions of Paragraph 6 hereof, the Company
will pay to Employee an amount equal to his current base salary for a period of
twelve (12) months beginning July 11, 1997 and ending July 10, 1998. Such
amounts shall be paid monthly in arrears on the eleventh day of the month. The
cash payments provided for in this Paragraph 1 and related Severance Benefits
provided for in Paragraph 3 shall be made to the Employee as a severance benefit
in recognition of services to the Company and in connection with his services as
an independent contractor consultant to the Company (if such services are
requested). The Employee shall be solely responsible for and shall pay all
federal, state and local taxes, charges and contributions imposed or assessed in
connection with the cash payments and related Severance Benefits provided for in
this Paragraph 1 and Paragraph 3, including estimated income and self-employment
taxes.
(b) In consideration of the payments described in Subparagraph 1(a)
above, Employee will serve as an independent consultant to the Company through
July 10, 1998. As an independent consultant, Employee will render such services
of an advisory or consultative nature to the Company as the Company may
reasonably request or direct, taking into consideration the demands of any
future employment or business relationships entered into by Employee in any case
the hours shall not exceed 20 hours a week. If Employee is unable to render such
advisory or consultative services due to his death, disability or other reasons
beyond his control, the Severance Benefits described in this Paragraph 1 and in
Paragraph 3 of this Agreement shall continue to be provided, without deduction
or set-off, to either the Employee or his estate.
2. CONTINUATION OF MEDICAL BENEFITS
Subject to the provisions of Paragraph 6 hereof, the Company will
pay directly, or will reimburse Employee for, the actual costs of continuing
coverage, for a period of twelve (12) months, through July 10, 1998 for Employee
and his dependents under the comprehensive medical and health plan maintained
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by the Company for the benefit of the Company's officers and employees
generally, pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"). The Company and Employee agree to cooperate and to
execute such notices, elections, and other forms or documentation as may be
necessary to continue such comprehensive medical and health coverage under
COBRA. If Employee and his dependents are determined beyond the control of the
Company to be ineligible to receive continued coverage under COBRA, Employee may
obtain, to the extent available, individual health insurance coverage, through
July 10, 1998, for himself and his dependents, providing substantially the same
benefits and the Company will reimburse him for the cost of such individual
coverage up to a maximum of $2,000.00.
3. BONUS
(a) Subject to the provisions of Paragraph 6 hereof, Employee will
be paid a cash payment equal to a pro rata share (through the Effective
Termination Date) of his regular yearly bonus (if any) under the Company's Base
Bonus Program. The amount of his bonus will be calculated and his payment equal
to the pro rata share of such bonus paid at the time and in the manner it would
have been calculated and paid if he had continued his employment with the
Company (i.e. his normal bonus will be calculated in the regular manner, except
the entire bonus will be based upon the achievement of Company objectives and
not on achievement of Employee's personal management objectives, and then the
amount of his pro rata share of such bonus will be calculated based upon the
number of days he was employed by the Company during fiscal 1997).
(b) Subject to the provisions of Paragraph 6 hereof, Employee will
be paid a cash payment equal to a pro rata share (through the Effective
Termination Date) of his regular yearly bonus (if any) under the Company's
Stretch Bonus Program. The amount of his bonus will be calculated and his
payment equal to the pro rata share of such bonus paid at the time and in the
manner it would have been calculated and paid if he had continued his employment
with the Company (i.e. his normal bonus will be calculated in the regular
manner, except the entire bonus will be based upon the achievement of Company
objectives and not on achievement of Employee's personal management objectives,
and then the amount of his pro rata share of such bonus will be calculated based
upon the number of days he was employed by the Company during fiscal 1997).
(c) Employee shall be paid a cash amount equal to a pro rata share
of the supplemental bonus, if any, that the Employee would have received under
the terms of the Long Term Incentive Bonus Program being maintained by the
Company and in effect for the 1997 fiscal year. The total supplemental bonus the
Employee would have received shall be determined in the same manner it would
have been determined if the Employee had continued his employment with the
Company, except the total supplemental
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bonus shall be equal to the lesser of the Employee's individual share of the
supplemental bonus pool: (i) at the end of the most recently completed
accounting period prior to the Effective Termination Date, or (ii) at the end of
the fiscal year in which the Effective Termination Date occurs. The pro rata
share of the total supplemental bonus to be paid to the Employee pursuant to
this Agreement shall be determined based upon the number of days the Employee
was employed by the Company from the beginning of the period covered by the Long
Term Incentive Bonus Program through the Effective Termination Date. The cash
amount required by this Paragraph 3(c) shall be paid at the same time as the
amount described in Paragraph 3(a).
4. NON-DISCLOSURE
(a) Ownership of Confidential Information. Employee acknowledges
that all of the "Confidential Information" (as defined below) disclosed to or
otherwise obtained by him is owned solely by the Company, will remain the
exclusive property of the Company and constitutes valuable trade secrets of the
Company. Employee acknowledges and agrees that the unauthorized use or
disclosure of such Confidential Information would cause irreparable harm to the
Company.
(b) Non-disclosure. Employee agrees that he will never, directly or
indirectly, use, disseminate, disclose, convert or appropriate any of the
Company's Confidential Information, without the prior written consent of the
Company.
(c) Confidential Information. For purposes of this Agreement, the
term Confidential Information will mean any of the Company's or its affiliates'
trade secrets, secret data or data bases, scientific or technical information,
procedures, formulas, recipes, marketing or business plans, financial
information, lists of names and addresses, and all other information or matters
of a confidential nature disclosed to or known by Employee as a consequence of
or through his employment with the Company, affecting or relating to the
Company's business, including without limitation the following, to the extent
such information or matters are not known generally by the public or by the
industry in which the Company is engaged:
(1) all information, whether oral or written, relating to
the recipe or process for the manufacture of Skyline
Chili or the manufacture of any other food item produced
or sold by the Company, including the identity of the
spices and ingredients and the proportions in which they
are used, the identity of the spice and ingredient
suppliers, and the actual cooking process;
(2) all of the Company's training, operations and
development manuals;
(3) all information relating to the Company's program of
accounting, identification schemes, management systems,
techniques and business operations plans;
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(4) all information relating to the Company's existing or
prospective franchisees or licensees, and all
information relating to the development, marketing,
licensing, selling and advertising of the Company's
franchise rights and systems; and
(5) all other information and written material relating to
the methods, procedures, techniques, distinctive trade
dress, advertising and proprietary marks associated with
the Company's business.
(c) Non-retention of Materials. Employee represents and warrants
that he has surrendered to the Company all documents, records, manuals, notes,
memoranda, notebooks, price lists, customer lists, computer diskettes or other
similar written or electronic documents containing Confidential Information
which have been made available to or compiled by Employee, including all copies
thereof, which are in Employee's possession or control, and that he has retained
no copies thereof.
5. COVENANT NOT TO COMPETE AND ADDITIONAL COVENANTS
(a) In consideration of the benefits provided by the Company under
Paragraphs 1, 2, and 3 hereof, Employee agrees that for the period from the
Effective Termination Date until July 10, 1999, he will not, without the prior
written consent of the Company, directly or indirectly, for himself, or on
behalf of or in conjunction with, any person, corporation, partnership or other
business entity:
(1) own, manage, operate, control, invest in, be employed
by, participate in, or be connected in any manner with
any business that develops, franchises, owns or operates
restaurants that sell primarily chili, hot dogs with
chili, chili-spaghetti, or related products, or that
manufactures and sells primarily chili, chili-spaghetti,
or related frozen grocery products (including but not
limited to any of the business organizations or entities
listed on Exhibit A attached to this Agreement, or any
affiliate, franchisee, licensee or successor thereof) in
any state in which the Company, its affiliates or its
franchisees are operating restaurants, or in which the
Company's frozen grocery products are sold; provided,
however, nothing contained in this Agreement will be
construed as restricting or prohibiting the Employee
from: (i) engaging in any restaurant or food business
not primarily involving the production or sale of chili;
or (ii) investing in any business not managed or
controlled by the Employee if an equity security of the
business is registered under the Securities Exchange Act
of 1934;
(2) divert or attempt to divert any business of the Company,
its affiliates, or its franchisees, of the kinds or
types engaged in by the Company, its affiliates, or its
franchisees to any competitor; or
(3) seek to employ any person who is at that time or has
been within the six (6) month period prior to that time
employed by the Company or its affiliates, or induce
such a person to leave his or her employment.
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(b) In consideration of the benefits provided by Company under
Paragraphs 1, 2 and 3 hereof, Employee agrees that he will not do or perform any
act or make any public statements that reasonably may be viewed as injurious or
prejudicial to the Company's business, its present management, or the good will
associated with the Company's products, names, trademarks, service marks,
franchisees or licensees, or that reasonably may be viewed as calculated to
cause adverse consequences to the Company or its present management.
6. REMEDIES
(a) If Employee materially breaches one or more of the covenants
contained in Paragraphs 4 or 5 hereof, he will immediately forfeit his rights to
any of the benefits described in Paragraphs 1, 2, 3 and 8 hereof, and he will
become obligated to immediately repay to the Company any amounts paid to him
under Paragraph 1 hereof prior to and through the date of the breach.
(b) In addition, if either party materially breaches any provision
of this Agreement, the parties acknowledge that the injured party will be
entitled to seek temporary and permanent injunctive or other equitable relief
hereunder, in addition to any other legal or equitable remedies the injured
party may have.
7. PROFIT SHARING AND DEFERRED COMPENSATION PLANS
Employee's vested account balances, if any, in the Company's Profit
Sharing Plan and Deferred Compensation Plan will be distributed to him in
accordance with the terms and conditions set forth in the Plans.
8. STOCK OPTIONS
Subject to the provisions of Paragraph 6 hereof, Employee's stock
option agreements are hereby amended to provide: (a) All options shall
immediately vest; and (b) All options shall be exercisable until July 10, 1998,
at which point they will expire.
9. RELEASE OF COMPANY
(a) For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Employee does hereby for himself and his
heirs, executors, administrators, personal representatives, successors and
assigns, release and forever discharge Skyline Chili, Inc., an Ohio corporation,
its present and former subsidiaries, affiliates, directors, officers, employees,
successors and assigns and their respective heirs, executors, administrators,
personal representatives, successors and assigns (hereinafter "Skyline
Releasees") from any and all debts, claims, demands, damages, actions, and
causes of action whatsoever, known or unknown, whether in law or in equity,
which Employee has or may have in any capacity against the Skyline Releasees
for, upon, or by reason of any matter, cause or thing whatsoever
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occurring prior to the date of this Release. Employee's release of the Skyline
Releasees expressly includes, without limitation, all charges, claims or causes
of action, including claims for attorney's fees, that Employee could assert
under any state or federal laws prohibiting discrimination in employment on the
basis of age, sex, race, religion, handicap, national original or any other
grounds, including but not limited to claims under any expressed or implied
contract of employment, any tort claim, any retaliation claim, the Age
Discrimination in Employment Act of 1967 (as amended), the Older Workers Benefit
Protection Act of 1990 (as amended), Title VII of the Civil Rights Act of 1964
(as amended), the Americans with Disabilities Act of 1990 (as amended), the
Employee Retirement Income Security Act of 1974 (as amended), and Ohio Revised
Code Chapter 4112.
(b) Employee acknowledges that he has had an opportunity to consult
with an attorney of his choice prior to signing this Agreement and signed this
Agreement, knowingly, voluntarily and freely, and with such counsel as Employee
deemed appropriate. Employee acknowledges that he is waiving the rights set
forth in this Agreement for the consideration stated above. Employee has been
informed as to what his entitlement would be; that he is not waiving any rights
which arise after the date of execution of this Agreement; that Employee has
been provided with a period of twenty-one (21) days in which to consider this
Agreement and Employee acknowledges that such was a reasonable period of time;
and that Employee has been informed that he has a period of seven (7) days
following execution of this Agreement within which to revoke this Agreement
which shall not become effective and enforceable until the revocation period has
expired; provided, however, that any and all consideration paid to Employee
hereunder shall be repaid to the Company as a condition precedent to the
effectiveness of any such revocation.
(c) Nothing contained in this Paragraph 9 shall be deemed to be a
release or discharge of, or to otherwise affect, a party's rights and
obligations created or contained in this Agreement.
10. REPRESENTATIONS AND WARRANTIES BY EMPLOYEE
(a) Employee acknowledges that this Agreement is written in a manner
calculated to be understood by him and that Employee understands the content of
this Agreement and its final and binding effect upon him.
(b) Employee acknowledges that in signing this Agreement, he has not
relied upon any representation or statement, written or oral, not set forth in
this Agreement, and that his execution of this Agreement is of his own free will
and volition. Employee further acknowledges that the only consideration for
executing this Agreement is recited herein.
(c) Employee acknowledges that he has been advised of and fully
understands his right to discuss all aspects of this Agreement with an attorney
of his choice (including without limitation, the
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Release of the Company set forth in Section 9), and if he desired to discuss
this Agreement with an attorney, he has done so.
12. MISCELLANEOUS
(a) Entire Agreement. This Agreement and the other writings and
agreements referred to herein or delivered in connection herewith contain the
entire understanding of the parties with respect to its subject matter and
supersede any prior understandings or oral or written agreements between the
parties.
(b) Amendment. This Agreement may be modified or amended only by a
written instrument duly executed by the parties hereto.
(c) Headings. The paragraph or subparagraph headings contained in
this Agreement are for reference purposes only and shall not effect in any way
the meaning or interpretation of this Agreement.
(d) Binding Effect. This Agreement shall be binding upon, shall
inure to the benefit of, and shall be enforceable by the Company and its
successors and assigns and by Employee and his heirs, executors, personal
representatives, successors and assigns.
(e) Choice of Law; Venue. This Agreement shall be governed in all
respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of Ohio. The parties hereto consent to
exclusive jurisdiction and venue over any legal actions in connection herewith
or in connection with Employee's present or former employment by the Company or
termination thereof in the state or federal courts located in Xxxxxxxx County,
Ohio.
(f) Severability. (1) If any provision of this Agreement, or the
application of any such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to any person or circumstance other than those to which it is held invalid,
shall not be effected thereby. (2) Further, should any provision of this
Agreement be held invalid or unenforceable by reason of an excessive scope,
restriction or obligation, such provision shall be deemed reformed to provide
for such scope, restriction or obligation to the fullest extent deemed not to be
invalid or unenforceable.
(g) Authorization. The execution, delivery and performance of this
Agreement by the Company have been duly and validly authorized by the Company's
Board of Directors.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which when fully executed and delivered shall be
considered an original, but all of which together shall constitute but one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
SKYLINE CHILI, INC.
/s/ Xxxxxx X. Xxxxxxx By:/s/ Xxxxx X. XxXxxxxxx
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XXXXXX X. XXXXXXX
Its: President, CEO
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EXHIBIT A
The Chili Company
Chili Time
Gold Star Chili
Empress Chili
Xxxxx Chili
INITIALS
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