OSI RESTAURANT PARTNERS, INC. Amendment
Exhibit
10.2
Amendment
THIS
AMENDMENT (this “Amendment”) is made and entered into effective this
5th
day of
November, 2006, by and among A. XXXXXXX XXXXX, III (“Employee” or “Optionee” or
“Grantee”), OSI RESTAURANT PARTNERS, INC., a Delaware corporation (the
“Company”), and OS RESTAURANT SERVICES, INC., a Delaware corporation
(“OSRS”).
W
I T N E
S S E T H:
WHEREAS,
the Company, OSRS and Employee are party to an Officer Employment Agreement,
effective as of March 8, 2005 (the “Employment Agreement”); and
WHEREAS,
the Company, OSRS and Employee are party to the Stock Option Agreement set
forth
on Exhibit A attached hereto (the “Stock Option Agreement”) and the Restricted
Stock Agreements set forth on Exhibit A attached hereto (the “Restricted Stock
Agreements” and together with the Stock Option Agreement, the “Incentive
Compensation Agreements”); and
WHEREAS,
the Company, OSRS and Employee desire to amend the Employment Agreement and
the
Incentive Compensation Agreements as set forth herein.
NOW,
THEREFORE, in consideration of the foregoing recitals, and of the premises,
covenants, terms and conditions contained herein, the parties hereto agree
as
follows:
1. Terms
used but not otherwise defined herein shall have the meanings ascribed to them
in the Employment Agreement or the Incentive Compensation
Agreements.
2. The
Employment Agreement and the Incentive Compensation Agreements are hereby
amended to include the following defined terms having the following
meanings:
“Change
of Control” means:
(a)
The
acquisition by any individual, corporation, limited liability company, joint
venture, partnership, trust, unincorporated organization or other legal entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (i) the then-outstanding shares of common
stock of the Company (the “Outstanding Company Common Stock”) or (ii) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
Agreement, the following acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company, (B) any acquisition by the
Company or (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated company;
(b)
Individuals who, as of the date hereof, constitute the Board of Directors of
the
Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors of the Company; provided, however, that
any
individual becoming a director subsequent to the date hereof whose election,
or
nomination for election by the Company’s stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board of Directors of the Company;
(c)
Consummation of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, immediately following such
Business Combination, (i) all or substantially all of the Persons that were
the
beneficial owners of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the
case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions
as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be and (ii) at least a majority of the members of the board
of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board of Directors of the Company providing
for such Business Combination; or
(d)
Approval by the stockholders of the Company of a liquidation or dissolution
of
the Company.
“Good
Reason” means any of the following: (a) the assignment to Employee of any duties
inconsistent in any respect with Employee’s position (including status, offices,
titles, and reporting requirements), authority, duties or responsibilities
as in
effect immediately prior to a Change of Control or any action by the Company
that results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by Employee, (b) a reduction
by
the Company in Employee’s base salary or benefits as in effect immediately prior
to a Change in Control, unless a similar reduction is made in salary and
benefits of all employees or (c) the Company requires Employee to be based
at or
generally work from any location more than fifty miles from the location at
which Employee was based or generally worked immediately prior to a Change
in
Control.
“Severance
Amount” means, with respect to Employee, an amount equal to (a) two multiplied
by (b) the sum of (i) Employee’s gross annual base salary at the rate in effect
immediately prior to a Change of Control and (ii) an amount equal to the
aggregate cash bonus compensation paid to Employee for the two fiscal years
preceding the year in which a Change of Control occurs divided by two.
3. Section
8(b) of the Employment Agreement is hereby amended in its entirety to read
as
follows:
“(b) The
Employee’s Disability during the Term of Employment. For purposes of this
Agreement (other than for purposes of the definition of “disability” under a
Stock Option Agreement granted prior to the date hereof), “Disability” means a
permanent and total disability as defined in Section 22(e)(3) of the
Code.”
4. Section
8(c) of the Employment Agreement is hereby amended in its entirety to read
as
follows:
“(c) The
existence of Cause. For purposes of this Agreement, “Cause” means any of the
following: (a) gross neglect of duty or prolonged absence from duty (other
than
any such failure resulting from incapacity due to physical or mental illness)
without the consent of the Company, as determined in good faith by the Board
of
Directors of the Company, (b) conviction or a plea of guilty or nolo contendere
with respect to commission of a felony under federal law or in the law of the
state in which such action occurred or (c) the willful engaging by Employee
in
illegal misconduct or gross misconduct that is materially and demonstrably
injurious to the Company.”
5. Section
9
of the Employment Agreement is hereby amended in its entirety to read as
follows:
“9. Severance.
(a) General.
In the
event of termination of this Agreement pursuant to Section
8,
the
Employee or the Employee’s estate, as appropriate, shall be entitled to receive
(in addition to any fringe benefits payable upon death in the case of the
Employee’s death) the base salary provided for herein up to and including the
effective date of termination (the “Termination Effective Date”), prorated on a
daily basis. Except as provided in subsections (b) or (d) of this Section 9,
Employee shall not be entitled to receive any severance
compensation.
(b) Severance
Prior to Change of Control.
Subject
to subsections (c) and (d) of this Section 9, in the event of termination of
this Agreement by the Employer pursuant to Section
8(d) prior to December 31, 2009, Employee
shall receive as severance compensation Five Millions Dollars ($5,000,000),
payable on the date of termination.
(c) Termination
of Right to Severance.
The
Company and the Employer shall not be required to pay severance compensation
under subsection
(b)
of this
Section 9 if the Employee is continuously employed as Chief Executive Officer
of
the Company through December 31, 2009.
(d) Severance
After Change of Control.
Notwithstanding anything to the contrary contained herein, in the event of
a
separation from service (as defined in Section 409A of the Internal Revenue
Code
of 1986, as amended, and the regulations thereunder (the “Code”)) of the
Employee caused by the Company without Cause or by the Employee for Good Reason
within two years after a Change of Control, the Severance Amount shall be paid
in a lump sum by the Company upon or immediately following the Employee’s
separation from service; provided, however, that if the Employee is a specified
employee of the Company (as defined in Section 409A of the Code), the Severance
Amount shall be paid on the date that is one day after the date that is six
months following such separation from service (or such earlier date that payment
of the Severance Amount can be made without incurring a tax pursuant to Section
409A of the Code). If the Change of Control and subsequent separation from
service cause the vesting of all unvested restricted stock granted to Employee
pursuant to the Restricted Stock Agreements, then the Company shall not be
required to pay severance compensation under subsection (b) of this Section
9.”
6. Section
21 of the Employment Agreement is hereby amended in its entirety to read as
follows:
“21. Effect
of Termination.
The
termination of this Agreement, for whatever reason, or the expiration of this
Agreement shall not extinguish those obligations of Employee specified in
Section
10,
Section
11,
Section
12, Section 13
and
Section
15
hereof
or those obligations of the Company specified in Section
9
and
Section
35
hereof.
The restrictive covenants of Section
10, Section 11, Section 12, Section 13, and
Section 15 shall
survive the termination or expiration of this Agreement.”
7. The
Employment Agreement is hereby amended to add the following as Section 35
thereof:
“35. Excess
Parachute Tax Gross-Up.
It is
possible that a payment or distribution (including, without limitation, any
distribution or payment with respect to the vesting of any stock options or
restricted stock grants or the vesting of any benefits) to Employee or for
Employee’s benefit (whether paid or payable or distributed or distributable)
pursuant to the terms of this Agreement, a stock option agreement, a restricted
stock agreement or otherwise (a “Payment”) may constitute a “parachute payment”
within the meaning of Section 280G of the Code. The Company acknowledges that
the protections set forth in this Section
35
are
important, and it is agreed that, except as provided in Section 35(a) below,
Employee should not have to bear the burden of any excise tax that might be
levied under Section 4999 of the Code (such excise tax, together with any
interest or penalties incurred by Employee with respect to such excise tax,
being collectively referred to as the “Excise Tax”) as a result of Employee’s
receipt of the amounts or benefits payable to Employee pursuant to this
Agreement, a stock option agreement, a restricted stock agreement or otherwise.
The following shall therefore apply:
(a) If
it is
determined that any Payment is subject to the Excise Tax, then the Company
shall
pay to or on behalf of Employee an additional payment (a “Gross-Up Payment”) in
an amount such that after payment by Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest or penalties imposed with respect
thereto) and Excise Tax, imposed upon the Gross-Up Payment, but excluding any
income taxes and penalties imposed pursuant to Section 409A of the Code,
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment. Notwithstanding the foregoing provisions of this
Section 35(a), if it shall be determined that Employee is entitled to the
Gross-Up Payment, but that the Parachute Value (as defined below) of all
Payments does not exceed 110% of the Safe Harbor Amount (as defined below),
then
no Gross-Up Payment shall be made to Employee and the amounts payable under
this
Agreement shall be reduced so that the Parachute Value of all Payments, in
the
aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the Severance Amount,
unless an alternative method of reduction is elected by Employee, and in any
event shall be made in such a manner as to maximize the Value (as defined below)
of all Payments actually made to Employee. For purposes of reducing the Payments
to the Safe Harbor Amount, only amounts payable under this Agreement (and no
other Payments) shall be reduced. If the reduction of the amount payable under
this Agreement would not result in a reduction of the Parachute Value of all
Payments to the Safe Harbor Amount, no amounts payable under the Agreement
shall
be reduced pursuant to this Section 35(a). The foregoing determinations will
be
made by the Company’s tax accountants serving immediately prior to a Change of
Control (the “Accountants”) in consultation with Employee and the Company and in
accordance with the analysis, valuations and calculations prepared by the
Accountants in connection with Section
35(b),
below.
Employee and the Company will each provide the Accountants access to and copies
of any books, records, and documents in the possession of Employee or the
Company, as the case may be, reasonably requested by the Accountants, and
otherwise cooperate with the Accountants in connection with the preparation
and
issuance of the determinations and calculations contemplated by this
Section
35.
(b) The
Company shall cause all determinations required to be made under this
Section
35,
including the assumptions to be utilized in arriving at such determinations,
to
be made by the Accountants, which shall provide Employee and the Company with
their determinations and detailed supporting calculations with respect thereto
at least 15 business days prior to the date on which Employee would be entitled
to receive a Payment (or as soon as practicable in the event that the
Accountants have less than 15 business days advance notice that Employee may
receive a Payment) in order that Employee may determine whether Employee concurs
with such determination. For the purpose of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
such Payments will be treated as “parachute payments” within the meaning of
Section 280G of the Code, and all “parachute payments” in excess of the “base
amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that in the opinion
of the Accountants such Payments (in whole or in part) either do not constitute
“parachute payments” or represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of
the
“base amount,” or such “parachute payments” are otherwise not subject to such
Excise Tax. Any determination by the Accountants shall be binding upon the
Company and Employee. The amount of any Gross-Up Payment shall be paid in a
lump
sum within seven days following such determination by the Accountants. In the
event that the Accountant’s determination is not finally accepted by the
Internal Revenue Service (the “IRS”), Employee shall notify the Company in
writing of any such claim by the IRS. Such notification shall be given as soon
as practicable after Employee is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which any
incremental tax attributable to such claim is requested to be paid. In
connection with any claim or potential contest of such claim, Employee and
the
Company will provide each other access to and copies of any books, records,
and
documents in the possession of Employee or the Company, as the case may be,
reasonably requested by the other party, and will otherwise cooperate with
each
other in connection with any such claim. In the event that Employee or the
Company contest such claim, the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest. Upon resolution of any such claim, an appropriate
adjustment, including penalties and interest, if any, shall be computed (with
an
additional Gross-Up Payment, if applicable) by the Accountants based upon the
final amount of the Excise Tax so determined. Such adjustment shall be paid
by
the appropriate party in a lump sum within seven days following the computation
of such adjustment by the Accountants. Nothing contained in this Section
35
shall
limit Employee’s ability or entitlement to settle or contest as the case may be,
any claim or issue asserted by the IRS. All fees and expenses of the Accountants
incurred pursuant to this Section
35
and all
costs associated with such claims by the IRS or any other taxing authority
shall
be borne solely by the Company.”
(c) The
following terms shall have the following meanings for purposes of this Section
35.
(i) “Parachute
Value” of a Payment shall mean the present value as of the date of the change of
control for purposes of Section 280G of the Code of the portion of such Payment
that constitutes a “parachute payment” under Section 280G(b)(2), as determined
by the Accountants for purposes of determining whether and to what extent the
Excise Tax will apply to such Payment.
(ii) The
“Safe
Harbor Amount” means 2.99 times the Employee’s “base amount,” within the meaning
of Section 280G(b)(3) of the Code.
(iii) “Value”
of a Payment shall mean the economic present value of a Payment as of the date
of the change of control for purposes of Section 280G of the Code, as determined
by the Accountants using the discount rate required by Section 280G(d)(4) of
the
Code.
Notwithstanding
any other provision of this Section 33, the Company may, in its sole discretion,
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of Employee, all or any portion of any
Gross-Up Payment, and Employee hereby consents to such withholding.
8. The
Stock
Option Agreement is hereby amended to provide that, to the extent the Stock
Option Agreement or plan under which it was granted did not define Disabled,
Disability or disability, such terms shall mean a permanent and total disability
as defined in Section 22(e)(3) of the Code.
9. Section
2
of the Stock Option Agreement is hereby amended to add the following as the
last
sentence thereof:
“Notwithstanding
Section 4 hereof, the Option shall become fully vested and exercisable if,
within two years after the effective date of a Change of Control (a) Optionee’s
employment is terminated by the Company without Cause, (b) Optionee resigns
for
Good Reason or (c) Optionee dies or suffers a Disability, and in such event,
the
Option shall expire on the earlier of (x) the date that is 10 years after the
date of this Agreement and (y) the date that is one year after the date of
termination, resignation, death or Disability (provided, however, that, the
post-termination exercise period shall be reduced to the later of (1) the 15th
day of the third month following the date the exercise period otherwise would
have expired pursuant to the terms of this Agreement without regard to the
extension provided in this sentence and (2) December 31 of the calendar year
in
which the exercise period otherwise would have expired pursuant to the terms
of
this Agreement without regard to the extension provided in this sentence, to
the
extent that the one-year exercise period provided in clause (y) hereof would
be
considered to be an “extension” within the meaning of the regulations under
Section 409A of the Code).”
10. The
introductory clause of Section 4 of the Stock Option Agreement is hereby amended
in its entirety to read as follows:
“4.
Termination
of Option.
Subject
to the last sentence of Section 2 hereof, the Option granted herein, to the
extent not theretofore exercised, and the Exercise Price for the exercised
Shares paid by Optionee, shall terminate and be null and void immediately upon
the first to occur of any of the following:”
11. The
second paragraph of Section 4 of the Stock Option Agreement is hereby amended
in
its entirety to read as follows:
“Subject
to the last sentence of Section 2 hereof, in the event Optionee dies or becomes
disabled, Optionee’s Beneficiary (as defined below), in the case of death, or
Optionee or Optionee’s guardian, in the case of disability, shall have ninety
(90) days from the date of death or disability (“Special Exercise Period”) to
exercise the Option to the same extent, and for the same number of Shares,
as
Optionee could have exercised as of the date of death or
disability.”
12. Section
2
of each of the Restricted Stock Agreements is hereby amended to add the
following as the last sentence thereof:
“Notwithstanding
anything to the contrary contained herein, the Restricted Stock shall become
fully vested and all restrictions on the Restricted Stock shall lapse if within
two years after the effective date of a Change of Control (a) Grantee’s
employment is terminated by the Company without Cause, (b) Grantee resigns
for
Good Reason or (c) Grantee dies or suffers a Disability. For purposes of this
Agreement, the defined terms used in the foregoing sentence shall have the
meanings given to them under the Grantee’s employment agreement with the Company
as amended.”
13. Section
5
of each of the Restricted Stock Agreements is hereby amended in its entirety
to
read as follows:
“Section
5. Termination
of Employment.
Except
as otherwise provided in Section 2 hereof, if the Grantee does not remain
employed by the Company in the position of Chief Executive Officer (or higher)
through the Final Vesting Date, all shares of Restricted Stock not vested as
of
the date Grantee is no longer employed by the Company in the position of Chief
Executive Officer (or higher) will be forfeited.”
14. This
Amendment may be executed in counterparts, each of which will constitute an
original and all of which together will constitute one agreement. The signature
page of any individual or entity, or copies or facsimiles thereof, may be
appended to any counterpart of this Amendment and when so appended will
constitute an original.
15. Except
as
expressly amended by this Amendment, all terms and conditions of the Employment
Agreement and the Incentive Compensations Agreements remain in full force and
effect and are unmodified hereby.
[signature
page follows]
IN
WITNESS WHEREOF, the parties have executed or caused this Amendment to be
executed as of the day and year first above written.
By:
/s/
Xxxxxx X. Xxxxxxxx
Name:
Xxxxxx
X. Xxxxxxxx
Title:
Vice
President
OS
RESTAURANT SERVICES, INC.
By:
/s/
Xxxxxx X. Xxxxxxxx
Name:
Xxxxxx
X. Xxxxxxxx
Title:
Vice
President
/s/
A.
Xxxxxxx Xxxxx, III
A.
Xxxxxxx Xxxxx, III
EXHIBIT
A
1. Stock
Option Agreement, effective as of July 24, 2002, among OSRS, the Company and
Employee
2. Restricted
Stock Agreement, effective as of April 27, 2005, among OSRS, the Company and
Employee
3. Restricted
Stock Agreement, effective as of December 31, 2005, among OSRS, the Company
and
Employee
23120,
91001, 101378147.1
