Exhibit 10.2
CONSULTING AGREEMENT
AGREEMENT, entered into this ___ day of April, 2004, between Grill
Concepts, Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxxx (the
"Consultant").
WHEREAS, the Company is engaged in the development, operation, management
and licensing of restaurant properties, including, but not limited to, Daily
Grill and The Grill on the Alley restaurants;
WHEREAS, the Consultant is a founder of the Company, having served as Chief
Executive Officer of the Company through his retirement and possesses extensive
and valuable knowledge and understanding concerning the restaurant industry and
the Company's restaurant operations; and
WHEREAS, the Company and the Consultant desire the Consultant to provide
certain consulting services to the Company as an independent contractor under a
consulting arrangement which shall commence on the first day that the Consultant
is no longer employed by the Company (the "Effective Date") and terminate on the
tenth anniversary of the Effective Date (the "Term").
NOW, THEREFORE, the Consultant and the Company agree as follows:
1. (a) During the Term, the Company hereby retains the Consultant to provide,
and the Consultant agrees to provide to the Company, business strategy
consulting services, including but not limited to advice regarding (i)
restaurant operations and management, (ii) managerial and financial
requirements, (iii) sales and marketing plans and activities, (iv) budgets and
business plans, and (v) other aspects relating to the management and operation
of the Company's business (the "Consulting Services"). The Consulting Services
shall be rendered at such times and places and in such manner as Consultant, in
his reasonable discretion, deems appropriate, it being mutually understood and
acknowledged that Consultant is expected to spend approximately forty (40) hours
per month during the Term in the performance of the Consulting Services
hereunder. Consultant shall provide such Consulting Services in accordance with
such guidelines as the Company may, from time to time, establish for its
independent contractors. In the event of a conflict between such guidelines and
this Agreement, the terms of this Agreement shall control.
(b) Should either party default in the performance of this Agreement or
materially breach any of its provisions other than for non-payment of
compensation or the providing of benefits pursuant to paragraph 2, the
non-breaching party may terminate this Agreement by giving written notification
to the breaching party describing in detail the alleged breach. The breaching
party shall have thirty (30) days within which to cure the purported breach. In
the event the breach is not cured within such thirty (30) day period,
termination shall be effective thirty (30) days from the mailing of the written
notification of breach. For purposes of this Agreement, material breach of this
Agreement shall include, but is not limited to, the following:
(i) Failure of the Company to pay to Consultant when due any of the
compensation or provide any of the benefits required in paragraph
2 above, following fifteen (15) business days prior written
notice from Consultant to Company advising the Company of such
failure;
(ii) Failure of the Consultant to provide the Consulting Services
agreed upon between the Consultant and the Company; or
(iii) Violation of the terms of the provisions relating to
confidential or proprietary information, trade secrets, works
for hire, non-solicitation or non-inducement.
Further, the Consulting Term shall automatically terminate upon
Consultant's death.
(c) It is expressly understood and agreed that the Consultant is an
independent contractor and not an employee of the Company for any purpose and
that the Company may not direct or control the Consultant with respect to the
manner in which the Consultant's services are performed under this Agreement.
The Consultant agrees that the Consultant, other than to the extent earned or
vested prior to the Effective Date, will not be entitled to participate in any
benefit programs maintained by the Company for its employees by reason of the
services performed hereunder, and expressly waives the right to participate in,
or share in any profit sharing, pension, retirement or employee benefit plan of
the Company by reason of the Services performed hereunder. This does not refer
to any pension or retiree life and medical benefits for which the Consultant may
be eligible with respect to the Consultant's prior employment with the Company
or to any other benefits as may be agreed to between the Company and the
Consultant.
(d) Neither the Company nor the Consultant shall treat the Consultant as
an employee for federal, state or local tax purposes. Accordingly, the Company
shall neither pay nor withhold federal, state or local income tax or payroll tax
of any kind on behalf of Consultant. The Consultant understands that he is
solely responsible to pay, according to law, his income and all other required
taxes. Consultant further understands that he may be liable for self-employment
(social security) tax to be paid by the Consultant according to law. In the
event that the Company shall be required by any governmental, federal, state,
municipal or other regulatory body having jurisdiction to pay social security,
FICA, unemployment, disability insurance or other similar tax or charge, by
reason of any ruling or determination that payments to the Consultant should be
treated as wages, or employee compensation, the Consultant shall reimburse for
and hold the Company harmless from any and all such expense.
(e) During the Term, no Workers' Compensation Insurance shall be obtained
by the Company covering the Consultant.
2. Compensation to Consultant for the Consulting Services shall be as
follows:
(a) $12,500.00 per month, payable in arrears on the last business day of
each month during the Term.
(b) During the Term, and in furtherance of providing Consulting Services
under this Agreement, the Company shall provide Consultant, at no cost to
Consultant, a private office at the Company's headquarters and to secretarial
and other assistance up to ten (10) hours per week. Further, during the initial
eighteen (18) months of the Term, Company shall provide to Consultant, at no
cost to Consultant, the use of an automobile comparable to the automobile
provided by the Company to Consultant immediately prior to the Effective Date.
(c) During the Term, the Company will provide to the Consultant, at the
Company's sole expense, the following minimum benefits:
(i) A five hundred thousand dollar ($500,000.00) whole life insurance
policy with Consultant designating the beneficiary(ies) (it being
understood that Consultant shall have exclusive control over the
accumulated value in the policy and the right to said policy upon
termination of this Agreement);
(ii) Medical insurance for Consultant and spouse of a kind and quality
provided other senior executives of the Company through COBRA, if
applicable, until the Consultant reaches the age of 65, or any
later age for eligibility for Medicare if it is postponed by law
before Consultant reaches 65;
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(iii) Supplemental Medicare insurance for Consultant and spouse after
the Consultant attains the age of 65, or any later age for
eligibility for Medicare if it is postponed by law before
Consultant reaches 65; and
(iv) Disability benefits such that in the event Consultant becomes
disabled to the extent he is unable to provide Consulting
Services in the same manner as provided in the past, the Company
shall continue to pay Consultant the monthly payment and other
compensation and benefits provided for in paragraph 2 hereof
during the balance of the Term; the Company may secure insurance
to cover all or some portion of the compensation due Consultant
during the period of any such disability.
(d) In the event that this Agreement is terminated either (i) by the
Company other than as a result of a material breach by the Consultant or (ii) by
the Consultant as a result of material breach by the Company, the Consultant
shall be paid a lump sum equal to the compensation that the Consultant would
have received over the remaining Term had the Agreement not been so terminated
discounted at the Applicable Federal Rate for the month in which the termination
occurs, including the amount necessary to make the premium payments contemplated
by the benefits provided in paragraphs 2(c)(i), (ii) (iii) and (iv) as
determined by Consultant's actuary at the Company's expense, and any other
amounts owed to the Consultant under this Agreement. Within five (5) days of
the date of such termination, (i) such lump sum shall be shall be paid to the
Consultant, and (ii) the Company will transfer and assign all right, title and
interest in the life insurance policy contemplated in paragraph 2(c)(i) free of
any liens or encumbrances to Consultant. The Company hereby appoints Consultant
its attorney-in-fact to execute in the Company's name all documents necessary to
effectuate such transfer and assignment. The parties hereby acknowledging
payment of such sum and transfer of the life insurance policy represents a
negotiated and agreed upon payment as liquidated damages in full settlement of
all claims Consultant may have as a result of such a termination.
3. The Company shall reimburse the Consultant for business expenses actually
and reasonably incurred by the Consultant in connection with the Consulting
Services rendered hereunder at the specific direction of the Company, but
reimbursements shall be made only in accordance with the Company's generally
applicable expense reimbursement policies. Consultant shall be entitled to
dining privileges at Company restaurants to a maximum of $1,000.00 per month
during the Term.
4. The Consultant shall and does hereby indemnify, defend and hold harmless
the Company, and the Company's officers, directors, employees and shareholders
from and against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorney fees and costs, that Company may
incur or suffer and that result from, or are related to the performance by
Consultant of his Consulting Services in a grossly negligent manner.
5. (a) The Consultant shall, during the Term, be subject to the same
restrictive covenants as senior executives of the Company with respect to
confidential or proprietary information, trade secrets, works for hire,
non-competition, non-solicitation and non-inducement and, following termination
of this Agreement for whatever reason, be subject to such restrictive covenants
in accordance with their terms to the same extent that senior executives of the
Company are subject thereto following termination of employment as employees of
the Company. In this regard, Consultant agrees to execute such other and
further documents as the Company may reasonably require incidental to such
covenants by Consultant.
(b) Consultant agrees that during the Term, unless otherwise sooner
modified or terminated in writing by the Company in its sole discretion, he
shall not, in, from or at any location within the United States, directly or
indirectly, as a principal, agent, employee, employer, consultant, stockholder,
partner or
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in any individual or representative capacity, engage in any business that
competes with the Company, i.e., a business that provides restaurant services
substantially similar to the "The Grill" and/or "Daily Grill" restaurant
operations as well as any restaurant or other business operations actively
engaged in by the Company as of the Effective Date. Notwithstanding the
foregoing, Consultant may, without violating the provisions hereof, purchase and
hold up to five percent (5%) of any entity whose shares are publicly traded. If
any covenant hereof should be deemed invalid or unenforceable because of the
scope, geographical area or duration, or any combination thereof, such covenant
shall be modified and reformed so that the scope, geographic area and duration
of the covenant is reduced only to the minimum extent necessary to render the
modified covenant valid and enforceable.
(c) During the Term, and for a period of one (1) year following the
termination thereof other than for termination based on material breach by the
Company, Consultant acknowledges and agrees that he will not, without the
express written consent of the Company, directly or indirectly, do or authorize
or assist any other person in doing any of the following acts:
(i) solicit, entice, persuade or induce any Person (whether or not
under a written contract of employment with the Company) to terminate his or her
employment by the Company or to refrain from entering into, extending or
renewing employment with the Company (upon the same or new terms) or to become
employed by a Person other than the Company; or
(ii) solicit, entice, persuade or induce any person or any Client
(whether or not under a written contract with the Company) to terminate his or
her contract or relationship with the Company or to refrain from entering into,
extending or renewing the same (upon the same or new terms) or enter into a
contract or relationship with a person other than the Company.
For purposes herein, Person shall mean any individual,
partnership, corporation, trust, joint venture, governmental agency,
unincorporated association or other entity. For purposes herein, Client shall
mean any person which the Company has conducted business with during the Term.
(d) Consultant understands and agrees that any breach of provisions (a)
(b) or (c) above would cause irreparable harm, which irreparable harm may not be
compensable entirely with monetary damages. Consultant agrees that injunctive
relief is an appropriate remedy for any breach of this paragraph. Consultant
further agrees that such injunctive relief shall be in addition to and not in
limitation of any monetary relief or other remedies or rights available under
applicable law, in equity or under this Agreement.
6. The Consultant agrees that so long as the Consultant is engaged by the
Company, the Consultant shall comply with all laws, regulations and rules
applicable to the conduct of the Company's business.
7. The Consultant represents, warrants and covenants that the Consultant is
not a party to or bound by any consulting, non-competition, non-solicitation or
confidentiality agreement or the like which would in any manner conflict or
interfere with the Consultant's ability to lawfully fulfill the Consultant's
duties under this Agreement.
8. Any notice given pursuant to this Agreement shall be in writing and shall
be delivered personally or mailed, certified or registered mail, postage
prepaid, if to the Company, to it at 00000 Xxx Xxxxxxx Xxxx., Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, marked for the attention Xxxxxxx Xxxxxxxxx, Vice
President with copy to Xxxxxxx X. Xxxxxxx, Esq., Herzog, Fisher, Xxxxxxx &
Xxxxx, 0000 Xxxxxxxx Xxxx., Xxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 and if
to the Consultant, to the Consultant at the address set forth in the Company's
records (or at such other address for a party as may be specified by notice
given pursuant hereto) with a copy to Xxxxxx X. Xxxxxxx, Xx., Esq., Xxxxxxx,
Gold & Rubaum, LLP, 12011 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000.
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9. This Agreement shall be binding upon the Company and Consultant and their
respective successors, assigns, heirs, executors and administrators.
10. This Agreement contains the entire understanding of the parties hereto and
supersedes all previous communications, representations, or agreements, oral or
written with respect to the subject matter hereof and supersedes all previous
communications, representations, or agreements, oral or written, with respect to
the subject matter hereof except for the provisions of the Consultant's previous
employment agreement with the Company, or for the provisions of the Company's
policies, relating to confidential or proprietary information, trade secrets,
works for hire, non-competition, non-solicitation and non-inducement, which
shall remain in effect in accordance with their terms. No failure to exercise
nor any delays in exercising any right or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise therefore or the exercise of
any other right or remedy. Neither this Agreement nor any of its provisions may
be amended, supplemented, changed, waived or rescinded except by a written
instrument signed by the party against whom enforcement thereof is sought. No
waiver of any right or remedy hereunder on any one occasion shall extend to any
subsequent or other matter.
11. This Agreement shall not be transferred or assigned in whole or in part by
the Consultant without the prior written consent of the Company.
12. This Agreement shall be governed by and construed in accordance with the
laws of the State of California applicable to contracts made on and performed
within the State of California. Any controversy arising under or relating to
this Agreement, or the breach hereof, shall be determined and settled by
arbitration in California by a three person panel mutually agreed upon, or in
the event of a disagreement as to the selection of the arbitrators, in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association. Any award rendered therein shall specify the findings
of fact of the arbitrator or arbitrators and the reasons of such award, with the
reference to and reliance on relevant law. Any such award shall be final and
binding on each and all of the parties thereto and their personal
representatives, and judgment may be enter thereon in any court having
jurisdiction thereof. The prevailing party, if any, shall be fully compensated
by the non-prevailing party for reasonable legal fees and expenses directly
related to the arbitration process.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
AGREED AND ACCEPTED: GRILL CONCEPTS, INC.
By: _______________________ By: _____________________________________
Xxxxxx Xxxxxx Xxxxxxx Xxxxxxxxx
Its: Chairman and Executive Vice President
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