Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between
Xxxxxxx X. Xxxxxxxx (the "Executive") and Avado Brands, Inc., a Georgia
corporation (the "Company").
WHEREAS, the Company is currently in the process of reorganizing its
capital structure under Chapter 11 of the Title 11 of the United States Code (11
U.S.C. xx.xx. 101 et seq.) (the "Bankruptcy Code"); and
WHEREAS, the Company desires to provide for the service and employment of
the Executive with the Company, and the Executive wishes to perform services for
the Company while the Company is in reorganization and following the effective
date of the Company's court-approved plan of reorganization ("Plan of
Reorganization"), all in accordance with the terms and conditions provided
herein.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the Executive and the Company hereby agree as follows:
Section 1. EMPLOYMENT. The Company does hereby employ the Executive and the
Executive does hereby accept employment as Chief Executive Officer of the
Company. The Executive shall have all the duties, responsibilities and authority
normally performed by the Chief Executive Officer and shall render services
consistent with such positions on the terms set forth herein and shall report to
the Board of Directors of the Company (the "Board"). In addition, the Executive
shall have such other executive and managerial powers and duties with respect to
the Company and its subsidiaries as may reasonably be assigned to him by the
Board, to the extent consistent with his position and status as set forth above.
The Executive agrees to devote all of his working time and efforts to the
business and affairs of the Company and its subsidiaries, subject to periods of
vacation and sick leave to which he is entitled, and shall not engage in
activities that interfere with such performance; provided, however, that this
Agreement shall not be interpreted to prohibit the Executive, subject to the
prior approval of the Board, from serving on the board of directors of any
corporation other than the Company.
Section 2. BOARD MEMBERSHIP. Effective upon the effective date of the Plan
of Reorganization, the Company shall cause the Executive to be appointed to the
Board as a voting member and during the Term (as defined below), the Company
shall cause the Executive to be nominated for election to the Board as a voting
member.
Section 3. TERM OF AGREEMENT. Subject to Section 6 hereof, the term (the
"Term") of this Agreement shall commence on the Executive's first day of
employment with the Company, which shall be no later than the 30th day following
the date this Agreement is approved by the court presiding over the Company's
bankruptcy case (the "Commencement Date") and, subject to Section 8(e), shall
continue until the Executive's employment is terminated pursuant to Section 6.
Section 4. LOCATION. In connection with the Executive's employment by the
Company, the Executive shall be based at the headquarters of the Company in
Madison, Georgia, except for required travel for the Company's business.
Section 5. COMPENSATION.
(a) BASE SALARY. Effective as of the Commencement Date, the Company shall
pay the Executive a base salary ("Base Salary") at an initial rate of $325,000
per year, payable in accordance with the Company's policies relating to salaried
employees. The Executive's Base Salary shall be reviewed not less frequently
than once per anniversary year of employment and may be increased (but not
decreased) by the Compensation Committee of the Board (the "Compensation
Committee") in its sole discretion.
(b) ANNUAL BONUS. Subject to the approval of the Board, commencing with the
fiscal year of the Company ("Fiscal Year") in which the Commencement Date
occurs, the Executive shall have the opportunity to earn a bonus for each Fiscal
Year during the Term as recommended by the Compensation Committee in accordance
with the Company's annual bonus plan applicable to the Executive (the "Annual
Bonus Plan"), the terms of which are set forth in Exhibit I hereto.
(c) GUARANTEED BONUS. Subject to Section 6(g), Executive shall be paid a
lump sum bonus of $100,000 (the "Guaranteed Bonus") within thirty (30) days of
the Commencement Date; provided, however, that in the event that the Executive
is entitled to an annual bonus for the 2004 calendar year from his current
employer, the Guaranteed Bonus shall be reduced by the amount of such 2004 bonus
paid or payable to or on behalf of the Executive prior to the Commencement Date
or no more than one (1) year following the Commencement Date.
(d) EMERGENCE BONUS. As soon as practicable following the effective date of
the Plan of Reorganization, subject to Section 6(g), the Company shall pay to
the Executive an amount in cash equal to $50,000 as a bonus.
(e) OTHER BONUSES. The Executive shall be entitled to receive such other
bonuses as are determined in the discretion of the Board.
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(f) STOCK OPTIONS.
(i) Initial Option Grant. On, or as soon as practicable following, the
effective date of the Plan of Reorganization, the Executive shall be granted an
option (the "Initial Option") to purchase 3% of the then outstanding shares of
common stock of the Company at a per share exercise price that is no greater
than the per share value of the Company as of the effective date of the Plan of
Reorganization. The Initial Option shall vest and become exercisable in annual
installments at the rate of 20% on each of the effective date of the Plan of
Reorganization, and the first (1st), second (2nd), third (3rd) and fourth (4th)
anniversaries of the Commencement Date (each such installment, an "lnitial
Option Installment"); provided in each case that the Executive has been
continuously employed with the Company from the effective date of the Plan of
Reorganization through the applicable vesting date, except as otherwise provided
herein and in such stock option grant agreement. Except as otherwise provided
herein, the Initial Option shall be subject to such terms and conditions,
including provisions regarding post-termination exercisability, as determined by
the Compensation Committee.
(ii) As of the Commencement Date, the Executive shall be granted an
opportunity to purchase up to that number of shares of common stock of the
Company equal in value to $500,000 (based upon the per share value of the
Company as of the effective date of the Plan of Reorganization), which purchase
must be made no later than the later of (1) December 31, 2004, or (2) thirty
(30) days following the effective date of the Plan of Reorganization.
(iii) Additional Option Grants. The Executive shall be eligible to receive
additional grants of stock options to purchase shares of common stock of the
Company as recommended by the Compensation Committee in its sole discretion.
(iv) Change in Control Acceleration. Upon the consummation of a "Change in
Control" (as defined in Exhibit II hereto), the Company shall accelerate the
vesting of the Initial Option and any other stock options granted to Executive
during the Term of this Agreement, such that all unvested shares will be fully
vested as of the date of consummation of a Change in Control. Notwithstanding
the foregoing, the Board may accelerate the vesting of the Initial Option and
any other stock options granted to Executive during the Term of this Agreement
at any time during the term of such options.
(g) FRINGE BENEFITS.
(i) General. The Executive shall be entitled to participate in each fringe,
welfare, death, disability and pension benefit and incentive programs adopted
from time to time by the Company for the benefit of, and which generally apply
to, its highest level of senior executive officers from time to time.
(ii) Vacation. The Executive will receive four (4) weeks of paid vacation
annually, subject to the terms of the Company's vacation policies as they relate
to senior executive officers. With prior approval of the Board, the Executive
shall be permitted to carry over some or all of an accrued but unused vacation
balance into the successive calendar year.
(iii) Reimbursement of Business Expenses. The Company shall pay or
reimburse the Executive for all reasonable business expenses incurred or paid by
the Executive in the performance of his duties hereunder, in accordance with the
Company's prevailing policy relating to expense reimbursement.
(iv) Indemnification. Executive will be eligible for indemnification to the
fullest extent authorized under the Company's Certificate of Incorporation and
By-laws (as applicable) and will be eligible for coverage under the Company's
Director & Officer's liability insurance policy, subject to the terms and
conditions contained therein.
Section 6. TERMINATION.
(a) NOTICE OF TERMINATION.
(i) "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provisions so indicated.
(ii) Any purported termination of the Executive's employment by the Company
or by the Executive shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 11 hereof.
(b) DATE OF TERMINATION. "Date of Termination" shall mean:
(i) if the Executive's employment is terminated because of death, the date
of the Executive's death, or
(ii) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination, which shall not be a date prior to
the date such Notice of Termination is given or the expiration of any required
notice period.
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(c) ACCRUED AND UNPAID BENEFITS. Following the termination of the
Executive's employment with the Company for any reason, the Executive shall
receive:
(i) any earned, but unpaid, Base Salary,
(ii) any earned, but unpaid, bonus for any Fiscal Year that ended prior to
the Fiscal Year in which the Date of Termination occurs,
(iii) the cash equivalent of any accrued, but unused, vacation, and
(iv) any accrued employee benefits, subject to the terms of the applicable
employee benefit plans.
The amounts payable under subparagraphs 6(c)(i), (ii) and (iii) shall be
paid within three (3) days following the Date of Termination.
(d) DEATH. In the event that the Executive's employment hereunder is
terminated by reason of the Executive's death, the Company shall pay the amounts
described in Section 6(c) above and all benefits payable to the Executive, if
any, under the terms of the Company's compensation and benefit plans, programs
or arrangements.
(e) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment under this Agreement for Cause (as defined below) at any time, in
which event, any rights of the Executive to continued employment under the
Agreement shall thereupon cease.
(i) As used herein, termination for "Cause" shall mean the occurrence of
any of the following:
(A) that Executive shall have been convicted of, or pleads guilty or nolo
contendere to, a felony involving theft or moral turpitude; or
(B) that Executive shall have engaged in conduct that constitutes gross
neglect or willful gross misconduct (including misappropriation or embezzlement
of property of, or fraud with respect to, the Company or its subsidiaries or
their affiliates) with respect to Executive's employment duties, which results
in material and demonstrable harm to the Company; provided, however, that for
purposes of determining whether conduct constitutes willful gross misconduct, no
act on Executive's part shall be considered "willful" unless it is done by
Executive in bad faith and without reasonable belief that his action was in the
best interests of the Company.
(ii) Termination of Executive upon Disability shall not constitute Cause.
For this purpose, Executive's "Disability" shall mean, after giving to Executive
ninety (90) days' prior written notice of its intention to terminate Executive
therefor, Executive's illness or injury that substantially and materially limits
the Executive from performing each of the essential functions of the Executive's
job, even with reasonable accommodation, and he becomes entitled to receive
disability benefits under the Company's long-term disability plan for exempt
employees.
(f) TERMINATION OTHER THAN FOR CAUSE. The Company may terminate the
Executive's employment under this Agreement without Cause at any time, in which
event, any rights of the Executive to continued employment under the Agreement
shall thereupon cease. In the event of such a termination, the Executive shall
be entitled to the severance benefits as provided in Section 7(a) hereof.
(g) TERMINATION BY THE EXECUTIVE. The Executive may terminate his
employment hereunder voluntarily upon at least thirty (30) days' prior notice to
the Company; provided, however, that if such termination occurs without Good
Reason (as defined below) prior to the second (2nd) anniversary of the
Commencement Date, the Executive shall be obligated to pay to the Company an
amount equal to that pro rata portion of the Guaranteed Bonus and the Emergence
Bonus equal to the product of (i) $150,000 and (ii) a fraction, the numerator of
which is equal to twenty four (24) minus the number of full and partial months
during the period commencing on the Commencement Date and ending on the Date of
Termination and the denominator of which is twenty four (24). If Executive's
employment is terminated by him for Good Reason, such termination shall be
treated as a termination by the Company without Cause under Section 6(f) and the
Executive shall be entitled to receive the severance payment and related
benefits as set forth in Section 7(a), subject to his prior execution of a
release as set forth in Section 7(c). For purposes hereof, the term "Good
Reason" shall mean a termination of employment by the Executive for one or more
of the following reasons: without the Executive's written consent, (i) a
material reduction in the Executive's duties and responsibilities, (ii) the
Executive's removal as CEO or as a member of the Board, (iii) a reduction in the
Executive's annualized Base Salary below $325,000 or the Company's failure to
pay Executive his Base Salary for more than 45 calendar days, or (iv) the
Company's or its successor's requirement that Executive relocate to a principal
corporate office located more than seventy (70) miles from Madison, Georgia.
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Section 7. SEVERANCE.
(a) SEVERANCE BENEFITS. If the Company terminates the Executive's
employment with the Company for any reason other than (i) the Executive's death
or (ii) for Cause (a "Qualifying Termination"), the Executive shall be entitled
to the following:
(i) All amounts payable pursuant to Section 6(c);
(ii) An amount equal to Executive's then-current annual Base Salary in
effect at the time of the Qualifying Termination. Such payment shall be made in
accordance with the normal payroll practice of the Company over the 12-month
period following the Date of Termination; (iii) the pro rata portion of
Executive's bonus under the Annual Bonus Plan for the fiscal year in which the
Date of Termination occurs based on the pro rata portion of actual increased
EBITDA compared to the total year planned increased EBITDA vs previous year
earned up to the date of termination and the number of full or partial months
worked in the fiscal year in which the Executive's employment is terminated.
(iv) Continued participation in the Company's welfare benefit plans, fringe
benefits, and employee perquisites for the 12-month period commencing on the
Date of Termination.
(b) NO MITIGATION. The Executive shall not be required to mitigate damages
with respect to any payments made pursuant to this Agreement, and no
compensation received by Executive from other employment with respect to
services rendered after the Date of Termination shall reduce the obligations of
the Company under this Agreement.
(c) RELEASE OF EMPLOYMENT CLAIMS. The Executive agrees, as a condition to
receipt of the payments and benefits provided for in this Section 7, that he
will execute a release agreement, in a form attached hereto as Exhibit III,
releasing any and all claims arising out of the Executive's employment (other
than claims to enforce the terms of this Agreement, claims as a stockholder or
optionholder of the Company and claims relating to the Executive's rights under
any of the Company's incentive compensation and employee benefit plans and
programs to which he is entitled under this Agreement).
Section 8. CONFIDENTIALITY; NON-COMPETITION.
(a) CONFIDENTIALITY. "Confidential Information" shall mean non-public
information about the Company and its subsidiaries or their affiliates, and
their respective clients and customers that is not disclosed by the Company or
its subsidiaries for financial reporting purposes and that was learned by the
Executive in the course of his employment with the Company, including, without
limitation, any proprietary knowledge, trade secrets, data, formulae,
information and client and customer lists and all papers, resumes and records
(including computer records) of the documents containing such Confidential
Information. Confidential Information does not include information regarding the
Executive's own compensation and benefits.
(i) The Executive acknowledges that in his employment with the Company he
will occupy a position of trust and confidence. The Executive shall not, except
as may be required to perform his duties hereunder or as required by applicable
law, without limitation in time or until such information shall have become
public other than by the Executive's unauthorized disclosure, disclose to others
or use, whether directly or indirectly, any Confidential Information.
(ii) The Executive acknowledges that all Confidential Information is
specialized, unique in nature and of great value to the Company and its
subsidiaries, and that such Confidential Information gives the Company and its
subsidiaries a competitive advantage. The Executive agrees to deliver or return
to the Company, at the Company's request at any time or upon termination or
expiration of his employment or as soon thereafter as possible, all documents,
computer tapes and disks, records, lists, data, drawings, prints, notes and
written information (and all copies thereof) furnished by or on behalf of or for
the benefit of the Company and its subsidiaries or their affiliates or prepared
by the Executive during the term of his employment by the Company, but excluding
documents relating to the Executive's own compensation and benefits.
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(b) NON-COMPETITION. During the Executive's employment with the Company and
during the one (1) year period commencing on the Date of Termination, if any,
the Executive shall not, directly or indirectly, whether as owner, consultant,
employee, partner, venturer, agent, through stock ownership, investment of
capital, lending of money or property, rendering of services, or otherwise,
compete with the Company or any of its affiliates or subsidiaries in any
business in which any of them is engaged while the Executive is employed with
Company (such businesses are hereinafter referred to as the "Business"), or
assist, become interested in or be connected with any corporation, firm,
partnership, joint venture, sole proprietorship or other entity that so competes
with the Business. For purposes of this Agreement, the parties acknowledge that
the term "Business" refers to the operation of a restaurant concept that is
similar to the restaurant concepts operated by the Company or any of its
affiliates or subsidiaries. For purposes of illustration, the parties
acknowledge that the Company and its affiliates and subsidiaries currently
operate restaurant concepts known as (i) "Mexican Casual" and (ii) "Mexican Fast
Casual" and it is expected that the Company and its affiliates and subsidiaries
will operate a restaurant concept known as "Grill Oriented Brew Pub." During the
one (1) year period commencing on the Date of Termination, the restrictions
imposed by this Section 8(b) shall not apply to any business in which the
Company or its affiliates and subsidiaries were not engaged at the time of
termination of the Executive's employment hereunder or to any geographic area in
which the Company or its affiliates and subsidiaries were not engaged in the
Business at the time of termination.
(c) NON-SOLICITATION OF EMPLOYEES.
(i) The Executive recognizes that he will possess confidential information
about other employees of the Company and its subsidiaries or their affiliates
relating to their education, experience, skills, abilities, compensation and
benefits, and interpersonal relationships with customers of the Company and its
subsidiaries or their affiliates.
(ii) The Executive recognizes that the information he will possess about
these other employees is not generally known, is of substantial value to the
Company and its subsidiaries in developing their business and in securing and
retaining customers, and will be acquired by him because of his business
position with the Company and its subsidiaries.
(iii) The Executive agrees that, during the Executive's employment with the
Company and during the two (2) year period commencing on the Date of Termination
he will not, directly or indirectly, solicit or recruit any employee of the
Company or its subsidiaries or their affiliates for the purpose of being
employed by him or by any Competitor of the Company on whose behalf he is acting
as an agent, representative or employee and that he will not convey any such
confidential information or trade secrets about other employees of the Company
and its subsidiaries or their affiliates to any other person. Any bulk mailings,
general advertisements or job postings by any entity that employs or engages
Executive during the two (2) year restricted period shall not, without more,
constitute a violation of Executive's obligations under this Section.
(d) REMEDIES. In the event of a breach or threatened breach of this Section
8, the Executive agrees that the Company shall be entitled to apply for
injunctive relief in a court of appropriate jurisdiction to remedy any such
breach or threatened breach, the Executive acknowledging that damages would be
inadequate and insufficient.
(e) SURVIVAL OF PROVISIONS. The obligations contained in Sections 7 and 8
shall survive the termination or expiration of the Executive's employment with
the Company and, as applicable, shall be fully enforceable thereafter in
accordance with the terms of this Agreement. If it is determined by a court of
competent jurisdiction in any state that any restriction in Section 8 is
excessive in duration or scope or is unreasonable or unenforceable under the
laws of that state, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the law of that state.
Section 9. RELOCATION EXPENSES. The Executive shall be entitled to the
relocation benefits described in Schedule 1 hereto.
Section 10. WITHHOLDING. The Company shall make such deductions and
withhold such amounts from each payment made to the Executive hereunder as may
be required from time to time by law, governmental regulation or order.
Section 11. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand, facsimile or
first-class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given upon delivery or three (3) days after
mailing or twenty-four (24) hours after transmission of a facsimile to the
respective persons named below:
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(a) If to the Company:
Avado Brands, Inc.
Xxxxxxx At Washington
Xxxxxxx, XX 00000
Attn: General Counsel
(b) If to the Executive:
Xxxxxxx X. Xxxxxxxx
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000,
Attention: Xxxx X. Xxxxxxx.
Either party may change such party's address for notices by notice duly
given pursuant hereto.
Section 12. DISPUTE RESOLUTION; ATTORNEYS' FEES. The Company and the
Executive agree that any dispute arising as to the parties' rights and
obligations hereunder, other than with respect to Section 8 hereof, shall be
resolved by binding arbitration in accordance with the rules of the American
Arbitration Association for resolution of employment disputes then in effect.
Each party shall have the right, in addition to any other relief granted by such
arbitrator (or by any court with respect to relief granted with respect to
Section 8 hereof), to reasonable attorneys' fees based on a determination by the
arbitrator (or, with respect to Section 8 hereof, the court) of the extent to
which each party has prevailed as to the material issues raised in the dispute.
Section 13. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under and
in accordance with the laws of the State of Georgia, without regard to its
conflicts of law principles.
Section 14. TERMINATION OF PRIOR AGREEMENTS. This Agreement terminates and
supersedes any and all prior agreements and understandings between the parties
with respect to the Executive's employment and compensation by the Company.
Section 15. WAIVER; MODIFICATION. Failure to insist upon strict compliance
with any of the terms, covenants or conditions hereof shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right
or power hereunder at any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times. This Agreement shall not be
modified in any respect except by a writing executed by each party hereto.
Section 16. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its
nature and neither of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger, consolidation, transfer or sale of
all or substantially all of the assets of the Company with or to any other
individual or entity or any similar event, this Agreement shall, subject to the
provisions hereof, be binding upon and inure to the benefit of such successor
and such successor shall discharge and perform all the promises, covenants,
duties and obligations of the Company hereunder.
Section 17. SEVERABILITY. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation of
any statute or public policy, only the portions of this Agreement that violate
such statute or public policy shall be stricken. All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect. Furthermore, any court order striking any portion of this Agreement
shall modify the stricken terms as little as possible to give as much effect as
possible to the intentions of the parties under this Agreement.
Section 18. HEADINGS; INCONSISTENCY. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. In the event of any inconsistency
between the terms of this Agreement and any form, award, plan or policy of the
Company, the terms of this Agreement shall control.
Section 19. COUNTERPARTS. This Agreement may be executed in counterparts
(including counterparts delivered by facsimile), each of which shall be deemed
an original, but all of which taken together shall constitute one and the same
instrument.
Section 20. REPRESENTATION BY COUNSEL; INTERPRETATION. Each party
acknowledges that it has had the opportunity to be represented by counsel in
connection with this Agreement. Any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived.
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Section 21. PAYMENT OF LEGAL FEES. The Company shall reimburse Executive
for legal fees incurred and paid by him in connection with the review,
negotiation, execution and delivery of this Agreement. Such reimbursement not to
exceed $10,000.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has hereunto signed this Agreement
as of the date indicated by the signature below.
AVADO BRANDS, INC.
DATED:
---------------------------- ------------------------------------
Xxxxxx Xxxxxx
Chairman of the Board of Directors
of Avado Brands, Inc.
EXECUTIVE
DATED:
---------------------------- ------------------------------------
Xxxxxxx X. Xxxxxxxx
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Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 8-K, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
