Exhibit 10.20
EMPLOYMENT CONTRACT
This EMPLOYMENT CONTRACT (the "Contract") is made and entered into as
of the __ day of August, 1998, by and between UNIQUE CASUAL RESTAURANTS, INC., a
Delaware corporation, having its principal place of business at One Corporate
Place, 00 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to
as "Employer" or the "Company"), and XXXXXX X. XXXXX whose business address is
at One Corporate Place, 00 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
(hereinafter referred to as "Employee").
WHEREAS, Employer is the parent of two principal wholly owned
subsidiaries (the "Principal Subsidiaries"), Fuddruckers, Inc., a Texas
corporation ("Fuddruckers"), and Champps Entertainment, Inc., a Minnesota
corporation ("Champps") (the term "Employer" to include, as the context
requires, one, some, all or none of the Principal Subsidiaries, as well as any,
all or none of the direct and indirect subsidiaries of the Principal
Subsidiaries (the Principal Subsidiaries and such other subsidiaries
collectively the "Subsidiaries")); and
WHEREAS, Employee is currently employed by Employer in the capacity of
its Acting Chief Executive Officer and Chief Financial Officer; and
WHEREAS, Employee possesses an intimate knowledge of the business and
affairs of Employer, its policies, methods, personnel and problems; and
WHEREAS, the Board of Directors of Employer recognizes that Employee's
contribution to the growth and success of Employer and the Subsidiaries has been
substantial and desires to assure Employer and the Subsidiaries of Employee's
continued employment in an executive capacity and to compensate him therefor;
and
WHEREAS, Employer has entered into a certain definitive agreement
pursuant to which it has agreed to sell Fuddruckers, and Employer recognizes
that Employee's supervision of this project is instrumental to its successful
completion; and
WHEREAS, Employer acknowledges that Employee's previous
responsibilities as Chief Financial Officer will be significantly diminished
after the completion of the sale of Fuddruckers; and
WHEREAS, Employee is desirous of committing himself to serve Employer
and the Subsidiaries on the terms herein provided.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained and the mutual benefits to be gained by the performance thereof, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions hereinafter set
forth.
2. TERM OF EMPLOYMENT. The commencement date ("Commencement Date") of
this Contract shall be August __, 1998. Subject to the provisions for
termination hereinafter provided, the term (the "Initial Term") of this Contract
shall be for a period of one (1) year from the Commencement Date; provided,
however, that the term hereof shall automatically extend (the "Extended Term")
for periods of one (1) year commencing on the first anniversary of the
Commencement Date and on each subsequent anniversary date thereafter, unless
this Contract is terminated in accordance with the terms hereof. The Initial
Term and Extended Term are hereinafter referred to as the "Employment Period".
3. DUTIES OF EMPLOYEE. Employee is hereby employed by Employer as a
full-time employee in the capacity of Acting Chief Executive Officer and Chief
Financial Officer of Employer, and his duties as such shall include, but not be
limited to, those normally performed by a senior executive officer of equal rank
in the restaurant industry. Employee shall comply with all of the policies,
standards, and regulations of Employer now or hereafter promulgated. Employer
shall have the right to assign Employee other managerial duties in addition to
the duties originally assigned and specified above; provided, however, in no
event shall Employee be assigned, without Employee's consent, duties other than
those reasonably required of an Acting Chief Executive Officer and Chief
Financial Officer of a restaurant company. In the event Employee assumes and
performs duties beyond those contemplated hereby to be within the scope of his
employment, and those that he is required to perform hereunder, it is
anticipated his compensation will be equitably adjusted (but in no event
adjusted downward). Employee is employed by Employer on a full-time basis and
Employee shall be required to devote his best efforts and business judgment,
productive time, ability and attention to the business of Employer and the
Subsidiaries during the Employment Period. During the Employment Period,
Employee shall not be engaged in any other business activity whether or not such
business activity is pursued for gain, profit or other pecuniary advantage that
will significantly interfere with his duties as Acting Chief Executive Officer
and Chief Financial Officer of Employer. With prior approval of the Board of
Directors of Employer, Employee may serve on the boards of directors of other
companies.
4. COMPENSATION. For all services rendered by Employee to Employer and
the Subsidiaries under this Contract, Employee shall receive the following
compensation:
(a) As compensation for services rendered under this Contract
for the term commencing as of the date hereof, Employee shall receive an initial
annual base salary of Two Hundred Fifty Thousand Dollars ($250,000) (the "Base
Salary"), payable in periodic installments in accordance with Employer's usual
practice for its senior executives. During the Employment Period, the Base
Salary will be subject to annual review by the Board of Directors of Employer
and if warranted, adjusted upward to reflect external conditions, Employee's
performance, and changing size and nature of Employer's operations.
(b) Annually and from time to time, as additional incentive
compensation from Employer to Employee, Employer, within its sole discretion,
may pay to Employee a bonus or additional compensation in an amount determined
by the Board of Directors of Employer.
5. VACATIONS, FRINGE BENEFITS, REIMBURSEMENT OF BUSINESS EXPENSES.
Employee shall be entitled to a paid vacation of three weeks per year in
accordance with the vacation policy established by Employer. The times for such
vacations shall be mutually agreed upon by Employee and Employer but such
vacation shall not be cumulative from year to year during the Employment Period.
No payment shall be made for unused vacation time, unless otherwise required by
law.
As a full-time employee of Employer, Employee shall be entitled to
participate in such other fringe benefits that are formally adopted by Employer
from time to time for and on behalf of all of its full-time employees. Employee
shall be reimbursed for reasonable travel and other expenses incurred by
Employee in promoting the business of Employer and the Subsidiaries and
performing his obligations hereunder in accordance with the policy adopted by
the Employer.
6. TRADE SECRETS. During the Employment Period, Employee will have
access to and become familiar with Employer's trade secrets, recipes, business
concepts, marketing and related records and specifications, which are owned by
Employer and which are regularly used in the operation of the business of
Employer and the Subsidiaries (collectively, "Confidential Information").
Employee hereby agrees he shall not disclose any Confidential Information,
directly or indirectly, nor use it in any way, either during the Employment
Period or at any time thereafter, except as required in the course of his
employment with Employer and the Subsidiaries. All files, records, documents,
drawings, specifications, equipment and other similar items relating to the
business of Employer and the Subsidiaries shall remain the sole and exclusive
property of Employer and the Subsidiaries and shall not be removed from the
premises of Employer under any circumstances whatsoever without the prior
written consent of Employer and shall not be reproduced or copied.
7. TERMINATION OF CONTRACT BY EMPLOYER.
(a) Termination for Cause. This Contract may be terminated by
Employer at any time for Cause, as hereinafter defined. For the purposes hereof,
the term "Cause" shall include: (1) Employee's theft from or fraud upon
Employer; (2) Employee's conviction of a felony; (3) Employee's willful
violation of terms and conditions hereof; (4) Employee's willful disregard or
neglect in the duties he is required to perform under the terms hereof; or (5)
Employee's willful and demonstrated unwillingness to prosecute and perform such
duties to the extent deemed reasonably necessary and advisable, which duties
encompass the duties reasonably required of a Acting Chief Executive Officer and
Chief Financial Officer of a restaurant company. For purposes of clauses (3),
(4) and (5) above, no act, or failure to act, on the Employee's part shall be
deemed "willful" unless done, or omitted to be done, by Employee without
reasonable belief that his act, or failure to act, was in the best interest of
Employer. Notwithstanding anything in this Agreement to the contrary, Employee
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
Board of Directors at a meeting of the Board of Directors called and held for
such purpose (after reasonable notice to Employee and an opportunity for him,
together with his counsel, to be heard before the Board of Directors), finding
that, in the good faith opinion of the Board of Directors, Employee was guilty
of the conduct enumerated in any of clauses (1) through (5) above under the
definition of Cause and specifying the particulars thereof in detail. Upon such
Cause, Employer may, at its option, terminate this Contract by giving written
notice (a "Notice of Termination") to Employee, which termination is without
prejudice to any other remedy to which Employer may be entitled, and such
termination shall be effective as of the date said written notice is received by
Employee.
(b) Termination Without Cause. In the event Employer shall
terminate this Contract without Cause, as hereinabove defined, by Notice of
Termination to Employee, all obligations of Employee hereunder shall terminate
upon receipt of such Notice of Termination. Nothing in this Contract shall be
construed as giving Employee the right to be retained as an employee of Employer
or as impairing the rights of Employer to terminate Employee's services.
8. TERMINATION OF CONTRACT BY EMPLOYEE. Employee may terminate his
employment hereunder (1) for Good Reason, or (2) at any time by giving Notice of
Termination to Employer at least forty-five (45) days prior to the effectiveness
of such termination. For purposes of this Contract, "Good Reason" shall mean (a)
any assignment to Employee of any duties other than those contemplated by, or
any limitation of the powers of Employee in any respect not contemplated by,
this Contract, (b) any removal of Employee from or any failure to elect or
re-elect Employee to the position of Acting Chief Executive Officer or Chief
Executive Officer of Employer, except in connection with termination of
Employee's employment for Cause, or (c) a reduction in Employee's rate of
compensation or a reduction in Employee's fringe benefits; provided, however,
that Employer shall have at least thirty (30) days to remedy the existence of
any Good Reason for termination by Employee of which it is made aware, whether
in a Notice of Termination or otherwise; and provided, further, that in the
event of a Change of Control described in clause (3)(A) or (3)(B) of the
definition thereof below relating to Champps, "Good Reason" shall not be deemed
to have arisen upon and solely by reason of such Change of Control if both (i)
the surviving or resulting entity in the merger or consolidation or the
purchaser ("Acquiror") assumes in full this Contract with the same effect as if
Acquiror were the Employer hereunder and (ii) Employee chooses to accept
employment with Acquiror and such employment is on terms and conditions
(including duties and responsibilities, position, compensation and fringe
benefits) equivalent in all material respects to those provided hereunder (it
being understood and agreed that after such Change of Control any of the actions
described in clauses (a), (b) or (c) above by Acquiror shall give rise to "Good
Reason").
9. COMPENSATION UPON TERMINATION.
(a) Termination by Employer for Cause or By Employee without
Good Reason. If Employee's employment shall be terminated by Employer for Cause
or termination by Employee without Good Reason, Employer shall pay Employee that
portion of his Base Salary which accrued through the date of termination at the
rate in effect at the time Notice of Termination is given and Employer shall
have no further obligations to Employee under this Contract.
(b) Termination by Employer Without Cause or by Employee with
Good Reason. If Employer shall terminate Employee's employment without Cause or
Employee shall terminate his employment for Good Reason, then: (i) Employer
shall pay Employee that portion of his Base Salary which accrued through the
date of termination at the rate in effect at the time Notice of Termination is
given; (ii) in lieu of any further salary payments to Employee for periods
subsequent to the date of termination, Employer shall pay as liquidated damages
to Employee an amount equal to two (2) times the annual Base Salary in effect at
the time Notice of Termination is given, to be paid in the normal pay periods of
the Company over the two-year period following the date of termination;
provided, however, that if termination occurs within twelve months after a
Change in Control (as defined below), Employer shall pay as liquidated damages
to Employee an amount equal to two (2) times the "base amount" (as such term is
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code")) applicable to Employee, less One Dollar ($1.00), to be paid a lump
sum within ten days of such termination; and provided, further, that if
termination occurs within twelve months after a Change of Control described in
clause (3)(A) or (3)(B) of the definition thereof below relating to Champps in
connection with which Employee is offered and chooses to accept employment with
an Acquiror, the liquidated damages payable to Employee shall be reduced by the
amount of any "sign-on" bonus or similar one-time payment made by Acquiror to
Employee in connection with the acceptance of such employment; and (iii)
Employer shall make the following changes with respect to all outstanding
unexercised stock options held by Employee: (x) the date of vesting and
exercisability of all unexercised and unexpired stock options or other stock
based incentive awards shall be accelerated to the date of termination, (y) the
period during which all unexercised and unexpired options which are not
incentive stock options as defined in Section 422 of the Code ("NQSO") may be
exercised by Employee shall be extended until the expiration date of such
options and (z) if Employee so elects in writing within 90 days after the date
of termination, all unexercised and unexpired options which are incentive stock
options ("ISO") as defined in Section 422 of the Code shall be converted into
NQSO and shall thereby become eligible for the benefit described in clause (y)
above as if they had been NQSO as of the date of termination.
A "Change in Control" shall be deemed to have occurred in any one of
the following events: (1) any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Act") (other than the
Company, any of its Subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or trust of Employer),
together with all "affiliates" and "associates" (as such terms are defined in
Rule 12b-2 under the Act) of such person, shall become the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the Company representing 50% or more of either (A) the combined
voting power of the Company's then outstanding securities having the right to
vote in an election of the Company's Board of Directors ("Voting Securities") or
(B) the then outstanding shares of capital stock of the Company ("Stock") (in
either such case other than as a result of an acquisition of securities directly
from the Company or by the Company); or (2) persons who, as of the date hereof,
constitute the Company's Board of Directors (the "Incumbent Directors") cease
for any reason, including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at least a majority
of the Board, provided that any person becoming a director of the Company
subsequent to the date hereof whose election or nomination for election was
approved by a vote of at least a majority of the Incumbent Directors shall, for
purposes of this Agreement, be considered an Incumbent Director; or (3) the
stockholder(s) of either the Company or Champps shall approve (A) any
consolidation or merger of either the Company or Champps where the
shareholder(s) of the Company or Champps, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, shares representing in the aggregate 80% or more of the voting
shares of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of either the Company or Champps or (C) any plan or proposal
for the liquidation or dissolution of either the Company or Champps.
It is the intention of Employee and Employer that no payments by
Employer to or for the benefit of Employee under this Agreement shall be
non-deductible to Employer by reason of the operation of Section 280G of the
Code relating to parachute payments. Accordingly, and notwithstanding any other
provision of this Agreement, if by reason of the operation of said Section 280G,
any such payments exceed the amount which can be deducted by Employer, such
payments shall be reduced to the maximum amount which can be deducted by
Employer. To the extent that there is more than one method of reducing the
payments (including by way of elimination or reduction of the changes to
Employee's options described in clause (iii) above) to bring them within the
limitations of said Section 280G, Employee shall determine which method shall be
followed, provided that if Employee fails to make such determination within
forty-five (45) days after Employer has sent Employee written notice of the need
for such reduction, Employer may determine the method of such reduction in its
sole discretion.
10. NO MITIGATION. Employer agrees that, if Employee's employment by
Employer is terminated during the term of this Agreement, Employee is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to Employee by Employer pursuant to Section 9 hereof. Further, the
amount of any payment provided for in this Agreement shall not be reduced by any
compensation earned by Employee as the result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be owed by
Employee to Employer or otherwise.
11. SETTLEMENT AND ARBITRATION OF DISPUTES. Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of The
Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by Employer, one by Employee and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in the City of Boston. Such arbitration shall be
conducted in the City of Boston in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with respect to the
selection of arbitrators which shall be as provided in this Section 13. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
12. NON-COMPETITION AGREEMENT. During the Employment Period, and unless
Employee's employment is terminated by Employee for Good Reason or by Employer
without Cause, for a period of one (1) year after the termination of his service
to Employer and the Subsidiaries, Employee covenants and agrees not to directly
or indirectly (a) engage or be interested in any business as owner, officer,
director, employee, consultant or otherwise which during the Employment Period
is in competition with the business of Employer or any of the Subsidiaries or
which following the Employment Period is in competition with such business as
conducted on the last day of the Employment Period, or (b) solicit or endeavor
to entice away, offer employment to or employ, or offer or conclude any contract
for personal services with, any person who during the preceding six months was
an employee of Employer. However, the restrictions in clause (a) shall not
prevent Employee from owning or dealing in securities of any corporation or
other entity which are traded on any national securities exchange or in the
over-the-counter market, and the restrictions in clause (b) prohibiting the
employment of any person who during the preceding six months was an employee of
Employer shall not apply with respect to Employee who, without otherwise
breaching clause (b) (by soliciting or enticing away a former employee), hires a
former employee who has voluntarily left the employ of Employer or who has been
terminated involuntarily by Employer.
13. INJUNCTIVE RELIEF. Employee irrevocably acknowledges that any
violation of this Contract will cause Employer immediate and irreparable harm
and that the damage that Employer will suffer may be difficult or impossible to
measure. Therefore, upon any actual or impending violation of this Contract,
Employer shall be entitled to the issuance of a restraining order, preliminary
or permanent injunction, without bond, restraining or enjoining such violation
by Employee or any entity or person acting in concert with Employee. Such remedy
shall be additional to and not in limitation of any other remedy which may
otherwise be available to Employer.
14. RELATIONSHIP OF THE PARTIES. The parties acknowledge, agree and
recognize that the Board of Directors of Employer shall manage the business
affairs of Employer and that the relationship of Employer and Employee is that
of employer and employee and any other relationship is hereby expressly
disclaimed.
15. ASSIGNMENT; OBLIGATIONS OF SUCCESSOR. Neither Employer nor Employee
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon
Employer and Employee, their respective successors, executors, administrators,
heirs and permitted assigns. In the event of Employee's death after termination
of employment but prior to the completion by Employer of all payments due
Employee hereunder, Employer shall continue such payments to Employee's
beneficiary designated in writing to Employer prior to his death (or to his
estate, if Employee fails to make such designation). In addition to any
obligations imposed by law upon any successor to Employer, Employer will use its
best efforts to require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform if no such succession had taken place.
16. NOTICES. Any notice to be given hereunder by either party to the
other must be in writing and may be effective either by personal delivery or by
certified mail, postage prepaid with return receipt requested. Mailed notices
shall be addressed to the parties at the addresses appearing in the introductory
paragraph. Notices delivered personally shall be deemed communicated as of the
actual receipt thereof; mailed notices shall be deemed communicated and received
three (3) days after the mailing of same.
17. INVALID PROVISIONS. The invalidity or unenforceability of a
particular provision of this Contract shall not affect the enforceability of any
other provisions hereof and this Contract shall be construed in all respects as
if such invalid or unenforceable provisions were omitted.
18. AMENDMENTS TO THE CONTRACT. This Contract may only be amended in
writing by an agreement executed by both parties hereto.
19. LAW GOVERNING CONTRACT. This Contract is made and performable in
The Commonwealth of Massachusetts, and shall be construed under the laws of The
Commonwealth of Massachusetts.
20. INDEMNITY. Employer shall indemnify Employee and hold him harmless
for any acts or decisions made by him in good faith while performing services
for Employer as a director, employee and/or agent of Employer and, in addition
thereto, shall use its best efforts to obtain insurance coverage for him under
any insurance policy now in force or hereinafter obtained during the Employment
Period covering the officers and directors of Employer against lawsuits as
director, employee and/or agent of Employer. Employer will pay all expenses,
including attorney's fees, actually and necessarily incurred by Employer in
connection with the defense of any action, suit or proceeding, and in connection
with any appeal thereon, including the costs of an out-of-court settlement
previously approved by Employer, with respect to any acts or decisions which
Employee shall have performed or made in good faith in performing services for
Employer; provided, however, that Employer's obligations under the terms of this
paragraph are subject to any limitations imposed by Employer's Certificate of
Incorporation and By-Laws and applicable state law.
21. CONSTRUCTION. Waiver by any party hereto of a breach of any
provision of this Contract shall not operate or be construed as a waiver of any
subsequent breach of any party. This Contract shall not be assignable except as
provided in Paragraph 15 above. Subject to the prohibition against assignment of
this Contract, the terms and conditions herein shall inure to the benefit of and
be binding upon the Parties hereto, their successor, heirs and legal
representatives.
22. LITIGATION AND REGULATORY COOPERATION. During and after Employee's
employment, Employee shall reasonably cooperate with Employer in the defense or
prosecution of any claims or actions now in existence or which may be brought in
the future against or on behalf of Employer which relate to events or
occurrences that transpired while Employee is or was employed by Employer.
Employee's reasonable cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of Employer at
mutually convenient times. During and after Employee's employment, Employee also
shall reasonably cooperate with Employer in connection with any investigation or
review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
Employee was employed by Employer. The Company shall, at the request of
Employee, pay in advance any out-of-pocket expenses that Employee would
otherwise be required to incur in connection with Employee's performance of its
obligations pursuant to this clause, and shall reimburse Employee for any
reasonable out-of-pocket expenses incurred by Employee that were not so paid in
advance by Employer.
23. ENTIRE AGREEMENT. This Contract will be effective as of August __,
1998, and upon such effectiveness will contain the entire agreement of the
parties hereto and supersede any and all prior agreements, oral or written, and
negotiations between said parties regarding the subject matter herein contained.
IN WITNESS WHEREOF, the parties have executed this Contract this day
and year first above written.
EMPLOYER EMPLOYEE
UNIQUE CASUAL RESTAURANTS, INC.
By:
------------------------ ------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Vice President and General Counsel
