EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of November 10,
1997 (the "Effective Date"), by and among RALLY'S HAMBURGERS, INC., a Kentucky
corporation ("Rally's"), CHECKERS DRIVE-IN RESTAURANTS, INC., a Florida
corporation ("Checkers"), and XXX XXXXXXXXX, an individual (the "Executive").
Rally's and Checkers are sometimes referred to herein singularly as a "Company"
and collectively as the "Companies." In consideration of the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
l. Employment and Duties. Subject to the terms and conditions of this
Agreement, the Companies each employ the Executive to serve in an executive and
managerial capacity as their Chief Executive Officer, and the Executive accepts
such employment and agrees to perform such reasonable responsibilities and
duties commensurate with the aforesaid positions, as directed by the Boards of
Directors of the Companies or as set forth in the Articles of Incorporation
and/or the Bylaws of the Companies, for all locations in which the Companies
have offices. In addition, the Boards of Directors of each Company, or any
appropriate committee of such Board, shall recommend to the shareholders of such
Company that Executive be elected to serve as a director on the Board of such
Company for each year during the Term (as defined below).
2. Term. The term of employment under this Agreement shall be for a
period of two (2) years (the "Term") commencing on the Effective Date, subject
to termination pursuant to Section 4, below. This Agreement shall automatically
be renewed each year for an additional one (1) year term unless the Companies
notify the Executive that they are terminating this Agreement prior to November
10th of such year.
3. Compensation.
3.1 Annual Salary. During the Term of this Agreement, the
Companies shall pay Executive an aggregate minimum base annual salary, before
deducting all applicable withholdings, of Two Hundred Eighty-Two Thousand Five
Hundred Dollars ($282,500) per year (the "Base Salary"), payable at the times
and in the manner dictated by the Companies' standard payroll policies. The
Boards of Directors of Checkers and Rally's shall determine how the Base Salary
under this Section 3.1 and the Incentive Bonus earned by the Executive under
3.2(a), below shall be allocated between the Companies.
3.2. Other Compensation and Benefits. During the Term, as
additional compensation, the Executive shall be entitled to participate in and
receive the following:
(a) Incentive Bonus. The Executive shall be entitled
to participate in the Companies' Incentive Bonus Plan, pursuant to which the
Executive shall be entitled to earn up to a maximum of fifty percent (50%) of
his Base Salary (the "Incentive Bonus"). The Incentive Bonus will be based on
certain performance criteria determined in good faith by the Companies'
respective Boards of Directors. The Incentive Bonus shall be pro-rated for any
partial employment period.
Any Incentive Bonus due for a given year of the term shall be paid no later than
April 15th of the following year.
(b) Benefits. Executive shall be entitled to choose
to participate in and receive all benefits under either (i) Rally's or (ii)
Checker's employee benefit plans or programs (including, without limitation,
medical, dental, disability, and group life), any retirement savings plans or
programs (including, without limitation, employee stock purchase plans), and
such other perquisites of office as Rally's or Checkers may, from time to time
and in their sole discretion, make available generally to employees of similar
rank as Executive, subject to such eligibility provisions as may be in effect
from time to time.
(c) Stock Options. Rally's hereby grants to Executive
options to purchase 300,000 shares of Rally's Common Stock, in accordance with
and pursuant to the terms of Rally's Stock Option Plan (the "Plan"). The
exercise price for such options shall be the closing price on the Effective Date
of Rally's Common Stock publicly traded on NASDAQ, as stated in the Wall Street
Journal. The above described options shall vest and become exercisable in three
(3) equal installments of 100,000 shares each on each of the first three (3)
anniversaries of the Effective Date. Notwithstanding the above, if the Term is
not extended for an addition one (1) year pursuant to Section 2, above, then
200,000 shares of options shall vest and become exercisable on the second
anniversary of the Effective Date.
(d) Moving Expenses/Monthly Stipend. Rally's and/or
Checkers, as the Companies so determine, shall pay all of Executive's reasonable
moving expenses from Dallas, Texas to the location at which Executive shall
initially perform his primary duties hereunder or any subsequent relocation of
Executive required by the Companies. In addition, in order to assist Executive
with such transition expenses, Rally's and/or Checkers, as the Companies so
determine, shall pay Executive the sum of One Thousand Dollars ($1,000) per
month commencing on the Effective Date and continuing for the five (5)
consecutive months thereafter.
(e) Commencement Bonus. On the Effective Date,
Rally's and/or Checkers, as the Companies so determine, shall pay Executive a
one time commencement bonus of Fifty Thousand Dollars ($50,000).
The Companies shall deduct from all compensation payable under this
Agreement to Executive any taxes or withholdings the Companies are required to
deduct pursuant to state and federal laws or by mutual agreement among the
parties.
3.3. Vacation. Executive will be entitled to paid vacation
time in accordance with the Companies' personnel policies and procedures made
available to the Companies' executive employees of similar rank, as the same may
change from time to time, or as otherwise determined
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by the respective Boards of Directors of the Companies. In addition, Executive
shall be entitled to such holidays consistent with the Companies' standard
policies or as the Companies' respective Boards of Directors may approve.
3.4 Expense Reimbursement. In addition to the compensation and
benefits provided herein, the Companies shall, upon receipt and approval of
appropriate documentation, reimburse Executive each month for his reasonable
travel, lodging, entertainment, promotion and other ordinary and necessary
business expenses. The arrangement set forth in this Section 3.4 is intended to
constitute an accountable plan within the meaning of Section 162 of the Internal
Revenue Code, as amended (the "Code") and the accompanying regulations, and the
Executive agrees to comply with all reasonable guidelines established by the
Companies from time to time to meet the requirements of Section 162 of the Code
and the accompanying regulations.
4. Termination.
4.1 For Cause. Notwithstanding any other provisions to the
contrary contained herein, the Companies may terminate this Agreement
immediately for cause upon written notice to the Executive, in which event the
Companies shall be obligated to pay the Executive that portion of the Base
Salary and the Incentive Bonus, if any, due him through the date of termination.
For purposes of this Agreement, "cause" shall mean: (a) material default or
other material breach by Executive of Executive's obligations hereunder; (b) the
willful and habitual failure by Executive to perform the duties that Executive
is required to perform under this Agreement or the Companies' corporate
policies, provided such corporate policies have previously been delivered to
Executive; or (c) misconduct, dishonesty, insubordination, or other act by
Executive that in any way has a direct, substantial and adverse effect on either
Company's reputation or their respective relationships with their customers or
employees, including, without limitation, (i) use of alcohol or illegal drugs
such as to interfere with the Executive's obligations hereunder, (ii) conviction
of a felony or of any crime involving moral turpitude or theft, and (iii)
material failure by Executive to comply with applicable laws or governmental
regulations pertaining to Executive's employment hereunder.
4.2 Without Cause. Notwithstanding any other provisions to the
contrary contained herein, the Companies, on the one hand, and the executive, on
the other hand, may terminate this Agreement immediately without cause by giving
written notice to the other. If the Companies terminate this Agreement under
this Section 4.2, it shall continue to pay to the Executive (i) the Base Salary
and (ii) the Incentive Bonus earned by the Executive in the prior year, for the
unexpired Term of this Agreement. The amount payable to Executive hereunder
shall be paid to the Executive in lump sum or as otherwise directed by the
Executive. If the Executive terminates this Agreement under this Section 4.2,
the Companies shall only be obligated to pay to the Executive the Base Salary
due him through the date of termination.
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4.3 Disability. Notwithstanding any other provisions to the
contrary contained herein, if the Executive fails to perform his duties
hereunder on account of illness or other incapacity for a period of six (6)
consecutive months, the Companies shall have the right upon written notice to
the Executive to terminate this Agreement, without further obligation, by paying
Executive the Base Salary without offset for the remainder of the Term of this
Agreement in a lump sum or as otherwise directed by Executive.
4.4 Death. Notwithstanding any other provisions to the
contrary contained herein, if the Executive dies during the Term of this
Agreement, this Agreement shall terminate immediately, and the Executive's legal
representatives or designated beneficiary shall be entitled to receive the Base
Salary to the date of Executive's death in a lump sum or as otherwise directed
by Executive's legal representatives or designated beneficiary, whichever the
case may be.
4.5 Termination by Companies Following Change of Control. In
the event of a Change of Control (as defined below) of either Company, the
Companies shall require any Successor (as defined below) to assume and agree to
perform this Agreement in the same manner and to the same extent that such
Company would be required to perform if the Change of Control had not occurred.
Upon the assumption of this Agreement by the Successor, and its agreement to
perform the duties and obligations of such Company hereunder, that Company shall
be released from any further liability under this Agreement. As used herein, a
"Change of Control" of either Company shall mean the acquisition by a
"Successor," whether directly or indirectly, by purchase, merger, consolidation
or otherwise, of all or substantially all of the common stock, business and/or
assets of such Company; provided, however, that a Change of Control shall not be
deemed to have occurred as a result of an increased ownership interest in either
Company by Xxxx Xxxxxxx Enterprises, Inc. or Fidelity National Financial, Inc.,
or any of their respective affiliates, or a transfer of any such ownership
interests by any such entity to any of its affiliates.
4.6 Effect of Termination. Termination for any cause shall not
constitute a waiver of the Companies' rights under this Agreement as specified
in Section 6 nor a release of Executive from any obligation hereunder except his
obligation to perform his day-to-day duties as an Executive.
5. Non-Delegation of Executive's Rights. The obligations, rights and
benefits of Executive hereunder are personal and may not be assigned or
transferred in any manner whatsoever, nor are such obligations, rights or
benefits subject to involuntary alienation, assignment or transfer.
6. Covenants of Executive.
6.1 Confidentiality. Executive acknowledges that in his
capacity as an Executive of each Company he will occupy a position of trust and
confidence, and he further acknowledges that
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he will have access to and learn substantial information about each Company and
its respective operations that is confidential or not generally known in the
industry including, without limitation, information that relates to purchasing,
sales, customers, marketing, such Company's financial position and financing
arrangements. Executive agrees that all such information is proprietary or
confidential or constitutes trade secrets and is the sole property of such
Company. Accordingly, during the Executive's employment by each Company and for
a period of two (2) years thereafter, Executive will keep confidential, and will
not without such Company's permission reproduce, copy or disclose to any other
person or firm, any such information or any documents or information relating to
such Company's methods, processes, customers, accounts, analyses, systems,
charts, programs, procedures, correspondence, or records, or any other documents
used or owned by such Company, nor will Executive advise, discuss with or in any
way assist any other person or firm in obtaining or learning about any of the
items described in this section, either alone or with others, outside the scope
of his duties and responsibilities with such Company unless otherwise required
by law or court ordered subpoena.
6.2 Competitive Activities During Employment Executive agrees
that during his employment by the Companies, he will devote substantially all
his business time and effort to and give undivided loyalty to the Companies.
Executive will not, during his employment by the Companies, engage in any way
whatsoever, directly or indirectly, in any business that is competitive with
either Company, nor solicit, or in any other manner work for or assist any
business which is competitive with either Company. During his employment by the
Companies, Executive will undertake no planning for or organization of any
business activity competitive with the work he performs as an executive of
either Company, and Executive will not, during his employment by the Companies,
combine or conspire with any other employee of either Company or any other
person for the purpose of organizing any such competitive business activity.
6.3 Remedy for Breach. Executive acknowledges that the
Companies will be irrevocably damaged if all of the provisions of this Section 6
are not specifically enforced. Accordingly, the Executive agrees that, in
addition to any other relief to which the Companies may be entitled, the
Companies will be entitled to seek and obtain injunctive relief from a court of
competent jurisdiction for the purpose of restraining the Executive from any
actual or threatened breach of this Section 6. The Executive's obligations under
this Section 6 shall survive the Executive's termination of employment with the
Companies for the periods of time specified in this Section 6.
7. Return of Documents. Upon termination of this Agreement, Executive
shall return immediately to the appropriate Company all records and documents of
or pertaining to such Company and shall not make or retain any copy or extract
of any such record or document.
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8. Improvements and Inventions. Any and all improvements or inventions
which Executive may conceive, make or participate in during the period of his
employment shall be the sole and exclusive property of the Companies. Executive
will, whenever requested by either Company during the period of his employment,
execute and deliver any and all documents which such Company shall deem
appropriate in order to apply for and obtain patents for improvements or
inventions or in order to assign and convey to such Company the sole and
exclusive right, title and interest in and to such improvements, inventions,
patents or applications.
9. Miscellaneous.
9.1 Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to Executive's employment
with the Companies and supersedes any and all prior or contemporaneous
agreements or understandings, whether oral or written, relating to the such
employment. This Agreement may be amended, modified, supplemented, or changed
only by a written document signed by all parties to this Agreement.
9.2 Governing Law and Venue. Any dispute arising exclusively
from the relationship between Rally's and the Executive under this Agreement
shall be governed by Kentucky law, and venue for any such dispute shall be in
Clay County, Kentucky. Any dispute arising exclusively from the relationship
between Checkers and the Executive under this Agreement shall be governed by
Florida law, and venue for any such dispute shall be in Pinellas County,
Florida. Any dispute under this Agreement involving both Companies and the
Executive shall be governed either by Kentucky law or Florida law, and venue for
any such dispute shall be either in Clay County, Kentucky or Pinellas County,
Florida.
9.3 Attorneys' Fees. In any litigation, arbitration, or other
proceeding by which one party either seeks to enforce its rights under this
Agreement (whether in contract, tort, or both) or seeks a declaration of any
rights or obligations under this Agreement, the prevailing party shall be
entitled to recover from the non-prevailing party reasonable attorney fees,
together with any costs and expenses, to resolve the dispute and to enforce the
final judgment.
9.4 Severability. If any section, subsection or provision
hereof is found for any reason whatsoever to be invalid or inoperative, that
section, subsection or provision shall be deemed severable and shall not affect
the force and validity of any other provision of this Agreement. If any covenant
herein is determined by a court to be overly broad thereby making the covenant
unenforceable, the parties agree and it is their desire that such court shall
substitute a reasonable judicially enforceable limitation in place of the
offensive part of the covenant and
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that as so modified the covenant shall be as fully enforceable as if set forth
herein by the parties themselves in the modified form. The covenants of each
Company and the Executive in this Agreement shall each be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Executive against either
Company or of either Company against the Executive, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Companies or the Executive of the covenants in this Agreement.
9.5 Notices. Any notice, request, or instruction to be given
hereunder shall be in writing and shall be deemed given when personally
delivered or three (3) days after being sent by United States certified mail,
postage prepaid, with return receipt requested, to the parties at their
respective addresses set forth below:
To Rally's:
Rally's Hamburgers, Inc.
00000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, XX
To Checkers:
Checkers Drive-In Restaurants, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, XX
To Executive:
Xxx Xxxxxxxxx
000 Xxxx Xxxxx Xxxxx
Xxxxxx Xxxx, Xxxxx 00000
9.6 Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
9.7 Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their permitted assigns. Neither this
Agreement nor any of the rights of the parties hereunder may be transferred or
assigned by either party, except that if there is a Change
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of Control of a Company and the Successor assumes, either expressly or by
operation of law, such Company's obligations under this Agreement, then such
Company shall assign its rights and obligations hereunder to such Successor
subject to the terms of Section 4.5 of this Agreement. Any assignment or
transfer in violation of this Section 9.7 shall be void.
9.8 Captions and Headings. The captions and headings are for
convenience of reference only and shall not be used to construe the terms or
meaning of any provisions of this Agreement.
9.9 Potential Conflicts of Interests. In the event that the
assumption by Executive of the duties of Chief Executive Officer of both
Companies creates a conflict of interest, the Companies shall indemnify, defend
and hold harmless Executive from and against any and all claims, losses,
damages, causes of action or other proceedings, and any and all other
liabilities of any nature whatsoever, which arise out of or relate to such
alleged conflict. Nothing contained in this Section 9.9 shall be deemed to be an
admission by the Companies that such a conflict exists, and notwithstanding the
Companies agreement to abide by the terms of this Section 9.9, the Companies
expressly disclaim that such a conflict exists.
IN WITNESS WHEREOF the parties have executed this Employment
Agreement as of the date set forth above.
RALLY'S:
RALLY'S HAMBURGERS, INC., a
Kentucky corporation
By: /s/ Xxxxxxx X. Xxxxx XX
-----------------------------
Its: Chairman of the Board
CHECKERS:
CHECKERS DRIVE-IN RESTAURANTS,
INC., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxx XX
-----------------------------
Its: Chairman of the Board
EXECUTIVE:
/s/ Xxx Xxxxxxxxx
-----------------------------
Xxx Xxxxxxxxx
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