EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day
of January, 2001, between PHOENIX RESTAURANT GROUP, INC., a Georgia
corporation, whose principal place of business is located at 0000 Xxxxx
Xxxxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxxxxx, Xxxxxxx 00000 (the "Employer"), and
XXXXXX X. XXXXXXXX, a resident of Xxxxxx County, Tennessee, whose address is
000 Xxxx Xxxxxx Xxxx, Xxxxxxxxxxxxxx, Xxxxxxxxx, 00000 (the "Employee").
1. TERM OF EMPLOYMENT.
1.1 Employment. Employer hereby employs Employee, and Employee
hereby accepts employment with Employer for the Employment Term (as
hereinafter defined). Notwithstanding anything to the contrary in
this Agreement and subject to the other provisions of this Agreement,
Employee's employment is at the will of Employer.
1.2 Employment Term. The term of this Agreement and the Employment
Term shall be three years, commencing on January 1, 2001, and
terminating on December 31, 2003, unless extended or sooner
terminated as herein provided.
1.3 Annual Extension. On January 1 of each year beginning January
1, 2002 (each such date an "Anniversary Date"), unless either party
to this Agreement has notified the other in writing not less than
five (5) business days prior to such Anniversary Date of that party's
intention to allow this Agreement to expire and not be renewed at the
end of the then current Employment Term, the Employment Term shall
automatically be extended for one (1) calendar year on each
Anniversary Date
14. Change in Control.
1.4.1 Extension Because of Change in Control. In the event of a
Change in Control (as hereinafter defined), the Employment Term shall
automatically be extended so that the Employment Term then ends three
(3) calendar years from the date of the Change in Control. For
purposes of this Agreement, a "Change in Control" of Employer shall
mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); provided, however, that, without limitation,
such a Change in Control shall be deemed to have occurred if (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Employer representing 50% or more of the combined
voting power of Employer's then-outstanding voting securities
(provided, however, that conversion of the Debenture issued by the
Employer's predecessor and dated September 30, 1997, in the amount
of Four Million Four Hundred Thousand Dollars ($4,400,000.00) and
made payable to CNL Growth Corp., as Agent therein, shall not be
deemed a Change
in Control for purposes of this instrument), (b) all or substantially
all of the assets of the Employer are sold, exchanged or otherwise
transferred (other than to secure debt owed by Employer); (c) the
Employer's shareholders approve a plan of liquidation or dissolution;
or (d) during the Employment Term, individuals who at the beginning
of the Employment Term constitute members of the Board of Directors
of Employer cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by Employer's
shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors
at the beginning of the Employment Term.
1.4.2 Potential Change in Control. In the event of a Potential
Change in Control (as hereinafter defined), Employee agrees to remain
employed by Employer from the time period beginning with the
Potential Change in Control and continuing through the earlier of two
(2) months after a Change in Control occurs (as defined in Section
1.4.1) or the one-year anniversary of the commencement of the
Potential Change in Control period. If Employee chooses to terminate
his employment after a Change in Control occurs, the provisions set
forth at Section 4.2.1 of this Agreement control such action. For
purposes of this Agreement, a "Potential Change in Control" shall
occur upon the execution of any agreement or memorandum of
understanding, the completion of which would result in a "Change in
Control" as defined in Section 1.4.1 of this Agreement or the
commencement of a proxy contest or a tender offer that has the
potential of causing a "Change in Control" as defined in Section
1.4.1 of this Agreement.
2. DUTIES OF EMPLOYEE.
2.1 General Duties. Employee is hereby employed as Chairman of the
Board and Chief Executive Officer of Employer with such duties and
responsibilities as Employer's Board of Directors shall designate.
He shall do and perform all services, acts, or things necessary or
advisable to manage and conduct the business of Employer, subject
always to the policies set forth by Employer's Board of Directors,
in accordance with any and all governing rules and regulations of
regulatory agencies.
2.2 Devotion of Entire Time to Employer's Business. Employee will
devote his entire productive time, ability, and attention during
normal business hours to the business of Employer during the
Employment Term; provided, however, that it is acknowledged and
understood that the foregoing shall not require Employee to relocate
from his home in the Nashville, Tennessee area. Employee shall not,
directly or indirectly, render any services of a business,
commercial, or professional nature to any other person or
organization, whether for compensation or otherwise, without the
prior written consent of Employer's Board of Directors; provided,
however, that the foregoing shall not preclude reasonable
participation as a member in community, civic, or similar
organizations, or the pursuit of personal investments that neither
interfere nor conflict with his normal business activities for
Employer.
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2.3 Disclosure of Information. Employee recognizes and acknowledges
that, as a result of this employment by Employer, he will become
familiar with and acquire knowledge of confidential information and
certain trade secrets that are valuable, special, and unique assets
of Employer. Employee agrees that any such confidential information
and trade secrets are the property of Employer. Therefore, Employee
agrees that, for and during the entire Employment Term, any such
confidential information and trade secrets shall be considered to be
proprietary to Employer and kept as the private records of Employer
and will not be divulged to any firm, individual, or institution
except pursuant to and within the course and scope of Employee's
employment hereunder. Further, upon termination of this Agreement
for any reason whatsoever, Employee agrees that he will continue to
treat as private and proprietary to Employer any such confidential
information and trade secrets to any person, firm or institution, and
will not use such information to the detriment of Employer. The
parties agree that nothing in this Agreement shall be construed as
prohibiting Employer from pursuing any remedies available to it for
any breach or threatened breach of this Section 2.3, including,
without limitation, the recovery of damages from Employee or any
person or entity acting in concert with Employee.
3. COMPENSATION OF EMPLOYEE.
3.1 Salary. As compensation for his services hereunder, Employee
shall receive a base salary (the "Base Salary") per annum of
$275,000, which shall be payable in accordance with the general
payroll practices of Employer. Increases in the Base Salary may be
made in the sole discretion of Employer's Board of Directors.
3.2 Bonuses. Employee shall be eligible for an annual bonus as
established by the Board of Directors through the annual bonus plan.
3.3 Other Benefit Programs. Employee shall be entitled to
participate in all employee benefit, bonus and similar programs,
including, without limitation, programs of insurance, deferred
compensation arrangements, and all other benefits made available by
Employer to management. During the Employment Term, so long as any
additional benefit is made available to management by Employer, such
benefit shall be provided to Employee. By way of explanation, and not
by way of limitation, Employee shall be entitled to additional
compensation for the use of an automobile of make, model, and year
of manufacture commensurate with the position of Employee.
3.4 Vacation. Employee shall be entitled annually to four (4) weeks
of paid vacation.
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3.5 Expense Reimbursement. Employee shall be entitled reimbursement
of all business expenses (including, without limitation, expenses for
travel to and from Nashville, Tennessee and Scottsdale, Arizona) upon
providing Employer with substantiation of such expenses.
4. TERMINATION OF EMPLOYMENT; SEVERANCE.
4.1 By Employer.
4.1.1 Termination Without Cause. Employer's Board of Directors may
terminate Employee's employment, with or without cause, at any time
by giving written notice of such termination to Employee, such
termination of employment to be effective on a date specified in such
notice; provided, however, that only in the event of such a
termination without cause Employee shall be entitled to receive the
greater of (a) the Base Salary and bonus paid or accrued on
Employee's behalf for the fiscal year of Employer immediately prior
to the fiscal year in which the termination took place; or (b) the
amount due Employee for Base Salary during the balance of the then-
current Employment Term. Payments shall be made, at the option of
Employer, in cash or, in the case of the preceding item (a), in equal
weekly payments using Employer's regular payroll periods or, in the
case of the preceding item (b), over the balance of the Employment
Term at the same time as current wages and bonuses are normally
payable. Employee's participation in all benefit programs other than
life, medical and disability insurance shall cease as of the date of
termination. Employee's participation in the life, medical and
disability insurance programs shall continue until the earlier of:
(a) such time as Employee is employed by another employer and is
covered or permitted to be covered by benefit plans of another
employer without regard to the extent of such coverage; (b) the
Employer no longer provides such benefit plans to Employer's
management employees; or (c) the expiration of the Employment Term
in effect at the time of termination. This provision supersedes any
other severance program or policy that may be offered by Employer and
is in lieu of such plan rather than in addition to other severance
plans that may be in place, except with regard to any rights Employee
may have pursuant to COBRA.
4.1.2. Termination for Cause. If Employee is terminated for cause,
Employer shall have no further obligation whatsoever to Employee
hereunder, and Employee's participation in all benefit programs shall
cease as of the date of termination. For purposes of this Agreement,
"cause" shall mean any one of the following: (i) Employee's personal
dishonesty in connection with his duties to Employer; (ii) Employee's
willful misconduct in the performance of his duties with Employer;
(iii) breach of fiduciary duty to the Employer involving personal
profit by Employee; (iv) conviction of Employee for any felony or
crime involving moral turpitude; (v) material intentional breach by
Employee of any provision of this Agreement; or (vi) unsatisfactory
performance by Employee of the duties designated for Employee by
Employer's Board of Directors as a result of alcohol or drug use by
Employee.
4.2 Termination by Employee.
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4.2.1 Termination After Change in Control. In the event a Change in
Control occurs, Employee, at any time within ninety (90) days after
such Change in Control, may terminate his employment with Employer
by giving not less than sixty (60) nor more than ninety (90) days'
prior written notice of such termination to Employer. In the event
that Employee terminates his employment pursuant to this Section
4.2.1, he shall be entitled to receive the greater of: (A) an amount
equal to two (2) times the base salary and bonus paid or accrued on
Employee's behalf for the fiscal year of Employer immediately prior
to the fiscal year in which the termination took place; or (B) the
amount due Employee for base salary during the balance of the then-
current Employment Term. Payments shall be made in the case of the
preceding item (A) in equal weekly payments using employer's regular
payroll periods or, in the case of the preceding item (B), over the
balance of the employment term at the same time as current wages and
bonuses normally are payable. Employee's participation in all
benefit programs other than life, medical and disability insurance
shall cease as of the date of termination from active employment with
Employer. Employee's participation in the life, medical and
disability insurance programs shall continue until the earlier of:
(a) such time as Employee is employed by another employer and is
covered or permitted to be covered by benefit plans of another
employer without regard to the extent of such coverage; (b) the
Employer no longer provides such benefit plans to Employer's other
management employees; or (c) the expiration of the Employment Term
then in effect. Nothing contained herein is intended to in any way
limit Employee's rights under COBRA.
4.2.2 Termination Other Than After Change in Control. Except as
limited by Section 1.4.2 of this Agreement, Employee may terminate
his employment with Employer at any time without further obligation
whatsoever by either party hereunder (except for the obligations and
covenants of Employee pursuant to Sections 2.3 and 4.4, which shall
survive termination as specified herein) by giving not less than
sixty (60) nor more than ninety (90) days' prior written notice of
such termination to Employer.
4.3 Effect of Termination on Stock Options. In the event of any
termination of this Agreement and the Employment Term, all stock
options held by Employee that are vested prior to the effective date
of the termination shall be exercisable in accordance with their
terms, and all stock options held by Employee that are not vested
prior to the effective date of the termination shall lapse and be
void. Also, in the event of any termination of Employee's employment
pursuant to Section 4.1.1 or Section 4.2.1, then, in addition to any
other rights of Employee hereunder, Employee shall receive, within
thirty (30) days after such termination, a lump sum cash distribution
equal to: (a) the number of shares of Employer's common stock that
is subject to options held by Employee which are not vested on the
date of termination of employment; multiplied by (b) the difference
between: (i) the closing price of a share of Employer's common stock
as of the day prior to the effective date of termination of
employment (or, if the United States securities trading markets are
closed on that date, on the last preceding date on which the United
States securities trading markets were open for trading), and (ii)
the applicable exercise price(s) of such non-vested shares.
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4.4 Covenant Not to Compete. Employee acknowledges that Employer's
business is built upon the confidence of its customers, suppliers,
employees, and the general public, and that Employee will acquire
confidential knowledge that should not be divulged or used for his
own benefit. In the event of any termination of Employee's
employment pursuant to Sections 4.1.2, 4.2.1 or 4.2.2 of this
Agreement, Employee covenants and agrees that, for a period of one
year from the effective date of his termination from active
employment with the Employer, he will not engage in, own, manage,
operate, control, or participate in any food service business that
conducts or franchises activities which are the same as or similar
to the restaurant concepts and operations of Employer as an employer,
employee, principal, partner, director, agent, or otherwise, directly
or indirectly, anywhere in the United States of America. Employee
understands and acknowledges that his violation of this covenant not
to compete would cause irreparable harm to Employer, and Employer
would be entitled to seek an injunction by any court of competent
jurisdiction enjoining and restraining Employee and each and every
other person concerned from any employment, service, or other act
prohibited by this Agreement. Employee and Employer recognize and
acknowledge that the area and time limitations contained in this
Agreement are reasonable. In addition, Employee and Employer
recognize and acknowledge that the area and time limitations are
properly required for the protection of the business interests of
Employer due to Employee's status and reputation in the industry and
the knowledge to be acquired by Employee through his association with
Employer's business and the public's close identification of Employee
with Employer and Employer with Employee. The parties agree that
nothing in this Agreement shall be construed as prohibiting Employer
from pursuing any other remedies available to it for any breach or
threatened breach of this covenant not to compete, including, without
limitation, the recovery of damages from Employee or any other person
or entity acting in concert with Employee. Employee also agrees that,
in the event he breaches this covenant not to compete, Employee will
pay reasonable attorneys' fees and expenses incurred by Employer in
enforcing this covenant not to compete. Employee acknowledges and
understands that, as consideration for his execution of this
Agreement and his agreement with the terms of this covenant not to
compete, Employee will receive employment by Employer in accordance
with this Agreement. Employer acknowledges that Employee's execution
of this Agreement and agreement with the terms of this covenant not
to compete is consideration for Employer's agreement to employ
Employee pursuant to this Agreement. If any part of this covenant
not to compete is found to be unreasonable, then it may be amended
by appropriate order of a court of competent jurisdiction to the
extent deemed reasonable. Employer shall receive injunctive relief
without the necessity of posting bond or other security, such bond
or other security being hereby waived by Employee.
5. DEATH OR DISABILITY OF EMPLOYEE.
5.1 Death of Employee. In the event Employee dies during the
Employment Term, this Agreement and the Employment Term shall
terminate upon Employee's death. Employee's estate shall be entitled
to any Base Salary earned but not paid plus any bonus
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accrued by Employer for Employee through the date of death plus an
amount equal to the Base Salary and bonus received by Employee in the
last full year immediately prior to the death of Employee. Such
payment shall be paid in lump sum to the Employee's estate within
ninety (90) days after Employer is given notice of Employee's death.
5.2 Disability of Employee. Employer has disability insurance
insuring those individuals holding management positions, and Employee
is included under such disability insurance. In the event of the
Disability (as hereinafter defined) of Employee, this Agreement and
the Employment Term shall terminate. Upon a termination resulting
from the Disability of Employee, Employee shall be entitled to
receive (i) any Base Salary earned but not paid through the date that
Employee becomes eligible for disability payments under such
disability insurance, and (ii) an amount equal to the Base Salary and
bonus received by Employee in the last full fiscal year of Employer
immediately prior to the Disability of Employee, which amount shall
be payable, at the option of Employee, in a lump sum payment or in
equal installments paid in accordance with the general payroll
policies of Employer over a period not to exceed three (3) years from
the effective date of a termination due to the Disability of
Employee; provided, however, that Employee shall not be entitled to
any payments under this Section 5.2 in the event this Agreement is
terminated pursuant to Section 4.1.2 hereof regardless of whether the
"cause" for which this Agreement is terminated pursuant to Section
4.1.2 also may constitute a Disability. For purposes of this
Agreement, a "Disability" of Employee shall occur if (i) Employee
suffers any mental or physical condition that impairs Employee's
ability to perform the essential functions of his duties hereunder
and (ii) Employee, within thirty (30) days after Employee receives
written notice from Employer requesting that Employee resume his
duties hereunder, is unable or refuses to do so.
6. GENERAL PROVISIONS.
6.1 Expenses. Employer shall reimburse Employee for all reasonable
and necessary business expenses of Employee incurred in the conduct
of his duties hereunder. Employee shall comply with all applicable
policies of Employer with respect to documentation and approval of
such expenses.
6.2 Notices. Any notices to be given hereunder by either party to
the other may be effected by personal delivery in writing or by mail,
registered or certified, postage prepaid, with return receipt
requested. Mailed notices shall be addressed to the parties at the
addresses appearing in the introductory paragraph of this Agreement
(to the attention of the Secretary in the case of notices to
Employer), but each party may change such address by written notice
in accordance with this Section 6.2. Notices delivered personally
shall be deemed communicated at the time of the actual receipt;
mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
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6.3 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Employee by Employer and contains
all of the covenants and agreements between the parties with respect
to such employment in any manner whatsoever, with the exception of
certain stock options, the terms and conditions of which shall be
governed by the particular stock option agreements. Each party to
this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not
embodied herein and that no other agreement shall be valid or binding
unless in writing and signed by the party against whom enforcement
of such agreement is sought. Any modification of this Agreement will
be effective only if it is in writing signed by the party against
whom enforcement of such modification is sought.
6.4 Partial Invalidity. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nonetheless continue
in full force without being impaired or invalid in any way.
6.5 Law Governing Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
6.6 Waiver of Jury Trial. Employer and Employee hereby expressly
waive any right to a trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement, and agree that any
such action or proceeding shall be tried before a court and not a
jury. Employee and Employer hereby agree that any action or
proceeding to enforce any claim arising out of this Agreement shall
be brought and maintained in any state or federal court having
subject matter jurisdiction and located in Nashville, Tennessee.
Employee irrevocably waives, to the fullest extent permitted by law,
any objection he may have or hereafter have to the laying of the
venue of any such action or proceeding brought in any court located
in Nashville, Tennessee, and any claim that any such action or
proceeding brought in such a court has been brought in an
inconvenient forum.
6.7 Miscellaneous. Failure or delay of either party to insist upon
compliance with any provision hereof will not operate as and is not
to be construed to be a waiver or amendment of the provision or the
right of the aggrieved party to insist upon compliance with such
provision or to take remedial steps to recover damages or other
relief for noncompliance. Any express waiver of any provision of
this Agreement will not operate and is not to be construed as a
waiver of any subsequent breach, irrespective of whether occurring
under similar or dissimilar circumstances. Employee acknowledges and
represents that the services to be rendered by him are unique and
personal. Accordingly, Employee may not assign any of his rights or
delegate any of his duties or obligations under this Agreement. The
rights and obligations of Employer under this Agreement shall inure
to the benefit of and shall be binding upon the successors and
assigns of Employer.
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IN WITNESS WHEREOF, Employee has hereunto affixed his hand, and Employer
has caused this Agreement to be executed by its duly authorized officer as of
the day and year first above written.
EMPLOYER:
PHOENIX RESTAURANT GROUP, INC.
By: /s/ X. X. Xxxxxxxx
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Title: Director
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EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
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