ADDENDUM AGREEMENT
THIS AGREEMENT (the "Agreement"), made this 7th day of April,
2000, is entered into by and between Advantica Restaurant
Group, Inc. (the "Company") and Xx. Xxxxx X. Xxxxxxx (the
"Executive").
WHEREAS the Company and the Executive are parties to a certain
Employment Agreement, as amended and restated on January 7,
1998 (the "Employment Agreement");
WHEREAS the parties desire to establish a two year term
of the Employment Agreement commencing January 1, 2000; and
WHEREAS in consideration of the obligations of the Executive
under the Employment Agreement, as amended hereby, the Company
wishes to provide the Executive additional incentive
compensation opportunities as an inducement for the Executive
to remain in the Company's employ for the two year term and to
forego other potential employment opportunities, which, if
accepted, would be likely to impede the Company's ability to
immediately undertake and timely complete the necessary
strategic business changes and initiatives;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, the Company and the
Executive agree as follows:
1. EMPLOYMENT TERM. Section 1 of the Employment Agreement is
hereby amended to provide that the Employment Term (as defined in the Employment
Agreement) shall commence on January 1, 2000 and expire on the second
anniversary thereof (the "Second Anniversary").
2. DUTIES. Section 2 of the Employment Agreement is hereby
amended to provide that during the Employment Term, the Executive shall, in
addition to the duties described therein, serve as the Chief Executive Officer
and President of Denny's, Inc.
3. CERTAIN TERMINATION WITHOUT CAUSE. The parties hereby
acknowledge and agree that for purposes of Section 5(c)(iii)(A) of the
Employment Agreement, neither (i) the implementation by the Company of the
strategic initiatives set forth in the report provided by McKinsey & Company,
dated January 26, 2000 and the Executive's performance of duties in accordance
therewith, nor (ii) the appointment by the Company of a non-executive Chairman
of the Board (which shall occur only if the Board and the Executive mutually
agree that such an appointment is necessary), shall constitute a breach by the
Company of a material provision of the Employment Agreement, or a change by the
Company of the Executive's title, duties or responsibilities as Chairman of the
Board and Chief Executive Officer of the Company without his consent.
4. OTHER PROVISIONS. Except as described in Sections 1, 2, and
3 of this Agreement, in all other respects, the terms and conditions of the
Employment Agreement shall remain in full force and effect.
5. GREENVILLE, SC RESIDENCE. The Company shall within 10
business days after the earliest to occur of (a) the Second Anniversary of this
Agreement, if the Executive is an employee of the Company on such date, (b) the
termination of the Executive's employment without Cause (as defined in the
Employment Agreement and as amended by Section 3 hereof), or (c) the Company's
relocation of its headquarters outside of Spartanburg, SC, purchase from
the Executive the residence located at 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxxx, XX (the "Greenville Residence") for $1,500,000 cash, payable in a
lump sum. This sum represents the actual costs Xxxxxxx paid to purchase the
Greenville Residence (including purchase price for land and partially-completed
residence building as well as completion of residence building). The Company
shall have no obligations under this Section 5 if none of the events set forth
in clauses (a), (b), and (c) occurs.
6. CHARLESTON, SC RESIDENCE.
6.1 APPRAISAL. The Company shall as soon as possible after
the date hereof retain, at its own expense, two independent real estate
appraisal firms reasonably acceptable to the Executive to appraise the value of
Executive's residence located at 00 X. Xxx Xxxxxx, Xxxxxxxxxx, XX (the
"Charleston Residence"). Within 30 business days of completion of such
appraisals, the Company shall cause the Charleston Residence to be purchased
from the Executive for cash in the amount set forth immediately below.
6.2 PURCHASE PRICE. The purchase price shall be $1,300,000.
7. RELOCATION GENERALLY. If during the Employment Term, the
Company relocates its headquarters outside of Spartanburg, SC, the Company shall
pay for all reasonable expenses incurred by Executive for his personal move in
connection therewith under the terms of and in accordance with the then
applicable relocation policy of the Company. If the Executive's employment is
terminated by the Company without Cause (as defined above), the Company shall
pay to the Executive all reasonable expenses incurred by him in connection with
moving his personal belongings from the location of the Company's headquarters
and the Greenville Residence to such other location in the continental United
States as the Executive designates. The Company shall have no obligations under
this Section 7 if neither of the events set forth in this Section 7 occurs.
8. BONUS
8.1 SUCCESS BONUSES. (a) During the Employment Term, the
Company shall pay to the Executive periodic success bonuses (any such payment a
"Success Bonus") upon the completion of certain strategic initiatives at the
times and in the manner set forth on Appendix A. The Company and the
Executive have mutually agreed upon the performance criteria, weighting,
value, metrics and target dates for the successful completion of the
strategic initiatives as set forth on Appendix A. Whether a strategic
initiative has been successfully completed will be determined by the Board.
It is agreed and understood that in no event shall the total amount of the
Success Bonuses available to be earned pursuant to this Section 8.1 be less
than $7,405,750. It is further agreed and understood that no Success Bonus
shall be due or owing for the successful completion of any of the referenced
strategic initiatives on or after the commencement of a financial
restructuring of the Company under Chapter Eleven of the United States
Bankruptcy Code or analogous law. The immediately preceding sentence shall
not apply in the event that the distribution received per share as a result
of or pursuant to the Chapter 11 or analogous proceeding by the holders of
shares of the Company's common stock equals or exceeds the average of the
closing bid and asked prices for such a share on the last trading day
immediately preceding the commencement of the proceeding. If a strategic
initiative is achieved during such a proceeding and, pursuant to the
immediately preceding sentence, a Success Bonus is payable to the Executive,
it shall be paid immediately upon consummation of such proceeding, plus
interest at a 7% rate from the date of achievement to the date of payment. It
is the parties' intention, to the extent possible, to resolve any disputes
regarding Appendix A without recourse to the judicial system. As a condition
precedent to the filing of any claim, the parties' attorneys, if any, must
confer at least twice, in person, in an effort to resolve any dispute. If
such efforts are not successful, the parties agree to submit the dispute to
non-binding mediation under the Mediation Procedures of the Association of
the Bar of the City of New York. The parties agree to share the costs of
mediation equally.
If mediation is not successful, the parties agree to arbitrate
any remaining matters before a three-member panel under the Rules of the
Association of the
Bar of the City of New York. The fees and expenses, including actual attorneys'
fees, of the prevailing party shall be paid by the non-prevailing party.
(b) In addition, if the Executive is employed on the Second
Anniversary, the Executive and/or his Family (as defined in the Employment
Agreement) shall be entitled until the earlier of (x) the second anniversary of
the Second Anniversary or (y) the commencement of coverage of the Executive
and/or his Family by another group medical benefits plan providing substantially
comparable benefits to the Welfare Benefits (as defined in the Employment
Agreement) and which does not contain any pre-existing condition exclusions or
limitations, to receive and participate in the Welfare Benefits in addition to
any continuation coverage which the Executive and/or his Family is entitled to
elect under Section 4980B of the Code.
(c) If there is a "Termination Without Cause" (as defined in
the Employment Agreement) following the consummation of a Change of Control (as
defined in Appendix B of this Agreement) that occurs prior to the Second
Anniversary, the Executive shall immediately be paid an amount in cash from the
Company equal to $7,405,750 less the sum of (a) the amount of any Success Bonus
already paid; plus (b) an amount equal to the amount of any success bonus that
was not paid because of the failure of the Company to attain a strategic
initiative; provided, that the parties hereby acknowledge and agree that for
purposes of this Section 8.1(c), a "Termination Without Cause" shall occur if
the members of the Board immediately preceding consummation of the Change of
Control do not constitute a majority of the members immediately following the
Change of Control.
8.2 ADDITIONAL BONUS. (a) If at any time (i) prior to the
Second Anniversary, the average closing bid price for the shares of the
Company's common stock over any 30 consecutive day period, as reflected on the
NASDAQ, equals or exceeds $5.00 per share, or (ii) during the term of this
Agreement, the Company enters into a binding agreement to sell the Company to a
bona fide purchaser for an amount which equals or exceeds $5.00 per share, the
Company shall immediately pay to the Executive $1,000,000 in cash; provided,
however, that a payment shall be due pursuant to clause (ii) only upon
consummation of such sale; and
(b) if the average closing bid price for the shares of the
Company's common stock during the 30 day period immediately preceding the Second
Anniversary equals or exceeds $5.00 per share, the Company shall immediately pay
to the Executive $500,000 in cash.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
ADVANTICA RESTAURANT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: Executive Vice President, General
Counsel and Secretary
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chairman, Compensation and Incentives
Committee
