EXHIBIT 10(ii)
Amended and Restated
Employment Agreement for Xxxxx Xxxxxx
This Amended and Restated Employment Agreement ("Agreement") is entered into as
of _________, 1998, by and between Xxxxx Xxxxxx ("Executive") and Xxx Xxx Roo
Enterprises, Inc., a Delaware corporation ("KKRE", formerly known as Family
Restaurants, Inc. ("FRI")), Chi-Chi's, Inc., a Delaware corporation ("Chi-
Chi's"), El Torito Restaurants, Inc., a Delaware corporation ("El Torito"), and
Xxx Xxx Roo, Inc., a Delaware corporation ("KKR") (KKRE, Chi-Chi's, El Torito
and KKR are hereinafter collectively referred to as "the Company").
RECITALS
--------
A. Executive and FRI, Chi-Chi's and El Torito entered into that certain
employment agreement dated January 1, 1996 ("Original Agreement") which
Original Agreement set forth the terms of Executive's employment until
January 1, 1999.
B. On December 15, 1997, the Boards of Directors of FRI, Chi-Chi's and El
Torito amended the Original Agreement to (i) provide Executive with five
percent (5%) salary increases on January 1, 1998 and January 1, 1999; and
(ii) extend the term of employment covered by the Original Agreement until
January 1, 2000.
C. Executive and the Company now desire to amend and restate the Original
Agreement to provide for various modifications to the Original Agreement as
more particularly set forth below, such that the Original Agreement shall
be superseded by this Agreement.
Now, therefore, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
AGREEMENTS
----------
1. POSITION AND DUTIES
----------------------
(a) The Company hereby agrees to employ Executive, and Executive hereby accepts
and agrees to employment by the Company, on the terms and conditions set
forth herein.
(b) Executive will hold the positions and titles of President, Chief Executive
Officer ("CEO"), and Chairman of KKRE, CEO of Chi-Chi's, CEO of El Torito
and CEO of KKR from the date of this Agreement and for the period of time
specified in this Agreement. Executive reports to the Board of Directors
(the "Board") of KKRE and will assist the Board in developing and
implementing KKRE's ongoing business strategy and objectives, including
those of its subsidiaries, El Torito, Chi-Chi's and KKR. The Executive may
have
1
additional powers and duties as prescribed from time to time by the
Board.
(c) Executive agrees to devote all of his business time, skill, attention, and
best efforts to the Company's business and to discharge and fulfill the
responsibilities assigned to him by the Company during his employment under
this Agreement. Executive further agrees that he will not render business
services to any other person or entity without the prior written consent of
the Company, and that he will not engage in any activity which conflicts or
interferes with the performance of the duties and responsibilities of his
position. Unless a conflict of interest occurs, as determined by the
Board, Executive shall be allowed to serve as a member of the Board of
Directors of at least one other company.
2. TERM OF EMPLOYMENT
---------------------
This Agreement covers the Executive's employment with the Company from the date
of this Agreement ("Effective Date") through December 31, 2001 ("Period of
Employment"), or such earlier termination date as provided for in Section 5
below.
3. LOCATION
-----------
Executive will be based at the Company's executive offices in Irvine,
California, and will be expected to travel to the Company's offices and
restaurants at other locations as needed for the performance of his duties and
responsibilities.
4. COMPENSATION AND BENEFITS
----------------------------
(a) Salary
----------
During the Period of Employment, in consideration of services to be rendered,
Executive will be paid an annual base salary as follows:
(i) Effective Date - December 31, 1998: $420,000
(ii) January 1, 1999 - December 31, 1999: $475,000
(iii) January 1, 2000 - December 31, 2000: $498,750
(iv) January 1, 2001 - December 31, 2001: $523,687
Executive's annual base salary shall be earned and paid in equal bi-weekly
installments, less any deductions required by law, pursuant to the procedures
regularly established by the Company. Executive may be eligible for other
periodic increases in base salary as determined by the Board in its sole and
absolute discretion.
2
(b) Annual Incentive Compensation
---------------------------------
During the Period of Employment, the Executive will participate in the Company's
Management Incentive Compensation Plan (the "Bonus Plan") as currently
established and as modified from time to time. Under the terms of the current
Bonus Plan, Executive's annual incentive award is based upon one or more
performance measures, such as Company sales performance, Company EBITDA
performance, and personal objectives. Executive will have an annual target
incentive equal to 80% of his annual base salary. Actual incentives payable
will be determined by the terms of the Bonus Plan or successor plans. The
Company reserves the right to modify, amend, or discontinue the Bonus Plan at
any time; however, if the Bonus Plan is discontinued, it is expected that a
comparable annual incentive plan, as agreed to by the Executive and the Company,
will be implemented in its place.
c) Long Term Incentive Compensation
-----------------------------------
The Executive will be eligible to participate in the Company's long term
incentive plan and shall be granted stock options thereunder as approved by
KKRE's Board. With regard to any grant(s) of stock options, notwithstanding the
vesting provisions of such grant(s) or the provisions of the stock incentive
plan, all options granted to Executive shall immediately vest upon (i) any
"Change of Control" as defined in the Indenture, dated January 27, 1994, between
FRI, as issuer, and IBJ Xxxxxxxx Bank & Trust Company, as trustee, or (ii) any
termination without "Cause" (as hereinafter defined), or (iii) any termination
for "Good Reason" (as hereinafter defined).
(d) Benefits
------------
During the Period of Employment, Executive will be entitled to participate in
the Company's standard medical, dental, life, accident, disability, retirement
plans, QRC privileges, and similar benefit plans as shall be generally available
to executive employees of the Company from time to time.
(e) Vacation
------------
During the Period of Employment, the Executive will receive Company paid
vacation time off in accordance with the Company's policies and procedures, as
may be amended from time to time, in the amount of six (6) weeks vacation per
year. Executive shall be entitled to accrue up to a maximum of six weeks of
paid vacation. If Executive has accrued six weeks of vacation, Executive shall
cease to accrue vacation days until the amount of such accrued vacation is less
than six weeks. Without the prior consent of the Board, Executive shall not
take more than six weeks of vacation in any calendar year.
3
(f) Car Allowance
-----------------
During the Period of Employment, the Company will provide Executive with a car
allowance in accordance with the Company's policies and procedures, as may be
amended from time to time, and which currently provide Executive with an
allowance of Eighteen Thousand Dollars ($18,000.00) per year.
(g) Expenses
------------
During the Period of Employment, the Company will reimburse Executive for
travel, lodging, entertainment, and other reasonable business expenses incurred
by him in the performance of his duties in accordance with the Company's general
policies, as may be amended from time to time.
5. TERMINATION OF EMPLOYMENT
----------------------------
The Period of Employment shall terminate:
(a) By Death or Disability
--------------------------
Employment will terminate automatically upon the death of Executive or when
Executive begins to receive benefits under the Company's Long Term Disability
Plan. In such cases, the Company will pay the Executive or his Estate:
(i) the salary to which he is entitled through the date of termination; and
(ii) a pro rata portion of the Executive's annual incentive award, if any,
to which he is entitled through the date of termination.
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
(b) By the Company for Cause
----------------------------
The Company may terminate, without liability, the Period of Employment for
"Cause" as defined below at any time and without notice. In such event, the
Company will pay the Executive the salary and benefits to which he is entitled
through the date of termination and thereafter the Company's obligations will
cease. The Executive will not be entitled to any annual incentive award or long
term incentive award for the period in which Termination for Cause occurs.
4
Termination shall be for "Cause" if the Executive:
(i) willfully breaches significant and material duties he is required to
perform or any of the material terms and conditions of this Agreement;
(ii) commits a material act of fraud, dishonesty, misrepresentation or
other act of moral turpitude;
(iii) is convicted of a felony, whether or not committed during the Period
of Employment or in the course of employment hereunder;
(iv) exhibits gross negligence in the performance of his duties, including,
without limitation, the refusal to perform or carry out the resolutions or
directives of the Board of Directors of the Company that are enacted by majority
vote;
(v) is ordered removed from employment with the Company by a regulatory or
other governmental agency pursuant to applicable law.
(c) By the Company Without Cause
--------------------------------
The Company may, upon two weeks' written notice, terminate the employment of the
Executive, at any time, for any reason, without "Cause" (as defined in Section
5(b) above) and without liability. If Executive's employment is terminated
without Cause by the Company as described in the preceding sentence:
(i) The Company will pay the Executive his base salary and car allowance at
the rate in effect at the time of termination for the remainder of the Period of
Employment or one (1) year from the date of termination, whichever is greater;
(ii) If termination occurs in 1999, the Company shall pay to Executive his
maximum annual incentive award(s) for the remainder of the Period of Employment.
If termination occurs after December 31, 1999, the Company shall pay the
Executive annual incentive award amounts equal to the amount of annual incentive
earned by the Executive in the previous fiscal year for the remainder of the
Period of Employment or for one (1) year, whichever is greater; and,
(iii) The Company will continue to cover the Executive in the Company"s
benefit programs through the end of Period of Employment or one (1) year from
the date of termination, whichever is greater.
The Company may elect, in its sole and absolute discretion, to pay severance
payments, exclusive of benefit programs, in a lump sum equal to the present
value of the future monthly payments (assuming a 7% discount rate).
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
5
(d) Voluntary Termination
-------------------------
The Executive may terminate employment at any time by giving the Company one (1)
month's advance written notice of such termination. In this event, the Company
will pay the salary and benefits to which the Executive is entitled through the
end of the notice period, and thereafter the Company's obligations under this
Agreement will cease. The Executive will not be entitled to any annual
incentive or long term incentive grant for the year in which he terminates his
employment.
(e) Termination for "Good Reason"
---------------------------------
The Executive may also terminate his employment for "Good Reason." For purposes
of this Agreement, "Good Reason" shall mean:
(i) any assignment to the Executive of duties without his consent other
than those contemplated by this Agreement or in accordance with those typically
assumed by a President, CEO and Chairman or which represent a material reduction
in the scope and authority of Executive's position;
(ii) a Company required relocation of Executive's principal place of work
which requires an increase in Executive's normal commute of more than 50 miles
which is not agreed to by Executive; or,
(iii) any reduction in annual base salary below the amounts set forth in
Section 4(a) per relevant year which is not agreed to by Executive.
If Executive terminates employment for "Good Reason," the Company will pay the
Executive:
(x) his base salary and car allowance at the rate in effect at the time of
termination for the remainder of the Period of Employment or one (1) year from
the date of termination, whichever is greater;
(y) If termination occurs in 1999, the Company shall pay to Executive his
maximum annual incentive award(s) for the remainder of the Period of Employment.
If termination occurs after December 31, 1999, the Company shall pay the
Executive annual incentive award amounts equal to the amount of annual incentive
earned by the Executive in the previous fiscal year for the remainder of the
Period of Employment or for one (1) year, whichever is greater;
(z) The Company will continue to cover the Executive in the Company's
benefit programs through the end of the Period of Employment or one (1) year
from the date of termination, whichever is greater.
The Company may elect, in its sole and absolute discretion, to pay severance
payments exclusive of benefit programs in a lump sum equal to the present value
of the future monthly payments (assuming a 7% discount rate).
6
After payment of termination benefits, the Company's obligations under this
Agreement will then cease.
6. PROPRIETARY INFORMATION
--------------------------
Executive understands that, by virtue of Executive's employment with the
Company, Executive will acquire and be exposed to Proprietary Information
(defined below). "Proprietary Information" means all ideas, information and
materials, tangible or intangible, not generally known to the public or
restaurant industry executives, relating in any manner to the business of the
Company, affiliates, personnel (including partners, principals, employees and
contractors), clients or others with whom it does business that Executive learns
of or acquires during the period of Executive's employment with the Company.
Proprietary Information includes, but is not limited to, manuals, documents,
computer programs, compilations of technical, financial, legal or other data,
client or prospective client lists, names of suppliers, specifications, designs,
business or marketing plans, forecasts, financial information, work in progress,
and other technical or business information.
Executive agrees to hold in trust and confidence all Proprietary Information
during Executive's employment with the Company and for three (3) years
immediately following the termination of Executive's employment with the
Company. Executive shall not disclose any Proprietary Information to anyone
outside the Company without the approval of the Board or use any Proprietary
Information for any purpose other than for the benefit of the Company as
required by Executive's authorized duties for the Company as an employee. For
three (3) years immediately following the termination of Executive's employment
with the Company, Executive shall not use Proprietary Information for any
purpose. Upon termination of employment, Executive shall not retain or take
with Executive any Proprietary Information in a Tangible Form (defined below),
and Executive shall immediately deliver to the Company any Proprietary
Information in a Tangible Form that Executive may then or thereafter hold or
control, as well as all other property, equipment, documents or things that
Executive was issued or otherwise received or obtained during Executive's
employment with the Company. "Tangible Form" includes ideas, information or
materials in written or graphic form, on a computer disc or other medium, or
otherwise stored in or available through electronic or other form.
7. NON-SOLICITATION
--------------------
During Executive's employment with the Company and for three (3) years
immediately following the termination of Executive's employment with the
Company, Executive shall not, directly or indirectly, (i) solicit, induce, or
attempt to solicit or induce, any person known to Executive to be an employee of
the Company or any of its affiliates (each such person, a "Company Person"), to
terminate his or her employment or other relationship with the Company or such
affiliate for the purpose of associating with (A) any entity of which Executive
is or becomes a partner, stockholder, member, officer, director, principal,
agent, trustee or consultant, or (B) any competitor of the Company or any such
affiliate or (ii) otherwise encourage any Company Person
7
to terminate his or her employment or other relationship with the Company or
such affiliate for any other purpose or no purpose.
8. ASSIGNMENT
-------------
The Executive's rights and obligations under this Agreement may not be assigned,
and any attempted assignment shall be null and void. Subject to the termination
provisions herein, the Company may assign this Agreement, but only to a
successor or affiliated organization.
9. NOTICES
----------
All notices referred to in this Agreement shall be in writing and delivered to
the Company at its principal address, 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, or to the Executive at 00000 Xxx X'Xxxxxxx Xxxxx, Xxxxx,
Xxxxxxxxxx 00000.
10. ENTIRE AGREEMENT
--------------------
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of the Executive by
the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement provided, however, the terms of benefit plans and long
term incentive plans referred to herein may require referral to such documents.
The parties further intend that this Agreement shall constitute the complete and
exclusive statement of its terms, and that no extrinsic evidence whatsoever may
be introduced in any judicial, administrative, or other legal proceeding
involving this Agreement.
11. AMENDMENTS AND WAIVERS
--------------------------
This Agreement may not be modified, amended, or terminated except in writing,
signed by the Executive and by a duly authorized representative of the Company
other than the Executive. No failure to exercise and no delay in exercising any
right, remedy, or power hereunder shall operate as a waiver thereof.
12. SEVERABILITY AND ENFORCEMENT
--------------------------------
If any provision of this Agreement shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Agreement shall remain in full force and effect.
13. GOVERNING LAW
-----------------
This Agreement shall be interpreted and construed in compliance with the laws of
the State of California, unless a superseding Federal law is applicable.
8
14. ARBITRATION
---------------
The parties agree that any disputes that may arise in connection with, arising
out of or relating to this Agreement, or any dispute that relates in any way, in
whole or in part, to Executive's employment with the Company, the termination of
that employment or any other dispute by and between the parties or their
successors or assigns, will be submitted to binding arbitration in Los Angeles,
California, according to the rules and procedures of the American Arbitration
Association and California Code of Civil Procedure Section 1283.05. Until any
dispute hereunder is resolved, the Company shall pay all fees and expenses of
the Arbitrator and shall pay to Executive all reasonable expenses and legal fees
incurred by Executive in connection with such arbitration. Such payments shall
be made within five (5) days after the Executive's request for payment,
accompanied with such evidence of fees and expenses incurred as the Company may
require. If the Company substantially prevails on substantially all of the
claims at arbitration, the Company shall be entitled to recover its costs and
expenses including the reasonable fees of its attorneys and the legal fees and
expenses of Executive paid by the Company in the arbitrated dispute from
Executive. Such payments shall be made within five (5) days after the Company's
request for payment, accompanied with such evidence of fees and expenses as
Executive may reasonably request. This arbitration obligation extends to any
and all claims that may arise by and between the parties or their successors,
assigns or affiliates, and expressly extends to, without limitation, claims or
causes of action for wrongful termination, impairment of ability to compete in
the open labor market, breach of an express or implied contract, breach of any
collective bargaining agreement, breach of the covenant of good faith and fair
dealing, breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, infliction of emotional distress, disability, loss of earning, and
claims under the California constitution, the United States Constitution, and
applicable state and federal fair state labor statutes and regulations,
including, but not limited to, the Civil Rights Act of 1964, as amended, the
Fair Labor Standards Acts, as amended, the Americans With Disabilities Act of
1990, the Rehabilitation Act of 1973, as amended, the Employee Retirement Income
Security Act of 1974, as amended, and the Age Discrimination in Employment Act
of 1967.
15. 280G CAP
-------------
If the Company determines that any severance payments hereunder, when added to
any other payment or benefit received or to be received by Executive in
connection with a change in control or the termination of Executive's
employment, will be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code (or any similar tax that may hereafter be imposed), the
Company shall reduce the severance payments (but not below zero) to the maximum
amount that will result in no portion of the severance payments being subject to
such tax.
9
In witness whereof, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer.
----------------------------------
Xxxxx Xxxxxx
Xxx Xxx Roo Enterprises, Inc. El Torito Restaurants, Inc.
By: By:
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx, Xx.
Executive Vice President and CFO Vice President
Chi-Chi's, Inc. Xxx Xxx Roo, Inc.
By: By:
------------------------------- ------------------------------
Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx, Xx.
Vice President Vice President
10
