AMENDED AND RESTATED
EMPLOYMENT CONTRACT
This AMENDED AND RESTATED EMPLOYMENT CONTRACT (the "Amended Contract")
is made and entered into as of the 28th day of September, 2000, by and between
CHAMPPS ENTERTAINMENT, INC., a Delaware corporation, formerly UNIQUE CASUAL
RESTAURANTS, INC., having its principal place of business at 0000 XXX Xxxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000 ("Employer" or the "Company"), and XXXXXXX
X. XXXXXXXXX whose address is at 000 Xxxxxxxxxxxxx Xxxx Xxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000 ("Employee").
WHEREAS, Employee and the Unique Casual Restaurants, Inc. entered into an
employment contract (the "Contract"), dated as of 24th day of June, 1999.
WHEREAS, on July 28, 1999 Unique Casual Restaurants, Inc. changed its name
to Champps Entertainment, Inc.
WHEREAS, Employee and the Company now wish to amend and restate the
Contract in its entirety.
WHEREAS, Employer wishes to employ Employee in the capacity of its
President and Chief Executive Officer and Employee wishes to accept such
employment; and
WHEREAS, Employee possess an intimate knowledge of the business and
affairs of Employer, its policies, methods, personnel and problems; and
WHEREAS, the Board of Directors of Employer (the "Board") recognizes
Employee's potential to contribute to the growth and success of Employer and
desires to employ Employee in an executive capacity and to compensate him
therefor; and
WHEREAS, Employee is desirous of committing himself to serve Employer
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
Amended Contract shall be September 28, 2000. Subject to the provisions for
termination hereinafter provided, the term (the "Employment Period") of this
Amended Contract shall extend from the Commencement Date to the earlier to occur
of (i) the consummation of a sale of the Company or all or substantially all of
the Company's assets or (ii) June 30, 2003.
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3. Duties of Employee. Employee is hereby employed by Employer as a full-time
employee in the capacity of President and Chief Executive Officer of Employer.
Employee's duties 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 a
President and Chief Executive Officer of a restaurant company. In the event
that, at Employer's request, 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, substantially all of his productive time (except
as may otherwise be agreed by the Board), ability and attention to the business
of Employer 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 President, Chief Executive Officer
and, if so nominated and elected, Chairman of the Board. With prior approval of
the Board, Employee may serve on the boards of directors of other companies.
4. Compensation. For all services rendered by Employee to Employer under this
Amended Contract, for the term commencing as of the date hereof, Employee shall
receive an initial annualized base salary of four hundred thousand dollars
($400,000) (the "Base Salary"), payable in periodic installments in accordance
with Employer's usual practice for its senior executives. Employer's Base Salary
shall be subject to annual review and determination of the Board of Directors on
or about June 30, 2001 and June 30, 2002.
5. Employee Benefits.
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(a) Generally. Employee shall be entitled to receive all employee benefits
generally made available to the senior executives of Employer.
(b) Vacation. Employee shall be entitled to a paid vacation as customarily
provided to other senior executives employed 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.
(c) Reimbursement of Business Expenses. Employee shall be reimbursed for
reasonable travel and other expenses incurred by Employee in promoting the
business of Employer and performing his obligations hereunder in accordance with
the policies adopted by the Employer.
6. Loan. The Board hereby authorizes a loan in the amount of $550,000 to
Employee to be used to exercise certain stock options and pay related tax
liabilities to be evidenced by a promissory note and secured by the stock being
issued pursuant to a pledge and security agreement substantially in the form
attached hereto.
7. Stock Options. The Board will cause the expiration date of those remaining
stock options of the Company listed below held by Employee as of the
Commencement Date to be extended from June 30, 2001 to June 30, 2003. As of the
Commencement Date, the Company has granted to the Employee the following stock
options to purchase the Company's common stock (the "Options"):
Extended
Shares Exercise Price Vesting Expiration Date Expiration Date
9,000 $4.762 fully vested 6/30/01 6/30/03
750,000 $4.00 12/24/01 6/30/01 6/30/03
250,000 $6.31 fully vested 6/30/01 6/30/03
Those Options, which are not fully vested as of the Commencement Date,
shall vest in full on the earlier of (i) December 24, 2001 or (ii) the
consummation of a sale of the Company or all or substantially all of the
Company's assets.
8. Board of Directors. The Company shall take appropriate action to re-elect
Employee to the Board, upon the expiration of his ------------------ current
term.
9. 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
(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. All files, records,
documents, drawings, specifications, equipment and other similar items relating
to the business of Employer shall remain the sole and exclusive property of
Employer 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.
10. Termination of Amended Contract by Employer.
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(a) Termination for Cause. This Amended Contract may be terminated by Employer
at any time for Cause, as hereinafter defined. For the purposes hereof, the term
"Cause" shall include: (i) Employee's theft from or fraud upon Employer; (ii)
Employee's conviction of or pleading guilty or no contest to a felony; (iii)
Employee's willful violation of terms and conditions hereof; (iv) Employee's
willful disregard or neglect in the duties he is required to perform under the
terms hereof, or (v) Employee's willful and demonstrated unwillingness to
prosecute and perform such duties to the extent deemed by the Employer to be
reasonably necessary and advisable, which duties encompass the duties reasonably
required of a President and Chief Executive Officer of a restaurant company. For
purposes of clauses (iii), (iv) and (v) 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 at a meeting of the Board 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), finding that, in the good faith
opinion of the Board, Employee was guilty of the conduct enumerated in any of
clauses (i) through (v) above under the definition of Cause and specifying the
particulars thereof in detail. Upon such Cause, Employer may, at its option,
terminate this Amended 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
Amended 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; provided that Employee's obligations pursuant to
Section 9 ("Trade Secrets") shall survive the termination of his employment.
Nothing in this Amended 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.
11. Termination of Amended Contract by Employee. Employee may terminate his
employment hereunder (a) for Good Reason, or (b) 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 Amended Contract, "Good Reason" shall
mean (i) 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 Amended Contract, (ii) any removal of Employee from or any failure to
elect or re-elect Employee to the position of President or Chief Executive
Officer of Employer, except in connection with termination of Employee's
employment for Cause, or (iii) 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.
12. Compensation Upon Termination.
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(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 Amended Contract. In addition, Employee shall
forfeit any unvested Options as of the date of such termination.
(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 then in effect at the time Notice of Termination is given, (ii)
Employer shall continue to pay Employee his Base Salary at the rate and in
accordance with its payment practices in effect at the time Notice of
Termination is given until such time as the Employment Period would have ended
pursuant to Section 2 had no Notice of Termination been given, 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 ("NQSOs") as defined in Section 422 of the Internal
Revenue Code (the "Code") may be exercised by Employee shall be extended until
the expiration date of such options, and (z) if Employee so elects in writing
ninety (90) days after the date of termination, all unexercised and unexpired
options which are incentive stock options ("ISOs") as defined in Section 422 of
the Code shall be converted into NQSOs and shall thereby become eligible for the
benefit described in clause (y) above as if they had been NQSOs as of the date
of termination.
(c) It is the intention of Employee and Employer that no payments by Employer to
or for the benefit of Employee under this Amended Contract 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 Amended Contract, if the Employer, in its sole judgement,
determines that by reason of the operation of Code 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 (b)(iii) above) to bring them within the limitations of Code 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.
13. No Mitigation. Employer agrees that, if Employee's employment by Employer is
terminated during the term of this Amended Contract, 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 12 hereof. Further, the amount of any
payment provided for in this Amended Contract 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.
14. Settlement and Arbitration of Disputes. Except as otherwise provided in
Section 16 with respect to injunctive relief, any controversy or claim arising
out of or relating to this Amended Contract or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the State of
Colorado 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 Denver. Such arbitration shall be conducted in the City of Denver in
accordance with the rules of the American Arbitration Association for employment
disputes, except with respect to the selection of arbitrators which shall be as
provided in this Section 14. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
15. Non-Competition Agreement. In consideration of the payments made by Employer
to Employee hereunder, Employee covenants and agrees that (a) during the
Employment Period, Employee shall not directly or indirectly engage or be
interested in any business as owner, officer, director, employee, consultant or
otherwise which is in competition with the business of Employer and (b) 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, Employee shall not
directly or indirectly 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 (6) months was an employee of Employer.
However, the restrictions in clause (a) above shall not prevent Employee from
owning not more than five percent (5%) of the outstanding stock of, or trading
for his own account 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 (6) 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.
16. Injunctive Relief. Employee irrevocably acknowledges that violations of
Section 9 or Section 15 of this Amended 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 Amended 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.
17. Relationship of the Parties. The parties acknowledge, agree and recognize
that the Board 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.
18. Assignment; Obligations of Successor. Neither Employer nor Employee may make
any assignment of this Amended Contract 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 Amended Contract 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 Employee's 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 Amended
Contract in the same manner and to the same extent that Employer would be
required to perform if no such succession had taken place.
19. 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.
20. 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 Amended Contract shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.
21. Amendments to the Amended Contract. This Amended Contract may only be
amended in writing by an agreement executed by both
parties hereto.
22. Law Governing Amended Contract. This Amended Contract is made and
performable in the State of Colorado, and shall be construed under the laws of
the State of Colorado.
23. 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 hereafter obtained during the Employment
Period covering the officers and directors of Employee against lawsuits as
director, employee and/or agent of Employer. Employer will pay all expenses,
including reasonable 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.
24. Construction. Waiver by any party hereto of a breach of any provision of
this Amended Contract shall not operate or be construed as a waiver of any
subsequent breach of any party. This Amended Contract shall not be assignable
except as provided in Section 18 above. Subject to the prohibition against
assignment of this Amended 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.
25. 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 to the extent that
any such investigation or review relates to events or occurrences that
transpired while Employee was employed by Employer. Employer 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.
26. Entire Agreement. This Amended Contract will be effective as of September
28, 2000, 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 Amended Contract
this day and year first above written.
EMPLOYER EMPLOYEE
CHAMPPS ENTERTAINMENT, INC.
By:____________________________________ ______________________________
Xxxxxxx X. Xxxxxxxxx
