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EXHIBIT 10.42
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
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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 by
the respective Boards of Directors of the Companies. In addition, Executive
shall
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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.
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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 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.
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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.
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
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Its: Chairman of the Board
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CHECKERS:
CHECKERS DRIVE-IN RESTAURANTS,
INC., a Florida corporation
By: /s/ Xxxxxxx X. Xxxxx XX
-----------------------------------
Its: Chairman of the Board
-----------------------------------
EXECUTIVE:
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
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