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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 15, 1997
Ground Round Restaurants, Inc.
(Exact name of registrant as specified in its charter)
New York 1-6192 13-5637682
State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
35 Braintree Hill Office Park, Braintree, Massachusetts 02184-9078
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (617) 380-3100
Not Applicable
(Former name or former address, if changed since last report.)
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Item 5. Other Events
AMENDMENT TO CREDIT FACILITY
Ground Round Restaurants, Inc. (the "Company") amended its
existing credit facility by entering into a Third Amendment (the "Amendment"),
dated as of May 23, 1997, to the Amended and Restated Credit Agreement (the
"Credit Agreement"), dated as of September 12, 1996, as amended, among The
Ground Round, Inc., GR of Minn., Inc. (collectively, the "Borrowers"), the
lenders listed therein (collectively, the "Lenders"), and The Bank of New York,
as Agent, and The Chase Manhattan Bank, as Co-Agent. The Amendment provides,
among other things, for the issuance by the Company of Amended and Restated
Convertible Notes (the "Amended Convertible Notes") to the Lenders to replace
the Convertible Notes issued to the Lenders on September 12, 1996. The Amended
Convertible Notes amended the original Convertible Notes to provide, among other
things, (y) that they shall become due thirty (30) days after written demand for
payment has been issued by any noteholder to the Company with a final maturity
date of December 31, 1997, and (z) that, commencing June 1, 1997, interest shall
accrue monthly on the unpaid principal balance of the Amended Convertible Notes,
at the rate of ten percent (10%) per annum, which interest shall be added to the
principal amount thereof, and shall be payable on the maturity date of the
Amended Convertible Notes.
The description of the Amendment and the Amended Convertible
Notes are qualified in their entirety by the terms and conditions contained in
such Amendment and the Amended Convertible Notes, copies of which are attached
as exhibits to this Form 8-K and are incorporated herein by reference.
EMPLOYMENT AGREEMENTS
On May 15, 1997, the Company entered into an employment
agreement (the "Bezsylko Employment Agreement") with Anthony E. Bezsylko,
pursuant to which Mr. Bezsylko will serve as Senior Vice President of Operations
of the Company for an initial term of one (1) year commencing May 15, 1997. Such
term shall be automatically extended for additional one-year terms unless, at
least ninety (90) days prior to the expiration of the original or any extended
term, either party shall notify the other in writing that it intends to
terminate the Bezsylko Employment Agreement as of the end of such term. As
compensation for his services pursuant to the Bezsylko Employment Agreement, Mr.
Bezsylko shall receive a base salary of One Hundred Fifty Thousand Dollars
($150,000) per year, be eligible to participate in the Company's Office
Incentive Plan and insurance programs and other fringe benefits customarily
provided to Company executives. The Bezsylko Employment Agreement further
provides that Mr. Bezsylko may be entitled to receive a severance payment
equivalent to twice his base salary if his employment is terminated under
certain circumstances following a "change of control" of the Company, as defined
in the Bezsylko Employment Agreement.
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On May 15, 1997, the Company entered into an employment
agreement (the "Evans Employment Agreement") with Henri R. Evans, pursuant to
which Mr. Evans will serve as Vice President of Marketing of the Company for an
initial term of one (1) year, commencing May 15, 1997. Such term shall be
automatically extended for additional one-year terms unless, at least ninety
(90) days prior to the expiration of the original or any extended term, either
party shall notify the other in writing that it intends to terminate the Evans
Employment Agreement as of the end of such term. As compensation for his
services pursuant to the Evans Employment Agreement, Mr. Evans shall receive a
base salary of One Hundred Thirty Thousand Dollars ($130,000) per year, be
eligible to participate in the Company's Office Incentive Plan and insurance
programs and other fringe benefits customarily provided to Company executives.
The Evans Employment Agreement further provides that Mr. Evans may be entitled
to receive a severance payment equivalent to twice his base salary if his
employment is terminated under certain circumstances following a "change of
control" of the Company, as defined in the Evans Employment Agreement.
On May 15, 1997, the Company entered into an Amendment to
the Employment Agreement dated September 1, 1996 with Stephen J. Kiel, the
Company's Chief Financial Officer, which provides, among other things, for a
severance payment equivalent to twice his salary, if his employment is
terminated under certain circumstances following a "change of control" of the
Company, as defined in such Amendment to the Employment Agreement.
The description of the foregoing employment agreements or
amendment to employment agreement, as the case may be, are qualified in their
entirety by the terms and conditions contained in such agreements, copies of
which are attached as exhibits to this Form 8-K and are incorporated herein by
reference.
Item 7. Financial Statements and Exhibits:
(a) Financial Statement of businesses acquired.
Not applicable.
(b) Pro Forma financial information.
Not applicable.
(c) Exhibits:
10.1 Third Amendment, dated as of May 23, 1997,
to Amended and Restated Credit Agreement,
dated as of September 12, 1996, as amended,
among The Ground Round, Inc.,
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and GR of Minn., Inc., and the Lenders named
therein, and The Bank of New York, as Agent,
and The Chase Manhattan Bank, as Co-Agent.
10.2 Form of Amended and Restated Convertible
Term Note payable to the Lenders.
10.3 Employment Agreement, effective as of May
15, 1997, between the Company and Anthony E.
Bezsylko.
10.4 Employment Agreement, effective as of May
15, 1997, between the Company and Henri R.
Evans.
10.5 Amendment to Employment Agreement, dated as
of May 15, 1997, between the Company and
Stephen J. Kiel.
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Signatures.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GROUND ROUND RESTAURANTS, INC.
By: /s/ Stephen J. Kiel
----------------------------------------
Name: Stephen J. Kiel
Title: Senior Vice-President and Chief
Financial Officer
Date: June 11, 1997
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EXHIBIT INDEX
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Exhibit
No. Description
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10.1 Third Amendment, dated as of May 23, 1997 to Amended and Restated
Credit Agreement, dated as of September 12, 1996, as amended, among The
Ground Round, Inc., and GR of Minn., Inc., and the Lenders named
therein, and The Bank of New York, as Agent, and The Chase Manhattan
Bank, as Co-Agent.
10.2 Form of Amended and Restated Convertible Term Note payable to the
Lenders.
10.3 Employment Agreement, effective as of May 15, 1997, between the
Company and Anthony E. Bezsylko.
10.4 Employment Agreement, effective as of May 15, 1997, between the
Company and Henri R. Evans.
10.5 Amendment to Employment Agreement, dated as of May 15, 1997, between
the Company and Stephen J. Kiel.
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Exhibit 10.1
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THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDMENT (this "Amendment"), dated as of May 23, 1997, to the
Amended and Restated Credit Agreement, dated as of September 12, 1996, as
amended by a First Amendment, dated as of October 31, 1996 and a Second
Amendment, dated as of December 5, 1996 (as so amended, the "Credit Agreement"),
among The Ground Round, Inc. (the "First Borrower"), a Delaware corporation, GR
of Minn., Inc., a Delaware corporation (the "Second Borrower", and together with
the First Borrower, the "Borrowers"), the banks named therein (the "Lenders"),
The Bank of New York, as Agent (the "Agent") and The Chase Manhattan Bank, as
Co-Agent.
PRELIMINARY STATEMENTS:
A. The Borrowers desire to amend the Credit Agreement as more fully
provided for herein.
B. The Lenders and the Agent are willing to amend the Credit Agreement
subject to the terms and conditions contained herein.
C. Unless otherwise defined herein, all terms defined in the Credit
Agreement shall be used herein as therein defined.
In consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
SECTION 1. Amendments to Credit Agreement.
The Credit Agreement is, effective as of the date hereof and subject to
the satisfaction of the conditions precedent set forth in Section 2 below,
hereby amended as follows:
(a) Section 1.01 is hereby amended by inserting the following
new definitions in appropriate alphabetical order:
"Convertible Note Maturity Date" has the meaning set
forth in Section 2.06(c).
"Third Amendment" means the Third Amendment, dated as
of May 23, 1997, to this Agreement.
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(b) Section 2.06(c) is hereby amended in its entirety to read
as follows:
"(c) Interest on Convertible Notes. From June 1, 1997 until
the earlier of (x) the date upon which demand for payment
shall have been made by the holder of the respective
Convertible Note, (y) the date upon which the principal
amounts under the Convertible Notes shall otherwise become due
and payable in accordance with their terms and (z) the date
upon which the respective Convertible Note shall have been
converted in accordance with its terms (the earliest such
date, the "Convertible Note Maturity Date"), each of the
Convertible Notes shall bear interest on the unpaid principal
amount thereof (including amounts added to the principal
thereof in accordance with the terms hereof) at the rate of
ten percent (10%) per annum. Interest on the Convertible Notes
shall accrue monthly on the last day of each month, and
payment thereof shall be deferred until the Convertible Note
Maturity Date. The amount of accrued interest on the
Convertible Notes shall be added to the principal amount
thereof on the last day of each month. After the Convertible
Note Maturity Date, the Borrowers shall pay interest on any
amounts due and owing under the Convertible Notes, on demand,
at a rate per annum equal to 2.75% above the Alternate Base
Rate."
(c) Exhibit B to the Credit Agreement is hereby amended and
replaced in its entirety by Exhibit B hereto.
SECTION 2. Conditions to Effectiveness.
This Amendment shall not become effective until the date on which the
Agent shall have received (i) counterparts of this Amendment signed by each of
the parties hereto; (ii) the Convertible Notes to the order of the Lenders;
(iii) the consent appended hereto executed by each of the Guarantors (the
"Consent"); and (iv) such other documents as the Agent shall reasonably request.
SECTION 3. Representations and Warranties.
The Borrowers hereby (a) reaffirm and admit the validity and
enforceability of the Loan Documents and all of their obligations thereunder,
(b) agree and admit that they have no defenses to or offsets against any of
their obligations to the Agent or any Lender
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under the Loan Documents, and (c) represent and warrant that there exists no
Default or Event of Default and that the representations and warranties
contained in the Credit Agreement are true and correct on and as of the date
hereof.
SECTION 4. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of this Amendment, on and after the
date hereof, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein", or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby;
(b) Except as specifically amended or waived above, the Credit
Agreement and the Notes, and all other Loan Documents, shall remain in full
force and effect and are hereby ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents and all Collateral
described therein shall continue to secure the payment of the obligations of the
Borrowers thereunder, under the Credit Agreement, as amended hereby, and under
the Notes and other Loan Documents; and
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor, except as provided herein, constitute a waiver of any provision
of any of the Loan Documents.
SECTION 5. Costs and Expenses.
The Borrowers agree to pay on demand all reasonable costs and expenses
of the Agent in connection with the arranging, preparation, reproduction,
execution and delivery of this Amendment and the other instruments and documents
to be delivered hereunder, including the reasonable fees and expenses of Zalkin,
Rodin & Goodman, LLP, special counsel for the Agent, with respect thereto, and
of local counsel, if any, who may be retained by said special counsel with
respect thereto.
SECTION 6. Counterparts.
This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
document.
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SECTION 7. Governing Law.
This Amendment is intended to be performed in the State of New York and
shall be construed and is enforceable in accordance with, and shall be governed
by, the internal laws of the State of New York without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
THE GROUND ROUND, INC.
By:_____________________________________
Name:
Title:
GR OF MINN., INC.
By:_____________________________________
Name:
Title:
THE BANK OF NEW YORK,
Individually and as Agent
By:_____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:_____________________________________
Name:
Title:
BANK OF AMERICA ILLINOIS
By:_____________________________________
Name:
Title:
NBD BANK
By:_____________________________________
Name:
Title:
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CREDIT LYONNAIS NEW YORK BRANCH
By:_____________________________________
Name:
Title:
5
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Exhibit 10.2
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AMENDED AND RESTATED CONVERTIBLE NOTE
$______________ May __, 1997
FOR VALUE RECEIVED, THE GROUND ROUND, INC., a Delaware
corporation, GR OF MINN., INC., a Delaware corporation and GROUND ROUND
RESTAURANTS INC., ("GRR"), a New York corporation (collectively, the
"Obligors"), DO HEREBY JOINTLY AND SEVERALLY PROMISE to pay to the order of
_________________, (the "Bank"), at the office of The Bank of New York (the
"Agent"), at One Wall Street, New York, New York 10286, the sum of
________________ ($__________) or the aggregate unpaid principal amount of the
Obligors' obligations hereunder, whichever is less, in lawful money of the
United States of America on the date set forth below, together with interest as
provided herein. The obligations of the Borrowers hereunder shall be joint and
several. Unless otherwise defined herein, all terms that are defined in the
Agreement (as hereinafter defined) shall have the same meaning herewith.
This Amended and Restated Convertible Note is one of the
Convertible Notes referred to in that certain Amended and Restated Credit
Agreement, dated as of September 12, 1996, as heretofore amended and as the same
may be amended, modified or supplemented from time to time (the "Agreement"),
among the Borrowers, the Agent and each of the financial institutions from time
to time party thereto (the "Lenders"), and is subject to the provisions
contained therein which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
prepayment of the principal hereof prior to the maturity thereof and for the
amendment or waiver of certain provisions of the Agreement, all upon the terms
and conditions specified therein.
Subject to the right of the holder of this Amended and
Restated Convertible Note to convert amounts owing hereunder to common stock of
GRR, this Amended and Restated Convertible Note shall be due and payable as
follows: (i) if the holder has issued a demand for payment on or prior to May
25, 1997, on May 31, 1997 or (ii) if the holder has not issued a demand for
payment on or prior to May 25, 1997, on thirty days prior written demand for
payment provided the holder has not otherwise theretofore exercised its rights
of conversion; provided, that if any of the Lenders under the Agreement issues a
written demand for payment under any of the other Convertible Notes (x) the
Obligors shall promptly, and in no event later than three Business Days
following receipt of such demand, provide written notice of such demand to the
Bank and (y) this Amended and
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Restated Convertible Note shall (without the necessity of the giving of any
notice or the issuance of any demand) be due and payable on the date that
amounts owing under such other Convertible Notes which were the subject of a
demand are due and payable (the "Demand Date") unless the Bank advises the
Obligors in writing that amounts due under this Amended and Restated Convertible
Note are not due and payable on the Demand Date, in which case the demand and
notice provisions set forth in clauses (i) and (ii) of this sentence shall
remain in effect, provided, further, that if demand for payment has not been
issued by the holder on or prior to November 30, 1997 and the holder has not
otherwise theretofore exercised its rights of conversion, this Amended and
Restated Convertible Note shall be due and payable on December 31, 1997 without
the necessity of a demand for payment or the taking of any action by the holder,
the Agent or any of the Lenders. Any demand for payment or exercise of a
conversion right shall be irrevocable.
This Note is secured by certain Collateral referred to in the
Agreement, reference to which is hereby made for a description of the Collateral
provided thereby and the rights of the Borrowers, the Agent and the holder of
this Note in respect of such Collateral.
This Amended and Restated Convertible Note is not subject to
prepayment by, or on behalf of, the Obligors. This Amended and Restated
Convertible Note shall not, prior to May 31, 1997, accrue interest. From and
after May 31, 1997, interest shall accrue on such unpaid principal amount at the
rate set forth in Section 2.06(c) of the Agreement and shall be payable as
provided therein.
The holder of this Amended and Restated Convertible Note shall
have the right, at its option, at any time during the period from and after May
1, 1997 through and including 5:00 p.m. N.Y.C. time on the Termination Date (as
the same may be extended pursuant to the terms of the Agreement), to convert,
subject to the terms and provisions hereof, not in excess of $________ [face
amount of note] of principal of this Amended and Restated Convertible Note into
non-registered and so legended shares of common stock of GRR at a conversion
price equal to $2.70833 (the "Conversion Price") of principal hereunder for each
share of common stock upon surrender of this Amended and Restated Convertible
Note to GRR at the address set forth in Section 8.02 of the Agreement, together
with a written notice of election executed by the holder hereof to convert this
Amended and Restated Convertible Note, specifying the name or names in which the
shares of common stock shall be registered, with the addresses of the persons so
named. As promptly as practicable after the surrender of this Amended and
Restated Convertible Note for conversion as set forth herein, GRR shall deliver,
or cause
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to be delivered, certificates representing the number of shares of fully paid
and non-assessable common stock into which this Amended and Restated Convertible
Note may be converted in accordance with the provisions hereof, registered in
the names as may be specified in such conversion notice. Such conversion shall
be deemed to have been made at the close of business on the date that such
Amended and Restated Convertible Note shall have been surrendered to GRR. Each
holder entitled to receive the shares of common stock upon conversion of such
Amended and Restated Convertible Note shall be treated for all purposes as
having become the record holder or holders of such shares of common stock at
such time. If the last day for the exercise of the conversion right shall be a
Sunday or shall be, in the city in which is then located GRR's principal place
of business, a legal holiday or a day on which banking institutions in such city
are authorized by law to close, then such conversion rights may be exercised on
the next succeeding business day.
The Conversion Price shall be subject to adjustment as
follows:
(a) In case GRR shall (i) pay a dividend in shares of
its capital stock, (ii) subdivide its outstanding shares of common
stock, (iii) combine its outstanding shares of common stock into a
smaller number of shares, or (iv) issue by reclassification of its
shares of common stock any shares of GRR, the conversion price in
effect immediately prior thereto shall be adjusted so that the holder
of this Amended and Restated Convertible Note if thereafter surrendered
for conversion shall be entitled to receive the number of shares of
common stock of GRR which it would have owned or have been entitled to
receive after the happening of any of the events described above, had
such Amended and Restated Convertible Note been converted immediately
prior to the happening of such event. Such adjustment shall be made
whenever any of the events listed above shall occur. An adjustment made
pursuant to this paragraph shall become effective retroactively
immediately after the record date in the case of a dividend and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) In case GRR shall issue rights or warrants to
holders of its common stock entitling them (for a period expiring
within 15 days after the record date mentioned below) to subscribe for
or purchase shares of common stock at a price per share less than the
closing price (as defined below) per share of common stock at the
record date mentioned below, the price per share at which this Amended
and Restated Convertible Note may thereafter be converted into common
stock shall be determined by dividing the price
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per share for which this Amended and Restated Convertible Note were theretofore
convertible into common stock by a fraction of which the numerator shall be the
number of shares of common stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of common stock offered
for subscription or purchase, and of which the denominator shall be the number
of shares of common stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such current market price.
Such adjustment shall be made whenever such rights or warrants are issued, and
shall become effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants.
(c) For the purpose of any computation under
subparagraph (b) above, the "closing price" for any business day shall
mean: (i) if the shares shall not be listed or admitted to trading on
any national securities exchange, the closing price, if reported, or,
if the closing price is not reported, the average of the closing bid
and asked prices, as reported by the National Association of Securities
Dealers Automated Quotation System (NASDAQ or a similar source selected
from time to time by GRR for such purpose, or (ii) if the shares are
listed or admitted to trading on the New York Stock Exchange, the
closing price on the NYSE - Consolidated Tape (or any successor
composite tape reporting transactions on the New York Exchange) or, if
such a composite tape shall not be in use or shall not report
transactions in the shares, or if the shares shall be listed on a stock
exchange other than the New York Stock Exchange, the last reported
sales price on the principal national securities exchange on which the
greatest number of the shares has been traded during the thirty (30)
consecutive business days preceding such business day, or, in either
case, if there is no transaction on any business day, the average of
the bid and asked prices on such day.
(d) No adjustment in the conversion price shall be
required unless such adjustment would require an increase or decrease
of at least $.10 in such price. All calculations under this paragraph
shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
After giving effect to any conversion hereunder, the remaining
principal balance of this Amended and Restated Convertible Note, together with
all accrued interest, shall be payable upon 30 days prior written demand to the
Obligors; provided, that if demand shall not have been made on or prior to
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November 30, 1997, such amounts shall be payable on December 31, 1997.
No fractional shares shall be issued upon the conversion of
this Amended and Restated Convertible Note. If any fractional interest in a
share of common stock would, except for the provisions of this paragraph, be
deliverable upon the conversion of this Amended and Restated Convertible Note,
GRR shall, in lieu of delivering a fractional share therefor, adjust such
fractional interest as follows: if GRR would otherwise be obligated to issue
less than one-half of a share, GRR shall reduce the number of shares to be
issued to the nearest whole number of shares (e.g. 100 4/9 shares shall be
reduced to 100 shares) and if GRR would otherwise be obligated to issue one-half
or more of a share, GRR shall increase the number of shares to be issued to the
nearest whole number of shares (e.g., 100 1/2 shares shall be increased to 101
shares).
Any share of GRR common stock issued to the holder of this
Amended and Restated Convertible Note shall be governed by the terms of that
certain Registration Rights Agreement among GRR and the Lenders of even date
herewith.
This Amended and Restated Convertible Note shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to conflicts of law principles.
THE GROUND ROUND, INC.
By:_______________________
Title:
GR OF MINN., INC.
By:_______________________
Title:
GROUND ROUND RESTAURANTS, INC.
By:________________________
Title:
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Exhibit 10.3
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EMPLOYMENT AGREEMENT
This is an agreement (the "Agreement") between Ground Round
Restaurants, Inc. (the "Company" or "Ground Round") a New York corporation with
its principal place of business at 35 Braintree Hill Office Park, Braintree,
Massachusetts and Anthony E. Bezsylko (the "Employee"), with a business address
of 35 Braintree Hill Office Park, Braintree, Massachusetts, effective as of May
15, 1997 (the "Effective Date").
In consideration of the promises and mutual covenants contained herein,
the parties agree as follows:
1. Employment.
From and after the Effective Date, for and during the term, and subject
to the further conditions of this Agreement, Employee shall be employed
in the capacity of Senior Vice President of Operations of Company and
its affiliates and subsidiaries and perform all duties that may
reasonably be required of him as Senior Vice President of Operations or
as may be assigned by the Chairman, President and Chief Executive
Officer (the "Chairman") of the Company. Employee shall report to the
Chairman and shall be subject to his discretion and control.
The location for such employment shall be at the corporate offices of
the Company.
Employee shall devote substantially all of his business time and his
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and to the
ethical discharge of his duties and responsibilities under this
Agreement. Employee shall not engage in any other business activity or
serve in any industry, trade, professional, governmental or academic
position during the term of employment, except for the following:
managing the personal business affairs of Employee; and as may
otherwise be expressly approved in writing in advance by the Chairman.
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2. Term.
Company shall employ Employee for an initial term commencing on the
Effective Date and ending one year from the Effective Date, unless
Employee's employment is sooner terminated pursuant to the provisions
of this Agreement. The initial term shall be automatically extended for
successive one year terms, unless at least 90 days prior to the
expiration of the original or extended term either party shall advise
the other in writing that it wishes to terminate this Agreement as of
the end of the original or that extended term (the original and any
extended term shall hereinafter be collectively referred to as the
"Employment Period").
3. Compensation and Benefits.
(a) Base Salary.
During the Employment Period, the Company shall pay the
Employee base salary (the "Base Salary") at a rate of no less
than Twelve Thousand Five Hundred Dollars ($12,500) per month
(the "Base Rate"), prorated for any partial period. Base
Salary shall be payable in accordance with the payroll
practices of the Company for its executives.
(b) Bonus.
Employee shall be eligible to receive during the term of this
Agreement commencing in the Company's 1997 fiscal year, and
shall be paid within thirty (30) days of the annual audit of
the Company, if the calculations mandate such payment, a bonus
as provided in the Corporate Office Incentive Plan, and
subject to its terms and conditions.
(c) Stock Options.
Employee was previously granted stock options to purchase from
the Company Fifty Thousand (50,000) shares of the Company's
common stock pursuant to the Company's Amended and Restated
1989 Stock Option Plan and the 1992 Equity Incentive Plan (the
"Plans").
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It is understood and agreed that any future stock options
which may be granted shall be governed in accordance with the
terms of the Plans and the rules and regulations of the
Securities and Exchange Commission.
(d) Benefits.
Except as otherwise provided herein, Employee shall be
entitled to receive the fringe benefits normally provided by
the Company to senior executives and in accordance with the
terms of each Plan or document which controls such benefit
(including but not limited to life insurance coverage, medical
and dental insurance, travel and accident insurance, Long-Term
Disability coverage, Executive Health examination on an annual
basis, stock options and other benefits during the term of
this Agreement). Employee shall be entitled to the use of a
company automobile in accordance with the Company's Automobile
Policy from time to time in effect. The Employee's
participation shall be subject to the terms of the applicable
plan documents, generally applicable company policies and
appropriate discretion of the Board or any administrative
committee contemplated by such plans.
(e) Vacation.
During the Employment Period, Employee shall be entitled to
vacation (prorated for partial calendar years), subject to the
reasonable business needs of the Company and in accordance
with the terms of the Company's Vacation Policy.
(f) Certain Expenses.
The Company shall pay or reimburse the Employee for all
reasonable, customary business expenses incurred or paid by
the Employee in the performance of the duties and
responsibilities of his position and to such reasonable
substantiation and documentation as may be required by the
Company.
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4. Termination of Employment.
(a) Death.
If the Employee dies during the Employment Period, the Company
shall have no further obligations under this Agreement other
than to pay to the Employee's estate Base Salary through the
end of the calendar month of his death and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy.
(b) Disability.
The Company may terminate the Employee's employment by written
notice in the event that, for any reason, he becomes disabled,
either physically or psychologically, or is unable to perform
substantially all of his essential duties and responsibilities
under this Agreement for One Hundred Eighty (180) days during
any period of three hundred and sixty-five (365) consecutive
days. In the event of such a termination, the Company shall
have no further obligations under this Agreement other than to
pay to the Employee Base Salary through the end of the
calendar month of his termination and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy.
The Employee shall at the request of the Company, submit to a
medical examination by a physician selected by the Company, to
whom the Employee or his duly appointed guardian has no
reasonable objection, to determine whether the Employee is
disabled. Such determination shall be conclusive. If the
Employee fails to submit to such medical examination, the
Company's determination of the Employee's disability shall be
conclusive.
Paragraph 4(b) shall be interpreted and applied in accordance
with the Americans with Disabilities Act, including but not
limited to, the obligation to provide reasonable
accommodations as specified under such Act.
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<PAGE> 5
(c) Termination by the Company for Cause.
The Company may terminate the Employee's employment hereunder
for Cause at any time upon written notice setting forth in
reasonable detail the nature of the Cause. The following, as
determined by the Chairman in his reasonable judgment, will
constitute Cause:
(i) The Employee's refusal to attempt in good
faith to perform his duties and
responsibilities to the Company; a breach of
fiduciary duty; any willful misconduct by the
Employee which injures the Company
(monetarily or otherwise) or the Employee's
gross negligence in the performance of his
duties and responsibilities; or
(ii) fraud, embezzlement or other dishonesty by
the Employee with respect to the Company;
or
(iii) the Employee's conviction of, or plea of nolo
contendere to, a felony or other crime
involving moral turpitude;
(iv) any material breach of this Agreement; and
(v) any form of misconduct as described in the
Company's current Termination Policy under
I.B. 4 of such policy.
Upon termination of the Employee's employment for Cause, the
Company shall have no further obligations under this Agreement
other than to pay to the Employee any Base Salary through the
date of termination, and any other amounts that have been
earned in accordance with the applicable Company policy, but
has not been paid, but specifically excluding any bonus
payment stated in paragraph 3(b).
(d) Termination by the Company Other Than for Cause (Excluding
Change of Control).
The Company may (other than during a Change of
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<PAGE> 6
Control time period as defined below) terminate the Employee's
employment hereunder, other than for Cause, at any time upon
written notice, as defined in the Company's current
Termination Policy. In the event of such termination, the
Company shall do the following:
(i) Pay to Employee his Base Salary in
accordance with the Company's customary
payroll practices for a period of six months
after the date of termination or the period
remaining in the Employment Period,
whichever shall be greater (such greater
period is referred to herein as the
"Severance Period") provided, however, if
Employee shall secure other employment,
the Company shall cease making such
payments as of that time.
(ii) Pay to Employee any other bonus or
compensation hereunder in accordance with
the applicable Company plan or policy; and
(iii) Continue to contribute to the cost of the Employee's
participation in the Company's Continued Benefit
Plans (as hereinafter defined) for a period of six
months after the date of termination or during the
remainder of the Employment Period, whichever shall
be greater, provided, however, if Employee shall
secure other employment, the Company's contribution
to such Continued Benefit Plans shall cease as of
that time.
The Company shall have no other obligations under this
Agreement, unless there is a Change of Control as defined in
paragraph 5(c)(ii), and if such a Change of Control occurs,
the terms and provisions of paragraph 5 of this Agreement
shall control.
(e) Termination by the Executive (Excluding Change of Control).
(i) If the Employee terminates his employment during the
Employment Period (other than during a Change of
Control period as defined below) because the Employee
resigns, the Company shall pay Employee the Base
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<PAGE> 7
Salary through the date of termination and
any other bonus or compensation in
accordance with the applicable Company
plan or policy.
(ii) If the Employee terminates his employment
with the Company for any other reason
(other than during a Change of Control
period as defined below), in addition to its
other rights and remedies, the Company
shall have no further obligations under this
Agreement other than to pay to the
Employee any Base Salary through the date
of termination and any other bonus or
compensation in accordance with the
applicable Company plan or policy.
(f) Stock Options.
Upon termination, death or disability, as such terms are
defined in paragraph 4, the Employee's rights with respect to
any stock options then held shall be governed by the Plan(s)
and/or any applicable documents under which such options were
awarded.
(g) Severance.
Upon any termination, death or disability, Employee waives any
rights Employee may have to receive any applicable Severance
Pay under the Company's Severance Pay Plan, subject to the
terms and conditions of such Plan, and except as otherwise
required by law.
5. Change of Control
The following provisions of this paragraph shall apply only in event of
a Change of Control:
(a) In the event of a Change of Control as defined below and in
consideration of Employee's continued employment with the
Company, the Company will pay Employee as termination
compensation: (x) an amount, determined as provided below, in
the event that within (i) twelve (12) months after a Change of
Control of the Company has
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<PAGE> 8
occurred Employee terminates employment with the Company for
Good Reason, as defined below, within ninety (90) days after
the event which constitutes Good Reason or (ii) twenty four
(24) months after a Change of Control of the Company has
occurred, Employee's employment with the Company is terminated
by the Company for any reason other than Cause, death or
disability (disability being defined as in paragraph 4(b)).
The amount of termination compensation so payable shall be an
amount equal to the product of 2 times the Employee's current
annual Base Salary and, if Employee's Base Salary is hereafter
increased, the Employee's highest annual base salary ("Highest
Base Salary") from time to time hereafter in effect; or (y) an
amount equal to the Employee's Base Salary or Highest Base
Salary, as the case may be, in the event the Employee
terminates employment with the Company for Good Reason within
ninety (90) days after the event which constitutes Good
Reason, at any time after the first anniversary and prior to
the second anniversary of the date on which a Change of
Control of the Company has occurred. The termination
compensation payable pursuant to (x) or (y) above, as the case
may be, is herein referred to as the "Severance Payment".. In
addition to the Severance Payment, the Company shall pay any
bonus due in accordance with paragraph 3(b)(a "Bonus
Payment"), and such bonus shall be pro rated only for that
fiscal year that the Change of Control occurs. The Severance
Payment and any Bonus Payment shall be paid to Employee as
follows: (i) any Bonus Payment and one-half of the Severance
Payment shall be paid within five (5) days after the date of
termination (hereinafter referred to as the "Payment Date") of
Employee's employment (hereinafter referred to as the
"Termination Date"), and (ii) one-half of the Severance
Payment shall be paid in twelve (12) equal monthly
installments commencing on the day that is one month after the
Termination Date (the "Monthly Severance Payments").
(b) In addition:
(i) Any compensation and other amounts
previously deferred by Employee, together
with accrued interest thereon, if any, to
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<PAGE> 9
which Employee is entitled, and any accrued vacation
pay not yet paid by the Company, shall be paid to
Employee on the Payment Date.
(ii) All other amounts accrued or earned by Employee
through the Payment Date and amounts otherwise
then owing under the Company's plans and
policies, excluding payment(s) due under the
Company's Severance Pay Plan (which Employee
shall not participate in) shall be paid to Employee
on the Payment Date, other than benefits due to
Employee under any qualified plan(s) of the
Company, which benefits shall be paid in
accordance with the terms of such plan(s).
(iii) The Company shall pay all reasonable legal
fees and expenses incurred by Employee in
seeking to obtain or enforce any right or
benefit provided by a Change of Control,
regardless of the outcome thereof, but
specifically excluding legal representation for
initiation of a lawsuit and representation
thereafter.
(iv) The Company shall maintain in full force and
effect, for the continued benefit of Employee
and/or Employee's family for one year after
the Termination Date, all medical and dental
insurance plans, disability and life insurance
plans, travel and accident insurance and the
Company's Automobile Policy (collectively,
the "Continued Benefits Plans") in which
Employee was entitled to participate
immediately prior to the Change of Control,
provided that Employee's continued
participation is possible under the general
terms and provisions of such plans and
programs. In the event that Employee's
participation in any such plan or program is
barred, the Company shall arrange to
provide Employee with benefits substantially
similar to those which Employee is entitled
to receive under such plans and programs or
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<PAGE> 10
at the Company's election, pay Employee in cash an
equivalent amount. At the end of the period of
coverage, Employee shall have the option to have
assigned to him at no cost and with no apportionment
of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to
Employee.
(v) All outstanding stock options which Employee holds
shall vest immediately upon a Change of Control.
(c) For purposes of this Agreement:
(i) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(ii) A "Change of Control" shall be deemed to have taken
place if (a) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power
of the Company's then outstanding securities, (b) the
stockholders of the Company shall have approved (i) a
reorganization, merger or consolidation, in each
case, with respect to which persons who were
stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in
the election of directors of the reorganized, merged
or consolidated company's then outstanding voting
securities, or (ii) a sale of all or substantially
all of the assets of the Company, or (c) as the
result of a tender offer, exchange offer, merger,
consolidation, sale of assets or contested election
or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the
Company immediately before the Transaction
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<PAGE> 11
shall cease to constitute a majority of the Board of
Directors of the Company or of any parent of or
successor to the Company immediately after the
Transaction occurs; or (d) any person or persons
acting as a group acquire the right, by contract,
agreement, understanding or otherwise, to elect or
designate a majority of the members of the Board of
Directors of the Company or of any parent of the
Company.
(iii) "Cause" is defined in paragraph 4(c) of this
Agreement and shall also be applicable to the Change
of Control section.
(d) "Good Reason" means:
(i) The assignment to Employee of any duties
materially inconsistent in any respect with
Employee's position of Senior Vice President
of Operations, or Employee's authority,
duties or responsibilities as in effect on the
date of the Change of Control, or any other
action by the Company which results in a
diminution in such position, authority, duties
or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent
action not taken in bad faith and which is
remedied by the Company promptly after
receipt of notice from Employee;
(ii) Any reduction of Employee's base salary or
the failure by the Company to provide
Employee with an incentive compensation
program, welfare benefits, retirement
benefits and other benefits which in the
aggregate are no less favorable than the
benefits to which Employee was entitled
prior to the Change of Control;
(iii) The Company's requiring Employee to be based at any
office or location more than fifty (50) miles from
the location at which Employee is employed on the
date of the Change of Control, except for travel
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<PAGE> 12
reasonably required in the performance of Employee's
responsibilities, or the Company's requiring Employee
to move his current Massachusetts residence more than
fifty (50) miles from the location of Employee's
current Massachusetts residence at which Employee
resides on the date of the Change of Control;
(e) (i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be
determined that any payment or distribution
by the Company to Employee or for his
benefit (whether paid or payable or
distributed or distributable pursuant to the
terms of this Agreement or otherwise) (a
"Payment"), would be nondeductible by the
Company for Federal income tax purposes
because of Section 280G of the Internal
Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value
of amounts payable or distributable to
Employee or for his benefit pursuant to this
Agreement (such payments or distributions
pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall
be reduced to the Reduced Amount. The
"Reduced Amount" shall be an amount
expressed in present value which maximizes
the aggregate present value of Agreement
Payments without causing any Payment to
be nondeductible by the Company because
of Section 280G of the Code. For purposes
of paragraphs 5(e)(i)(ii)(iii), present value
shall be determined in accordance with
Section 280G(d)(4) of the Code.
(ii) All determinations required to be made under
paragraphs 5(e)(i)(ii)(iii) shall be made by the
Company's then independent certified accountants,
which shall provide detailed supporting calculations
both to the Company and Employee within fifteen (15)
business days of the Termination Date, or such
earlier
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<PAGE> 13
time as is requested by the Company, and a written
opinion to Employee at Employer's cost that Employee
has substantial authority not to report any Excise
Tax on Employee's federal income tax return with
respect to the Payments. Any such determination by
the Company's then independent certified accountants
shall be binding upon the Company and Employee.
Employee shall determine which and how much of the
Payments shall be eliminated or reduced consistent
with the requirements of paragraphs 5(e)(i)(ii)(iii),
provided that, if Employee does not make such
determination within ten business days of the receipt
of the calculations made by the Company's then
independent certified accountants, the Company shall
elect which and how much of the Payments shall be
eliminated or reduced consistent with the
requirements of paragraphs 5(e)(i)(ii)(iii) and shall
notify Employee promptly of such election. Within
five business days thereafter, the Company shall pay
to or distribute to Employee or for Employee's
benefit such amounts as are then due to Employee
under this Agreement. For purposes of paragraphs
5(e)(i)(ii)(iii), "Excise Tax" shall mean the excise
tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise
tax.
(iii) As a result of the uncertainty in the
application of Section 280G of the Code at
the time of the initial determination by the
Company's then certified independent
accountants hereunder, it is possible that
Payments will have been made by the
Company which should not have been made
("Overpayment") or that additional
Payments which will not have been made by
the Company could have been made
("Underpayment"), in each case, consistent
with the calculations required to be made
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<PAGE> 14
hereunder. In the event that the Company's then
certified independent accountants, based upon the
assertion of a deficiency by the Internal Revenue
Service against Employee which the Company's then
certified independent accountants believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or
distributed by the Company to Employee or for
Employee's benefit shall be treated for all purposes
as a loan ab initio to Employee which Employee shall
repay to the Company together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no
amount shall be payable by Employee to the Company if
and to the extent such deemed loan and payment would
not either reduce the amount on which Employee is
subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the
event that the Company's then certified independent
accountants, based upon controlling precedent or
other substantial authority, determines that an
Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to Employee or
for Employee's benefit together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code.
(f) Employee shall not be required to mitigate the amount of
any Payment provided for in this paragraph 5 by seeking
other employment or otherwise, nor shall the amount of
any Payment provided for in this paragraph 5 be reduced
by any compensation earned by Employee as the result of
employment by another employer after the Termination
Date, or otherwise except that Employee shall not be
entitled to continue to participate in a Continued Benefits
Plan to the extent that Employee is eligible to participate
in a benefits plan of another employer that is
substantially similar to such Continued Benefits Plan, as
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<PAGE> 15
to type and coverage, during the one year period following the
Termination Date. The Company's obligation to make the
Payments provided for in this paragraph 5 and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim,
right or action which it may have against Employee or others.
Notwithstanding anything to the contrary contained herein, in
the event that the Company makes a good faith determination
that Employee has breached the non-compete provisions
contained in paragraph 8 hereof, in addition to any of its
other rights and remedies, the Company shall have the right to
set-off and withhold any remaining Monthly Severance Payments.
(g) The failure by Employee to set forth in any notice of
termination of employment any fact or circumstances which
contributes to a showing of Good Reason shall not waive any of
Employee's rights hereunder or preclude Employee from
asserting such fact or circumstance in enforcing Employee's
rights hereunder.
(h) If a Change of Control occurs, the terms and provisions of
paragraph 5 of this Agreement governing the payments to be
made shall control in lieu of any provisions elsewhere in the
Employment Agreement.
(i) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to
perform according to this paragraph 5 in the same
manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. As used in this paragraph 5, "Company" shall
mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(k) Nothing in this paragraph 5 shall prevent or limit
Employee from any continuing or future participation in
any benefit, incentive or other plan or program (excluding
the Company's Severance Pay Plan) provided by the
Company and for which Employee may qualify. Amounts
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<PAGE> 16
which are vested benefits or which Employee is otherwise
entitled to receive under any plan or program of the Company
at or subsequent to any Change of Control shall be payable in
accordance with such plan or program.
6. D & O Liability Insurance.
The Employee shall be covered in his capacity as an officer of the
Company under the Company's directors and officers liability insurance
policy. The cost of such coverage shall be borne by the Company.
7. Nondisclosure.
During the Employment Period, the Employee may become aware of
information which is nonpublic, confidential or proprietary in nature
with respect to the Company or with respect to other companies,
persons, entities, ventures or business opportunities in which the
Company has, or, if it were disclosed to the Company, the Company might
have, an interest ("Confidential Information"). During the Employment
Period and thereafter, all Confidential Information will be kept
strictly confidential by the Employee and the Employee shall not: (a)
copy, reproduce, distribute or disclose any Confidential Information to
any third party except in the course of his employment by the Company;
(b) use any Confidential Information for any purpose other than in
connection with his employment by the Company; or (c) use any
Confidential Information in any way that is detrimental to the Company.
Confidential Information shall not include information which the
Employee can demonstrate: (a) is or becomes generally available to the
public other than by breach by the Employee of his agreement herein;
(b) is required to be disclosed by the Employee after due notice to the
Company, pursuant to obligations under law, regulation or court order;
or (c) was prior to the Effective Date, or thereafter becomes, known to
the Employee on a nonconfidential basis.
Upon termination of the Employee's employment, he shall immediately
return at Company's expense or destroy on request of Company's Counsel
all Confidential Information, including all notes, copies,
reproductions, summaries, analyses, or extracts thereof, then in his
possession. Such return or destruction shall not abrogate the
continuing obligations of the Employee under this Agreement.
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<PAGE> 17
In the event that the Employee is requested or required (by
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, he shall provide the Company with prompt written notice so
that it may seek a protective order or other appropriate remedy. In the
event such protection or other remedy is not obtained, the Employee
shall furnish only that portion of the Confidential Information which
he is advised by counsel agreed to by Company and Employee, at
Company's expense, is legally required and shall exercise best efforts
to obtain assurance that confidential treatment will be accorded to
such Confidential Information, but in no event shall Employee be
required to withhold such Confidential Information if incarceration of
Employee may result.
The Employee agrees that until the expiration of two (2) years from the
date of termination of his employment by the Company, regardless of the
reason for termination, he will not without the prior written approval
of the Company (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities, assets or
property of the Company or any of its subsidiaries, whether such
agreement or proposal is with the Employee or with a third party, other
than shares of common stock he is entitled to acquire under the terms
of this Agreement or the Stock Option Plan or Equity Incentive Plan, or
by inheritance, (ii) propose to enter into, directly or indirectly, any
merger or other business combination involving the Company or any of
its subsidiaries, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" or "proxies" (as such terms are used
in the proxy rules of the Securities and Exchange Commission) to vote,
or seek to advise or influence any person with respect to the voting
of, any voting securities of the Company or any of its subsidiaries,
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
with respect to any voting securities of the Company or any of its
subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or
policies of the Company, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing or (vii) advise, encourage,
provide assistance (including financial assistance) to or hold
discussions with any other persons in connection with any of the
foregoing. Employee may vote any stock owned by Employee, either
directly or indirectly, in any manner Employee chooses, as long as such
voting right does not violate any securities laws.
The Employee hereby acknowledges that he is aware that the
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<PAGE> 18
securities laws prohibit any person who has material, nonpublic
information concerning the Company from purchasing or selling
securities of the Company or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell securities.
The obligations of the Employee stated in this paragraph shall, except
where expressly limited as to time, continue without limit as to time
and without regard to the employment status of the Employee.
8. Non-Compete Provision.
Upon termination of this Agreement for any reason, Employee agrees that
he will not, for a period of one (1) year following any such
termination, except in the event of Employee's termination pursuant to
paragraph 4(d) hereof, in which case, Employee agrees that he will not
throughout the Severance Period, either directly or indirectly, as a
director, officer, employee, agent, consultant, or owner, in whole or
in part, engage in any related activities which are competitive with
the Company's (or its subsidiaries) full-service restaurant operations
within geographic proximity to the Company operations or its
subsidiaries. Employee acknowledges that the remedy at law available to
the Employer and its subsidiaries for a breach or threatened breach of
this paragraph would be inadequate and, therefore, Employee agrees that
in addition to any remedies at law, in the event of any such breach or
threatened breach, the Employer and/or its subsidiaries shall be
entitled to obtain equitable relief or injunctive relief to enforce the
provisions of this paragraph. Ownership of less than five (5%) percent
of any class of publicly-traded securities shall not be deemed a breach
of this paragraph.
9. Payments.
The Company shall have the right to cause all payments pursuant to this
Agreement to be made by The Ground Round, Inc. ("TGRI") and to cause
TGRI to provide all benefits required hereunder, which benefits shall
be those normally provided by TGRI to senior executives of TGRI or the
Company.
10. Withholding.
All payments made by the Company under this Agreement shall be reduced
by any tax or other amounts required to be withheld by the Company
under applicable law.
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11. Assignment.
Except as provided in this paragraph, neither the Company nor the
Employee may make any assignment of this Agreement or any interest
herein, by operation of law or otherwise, without the prior written
consent of the other. The Company may without the consent of the
Employee assign its rights and obligations under this Agreement to any
wholly-owned subsidiary of the Company or to any corporation or other
business entity into which the Company has merged or with which it has
consolidated or which has acquired substantially all of the Company's
assets, provided that no such assignment shall relieve the Company of
its obligations under this Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and the Employee, their
respective successors, executors, administrators, heirs and permitted
assigns.
12. Conflicting Agreement.
The Employee hereby represents and warrants that the execution of this
Agreement and the performance of the obligations hereunder will not
breach or be in conflict with any other agreement to which Employee is
a party or is bound and that Employee is not now subject to any
covenants against competition or similar covenants that would affect
the performance of Employee's obligations hereunder.
13. Entire Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes all prior communications, agreements, representations and
understandings, written or oral, express or implied, with respect to
the terms and conditions of the Employee's employment.
14. Amendment.
This Agreement may be amended or modified only by a written instrument
signed by the Employee and by such officer as may be specifically
designated and authorized by the Board.
15. Governing Law.
This is a Massachusetts contract and shall be construed and enforced
under and be governed in all respects by the law of the Commonwealth of
Massachusetts without regard to principles of conflicts of laws.
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16. Notice.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed
to have been duly given when delivered by hand, telecopied (receipt
acknowledged) or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that
all notices to Company shall be directed to the attention of the
Chairman with a copy to the Secretary of Company, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.
17. Validity,
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. No
waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the time or at any
prior or subsequent time. The provisions of paragraph 7 shall survive
the termination or expiration of this Agreement regardless of the
reasons therefor. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Employee, as of the date first above written.
GROUND ROUND RESTAURANTS, INC.
By: /s/ Daniel R. Scoggin
------------------------
Daniel R. Scoggin
Chairman, President and
Chief Executive Officer
ANTHONY E. BEZSYLKO
/s/ ANTHONY E. BEZSYLKO
-----------------------------
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<PAGE> 1
Exhibit 10.4
------------
EMPLOYMENT AGREEMENT
This is an agreement (the "Agreement") between Ground Round
Restaurants, Inc. (the "Company" or "Ground Round") a New York corporation with
its principal place of business at 35 Braintree Hill Office Park, Braintree,
Massachusetts and Henri R. Evans (the "Employee"), with a business address of 35
Braintree Hill Office Park, Braintree, Massachusetts, effective as of May 15,
1997 (the "Effective Date").
In consideration of the promises and mutual covenants contained herein,
the parties agree as follows:
1. Employment.
From and after the Effective Date, for and during the term, and subject
to the further conditions of this Agreement, Employee shall be employed
in the capacity of Vice President of Marketing of the Company and its
affiliates and subsidiaries and perform all duties that may reasonably
be required of him as Vice President of Marketing or as may be assigned
by the Chairman, President and Chief Executive Officer (the "Chairman")
of the Company. Employee shall report to the Chairman and shall be
subject to his discretion and control.
The location for such employment shall be at the corporate offices of
the Company.
Employee shall devote substantially all of his business time and his
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and to the
ethical discharge of his duties and responsibilities under this
Agreement. Employee shall not engage in any other business activity or
serve in any industry, trade, professional, governmental or academic
position during the term of employment, except for the following:
managing the personal business affairs of Employee; and as may
otherwise be expressly approved in writing in advance by the Chairman.
<PAGE> 2
2. Term.
Company shall employ Employee for an initial term commencing on the
Effective Date and ending one year from the Effective Date, unless
Employee's employment is sooner terminated pursuant to the provisions
of this Agreement. The initial term shall be automatically extended for
successive one year terms, unless at least 90 days prior to the
expiration of the original or extended term either party shall advise
the other in writing that it wishes to terminate this Agreement as of
the end of the original or that extended term (the original and any
extended term shall hereinafter be collectively referred to as the
"Employment Period").
3. Compensation and Benefits.
(a) Base Salary.
During the Employment Period, the Company shall pay the
Employee base salary (the "Base Salary") at a rate of no less
than Ten Thousand Eight Hundred Thirty-Three and Thirty-Three
Cents ($10,833.33) per month (the "Base Rate"), prorated for
any partial period. Base Salary shall be payable in accordance
with the payroll practices of the Company for its executives.
(b) Bonus.
Employee shall be eligible to receive during the term of this
Agreement commencing in the Company's 1997 fiscal year, and
shall be paid within thirty (30) days of the annual audit of
the Company, if the calculations mandate such payment, a bonus
as provided in the Corporate Office Incentive Plan, and
subject to its terms and conditions.
(c) Stock Options.
The Company shall grant to Employee, on the Effective Date, a
stock option to purchase Thirty Thousand (30,000) shares of
common stock of the Company in accordance with the terms of
the Company's Amended and Restated 1989 Stock Option Plan and
the 1992 Equity Incentive Plan. The price at which shares of
Common Stock may be purchased pursuant to the option shall be
the closing price, as of May 15, 1997, of a share of the
Company's common stock as listed on NASDAQ.
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<PAGE> 3
The option shall become exercisable in equal installments over
a three-year period, with the first installment being
exercisable on May 14, 1998.
Promptly after the grant of the Option, the Company and
Employee shall execute and deliver to each other a Stock
Option Agreement evidencing the Option and the terms thereof
(the "Stock Option Agreement"). It is understood and agreed
that the Option shall be granted and governed in accordance
with the terms of the Plans and the rules and regulations of
the Securities and Exchange Commission.
(d) Benefits.
Except as otherwise provided herein, Employee shall be
entitled to receive the fringe benefits normally provided by
the Company to senior executives and in accordance with the
terms of each Plan or document which controls such benefit
(including but not limited to life insurance coverage, medical
and dental insurance, travel and accident insurance, Long-Term
Disability coverage, Executive Health examination on an annual
basis, stock options and other benefits during the term of
this Agreement). Employee shall be entitled to the use of a
company automobile in accordance with the Company's Automobile
Policy, from time to time in effect. The Employee's
participation shall be subject to the terms of the applicable
plan documents, generally applicable company policies and
appropriate discretion of the Board or any administrative
committee contemplated by such plans.
(e) Vacation.
During the Employment Period, Employee shall be entitled to
vacation (prorated for partial calendar years), subject to the
reasonable business needs of the Company and in accordance
with the terms of the Company's Vacation Policy.
(f) Certain Expenses.
The Company shall pay or reimburse the Employee for all
reasonable, customary business expenses incurred or paid by
the Employee in the performance of the duties
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<PAGE> 4
and responsibilities of his position and to such reasonable
substantiation and documentation as may be required by
the Company.
(g) Relocation.
When the Employee relocates to the Commonwealth of
Massachusetts, the Company agrees to reimburse Employee for
reasonable and ordinary expenses which are covered under the
Company's Employee Relocation Policy and in accordance with
the terms of the Policy.
4. Termination of Employment.
(a) Death.
If the Employee dies during the Employment Period, the Company
shall have no further obligations under this Agreement other
than to pay to the Employee's estate Base Salary through the
end of the calendar month of his death and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy.
(b) Disability.
The Company may terminate the Employee's employment by written
notice in the event that, for any reason, he becomes disabled,
either physically or psychologically, or is unable to perform
substantially all of his essential duties and responsibilities
under this Agreement for One Hundred Eighty (180) days during
any period of three hundred and sixty-five (365) consecutive
days. In the event of such a termination, the Company shall
have no further obligations under this Agreement other than to
pay to the Employee Base Salary through the end of the
calendar month of his termination and any other bonus or
compensation hereunder in accordance with the applicable
Company plan or policy.
The Employee shall at the request of the Company, submit to a
medical examination by a physician selected by the Company, to
whom the Employee or his duly appointed guardian has no
reasonable objection, to determine whether the Employee is
disabled. Such determination shall be conclusive. If the
Employee fails to submit to such medical examination, the
Company's
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<PAGE> 5
determination of the Employee's disability shall be
conclusive.
Paragraph 4(b) shall be interpreted and applied in accordance
with the Americans with Disabilities Act, including but not
limited to, the obligation to provide reasonable
accommodations as specified under such Act.
(c) Termination by the Company for Cause.
The Company may terminate the Employee's employment hereunder
for Cause at any time upon written notice setting forth in
reasonable detail the nature of the Cause. The following, as
determined by the Chairman in his reasonable judgment, will
constitute Cause:
(i) The Employee's refusal to attempt in good faith to
perform his duties and responsibilities to the
Company; a breach of fiduciary duty; any willful
misconduct by the Employee which injures the Company
(monetarily or otherwise) or the Employee's gross
negligence in the performance of his duties and
responsibilities; or
(ii) fraud, embezzlement or other dishonesty by the
Employee with respect to the Company; or
(iii) the Employee's conviction of, or plea of nolo
contendere to, a felony or other crime involving
moral turpitude;
(iv) any material breach of this Agreement; and
(v) any form of misconduct as described in the Company's
current Termination Policy under I.B. 4 of such
policy.
Upon termination of the Employee's employment for Cause, the
Company shall have no further obligations under this Agreement
other than to pay to the Employee any Base Salary through the
date of termination, and any other amounts that have been
earned in accordance with the applicable Company policy, but
has not been paid, but specifically excluding any bonus
payment stated in
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<PAGE> 6
paragraph 3(b).
(d) Termination by the Company Other Than for Cause (Excluding
Change of Control).
The Company may (other than during a Change of Control time
period as defined below) terminate the Employee's employment
hereunder, other than for Cause, at any time upon written
notice, as defined in the Company's current Termination
Policy. In the event of such termination, the Company shall do
the following:
(i) Pay to Employee his Base Salary in accordance with
the Company's customary payroll practices for a
period of six months after the date of termination or
the period remaining in the Employment Period,
whichever shall be greater (such greater period is
referred to herein as the "Severance Period")
provided, however, if Employee shall secure other
employment, the Company shall cease making such
payments as of that time.
(ii) Pay to Employee any other bonus or compensation
hereunder in accordance with the applicable Company
plan or policy; and
(iii) Continue to contribute to the cost of the Employee's
participation in the Company's Continued Benefit
Plans (as hereinafter defined) for a period of six
months after the date of termination or during the
remainder of the Employment Period, whichever shall
be greater, provided, however, if Employee shall
secure other employment, the Company's contribution
to such Continued Benefit Plans shall cease as of
that time.
The Company shall have no other obligations under this
Agreement, unless there is a Change of Control as defined in
paragraph 5(c)(ii), and if such a Change of Control occurs,
the terms and provisions of paragraph 5 of this Agreement
shall control.
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<PAGE> 7
(e) Termination by the Executive (Excluding Change of Control).
(i) If the Employee terminates his employment during the
Employment Period (other than during a Change of
Control period as defined below) because the Employee
resigns, the Company shall pay Employee the Base
Salary through the date of termination and any other
bonus or compensation in accordance with the
applicable Company plan or policy.
(ii) If the Employee terminates his employment with the
Company for any other reason (other than during a
Change of Control period as defined below), in
addition to its other rights and remedies, the
Company shall have no further obligations under this
Agreement other than to pay to the Employee any Base
Salary through the date of termination and any other
bonus or compensation in accordance with the
applicable Company plan or policy.
(f) Stock Options.
Upon termination, death or disability, as such terms are
defined in paragraph 4, the Employee's rights with respect to
any stock options then held shall be governed by the Plan(s)
and/or any applicable documents under which such options were
awarded.
(g) Severance.
Upon any termination, death or disability, Employee waives any
rights Employee may have to receive any applicable Severance
Pay under the Company's Severance Pay Plan, subject to the
terms and conditions of such Plan, and except as otherwise
required by law.
5. Change of Control
The following provisions of this paragraph shall apply only in event of
a Change of Control:
(a) In the event of a Change of Control as defined below and
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<PAGE> 8
in consideration of Employee's continued employment with the
Company, the Company will pay Employee as termination
compensation: (x) an amount, determined as provided below, in
the event that within (i) twelve (12) months after a Change of
Control of the Company has occurred Employee terminates
employment with the Company for Good Reason, (as defined
below), within ninety (90) days after the event which
constitutes Good Reason or (ii) twenty four (24) months after
a Change of Control of the Company has occurred, Employee's
employment with the Company is terminated by the Company for
any reason other than Cause, death or disability (disability
being defined as in paragraph 4(b)). The amount of termination
compensation so payable shall be an amount equal to the
product of 2 times the Employee's current annual Base Salary
and, if Employee's Base Salary is hereafter increased, the
Employee's highest annual base salary ("Highest Base Salary")
from time to time hereafter in effect; or (y) an amount equal
to the Employee's Base Salary or Highest Base Salary, as the
case may be, in the event the Employee terminates employment
with the Company for Good Reason within ninety (90) days after
the event which constitutes Good Reason, at any time after the
first anniversary and prior to the second anniversary of the
date on which a Change of Control of the Company has occurred.
The termination compensation payable pursuant to (x) or (y)
above, as the case may be, is herein referred to as the
"Severance Payment". In addition to the Severance Payment, the
Company shall pay any bonus due in accordance with paragraph
3(b)(a "Bonus Payment"), and such bonus shall be pro rated
only for that fiscal year that the Change of Control occurs.
The Severance Payment and any Bonus Payment shall be paid to
Employee as follows: (i) any Bonus Payment and one-half of the
Severance Payment shall be paid within five (5) days after the
date of termination (hereinafter referred to as the "Payment
Date") of Employee's employment (hereinafter referred to as
the "Termination Date"), and (ii) one-half of the Severance
Payment shall be paid in twelve (12) equal monthly
installments commencing on the day that is one month after the
Termination Date (the "Monthly Severance Payments").
8
<PAGE> 9
(b) In addition:
(i) Any compensation and other amounts previously
deferred by Employee, together with accrued interest
thereon, if any, to which Employee is entitled, and
any accrued vacation pay not yet paid by the Company,
shall be paid to Employee on the Payment Date.
(ii) All other amounts accrued or earned by Employee
through the Payment Date and amounts otherwise then
owing under the Company's plans and policies,
excluding payment(s) due under the Company's
Severance Pay Plan (which Employee shall not
participate in) shall be paid to Employee on the
Payment Date, other than benefits due to Employee
under any qualified plan(s) of the Company, which
benefits shall be paid in accordance with the terms
of such plan(s).
(iii) The Company shall pay all reasonable legal fees and
expenses incurred by Employee in seeking to obtain or
enforce any right or benefit provided by a Change of
Control, regardless of the outcome thereof, but
specifically excluding legal representation for
initiation of a lawsuit and representation
thereafter.
(iv) The Company shall maintain in full force and effect,
for the continued benefit of Employee and/or
Employee's family for one year after the Termination
Date, all medical and dental insurance plans,
disability and life insurance plans, travel and
accident insurance and the Company's Automobile
Policy (collectively, the "Continued Benefits Plans")
in which Employee was entitled to participate
immediately prior to the Change of Control, provided
that Employee's continued participation is possible
under the general terms and provisions of such plans
and programs. In the event that Employee's
participation in any such plan or program is barred,
the Company shall arrange to
9
<PAGE> 10
provide Employee with benefits substantially similar
to those which Employee is entitled to receive under
such plans and programs or at the Company's election,
pay Employee in cash an equivalent amount. At the end
of the period of coverage, Employee shall have the
option to have assigned to him at no cost and with no
apportionment of prepaid premiums, any assignable
insurance policy owned by the Company and relating
specifically to Employee.
(v) All outstanding stock options which Employee holds
shall vest immediately upon a Change of Control.
(c) For purposes of this Agreement:
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(ii) A "Change of Control" shall be deemed to have taken
place if (a) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power
of the Company's then outstanding securities, (b) the
stockholders of the Company shall have approved (i) a
reorganization, merger or consolidation, in each
case, with respect to which persons who were
stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in
the election of directors of the reorganized, merged
or consolidated company's then outstanding voting
securities, or (ii) a sale of all or substantially
all of the assets of the Company, or (c) as the
result of a tender offer, exchange offer, merger,
consolidation, sale of assets or contested election
or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of
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<PAGE> 11
the Company immediately before the Transaction shall
cease to constitute a majority of the Board of
Directors of the Company or of any parent of or
successor to the Company immediately after the
Transaction occurs; or (d) any person or persons
acting as a group acquire the right, by contract,
agreement, understanding or otherwise, to elect or
designate a majority of the members of the Board of
Directors of the Company or of any parent of the
Company.
(iii) "Cause" is defined in paragraph 4(c) of this
Agreement and shall also be applicable to the Change
of Control section.
(d) "Good Reason" means:
(i) The assignment to Employee of any duties materially
inconsistent in any respect with Employee's position
of Vice President of Marketing, or Employee's
authority, duties or responsibilities as in effect on
the date of the Change of Control, or any other
action by the Company which results in a diminution
in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the
Company promptly after receipt of notice from
Employee;
(ii) Any reduction of Employee's base salary or the
failure by the Company to provide Employee with an
incentive compensation program, welfare benefits,
retirement benefits and other benefits which in the
aggregate are no less favorable than the benefits to
which Employee was entitled prior to the Change of
Control;
(iii) The Company's requiring Employee to be based at any
office or location more than fifty (50) miles from
the location at which Employee is employed on the
date of the Change of Control, except for travel
reasonably required in the performance of
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<PAGE> 12
Employee's responsibilities, or the Company's
requiring Employee to move his Massachusetts
residence more than fifty (50) miles from the
location of Employee's current Massachusetts
residence at which Employee resides on the date of
the Change of Control;
(e) (i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to
Employee or for his benefit (whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (a "Payment"), would
be nondeductible by the Company for Federal income
tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of amounts payable or
distributable to Employee or for his benefit pursuant
to this Agreement (such payments or distributions
pursuant to this Agreement are hereinafter referred
to as "Agreement Payments") shall be reduced to the
Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without
causing any Payment to be nondeductible by the
Company because of Section 280G of the Code. For
purposes of paragraphs 5(e)(i)(ii)(iii), present
value shall be determined in accordance with Section
280G(d)(4) of the Code.
(ii) All determinations required to be made under
paragraphs 5(e)(i)(ii)(iii) shall be made by the
Company's then independent certified accountants,
which shall provide detailed supporting calculations
both to the Company and Employee within fifteen (15)
business days of the Termination Date, or such
earlier time as is requested by the Company, and a
written opinion to Employee at Employer's cost that
Employee has substantial authority
12
<PAGE> 13
not to report any Excise Tax on Employee's federal
income tax return with respect to the Payments. Any
such determination by the Company's then independent
certified accountants shall be binding upon the
Company and Employee. Employee shall determine which
and how much of the Payments shall be eliminated or
reduced consistent with the requirements of
paragraphs 5(e)(i)(ii)(iii), provided that, if
Employee does not make such determination within ten
business days of the receipt of the calculations made
by the Company's then independent certified
accountants, the Company shall elect which and how
much of the Payments shall be eliminated or reduced
consistent with the requirements of paragraphs
5(e)(i)(ii)(iii) and shall notify Employee promptly
of such election. Within five business days
thereafter, the Company shall pay to or distribute to
Employee or for Employee's benefit such amounts as
are then due to Employee under this Agreement. For
purposes of paragraphs 5(e)(i)(ii)(iii), "Excise Tax"
shall mean the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to
such excise tax.
(iii) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial
determination by the Company's then certified
independent accountants hereunder, it is possible
that Payments will have been made by the Company
which should not have been made ("Overpayment") or
that additional Payments which will not have been
made by the Company could have been made
("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the
event that the Company's then certified independent
accountants, based upon the assertion of a deficiency
by the Internal Revenue Service against Employee
which the Company's then
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<PAGE> 14
certified independent accountants believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or
distributed by the Company to Employee or for
Employee's benefit shall be treated for all purposes
as a loan ab initio to Employee which Employee shall
repay to the Company together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no
amount shall be payable by Employee to the Company if
and to the extent such deemed loan and payment would
not either reduce the amount on which Employee is
subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the
event that the Company's then certified independent
accountants, based upon controlling precedent or
other substantial authority, determines that an
Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to Employee or
for Employee's benefit together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code.
(f) Employee shall not be required to mitigate the amount of
any Payment provided for in this paragraph 5 by seeking
other employment or otherwise, nor shall the amount of
any Payment provided for in this paragraph 5 be reduced
by any compensation earned by Employee as the result of
employment by another employer after the Termination
Date, or otherwise except that Employee shall not be
entitled to continue to participate in a Continued Benefits
Plan to the extent that Employee is eligible to participate
in a benefits plan of another employer that is
substantially similar to such Continued Benefits Plan, as
to type and coverage, during the one year period
following the Termination Date. The Company's
obligation to make the Payments provided for in this
paragraph 5 and otherwise to perform its obligations
hereunder shall not be affected by any set-off,
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<PAGE> 15
counterclaim, recoupment, defense or other claim, right or
action which it may have against Employee or others.
Notwithstanding anything to the contrary contained herein, in
the event that the Company makes a good faith determination
that Employee has breached the non-compete provisions
contained in paragraph 8 hereof, in addition to any of its
other rights and remedies, the Company shall have the right to
set-off and withhold any remaining Monthly Severance Payments.
(g) The failure by Employee to set forth in any notice of
termination of employment any fact or circumstances which
contributes to a showing of Good Reason shall not waive any of
Employee's rights hereunder or preclude Employee from
asserting such fact or circumstance in enforcing Employee's
rights hereunder.
(h) If a Change of Control occurs, the terms and provisions of
paragraph 5 of this Agreement governing the payments to be
made shall control in lieu of any provisions elsewhere in the
Employment Agreement.
(i) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to
perform according to this paragraph 5 in the same
manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. As used in this paragraph 5, "Company" shall
mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(k) Nothing in this paragraph 5 shall prevent or limit
Employee from any continuing or future participation in
any benefit, incentive or other plan or program (excluding
the Company's Severance Pay Plan) provided by the
Company and for which Employee may qualify. Amounts
which are vested benefits or which Employee is
otherwise entitled to receive under any plan or program
of the Company at or subsequent to any Change of
Control shall be payable in accordance with such plan or
program.
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<PAGE> 16
6. D & O Liability Insurance.
The Employee shall be covered in his capacity as an officer of the
Company under the Company's directors and officers liability insurance
policy. The cost of such coverage shall be borne by the Company.
7. Nondisclosure.
During the Employment Period, the Employee may become aware of
information which is nonpublic, confidential or proprietary in nature
with respect to the Company or with respect to other companies,
persons, entities, ventures or business opportunities in which the
Company has, or, if it were disclosed to the Company, the Company might
have, an interest ("Confidential Information"). During the Employment
Period and thereafter, all Confidential Information will be kept
strictly confidential by the Employee and the Employee shall not: (a)
copy, reproduce, distribute or disclose any Confidential Information to
any third party except in the course of his employment by the Company;
(b) use any Confidential Information for any purpose other than in
connection with his employment by the Company; or (c) use any
Confidential Information in any way that is detrimental to the Company.
Confidential Information shall not include information which the
Employee can demonstrate: (a) is or becomes generally available to the
public other than by breach by the Employee of his agreement herein;
(b) is required to be disclosed by the Employee after due notice to the
Company, pursuant to obligations under law, regulation or court order;
or (c) was prior to the Effective Date, or thereafter becomes, known to
the Employee on a nonconfidential basis.
Upon termination of the Employee's employment, he shall immediately
return at Company's expense or destroy on request of Company's Counsel
all Confidential Information, including all notes, copies,
reproductions, summaries, analyses, or extracts thereof, then in his
possession. Such return or destruction shall not abrogate the
continuing obligations of the Employee under this Agreement.
In the event that the Employee is requested or required (by
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, he shall provide the Company with prompt written notice
so that it may seek a protective order or other appropriate remedy. In
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<PAGE> 17
the event such protection or other remedy is not obtained, the Employee
shall furnish only that portion of the Confidential Information which
he is advised by counsel agreed to by Company and Employee, at
Company's expense, is legally required and shall exercise best efforts
to obtain assurance that confidential treatment will be accorded to
such Confidential Information, but in no event shall Employee be
required to withhold such Confidential Information if incarceration of
Employee may result.
The Employee agrees that until the expiration of two (2) years from the
date of termination of his employment by the Company, regardless of the
reason for termination, he will not without the prior written approval
of the Company (i) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities, assets or
property of the Company or any of its subsidiaries, whether such
agreement or proposal is with the Employee or with a third party, other
than shares of common stock he is entitled to acquire under the terms
of this Agreement or the Stock Option Plan or Equity Incentive Plan, or
by inheritance, (ii) propose to enter into, directly or indirectly, any
merger or other business combination involving the Company or any of
its subsidiaries, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" or "proxies" (as such terms are used
in the proxy rules of the Securities and Exchange Commission) to vote,
or seek to advise or influence any person with respect to the voting
of, any voting securities of the Company or any of its subsidiaries,
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934)
with respect to any voting securities of the Company or any of its
subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or
policies of the Company, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing or (vii) advise, encourage,
provide assistance (including financial assistance) to or hold
discussions with any other persons in connection with any of the
foregoing. Employee may vote any stock owned by Employee, either
directly or indirectly, in any manner Employee chooses, as long as such
voting right does not violate any securities laws.
The Employee hereby acknowledges that he is aware that the securities
laws prohibit any person who has material, nonpublic information
concerning the Company from purchasing or selling securities of the
Company or from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities.
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<PAGE> 18
The obligations of the Employee stated in this paragraph shall, except
where expressly limited as to time, continue without limit as to time
and without regard to the employment status of the Employee.
8. Non-Compete Provision.
Upon termination of this Agreement for any reason, Employee agrees that
he will not, for a period of one (1) year following any such
termination, except in the event of Employee's termination pursuant to
paragraph 4(d) hereof, in which case, Employee agrees that he will not
throughout the Severance Period, either directly or indirectly, as a
director, officer, employee, agent, consultant, or owner, in whole or
in part, engage in any related activities which are competitive with
the Company's (or its subsidiaries) full-service restaurant operations
within geographic proximity to the Company operations or its
subsidiaries. Employee acknowledges that the remedy at law available to
the Employer and its subsidiaries for a breach or threatened breach of
this paragraph would be inadequate and, therefore, Employee agrees that
in addition to any remedies at law, in the event of any such breach or
threatened breach, the Employer and/or its subsidiaries shall be
entitled to obtain equitable relief or injunctive relief to enforce the
provisions of this paragraph. Ownership of less than five (5%) percent
of any class of publicly-traded securities shall not be deemed a breach
of this paragraph.
9. Payments.
The Company shall have the right to cause all payments pursuant to this
Agreement to be made by The Ground Round, Inc. ("TGRI") and to cause
TGRI to provide all benefits required hereunder, which benefits shall
be those normally provided by TGRI to senior executives of TGRI or the
Company.
10. Withholding.
All payments made by the Company under this Agreement shall be reduced
by any tax or other amounts required to be withheld by the Company
under applicable law.
11. Assignment.
Except as provided in this paragraph, neither the Company nor the
Employee may make any assignment of this Agreement or any interest
herein, by operation of law or otherwise, without the prior written
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consent of the other. The Company may without the consent of the
Employee assign its rights and obligations under this Agreement to any
wholly-owned subsidiary of the Company or to any corporation or other
business entity into which the Company has merged or with which it has
consolidated or which has acquired substantially all of the Company's
assets, provided that no such assignment shall relieve the Company of
its obligations under this Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and the Employee, their
respective successors, executors, administrators, heirs and permitted
assigns.
12. Conflicting Agreement.
The Employee hereby represents and warrants that the execution of this
Agreement and the performance of the obligations hereunder will not
breach or be in conflict with any other agreement to which Employee is
a party or is bound and that Employee is not now subject to any
covenants against competition or similar covenants that would affect
the performance of Employee's obligations hereunder.
13. Entire Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes all prior communications, agreements, representations and
understandings, written or oral, express or implied, with respect to
the terms and conditions of the Employee's employment.
14. Amendment.
This Agreement may be amended or modified only by a written instrument
signed by the Employee and by such officer as may be specifically
designated and authorized by the Board.
15. Governing Law.
This is a Massachusetts contract and shall be construed and enforced
under and be governed in all respects by the law of the Commonwealth of
Massachusetts without regard to principles of conflicts of laws.
16. Notice.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed
to have been duly given when delivered by hand, telecopied (receipt
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<PAGE> 20
acknowledged) or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that
all notices to Company shall be directed to the attention of the
Chairman with a copy to the Secretary of Company, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.
17. Validity,
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. No
waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the time or at any
prior or subsequent time. The provisions of paragraph 7 shall survive
the termination or expiration of this Agreement regardless of the
reasons therefor. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Employee, as of the date first above written.
GROUND ROUND RESTAURANTS, INC.
By: /s/ Daniel R. Scoggin
---------------------------------
Daniel R. Scoggin
Chairman, President and
Chief Executive Officer
HENRI R. EVANS
/s/ Henri R. Evans
---------------------------------
20
<PAGE> 1
Exhibit 10.5
------------
AMENDMENT TO EMPLOYMENT AGREEMENT
Ground Round Restaurants, Inc. (the "Company" or "Ground Round") a New
York Corporation with its principal place of business at 35 Braintree Hill
Office Park, Braintree, Massachusetts and Stephen J. Kiel (the "Employee"), with
a business address of 35 Braintree Hill Office Park, Braintree, Massachusetts,
in consideration of the promises and mutual covenants contained herein, the
parties agree to amend the Employment Agreement by and between Ground Round and
Employee dated September 1, 1996 (the "Agreement") as follows:
I. Paragraph 4 (Termination of Employment) under section (c)(i) shall be
replaced with the following language:
(i) The Employee's refusal to attempt in good
faith to perform his duties and responsibilities
to the Company; a breach of fiduciary duty;
any willful misconduct by the Employee which
injures the Company (monetarily or otherwise)
or the Employee's gross negligence in the
performance of his duties and responsibilities;
or
II. Paragraph 4 (Termination of Employment) under section (d) and (e)
shall be replaced with the following language:
(d) Termination by the Company Other Than for Cause (Excluding Change of
Control)
The Company may (other than during a Change of Control period
as defined below) terminate the Employee's employment
hereunder, other than for Cause, at any time upon written
notice, as defined in the Company's current Termination
Policy. In the event of such termination, the Company shall do
the following:
(i) Pay to Employee his Base Salary through the date of
termination, plus a prorata share of the 1997
guaranteed minimum bonus based on the number of days
worked by Employee in the 1997 fiscal year.
(ii) Pay to the Employee severance equal to the greater of
(i) six (6) months of Employee's
<PAGE> 2
monthly Base Salary or (ii) the amount of Base Salary
the Employee would have received between the date of
termination and September 30, 1997. Said severance
shall be considered as severance under the Company's
Severance Pay Plan and paid to Employee in accordance
with such Plan.
(iii) Pay to Employee any other bonus or compensation
hereunder in accordance with the applicable Company
plan or policy.
The Company shall have no other obligations under this
Agreement.
(e) Termination by the Executive (Excluding Change of Control).
(i) If the Employee terminates his employment during the
Employment Period (other than during a Change of
Control period as defined below) because the Employee
resigns, the Company shall pay Employee the Base
Salary through the date of termination and any other
bonus or compensation in accordance with the
applicable Company plan or policy.
(ii) If the Employee terminates his employment with the
Company for any other reason (other than during a
Change of Control period as defined below), in
addition to its other rights and remedies, the
Company shall have no further obligations under this
Agreement other than to pay to the Employee any Base
Salary through the date of termination and any other
bonus or compensation in accordance with the
applicable Company plan or policy.
III. The Agreement shall be revised to add the following paragraph 16
entitled "Change of Control":
16. Change of Control
The following provisions of this paragraph shall apply only in event of
a Change of Control:
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<PAGE> 3
(a) In the event of a Change of Control as defined below and
in consideration of Employee's continued employment with
the Company, the Company will pay Employee as
termination compensation: (x) an amount, determined as
provided below, in the event that within (i) twelve (12)
months after a Change of Control of the Company has
occurred Employee terminates employment with the
Company for Good Reason, (as defined below), within
ninety (90) days after the event which constitutes Good
Reason or (ii) twenty four (24) months after a Change of
Control of the Company has occurred, Employee's
employment with the Company is terminated by the
Company for any reason other than Cause, death or
disability (disability being defined as in paragraph 4(b)).
The amount of termination compensation so payable shall
be an amount equal to the product of two (2) times the
Employee's current annual Base Salary and, if Employee's
Base Salary is hereafter increased, the Employee's highest
annual base salary ("Highest Base Salary") from time to
time hereafter in effect; or (y) an amount equal to the
Employee's Base Salary or Highest Base Salary, as the case
may be, in the event the Employee terminates employment
with the Company for Good Reason within ninety (90) days
after the event which constitutes Good Reason, at any time
after the first anniversary and prior to the second
anniversary of the date on which a Change of Control of
the Company has occurred. The termination compensation
payable pursuant to (x) or (y) above, as the case may be,
is herein referred to as the "Severance Payment". In
addition to the Severance Payment, the Company shall pay
any bonus due in accordance with paragraph 3(b)(a "Bonus
Payment"), and such bonus shall be pro rated only for that
fiscal year that the Change of Control occurs. The
Severance Payment and any Bonus Payment shall be paid
to Employee within five (5) days after the date of
termination (hereinafter referred to as the "Payment Date")
of Employee's employment (hereinafter referred to as the
"Termination Date").
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<PAGE> 4
(b) In addition:
(i) Any compensation and other amounts previously
deferred by Employee, together with accrued interest
thereon, if any, to which Employee is entitled, and
any accrued vacation pay not yet paid by the Company,
shall be paid to Employee on the Payment Date.
(ii) All other amounts accrued or earned by Employee
through the Payment Date and amounts otherwise then
owing under the Company's plans and policies,
excluding payment(s) due under the Company's
Severance Pay Plan (which Employee shall not
participate in) shall be paid to Employee on the
Payment Date, other than benefits due to Employee
under any qualified plan(s) of the Company, which
benefits shall be paid in accordance with the terms
of such plan(s).
(iii) The Company shall pay all reasonable legal fees and
expenses incurred by Employee in seeking to obtain or
enforce any right or benefit provided by a Change of
Control, regardless of the outcome thereof, but
specifically excluding legal representation for
initiation of a lawsuit and representation
thereafter.
(iv) The Company shall maintain in full force and effect,
for the continued benefit of Employee and/or
Employee's family for one year after the Termination
Date, all medical and dental insurance plans,
disability and life insurance plans, travel and
accident insurance and the Company's Automobile
Policy (collectively, the "Continued Benefits Plans")
in which Employee was entitled to participate
immediately prior to the Change of Control, provided
that Employee's continued participation is possible
under the general terms and provisions of such plans
and
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<PAGE> 5
programs. In the event that Employee's participation
in any such plan or program is barred, the Company
shall arrange to provide Employee with benefits
substantially similar to those which Employee is
entitled to receive under such plans and programs or
at the Company's election, pay Employee in cash an
equivalent amount. At the end of the period of
coverage, Employee shall have the option to have
assigned to him at no cost and with no apportionment
of prepaid premiums, any assignable insurance policy
owned by the Company and relating specifically to
Employee.
(v) All outstanding stock options which Employee holds
shall vest immediately upon a Change of Control.
(c) For purposes of this Agreement:
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(ii) A "Change of Control" shall be deemed to have taken
place if (a) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power
of the Company's then outstanding securities, (b) the
stockholders of the Company shall have approved (i) a
reorganization, merger or consolidation, in each
case, with respect to which persons who were
stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in
the election of directors of the reorganized, merged
or consolidated
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<PAGE> 6
company's then outstanding voting securities, or (ii)
a sale of all or substantially all of the assets of
the Company, or (c) as the result of a tender offer,
exchange offer, merger, consolidation, sale of assets
or contested election or any combination of the
foregoing transactions (a "Transaction"), the persons
who were directors of the Company immediately before
the Transaction shall cease to constitute a majority
of the Board of Directors of the Company or of any
parent of or successor to the Company immediately
after the Transaction occurs; or (d) any person or
persons acting as a group acquire the right, by
contract, agreement, understanding or otherwise, to
elect or designate a majority of the members of the
Board of Directors of the Company or of any parent of
the Company.
(iii) "Cause" is defined in paragraph 4(c) of this
Agreement and shall also be applicable to the Change
of Control section.
(d) "Good Reason" means:
(i) The assignment to Employee of any duties materially
inconsistent in any respect with Employee's position
of Senior Vice President, Chief Financial Officer and
Treasurer, or Employee's authority, duties or
responsibilities as in effect on the date of the
Change of Control, or any other action by the Company
which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of
notice from Employee;
(ii) Any reduction of Employee's base salary or the
failure by the Company to provide Employee with an
incentive compensation program, welfare benefits,
retirement benefits and other benefits which in the
aggregate are
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<PAGE> 7
no less favorable than the benefits to which Employee
was entitled prior to the Change of Control;
(iii) The Company's requiring Employee to be based at any
office or location more than fifty (50) miles from
the location at which Employee is employed on the
date of the Change of Control, except for travel
reasonably required in the performance of Employee's
responsibilities, or the Company's requiring Employee
to move his current principal residence at which
Employee resides on the date of the Change of
Control, with the proviso that paragraph 3(g) of
Employe's Employment Agreement shall remain in place;
or
(e) (i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to
Employee or for his benefit (whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement or otherwise) (a "Payment"), would
be nondeductible by the Company for Federal income
tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of amounts payable or
distributable to Employee or for his benefit pursuant
to this Agreement (such payments or distributions
pursuant to this Agreement are hereinafter referred
to as "Agreement Payments") shall be reduced to the
Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without
causing any Payment to be nondeductible by the
Company because of Section 280G of the Code. For
purposes of paragraphs 16(e)(i)(ii)(iii), present
value shall be determined in accordance with Section
280G(d)(4) of the Code.
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<PAGE> 8
(ii) All determinations required to be made under
paragraphs 16(e)(i)(ii)(iii) shall be made by the
Company's then independent certified accountants,
which shall provide detailed supporting calculations
both to the Company and Employee within fifteen (15)
business days of the Termination Date, or such
earlier time as is requested by the Company, and a
written opinion to Employee at Employer's cost that
Employee has substantial authority not to report any
Excise Tax on Employee's federal income tax return
with respect to the Payments. Any such determination
by the Company's then independent certified
accountants shall be binding upon the Company and
Employee. Employee shall determine which and how much
of the Payments shall be eliminated or reduced
consistent with the requirements of paragraphs
16(e)(i)(ii)(iii), provided that, if Employee does
not make such determination within ten business days
of the receipt of the calculations made by the
Company's then independent certified accountants, the
Company shall elect which and how much of the
Payments shall be eliminated or reduced consistent
with the requirements of paragraphs 16(e)(i)(ii)(iii)
and shall notify Employee promptly of such election.
Within five business days thereafter, the Company
shall pay to or distribute to Employee or for
Employee's benefit such amounts as are then due to
Employee under this Agreement. For purposes of
paragraphs 16(e)(i)(ii)(iii), "Excise Tax" shall mean
the excise tax imposed by Section 4999 of the Code or
any interest or penalties with respect to such excise
tax.
(iii) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial
determination by the Company's then certified
independent accountants hereunder, it is possible
that Payments will have been made by the
8
<PAGE> 9
Company which should not have been made
("Overpayment") or that additional Payments which
will not have been made by the Company could have
been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder.
In the event that the Company's then certified
independent accountants, based upon the assertion of
a deficiency by the Internal Revenue Service against
Employee which the Company's then certified
independent accountants believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or
distributed by the Company to Employee or for
Employee's benefit shall be treated for all purposes
as a loan ab initio to Employee which Employee shall
repay to the Company together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no
amount shall be payable by Employee to the Company if
and to the extent such deemed loan and payment would
not either reduce the amount on which Employee is
subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the
event that the Company's then certified independent
accountants, based upon controlling precedent or
other substantial authority, determines that an
Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to Employee or
for Employee's benefit together with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code.
(f) Employee shall not be required to mitigate the amount of any
Payment provided for in this paragraph 16 by seeking other
employment or otherwise, nor shall the amount of any Payment
provided for in this paragraph 16 be reduced by any
compensation earned by Employee as the result of employment by
another employer after the Termination
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<PAGE> 10
Date, or otherwise, except that Employee shall not be entitled
to continue to participate in a Continued Benefits Plan to the
extent that Employee is eligible to participate in a benefits
plan of another employer that is substantially similar to such
Continued Benefits Plan, as to type and coverage, during the
one year period following the Termination Date. The Company's
obligation to make the Payments provided for in this paragraph
16 and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which it may have
against Employee or others.
(g) The failure by Employee to set forth in any notice of
termination of employment any fact or circumstances which
contributes to a showing of Good Reason shall not waive any of
Employee's rights hereunder or preclude Employee from
asserting such fact or circumstance in enforcing Employee's
rights hereunder.
(h) If a Change of Control occurs, the terms and provisions of
paragraph 16 of this Agreement governing the payments to be
made shall control in lieu of any provisions elsewhere in the
Employment Agreement.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform
according to this paragraph 16 in the same manner and to
the same extent that the Company would be required to
perform it if no such succession had taken place. As used
in this paragraph 16, "Company" shall mean the Company
as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(k) Nothing in this paragraph 16 shall prevent or limit Employee
from any continuing or future participation in any benefit,
incentive or other plan or program (excluding the
Company's Severance Pay Plan) provided by the Company
and for which Employee may qualify. Amounts which are
vested benefits or which Employee is otherwise entitled to
receive under any plan or program of the Company at or
subsequent to any Change of Control shall be payable in
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<PAGE> 11
accordance with such plan or program.
Except as hereby amended, the Agreement shall continue in full force
and effect.
WHEREOF, this Agreement has been executed as a sealed instrument by the
Company, by its duly authorized representative, and by the Employee, as of this
15th day of May 1997.
Ground Round Restaurants, Inc.
By: /s/ Daniel R. Scoggin
-----------------------------
Daniel R. Scoggin
Chairman, President and
Chief Executive Officer
/s/ Stephen J. Kiel
-----------------------------
Stephen J. Kiel
11
