Management Employment Agreement - Rock Bottom Restaurants Inc.
FORM OF MANAGEMENT EMPLOYMENT AGREEMENT
This MANAGEMENT EMPLOYMENT AGREEMENT is made as of July 11, 1997, by and
between Rock Bottom Restaurants, Inc., a Delaware corporation (the "Company"),
and ________________ (the "Employee").
WHEREAS, the Company desires to employ the Employee to perform the duties
of ____________________ of the Company as such duties may be designated by the
Board of Directors (the "Board") from time to time;
WHEREAS, the Employee desires to be employed by the Company to perform such
duties upon the following terms and conditions;
WHEREAS, the Board has heretofore determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company;
and
WHEREAS, the Board has determined it is imperative to diminish the
inevitable distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control and to provide the Employee
with compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits to be paid to the Employee are at
least as favorable as those in effect at the time of the Change of Control and
which are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the mutual covenants herein, the
parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
a. A "Change of Control" shall be deemed to have occurred if
(i) any "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934) other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or Frank B. Day becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of 30% or more of the Company's then
outstanding voting common stock; or
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2 (ii) at any time during the period of three (3) consecutive
years (not including any period prior to the date hereof), individuals
who at the beginning of such period constitute the Board (and any new
director whose election by the Board or whose nomination for election
by the Company's stockholders were approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation (a) in which a majority of the directors of
the surviving entity were directors of the Company prior to such
consolidation or merger and (b) which would result in the voting
securities of the Company outstanding immediately prior thereto
continue to represent (either by remaining outstanding or by being
changed into voting securities of the surviving entity) at least 55%
of the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation; or
(iv) the stockholders approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets.
b. "Cause" shall mean:
(i) Dishonesty which is not the result of an inadvertent or
innocent mistake of the Employee with respect to the Company or any of
its subsidiaries;
(ii) Willful misfeasance or nonfeasance of duty by the Employee
intended to injure or having the effect of injuring in some material
fashion the reputation, business or business relationships of the
Company or any of its subsidiaries or any of their respective
officers, directors or employees;
(iii) Material violation by the Employee of any term of this
Agreement if such violation is not remedied or reasonable steps to
effect such remedy are not commenced within thirty (30) days after
written notice of such violation and diligently pursued to completion;
(iv)Conviction of the Employee of any felony, any crime involving
moral turpitude or any crime other than a vehicular offense which
could reflect in some material fashion unfavorably upon the Company or
any of its subsidiaries.
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c. "Disability" shall mean the absence of the Employee from the
Employee's duties with the Company on a full-time basis for 180 consecutive
days, or 180 days in a 365-day period, as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by
a physician selected by the Company or its insurers and acceptable to the
Employee or the Employee's legal representative.
d. "Termination Date" shall mean:
(i) if the Employee's employment is terminated by the Company for
Cause, by the Employee for Good Reason or pursuant to a Termination
Following a Change of Control, the date of receipt of a notice of
termination or any later date specified therein, as the case may be;
(ii) if the Employee's employment is terminated by the Company
other than for Cause or Disability, the Termination Date shall be the
date thirty (30) days after the date on which the Company notifies the
Employee of such termination;
(iii) if the Employee's employment is terminated by reason of
Disability, the Termination Date shall be thirty (30) days after the
Company has notified the Employee of its intention to terminate
Employment due to his Disability;
(iv) if the Employee's employment is terminated by reason of his
death, the Termination Date shall be the last day of the month during
which his death occurs; and
(v) if the Employee voluntarily terminates his employment, the
Termination Date shall be the effective date of such termination as
determined in accordance with Section 7, Compensation.
e. "Termination Following a Change of Control" shall mean a
Termination of the Employee without Cause by the Company in connection with
or within one year following a Change of Control or a termination by the
Employee for Good Reason of the Employee's employment with the Company
within one year following a Change of Control.
f. "Good Reason" shall mean any of the following (without the
Employee's express written consent):
(i) A substantial and material alteration in the nature or status
of the Employee's responsibilities, or the assignment of duties
inconsistent with, or a substantial and material alteration in the
nature or status of, the Employee's responsibilities as in effect
immediately prior to a Change of Control;
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(ii) A failure by the Company to continue in effect any employee
benefit plan in which the Employee was participating, or the taking of
any action by the Company that would adversely affect the Employee's
participation in, or materially reduce the Employee's benefits under,
any such employee benefit plan, unless such failure or such taking of
any action adversely affects the senior members of corporate
management of the Company generally;
(iii) A relocation of the Company's principal offices, or the
Employee's relocation to any place other than the principal offices,
exceeding a distance of sixty (60) miles from the Company's current
corporate office located in Louisville, Colorado, except for
reasonably required travel by the Employee on the Company's business;
(iv) Any material breach by the Company of any provision of this
Agreement if such material breach has not been cured within thirty
(30) days following written notice of such breach by the Employee to
the Company setting forth with reasonable specificity the nature of
the breach; or
(v) Any failure by the Company to obtain the assumption and
performance of this Agreement by any successor (by merger,
consolidation or otherwise) or assign of the Company.
2. Termination Following a Change of Control; Benefits. In the event there
is a Termination Following a Change of Control, the Agreement shall terminate
and the Employee shall be entitled to the following severance benefits for a
period of _______(periods ranging from 12 to 24 months) after the Termination
Date:
a. Continued Base Salary (as defined in Section 7, Compensation) at
the rate in effect immediately prior to the Change of Control or on the
Termination Date, whichever is higher, in regular biweekly payments, or the
customary practice of the Company if different than biweekly, or if so
elected by the Employee, a lump sum payable within sixty (60) days after
the Employee's election;
b. Bonus payable in such amount as would be payable to the Employee
had he been employed by the Company for the full fiscal year during which
the termination occurred and the following year, and the Company had
achieved Plan performance for such fiscal years. Such bonus shall be paid
in the same manner as elected by the Employee in (a) above; and
c. To the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Employee any other amounts or benefits
required to be paid or provided or which the Employee is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits").
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d. If the Employee receives any payments hereunder which are subject
to an excise tax imposed under Section 4999 of the Internal Revenue Code of
1986, as amended, or any similar tax imposed under federal, state or local
law (collectively, "Excise Taxes"), the Company shall pay to the Employee
(on or before the date which the Employee is required to pay such Excise
Taxes) (i) an additional amount equal to all Excise Taxes then due and
payable, and (ii) the amount necessary to defray the Employee's increased
(federal, state and local) income tax liability arising due to payment of
the amount specified in Subsections a., b. and c. of this Section 2. For
purposes of calculating the amount payable to the Employee under this
Section, the federal and state income tax rates used shall be the highest
marginal federal and state rates applicable to ordinary income in the
Employee's state of residence, taking into account any federal income tax
deductions or credits available to the Employee for state income taxes. The
Company shall cause its independent auditors to calculate such amount and
provide the Employee a copy of such calculation at least ten (10) days
prior to the date specified above for payment of such amount; and
e. All accrued compensation and unreimbursed expenses through the
Termination Date. Such amounts shall be paid to the Employee in a lump sum
in cash within thirty (30) days after the Termination Date.
f. The Employee shall be free to accept other employment during such
period, and there shall be no offset of any employment compensation earned
by the Employee in such other employment during such period against
payments due the Employee hereunder, and there shall be no offset in any
compensation received from such other employment against the continued
salary set forth above.
3. Termination Without Cause By Company; Benefits. The Company may
terminate the Employee's employment without Cause at any time upon 30 days prior
written notice. If there is a termination by the Company without Cause (not
involving a Change of Control, death or Disability), this Agreement shall
terminate and the Employee shall be entitled to the severance benefits set forth
below:
a. Continued Base Salary in regular biweekly payments for a period of
________(periods ranging from 6 to 12 months) after the Termination Date;
b. Bonus shall be payable at the same time as annual bonus payments to
employees who served for the full year, but the amount of the bonus payable
to the Employee shall be proportionately reduced by multiplying (x) the
full Bonus that would have been earned if the Employee had been employed
for the full fiscal year times (y) the fraction represented by the number
of days Employee was employed by the Company during such fiscal year
divided by the total number of days in such fiscal year; and
c. The Other Benefits for a period of ____________ after the
Termination Date shall be substantially equal to those to which the
Employee was entitled immediately prior to the Termination Date. During
such period, the Employee shall continue to be an employee of the Company
for purposes of participation in the plans which provide the Other
Benefits, but shall have no further responsibilities as an employee and
shall not be required or permitted to continue his former duties;
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d. All accrued compensation and unreimbursed expenses through the
Termination Date. Such amounts shall be paid to the Employee in a lump sum
in cash within thirty (30) days after the Termination Date; and
e. The Employee shall be free to accept other employment during such
period, and there shall be no offset of any employment compensation earned
by the Employee in such other employment during such period against
payments due the Employee hereunder, and there shall be no offset in any
compensation received from such other employment against the continued
salary set forth above.
4. Termination in Event of Death; Benefits. If the Employee's employment is
terminated by reason of the Employee's death during the Employment Period, this
Agreement shall terminate without further obligation to the Employee's legal
representatives under this Agreement, other than for payment of all accrued
compensation, unreimbursed expenses and the timely payment or provision of Other
Benefits through the Termination Date. Such amounts shall be paid to the
Employee's estate or beneficiary, as applicable, in a lump sum in cash within 30
days after the Termination Date. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 4 shall include,
without limitation, and the Employee's estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company to the estates and beneficiaries of other executive
level employees of the Company under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
executives and their beneficiaries at any time during the 120-day period
immediately preceding the Termination Date.
5. Termination In Event of Disability; Benefits. If the Employee's
employment is terminated by reason of the Employee's Disability during the
Employment Period, this Agreement shall terminate without further obligations to
the Employee, other than for payment of all accrued compensation, unreimbursed
expenses and the timely payment or provision of Other Benefits. Such amounts
shall be paid to the Employee in a lump sum in cash within 30 days after the
Termination Date. With respect to the provision of Other Benefits, the term
Other Benefits as used in this Section 5 shall include, and the Employee shall
be entitled after the Termination Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by the Company
to disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other executive level employees and their families at
any time during the 120-day period immediately preceding the Termination Date.
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6. Voluntary Termination by Employee and Termination for Cause; Benefits.
The Employee may terminate his employment with the Company by giving written
notice of his intent and stating an effective date of termination at least sixty
(60) days after the date of such notice; provided, however, that the Company may
accelerate such effective date without liability to the Employee. The Company
may terminate the Employee's employment with Cause at any time without notice.
Upon such a termination by the Employee or upon termination for Cause by the
Company, this Agreement shall terminate and the Company shall pay to the
Employee all accrued compensation, unreimbursed expenses and the Other Benefits
through the Termination Date. Such amounts shall be paid to the Employee in a
lump sum in cash within 30 days after the Termination Date.
7. Compensation. During the term of this Agreement, the Employee
compensation shall be as follows:
a. The Company shall employ the Employee as its __________________ (or
as an executive officer with duties commensurate with serving as such an
executive officer of the Company and without altering the level to which
such officer reports) at a gross salary of __________ per annum payable in
accordance with the customary practices of the Company, plus such salary
increases and bonuses as are approved by the Board of Directors or the
Compensation Committee of the Board. (References to "Committee" in this
Agreement shall include such a committee of the Board or the Board of
Directors, whichever shall have taken action in the relevant
circumstances.) The annual gross salary, excluding all bonus plan payments,
as in effect from time to time, is referred to as the "Base Salary."
b. The Employee shall be a participant in the Company's Executive
Compensation Plan (the "Plan") under which, in addition to the Employee's
Base Salary, the Employee shall be eligible for an "Annual Cash Bonus"
based on criteria set by the Compensation Committee.
The Committee shall determine the basis for the Annual Cash Bonus for
each fiscal year prior to or as soon as reasonably practical after the
beginning of such fiscal year. The Employee shall not be entitled to an
Annual Cash Bonus with respect to any year in which he was not employed by
the Company for the full fiscal year unless his employment was terminated
by the Company without Cause or Employee's termination was a termination
pursuant to Section 2 or 3 hereof.
c. The Employee shall be designated a participant to the extent
determined by the Committee in the Company's long term incentive program
for each year during which he is employed by the Company.
d. The Employee shall receive the fringe benefits and such other
benefits as are made available to executive level employees of the Company
and such other payments or allowances as the Committee may from time to
time make available to the Employee (collectively, the "Fringe Benefits").
Without prejudice to the Employee's rights under this Agreement, the
Company reserves the right
(i) to modify the terms of any benefit plan that is generally
made available to executive level employees of the Company and in
which the Employee participates so long as such changes affect all
plan participants equally (or in proportion to their respective
interests), and
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(ii) to make reasonable changes in the Fringe Benefits at the
direction of the Compensation Committee of the Board, so long as the
Fringe Benefits available to the Employee after giving effect to such
change are not materially different from those being provided prior to
such change.
8. Duties. The Employee shall during the term of his employment hereunder:
a. Devote his full normal working time, energies and attention to the
duties of his employment, as they may be established from time to time by
the Board of Directors consistent with the position and office occupied by
the Employee (provided, however, that the Employee shall at all times have
complete control over the day-to-day operations of the Company);
b. Comply with all reasonable rules, regulations and administrative
directions now or hereafter established by the Company;
c. Be reimbursed by the Company from time to time (but at least
monthly) for all reasonable and necessary business expenses incurred by him
in the performance of his duties hereunder, provided that the Employee
shall render to the Company such accounts and vouchers covering
expenditures as the Company reasonably requires and as are necessary for
tax purposes, and shall follow normal Company policy on expenses; and
d. Not engage in any activity or employment which would reasonably be
expected to materially or directly conflict with the present or prospective
business interest of the Company.
9. Term. This Agreement shall be effective as of July 1, 1997 and shall
terminate on June 30, 1998, unless terminated earlier as provided herein;
provided, however, that this Agreement shall be automatically renewed for
successive one (1) year periods unless the Employee or the Company notifies the
other in writing on or before April 30 of each year of his or its determination
not to renew this Agreement, in which event this Agreement shall terminate on
June 30 of such year. If the Company provides such notice of nonrenewal, the
resulting termination shall be considered a termination without cause under
Section 2 or 3, as applicable.
10. Confidentiality and Non-Competition. The Employee acknowledges that the
Company has trade secrets and confidential information, that as an executive
level officer he will have access to all such trade secrets and confidential
information, and that in performing duties for another company he might
necessarily use and divulge such trade secrets and confidential information. The
Employee agrees that for a twelve (12) month period following the Termination
Date, the Employee will not, directly or indirectly:
a. In any manner, misuse or divulge to any person any confidential
information or trade secrets of the Company;
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b. Alone or in any capacity solicit or in any manner attempt to
solicit or induce any person or persons employed by the Company (or who
were employed by the Company) within one (1) year prior to the Termination
Date to leave their employment; or
c. As an employee, employer, consultant, agent, principal, partner,
more than 5% stockholder, corporate officer or director, engage or
participate in any business which operates a brew pub or neighborhood
casual dining restaurant featuring a wide selection of beer within a 1.5
mile radius of any restaurant of the Company (or any restaurant of the
Company planned to be opened within two years of the Termination Date).
11. Right to Injunctive Relief. The Employee agrees and acknowledges that a
violation of the covenants contained in this Section will cause irreparable
damage to the Company, and that it is and will be impossible to estimate or
determine the damage that will be suffered by the Company in the event of such
breach by the Employee. Therefore, the Employee further agrees that in the event
of any violation or threatened violation of such covenants, the Company shall be
entitled as a matter of course to an injunction out of any court of competent
jurisdiction restraining such violation or threatened violation by the Employee,
such right to an injunction to be cumulative and in addition to whatever other
remedies the Company may have.
12. Integration. This Agreement shall constitute the entire Agreement
relating to the employment of the Employee and supersedes any prior agreement
between the parties with respect to the subject matter hereof. This Agreement
shall be governed by the laws of Colorado, excluding laws on choice of law. Any
litigation regarding this Agreement shall only be brought and heard in the
federal or state courts located in Boulder or Denver, Colorado and no transfer
of venue outside such area shall be permitted.
13. Unenforceability. If any Section, Subsection, paragraph or subparagraph
of this Agreement or any part thereof shall be unenforceable under any
applicable laws, notwithstanding such unenforceability, the remainder of this
Agreement shall remain in full force and effect.
14. Assignment. This Agreement is person to the Employee and, without the
prior written consent of the Company, shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
15. Attorneys' Fees. In the event of any legal, mediation or arbitration
action or proceeding to enforce or interpret the provisions hereof, the
prevailing party shall be entitled to reasonable attorneys' fees and costs,
whether or not the proceeding results in a final judgment; provided, however, in
the event of any such action or proceeding arising in connection with or as a
result of a Change of Control, the Company shall pay all such fees and costs
unless it is determined in such action or proceeding by final award or order
that the Employee had no reasonable basis for his position.
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16. Survival. Terms which by their terms or sense are to survive
termination here shall so survive.
17. Notice. Notices hereunder shall be in writing and sent to the residence
address of the Employee last provided to the Company, and to the then current
business address of the Company. Notices may be sent by first class U.S. mail
and shall be effective three (3) days after deposit. Notices sent by other means
shall be effective when actually delivered to the above-described address.
18. Withholdings. The Company may withhold any amounts payable under the
Agreement, the minimum amounts of any federal, state, local or foreign taxes, as
shall be required to be withheld pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, the parties have executed this Management Employment
Agreement as of the date first above written.
ROCK BOTTOM RESTAURANTS, INC., EMPLOYEE
a Delaware corporation
By:________________________________ _____________________________
Title: Chairman of the Board
Note: Any executive compensation agreement shall be executed only following
specific approval of its terms by the Compensation Committee.