Execution Copy II
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EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
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This Employment and Non-Interference Agreement (this "Agreement") dated as
of May 1, 1997, is by and between Augustus F. Hothorn (the "Executive") and
National Restaurant Enterprises, Inc., a Delaware corporation (the "Company")
and a wholly owned subsidiary of AmeriKing, Inc., a Delaware corporation
("Parent");
W I T N E S S E T H:
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WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
Subject to Section 3, the Company hereby employs the Executive, and the
Executive agrees to accept such employment, during the Term of Employment (as
defined in Section 3(a)), as Senior Vice President, Development of the Company
and to undertake such duties and responsibilities as may be reasonably assigned
to the Executive in good faith from time to time by the Chairman, Chief
Executive Officer or the Board of Directors of the Company or the Parent.
2. Extent of Employment
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Chairman, Chief
Executive Officer and Board of Directors of the Company (the "Board of
Directors"), and shall abide by the rules, customs
and usages from time to time established by the Company and AmeriKing, Inc. (the
"Parent").
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations hereunder (except
for vacation periods and reasonable periods of illness or other incapacity),
consistent with the expectations of the Board of Directors and norms in the
industry for similar positions. The Executive shall not, without the prior
written consent of the Company, render to others services of any kind for
compensation, and will not engage in any other business activity that would
interfere with the performance of his duties for the Company.
(c) Nothing contained herein shall require the Executive to follow any
directive or to perform any act which would violate any of the Burger King
Corporation franchise entity form of ownership guidelines, the Burger King
Uniform Franchise Offering Circular as amended or updated from time to time, and
any other franchise and other regulations and requirements, from time to time in
effect (collectively, the "Burger King Regulations") of the Burger King
Corporation, or any laws, ordinances, regulations or rules of any governmental,
regulatory or administrative body, agent or authority, any court or judicial
authority, or any public, private or industry regulatory authority. The
Executive shall act in good faith in accordance with all Burger King Regulations
and laws, ordinances, regulations or rules of any governmental, regulatory or
administrative body, agent or authority, any court or judicial authority, or any
public, private or industry regulatory authority to the extent the Executive
knows or has reasonable notice of such Burger King regulations, laws,
ordinances, regulations or rules.
(d) During the term of his employment, the Executive shall live in the
Chicago area and generally perform his duties under this Agreement from the
Company's offices in the Chicago area, unless otherwise directed by the
Chairman, Chief Executive Officer or the Board of Directors and agreed to by the
Executive; provided, that if the Company's offices are moved and the senior
executives of the Company move to the new office location, the Executive shall
also move to the new office location.
3. Term of Employment; Termination
(a) The "Term of Employment" shall commence on May 19, 1997 or such other
date as the Company and the Executive may agree (the "Effective Date") and
shall, subject to the terms and conditions of this Agreement, continue for an
initial term of three years. Should the Executive's employment be earlier
terminated by the Company pursuant to Section 3(b) or by the Executive pursuant
to Section 3(c), the Term of Employment shall end on the Termination Date (as
defined in Section 3(b)).
(b) Subject to the obligation of the Company to make any payments
pursuant to Section 3(e), the Term of Employment may be terminated at any time
by the Company:
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(i) upon the death of the Executive;
(ii) in the event the Executive is Disabled for 90 days (which need
not be continuous) during a twelve continuous month period (or any shorter
period). For the purposes of this Agreement, the Executive shall be deemed
to be Disabled if because of a physical or mental disability the Executive
is unable to perform, and does not perform, his duties under this
Agreement. In the event of a dispute as to whether the Executive is
Disabled, the Company and the Executive agree to submit such dispute to a
licensed, practicing physician mutually satisfactory to the Company and the
Executive who shall be selected and who shall examine the Executive within
30 days, and the Executive agrees to submit to such tests and examination
as such physician shall deem appropriate;
(iii) for Cause (as defined in Section 3(c));
(iv) for any other reason not referred to in clauses (i) through
(iii) or for no reason in either case after 60 days' prior written notice
from the Company, such that this Agreement, subject to the provisions of
Section 3(e), shall be construed as terminable at will by the Company.
The Executive acknowledges that no representations or promises have been
made concerning the grounds for termination or the future operation of the
Company's business, and that nothing contained herein or otherwise stated by or
on behalf of the Company modifies or amends the right of the Company to
terminate the Executive at any time, with or without Cause. Termination shall
become effective upon the "Termination Date", which shall be as follows. If
termination of the Term of Employment occurs:
(A) under Sections 3(b)(i) or 3(c)(i) - the date of death of the
Executive;
(B) under Sections 3(b)(ii) or 3(c)(ii) - as of the date the Executive is
Disabled for the period provided in such Sections, as agreed to by the
Company and the Executive, or as determined by a physician selected under
such Sections;
(C) under Sections 3(b)(iii), 3(b)(iv), 3(c)(iii) or 3(c)(iv) - the date a
party to this Agreement delivers to the other party a notice of termination
or resignation specifying the reason(s) therefor, as the case may be,
subject to the requirements for advance notice and the opportunity to cure
provided in this Agreement, if and to the extent applicable;
(D) under Section 3(f) - the next anniversary of the Effective Date
occurring more than 120 days after notice of termination is delivered by
either party to the other under such Section; or
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(E) upon the mutual agreement of the parties - the effective date of such
mutual agreement.
(c) Subject to the obligation of the Company to make any payments pursuant
to Section 3(e), the Term of Employment may be terminated at any time by the
Executive:
(i) upon the death of the Executive;
(ii) in the event the Executive is Disabled;
(iii) as a result of material reduction in the Executive's authority,
perquisites, position or responsibilities (other than such a reduction
which affects all of the Company's senior executives on a substantially
equal or proportionate basis) or the Company's willful, material violation
of its obligations under this Agreement, in each case, after 60 days' prior
written notice to the Company and its Board of Directors and the Company's
failure thereafter to cure such reduction or violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii) or for no reason, in either case, after 60 days' prior
written notice to the Company and its Board of Directors.
(d) For the purposes of this Section 3, "Cause" shall mean any of the
following:
(i) The Executive's conviction of a serious felony or a crime
involving embezzlement, conversion of property or moral turpitude;
(ii) a final, non-appealable finding of the Executive's fraud,
embezzlement or conversion of property; (iii) a final non-appealable
finding of the Executive's breach of any of his fiduciary duties to
the Company or its stockholders (which shall include, but not be
limited to, a duty to discharge the Executive's duties and
responsibilities in good faith and with a degree of diligence, care
and skill commensurate with the Executive's position in the Company)
or making of a willful misrepresentation or omission which breach,
misrepresentation or omission might reasonably be expected to
materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of the Company; provided,
that, the Executive has been given notice and within 30 days of such
notice fails to cure the breach, misrepresentation or omission; (iv)
the Executive's continual neglect or failure to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any
other agreement between the Executive and the Company other than as a
result of the Executive's being Disabled; provided, that, the
Executive has been given notice and within 30 days of such notice
fails to cure the neglect or failure; (v) the Executive's drunkenness
or substance abuse, which materially interferes with the Executive's
ability to discharge his duties, responsibilities and obligations
prescribed by this Agreement; provided that the Executive has been
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given notice and within 30 days of such notice fails to cure such
drunkenness or abuse; (vi) the Executive's material and knowing
violation of any obligations imposed upon the Executive, personally,
as opposed to upon the Company, under this Agreement, the Certificate
of Incorporation or By-Laws of the Company, each as amended to date,
provided, that the Executive has been given notice and within 90 days
of such notice fails to cure the violation; (vii) the Executive's
engagement in egregious misconduct which materially injures the
Company or does not conform to the standard of conduct of the
Company's executive officers as set forth in the Company's Code of
Ethics and Policy Manual or as stipulated by the Board of Directors;
provided, that, the Executive has been given written notice and within
30 days of such notice fails to cure such misconduct; or (viii) the
Executive's personal (as opposed to the Company's) material and
knowing failure, to observe or comply with Burger King Regulations
whether as an officer, stockholder or otherwise, in any material
respect or in any manner which might reasonably have a material
adverse effect in respect of the Company's ongoing business,
operations, conditions, franchises, other business relationships or
properties, provided, that the Executive has been given notice and
within 90 days of such notice fails to cure the failure.
(e) In the event the Executive's Term of Employment is terminated pursuant
to
(i) Section 3(b)(i) or (ii) or 3(c)(i) or (ii), the Company will
pay to the Executive (or his estate or representative) the full amounts to
which he would be entitled under Section 4(a) for the period from
Termination Date through the first anniversary of such Termination Date;
(ii) Section 3(b)(iii) or 3(c)(iv), there will be no amounts owing
by the Company to the Executive from and after the Termination Date, except
for accrued but unused vacation pay and sick pay which shall be paid to the
Executive in accordance with Company practices; and
(iii) Section 3(b)(iv) or 3(c)(iii), the Company will pay the
Executive the full amounts to which he would be entitled under Section 4(a)
from the Termination Date through the later of the first anniversary of
such Termination Date or the third anniversary of the Effective Date,
payable in each case in two installments, half payable upon the Termination
Date and half payable upon the last day of such period;
provided, that, in the event the Executive's Term of Employment is terminated
following any Change of Control during the Original Term) other than pursuant to
Sections 3(b)(i), or (iii), or 3(c)(i) or (iv), the Executive shall be entitled
to receive, in addition to any amounts determined pursuant to Section 3(e)(i)-
(iii) above, an amount equal to (x) the Incremental Market Value as of such
Termination Date plus (y) the full amount he would be entitled as
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base compensation pursuant to Section 4(a) from the Termination Date through the
later of the first anniversary of the Termination Date or the third anniversary
of the Effective Date.
Termination of the Term of Employment will not terminate Sections 7, 8, 10
through 21, or any other provisions not associated specifically with the Term of
Employment.
In the event the Executive is terminated and the Company is obligated to make
payments pursuant to this Section 3(e), the Company's payment obligations under
this Section 3(e) will be mitigated and reduced on a dollar-for-dollar basis, to
the extent of the Executive receives, during the period for which payments are
owed by the Company pursuant to this Section 3(e). any compensation for services
provided following the Termination Date to a third party.
(f) Upon the conclusion of the initial three year term of this Agreement
(the "Original Term") and upon each succeeding anniversary of the Effective
Date, the Executive's Term of Employment will be automatically renewed for
another year; provided, that neither the Company nor the Executive terminates
this Agreement pursuant to Section 3 during the Original Term; and provided,
further, that, following the Original Term, neither the Company nor the
Executive provides notice of termination to the other at least 120 days before
the anniversary of this Agreement.
4. Compensation. (a) During the Term of Employment, the Company shall
pay to the Executive, as base compensation for his services hereunder, in
biweekly installments, a base salary at a rate of $200,000 per annum, as
increased on an annual basis to reflect the increase in the United States
Government cost of living index for the Chicago, Illinois area. Notwithstanding
the minimum increase set forth above, the Board of Directors in their sole
discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company may pay, to the Executive
an annual bonus of up to 50% of his annual base compensation based on the
Executive's performance, as determined and approved by the Board of Directors,
in its sole discretion. Such bonus will be at the full discretion of the Board
of Directors, and may not be paid at all. The Executive acknowledges that no
such bonuses have been agreed upon or promised. If the Board of Directors
decides to pay a bonus, it is to be paid within thirty days after the issuance
of audited financial statements of the Parent. The Board of Directors in their
sole discretion may establish a higher bonus level based on the performance of
the Executive.
(c) In the event the Executive remains employed by the Company on the
Measurement Date, the Executive shall be entitled to receive long term incentive
compensation equal to 3.5% of the Incremental Market Value as of the Measurement
Date. In the event the Executive's employment is terminated pursuant to Section
3(b)(i),(ii) or (iv), or Section 3(c)(iii), at any time after the third
anniversary of the Effective Date and prior to the Measurement Date, the
Executive shall be entitled to receive 3.5% of the Incremental Market Value as
of the Termination Date. An example of the calculation of such long term
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incentive compensation is set forth in Exhibit A attached hereto. The Executive
agrees that, other than as set forth in this Section 4(c) and in Section 3(e),
above, the Executive shall not be entitled to receive any portion of such long
term incentive compensation as measured by the Incremental Market Value and no
other form of long term incentive compensation has been agreed upon or promised
by the Company other than as set forth in this Agreement.
(d) During the Term of Employment, the Executive shall receive an
automobile allowance of $800 per month and reimbursements for automobile
insurance, repairs, maintenance and business-related fuel not to exceed $6,000
per annum.
(e) On the Executive's first day of employment at the Company pursuant to
the terms of this Agreement, which shall have been previously executed by the
Executive and the Company, the Company shall pay to the Executive a signing
bonus of $25,000.
5. Reimbursement of Expenses
During the Term of Employment, the Company shall reimburse the Executive
for documented travel, entertainment and other expenses reasonably incurred by
the Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
During the Term of Employment, the Executive shall be entitled to
perquisites and benefits (including health, short and long term disability,
pension and life insurance benefits and directors and officers insurance
consistent with past practice, or as increased from time to time), as
established from time to time by the Board of Directors for executives of the
Company.
7. Confidential Information
(a) During and after the Term of Employment, the Executive will not,
directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for the Executive's own benefit or for the
benefit of anyone other than the Company, any Confidential Information (as
defined in Section 9), whether prepared by the Executive or not; provided,
however, that any Confidential Information may be disclosed to officers,
representatives, employees and agents of the Company who need to know such
Confidential Information in order to perform the services or conduct the
operations required or expected of them in the Business (as defined in Section
9). The Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. The Executive shall use his
best efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. The Executive shall have no
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obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law; provided,
however, that in the event disclosure is required by applicable law, the
Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, the Executive agrees to
deliver to the Company, at any time during the Term of Employment, or
thereafter, all Confidential Information which he may possess or control. The
Executive agrees that all Confidential Information of the Company (whether now
or hereafter existing) conceived, discovered or made by him during the Term of
Employment exclusively belongs to the Company (and not to the Executive). The
Executive will promptly disclose such Confidential Information to the Company
and perform all actions reasonably requested by the Company to establish and
confirm such exclusive ownership. Upon Termination, the Executive shall
promptly return, and in no event later than 30 days following Termination, all
Confidential Information held by the Executive to the Company.
(b) The terms of this Section 7 shall survive the termination of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference/Non-Disparagement
(a) The Executive acknowledges that his employment by the Company gives him
the opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, the Executive
covenants and agrees that:
(i) From the date hereof until the first anniversary of expiration or
termination of the Term of Employment (the "Restricted Period"), the
Executive will not, without the express written approval of the Board of
Directors of the Company, anywhere in the Market, directly or indirectly,
in one or a series of transactions, own, manage, operate, control, invest
or acquire an interest in, or otherwise engage or participate in, whether
as a proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, agent, representative or other
participant, in any quick service hamburger restaurant business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of the Executive
referred to above occur or are performed within or without the Market or
(C) whether the Executive resides, or reports to an office, within or
without the Market; provided, however, that (x) the Executive may, anywhere
in the Market, directly or indirectly, in one or a series of transactions,
own, invest or acquire an interest in up to five percent (5%) of the
capital stock of a corporation whose capital stock is traded publicly, (y)
the Executive may accept employment with a successor company to the
Company, (z) the Executive may work for the Burger King
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Corporation or may own and operate independent Burger King franchisees,
provided that none of such Burger King franchisees are owned or operated,
directly or indirectly, in any way by a Competitive Business.
(ii) During the Restricted Period (which shall not include any period
of violation of this Agreement by the Executive or period which is required
for litigation to enforce the rights hereunder), the Executive will not
without the express prior written approval of the Board of Directors of the
Company (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with the Company or had
a business relationship with the Company within the twenty-four (24) month
period preceding the date of the incident in question, to discontinue,
reduce or modify such employment, agency or business relationship with the
Company, or (B) employ or seek to employ or cause any Competitive Business
to employ or seek to employ any person or agent who is then (or was at any
time within six (6) months prior to the date the Executive or the
Competitive Business employs or seeks to employ such person) employed or
retained by the Company. Also during the Restricted Period, the Executive
will not disparage or make public statements that damage Parent, the
Company and their respective business. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude him
from earning a living with an entity that is not a Competitive Business.
(b) The Executive covenants and agrees that during the Term of Employment
and for a period of three years after Termination, he shall not make any false,
defamatory or disparaging statements about the Company, Parent, any existing or
future subsidiary of the Company or Parent or any director or officer of the
Company, Parent or any subsidiary that are reasonably likely to cause material
damage to the Business of the Company, Parent or subsidiary or to the directors
or officers of the Company, Parent or any subsidiary.
(c) Upon a final, non-appealable finding that the Executive has breached
his obligations in any material respect under this Section 8, the Company, in
addition to pursuing all available remedies under this Agreement, at law or
otherwise, and without limiting its right to pursue the same shall cease all
payments to the Executive under this Agreement or any other agreement.
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9. Definitions
"Burger King Regulations" is defined in Section 1.
"Business" means (a) the construction, development, operations, ownership
and promotion of restaurants in which the Burger King Corporation is either (i)
the exclusive franchisor or (ii) co-franchisor in a dual-use restaurant, or (b)
any similar or incidental business conducted, or engaged in, by the Company or
the Parent prior to the date hereof or at any time during the Term of
Employment.
"Change of Control" means (i) a transaction or series of transactions
(other than pursuant to a registered public offering of the Parent's voting
stock) the result of which is that more than 50% of the voting stock of Parent
is acquired and held by a person or entity other than those stockholders of
Parent set forth on Exhibit B attached hereto, (ii) a transaction or series of
transactions (other than pursuant to a registered public offering of the
Company's voting stock) the result of which is that more than 50% of the voting
stock of the Company is acquired and held by a person or entity other than
Parent or an affiliate of Parent, (iii) a merger or consolidation of Parent in
which Parent is not the surviving entity or (iv) the sale of all or
substantially all of the assets of Parent or the Company.
"Confidential Information" means any confidential information including,
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulae,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Augustus F. Hothorn or his estate, if deceased.
"Incremental Market Value" means the theoretical market value of new Burger
King restaurants developed by Parent, the Company or any of their wholly-owned
subsidiaries during the five year period from the Effective Date to the
Measurement Date, or during such period as set forth in Section 4(c) or Section
3(e) of this Agreement. For purposes of this Agreement, "theoretical market
value" means an amount equal to the "pro forma cash flow" (as reasonably
determined by the Board of Directors in their sole discretion using generally
accepted accounting principles) of the newly developed Burger King restaurants
multiplied by
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five (5) less all gross capitalized costs (excluding any costs associated with
the purchase and improvement of land and the construction of new Burger King
restaurants, but including any costs related to furniture, fixtures and
equipment) incurred by the Company or the Parent (including gross capitalized
internal development costs allocated to such restaurants prior to any deduction
for depreciation and amortization of such costs) to develop such restaurants.
"Pro forma cash flow" of the newly developed Burger King restaurants is to be
based on (i) the actual cash flows of the Burger King restaurants developed by
the Executive and open for a period of 12 months or more and (ii) the projected
cash flows of the Burger King restaurants developed by the Executive and open
for a period of less than 12 months. For purposes of this Agreement, actual
cash flow shall be equal to restaurant revenues (defined as all sums charged by
such restaurants in their capacity as Burger King franchisees for goods,
merchandise or services sold at, from or away from such restaurant, including
premiums and telephone orders; provided, however, that such sums shall not
include (x) any federal, state, county or city sales or excise tax, or other
similar taxes collected by such restaurants, in their capacity from customers
based upon sales, (y) cash received as payment in credit transactions where the
extension of credit itself has already been included such sums and (z) any
amounts received for not-for-profit sales of nonfood items approved for use in
connection with promotional campaigns, if any, of Burger King Corporation) less
cost of goods sold and all operating expenses, including general and
administrative expenses and lease expenses (whether payable to a third party or
to the Company, Parent or their respective affiliates, allocable to such
restaurant but excluding depreciation and amortization allocable to the
restaurant, all of the foregoing on an arms-length basis).
"Market" means any county in the United States of America and each similar
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or for which a restaurant site is in development, by the Company at any time
during the Term of Employment.
"Measurement Date" means the fifth anniversary of the Effective Date.
10. Notice
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
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If to the Executive: Augustus F. Hothorn
Sutherland, 5 Hartwell Drive
Beaconsfield, Bucks HP9 1JA
England
with a copy to:
McGlinchey Stafford
643 Magazine Street
New Orleans, Louisiana 70130-3477
Attention: James M. Fantaci, Esq.
If to Company: 2215 Enterprise Drive
Suite 1502
Westchester, IL 60154
Attention: Chief Executive Officer
with a copy to:
Mayer, Brown & Platt
1675 Broadway
Suite 1900
New York, New York 10019
Attention: James B. Carlson, Esq.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. The Executive's Representation
The Executive hereby warrants and represents to the Company that: (i) the
Executive has carefully reviewed this Agreement and has consulted with such
advisors as the Executive considers appropriate in connection with this
Agreement, (ii) the Executive is not subject to any covenants, agreements or
restrictions, including without limitation any covenants, agreements or
restrictions arising out of the Executive's prior employment or the Burger King
Regulations which would be breached or violated by the Executive's execution of
this Agreement or by the Executive's performance of his duties hereunder and
(iii) the Executive will not knowingly breach or violate any provision of the
Burger King Regulations in any material respect or in any manner which might
reasonably have a material adverse effect in respect of the Company's ongoing
business, operations, conditions, franchises, or other business relationships or
properties.
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12. Other Matters
(a) The Executive agrees and acknowledges that the obligations owed to the
Executive under this Agreement are solely the obligations of the Company, and
that none of the Company's stockholders, directors, officers or lenders will
have any obligations or liabilities in respect of this Agreement and the subject
matter hereof.
(b) The Executive and the Company hereby agree and acknowledge that this
Agreement replaces and supersedes any prior employment agreement to which the
Executive is a party, and upon the execution of this Agreement, such prior
employment agreement shall automatically be terminated and rendered without
force and effect and that the Executive shall release and discharge the Company
and Parent, and their respective directors, stockholders, officers and lenders
from any further obligations or liabilities thereunder.
13. Validity
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 8 or any other provision hereof is unenforceable because of
the power to reduce the scope or duration of such provision, as the case may be
and, in its reduced form, such provision shall then be enforceable.
15. Waiver of Breach; Specific Performance
The waiver by the Company or the Executive of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its rights under
this breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of
Sections 7 and 8 of this Agreement and that any party (and third party
beneficiaries) may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief,
including temporary restraining
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orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, reasonable attorneys' fees, incurred in
such action.
16. Assignment; Third Parties
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, the
Executive's agreements set forth in Sections 7 and 8.
17. Amendment; Entire Agreement
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. EACH OF THE PARTIES HERETO
ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE
NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY
MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE
ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR
INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES THAT JURISDICTION
AND VENUE WILL BE PROPER IN CHICAGO, ILLINOIS AND WAIVES ANY OBJECTIONS BASED
UPON FORUM NON CONVENIENS. EACH PARTY WAIVES PERSONAL SERVICE OF PROCESS AND
AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING SHALL BE
PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED
OR CERTIFIED MAIL TO THE PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT, OR AS
OTHERWISE PROVIDED BY THE LAWS OF THE STATE OF ILLINOIS OR THE UNITED STATES.
THE CHOICE OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT OF ANY
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JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
19. Arbitration
ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR
IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT
MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION ANY CLAIM UNDER THE SECURITIES
ACT, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, ANY OTHER STATE OR FEDERAL
LAW RELATING TO SECURITIES OR FRAUD OR BOTH, THE RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR FEDERAL OR STATE COMMON LAW, SHALL BE
SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO, ARBITRATION IN ACCORDANCE
WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
SUCH ARBITRATION SHALL TAKE PLACE IN CHICAGO, ILLINOIS, AND SHALL BE SUBJECT TO
THE SUBSTANTIVE LAW OF THE STATE OF ILLINOIS. DECISIONS AS TO FINDINGS OF FACT
AND CONCLUSIONS OF LAW PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE
AND BINDING ON THE PARTIES, SUBJECT TO CONFIRMATION, MODIFICATION OR CHALLENGE
PURSUANT TO 9 U.S.C. (S)(S) 1 ET SEQ. ANY FINAL AWARD SHALL BE ENFORCEABLE AS A
JUDGMENT OF A COURT OF RECORD.
20. Further Action
the Executive and the Company agree to perform any further acts and to
execute and deliver any documents which may be reasonable to carry out the
provisions hereof.
21. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
22. Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns, including but not limited to any successor of
the Company as a result of a Change of Control.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Augustus F. Hothorn
----------------------------------------------
Name: Augustus F. Hothorn
NATIONAL RESTAURANT ENTERPRISES, INC.
By /s/ Lawrence E. Jaro
-------------------------------------------
Name: Lawrence E. Jaro
Title: Chairman and Chief Executive Officer
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EXHIBIT A
A. F. Hothorn
Long Term Incentive Compensation
ILLUSTRATIVE EXAMPLE
New Restaurant Cash Flow
Actual Prior 12 months Cash Flow-Restaurants Open Greater-than 12 months $12,000,000
Projected Full 12 months Cash Flow-Restaurants Open Less-than 12 months $3,000,000
Total Cash Flow $15,000,000
Theoretical Market Value (5 times New Restaurant Cash Flow) $75,000,000
Non-Real Estate Cost to Develop New Restaurants $40,000,000
Incremental Market Value (Theoretical Mrkt. Value minus Non-Real Estate Cost to Develop) $35,000,000
A.F. Hothorn Long Term Incentive (3.5% of Incremental Market Value) $1,225,000
EXHIBIT B
AmeriKing, Inc. Stockholders
Lawrence Jaro
William Osborn
Gary Hubert
Joel Aaseby
Scott Vasatka (1)
Donald Stahurski (1)
The Jordan Investors (2)
MCIT PLC
Leucadia Investors
(1) Assumes the exercise of option to purchase 4,851 shares of common stock of
AmeriKing, Inc.
(2) Includes John W. Jordan II, David W. Salaznick, Jonathan F. Boucher, John
R. Lowden, Adam E. Max, John M. Camp III, A. Richard Caputo, Jr., Paul R.
Rodzevik, James E. Jordan, Jr., JIT Partners, Thomas H. Quinn, Dennis Hogerty
and Jerald Dunn.