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Exhibit 10.15
August 18, 1995
Robin L. Moroz
56 Pinecliff Road
Weymouth, MA 02189
Dear Ms. Moroz:
The Board of Directors of Ground Round Restaurants, Inc. (the
"Corporation") and the Compensation Committee (the "Committee") of the Board
have determined that it is in the best interests of the Corporation and its
shareholders for the Corporation to agree, as provided herein, to pay you
compensation, including termination compensation in the event you should leave
the employ of the Corporation under the circumstances described below.
The Board and the Committee recognize that the continuing possibility
of a sale or change of control of the Corporation is unsettling to you and other
senior executives of the Corporation. Therefore, these arrangements are being
made to help assure a continuing dedication by you to your duties to the
Corporation by diminishing the inevitable distraction to you from the personal
uncertainties and risks created by a pending sale or change of control of the
Corporation. In particular, the Board and the Committee believe it important,
should the Corporation receive proposals from third parties with respect to its
future, to enable you, without being influenced by the uncertainties of your own
situation, to assess and advise the Board whether such proposals would be in the
best interests of the Corporation and its shareholders and to take such other
action regarding such proposals as the Board might determine to be appropriate,
including being available to assist in any transition should there be a sale or
change of control of the Corporation. The Board and the Committee also wish to
demonstrate to executives of the Corporation that the Corporation is concerned
with the welfare of its executives and intends to see that loyal executives are
treated fairly.
1. In view of the foregoing and in further consideration of your
continued employment with the Corporation, the Corporation will pay to you as a
bonus (hereinafter referred to as the "Bonus") a lump sum amount, determined as
provided below, in the event that (a) within one hundred twenty (120) days after
a Change of Control of the Corporation has occurred (hereinafter referred to as
the "Stay Period") you terminate your employment with the Company and such
termination constitutes Good Reason within the meaning of Section 3(d)(ii) or
Section 3(d)(iii) of this Agreement, (b) during the Stay Period your employment
with the Corporation is terminated by the Corporation for any reason other than
Cause, or (c) upon expiration of the Stay Period you have not terminated your
employment with the Corporation (other than for on a basis which constitutes
Good Reason within the meaning of Section 3(d)(ii) or Section 3(d)(iii) of this
Agreement). The Bonus shall be equal to one-half of your current annual base
salary or, if your base salary is hereafter increased, one-half of your highest
annual base salary from time to time in effect, and shall be paid to you
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within five days after the expiration of the Stay Period (hereinafter referred
to as the "Payment Date")
In further view of the foregoing and in further consideration of your
continued employment with the Corporation, the Corporation will pay to you as
termination compensation (in addition to any Bonus to which you may be
entitled), a lump sum amount, determined as provided below, in the event that
(a) within twenty-four months after a Change of Control of the Corporation has
occurred, you terminate your employment with the Corporation for Good Reason
within ninety (90) days after the event which constitutes Good Reason or (b)
within such twenty-four month period your employment with the Corporation is
terminated by the Corporation for any reason other than Cause. The lump sum
compensation so payable (hereinafter referred to as the "Severance Payment")
shall be an amount equal to the product of two (2) times the sum of (a) the
higher of (i) your current annual base salary and (ii), if your base salary is
hereafter increased, your highest annual base salary from time to time hereafter
in effect plus (b) the higher of (i) your current targeted bonus under the
Corporation's incentive bonus plan and (ii), if your targeted bonus is hereafter
increased, your highest targeted bonus from time to time hereafter in effect.
The Severance Payment shall be paid to you within five days after the date of
termination of your employment (hereinafter referred to as the "Termination
Date").
For the purposes of this Section 1, your death or disability which
prohibits you from performing your duties to the Corporation for more than 60
consecutive days shall be deemed a termination of your employment with the
Corporation.
2. In addition:
(a) Any compensation and other amounts previously deferred by
you, together with accrued interest thereon, if any, to which you are
entitled, and any accrued vacation pay not yet paid by the Corporation,
shall be paid to you on the Payment Date.
(b) All other amounts accrued or earned by you through the
Payment Date and amounts otherwise then owing under the Corporation's
plans and policies shall be paid to you on the Payment Date, other than
benefits due to you under any qualified plan(s) of the Corporation,
which benefits shall be paid in accordance with the terms of such
plan(s).
(c) The Corporation shall pay all legal fees and expenses
incurred by you in seeking to obtain or enforce any right or benefit
provided by this Agreement, regardless of the outcome thereof.
(d) The Corporation shall maintain in full force and effect,
for the continued benefit of you and/or your family for two years after
the Termination Date, all employee welfare benefit plans and any other
employee benefit programs or arrangements (including, without
limitation, medical and dental insurance plans, disability and life
insurance plans and car allowance programs) in which you were entitled
to participate immediately prior to the Change of Control, provided
that your continued participation is possible under the general terms
and provisions of such plans and programs. In the event that your
participation in any such plan or program is barred, the Corporation
shall arrange to provide you with benefits substantially similar to
those which you are entitled to receive under such plans and programs.
At the end of the period of coverage, you shall have the option to have
assigned to you at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Corporation and
relating specifically to you.
(e) All outstanding stock options which you hold shall vest
immediately upon a Change of Control.
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3. For purposes of this Agreement:
(a) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(b) A "Change of Control" shall be deemed to have taken place
if (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) other than HM Holdings, Inc. ("HMH") 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 Corporation representing 25% or more of the combined
voting power of the Corporation's then outstanding securities, (ii) HMH
or any of its "affiliates" or "associates" (as such terms are used in
Rule 12b-2 promulgated under the Exchange Act), either singly or
collectively, is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 50% or more
of the combined voting power of the Corporation's then outstanding
securities, (iii) the stockholders of the Corporation shall have
approved (A) a reorganization, merger or consolidation, in each case,
with respect to which persons who were stockholders of the Corporation
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, (B) a liquidation or dissolution of the Corporation, or (C)
a sale of all or substantially all of the assets of the Corporation, or
(iv) 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 Corporation immediately before the Transaction shall
cease to constitute a majority of the Board of Directors of the
Corporation or of any parent of or successor to the Corporation
immediately after the Transaction occurs.
(c) "Cause" means (i) an act or acts of personal dishonesty on
your part intended to result in substantial personal enrichment at the
expense of the Corporation, or (ii) your conviction for a felony.
(d) "Good Reason" means:
(i) The assignment to you of any duties inconsistent
in any respect with your position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as in effect on the date of the Change of
Control, or any other action by the Corporation 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 Corporation promptly after
receipt of notice from you;
(ii) Any reduction of your base salary or the failure
by the Corporation to provide you 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 you were entitled prior
to the Change of Control;
(iii) The Corporation's requiring you to be based at
any office or location more than fifty miles from the location
at which you are employed on the date of the Change of
Control, except for travel reasonably required in the
performance of your responsibilities, or the Corporation's
requiring you to move your principal residence more than fifty
miles from the location of your principal residence on the
date of the Change of Control; or
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(iv) Any action taken or suffered by the Corporation
as of or following the Change of Control (such as, without
limitation, transfer or encumbrance of assets or incurring of
indebtedness) which materially impairs the ability of the
Corporation to make any payments due or which may become due
to you under this Agreement.
For purposes of this Agreement, any good faith determination of "Good
Reason" made by you shall be conclusive.
4.(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Corporation
to you or for your 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 Corporation 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 you or for your 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 Corporation because of Section 280G of the Code. For
purposes of this Section 4, present value shall be determined in accordance with
Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 4 shall
be made by Ernst & Young (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and you within 15 business days
of the date your employment with the Corporation terminates, or such earlier
time as is requested by the Corporation, and an opinion to you that you have
substantial authority not to report any Excise Tax on your federal income tax
return with respect to the Agreement Payments. Any such determination by the
Accounting Firm shall be binding upon the Corporation and you. You shall
determine which and how much of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 4, provided that, if
you do not make such determination within ten business days of the receipt of
the calculations made by the Accounting Firm, the Corporation shall elect which
and how much of the Agreement Payments shall be eliminated or reduced consistent
with the requirements of this Section 4 and shall notify you promptly of such
election. Within five business days thereafter, the Corporation shall pay to or
distribute to you or for your benefit such amounts as are then due to you under
this Agreement. For purposes of this Section 4, "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.
(c) As a result of the uncertainty in the application of Section 280G
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments will have been made by the
Corporation which should not have been made ("Overpayment") or that additional
Agreement Payments which will not have been made by the Corporation could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Accounting Firm, based upon
the assertion of a deficiency by the Internal Revenue Service against you which
the Accounting Firm believes has a high probability of success determines that
an Overpayment has been made, any such Overpayment paid or distributed by the
Corporation to you or for your benefit shall be treated for all purposes as a
loan ab initio to you which you shall repay to the Corporation 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 you to the Corporation if and to the extent
such deemed loan and payment would not either reduce the amount on which you are
subject to tax under Section 1 and Section 4999 of the Code or generate a refund
of such taxes. In the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Corporation to you
or for
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your benefit together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code.
5. You shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by you as the result of employment by another employer after
the Termination Date, or otherwise. The Corporation's obligation to make the
payments provided for in this Agreement 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 you or others.
6. Anything in this Agreement to the contrary notwithstanding, if your
employment with the Corporation is terminated prior to the date on which a
Change of Control occurs, and it is reasonably demonstrated by you that such
termination (a) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (b) otherwise arose in
connection with or in anticipation of a Change of Control, then for all purposes
of this Agreement, a Change of Control shall be deemed to have occurred the date
immediately prior to the date of such termination.
7. This Agreement shall be binding upon and inure to the benefit of you,
your estate and the Corporation and any successor or assign of the Corporation,
but neither this Agreement nor any rights arising hereunder may be assigned or
pledged by you.
8. 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 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 (all notices to the Corporation to
be directed to the attention of the President of the Corporation with a copy to
the Secretary of the Corporation) 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. The failure
by you 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 your rights hereunder or preclude you from asserting such fact or
circumstance in enforcing your rights hereunder.
9. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
you and such officer as may be specifically designed by the Board of Directors
of the Corporation (which shall in any event include the Corporation's
President). 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. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Massachusetts without regard to principles of
conflicts of laws.
10. The Corporation 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 Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, "Corporation" shall mean
the Corporation 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.
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11. Nothing in this Agreement shall prevent or limit your continuing or
future participation in any benefit, bonus, incentive or other plan or program
provided by the Corporation and for which you may qualify. Amounts which are
vested benefits or which you are otherwise entitled to receive under any plan or
program of the Corporation at or subsequent to any Change of Control shall be
payable in accordance with such plan or program.
12. The invalidity or unenforceability of any provisions 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.
13. 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.
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Corporation the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement under seal between
you and the Corporation.
Very truly yours,
GROUND ROUND RESTAURANTS, INC.
By
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Agreed:
/s/ Robin L. Moroz
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Robin L. Moroz