EXHIBIT 10.5
Buffets Holdings, Inc.
Buffets, Inc.
c/o ▇▇▇▇▇▇-▇▇▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
September 28, 2000
C. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇▇:
This letter agreement (the "Agreement") states the terms under
which Buffets Holdings, Inc., a Delaware corporation ( "Holding Co."), and
Buffets, Inc., a Minnesota corporation ("Buffets"), have agreed to retain you as
an advisor and you have agreed to provide services to both Holding Co. and
Buffets as an advisor. Holding Co. and Buffets are hereinafter collectively
referred to as the "Companies".
1. Service Period. The "Service Period" shall mean the period
beginning on the date hereof and ending on the earlier of (i) the last day of
the Buffets's fiscal year 2005, or (ii) the date this Agreement is terminated
pursuant to Section 4.
2. Advisory Services and Relationship.
(a) Services. During the Service Period, you will provide
advisory services to the Companies's boards of directors, shareholders, and
designated senior officers with respect to board of directors meetings and
preparation for board of directors meetings, and such other advisory services as
may be mutually agreed upon by you and the Companies; provided, however, in no
event shall you be required (unless you otherwise consent) to devote more than
an equivalent of 2 days per calendar month to providing advisory services,
including attending board of directors meetings.
(b) Relationship. You shall be an employee of the Companies
within the meaning of all federal, state and local laws and regulations
governing employment insurance, workers' compensation, industrial accident,
labor and taxes. Except as specifically authorized, this Agreement does not
grant you any authority to act as an agent for the Companies or any of their
affiliates and you shall not represent to the
contrary to any person.
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3. Fees and Other Benefits.
(a) Cash Compensation. In consideration for the services
rendered hereunder, Buffets shall pay you an amount ("Cash Compensation") equal
to your current salary and bonus for the balance of its fiscal year 2000 in
accordance with its regular payroll practices.
(b) Facilities. During the Service Period you shall be
provided, without charge, with your current office and secretarial assistance as
currently provided and other staff assistance at Buffets's regional offices in
southern California in accordance with past practice.
(c) Business Expense Reimbursement. Reasonable business
expenses incurred by you during the Service Period, including the current auto
reimbursement program, in connection with the performance of your duties
hereunder shall be promptly reimbursed by Buffets in accordance with its
policies.
(d) Participant in Health and Welfare Plans. During the
Service Period, Buffets shall continue to provide you and your family with
health insurance benefits on the same basis as are from time to time provided to
senior executives of Buffets. Except as provided in the preceding sentence,
during the Service Period you shall not be eligible to participate in any
pension, profit-sharing, saving, retirement, deferred compensation, stock
option, stock purchase, severance pay, bonus, incentive, life, disability,
accident insurance, vacation or any other employee benefit plan, program or
arrangement sponsored, maintained or contributed to by any of the Companies.
4. Termination; Severance Payments. Notwithstanding any other
provision of this Agreement:
(a) Termination for Cause by the Companies. This Agreement and
your service as an employee may be terminated by the Companies for Cause in
accordance with this Section 4(a). If you are terminated for Cause in accordance
with this Section 4(a), all Cash Compensation, benefits and other perquisites
provided to you pursuant to this Agreement shall immediately cease and you shall
be solely entitled to receive your accrued, but unpaid, Cash Compensation, if
any, through the date of such termination, plus any previously-incurred, but
unreimbursed, business expenses, in accordance with Section 3(c).
For purposes of this Agreement, "Cause" shall mean (i) your
material breach of the noncompetition, nonsolicitation or confidentiality
provisions set forth in the Buffets Holdings, Inc. Stockholders' Agreement,
dated as of September 28, 2000 (the "Stockholders' Agreement"), whether or not
such agreement or requirement is enforceable under applicable law, (ii) your
failure or refusal after receipt of written notice to abide by, in any material
respect, the reasonable policies or directives of the Board of Directors of
Holding Co. (the "Board"), or (iii) your conviction of, or pleading nolo
contendere to, a crime involving moral turpitude. Notwithstanding the foregoing,
this
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Agreement and your service as an employee shall not be deemed to have been
terminated for Cause pursuant to clause (ii) until ten (10) days after there
shall have been delivered to you a written notice setting forth in reasonable
detail the particulars forming the basis for such termination and you shall be
given the opportunity to be heard during such ten (10) day period by the Board
respecting the matters set forth in such notice.
(b) Disability or Death. This Agreement and your service as an
employee may be terminated by you or the Companies upon your death or
"Disability" in accordance with this Section 4(b). Upon termination of this
Agreement and your service as an employee for either death or Disability in
accordance with this Section 4(b), all Cash Compensation, benefits and other
perquisites provided to you pursuant to Section 3 hereof shall continue to be
provided to you or your beneficiaries or estate (as the case may be) for the
remainder of the calendar year in which your death or Disability occurs.
For purposes of this Agreement, "Disability" shall mean any
event of disability under any disability insurance plan maintained by Buffets in
which you are eligible to participate, or if there shall be no such disability
plan, then your inability to perform your duties as an advisor to the Companies
and their affiliates for any period of at least 90 days during any consecutive
six month period.
(c) Without Cause by the Companies. This Agreement and your
service as an employee may be terminated at any time by the Companies without
Cause. Upon termination of this Agreement and your service as an employee by the
Companies without Cause in accordance with this Section 4(c), you shall continue
to receive the Cash Compensation, benefits and other perquisites you were
otherwise entitled to receive pursuant to Section 3 hereof through the end of
Buffets's fiscal year 2005.
(d) Voluntary Resignation. You may terminate this Agreement
and your service as an employee at any time by providing at least 30 days'
written notice to the Companies. Upon termination of this Agreement and your
service as an employee due to your voluntary resignation in accordance with this
Section 4(d), all benefits and perquisites provided to pursuant to this
Agreement shall immediately cease and you shall be solely entitled to receive
your Cash Compensation for the remainder of the calendar year in which such
termination occurs, plus any previously-incurred, but unreimbursed business,
expenses, in accordance with Section 3(c). Notwithstanding the foregoing,
Buffets may, in its sole discretion, elect to continue to provide you with the
Cash Compensation, benefits and other perquisites you were otherwise eligible to
receive pursuant to Section 3 hereof.
5. Purchase of Incentive Equity.
(a) Issuance of Incentive Equity. Subject to the restrictions
and conditions set forth below, Holding Co. is on the date hereof selling and
issuing to you, 16,250 shares of Holding Co. common stock, par value $.01 per
share, (hereinafter called the "Incentive Shares") for an aggregate
consideration of One Hundred Sixty Two
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Thousand Five Hundred Dollars ($162,500) (the "Purchase Price"), which Purchase
Price shall be paid at the time and in the manner set forth in the Buffet
Holdings, Inc. Subscription Agreement, dated as of September 28, 2000 (the
"Subscription Agreement"). The Purchase Price is the fair market value of the
Incentive Shares as of the date hereof, determined without regard to any
restrictions applicable thereto.
(b) Vesting of Incentive Shares. The Incentive Shares shall be
fully vested as of the date hereof.
(c) Restrictions; Repurchase Rights. The Incentive Shares
shall be held subject to all the restrictions and limitations set forth in the
Stockholders' Agreement and the repurchase and other rights set forth below:
(i) In the event this Agreement and your service as an
employee is terminated by the Companies for Cause in accordance with Section
4(a) hereof, Holding Co. shall have the right (a "Call Right") exercisable for a
period of one year following the date of the termination of your service to
repurchase all or a portion of the Incentive Shares at a purchase price per
share to be calculated in the manner set forth in Section 4.8(b) of the
Stockholders' Agreement for the repurchase of a Management Stockholder's
Incentive Stock in the event his or her employment is terminated for "Cause."
The exercise of a Call Right and the consummation of the repurchase shall be
subject to the procedures set forth in Section 4.8(e) and Section 4.12 of the
Stockholders' Agreement.
(ii) In the event this Agreement and your service as an
employee is terminated as a result of your death or Disability in accordance
with Section 4(b) hereof, or by the Companies without Cause in accordance with
Section 4(c) hereof, then you (or your estate or Permitted Transferees, if
applicable) shall have the right (a "Put Right") exercisable for a period of one
year following the date of the termination of your service to require Holding
Co. to purchase all, but not less than all, of the Incentive Shares at a
purchase price per share to be calculated in the manner set forth in Section 4.9
of the Stockholders' Agreement. The exercise of a Put Right and the consummation
of the repurchase shall be subject to the procedures set forth in Section 4.8(e)
and Section 4.12 of the Stockholders' Agreement.
(d) Notwithstanding any provision of Section 5 of this
Agreement, the exercise of a Call Right pursuant to Sections 5(c)(i) hereof or
the exercise of a Put Right pursuant Section 5(c)(ii) hereof shall be subject to
all of the deferred payment provisions set forth in Section 4.10 of the
Stockholders' Agreement.
(e) As a condition to the receipt of the Incentive Shares you
hereby agree to elect to be taxed under Section 83 of the Internal Revenue Code
of 1986, as amended (the "Code") to the extent the fair market value of the
Incentive Shares exceeds the Purchase Price by executing and delivering a valid
election under Section 83(b) of the Code to the Internal Revenue Service and to
Holding Co. within 30 days of the date hereof.
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6. Successors.
(a) This Agreement is personal to you and shall not be
assignable by you without the prior written consent of the Companies.
(b) This Agreement shall inure to the benefit of and be
binding upon the Companies and their successors or assigns.
7. Liability; Indemnity.
(d) In no event shall you be liable to the Companies for lost
profits of the Companies, or special, incidental or consequential damages (even
if you have been advised of the possibility of such damages) except with respect
to your fraud or intentional misrepresentation.
(e) Your total liability under this Agreement, if any, for
damages, costs and expenses, regardless of cause (other than with respect to
your fraud or intentional misrepresentation), shall not exceed the total amount
of compensation paid to you under this Agreement.
(f) You shall not be liable for any claim or demand made
against the Companies by any third party other than with respect to your fraud
or intentional misrepresentation.
(g) The Companies shall indemnify you against all claims,
liabilities and costs, including reasonable attorney fees incurred in defending
any third party claim or suit arising out of or in connection with this
Agreement. You shall promptly notify the Companies in writing of such claim or
suit and the Companies shall have the right to fully control the defense and any
settlement of the claim or suit; provided, however, that any settlement which
would require any action or payment by you, or would require you to undertake
certain actions or to refrain from acting, shall be subject to your prior
written approval.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to its
principles of conflict of laws or such principles of any other jurisdiction
which could cause the application of the laws of any jurisdiction other than the
State of Delaware.
(b) This Agreement, the Stockholders' Agreement, the
Subscription Agreement and a side letter relating to certain tax payments
arising from the acceleration of options to acquire stock of Buffets state the
entire agreement and understanding of the parties on the subject matter
discussed herein, and supersedes all previous agreements, arrangements,
communications and understandings relating to that subject matter.
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(c) This Agreement may be amended, modified, superseded, or
canceled, and any of the terms may be waived, only by a written agreement
executed by the parties hereto or their respective successors or legal
representatives.
(d) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(e) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by recognized
overnight courier, to the addresses listed above or to such other address as
either party shall have furnished to the other in writing in accordance
herewith.
(f) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(g) The failure of the Companies at any time to enforce
performance by you of any provisions of this Agreement shall in no way affect
the Companies' rights thereafter to enforce the same, nor shall the waiver by
the Companies of any breach of any provision hereof be held to be a waiver of
any other breach of the same or any other provision.
(h) The Companies may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
Please sign below to indicate your agreement to the terms described
herein.
Very truly yours,
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Buffets Holdings, Inc.
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
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R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
Executive Vice President & Chief Financial Officer
Buffets, Inc.
AGREED to by C. ▇▇▇▇▇▇ ▇▇▇▇▇
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/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇
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Date: September 28, 2002
