EXHIBIT 10.47
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (this “Agreement”),
effective as of December 31, 2008 (the “Amended
Effective Date”), is made and entered into this 31
st
day of December,
2008, by and between California Pizza Kitchen, Inc., a Delaware
corporation (the “Company”), and Larry S. Flax
(“Executive”). This Agreement amends and restates in
its entirety the Prior Agreement (as defined below).
WHEREAS, Executive and the Company
are currently parties to that certain Employment Agreement, as
executed on April 11, 2005 (the “Prior Agreement”)
and effective as of January 1, 2005 (the “Effective
Date”); and
WHEREAS, Executive and the Company
wish to amend and restate the Prior Agreement on the terms and
conditions set forth in this Agreement to comply with or be exempt
from the application of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”).
NOW, THEREFORE, in consideration of
the premises and the mutual covenants herein contained, and
intending to be legally bound hereby, the parties hereto agree as
follows:
Section 1. Employment
Term . The Company hereby employs Executive and Executive
hereby accepts such employment upon the terms and conditions set
forth herein. The Company shall continue to employ Executive as a
Co-Chief Executive Officer of the Company for the period commencing
on the Amended Effective Date and ending on the earlier of
(a) the date of termination of this Agreement pursuant to the
provisions of Section 4 hereof, or (b) December 31,
2009; provided, however, that commencing on December 31, 2009,
and on each subsequent anniversary thereof, the Employment Period
shall be automatically extended for one (1) additional year
unless, no later than six (6) months before such date, either
party shall have given written notice to the other that it does not
wish to extend the Employment Period of this Agreement (the
“Employment Period”). References herein to the
Employment Period of this Agreement shall refer to both the initial
Employment Period and any such extended Employment Period.
Executive hereby accepts such continued employment by the Company
for the Employment Period on the terms set forth herein.
Section 2. Duties .
During the Employment Period, Executive shall serve as a Co-Chief
Executive Officer. Executive shall render such business and
professional services in the performance of his duties consistent
with Executive’s position within the Company as Co-Chief
Executive Officer as well as such services reasonably assigned to
him by the Board of Directors of the Company. Executive shall, at
all times, report to the Board of Directors of the Company and no
other individual within the Company and all other employees of the
Company shall be responsible to report to Executive or such other
individuals as he designates. Executive’s principal place of
employment shall be the offices provided by the Company located in
Los Angeles, California, but it is understood and acknowledged that
the performance of his duties will require Executive to travel
outside Los Angeles. Executive, however, shall not be required,
without his consent, to relocate his principal place of employment
more than 25 miles from the current location of the offices
provided by the Company located in Los Angeles.
At all times during the Employment
Period, Executive shall devote his best efforts and abilities to
the performance of his duties on behalf of the Company and to the
promotion of its interests consistent with, and subject to, the
strategies, policies and directions of the Board. Notwithstanding
the foregoing, Executive may be involved in civic and charitable
activities, may manage his personal investments and may serve on
the board of any public companies, trade or professional
associations.
The Company agrees that it will use
its reasonable best efforts to cause Executive to be nominated to
and continue to be named Co-Chairman (or Chairman, if Richard L.
Rosenfield does not continue as the other Co-Chairman) of the Board
of Directors during the term of this Agreement.
Section 3. Compensation
. During the Employment Period, as compensation for his services
and covenants hereunder:
(a) During the Employment Period,
the Company shall pay Executive an annual base salary of Five
Hundred Thousand Dollars ($500,000), prorated for any partial
employment year, payable in equal installments at the
Company’s current payroll intervals; provided, however, that
the Board may increase such amount during the Employment Period in
its sole and absolute discretion (the “Base Salary”).
Such Base Salary shall be reviewed annually, and shall be subject
to such annual increase, if any, as determined by the Company in
its sole discretion.
(b) During the Employment Period,
Executive shall be entitled to an annual target performance based
bonus (the “Annual Bonus”) based on the achievement of
certain performance based objectives established by the
Compensation Committee. Executive’s target Annual Bonus shall
be equal to sixty percent (60%) of his Base Salary. The actual
Annual Bonus is determined based on achievement of performance
results within a range between a threshold that is less than the
specified performance target or in excess of the specified
performance target. The Annual Bonus will range from a minimum of
30% of Base Salary for attainment of the performance based
threshold amount to a maximum of 200% for exceptional performance
in excess of the performance based target amount. Exhibit A
hereto sets forth the performance targets that if achieved will
result in the payment of the corresponding percentage of Base
Salary as Annual Bonus in calendar year 2005.
(i) The performance targets for 2005
are specified in Exhibit A hereto and, thereafter, shall be
established annually by the Compensation Committee based on
financial performance factors determined by the Compensation
Committee in its sole discretion, but after consultation with
Executive.
(ii) The Annual Bonus shall be
payable in cash as soon as practicable following delivery of the
audited financial statements for the Company and its subsidiaries
for the year for which the Annual Bonus is payable (the
“Audited Financial Statements”), but in no event later
than the last day of the applicable two and one-half month
“short-term deferral period” with respect to such
annual bonus, within the meaning of Treasury Regulation
Section 1.409A-1(b)(4).
(c) The Parties acknowledge that on
December 29, 2004, the Company granted Executive options to
purchase 300,000 shares of Company common stock, par value
.01
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per share (“Common Stock”), the
terms and conditions of which were modified by the Prior Agreement
as follows: “Such options shall become vested and exercisable
on the date this Agreement is executed with respect to all of the
shares subject to such option. To the extent that any terms of such
option provided in the Notice of Stock Option Grant delivered to
Executive prior to the date hereof differ from any terms set forth
herein, the terms set forth herein supersede the terms of any such
notice and the Company will cause an appropriate amendment to such
Notice of Stock Option Grant to be prepared and
executed.”
(d) The parties acknowledge that on
April 11, 2005, the Company granted Executive options to
acquire 300,000 shares of Common Stock, pursuant and subject to the
terms and conditions of the Prior Agreement, the Company’s
2004 Omnibus Incentive Compensation Plan, and the Non-Qualified
Stock Option Agreement, a sample which is attached hereto as
Exhibit B , which include but are not limited to the
following: The exercise price per share of the options was based on
the higher of (i) the closing price of the Company Common
Stock on April 11, 2005 or (ii) the average closing price
of the Company Common Stock for the five (5) day period
immediately preceding April 11, 2005. The options shall vest
and be exercisable as to 20% of the grant on the third anniversary
of the grant date and thereafter an additional 10% of the original
grant shall vest on each quarterly anniversary until fully vested
and exercisable at the end of the fifth anniversary of the grant
date. The options granted to Executive under the 2004 Omnibus
Incentive Compensation Plan shall be nonstatutory stock options
that are not intended to be incentive stock options under
Section 422 of the Internal Revenue Code. Each option granted
under the terms of the 2004 Omnibus Incentive Compensation Plan
shall be for a term of ten years and shall provide that in the
event Executive’s employment terminates for any reason other
than for Cause or voluntary termination by Executive without Good
Reason, vested options shall continue to be exercisable for at
least three years following the employment termination date, but
not longer than the expiration of the ten-year term after the date
of grant.
(e) The parties acknowledge that on
January 11, 2006, the Company granted Executive 70,000 shares
of restricted stock of the Company, which award was made pursuant
and subject to the terms and conditions of the Prior Agreement, the
Company’s 2004 Omnibus Incentive Compensation Plan, and the
Restricted Stock Agreement, which include but are not limited to
the following: The award shall vest as to 12,500 shares of
restricted stock on the first anniversary of the grant date and
thereafter an additional 3,125 shares of restricted stock subject
to the award shall vest on each quarterly anniversary until and
including the fourth anniversary of the grant date. The award shall
vest as to 10,000 shares of restricted stock subject to the award
on the earlier of (i) the fifth anniversary of the grant date
and (ii) the last day of the first 30-day period following
January 1, 2005 during which the average closing price of the
Company Common Stock exceeds $35.00 per share. The award shall vest
as to the remaining 10,000 shares of restricted stock subject to
the award on the earlier of (i) the fifth anniversary of the
grant date and (ii) the last day of the first 30-day period
following January 1, 2005 during which the average closing
price of the Company Common Stock exceeds $40.00 per
share.
(f) For so long as the Company
remains a public company, Company shall use commercially reasonable
efforts to (i) cause the shares of Common Stock reserved for
issuance to Executive pursuant to the Company’s 2004 Omnibus
Incentive Compensation Plan to be included in a registration
statement on Form S-8 (the “Registration Statement”)
relating to the registration under the Securities Act of 1933 (the
“Act”) of no less than 3,750,000 shares of the
Company’s Common Stock, issuable pursuant to the
Company’s 2004 Omnibus Incentive Compensation Plan;
(ii) cause such awards and the shares issuable pursuant to
such awards to be
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registered or otherwise exempt under the
securities or blue sky laws of California and such other
jurisdictions in the United States as may be applicable; and
(iii) to maintain a current prospectus and to cause such
Common Stock to be listed on the principal exchange or exchanges or
qualified for trading on the principal over-the-counter market on
which the Company’s Common Stock is then listed or traded, so
long as any Options remain outstanding and have not been exercised
or terminated and for a period of five years after
exercise.
(g) (i) Executive shall be entitled
to an annual supplemental retirement benefit (the
“Supplemental Retirement Benefit”) payable for
Executive’s life in an amount equal to:
(A) $200,000; provided, however,
that if Executive voluntarily terminates employment without Good
Reason or is terminated for Cause prior to the calendar year in
which he attains age 70, such amount shall be reduced by a
percentage equal to the product of (i) 15% and (ii) the
lesser of (x) the number of full or partial calendar years
remaining until the calendar year in which Executive attains age 70
or (y) five (5), less
(B) the Contribution Offset (as
defined below).
(ii) The “Contribution
Offset” shall be determined as follows. Effective as of
December 31, 2008, Executive shall be assumed to have an
account balance (the “Account Balance”) attributable to
Company contributions under the Company’s 401(k) plan and
other retirement plans equal to $16,400. For each calendar year
(beginning with 2009 and ending with the year immediately preceding
Executive’s “separation from service” from the
Company (within the meaning of Section 409A(a)(2)(A)(i) of the
Code, and Treasury Regulation Section 1.409A-1(h))
(“Separation from Service”), the Company shall be
assumed to have made a contribution on behalf of Executive under
the Company’s 401(k) plan and other retirement plans equal to
$4,200 (the “Annual Contribution”). The Annual
Contribution for a calendar year shall be assumed to have been made
on December 31 of such year and shall be credited to the
Account Balance. The Account Balance shall be assumed to be
credited with interest on and after January 1, 2009 at an
annual rate of 2.06%. The “Contribution Offset” shall
equal the Account Balance, determined as of the date of
commencement of payment of the Supplemental Retirement Benefit,
converted into an actuarial equivalent life annuity annual benefit
commencing on the date of commencement of payment of the
Supplemental Retirement Benefit. For purposes of this paragraph,
the actuarial equivalent shall be determined using an annual
interest rate equal to 6% and using the RP 2000 (unisex) mortality
table with improvements to 2025.
(iii) The
Supplemental Retirement Benefit shall be paid to Executive in the
form of monthly payments equal to one-twelfth (
1 / 12 ) of the Supplemental
Retirement Benefit. Such monthly payments shall commence on the
later of: (i) the first day of the calendar month next
following Executive’s Separation from Service, subject to
Section 5(j) below, or (ii) the first day of the calendar
month next following Executive’s attainment of age 65, and
shall continue on each month thereafter until Executive’s
death.
(iv) Notwithstanding the foregoing,
in the event that Executive is in violation of Section 6 or
Section 7, any Supplemental Retirement Benefit payable
hereunder shall be forfeited and cancelled immediately upon such
violation. No interest in the
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Supplemental Retirement Benefit may be sold,
pledged, assigned or transferred by Executive in any manner and no
interest in the Supplemental Retirement Benefit shall be liable for
the debts, contracts or engagements of Executive or shall be
subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no
effect.
(h) Executive shall be entitled to
paid vacation of four weeks annually. Such vacation shall be taken
at such times as will interfere as little as possible with the
performance of Executive’s duties hereunder. At no time may
Executive accumulate or accrue more than eight weeks of unused
vacation time. Should Executive accumulate or accrue eight weeks of
earned but unused vacation time, Executive shall cease to earn any
further vacation benefits until such time as Executive’s
earned but unused vacation time falls below eight weeks.
(i) Upon presentation of properly
itemized charges together with appropriate documentation, the
Company shall reimburse Executive for all reasonable and necessary
expenses properly incurred by him in the performance of his duties
hereunder, in accordance with the Company’s policies
therefor, as may be in effect from time to time.
(j) The Company shall provide
Executive with an automobile allowance of Two Thousand Dollars
($2,000) per month.
(k) The Company shall reimburse
Executive for his dues (not including minimums or other usage
charges unless such expenses are reimbursable pursuant to paragraph
(i) above) at one country or dining club of his choice located
in the State of California.
(l) Executive shall be allowed to
participate in any present or future medical, health insurance or
other personal fringe benefits plan adopted by the Company for the
general and overall benefit of its full time employees (it being
understood, however, that participation in any such plan is subject
to whatever eligibility requirements are applicable generally to
such plan).
(m) The Company shall reimburse
Executive for all reasonable legal fees and disbursements incurred
by Executive in connection with the negotiation, preparation and
execution of this Agreement, up to a maximum of $30,000.
(n) To the extent that any payments
or reimbursements provided to Executive under this Agreement,
including, without limitation, under Sections 3(i), 3(j), 3(k),
3(m), 5(b), 5(c), 5(d) or 5(f), are deemed to constitute
compensation to Executive, such amounts shall be paid or reimbursed
reasonably promptly, but not later than December 31 of the
year following the year in which the expense was incurred. The
amount of any payments or expense reimbursements that constitute
compensation in one year shall not affect the amount of payments or
expense reimbursements constituting compensation that are eligible
for payment or reimbursement in any subsequent year, and
Executive’s right to such payments or reimbursement of any
such expenses shall not be subject to liquidation or exchange for
any other benefit.
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Section 4. Early Termination of
Agreement and other Matters.
(a) It is agreed and understood that
this Agreement (except for Section 6 and 7 hereof) and
Executive’s employment with the Company shall terminate
automatically upon the first to occur of any of the events set
forth in (i) through (v) below:
(i) the date of Executive’s
death;
(ii) the date on which the Board
shall give Executive notice of termination on account of a
Disability (as hereinafter defined), which has prevented Executive
from satisfactorily and completely performing his duties under this
Agreement for a period or periods aggregating more than one hundred
twenty (120) days in any twelve (12) consecutive
months;
(iii) within 30 days following the
date on which the Board shall give Executive notice of termination
for Cause (as hereinafter defined);
(iv) within 30 days following the
date on which the Board shall give Executive notice of termination
for any reason other than Disability or Cause or Executive shall
give the Board notice of termination for Good Reason (as
hereinafter defined); or
(v) within 60 days following the
date on which Executive shall give the Board notice of
Executive’s termination for other than for Good
Reason.
(b) For purposes of this Agreement,
“Cause” shall mean that Executive: (i) has been
convicted of, or pleads guilty or nolo contendere to any act of
embezzlement or fraud against the Company, its parent or any of its
subsidiaries or to any felony; (ii) has committed any willful,
intentional, purposeful, grossly negligent or malicious act that
constitutes misconduct and has the effect of materially injuring
the business or reputation of the Company, its parent or any of its
affiliates and any divisions Executive may manage; or
(iii) has materially breached this Agreement; provided,
however, that in the event that the Board determines to terminate
Executive’s employment for Cause, such termination shall only
become effective if the Board shall first provide Executive written
notice detailing such Cause, and if such act or omission is
susceptible to cure, Executive shall be provided a 30 day period to
cure such act or omission.
(c) For the purposes of this
Agreement, “Disability” shall mean that Executive is
determined to be substantially disabled by the insurance company
providing group long-term disability insurance for the
Company’s employees, which determination would entitle
Executive to disability benefit payments thereunder. If no such
insurance is then in force or if no such determination has been
made, “Disability” shall refer to a medically
determinable physical or mental condition disabling Executive from
substantially performing his duties hereunder. If such
determination is disputed, then the Company and Executive shall
each select a physician licensed to practice medicine in the State
of California who shall, in turn, jointly select a third physician
licensed to practice medicine in the State of California, who shall
make a binding determination of disability. The Company shall bear
the costs of obtaining such determination.
(d) For purposes of this Agreement,
“Good Reason” shall mean without Executive’s
consent (i) a material diminution in the duties, authority or
responsibilities of Executive or a material breach of this
Agreement by the Company, provided that the Board fails to cure
such material reduction or breach within 30 days of receipt of a
written notice from
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Executive of such material reduction or breach
(which notice shall be provided by Executive to the Company within
90 days following the initial occurrence of such event) or
(ii) requiring Executive to relocate his principal place of
employment to a location that is more than twenty-five
(25) miles from the location of the Company’s principal
office in the Los Angeles area as of the Amended Effective Date.
Executive’s Separation from Service from the Company as a
result of any of the foregoing events must occur within 2 years of
the initial occurrence of any such event.
Section 5. Compensation in
Event of Termination; Survival.
(a) Except as otherwise provided
below in this Section 5, upon termination of Executive’s
employment for any reason, the Employment Period of this Agreement
shall end and this Agreement shall expire and the Company shall
have no further obligation to Executive except to the extent that
Executive is otherwise entitled to any unpaid salary or benefits
hereunder and insurance coverage in accordance with applicable law.
Notwithstanding the expiration of the Employment Period or
termination of this Agreement; the provisions set forth in
Section 6, 7 and 8 shall remain in full force and effect after
the termination of Executive’s employment hereunder.
Executive shall not be required to seek other employment or
otherwise attempt to mitigate damages to be entitled to any of the
termination benefits provided in this Section 5.
(b) Subject to Section 5(j)
below, if Executive incurs a Separation from Service prior to the
calendar year in which Executive attains age 70 by reason of the
Company providing Executive with written notice that it does not
wish to extend the Employment Period, Executive (or his estate in
the event he dies after his termination, as applicable) shall be
entitled to the following: (i) a lump sum cash payment within
60 days after the date of Executive’s Separation from Service
(the “Separation Date”) in an amount equal to the sum
of Executive’s Base Salary plus his Target Bonus in effect as
of such date; (ii) any unvested options shall become fully
vested and immediately exercisable and any restrictions on
restricted stock that was awarded to Executive by the Company
during the Employment Period shall lapse immediately;
(iii) the exercise period with respect to any stock option
shall continue until the earlier of (x) the last day of the
three-year period following the Separation Date or
(y) expiration date of such option according to its terms; and
(iv) continuation of health insurance benefits consistent with
those provided by the Company to its senior Executives; provided,
however, that the percentage of the cost of such coverage paid by
the Company shall not be less than the percentage of such costs
that was paid by the Company immediately prior to the expiration
date of the Agreement.
(c) Subject to Section 5(j)
below, if Executive incurs a Separation from Service prior to the
calendar year in which Executive attains age 70 by reason of a
termination of Executive’s employment either by the Company
without Cause or by Executive for Good Reason, Executive (or his
estate in the event he dies after his termination, as applicable)
shall be entitled to the following: (i) a lump sum cash
payment within 60 days after the Separation Date in an amount equal
to two (2) times the sum of Executive’s Base Salary plus
his Target Bonus in effect as of such date; (ii) any unvested
option shall become fully vested and immediately exercisable and
any restrictions on restricted stock that was awarded to Executive
by the Company during the Employment Period shall lapse
immediately; (iii) the exercise period with respect to any
stock option shall continue until the earlier of (x) the last
day of the three-year period following the Separation Date or
(y) the expiration date of such option according to its terms;
and (iv) continuation of health insurance benefits consistent
with those provided by the
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Company to its senior Executives during the
period commencing on the Separation Date and ending on the later of
(A) the date that is 18 months after the Separation Date and
(B) the last day of the Employment Period as determined
without regard to Executive’s Separation from Service;
provided, however, that the percentage of the cost of such coverage
paid by the Company shall not be less than the percentage of such
costs that was paid by the Company immediately prior to the
expiration date of the Agreement.
(d) Subject to Section 5(j)
below, if Executive incurs a Separation from Service after the
commencement of the calendar year in which Executive attains age 70
by reason of (x) Executive’s receipt of written notice
from the Company that it does not wish to extend the Employment
Period, or (y) of a termination of Executive’s
employment either by the Company without Cause or by Executive for
Good Reason, Executive (or his estate in the event he dies after
his termination, as applicable) shall be entitled to the following:
(i) any unvested option shall become fully vested and
immediately exercisable and any restrictions on restricted stock
that was awarded to Executive by the Company during the Employment
Period shall lapse immediately; (ii) the exercise period with
respect to any stock option shall continue until the earlier of
(x) the last day of the three-year period following the
Separation Date or (y) the expiration date of such option
according to its terms; and (iii) continuation of health
insurance benefits consistent with those provided by the Company to
its senior Executives during the period commencing on the
Separation Date and ending on the later of (A) the date that
is 18 months after the Separation Date and (B) the last day of
the Employment Period as determined without regard to
Executive’s Separation from Service; provided, however, that
the percentage of the cost of such coverage paid by the Company
shall not be less than the percentage of such costs that was paid
by the Company immediately prior to the expiration date of the
Agreement.
(e) In the event of
Executive’s death or, subject to Section 5(j) below, if
Executive incurs a Separation from Service by reason of
Executive’s Disability, Executive (or his estate, as
applicable) shall be entitled to the following: (i) any
unvested option shall become fully vested and immediately
exercisable and any restrictions on restricted stock that was
awarded to Executive by the Company during the Employment Period
shall lapse immediately; and (ii) the exercise period with
respect to any stock option shall continue until the earlier of
(x) the last day of the three-year period following the
Separation Date or (y) the expiration date of such option
according to its terms; provided that Executive has not been
provided with notice referred to in Section 4(a)(iii)
above.
(f) Subject to Section 5(j)
below, if a Change of Control (as defined below) occurs and
Executive incurs a Separation from Service by reason of a
termination of employment either by the Company without Cause or by
Executive for Good Reason, in each case within 2 years following
the effective date of a Change of Control, Executive (or his estate
in the event he dies after his termination, as applicable) shall be
entitled to the following: (i) a lump sum cash payment within
60 days after the Separation Date in an amount equal to two
(2) times the sum of Executive’s Base Salary and Target
Bonus in effect as of such date; (ii) any unvested option
shall become fully vested and immediately exercisable and any
restrictions on restricted stock that was awarded to Executive by
the Company during the Employment Period shall lapse immediately;
(iii) the exercise period with respect to any stock option
shall continue until the earlier of (x) the last day of the
three-year period following the Separation Date or (y) the
expiration date of such opti
