EMPLOYMENT AGREEMENT (the “ Agreement ”) dated as January 25, 2011 by and between Morton’s Restaurant Group (the “ Company ”) and Christopher J. Artinian (the “ Executive ”) (each a “ Party ” and together, the “ Parties ”).
WHEREAS, the Executive has been employed by the Company since 1995 and in or about February of 2010, the Executive was appointed Chief Executive Officer and President of the Company; and
WHEREAS, the Executive and the Company wish to establish the terms of the Executive’s continued employment with the Company following the Effective Date (as defined below);
Accordingly, the Parties agree as follows:
1. Employment and Acceptance . The Company shall continue to employ the Executive, and the Executive shall accept such employment, subject to the terms of this Agreement, which shall become effective on January 25, 2011 (the “ Effective Date ”).
2. Term . Subject to earlier termination pursuant to Section 5 of this Agreement, this Agreement and the employment relationship hereunder shall continue from the Effective Date until December 31, 2012 (“ Initial Term ”). The employment term hereunder shall automatically be extended for successive one-year periods beginning on January 1, 2013 (“ Extension Terms ” and, collectively with the Initial Term, the “ Term ”) unless either party gives notice of non-extension to the other no later than sixty (60) days prior to the expiration of the then-applicable Term. In the event that the Executive’s employment with the Company terminates, the Company’s obligation to continue to pay, after the date of termination, Base Salary (as defined below), Bonus (as defined below) and other benefits shall terminate except as may be provided for in Section 5 below.
3. Duties and Title .
3.1 Title . The Company shall employ the Executive to render exclusive and full-time services to the Company and its subsidiaries. The Executive shall serve in the capacity of Chief Executive Officer and President of the Company.
3.2 Duties . The Executive shall have responsibilities commensurate with the Executive’s position and shall perform the duties that the Board of Directors of the Company (the “ Board ”) may from time to time require of the Executive in that capacity, consistent with the Executive’s position. The Executive shall report to the Board of Directors. The Executive shall devote substantially all of the Executive’s full professional time, energies, skills and attention to the performance of the Executive’s duties and responsibilities hereunder. The Executive shall, as necessary, also serve, if elected or appointed, without additional compensation, as a director and an officer of any and all restaurant businesses wholly or partly owned by the Company.
4. Compensation and Benefits by the Company . As compensation for all services rendered pursuant to this Agreement, the Company shall provide the Executive the following during the Term:
4.1 Base Salary . The Company will pay to the Executive an annualized base salary of $370,000 (“ Base Salary ”), payable not less frequently than monthly, less such deductions as shall be required to be withheld by applicable law and regulations. The Executive’s Base Salary shall be reviewed at least annually by the Board and may be adjusted upward from time to time.
4.2 Annual Bonus . The Executive shall be eligible to receive an annual bonus (the “ Bonus ”) targeted at sixty-five percent (65%) of Base Salary (the “ Target Bonus ”), based upon achievement of performance targets as determined by the Board and the Company’s Compensation Committee. Any Bonus shall be paid within two and one-half (2.5) months following the fiscal year to which the Bonus relates (the “ Bonus Payment Date ”). Except as otherwise set forth in Section 5, the Executive must be employed by the Company, and not have given notice of resignation, as of the Bonus Payment Date, in order to receive such Bonus.
4.3 Participation in Employee Benefit Plans . The Executive shall be permitted during the Term, if and to the extent eligible, to participate in any group life, accidental death and dismemberment or disability insurance plan, health (including an executive health benefit plan) program, incentive or other supplemental or special compensation plans or arrangements, and stock purchase programs, retirement plan or similar benefit plan or perquisite program of the Company, which may be available generally to other senior executives of the Company and its subsidiaries on the same terms as such other persons in accordance with the terms of such plans and programs.
4.4 Expense Reimbursement . The Executive shall be entitled to receive reimbursement for all appropriate business expenses incurred by the Executive in connection with the Executive’s duties under this Agreement in accordance with the policies of the Company as in effect from time to time. During the Term, the Company will continue to provide the Executive with an automobile or reimbursement for the costs of an automobile for business purposes, in the same capacity or amount as the Executive receives as of the Effective Date.
5. Termination of Employment .
5.1 Termination by the Company for Cause, by the Executive without Good Reason, Due to Death or Disability, or Nonrenewal of the Term . If: (i) the Company terminates the Executive’s employment with the Company for Cause (as defined below); (ii) the Executive terminates employment with the Company without Good Reason (as defined below); (iii) the Company terminates the Executive’s employment with the Company due to the Executive’s Disability (as defined below); (iv) the Executive’s employment terminates due to the Executive’s death; or (v) the Executive’s employment terminates due to nonrenewal of the Term by either Party pursuant to Section 2 of this Agreement, the Executive or the Executive’s legal representatives (as appropriate), shall be entitled to receive the following payments (the “ Accrued Benefits ”):
(a) the Executive’s accrued but unpaid Base Salary to the date of termination; and
(b) expenses reimbursable under Section 4.4 above incurred but not yet reimbursed to the Executive to the date of termination.
For the purposes of this Agreement, “ Cause ” means as determined by the Board (or its designee), (i) indictment for a felony or any crime involving dishonesty or theft; (ii) conduct by the Executive in connection with the Executive’s employment duties or responsibilities that is fraudulent, unlawful or grossly negligent; (iii) the Executive’s willful misconduct; (iv) the Executive’s contravention of specific lawful directions related to a material duty or responsibility which is directed to be undertaken from the Board; (v) the Executive’s material breach of the Executive’s obligations under this Agreement, including, but not limited to breach of the Executive’s obligations under Section 6, and the Executive’s continued inattention to or material failure to perform the duties reasonably assigned to the Executive by the Board; (vi) any acts of dishonesty by the Executive resulting or intending to result in personal gain or enrichment at the expense of the Company, its subsidiaries or affiliates; (vii) the Executive’s failure to comply with a material policy of the Company, its subsidiaries or affiliates; or (viii) the Executive’s engaging in personal conduct (including, but not limited to, harassment or discrimination of employees, or the use or possession at work of any illegal controlled substance) which seriously discredits or damages, or could seriously discredit or damage, the Company, its subsidiaries or affiliates. A termination for “Cause” shall be effective immediately (or on such other date set forth by the Board). With respect to any event or deficiency constituting Cause pursuant to clauses (v) and (vii) above (except with respect to a breach by the Executive of the Executive’s obligations under Section 6 of the Agreement), the Company shall be required to provide the Executive with written notice specifying such event or deficiency within ninety (90) days following the Board’s verifiable knowledge of the occurrence of such event or deficiency and the Executive shall have thirty (30) days after receipt of such notice to cure, if curable, such event or deficiency that would result in such Cause, as reasonably determined by the Board.
For the purposes of this Agreement, “ Good Reason ” means (i) the Executive is assigned any duties or responsibilities materially inconsistent with the Executive’s positions as Chief Executive Officer and President of the Company; (ii) the Company fails to pay any sum of money to the Executive when the same becomes due; or (iii) relocation of the Company’s headquarters to a location more than fifty (50) miles from the Company’s current headquarters. The Executive shall be required to provide the Company with written notice specifying such event or deficiency constituting Good Reason within ninety (90) days following the Executive’s knowledge of the occurrence of such event and the Company shall have thirty (30) days after receipt of such notice to cure the event or deficiency that would result in Good Reason.
For the purposes of this Agreement, “ Disability ” means, as a result of a physical or mental injury or illness, the Executive is unable to perform the essential functions of the Executive’s job with reasonable accommodation as reasonably determined by the Company in good faith for a period of (i) 90 consecutive days or (ii) 180 days in any twelve (12) month period.
5.2 Termination By the Company Without Cause, or By the Executive for Good Reason . If during the Term, (i) the Company terminates the Executive’s
employment without Cause or (ii) the Executive terminates the Executive’s employment with the Company for Good Reason, the Executive will be entitled to the Accrued Benefits and, subject to (x) the Executive complying the obligations of Section 6 hereunder and (y) the Executive’s execution (without revocation) of a valid release agreement in a form acceptable to the Company within thirty (30) days following the date of termination of the Executive’s employment, then beginning on the sixtieth (60th) day following such termination, the Executive shall receive the following payments and benefits:
(a) Continued payment of the Executive’s Base Salary then in effect for twenty-four (24) months, payable in equal installments and in accordance with the Company’s normal payroll practices;
(b) An amount equal to the Bonus received by the Executive from the previously completed fiscal year, if any, multiplied by two (2), payable over twenty-four (24) months in equal installments and in accordance with the Company’s normal payroll practice;
(c) A monthly payment equal to the monthly cost of continuation coverage of group health coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, for a maximum of eighteen (18) months to the extent Executive elects such continuation coverage and is eligible and subject to the terms of the plan and the law; provided, that such payment shall cease to the extent that the Executive is eligible for comparable benefits from a new employer; and
(d) For a period of two (2) years, the Company shall promptly pay (or, in the discretion of the Executive, reimburse the Executive for all reasonable expenses incurred) for professional outplacement services of a qualified consultant selected by the Company, but for no longer than the date Executive first obtains full-time employment after such termination (not to exceed $25,000 in the aggregate).
If payments or benefits would otherwise have been owed to the Executive prior to the sixtieth (60th) day after termination of employment, any such delayed payments or benefits shall be made to or on behalf of the Executive on the 60th day after termination of employment. The Company shall have no obligation to provide the benefits set forth above in the event that the Executive materially breaches the provisions of Section 6.
5.3 Removal from any Boards and Position . If the Executive’s employment is terminated for any reason under this Agreement, the Executive shall be deemed to resign (i) if a member, from the Board or board of directors of any subsidiary of the Company or any other board to which the Executive has been appointed or nominated by or on behalf of the Company and (ii) from any position with the Company or any subsidiary of the Company, including, but not limited to, as an officer of the Company and any of its subsidiaries.
5.4 Continued Employment Beyond the Expiration of the Term . Unless the Parties otherwise agree in writing, continuation of the Executive’s employment with the Company beyond the expiration of the Term shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement and the Executive’s employment may thereafter be terminated at-will by either the Executive or the Company; provided that the provisions of Sections 5.3, 5.5, 6, 7, 8.5, 8.9, 8.10, 8.11 and 8.12 of this Agreement shall survive any termination of this Agreement or the termination of the Executive’s employment hereunder.
5.5 Parachute Payments . If the Company determines in good faith that any payments or benefits (whether made or provided pursuant to this Agreement or otherwise) provided to the Executive constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”), (“ Parachute Payments ”), and may be subject to an excise tax imposed pursuant to Section 4999 of the Code, the Executive’s Parachute Payments will be reduced to an amount determined by the Company in good faith to be the maximum amount that may be provided to the Executive without resulting in any portion of such Parachute Payments being subject to such excise tax. The Executive shall be entitled to select which Parachute Payments shall be reduced hereunder; provided that if the Executive fails to so select, the Company shall select which Parachute Payments will be reduced.
5.6 No Mitigation . The Executive shall be under no obligation to seek other employment after termination of employment with the Company and the obligations of the Company to the Executive which arise upon the termination of the Executive’s employment pursuant to this Section 5 shall not be subject to mitigation.
6. Restrictions and Obligations of the Executive .
6.1 Confidentiality .
(a) During the course of the Executive’s employment by the Company (prior to and during the Term), the Executive has had and will have access to certain trade secrets and confidential information relating to the Company and its subsidiaries and affiliates (the “ Protected Parties ”) which is not readily available from sources outside the Company. The confidential and proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including but not limited to, their customer, supplier and vendor lists, databases, competitive strategies, computer programs, frameworks, or models, their marketing programs, their sales, financial, marketing, training and t