This Employment Agreement involves
Title: THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Governing Law: New York Date: 1/23/2006
Industry: Restaurants Law Firm: Salamon, Gruber, Newman Blaymore, P.C;Schulte Roth Zabel LLP Sector: Services
THIRD AMENDED AND RESTATED
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of the 20th day of January, 2006, between MORTON’S RESTAURANT GROUP, INC., a Delaware corporation (“MRG”) and THOMAS J. BALDWIN (“Baldwin”), an individual.
WHEREAS, MRG and Baldwin entered into the Employment Agreement dated as of March 1, 2001, as amended by the Amendment dated as of December 6, 2002, and the Amended and Restated Employment Agreement dated as of January 1, 2003, (together the “Amended and Restated Employment Agreement”); and
WHEREAS, MRG and Baldwin have agreed to amend and restate the Amended and Restated Employment Agreement by this THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT.
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment .
(a) MRG hereby continues to employ Baldwin and Baldwin hereby accepts such continued employment for a term beginning as of January 1, 2006 (the “Commencement Date”) and continuing thereafter for a three (3) year period; provided, that the employment term shall continue thereafter such that at any date following the Commencement Date, the term of Baldwin’s employment shall be three (3) years (the “Employment Period”), unless sooner terminated as hereinafter provided.
(b) At any time during the Employment Period, MRG may send a notice to Baldwin, terminating his employment (“MRG Notice”). MRG Notice shall set forth the date of termination, which shall in no event be earlier than thirty (30) days following the date the MRG Notice is received by Baldwin. Following the delivery of MRG Notice, MRG’s compensation obligation to Baldwin shall be as set forth in Section 7(f).
2. Compensation; Benefits; Expenses; and Bonus
(a) As compensation for the services to be rendered hereunder, until December 31, 2006, MRG shall pay to Baldwin a base salary (as adjusted thereafter pursuant to the next sentence hereof, the “Base Salary”) at the rate of $350,000 per annum, payable in equal installments at such times as shall be agreed upon by MRG and Baldwin, but no less frequently than monthly. The annual Base Salary for the calendar year commencing January 1, 2007 and for each calendar year thereafter shall increase at no less than the rate of increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, as compiled by the U.S. Bureau of Labor Statistics for the preceding year (the “CPI”). The Base Salary may be increased at a faster rate than that of the CPI, at the discretion of the Board of Directors.
(b) Baldwin shall be eligible to participate in all benefit programs, if any, of MRG which are in effect for its executive personnel from time to time, including but not limited to profit sharing, pension, medical and all other insurance, incentive or other supplemental or special compensation plans or arrangements, and stock purchase programs, in each case in accordance with the terms of such program.
(c) MRG recognizes that Baldwin, in rendering the services hereunder, will be required to spend sums of money for the entertainment of various persons and representatives of companies and organizations with whom MRG is having, or would like to have business relations, and otherwise in performance of his duties hereunder. MRG will advance and/or reimburse reasonable traveling or other
out-of-pocket expenses incurred or to be incurred by Baldwin in rendering the services hereunder on behalf of MRG, and MRG will advance such funds to Baldwin, or reimburse Baldwin upon presentation of vouchers or other documents reasonably necessary to verify the expenditures and sufficient, in form and substance, to satisfy Internal Revenue Service (“IRS”) requirements for any traveling or other expenses.
(d) MRG recognizes Baldwin’s need for an automobile for business purposes and to facilitate the performance of Baldwin’s duties hereunder. Therefore, MRG shall pay to Baldwin a monthly automobile allowance to be used by Baldwin towards the purchase or lease of an automobile, (the make and model of which shall be selected by Baldwin), and all costs related to the operation and maintenance of such automobile.
(e) In addition to the Base Salary, during the Employment Period, Baldwin shall be eligible to receive a target annual bonus incentive payment (“Bonus”) of sixty-five percent (65%) of Base Salary. At the beginning of each fiscal year, the compensation committee of the Board of Directors (the “Compensation Committee”) shall establish a profitability target on which the Bonus will be based (the “Target”), including profitability targets for minimum and maximum bonus amounts. In its discretion, the Compensation Committee may base the Target on net income, operating income, EBITDA or any other basis it considers most appropriate. The Bonus shall be payable to Baldwin in the fiscal year following such fiscal year, within thirty (30) days of receipt by MRG of the statement of profits and losses for the preceding fiscal year, on a fully consolidated basis, from its independent certified public accountant then regularly auditing the books and records of MRG.
3. Duties .
MRG hereby employs Baldwin on the terms set forth in this Agreement, and Baldwin hereby accepts such employment. Baldwin shall have the title of Chairman of the Board of Directors, Chief Executive Officer and President of MRG, and perform the general duties that the Board of Directors may from time to time require of him in that capacity, consistent with his position. He shall report to the Board of Directors. Baldwin shall devote substantially all his full professional time, energies, skills and attention to the performance of his duties and responsibilities hereunder. However, the Company acknowledges that Baldwin presently does and may hereafter serve as a director of and advisor/consultant to other business entities and nothing contained herein shall prevent him from so serving provided such service does not conflict or materially interfere with his obligations to the Company hereunder. Baldwin shall, as necessary, also serve, if elected or appointed, without additional compensation, as a director and an officer of any and all restaurant businesses (each, an “Operating Company”, or collectively, the “Operating Companies”) wholly or partly owned by MRG. Baldwin shall assist in the development of the Operating Companies, and the determination and implementation of policy pertaining to merchandising, production, distribution, promotion, advertising and sales.
4. Vacations . Baldwin shall be entitled to take periodic vacations consistent with past practices and with his duties hereunder.
5. Working Facilities . MRG’s headquarters is in Chicago, Illinois. The parties acknowledge that performance of Baldwin’s duties hereunder will require that he be present from time to time in the metropolitan New York area to, among other things, attend Board meetings, management meetings, investor meetings and conferences, and that he otherwise will be required to travel within and without the continental United States to, among other things, visit Operating Companies, assess potential new locations and business opportunities, and meet with investors. Taking the above into consideration, Baldwin agrees to perform his duties at MRG’s headquarters, as and when necessary for the proper performance of his duties hereunder; provided, however, MRG recognizes that Baldwin lives in Connecticut and, unless Baldwin elects to move his primary residence more than 50 miles from his primary residence as of the Commencement Date, MRG shall not require Baldwin to move his primary residence to the metropolitan area in which the corporate headquarters is located, or any other location and Baldwin shall be allowed to perform a reasonable portion of
his duties at or near his primary residence without further consent of the Board of Directors. Baldwin shall be furnished with a private office, secretarial help and services, consistent with past practices and suitable to his position and adequate for the performance of his duties.
6. Confidentiality, etc .
(a) Upon the termination of the Employment Period or at such other times as MRG may request, Baldwin agrees to return to MRG all originals and copies, whether generated by Baldwin or anyone else, of all material, documents, files, lists, forms, contracts, notebooks, rolodexes, keys, credit cards, and any other material which, during the Employment Period, came into, and continue to be in, Baldwin’s possession and relate to MRG, the Operating Companies, their respective businesses or their potential acquisitions and investments.
(b) Baldwin acknowledges that the provisions of this Section 6 are essential to the continued goodwill and profitability of MRG and the Operating Companies, and have provided a substantial inducement to MRG to enter into this Agreement. Baldwin further acknowledges that the application or operation thereof will not involve a substantial hardship upon his future livelihood. Should any court determine that the provisions of this Section 6 shall he unenforceable in respect of scope, duration or geographic area, such court shall be empowered to substitute, to the extent enforceable, provisions similar hereto or other provisions so as to provide to MRG, to the fullest extent permitted by applicable law, the benefits intended by this Section 6.
(c) The parties hereto intend to and hereby confer jurisdiction to enforce the covenants contained in this Section 6 upon the courts of any state within the geographic scope of such covenants. In the event that the courts of any one or more of such states shall hold such covenants wholly unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect MRG’s right to the relief provided in this Agreement in the courts of any other state within the geographic scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each state being, for this purpose, severable into diverse and independent covenants.
7. Death Or Disability Of Baldwin; Other Termination .
(a) If Baldwin is unable to perform his duties by reason of illness or incapacity (a “Disability”) for a continuous period of more than six (6) months, the compensation otherwise payable to him during the continued period of such illness or incapacity after such six (6) month period shall be at the annual rate of $130,000. Baldwin’s full compensation shall be reinstated upon his return to employment and the discharge of his full duties hereunder. Notwithstanding anything herein to the contrary, if Baldwin shall be absent from his employment by reason of illness or incapacity for a continuous period of more than eighteen (18) months, this Agreement shall terminate, except Baldwin’s legal representatives shall be entitled to receive the compensation herein provided to the last day of the eighteenth month of such continuous period.
(b) If Baldwin dies during the term of this Agreement, this Agreement shall terminate, except that Baldwin’s legal representatives shall be entitled to receive the compensation herein provided only to the last day of the month in which Baldwin’s death occurs.
(c) In addition to MRG rights set forth in clauses (a) and (b) above, subject to clause (d) below, this Agreement shall terminate in the event:
(i) A licensed physician shall determine that Baldwin is a “drug dependent person” (as defined in the New York Mental Hygiene Law or any successor statute); or
(ii) Baldwin shall be declared to be incompetent pursuant to the New York Mental Hygiene Law or any successor or similar statute, or a conservator of his property shall have been appointed pursuant to the New York Mental Hygiene Law or any successor or similar statute; or
(iii) Baldwin is convicted in a court of law of theft, embezzlement, fraud or other felony or of any other crime that constitutes a felony in the jurisdiction involved; or
(iv) Baldwin willfully breaches a substantial provision of this Agreement or commits any act not approved by the Board of Directors of MRG involving any material conflict of interest which substantially adversely affects MRG or any Operating Company.
(d) In the event of a termination pursuant to Section 7(c)(iv) above, MRG shall deliver to Baldwin a notice setting forth a reasonably detailed description of the breached provision or unauthorized conduct constituting the basis for termination, and this Agreement shall not terminate unless Baldwin fails to cure same within 20 days after receipt of notice, or, if Baldwin cannot reasonably be expected to effect a cure within such 20 day period, if Baldwin fails to commence such cure within such 20 day period and diligently proceed to effect same within 90 days after the aforesaid notice. In the event of a termination pursuant to Section 7(c)(i)—(iii) above, MRG shall deliver to Baldwin a notice stating whi