Benihana Inc. Contracts
Sample Business Contracts
Employment Agreement - Benihana Inc. and Joel A. Schwartz
Employment Forms
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2001
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 1st day of April,
2001 (the "Effective Date"), by and among BENIHANA INC., a Delaware corporation
(the "Company") and JOEL A. SCHWARTZ (the "Executive").
The Executive has heretofore for many years been employed
by the Company and by its predecessor, Benihana National Corp., as its President
and Chief Operating Officer and, since 1998, as its President and Chief
Executive Officer. The Company and the Executive desire to enter into an
employment agreement which will set forth the terms and conditions upon which
the Executive shall serve in the employ of the Company and upon which the
Company shall compensate the Executive and to replace and supersede the
Employment Agreement (the "Prior Agreement"), dated as of May 15, 1995 and
amended as of December 11, 1997, September 1, 1998 and January 25, 2000, between
the Executive and the Company.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants hereinafter set forth, the parties hereto have agreed, and do
hereby agree, as follows:
1. EMPLOYMENT TERM
1.1 The Company will employ the Executive in its
business and the Executive will work for the Company as President and Chief
Executive Officer for a term commencing as of the Effective Date and continuing
until March 31, 2006. Executive also agrees to serve as director of the Company
and as an officer and director of any subsidiary, if so elected. Employment
Period shall mean the term hereof. Executive may terminate this Agreement upon
not less than three months prior written notice to the Company in the event that
Executive would be required, in order to perform his services hereunder, to move
his principal residence from the metropolitan Miami area.
1.2 The term "Company" as used in this Agreement
shall be deemed to include any and all present and future subsidiaries and
affiliates of the Company
2. DUTIES
2.1 During the Employment Period, the Executive
shall perform the duties of President and Chief Executive Officer of the Company
and such further executive duties consistent with such position as shall, from
time to time, be reasonably delegated or assigned to him by the Board of
Directors of the Company consistent with the Executive's abilities.
<PAGE>
3. DEVOTION OF TIME
3.1 During the Employment Period, the Executive
shall expend substantially all of his working time for the Company; shall devote
his best efforts, energy and skill to the services of the Company and the
promotion of its interests; and shall not take part in activities detrimental to
the best interests of the Company.
4. COMPENSATION
4.1 In respect of services to be performed by
the Executive during the Employment Period, the Company agrees to pay the
Executive an annual salary of Three Hundred thousand ($300,000) Dollars ("Basic
Compensation"), payable in accordance with the Company's customary payroll
practices for executive employees.
4.2 The Basic Compensation shall be increased by
an amount established by reference to the "Consumer Price Index for Urban Wage
Earners and Clerical Workers, New York, New York- Northern New Jersey area
published by the Bureau of Labor Statistics of the United States Department of
Labor (the "Consumer Price Index"). The base period shall be the month ended
December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month
of December in any year, commencing in 2001, is greater than the Consumer Price
Index for the Base Period, Basic Compensation shall be increased, commencing on
April 1 of the next following year, to the amount obtained by multiplying Basic
Compensation by a fraction, the numerator of which is the Consumer Price Index
for the month of December of the year in which such determination is being made
and the denominator of which is the Consumer Price Index for the Base Period.
4.3 The Executive shall also be entitled to such
additional increments and bonuses as shall be determined from time to time by
the Board of Directors of the Company.
4.4 If during the term hereof Executive owns any
options to purchase securities of the Company which securities are publicly
traded and which options were granted to him in connection with his service as
an employee, officer or director of the Company, the Executive shall have the
right at any time after a "Change in Control", as defined in Section 7.1 to
cause the Company to repurchase such options from him at a purchase price equal
to the difference between (i) the closing price of the appropriate security of
the Company (if traded on the New York or American Stock Exchange or quoted in
the NASDAQ National Market) or the average between the closing bid and asked
prices (if traded on the over-the-counter market) on the date immediately prior
to the date on which Executive exercises such right and (ii) the exercise price
of such option; provided however, that in no fiscal year of the Company shall
the aggregate purchase price of such options exceed five percent (5%) of the
total stockholders equity (net worth) of the Company as shown on its audited
financial statements for the fiscal year immediately preceding the year in which
such right is exercised. Such right shall be exercised by Executive giving the
Company written notice thereof and the purchase and sale shall be consummated
not more than ten (10) business days after receipt by the Company of the notice
of exercise.
<PAGE>
5. USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES
5.1 The Company shall pay directly, or reimburse
the Executive, for all other reasonable and necessary expenses (other than the
automobile expenses described in Section 5.2) and disbursements incurred by him
for and on behalf of the Company in the performance of his duties during the
Employment Period upon submission of vouchers or other evidence thereof in
accordance with the Company's usual policies of expense reimbursement.
5.2 In addition to the reimbursement described
in Section 5.1, Executive shall receive an allowance of $300 per month for
automobile expenses, including lease costs or purchase price, gasoline and oil
and garaging.
6. DISABILITY OR DEATH
6.1 If, during the Employment Period, the
Executive shall die, the Company shall pay to such person or persons as
Executive shall from time to time designate in writing as the beneficiary of
such payment, or, in the absence of such designation, to Executive's estate,
("Beneficiary") the amount of Three Hundred and Fifty Thousand ($350,000)
Dollars less the amount of any insurance on Executive's life which has been
purchased by the Company for the payment to the Beneficiary. Such payment shall
be made in a lump sum within Ninety (90) days of the death of the Executive.
6.2 In the event Executive's employment hereunder
shall terminate because Executive has incurred a "Disability", as hereinafter
defined, then there shall be paid to Executive the amount of "Long Term
Compensation" set forth in Section 9. In such case such amount shall be paid to
Executive in Sixty (60) equal monthly installments. Such payments shall commence
on the first day of month next following such termination of employment. In the
event Executive shall suffer an event which might reasonably be considered a
Disability, either the Company or the Executive (or the Executive's legal
representative) shall have the right to give to the other party written notice
of such termination on 15 days notice. In the event the parties shall in good
faith disagree on whether Executive is suffering a Disability, final
determination shall be made by a doctor reasonable acceptable to both parties.
"Disability" shall mean the inability of Executive, for a continuous period of
more than twelve (12) months, to perform substantially all of his regular duties
and carry out substantially all of his responsibilities hereunder because of
physical or mental incapacity. The Company shall have the right to have
Executive examined by a competent doctor for purposes of determining his
physical or mental incapacity.
6.3 The obligations of the Company under
Section 6.2 may be satisfied, in whole or in part, by payments to the Executive
under disability insurance provided by the Company, and under laws providing
disability benefits for employees.
<PAGE>
7. CHANGE IN CONTROL
7.1 In the event at any time after the Effective
Date, a majority of the Board of Directors is composed of persons who are not
"Continuing Directors", as hereinafter defined, which event is defined to mean a
"Change in Control", Executive shall have the option, to be exercised by written
notice to the Company, to resign as an employee and terminate this Agreement,
effective as of such date specified in the notice of exercise and immediately
upon such termination to receive payment of a sum equal to the product of (A)
the Basic Compensation in effect on the date of such termination multiplied (B)
by the number of years (both full and partial) remaining in the term hereof had
such termination not occurred. The payment to be made upon the exercise of the
option by the Executive in accordance with the provisions of the preceding
sentence is defined as the "Severance Payment". The Severance Payment shall be
made to Executive not later than twenty (20) days after the date designated by
the Executive as the date upon which Executive's resignation as an employee and
termination of his Employment is to be effective. The Severance Payment shall
constitute liquidated damages and not a penalty, and Executive shall not be
obligated to seek employment to mitigate his damages; nor shall any compensation
the Executive receives from any party subsequent to such termination be an
offset to the amount of the Severance Payment.
7.2 "Continuing Directors" shall mean (i) the
directors of the Company at the close of business on April 1, 2001, and (ii) any
person who was or is recommended to (A) succeed a Continuing Director or (B)
become a director as a result of an increase in the size of the Board, in each
case, by a majority of the Continuing Directors then on the Board.
7.3 In the event that payments to Executive under
this Section 7, plus payments made under Section 9 on account of a Change in
Control, plus any other payments or other benefits made by the Company to
Executive on account of a Change in Control would, in the opinion of tax counsel
selected by the Company and reasonably acceptable to the Executive ("Tax
Counsel"), be subject, in whole or in part, to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), as determined as provided below, the total amount of such payments
shall be reduced (with the Executive having the option as to which payments are
to bear the burden of such reduction) until no portion of such payments would be
subject to the Excise Tax. For the purpose of this provision, (i) only the
portion of such payments which in the opinion of Tax Counsel constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code shall
be taken into account and (ii) such payments shall be reduced only to the extent
necessary so that such payments would not be subject to the Excise Tax, in the
opinion of Tax Counsel.
<PAGE>
8. TERMINATION OF EMPLOYMENT WITHOUT CAUSE
Upon any termination of the Executive's employment without
"Cause" as hereafter defined, the Executive shall be entitled to receive an
amount computed in the same manner as the Severance Payment not later than 20
days after any such termination. This payment shall constitute liquidated
damages and not a penalty, and Executive shall not be obligated to seek
employment to mitigate his damages; nor shall any compensation the Executive
receives from any party subsequent to such termination be an offset to the
amount of such payment. As used herein, the term "Cause" shall mean:(i)
Executive's deliberate and intentional refusal (except by reason of incapacity
due to mental or physical illness or disability) to comply with the provisions
of Section 3.1 of this Agreement relating to the time and effort to be devoted
by the Executive to the business and affairs of the Company after demand for
performance by the Company that specifically identifies the manner in which the
Company alleges the Executive has not performed his duties, (ii) the Executive's
proven dishonesty with respect to the Company, disloyalty, Executive's gross
negligence or willful misconduct which, in any case, results in demonstrable
material harm to the Company, (iii) the breach by the Executive of his covenant
not to compete contained in Section 10.4 hereof, (iv) the continuing breach of
any of the other covenants on the Executive's part herein set forth resulting
in, or which may reasonably be expected to result in a substantial adverse
effect on the Company, or (v) Executive's conviction of a crime involving moral
turpitude.
9. LONG TERM COMPENSATION
In recognition of Executive's many years of service to the
Company and its predecessors, in the event Executive's employment with the
Company is terminated (i) involuntarily during the term of this agreement other
than for Cause in accordance with Section 8, (ii) as a result of a Change of
Control in accordance with Section 7, (iii) as a result of Executive's incurring
a Disability as contemplated by Section 6.2 or (iv) as a result of the failure
of the Company and Executive to reach agreement on a renewal, extension or
replacement of this Agreement upon expiration of the term hereof, the Company
shall pay Executive, as additional long term compensation, an amount equal to
Five (5) times Executive's Basic Compensation in effect as at the time of such
termination of employment. Such payments shall be in addition to the payments
contemplated by Sections 7 or 8, respectively. In the case of termination by the
Company for reasons other than Cause or termination on account of a Change in
Control, such payment shall be made in two installments - 50% at the time of
termination and the remaining 50% on the first anniversary of such date. In the
case of termination on account of Disability or termination because of the
failure to renew, extend or replace this Agreement, such payment shall be made
in 60 equal monthly installments. Nothing in this provision shall imply any
obligation of Executive to enter into an extension, renewal or replacement of
this Agreement or to be reasonable in negotiating any such extension, renewal or
replacement.
<PAGE>
10. CONFIDENTIAL INFORMATION; INVENTIONS;
RESTRICTIVE COVENANT
10.1 The Executive agrees not to divulge, furnish
or make available to anyone (other than in the regular course of business of the
Company) any knowledge or information with respect to the Company, or with
respect to any other confidential or secret aspect of the Company's activities.
10.2 Any methods, developments, inventions and/or
improvements, whether patentable or unpatentable, which the Executive may
conceive or make along the lines of the Company's business while in its employ
as an employee or consultant, shall be and remain the property of the Company.
The Executive further agrees on request to execute patent applications based on
such methods, developments, inventions and/or improvements, including any other
instruments deemed necessary by the Company for the prosecution of such patent
application or the acquisition of Letters Patent of this and any foreign
country.
10.3 The Executive agrees to communicate and
make known to the Company all knowledge possessed by him relating to any
methods, developments, inventions and/or improvements, whether patented,
patentable or unpatentable, which concern in any way the business of the
Company, whether acquired by him before or during the term hereof, provided,
however, that nothing herein shall be construed as requiring any such
communication where the method, development, invention and/or improvement is
lawfully protected from disclosure as the trade secret of a third party or by
any other lawful bar to such communication.
10.4 The services of the Executive are unique
and extraordinary and essential to the business of the Company, especially since
the Executive shall have access to the Company's customer lists, trade secrets
and other privileged and confidential information essential to the Company's
business. Therefore, the Executive agrees that if his employment hereunder shall
at any time be terminated for any reason (other than by the Company. without
Cause), the Executive will not at any time within one (1) year after such
termination, without the prior written approval of the Company, directly or
indirectly, within the United States of America, or any other area in which the
Company shall then conduct substantial operations, engage in any business
activity "competitive with the business of the Company", as hereinafter defined,
and further, the Executive agrees that during such one (1) year period he shall
not solicit, directly or indirectly, any employee or customer or account of the
Company who at the time of such termination was then actively being solicited by
the Company. For the purpose of this agreement a business activity competitive
with the business of the Company shall include only (i) the operation or
franchising of restaurants of a type then being operated, or under construction,
by the Company and (ii) the sale, at wholesale or retail, of products similar in
type and quality to those being marketed by the Company at the time of
Executive's termination of employment.
<PAGE>
11. VACATIONS
The Executive shall be entitled to reasonable
vacations during each twelve-month period of the term hereof, the time and
duration thereof to be determined by mutual agreement between the Executive and
the Company.
12. PARTICIPATION IN EMPLOYEE BENEFIT PLANS
The Executive and any beneficiary of the
Executive shall be accorded the right to participate in and receive benefits
under and in accordance with the provisions of any pension, profit-sharing,
insurance, bonus, deferred compensation, medical and dental insurance or
reimbursement, stock option, or other plan or program of the Company now in
existence or hereafter adopted for the benefit of its executive employees.
13. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that, in
the event he shall violate any of the restrictions of Section 10 hereof, the
Company will be without adequate remedy at law and will therefor be entitled to
enforce such restrictions by temporary or permanent injunctive or mandatory
relief obtained in an action or may have at law or in equity, and the Executive
hereby consents to the jurisdiction of such Court for such purpose, provided
that reasonable notice of any proceeding is given, it being understood that such
injunction shall be in addition to any remedy which the Company may have at law
or otherwise.
14. ASSIGNMENT, ETC.
This Agreement, as it relates to the employment
of the Executive, is a personal contract and the rights and interests of the
Executive hereunder may not be sold, transferred, assigned, pledged or
hypothecated. Except as otherwise expressly provided, this Agreement shall inure
to the benefit of and be binding upon the Company and its successors and
assigns.
15. RIGHT TO PAYMENTS, ETC.
The Executive shall not under any circumstances
have any option or right to require payments hereunder otherwise than in
accordance with the terms hereof. To the extent allowed by law, the Executive
shall not have any power of anticipation, alienation or assignment of payments
contemplated hereunder, and all rights and benefits of the Executive, and no
other person shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against the Executive.
<PAGE>
16. NOTICES, ETC.
Any notice required or permitted to be given to
the Executive pursuant to this Agreement shall be sufficiently given if sent to
the Executive by certified mail addressed to him at the following address: 4100
North 36th Avenue, Hollywood, Florida, 33021, or at any such other address as he
shall designate by notice to the Company, and any notice required or permitted
to be given to the Company pursuant to this Agreement shall be sufficiently
given if sent to the Company by certified mail addressed to it at 8685 Northwest
53rd Terrace, Miami, Florida 33166, attention of Corporation Secretary, or such
other address as the Company shall designate by notice to the Executive, with a
copy to Herschel S. Weinstein, Esq., Dornbush Mensch Mandelstam & Schaeffer,
LLP, 747 Third Avenue, New York, New York, 10017.
17. GOVERNING LAW
This Agreement shall be governed by, and
construed in accordance with the laws of the State of Florida, applicable to
agreements made and to be performed solely within such state.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provisions of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and not in any way affect or render invalid or unenforceable
any other provisions of this Agreement, and this Agreement shall be carried out
as if such invalid or unenforceable provision were not embodied therein.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement
between the parties hereto and there are no representations, warranties or
commitments except as set forth herein. This Agreement supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
including the Prior Agreement, whether written or oral, of the parties hereto
relating to the transactions contemplated by this Agreement. This Agreement may
be amended only in writing executed by the parties hereto affected by such
amendment.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
BENIHANA INC.
By: /s/ Taka Yoshimoto
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Taka Yoshimoto, Executive Vice President
/s/ Joel A. Schwartz
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Joel A. Schwartz