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 ------------------------------------ Taka Yoshimoto, Executive Vice President /s/ Joel A. Schwartz ------------------------------------ Joel A. Schwartz