EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this
____ day of _________, 1996, by and between KATMANDU ENTERTAINMENT CORP., a
Delaware Corporation (the "Company"), and X. XXXXX SILVER (the "Executive"). The
Agreement shall become effective as of the date on which the Registration
Statement on Form SB-2 with respect to the Company's initial public offering
shall be deemed effective by the Securities and Exchange Commission (the
"Effective Date").
W I T N E S S E T H:
WHEREAS, the Company believes that it would benefit from the
application of the Executive's particular and unique skill, experience and
background to the management and operation of the Company, and wishes to employ
the Executive as Chief Executive Officer ("CEO") and Co-President of the
Company; and
WHEREAS, the parties desire by this Agreement to set forth the
terms and conditions of the employment relationship between the Company and the
Executive.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants in this Agreement, the Company and the Executive agree as
follows:
1. Employment and Duties. The Company hereby employs the
Executive as CEO and Co-President on the terms and conditions provided in
this Agreement and Executive
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agrees to accept such employment subject to the terms and conditions of this
Agreement. The Executive shall perform the duties and responsibilities as are
customary for the officer of a corporation in such positions, and shall perform
such other duties and responsibilities as are reasonably determined from time to
time by the Board of Directors of the Company (the "Board"). The Executive shall
be based at the Company's offices in Philadelphia, Pennsylvania or such other
place that shall constitute the Company's headquarters, although he may perform
such duties and responsibilities, consistent with his obligations hereunder,
from any other location, and except for business travel incident to his
employment under this Agreement, the Company agrees the Executive shall not be
required to relocate.
2. Term. The term of this Agreement shall be for three years
(the "Initial Term"), commencing on the Effective Date, and expiring on the day
preceding the third anniversary of the Effective Date (the "Termination Date"),
unless extended by mutual agreement of the parties or earlier terminated in
accordance with the terms of this Agreement.
3. Compensation. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, the Executive
shall be compensated as follows:
(a) Base Compensation and Bonuses. For services rendered
by the Executive during the first year of the Initial Term, the Company shall
pay to the Executive a salary of $100,000 payable in equal installments pursuant
to the Company's customary payroll procedures in effect for its executive
personnel at the time of payment, but in no event less frequently than monthly,
subject to withholding for applicable federal, state, and local taxes.
Thereafter, the Company shall pay to the Executive an annual salary of $150,000,
payable in equal installments pursuant to the Company's customary payroll
procedures in effect for its executive personnel at the time of payment, but in
no event less frequently than monthly, subject to withholding for applicable
federal, state, and local taxes. The annual salary to be paid to the Executive
in each of the three years during the term of this Agreement is hereinafter
referred to as "Base Compensation." If on the first anniversary of the Effective
Date the Company is operating three restaurant, bar and night-club units, then
the Executive shall be entitled to a bonus of $50,000, to be paid to the
Executive within 14 days after the first anniversary of the Effective Date.
Thereafter, the Executive shall be entitled to increases in Base Compensation
and bonuses in each of the two remaining years during the term of this
Agreement, to be determined by the
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Compensation Committee of the Board based on periodic reviews of the Executive's
performance conducted on at least an annual basis. The Executive's Base
Compensation shall not be reduced during the term of this Agreement.
(b) Incentive Compensation. In addition to Base
Compensation, the Executive shall receive additional compensation ("Incentive
Compensation"). The Incentive Compensation shall be pursuant to short-term
and/or long-term incentive compensation programs which shall be established by
the Compensation Committee of the Board. For purposes of this Agreement, the
Executive's "Pro Rata Share" of Incentive Compensation for any fiscal year of
the Company shall be a fraction whose numerator shall be equal to the number of
months (or parts of months) during which the Executive was actually employed by
the Company during any such fiscal year and whose denominator shall be the total
number of months in such fiscal year.
4. Employee Benefits. During the term of this Agreement and
subject to the limitations set forth in this Section 4, the Executive and his
eligible dependents shall have the right to participate in any retirement plans
(qualified and non-qualified), pension, insurance, health, disability or other
benefit plan or program that has been or is hereafter adopted by the Company (or
in which the Company participates), according to the terms of such plan or
program, on terms no less favorable than the most favorable terms granted to
senior executives of the Company.
5. Vacation and Leaves of Absence. The Executive shall be
entitled to the normal and customary amount of paid vacation provided to senior
executive officers of the Company, but in no event less than 25 days during each
12 month period, beginning on the Effective Date of this Agreement. Any vacation
days that are not taken in a given 12 month period shall not accrue or carry
over from year to year. Upon any termination of this Agreement
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for any reason whatsoever, accrued and unused vacation for the year in which
this Agreement terminates will be paid to the Executive within 10 days of such
termination based on his annual rate of Base Compensation in effect on the date
of such termination. In addition, the Executive may be granted leaves of absence
with or without pay for such valid and legitimate reasons as the Board in its
sole and absolute discretion may determine, and is entitled to the same sick
leave and holidays provided to other senior executive officers of the Company.
6. Expenses.
(a) Business Expenses. The Executive shall be promptly
reimbursed against presentation of vouchers or receipts for all reasonable and
necessary expenses incurred by him in connection with the performance of
business-related duties.
(b) Automobile Expense. During the term of this Agreement,
in order to facilitate the performance of the Executive's duties hereunder, and
otherwise for the convenience of the Company, the Company shall provide the
Executive with an automobile allowance of $750 per month.
7. Indemnification. The Company shall (and is hereby obligated
to) indemnify (including advance payment of expenses, which such expenses shall
include without limitation attorneys' fees) the Executive in each and every
situation where (i) the Company is obligated to make such indemnification
pursuant to applicable law and the relevant portions of the Company's
Certificate of Incorporation and By-Laws, and (ii) the Company, under applicable
law, is not obligated, but is nevertheless permitted or empowered, to make such
indemnification.
8. Termination and Termination Benefits.
(a) Termination by the Company.
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(i) With Cause. The Company may terminate this Agreement
prior to its expiration date only with "cause" by action of the Board. For
purposes of this subsection 8(a)(i), "cause" shall mean (1) the continuing
willful failure by the Executive to substantially perform his duties hereunder
for any reason other than total or partial incapacity due to physical or mental
illness, (2) gross negligence or malfeasance on the part of the Executive in the
performance of his duties hereunder, and (3) the conviction of the Executive, by
a court of competent jurisdiction, of a felony. Termination pursuant to this
subsection 8(a)(i) shall be effective immediately upon giving the Executive
written notice thereof and the reason or reasons therefor with respect to
clauses (2) and (3) above, and 15 days after written notice thereof from the
Board to the Executive specifying the acts or omissions constituting the failure
and requesting that they be remedied with respect to clause (1) above, but only
if the Executive has not cured such failure within such 15 day period. In the
event of a termination pursuant to this subsection 8(a)(i), the Executive shall
be entitled to payment of his Base Compensation and the benefits pursuant to
Section 4 hereof up to the effective date of such termination.
(ii) Disability. If due to illness, physical or mental
disability, or other incapacity, the Executive shall fail, for a total of any
six consecutive months ("Disability"), to substantially perform the principal
duties required by this Agreement, the Company may terminate this Agreement upon
30 days' written notice to the Executive. In such event, the Executive shall be
(A) paid his Base Compensation until the Termination Date and his Pro Rata Share
of any Incentive Compensation payable to him for the year in which the
termination occurs, and (B) provided with employee benefits pursuant to Section
4, to the extent available, until the Termination Date; provided, however, that
any compensation to be paid to the Executive
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pursuant to this subsection 8(a)(ii) shall be offset against any payments
received by the Executive pursuant to any policy of disability insurance the
premiums of which are paid for by the Company.
(b) Termination by the Executive. The Executive may
terminate this Agreement for "good reason" upon 30 days' written notice to the
Company (during which period the Executive shall, if requested in writing by the
Company, continue to perform his duties as specified under this Agreement). For
purposes of this Agreement, if the Executive's employment is terminated by the
Company without cause (as such term is defined in subsection 8(a)(i) above) it
shall be deemed as though the Executive terminated this Agreement for "good
reason" under this subsection 8(b). In such event, the Executive shall be paid
his Base Compensation up to the effective date of such termination and his full
share of any Incentive Compensation payable to him for the year in which the
termination occurs. For purposes of the Executive's termination of this
Agreement for "good reason" under this subsection 8(b), "good reason" includes
without limitation (A) the Company's failure to make any of the payments or
provide any of the benefits to the Executive under this Agreement, and (B) the
Company's material breach of any provision of this Agreement. In addition, it
shall, at the option of the Executive, be deemed as though the Executive
terminated this Agreement for "good reason" pursuant to this subsection 8(b) in
the event that Xxxxxx X. Xxxxxxx, the Company's Co-President, terminates his
Employment Agreement with the Company for "good reason" pursuant to subsection
8(b) of such Employment Agreement.
(c) Additional Termination Compensation. In the event of a
termination of this Agreement pursuant to subsection 8(b) above, the Company, in
addition to paying the Executive his Base Compensation and Incentive
Compensation as hereinabove
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provided, shall make the following payment (hereinafter "Termination
Compensation") to the Executive: a lump sum payment equal to the lesser of (A)
24 months' Base Compensation (based on the amount of Base Compensation the
Executive is to receive for services rendered during the second and third years
of the term of this Agreement), or (B) the Base Compensation that the Executive
would have received during the remaining portion of the Initial Term, if any.
Payment of Termination Compensation to the Executive shall occur no later than
14 days following the effective date of the Executive's termination.
(d) Death Benefit. Notwithstanding any other provision of
this Agreement, this Agreement shall terminate on the date of the Executive's
death. In such event the Executive's estate shall be paid his Base Compensation
for the remainder of the month in which such termination occurs and his Pro Rata
Share of any Incentive Compensation payable to him for the year in which such
termination occurs.
(e) No Mitigation. The Executive shall not be required to
mitigate the amount of any payments provided for by this Agreement by seeking
employment or otherwise, nor shall the amount of any payment or benefit provided
in this Agreement be reduced by any compensation or benefit earned by the
Executive after termination of his employment.
9. Company Property. All food and beverage preparation,
menu-related, advertising, promotional, sales, suppliers', manufacturers' and
other materials or articles or information, including without limitation data
processing reports, customer sales analyses, invoices, price lists or
information, samples, or any other materials or data of any kind furnished to
the Executive by the Company or developed by the Executive on behalf of the
Company or at the Company's direction or for the Company's use or otherwise in
connection with the Executive's employment hereunder, are and shall remain the
sole and confidential property of the Company; if
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the Company requests the return of such materials at any time during or at or
after the termination of the Executive's employment, the Executive shall
immediately deliver the same to the Company.
10. Covenant Not To Compete.
(a) No Solicitation or Competition. During the
effectiveness of this Agreement and for a period of one year after termination
of the Executive's employment with the Company for any reason other than
termination by the Company without cause or termination by the Executive for
good reason, the Executive shall not, directly or indirectly, solicit, induce,
encourage or attempt to influence any client, customer, employee, consultant,
independent contractor, salesman or supplier of the Company to cease to do
business or terminate his employment with the Company, and shall not engage in
(as a principal, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any business operating anywhere
within a 50 mile radius of any of the Company's restaurant, bar and night-club
units which is involved in business activities which are in competition with the
business activities carried on by the Company, or being definitively planned by
the Company, at the time of the termination of Executive's employment. However,
nothing contained in this Section 10 shall prevent the Executive from holding
for investment no more than five percent (5%) of any class of equity securities
of a company whose securities are publicly traded or from engaging in any real
estate-related activities that are not in competition with the business
activities of the Company.
(b) Confidentiality of Company Property. During the
effectiveness of this Agreement and at all times thereafter, the Executive shall
not use for his personal benefit, or disclose, communicate or divulge to, or use
for the direct or indirect benefit of any person, firm, association or company
other than the Company, any material referred to in Section 9 above.
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(c) Saving Clause. If the period of time or the area
specified in subsection (a) above should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such number of months or
the area shall be reduced by the elimination of such portion thereof or both so
that such restrictions may be enforced in such area and for such time as is
adjudged to be reasonable. If the Executive violates any of the restrictions
contained in the foregoing subsection (a), the restrictive period shall not run
in favor of the Executive from the time of the commencement of any such
violation until such time as such violation shall be cured by the Executive to
the satisfaction of Company.
11. Miscellaneous.
(a) Integration; Amendment. This Agreement constitutes
the entire agreement between the parties hereto with respect to the matters set
forth herein and supersedes and renders of no force and effect all prior
understandings and agreements between the parties with respect to the matters
set forth herein. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties.
(b) Severability. If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable law or
regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited, or invalid, but the remainder of this Agreement
shall not be invalid and shall be given full force and effect so far as
possible.
(c) Waivers. The failure or delay of any party at any
time to require performance by the other party of any provision of this
Agreement, even if known, shall not affect the right of such party to require
performance of that provision or to exercise any right, power, or remedy
hereunder, and any waiver by any party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of any
right, power, or
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remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to the other or further notice or demand in
similar or other circumstances.
(d) Power and Authority. The Company represents and
warrants to the Executive that it has the requisite corporate power, to enter
into this Agreement and perform the terms hereof; and that the execution,
delivery and performance of this Agreement by it has been duly authorized by all
appropriate corporate action; and this Agreement represents the valid and
legally binding obligation of the Company and is enforceable against it in
accordance with its terms.
(e) Burden and Benefit; Survival. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, personal and legal representatives, successors and
assigns. In addition to, and not in limitation of anything contained in this
Agreement, it is expressly understood and agreed that the Company's obligation
to pay Termination Compensation as set forth herein shall survive any
termination of this Agreement.
(f) Governing Law; Headings. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania.
Headings and titles herein are included solely for convenience and shall not
affect, or be used in connection with, the interpretation of this Agreement.
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(g) Notices. All notices called for under this Agreement
shall be in writing and shall be deemed given upon receipt if delivered
personally or by facsimile transmission and followed promptly by mail, or mailed
by registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
If to the Executive:
X. Xxxxx Silver
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
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with a copy to:
X. Xxxxx Silver, Esquire
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
Twelfth Xxxxx, Xxxxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
If to the Company:
Katmandu Entertainment Corp.
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Board of Directors
with a copy to:
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Esquire
or to any other address or addressee as any party entitled to receive notice
under this Agreement shall designate, from time to time, to others in the manner
provided in this subsection 11(g) for the service of Notices.
Any notice delivered to the party hereto to whom it is
addressed shall be deemed to have been given and received on the day it was
received; provided, however, that if such day is not a business day then the
notice shall be deemed to have been given and received on the business day next
following such day. Any notice sent by facsimile transmission shall be deemed to
have been given and received on the business day next following the day of
transmission.
(h) Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which
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federal banks are or may elect to be closed, then the final day shall be deemed
to be the next day which is not a Saturday, Sunday or such holiday.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ATTEST: KATMANDU ENTERTAINMENT CORP.
______________________ By: _____________________________
Name:
Title:
______________________ _________________________________
X. Xxxxx Silver
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