EXHIBIT A
EMPLOYMENT AGREEMENT
Agreement made effective as of the 1st day of July, 1999 by and among
Boston Restaurant Associates, Inc. (the "Company"), a Delaware corporation with
its principal place of business in Saugus, Massachusetts and Xxxxxx X.
Xxxxxxxxxxx (the "Employee") of Essex County, Massachusetts.
WHEREAS, Employee has served as President and Chief Executive Officer
of the Company since April 1994;
WHEREAS, in order to assure itself of the benefits to be obtained from
the special talents and abilities of Employee resulting from Employee's
involvement and knowledge of the business of the Company and relative to the
continued operation of the business of the Company, the Company desires to
continue Employee's employment as an executive officer of the Company on the
terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the receipt and sufficiency of which is acknowledged, and
intending to be legally bound, it is hereby agreed by and between the parties as
follows:
1. EMPLOYMENT. The Company hereby continues to employ Employee as
President and Chief Executive Officer of the Company. Employee shall have
general management and control of the business, affairs and property of the
Company and its direct and indirect subsidiaries and shall perform such duties
of such offices as are provided for in the bylaws of the Company subject to the
general supervision and direction of, and any policies and procedures
established from time to time by, the Board of Directors of the Company.
Employee hereby accepts such employment.
2. TERM. Employee's employment pursuant to the terms of this Agreement
shall commence on the date hereof and shall continue for a period of one (1)
year or until earlier terminated in accordance with the termination provisions
provided for in Section 10 herein (the "Initial Term"). Unless earlier
terminated in accordance with the termination provisions provided for in Section
10 herein, Employee's employment pursuant to this Agreement shall automatically
renew for additional periods of one (1) year each (each an "Additional Term") at
the expiration of the Initial Term and at the expiration of each Additional Term
(the Initial Term and Additional Terms are collectively referred to herein as
the "Term").
3. SALARY. The Company shall pay Employee, during the Term of this
Agreement, an annual salary of not less than $185,000, payable in installments
no less often than monthly. A salary review shall be conducted by the
Compensation Committee of the Board of Directors of the Company no later than
twelve (12) months after the commencement date of this Agreement with yearly
reviews thereafter on the anniversary date of such first review (each a
"Review"). In connection with such Review, the Compensation Committee may
increase, but not decrease, the then current salary of Employee by such amount
as it determines, in its sole discretion, provided however, that effective as of
the date of each Review, Employee's then current salary shall be
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adjusted to an amount at least equal to Employee's then current salary
multiplied by a fraction, the numerator of which shall be the Consumer Price
Index (as hereinafter defined) for the month immediately prior to the applicable
Review date, and the denominator of which shall be the Consumer Price Index of
162.8 for the month of June, 1999. The Consumer Price Index referred to above is
the Consumer Price Index of the United States Bureau of Labor Statistics (Urban
Wage Earners and Clerical Workers, U.S. City Average, all items) on the 1982-84
equals 100 standard.
4. AUTOMOBILE During the term of this Agreement, Employee shall be paid
the sum of $1,000 plus the amount necessary to pay insurance and parking each
month to defray the cost of the leasing or purchasing of, and gas, mileage,
insurance, repairs and parking for one automobile for his use in connection with
his employment hereunder.
5. BONUS. Following each Review date but in no event later than one
hundred (100) days after the Company's fiscal year end, Employee shall be paid a
performance bonus based on Company sales during the most recently completed
fiscal year (the "Sales Bonus") and a performance bonus based on Company profits
during the most recently completed fiscal year (the "Profits Bonus"), each as
more fully described below, payable to Employee in a lump sum. The Sales Bonus
or the Profits Bonus, or both, may be increased, but not decreased, by the
Compensation Committee, in its discretion. The target dollar amounts described
below for the Sales Bonus and Performance Bonus shall be adjusted annually for
each following fiscal year.
(i) Sales Bonus. The Sales Bonus shall equal seven-tenths percent
(0.7%) of Company Sales in excess of fifteen million dollars
($15,000,000) and less than or equal to nineteen million
dollars ($19,000,000), PLUS one percent (1.0%) of Company
sales in excess of nineteen million dollars ($19,000,000). For
example, the following amounts of Company sales would result
in the following Sales Bonus payments:
(ii) PROFITS BONUS. In the event the Company reports a loss or a
breakeven position (neither loss nor profit) for the most
recently completed fiscal year, the Profits Bonus shall equal
two percent (2%) of the amount by which such loss or such
breakeven position is more favorable than a two hundred fifty
thousand dollar ($250,000) loss. In the event the Company
reports a profit for the most recently completed fiscal year,
the Profits Bonus shall equal four percent (4%) of the amount
by which such profits are more favorable than a two hundred
fifty thousand dollar ($250,000) loss. For example, the
following Company loss/profit amounts would result in the
following Profits Bonus payments.
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For the purposes of calculating the Profits Bonus hereunder, the calculation of
Company loss or profit shall assume that pre-opening expenses are written off.
6. EXPENSES. Employee shall be reimbursed for all reasonable expenses
incurred by Employee in connection with his employment under this Agreement,
including expenses for travel and entertainment. Employee shall furnish the
Company with the appropriate documentation relating to such expenses.
7. FRINGE BENEFITS. Employee shall be entitled to the fringe benefits
generally made available to employees or officers of the Company of standing
comparable to that of Employee, on the same or more favorable terms and
conditions as such benefits are made available or furnished to those employees
or officers.
8. VACATION. Employee shall be entitled to at least four (4) weeks of
paid vacation during each year of employment with the Company, which vacation
may be taken by Employee at any time at the sole discretion of Employee.
9. FULL-TIME DUTIES. Employee shall devote all of his business time,
attention and efforts necessary and appropriate to fulfill his duties hereunder.
This provision shall not serve to prevent Employee from engaging in investment
activity that is passive in nature.
10. TERMINATION.
(a) TERMINATION BY THE COMPANY. At the election of the Company, this
Agreement shall terminate and any and all rights and obligations of
the Company and Employee hereunder shall cease and be completely
void except as specifically set forth in this Agreement, upon the
earliest to occur of the following: (i) the death or "long-term
disability" of Employee; or (ii) the termination of Employee by the
Company for "just cause" pursuant to written notice thereof; or
(iii) at any time, without cause, upon thirty (30) days prior
written notice.
For purposes of this Agreement, "long-term disability" shall mean
the disability of Employee which prevents Employee from devoting to the business
of the Company his full-time, best efforts, skill and attention, and such
condition continues for a period of one hundred eighty (180) consecutive days.
For purposes hereof, "just cause" shall include, without limitation,
the occurrence of any of the following events during the Term of this Agreement:
(A) habitual neglect of material duties assigned to Employee
hereunder which is not remedied within thirty (30) days of receipt
of written notice thereof from the Company;
(B) fraud, embezzlement or similar act of dishonesty committed
by Employee against the Company; and
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(C) conviction of a crime classified as a felony under any
Federal, state or local law with all appeals relating thereto
having been unsuccessfully exhausted and all appeal periods being
lapsed.
(b) TERMINATION BY EMPLOYEE. At the election of the Employee, this
Agreement shall terminate and any and all rights and obligations
of the Company and Employee under this Agreement shall cease and
be completely void except as specifically set forth in this
Agreement, upon the earlier to occur of (i) termination by
Employee of his employment with the Company, pursuant to thirty
(30) days prior written notice thereof to the Company for any
reason, or (ii) termination by Employee of his employment with the
Company at any time in the event the Employee has "good reason",
pursuant to written notice thereof, or (iii) a "change in control"
of the Company.
For purposes hereof, "good reason" shall mean (A) the Company has taken
action that serves to adversely change Employee's status by a reduction in title
or a reduction in duties without Employee's consent, or (B) without the
Employee's consent the Company's corporate offices are relocated to a place that
is more than thirty-five (35) miles from Boston, Massachusetts.
For purposes hereof a "change of control" of the Company shall be
deemed to have occurred if:
(I) any person (as defined in Section 13(d) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") shall have become the beneficial owner of
20% or more of the combined voting power of the Company's
voting securities (other than any person who is a
beneficial owner of such 20% threshold as at the date of
this Agreement), not counting for purposes of such 20%
threshold any voting securities acquired from the
Employee;
(II) the stockholders or directors approve by the requisite
vote any Business Combination; or
(III) the stockholders or directors approve the complete
liquidation or dissolution of the Company.
"Business Combination" means any of the following transactions: (x)
a merger or consolidation of the Company (except for a merger that Employee
consents to and supports or a merger in respect of which, pursuant to Section
251(f) of the Delaware General Corporation law, as now in effect and as the same
may be amended from time to time, no vote of the stockholders of the Company is
required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), whether as part of
a dissolution or otherwise, of assets of the Company or of any direct or
indirect majority-owned subsidiary of the Company (other than to any direct or
indirect wholly-owned subsidiary or to the Company) having an aggregate market
value equal to 50% or more of either that aggregate market value of all of the
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assets of the Company determined on a consolidated basis or the aggregate market
value of all the outstanding stock of the Company; or (z) a proposed tender or
exchange offer for 50% or more of the outstanding voting stock of the Company.
(C) EFFECT OF TERMINATION. (i) It is expressly acknowledged and agreed
that, if the Employee's employment shall terminate at any time
pursuant to paragraph (a) above, the Company will pay to Employee
or his estate any salary and bonus pursuant to Sections 3 and 5,
respectively, hereof, and any perquisites and fringe benefits,
which shall be paid proportionately to the time of termination
(which payment shall be made at the time it would be normally
paid) without further recourse or liability to the Company, except
that, in the event such termination of Employee by the Company is
pursuant to clause (a)(iii), above, or in the event such
termination is at the election of Employee and is pursuant to
clause (b)(ii) or (b)(iii), above then the Company shall pay to
Employee his then current annual base salary payable in equal
monthly installments on the first business day of each month
(prorated for any partial month) (the "Severance Payment") from
the date of such termination until the later of (A) June 30, 2001
or (B) the second business day of the month next following the
expiration of twelve (12) months following the date of such
termination (the "Severance Period"); provided, however, that
during such Severance Period Employee shall not, within the
Territory (as such term is defined in Section 12 hereof), whether
as owner, partner, shareholder (excluding as a passive shareholder
of not more than 1% in a class of securities of any business
enterprise registered under the Exchange Act), director,
consultant, agent, employee, or otherwise, or through any person,
engage in any employment, consulting or other activity which
competes, directly or indirectly with the business of the Company
(as such phrase is defined in Section 12 hereof); provided,
further that in the event the Company does not make any past due
portion of the Severance Payment hereunder within ten (10)
business days of written demand therefor by Employee, then the
entire remaining portion of the Severance Payment to be paid
hereunder shall become immediately due and payable and the
non-competition covenant set forth above shall cease and be of no
further effect against Employee. Notwithstanding the foregoing, if
Employee's employment is terminated in connection with a "change
in control" of Employer, as that term is used in Section 280G of
the Internal Revenue Code of 1986 as amended ("Section 280G"),
Employee is a "disqualified individual" as that term is used in
Section 280G, and such payment, or portion thereof, would
otherwise be considered an "excess parachute payment", as that
term is used in Section 280G, then the aggregate present value of
the payments or portion thereof, which are in the nature of
compensation to (or for the benefit of) Employee, which are
contingent on such change in control, and which would otherwise be
considered an excess parachute payment, shall be the lesser of (x)
the result of the proceeding sentence, or (y) one dollar ($1.00)
less than three (3) times Employee's annualized compensation which
was includable in Employee's income and which was paid by the
Company during the five (5) most recent taxable years ending
before the change in control. The foregoing calculations shall be
made by the Company,
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provided that if Employee provides the Company with a calculation
thereof reasonably prepared by an independent certified public
accountant then, within thirty (30) days of receipt thereof, the
Company shall pay Employee the amount of such calculation, reduced
by the amount, if any, previously paid by the Company as the
Severance Payment pursuant to this provision.
(ii) It is further expressly acknowledged and agreed that if the
Employee's employment shall terminate at any time pursuant to paragraph (b)
above, the Company will pay to Employee or his estate any salary and bonus
pursuant to Sections 3 and 5, respectively, hereof and any perquisites and
fringe benefits, which shall be paid proportionately to the time of termination
(which payment shall be made at the time it would be normally paid) without
further recourse or liability to the Company, except that, in the event such
termination is pursuant to clause (b)(ii) or (b)(iii) above, then the Employee
shall be entitled to receive the Severance Payment in accordance with paragraph
(c)(i) above.
(iii) For purposes of this subsection (c), Employee's bonuses will be
determined by the Compensation Committee of the Company's Board of Directors, in
good faith. To the extent any perquisite or fringe benefit that the Company is
obligated to continue hereunder after the termination of Employee's employment
cannot be so continued due to legal impediment then, in such event, the Company
shall, in lieu thereof, pay in cash to the Employee the equivalent cost to the
Company of such perquisite or fringe benefit, with any such payments to be made
at the time the payment of such perquisite or fringe benefit would normally be
paid. It is further expressly acknowledged and agreed that, notwithstanding the
termination of this Agreement pursuant to paragraph (a) or (b) above or
otherwise, the provisions of this Section 10 shall survive such termination for
the periods of time provided therein.
11. NOTICES. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telegram addressed as provided below) and if either (a) actually delivered
(electronically or physically) at said address, or (b) in the case of a letter,
three (3) business days shall have elapsed after the same shall have been
deposited in the United States mail, postage prepaid and registered or
certified, return receipt requested:
If to Employee, to:
Xx. Xxxxxx X. Xxxxxxxxxxx
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If to the Company to:
Boston Restaurant Associates, Inc.
000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
and in any case at such other address as the addressee shall have specified by
written notice.
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12. Noncompetition and Confidentiality.
(a) As long as Employee is an employee of the Company or any successor
in interest and, if Employee's employment is terminated pursuant to
either clause 10(a)(ii) or 10(b)(i), then for an additional period
of twenty-four (24) months thereafter, Employee shall not, within
the Territory, whether as owner, partner, shareholder, director,
consultant, agent, employee, or otherwise, or through any person,
engage in any employment, consulting or other activity which
competes, directly or indirectly, with the business of the Company.
The "Territory" shall be each ten (10) mile radius surrounding any
Italian or pizza-style restaurant operated by the Company. The
"business of the Company" shall be limited to mean the operation of
Italian and pizza-style restaurants. The involvement of Employee
with a business or enterprise that operates restaurants that
specialize in foods other than Italian food or pizza shall not be
deemed to be competitive with the business of the Company.
(b) Nothing in this Agreement shall preclude Employee from making
passive investments of not more than 1% in a class of securities of
any business enterprise registered under the Exchange Act.
(c) Employee recognizes that the Company is and will be engaged in a
continuous program of research and development relating to its
business opportunities, operating procedures, products, methods,
service techniques, engineering and manufacturing data, machines,
devices, apparatus, "know-how", formulas, secret processes, plans,
designs, specifications, trade secrets, marketing and Company data
regarding costs, profits, markets, sales, customer lists, plans for
present and future development and acquisitions and other
proprietary information not available to the public (collectively,
the "Proprietary Information") which gives it a special competence
in its various fields of endeavor, all of which have been or may be
acquired or developed at considerable expense to the Company.
Employee understands that in connection with his employment with
the Company the Employee is expected to make contributions to the
development of Proprietary Information. Employee acknowledges that
his employment creates a relationship of confidentiality and trust
between Employee and the Company with respect to information of a
confidential or secret nature which is discovered, made known to,
or learned by Employee during his employment with the Company
including, without limitation, Proprietary Information.
(d) Employee will not, while he is or after he ceases to be an employee
of the Company, disclose any of the Proprietary Information
referred to above to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, other than in
furtherance of the business of the Company or in response to court
order.
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(e) Employee further agrees that in the event of the termination of his
employment with the Company, for any reason, or at any time upon
the request of the Company, Employee will deliver to the Company
all documents and other material items of any nature pertaining to
any Proprietary Information. When Employee terminates employment
with the Company, Employee will sign a certificate confirming that
he has complied with the requirements of this subparagraph.
(f) In the event of any breach or threatened breach by Employee of the
provisions of this Agreement, the Company shall be entitled to an
injunction restraining such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened
breach, including the recovery of damages from Employee.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and all promises,
representations, understandings, warranties and agreements with reference to the
subject matter hereof and inducements to the making of this Agreement relied
upon by any party hereto have been expressed herein.
14. GOVERNING LAW. This Agreement shall be deemed a contract made and
entered into in the Commonwealth of Massachusetts and, together with the rights
and obligations of the parties hereunder, shall be construed under and governed
by the laws of such state.
15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. EFFECT OF HEADINGS. Any title of an article or section heading
herein contained is for convenience of reference only, and shall not affect the
meaning of construction of any of the provisions hereof.
17. SUCCESSORS AND ASSIGNS. All covenants, promises and agreements by
or on behalf of the parties contained in this Agreement shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in multiple counterparts as of the date set forth above by their duly
authorized representative.
BOSTON RESTAURANT ASSOCIATES, INC.
By:
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Name:
Title:
EMPLOYEE
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Xxxxxx X. Xxxxxxxxxxx
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