Exhibit 10
Material Contracts(c)
PRIVILEGED AND CONFIDENTIAL
5588C
05/24/88
CHOCK FULL O' NUTS CORPORATION
SEVERANCE POLICY
1.0 Intent
It is the intent of Chock Full O' Nuts Corporation to provide
severance benefits ("Severance Benefit Payments") for each of
its Employees (as defined below whose employment with the
Company (as defined below) is involuntarily terminated
other than on account of Cause, Disability, Sale of a Business
(all as defined below) or the Employee's death.
2.0 Scope
This Policy shall apply without exception to all Employees who are
described in Section 5.8 below.
3.0 Contractual Right
On the date of a Qualifying Termination (as defined below), each
Employee described in Section 5.8 below shall have a fully vested,
nonforfeitable contractual right, enforceable against the Company,
to the benefits provided for under Section 7.0 of this Policy upon
the conditions specified in Section 6.1 below. Such contractual
right to receive such benefits if the conditions specified in
Section 6.1 are fulfilled shall arise on the date on which the
Qualifying Termination occurs.
4.0 Effective Date
This Policy is effective May ___, 1988 (the "Effective Date").
5.0 Definitions
For purposes of this Policy, the following definitions shall apply:
5.1 Base Pay: "Base Pay" shall mean the Employee's base annual
salary as of the date of his termination of employment or, if
greater, as of the date on which a Change in Control occurs,
divided by Fifty-Two (52).
5.2 Cause: The Company shall have Cause to terminate an
Employee only if the Employee (a) intentionally failed to perform
reasonably assigned duties, (b acted dishonestly or engaged in
willful misconduct in the performance of his duties, (c)
engaged in a transaction in connection with the performance of
his duties to the Company for personal profit to himself or
(d) willfully violated any law rule or regulation in connection
with the performance of his duties (other than traffic violations
or similar offenses).
5.3 Change in Control: For purposes of this Policy, a Change in
Control shall occur if following any event which constitutes
(A) a tender or exchange offer for voting securities of the
Company,
(B) a proxy contest for the election of directors of the
Company, or
(C) a merger or consolidation or sale of all or substantially
all of the business or assets of the Company,
the persons constituting the Board of Directors of the Company immediately
prior to the initiation of such event cease to constitute majority of the
Board of Directors of the Company upon the occurrence of such event or within
two years after such event.
5.4 Class A Employee: "Class A Employee" shall mean an Employee
who, as of the Effective Date, has a base annual salary which is
equal to or greater than $25,000.
5.5 Class B Employee:
"Class B Employee" shall mean any employee who is not a Class A
Employee.
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5.6 Company: "Company" shall mean Chock Full O'Nut
Corporation and any successor thereto, including, without
limitation, any person (as such term is used in Sections 13(d)
and 14(d) (2) of the Securities Exchange Act of 1934, as amended),
partnership(s) or corporation(s) acquiring directly or indirectly
all or substantially all of the business or assets of Chock Full
O'Nuts Corporation.
5.7 Disability: "Disability" shall mean physical or mental
infirmity which impairs the Employee's ability to substantially
perform his duties (as they existed immediately prior to the illness
or injury) on a full-time basis for four (4) consecutive calendar
months.
5.8 Employee: The term "Employee" shall mean an active
employee of the Company (or any of its subsidiaries, including
Greenwich Mills Company and its Subsidiaries), other than an active
employee who, (i) is included in a unit of employees covered by a
collective bargaining agreement; or (ii) at the time of his
termination of employment, is covered under an individual employment
or severance agreement (as distinguished from a plan or program
which is applicable to groups of salaried employees generally)
which provides for compensation and/or benefits upon termination
of employment.
5.9 Sale of a Business: For purposes of this Policy a
"Sale of a Business" shall be deemed to have occurred if the
company has sold a subsidiary, division or other
business unit in which the Employee was employed before such sale,
and the Employee has been offered employment with the purchaser
of such subsidiary, division or business unit on substantially
the same terms and conditions under which he worked for the Company.
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6.0 When Provisions Apply
6.1 The benefits provided for under Section 7.0 of this
Policy shall be provided to each Employee described in
Section 5.8 above who incurs a Qualifying
Termination. For the purposes of this Policy, a
"Qualifying Termination" shall occur only if an Employee's
employment with the Company is involuntary terminated other
than for Cause, Disability, Sale of a Business
or death.
6.2 The fact that an Employee is eligible to immediately
receive retirement benefits under the Chock Full O'Nuts
Corporation Pension Plan the Greenwich Mills Company
retirement plan or any other Company employee benefit plan,
practice or policy shall not render him ineligible for
the benefits under this Policy.
7.0 Severance Benefit Payment
7.1 Subject to Section 7.3, each Class A Employee
entitled to benefits under this Policy shall receive the
Severance Benefit Payment described below.
Complete Severance Benefit Payment
Years of Service Upon Qualifying Termination
(i) Prior to, or *(ii) Within Two Years
More than Two * After Change in Control
Years After, * Control
a Change in *
Control *
*
(a) 1 - 2 times Base Pay * 4 times Base Pay
5 per Complete Year * per Complete Year
of Service * of Service
*
(b) 6 - 10 times Base Pay * 20 times Base Pay,
10 plus 3 times Base * plus 6 times Base
Pay per Complete * Pay per Complete
Year of Service in * Year of Service in
excess of 5 * excess of 5
*
(c) More 25 times Base Pay, * 50 times Base Pay,
than 10 plus 4 times Base * plus 8 times Base
Pay per Complete * Pay per Complete
Year of Service in * Year of Service in
excess of 10 * excess of 10
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7.2 Subject to Section 7.3, each Class B Employee
entitled to benefits under this Policy shall receive the
Severance Benefit Payment described below.
Complete Severance Benefit Payment
Years of Service Upon Qualifying Termination
(i) Prior to, or *(ii) Within Two Years
More Than Two * After Change in
Years After, * Control
*
(a) 1 - 1.33 times Base Pay * 2.67 times Base Pay
5 per Complete Year * per Complete Year
of Service * of Service
*
(b) 6 - 10 6.67 times Base * 13.33 times Base
Pay, plus 2 times * Pay, plus 4 times
Base Pay per Complete * Base Pay per Complete
Year of Service in * Year of Service in
excess of 5 * excess of 10
*
(c) More 16.67 times Base * 33.33 times Base
than 10 Pay, plus 2.67 * Pay, plus 5.33
times Base Pay per * times Base Pay per
Complete Year of * Complete Year of
Service in excess * Service in excess
of 10 * of 10
7.3 In no event shall the Severance Benefit Payment paid
to an Employee in connection with a Qualifying Termination that occurs prior
to a Change in Control or more than two years after a Change in Control
exceed fifty-two (52) times his Base Pay. In addition, in no event shall
the Severance Benefit Payment paid to an Employee in connection with a
Qualifying Termination that occurs within two years after a Change in Control
exceed One Hundred Four (104) times his Base Pay.
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7.4 An Employee shall be credited with a number of weeks
of service equal to the number of weeks of Base Pay he
receives or is entitled to receive as a Severance Benefit
Payment for the purpose of determining eligibility,
vesting and accrual service under all employee benefit
plans of the Company, including, but not limited to, group
health and life insurance, long-term disability, the Chock
Full o'Nuts Corporation Pension Plan, and the Greenwich Mills
Company retirement plan.
7.5 The Severance Benefit Payments described in Sections
7.1 and 7.2 above shall be payable in addition to, and not
in lieu of, all other accrued, vested, earned, or deferred
compensation rights, options, or other benefits which may be
payable or owed to an Employee following termination of
employment under any plan, including but not limited to
accrued vacation or sick pay, compensation or benefits
payable under any employee benefit plans, practices or
policies of the Company (or any of its subsidiaries,
including Greenwich Mills Company and its Subsidiaries).
7.6 All Severance Benefit Payments provided for in
Sections 7.1 and 7.2 above shall be paid within twenty-five
(25) days after the Employee's Qualifying Termination and,
subject to applicable withholding requirements, shall be
paid in a lump sum.
7.7 Severance Benefit Payments shall not be offset or
reduced by any unemployment insurance benefit or income
from subsequent employment that the Employee may receive.
An Employee who is entitled to benefits
under this Policy shall not be required to accept or
to seek other employment as a condition of receiving
such benefits.
7.8 If an employee who is entitled to benefits under
this Policy dies before receiving the Severance Benefit
Payment, such Payment shall be made to the Employee's
surviving spouse, or, if applicable, to the Employee's
estate.
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8.0 Successor to Company
This Policy shall bind any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the
business and/or assets of the Company, in the same
manner and to the same extent that the Company
would be obligated under this Policy if no
succession had taken place. In the case of
any transaction in which a successor would not
by the foregoing provision or by operation of law be
bound by this Policy, the Company shall require such
successor expressly and unconditionally to assume
and agree to perform the Company's to assume and
agree to perform the Company's obligations under
this Policy, in the same manner and to the same
extent that the Company would be required to
perform if no such succession had taken place.
9.0 Amendment and Termination on or After a Change
in Control
Prior to the occurrence of a Change in Control,
this Policy may be amended in any respect whatsoever
or terminated by the Board.
If a Change in Control occurs, the Policy may not be
amended or terminated in any respect whatsoever for a
period of two years following such Change in Control
if the effect of such amendment or termination
would result in any reduction or elimination of
any benefits the Employee would have been entitled
to absent such amendment or termination nor shall any
such amendment or termination change or eliminate any
of the circumstances pursuant to which the Employee
would have become entitled to the benefits provided
herein absent such amendment or termination.
10.0 Employment Status
This Policy does not constitute a contract of
employment or impose on the Company any obligation
to retain any individual as an Employee, to change
the status of any Employee's employment, or to change
the Company's policies regarding termination of
employment.
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11.0 Administration
The Board of Directors of the Company, or a Committee
appointed by the Board shall be responsible for
implementing, administering and interpreting the
provisions of this Policy.
12.0 Severability
If any provision of this Policy is held invalid or
unenforceable, the remainder of this Policy shall
nevertheless remain in full force and effect, and
if any provision is held invalid or unenforceable
with respect to particular circumstances, it shall
nevertheless remain in full force and effect in
all other circumstances.
13.0 Governing Law
The interpretation, construction and performance of
this Policy shall in all respects be governed by
the laws of New York.
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