Exhibit 10.22
EMPLOYMENT AND SAR AGREEMENT
THIS EMPLOYMENT AND SAR AGREEMENT, made and entered into as of August
9, 1995 by and between Mistic Brands, Inc., a Delaware corporation (the
"Company"), and Mr. Michael Weinstein, an individual residing at 17 Pine
Brook Drive, White Plains, New York 10605 (the "Executive").
The Company wishes to employ the Executive as its Chief Executive
Officer, and the Executive wishes to accept such position, in each case on
such terms and subject to such conditions as are set forth herein.
In consideration of the mutual promises, covenants and agreements
contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
EMPLOYMENT AND DUTIES; COMPENSATION
SECTION 1. Employment And Duties.
(a) During the Term of Employment, as defined in Section 2 of this
Article I, the Company hereby employs the Executive and the Executive
hereby accepts full time employment by the Company as its Chief Executive
Officer, on the terms and conditions set forth in this Agreement. The
Executive shall perform the duties and have the responsibilities customary
for the position of Chief Executive Officer, including such duties and
responsibilities as shall reasonably be assigned to him from time to time
by (a) the Board of Directors of the Company (the "Board of Directors"),
(b) the Chief Executive Officer or Chief Operating Officer of Triarc
Companies, Inc., the parent of the Company ("Triarc"), or (c) the Chairman
of the Triarc Beverage Group. During the Term of Employment the Executive
shall also serve in such additional offices or capacities of the Company
and/or its affiliates to which the Executive may be elected or appointed
from time to time with the consent of the Executive, which consent shall
not be unreasonably withheld. The Executive shall not be entitled to any
additional compensation for such service. Such duties shall be performed
by the Executive primarily at the corporate headquarters of the Company
which will be located in the New York Metropolitan Area; provided, however,
that the Executive acknowledges and agrees that his duties hereunder may
require the Executive to engage in a reasonable amount of travel outside
the New York Metropolitan Area, from time to time.
(b) During the Term of Employment, the Company shall take steps so
that the Executive will be elected as a member of the Board of Directors of
the Company, as long as (i) it remains a separate legal entity and (ii) he
shall be an employee of the Company.
SECTION 2. Term Of Employment. Except as otherwise provided in
Article II or Article III, the Term of Employment under this Agreement
shall commence on the date hereof and shall terminate as of the close of
business on December 31, 1998, provided that such initial term shall
automatically be extended for successive one year periods, unless either
the Executive or the Company, in their respective sole discretion, gives
notice to the other, at least 180 days before the expiration of the initial
or any renewal Term of Employment that either the Executive or the Company,
as the case may be, does not want such Term of Employment to be so extended
for an additional one year period, subject to earlier termination at any
time during the Executive's employment as hereinafter provided.
SECTION 3. Compensation, Benefits And Expenses. As compensation and
consideration for the performance by the Executive of his duties and
responsibilities pursuant to this Agreement, the Company agrees to pay the
Executive, and the Executive agrees to accept, the following amounts and
benefits:
(a) Base Salary. A base salary (the "Base Salary") at a rate of Two
Hundred and Fifty Thousand Dollars ($250,000) per annum, which amount shall
be payable in equal installments pursuant to the Company's normal payroll
policies.
(b) Annual Bonus. Participation in an annual cash incentive plan
that will enable the Executive to earn an annual cash bonus (the "Annual
Bonus") equal to the sum of (i) 50% of his annual Base Salary based upon
the Company's achievement of the performance goals ("Performance Goals")
mutually agreed upon from time to time between the Executive and the Board
of Directors within one-hundred twenty (120) days after the commencement of
each calendar year commencing January 1, 1996 and (ii) up to an additional
50% of his annual Base Salary in the event that (x) the Company exceeds
such goals and (y) the Compensation Committee of the Board of Directors of
Triarc (the "Compensation Committee") determines, in its sole discretion,
to award such a bonus to the Executive; it being understood and agreed that
the Performance Goals for any year shall be based upon the Company's
earnings from operations before interest, taxes, depreciation and
amortization, as determined in accordance with generally accepted
accounting principles, for such year; it being further understood and
agreed that for all purposes of this Agreement, such determination for any
year shall: (A) not reflect, without limitation, any of the following: (1)
all payments made or accrued for during such year in respect of the SAR (as
defined below); and (2) all payments made during such year or accrued for
in respect of any stock appreciation rights (the "Cavallo SAR") granted to
Ernest Cavallo under his Employment and SAR Agreement; and (B) reflect,
without limitation, each of the following: (1) all payments of the Annual
Bonus made or accrued for with respect to such year to the Executive
hereunder; (2) all payments of annual bonus of any kind made or accrued for
with respect to such year to any employee of the Company who is entitled to
receive such annual bonuses; and (3) all amounts accrued with respect to
such year under any mid-term plan or other incentive compensation plan of
the Company in existence at any time during the Term of Employment; and (C)
be increased to reflect (i) amounts deducted with respect to payments or
accruals under the Management Services Agreement dated as of August 9,
1995, between Triarc and the Company, as amended from time to time, or any
successor agreement (the "Management Services Agreement"), and (ii)
Affiliate Payments in excess of $250,000 during any fiscal year of the
Company, such determination after taking into account clauses (A), (B) and
(C) above, is referred to as "EBITDA"; provided, however, that the Annual
Bonus payable in respect of the fiscal year ended December 31, 1995 will be
pro rated to reflect the actual number of days in 1995 that the Executive
was employed by the Company. The parties acknowledge that EBITDA will not
reflect payments made with respect to the stock appreciation rights granted
to The Chase Manhattan Bank (National Association) as of the date hereof or
any of its subsequent successors, assignees or transferees. "Affiliate
Payments" means the net payments made by the Company to any Affiliate for
goods or services that are in excess of amounts that the Company would have
paid to a person or entity not an Affiliate of the Company in a comparable
transaction. Affiliate Payments shall not include any payments made
pursuant to (x) the Taxing Sharing Agreement dated as of August 9, 1995,
between the Company and Triarc, as amended from time to time, or any other
tax sharing arrangements with the Company's parent or any other Affiliate
of the Company or (y) the Management Services Agreement. Determinations of
any Affiliate Payment shall be made in good faith by the Board of Directors
whose determinations shall be binding and conclusive. "Affiliate" shall
have the meaning set forth in Article III, Section 1, hereof.
(c) Option. An option (the "Option") to purchase 15,000 shares of
Class A Common Stock of Triarc at an exercise price equal to the fair
market price (determined in accordance with the Plan, as defined below) of
such stock on the date of grant, which option will be awarded pursuant to
Triarc's 1993 Equity Participation Plan (the "Plan"). The Option will be
exercisable for a period of ten years from the date hereof. The Option
will vest and become exercisable as to one-third of the shares subject to
such Option on each of the third, fourth and fifth anniversary of the date
hereof; provided, however, that if the Company gives notice to the
Executive that the Term of Employment is not automatically extended for an
additional period of one year pursuant to Section 2 above, then all the
shares subject to the Option will vest on the last day of the then current
Term of Employment; provided, further, that if the employment of the
Executive hereunder terminates at any time due to death, disability, Good
Cause (as defined below), without Good Cause or Change in Control (as
defined below), then the term of exercisability of the Option and its
vesting shall be determined in accordance with the applicable provisions of
Article II or III, as the case may be.
(d) SAR. (i) The Company hereby grants a stock appreciation right
with respect to 48.5 shares of the Company's common stock ("Common Stock"),
par value $1.00 per share (the "SAR"). The appreciation base of the SAR
will be equal to $28,636.88 per share (the "Appreciation Base"). The SAR
shall not be transferable to any person or entity, except as provided
herein. The SAR shall terminate and expire, if not sooner exercised or
terminated, on the tenth anniversary of the date hereof (the "SAR
Termination Date"). Subject to Article II below, the Executive may
exercise the vested portion of the SAR at any time prior to the SAR
Termination Date. The vested portion of the SAR may be exercised in whole
and not in part upon giving to the Company written notice of such exercise,
except as otherwise provided herein. The SAR will vest as follows:
(x) Automatic SARs: An aggregate of 16.16667 of the shares
subject to the SAR (the "Automatic SAR") will become exercisable as
follows: (1) 5.38889 of the Automatic SAR will become exercisable on or
after January 1, 1996; (2) 5.38889 of the Automatic SAR will become
exercisable on or after January 1, 1997; and (3) 5.38889 of the Automatic
SAR will become exercisable on or after January 1, 1998;
(y) Earn-Out Level 1 SARs: An aggregate of 16.6667 of the
shares subject to the SAR (the "Earn-Out Level 1 SAR") will be exercisable
as follows: (1) 5.38889 of the Earn-Out Level 1 SAR will be exercisable if
the Company's EBITDA for the year ended December 31, 1996 is at least equal
to the Level 1 Target (as defined below) for such year on an annual or a
cumulative basis; (2) 5.38889 of the Earn-Out Level 1 SAR will be
exercisable if the Company's EBITDA for the year ended December 31, 1997 is
at least equal to the Level 1 Target for such year on an annual or a
cumulative basis; and (3) 5.38889 of the Earn-Out Level 1 SAR will be
exercisable if the Company's EBITDA for the year ended December 31, 1998 is
at least equal to the Level 1 Target for such year on an annual or a
cumulative basis; it being understood and agreed that for the Company's
EBITDA for any year to be at least equal to the Level 1 Target for such
year on a cumulative basis, the Company's EBITDA for the year immediately
succeeding the last year used in determining the Company's cumulative
EBITDA must be at least equal to the Company's EBITDA for such last year;
provided, however, that if the Company's EBITDA for any year is less than
the Level 1 Target for such year on an annual (not cumulative) basis and
such deficiency (the "Deficiency") is less than $1 million, then with
respect to such year the Earn-Out Level 1 SAR will vest and become
exercisable in accordance with the following formula (the "Formula"):
((A - B) / A) x C
Where:
A = $1 million
B = the Deficiency, up to $999,999, and
C = 5.38889
(z) Earn-Out Level 2 SARs: An aggregate of 16.16666 of the shares
subject to the SAR (the "Earn-Out Level 2 SAR") will be exercisable as
follows: (1) 5.38889 of the Earn-Out Level 2 SAR will be exercisable if the
Company's EBITDA for the year ended December 31, 1996 is at least equal to
the Level 2 Target (as defined below) for such year on an annual or a
cumulative basis; (2) 5.38889 of the Earn-Out Level 2 SAR will be
exercisable if the Company's EBITDA for the year ended December 31, 1997 is
at least equal to the Level 2 Target for such year on an annual or a
cumulative basis; and (3) 5.38888 of the Earn-Out Level 2 SAR will be
exercisable if the Company's EBITDA for the year ended December 31, 1998 is
at least equal to the Level 2 Target for such year on an annual or a
cumulative basis; it being understood and agreed that for the Company's
EBITDA for any year to be at least equal to the Level 2 Target for such
year on a cumulative basis, the Company's EBITDA for the year immediately
succeeding the last year used in determining the Company's cumulative
EBITDA must be at least equal to the Company's EBITDA for such last year;
provided, however, that if the Company's EBITDA for any year is less than
the Level 2 Target for such year on an annual (not cumulative) basis and
the Deficiency is less than $1 million, then with respect to such year the
Earn-Out Level 2 SAR will vest and become exercisable in accordance with
the Formula.
(ii) For purposes of this Agreement, (x) "Level 1 Target" for any
year shall mean the Company's EBITDA of at least $21.4 million for the
fiscal year ended December 31, 1996, the Company's EBITDA of at least $22.7
million for the fiscal year ended December 31, 1997, and the Company's
EBITDA of at least $23.7 million for the fiscal year ended December 31,
1998, in each case as reported in the Company's audited financial
statements for such year; and (y) "Level 2 Target" for any year shall mean
the Company's EBITDA of at least $23.7 million for the fiscal year ended
December 31, 1996, the Company's EBITDA of at least $26.9 million for the
fiscal year ended December 31, 1997, and the Company's EBITDA of at least
$30.3 million for the fiscal year ended December 31, 1998, in each case as
reported in the Company's audited financial statements for such year.
(iii) Notwithstanding anything herein to the contrary, if the
employment of the Executive hereunder terminates due to death, disability,
Good Cause, without Good Cause or Change in Control, then the vesting of
the SAR shall be determined in accordance with the applicable provisions of
Article II or III, as the case may be.
(iv) Subject to the last paragraph of this clause (iv), if the
Executive exercises the SAR, the Company shall pay to the Executive, with
respect to the vested portion of the SAR which is the subject of such
exercise, an amount in cash equal to the excess of (x) the aggregate Fair
Market Value (as defined below) of the shares of common stock subject to
such vested portion of the SAR being exercised, determined as of the last
fiscal quarter of the Company prior to the date of such exercise over (y)
the aggregate Appreciation Base of the shares of common stock subject to
such vested portion of the SAR being exercised; provided, however, that the
Company shall not pay to the Executive any monies with respect to such SAR
if at the time of such payment or after giving effect to such payment a
Default (as such term is defined in the Credit Agreement, as defined below)
or an Event of Default (as such term is defined in the Credit Agreement)
exists or would exist. Notwithstanding the foregoing, if the payment to
the Executive in respect of a SAR is limited by the foregoing sentence, the
Company shall promptly make such payment to the Executive on the earliest
date that such payment would not constitute such a Default or an Event of
Default, together with interest thereon, at the prime rate as reported in
The Wall Street Journal from time to time, compounded semi-annually, from
the exercise date of the SAR to the date on which payment is actually made
in full to the Executive. For purposes of this Agreement, "Credit
Agreement" means that certain Credit Agreement among the Company, The Chase
Manhattan Bank (National Association), as agent, and the lenders signatory
thereto, dated as of the date hereof, as the same may be restated, amended
or modified from time to time. The Fair Market Value as of such date shall
be determined by the Board of Directors; provided, however, that after such
determination, the Executive shall have the option, exercisable in his sole
discretion by written notice delivered to the Company within thirty (30)
days following such Board of Directors' determination, to have the Fair
Market Value as of such date determined instead by a mutually acceptable
independent investment bank whose determination of Fair Market Value as of
such date shall be conclusive and binding upon the parties hereto if such
Fair Market Value is greater than 110% of the Fair Market Value as
determined by the Board of Directors. In the event that the parties are
unable to agree on a mutually acceptable independent investment bank, the
Company and the executive shall each select an independent investment bank
and the two investment banks shall select a third independent investment
bank which shall determine Fair Market Value. The fees of the investment
bank that actually determines Fair Market Value, shall be paid by (1) the
Company if the Fair Market Value as of such date as determined by such
investment bank is greater than 110% of the Fair Market Value as of such
date as determined by the Board of Directors or (2) the Executive if the
Fair Market Value as of such date as determined by such investment bank is
less than or equal to 110% of the Fair Market Value as of such date as
determined by the Board of Directors. The fees and expenses of the
investment bank selected by each party to select the third investment bank
shall be borne by the Company.
Payment of such amount, in accordance with the immediately prior
paragraph, shall be made in a single lump sum payment within 90 days after
Fair Market Value is determined to the extent the Company has the ability
to do so with any unpaid balance to be paid within 12 months after Fair
Market Value is determined.
For purposes of this Agreement, "Fair Market Value" as of any date
shall be determined by reference to the sale price for all of the business
of the Company that a willing purchaser would pay in an arm's length
transaction divided by the Company's common equity as of the date of such
sale on a fully-diluted basis (including the SARs, the Cavallo SAR and each
SAR issued to Chase and its assignees and transferees and any securities
convertible into, or exchangeable or exercisable for, the Company's common
equity) (accordingly, as of the date hereof, such denominator would be
based on 1,000 shares of common equity). Fair Market Value of the Company
shall be determined without giving effect to any payments to be made to the
Executive or Ernest J. Cavallo or any expense accrued for in connection
with, any SAR or the Cavallo SAR.
(v) The number of shares with respect to which the SAR is granted,
the Appreciation Base per share and the Level 1 Target and Level 2 Target
may be appropriately adjusted, in the sole discretion of the Board of
Directors or by the Compensation Committee, to reflect, without limitation,
(1) any increase or decrease in the number of issued shares of any class of
capital stock of the Company, (2) any increase or decrease of equity
capitalization occurring without a change in the number of outstanding
shares of any class of stock of the Company, (3) the issuance or sale of
any additional shares of common stock at a price per share less than the
Fair Market Value per share of common stock on the date of such issuance or
sale and (4) any other event or transaction that the Board of Directors or
the Compensation Committee deems appropriate, in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made to
the Executive hereunder pursuant to the SAR, including, without limitation,
to reflect changes in accounting principles, extraordinary or unusual
charges or credits, acquisitions, transactions with affiliates, mergers,
consolidations, recapitalization, reorganization, sales of assets or
similar events. Any such determination by the Board of Directors or the
Compensation Committee shall be done in good faith and shall be binding and
conclusive.
(vi) In the event that the Company shall pay a dividend or make a
distribution to the holders of equity securities of the Company which is
funded through the incurrence of indebtedness for borrowed money, the Fair
Market Value of the SAR as of the last fiscal quarter of the Company prior
to the date of exercise shall be equitably adjusted to reflect the
Executive's pro rata share of such dividend or distribution that the
Executive would have received if he had owned shares of the Company's
Common Stock equal in number to that portion of the SAR which was
exercisable as of the record date of such distribution or dividend.
(e) Insurance, etc. Participation in any life insurance, disability
insurance and medical, dental, hospitalization and surgical expense,
vacation, pension and retirement plan and other employee benefits and
perquisites made generally available by Royal Crown Company, Inc., a
Delaware corporation and an indirect wholly-owned subsidiary of Triarc
("RCC"), to its senior officers from time to time.
(f) Car. The Company shall provide to the Executive an automobile
allowance of $900 per month during the Term of Employment, in lieu of all
other reimbursable automobile expenses, including, without limitation, all
operating costs, such as insurance, maintenance and fuel, for such
automobile.
In addition to the amounts and benefits provided for above, the Company
shall provide the Executive during the Term of Employment with a private
office, stenographic and secretarial help and such other facilities and
services as are suitable to his position and adequate for the performance
of his duties, and shall reimburse the Executive for all entertainment,
travel and other expenses reasonably incurred by him in the course of
attending to and promoting the affairs of the Company, subject to the
Company's normal rules with respect to documentation of such expenses.
ARTICLE II
TERMINATION
SECTION 1. Termination Due To Death. The employment of the Executive
under this Agreement shall terminate upon the Executive's death. In the
event of the death of the Executive during the Executive's employment
hereunder, the estate or other legal representative of the Executive shall
be entitled only to the following:
(a) Base Salary. The Company shall pay to the Executive's estate or
other legal representative his Base Salary through the last day of the
calendar quarter in which the Executive dies plus any earned but unpaid
Base Salary or vacation and any Annual Bonus in respect of a prior year.
Such amount shall be paid by the Company in a lump sum, subject to all
withholdings, within thirty (30) days of the date of death.
(b) Annual Bonus. The Company shall pay to the Executive's estate or
other legal representative (i) Annual Bonus, if any, accrued in respect of
the immediately preceding year but not yet paid as of the date of death and
(ii) the pro-rata portion of the Executive's Annual Bonus for the year in
which death occurs to the extent that the performance goals for that year
shall be met. Such payment shall be calculated by multiplying the amount
determined to be payable as an Annual Bonus by a fraction, the numerator of
which is the number of weeks in the applicable year which precede and
include the date of death and the denominator of which is 52. Such amount
shall be paid by the Company in a lump sum, subject to all withholdings,
within thirty (30) days of the determination of whether the Company has met
the performance goals for such year.
(c) Option, SAR. The Option and the SAR shall vest immediately and
in their entirety and each shall remain exercisable by the Executive's
estate or other legal representative for a period of one year following the
date of death.
SECTION 2. Termination Due To Disability. If the Executive shall be
unable to perform all or substantially all of his duties and
responsibilities on account of his illness (either physical or mental) or
other incapacity, the Company shall continue to pay the Executive the full
amounts and benefits provided for in Section 3 of Article I above for the
period of such illness or incapacity; provided, however, that in the event
such illness or incapacity continues for a period longer than 180
consecutive days or for an aggregate of 175 days during any consecutive
nine-month period (each, a "disability"), the Board of Directors shall have
the right to terminate the Term of Employment by giving the Executive not
less than thirty (30) days written notice of its election to do so. In the
event the Executive's employment is terminated on account of disability
under this Section 2, the Executive shall be entitled to the compensation
and benefits set forth in Section 1 of Article II above.
SECTION 3. The Company's Right To Terminate For "Good Cause".
(a) Notwithstanding anything in this Agreement to the contrary, the
Term of Employment and the Executive's employment hereunder may be
terminated by the Company at any time for "Good Cause" (as defined below).
In the event the Board of Directors shall determine that grounds exist for
terminating the Term of Employment and the Executive's employment hereunder
for Good Cause, the Company shall send written notice to the Executive that
his employment is so terminated and specifying the facts based upon which
Good Cause exists for the termination of the Term of Employment and the
Executive's employment by the Company. In the event the Board of Directors
shall so terminate the Term of Employment and the Executive's employment,
Executive shall be entitled only to the following:
(i) Base Salary. Within thirty (30) days of the date of
termination, the Company shall pay the Executive his Base Salary accrued
through the date of termination of employment plus any earned but unpaid
vacation plus any earned but unpaid Base Salary, vacation or Annual Bonus
in respect of a prior year.
(ii) Annual Bonus. The Company shall pay the Executive his Annual
Bonus, if any, accrued in respect of any preceding year but not yet paid.
The amount shall be paid at the time it would have been paid had the
Executive's employment not been terminated.
(iii) Option, SAR. The Executive's right to exercise the Option and
the SAR, whether vested or unvested, shall terminate on the date of
termination.
(b) For purposes of this Agreement, "Good Cause" shall mean:
(i) any willful failure by the Executive to perform his duties of
Chief Executive Officer of the Company;
(ii) any material misconduct (including misconduct involving moral
turpitude) by the Executive in the performance of his duties as Chief
Executive Officer, which misconduct is materially injurious to the Company
or results in the Executive's conviction of a felony under the laws of the
United States of America, any state thereof or an equivalent crime under
the laws of any other jurisdiction;
(iii) any willful and unexcused refusal by the Executive to obey the
lawful and reasonable instructions of the Board of Directors or of the
individuals designated in clause (b) of Article I, Section 1(a) above;
(iv) any willful failure by the Executive to substantially comply
with any written rule, regulation, policy or procedure of the Company,
Triarc, or its respective affiliates furnished to Executive, which
noncompliance could reasonably be expected to have a material and adverse
effect on the Company's or Triarc's business; or
(v) any willful failure by the Executive to comply with Triarc's
policies with respect to insider trading which are furnished to Executive.
Notwithstanding the foregoing, any termination for "Good Cause" under
clause (i) above shall be effective upon the giving of the written notice
referred to in the first paragraph of subsection (a) of this Section 3;
provided, however, that the Executive shall not be deemed to have been
terminated for "Good Cause" by reason of clause (i) above if within 5 days
after such notice to the Executive, such conduct is no longer continuing,
provided that such notice is the first such notice under this Section 3.
SECTION 4. The Company's Right To Terminate Without Good Cause.
Notwithstanding anything in this Agreement to the contrary, the Term of
Employment and the Executive's employment hereunder may be terminated by
the Company at any time without Good Cause upon thirty (30) days prior
notice; provided, however, that in the event the Executive's employment
hereunder is so terminated, the Executive shall be entitled only to the
following:
(a) Base Salary; Annual Bonus. The Company shall pay the Executive
an amount equal to the sum of (i) the greater of (x) his Base Salary, as in
effect for the year in which such termination occurs, for one year and (y)
the entire amount of Base Salary that would be payable to the Executive
hereunder through the last day of the then current Term of Employment if
such termination had not occurred plus any earned but unpaid Base Salary,
vacation or Annual Bonus in respect of a prior year owing to Executive
accrued with respect to the period prior to the date of termination, and
(ii) the Executive's Annual Bonus for the year in which such termination
occurs to the extent that the performance goals for that year shall be met
(such sum is hereinafter referred to as the "Severance Amount"). The
amounts payable to the Executive pursuant to this subsection 4(a) shall be
payable when and as such amounts would otherwise be payable hereunder if
such termination had not occurred.
(b) Option. The Option shall vest immediately and in its entirety as
of the date of such termination and shall remain exercisable by the
Executive for a period of one year from the date of termination.
(c) SAR. The Automatic SARs shall vest immediately and in their
entirety and remain exercisable for one year following the date of such
termination. Earn-Out Level 1 SARs and Earn-Out Level 2 SARs will vest
immediately and in their entirety and remain exercisable for one year
following the date of such termination if and only if the Company's EBITDA
for the year immediately preceding the year in which such termination
occurs is at least equal to Level 1 Target for such year on an annual or
cumulative basis, in the case of Earn-Out Level 1 SARs, and at least equal
to Level 2 Target for such year on an annual or cumulative basis, in the
case of Earn-Out Level 2 SARs. If the Company's EBITDA for the year
immediately preceding the year in which such termination occurs is less
than the Level 1 Target or the Level 2 Target, as the case may be, for such
year on an annual (not cumulative) basis and the Deficiency is less than $1
million, then and only then unvested Earn-Out Level 1 SARs or unvested
Earn-Out Level 2 SARs, as the case may be, will vest immediately and in the
proportion determined pursuant to the Formula and shall remain exercisable
for one year following the date of such termination. The Executive's right
to exercise any unvested portion of the SAR shall terminate on the date of
such termination.
(d) Other Benefits; Car. All other benefits set forth in Article I,
Section 3(e) and 3(f) shall continue until the first to occur of (i) the
first anniversary of the date of termination and (ii) the date the
Executive commences full-time employment with another employer.
(e) The parties agree that the Executive shall not be obligated to
mitigate damages by seeking other employment and any earnings from
subsequent employment shall not reduce the amounts payable by the Company
under this Section 4.
ARTICLE III
CHANGE IN CONTROL
SECTION 1. Definition Of Change In Control. The term "Change in
Control" shall mean:
(a) the acquisition by any person or entity of 50% or more of
the combined voting power of the outstanding securities entitled to
vote generally in the election of directors of either the Company or
of any other corporation (a "Parent Corporation") that owns directly
or indirectly 50% or more of the combined voting power of the
Company's outstanding securities entitled so to vote;
(b) a majority of the Board of Directors of the Company or any
Parent Corporation shall be individuals who are not nominated by the
then current Board of Directors of the Company or such Parent
Corporation, as the case may be; or
(c) the Company or any Parent Corporation is merged or
consolidated with a corporation or entity other than the Company or a
Parent Corporation, or all or substantially all of the assets of the
Company or a Parent Corporation are acquired by a corporation or
entity that is not the Company or a Parent Corporation;
provided, however, that in each case, (i) the acquisition of any portion of
the combined voting power of either the Company or Triarc by DWG
Acquisition Group, L.P., Nelson Peltz and/or Peter W. May or by any person
affiliated with such persons shall in no event constitute a Change in
Control and (ii) the merger, consolidation or sale of assets of either the
Company or Triarc or any subsidiary of Triarc with or to any corporation or
entity controlled by DWG Acquisition Group, L.P., Nelson Peltz and/or Peter
W. May or by any person affiliated with such persons shall in no event
constitute a Change in Control. "Affiliate" of a specified person or
entity shall mean any other person or entity who directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with, the person or entity specified.
SECTION 2. Effects Of Change In Control.
(a) If (i) the Executive terminates his employment hereunder (x)
within twelve months following a Change in Control, (y) during the Term of
Employment and (z) as a result of any meaningful diminution of the
Executive's duties, authority or compensation hereunder following such
Change in Control, or (ii) the Executive's employment hereunder is
terminated by the Company without Good Cause within 18 months following a
Change in Control, then the Executive shall be entitled to receive the
Severance Amount, plus continuation of employee benefits for a period of 12
months.
(b) If (i) a Change in Control occurs and (ii) (x) in one or a series
of related disposition transactions, Triarc has realized a 40% annual
internal rate of return, compounded semi-annually (the "Target IRR"), on
the disposition of its entire equity investment in the Company as of the
date of such Change in Control, then all the SARs will immediately vest in
their entirety; or (y) in one or a series of related disposition
transactions, Triarc has realized an annual internal rate of return,
compounded semi-annually, equal to the Pro-Rata Target IRR (as hereinafter
defined) expressed as a percentage, with respect to disposition of not less
than 55% of Triarc's entire equity investment in the Company as of the date
of such Change in Control, then a percentage of the SARs equal to the
percentage of Triarc's entire equity investment in the Company being so
disposed (the "Disposition Percentage") will immediately vest. The
provisions of Article II, Section 4 shall, following the application of
clause (ii)(y) of the immediately preceding sentence, remain applicable to
all SARs still outstanding following the application of such clause. The
pro-rata Target IRR percentage shall be determined pursuant to the
following formula:
Pro-Rata Target IRR (expressed as a percentage) = 40 x Disposition
Percentage
It is understood and agreed that such internal rates of return shall be
determined based on the actual amounts realized by Triarc or any parent
corporation, on an after-tax basis, with respect to the disposition of the
assets or capital stock of the Company. Any non-cash proceeds received, if
traded on a national securities exchange or quoted on NASDAQ, shall be
valued as of the date of receipt by Triarc or any parent or the Company,
based on the closing market price on the primary exchange or NASDAQ where
such securities are traded or quoted, as the case may be, and if not so
traded or quoted, shall be valued as of such date using the methods and
procedures for determining Fair Market Value in paragraph (iv) of Section
3(d) of Article I hereof.
(c) If a Change in Control occurs which results from the first
primary public offering by the Company for cash of common stock of the
Company after the date hereof (other than an offering on Form S-4 or S-8 or
any similar or successor form), and paragraph (b) of this Section 2 would
have been applicable if such offering of shares had been a secondary
offering by Triarc of the same number of common shares as were sold by the
Company in such primary offering, the Board of Directors or the
Compensation Committee shall equitably convert the outstanding SARs into
options for and/or shares of common stock of the Company (such
determination to award options and/or shares shall be made in the sole
discretion of the Board of Directors or Compensation Committee) which in
the aggregate would afford the Executive substantially the same economic
value as the then outstanding SARs and which would, to the extent
practicable, have substantially the same terms and conditions as the then
outstanding SARs granted hereunder; provided, however, that the obligation
of the Company to effect such conversion shall be subject to the Company
not incurring any material cost or liability and such conversion not
resulting in a breach or violation of any material agreement to which the
Company is bound or to which it is a party. Such determination by the
Board of Directors or the Compensation Committee, as the case may be, shall
be done in good faith and shall be binding and conclusive.
ARTICLE IV
PUT RIGHT
SECTION 1. Put Right.
(a) Following a Triggering Event (as defined below), the Company
shall, in accordance with the terms of this Article IV, purchase all of the
Executive's SARs which have vested as of the date of such Triggering Event
(the "Put") for an aggregate purchase price equal to the excess of (i) the
aggregate Fair Market Value, as of the Triggering Event such Triggering
Event, of the SARs subject to the Put over (ii) the aggregate Appreciation
Base of the SARs subject to the Put. The Fair Market Value as of the date
of such Triggering Event shall be determined using the procedures and
methods for determining Fair Market Value in paragraph (iv) of Section 3(d)
of Article I hereof.
(b) For purposes of this Agreement, "Triggering Event" shall mean
any of the following: (x) a Change in Control; (y) the termination of the
Term of Employment by the Company without Good Cause or due to death or
disability (as such term is defined in Section 2, Article II above); (z)
the Company's or the Executive's non-renewal of this Agreement following
the expiration of the then current Term of Employment; or (aa) an election
by the Executive on or after January 1, 1999 while the Executive is still
employed by the Company on a full-time basis as a senior executive
employee, with respect to the exercise of not more than (i) 20% of the
vested SARs during any 12 month period and (ii) 50% of the vested SARs in
the aggregate taking into account any prior exercises under this clause
(aa).
(c) All payments by the Company pursuant to the Put shall be made in
accordance with Section 3(d) of Article I above, substituting the date of
the Triggering Event for the SAR exercise date therein; provided, however,
the provisions of the second full sentence of such paragraph shall not be
applicable to payments made pursuant to the exercise of the Put upon the
occurrence of the Triggering Event specified in clause (aa) of paragraph
(b) of this Section 1, Article IV.
ARTICLE V
COVENANT NOT TO COMPETE; CONFIDENTIALITY; INVENTIONS
SECTION 1. Covenant Not To Compete. The Executive acknowledges that
as the Company's Chief Executive Officer he will be involved, at the
highest level, in the development, implementation and management of the
Company's business strategies and plans, including those which involve the
Company's finances, marketing, operations, industrial relations and
acquisitions. By virtue of the Executive's unique and sensitive position,
the employment of the Executive by a competitor of the Company represents a
serious competitive danger to the Company, and the use of the Executive's
talent and knowledge and information about the Company's business,
strategies and plans can and would constitute a valuable competitive
advantage over the Company. In view of the foregoing, if either (i) the
Executive's employment with the Company ends prior to the last day of the
Term of Employment as a result of the Executive's voluntary resignation or
(ii) the Executive's employment hereunder is terminated by the Company for
Good Cause pursuant to Section 3 of Article II, then the Executive
covenants and agrees that in either of such events for a period of eighteen
(18) months following termination of the Executive's employment under this
Agreement, the Executive will not engage or be engaged, in any capacity,
directly or indirectly, including, but not limited to, as an employee,
agent, consultant, manager, executive, owner or stockholder (except as a
passive investor owning less that a 2% interest in a publicly held company)
in the "new age" or carbonated beverage industry. The covenant not to
compete contained in this Section 1 shall survive any termination of the
Term of Employment regardless of whether such termination shall have been
initiated or otherwise caused by the Company.
SECTION 2. Injunctive Relief. The Executive agrees that in addition
to any other remedy provided at law or in equity or in this Agreement, the
Company shall be entitled to a temporary restraining order and both
preliminary and permanent injunctions restraining the Executive from
violating any provision of Section 1 or Section 3 of this Article V.
SECTION 3. Confidentiality. The Executive agrees to treat as
confidential and not to disclose to anyone other than the Company and its
subsidiaries and affiliated companies the affairs of the Company and its
subsidiaries and affiliated companies, and he agrees that he will not at
any time during his employment under this Agreement and for a period of
four (4) years thereafter, without the prior written consent of the
Company, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Company and its subsidiaries and
affiliated companies, any information of a confidential nature relating in
any way to the business of the Company or its subsidiaries or affiliated
companies, or any of their respective customers, unless (i) the Executive
is required to disclose any such information by judicial or administrative
process or, in the opinion of his counsel, by other requirements of law,
(ii) such information is in the public domain through no fault of the
Executive, (iii) such information has been lawfully acquired by the
Executive from other sources unless the Executive knows that such
information was obtained in violation of an agreement of confidentiality or
(iv) such information was known to the Executive prior to June 6, 1995.
SECTION 4. Inventions. The Executive agrees that any product, "know-
how," trade secret, idea, formula, operational method, recipe, method of
manufacture, invention, development, discovery or other knowledge or
technical improvement (collectively, "Special Information") in which he
participates, whether patentable or not, made or conceived by the Executive
during his employment under this Agreement or within six (6) months
thereafter, whether made within or without the course of the Executive's
employment with the Company, which relates in any way to the business of
the Company or its subsidiaries or affiliates and/or results directly or
indirectly from the Executive's employment with the Company shall be
treated as owned by and for the benefit of, shall be assigned by the
Executive without further compensation to, and shall be the property of,
the Company. Further, in such regard, the Executive shall communicate and
promptly disclose to the Board of Directors all such Special Information
and will assist the Company in every proper way at its expense to obtain a
patent or patents thereon in the United States and any other jurisdiction
that the Company deems appropriate, and the Executive agrees to execute all
instruments and to take all steps necessary to make the benefits of such
Special Information available to the Company as its exclusive property.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. Indemnification. The Company shall indemnify and hold
harmless the Executive if he should become a party or he should be
threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the Executive is or was a
director, officer, employee, or agent of the Company or is or was serving
at the request of the Company as a director, trustee, officer, employee, or
agent of another corporation, domestic or foreign, non profit or for
profit, partnership, joint venture, trust or other enterprise, in the
manner and to the maximum extent permitted by the Delaware General
Corporation Law, as amended from time to time. The indemnification
provided for in this Section 1 shall not be deemed exclusive of any other
right to which the Executive may be entitled under the Company's
Certificate of Incorporation or By-laws or any agreement, vote of
shareholders or disinterested directors, or otherwise, and shall continue
after the Executive has ceased to be a director, trustee, officer, employee
or agent and shall inure to the benefit of the Executive's heirs,
executors, and administrators. To the extent and for the period that the
Company or Triarc purchases and maintains insurance on behalf of any of its
directors, officers, or employees, against liability asserted against any
such person and incurred by such person in any such capacity, or arising
out of such person's status as such, the Company hereby covenants that the
Executive will be included as an insured under such policy.
SECTION 2. Failure To Enforce And Waiver. The failure to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver of such terms, covenants or
conditions, and the waiver or relinquishment of any right or power under
this Agreement at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 3. Remedy For Breach Of Contract. The parties agree that in
the event there is any breach or asserted breach of the terms, covenants or
conditions of this Agreement, the remedy of the parties hereto shall be in
law and in equity and injunctive relief shall lie for the enforcement or
nonenforcement of any provisions of this Agreement.
SECTION 4. Assignment. The rights and obligations of the Company
under this Agreement (i) are assignable by the Company to any parent or
subsidiary of the Company, to any successor by merger to the Company and to
any person which acquires all or substantially all of the assets and
business of the Company as a going concern and (ii) shall inure to the
benefit and shall be binding upon the successors and assigns of the
Company. The rights and obligations of the Executive under this Agreement
(including the Option and the SAR) are not assignable or transferable by
the Executive (whether by operation of law or otherwise or whether
voluntarily or involuntarily); provided, however, that the Option and the
SAR may be transferred by will or by the laws of descent and distribution.
SECTION 5. Notices. All notices required or permitted to be given
under this Agreement shall be given in writing and shall be deemed
sufficiently given if delivered by hand or mailed by registered mail,
return receipt requested, to his residence in the case of the Executive and
to its principal executive offices in the case of the Company. Either
party may by notice to the other party change the address at which he or it
is to receive notices hereunder.
SECTION 6. Applicable Law And Severability. This Agreement shall
take effect and be construed and enforced in accordance with the laws of
the State of New York, excluding any such laws which direct the application
of the laws of some other forum. If any provision or provisions, as the
case may be, of this Agreement are void or unenforceable or so declared,
such provision or provisions shall be deemed and hereby are severed from
this Agreement, which shall otherwise remain in full force and effect.
SECTION 7. Headings. The headings used in this Agreement are for
convenience only and shall not be deemed to curtail or affect the meaning
or construction of any provision under this Agreement.
SECTION 8. Withholding. All payments or benefits to the Executive
under this Agreement shall be reduced by any amounts required to be
withheld by the Company under federal, state or local income tax laws or
similar laws then in effect.
SECTION 9. Entire Agreement; Amendment. This Agreement contains the
entire Agreement between the parties hereto with respect to the subject
matter hereof. This Agreement may not be changed orally but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
SECTION 10. No Rights as Stockholder. Neither the Executive nor any
person exercising the SAR on his behalf shall have any rights of a
stockholder of a Company with respect to shares of the Company's common
stock. A SAR is a fictitious share of common stock of the Company which is
a measure of compensation payable hereunder. To the extent the Executive
acquires a right to receive a payment with respect to a SAR, such right
shall be no greater than the right of any general unsecured creditor of the
Company. The obligation of the Company to the Executive shall be unfunded
and no property or assets shall be set aside, or trust or fiduciary
relationship created, to assure payment thereof.
SECTION 11. Legal Fees. The Company shall pay or reimburse the
Executive for the reasonable attorneys fees and expenses incurred by him in
the negotiation of this Agreement up to $6,000.
SECTION 12 Generally Accepted Accounting Principles. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred
in by the Company's independent public accountants and disclosed in writing
to the Executive) with the most recent audited consolidated financial
statements of the Company.
SECTION 13. Arbitration. Any dispute or question arising from this
Agreement or its interpretation shall be settled exclusively by arbitration
in New York City, New York, in accordance with the commercial rules then in
effect of the American Arbitration Association. The arbitrator(s) shall
set forth in writing and deliver to the parties findings of fact and
conclusions reached. Judgment upon an award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction, including courts in
the State of New York. Any award so rendered shall be final and binding
upon the parties hereto. All costs and expenses of the arbitrator(s) shall
be borne by equally by the parties hereto and all costs and expenses of
attorneys, experts, witnesses and other persons retained by the parties
shall be borne by the party that retained such attorneys, experts,
witnesses or other persons; provided, however, that the arbitrator(s) shall
have the authority to reallocate responsibility for such costs and expenses
in connection with its arbitration decision. In the event that injunctive
relief shall become necessary under this Agreement, either of the parties
shall have the right to seek provisional remedies prior to an ultimate
resolution by arbitration.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
MICHAEL WEINSTEIN
Michael Weinstein
MISTIC BRANDS, INC.
By:ERNEST J. CAVALLO
Name: Ernest J. Cavallo
Title: President and
Chief Financial Officer