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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into the 1st
day of April, 1998 ("Effective Date"), by and between NATIONAL DELI CORPORATION,
a Florida corporation ("NDC"), having a place of business at 1656 Alton Road,
Miami Beach, Florida, JERRY'S FAMOUS DELI, INC., a California corporation
("JFD"), having its principal offices at 12711 Ventura Boulevard, Suite 400,
Studio City California, 91604, and HARRY THAL ("Thal"), residing at
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W I T N E S S E T H:
WHEREAS, Thal is a principal owner of The Epicure Market, Inc., a
Florida corporation ("Epicure, Inc."), and Epicure, Inc. has been the operator
of that certain business located primarily at 1656 Alton Road, Miami Beach,
Florida ("Epicure Location"), known as the "Epicure Market" ("Epicure
Business"); and
WHEREAS, simultaneously herewith, pursuant to a certain Asset Purchase
Agreement having an "Effective Date" of February 9, 1998 ("Purchase Contract"),
Epicure, Inc. has closed on the conveyance of the Epicure Business to NDC, as
assignee of JFD; and
WHEREAS, as inducements to JFD and Thal to enter into the Purchase
Contract, the Purchase Contract provided for the employment of Thal by JFD or
its affiliate, and requires that JFD, NDC and Thal enter into this Agreement;
NOW, THEREFORE, for and in consideration of the mutual promises, the sum
of TEN ($10.00) DOLLARS and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. RECITALS: The foregoing recitals are true and correct, and are
incorporated herein by this reference.
2. EMPLOYMENT OF THAL: NDC hereby employs Thal, and Thal hereby
accepts employment with NDC, to render the services provided herein and
contemplated hereby, all upon the terms and conditions set forth herein. Thal's
title initially shall be co-general manager for the Epicure Business. NDC, at
its expense, shall provide to Thal an individual office, use of a desktop
computer and support staff, to perform his duties hereunder.
3. TERM/CONVERSION OPTION:
(A) Term: The term of this Agreement shall be the period
commencing as of the Effective Date and continuing until the fifth (5th)
anniversary of the Effective Date, unless sooner terminated pursuant to Sections
7 or 8 hereof or the mutual written agreement between NDC and Thal.
(B) Conversion Option: NDC and Thal each shall have the option to
convert years 4 and 5 to a fifty (50%) percent time consulting arrangement
("Consulting Arrangement"), as follows: In the event either NDC or Thal, no
later than three months prior to the end of year 3, delivers to the other notice
that such party wishes to convert, then, for the fourth and fifth year of the
term of this Agreement ("Consulting Term"), (i) Thal shall be required to devote
fifty (50%) percent of his full business time and attention to NDC, at the
Epicure Location (subject to reasonable travel requirements imposed by NDC), at
such days and hours as shall be mutually agreed between NDC and Thal, but (a)
assuming Thal is not disabled or ill, Thal must be present at the Epicure
Location substantially at all times that Mitchell Thal shall not be present (and
if Mitchell Thal is no longer employed by NDC, Thal shall not be permitted to be
away from the Epicure Location for more than one (1) month at a time), and (b)
so long as Mitchell
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Thal shall be present at the Epicure Location, NDC and Thal shall reasonably
cooperate with one another to reconcile the interests of Thal to work
consecutive full days, on the one hand, and to be off work consecutive full days
and the interests of Thal and NDC to maximize the Epicure Business, on the other
hand, (iii) Thal shall not be entitled to vacation, sick or personal pay or
other benefits as may be afforded NDC "full time" employees (and expressly,
Section 6(A), (B) and (C) shall not be applicable to the Consulting Term), (iv)
in lieu of the compensation provided in Section 5 hereof, Thal shall be entitled
to the sum of $100,000 per annum (subject to increase or decrease, if (and only
if) NDC and Thal, agree in writing to a substantial change to the fifty (50%)
percent time worked), payable biweekly, and (iv) Thal shall be entitled to
reimbursement of actual expenditures incurred in the performance of his duties
hereunder if first approved by NDC. If NDC and Thal mutually agree to end this
Agreement at the end of Year 3, Thal shall not be entitled to any compensation
thereafter accruing, and if they do not so mutually agree, then except as
otherwise provided herein, he shall be entitled to the compensation provided in
this Section 3(B).
4 DUTIES OF THAL: Thal shall use his best efforts to perform his
duties hereunder, which shall be substantially similar to the duties performed
by Thal prior to entering into the Purchase Contract (which, Thal represents is
set forth on a schedule attached hereto and initialled by NDC and Thal, is
hereby made a part hereof), but which may also include such other duties
relating to the Epicure Business and/or other business of NDC as may be
reasonably requested by JFD and/or NDC from time to time. Thal shall not be
relocated from Miami, Florida, and Thal's duties shall be primarily situated at
the Epicure Location (although it is understood that Thal may be called upon
from time to time to travel as may be reasonably requested by JFD and/or NDC).
In carrying out his duties, Thal shall consult with NDC, and shall be guided in
all matters by NDC's policies, written or otherwise. Thal shall devote his full
business time, entire business skills, and best efforts to the conduct of the
affairs of the Epicure Business, JFD and NDC (subject to the conversion option
set forth in Section 3 hereof). Thal shall report to either NDC's chief
executive officer or chief operating officer. Upon the expiration or sooner
termination of this Agreement, Thal shall use his best efforts to ensure a
smooth and orderly transition for the Epicure Business.
5. COMPENSATION: NDC shall pay Thal an annual salary of $200,000,
payable in equal biweekly installments or otherwise according to the normal
payroll practices of NDC, for the Epicure Business.
6. VACATION AND OTHER BENEFITS:
(A) Vacation: Thal shall be entitled to paid vacation, sick leave
and unpaid personal leave, as follows:
(i) Paid Vacation Year 1: 1 week
Thereafter: 2 weeks per year
(ii) Paid sick leave None
(iii) Paid holiday or
"all purpose"
leave 5 days per year, as designated by
Thal from time to time, which may be
any day of the year subject to the
last paragraph of this Section 6(A)
(iv) Unpaid leave Year 1: 3 weeks
Thereafter: 2 weeks per year
Paid vacation, paid holiday/"all purpose" leave and unpaid leave shall be taken
by Thal at such time as shall not interfere with the
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operations of NDC (as coordinated jointly and reasonably by NDC and Thal), and
shall not be taken at such time as Mitchell Thal shall be away on vacation or
taking unpaid leave. Overlaps of up to two (2) weekdays attributable to illness
of either Thal or Mitchell Thal shall not be deemed a breach of this provision.
(B) Insurance: Thal shall be entitled to participate in NDC's
group health insurance plan. NDC shall pay 100% of the premiums therefor for
Thal or apply the dollar equivalent of such premiums to a health plan of Thal's
choice. The provisions of this Section 6(B) shall be subject to change from time
to time, as implemented by NDC on a company wide basis for other JFD senior
level managers; provided that if a group insurance program for him is not
available in Florida, then Thal shall receive the after-tax dollar equivalent of
the premium last paid for him under the NDC health plan in which he last
participated.
(C) Reimbursable Expenses: Thal shall be entitled to
reimbursement for travel and other certain costs and expenses incurred by Thal
in connection with the Epicure Business in accordance with the policies of NDC,
substantially the same (as applicable) to that afforded other JFD managers of
similar position, or otherwise as first approved by NDC. It is understood that
Thal shall be reimbursed for lowest available airfare (and not for first or
business class, except for flights in excess of 3 hours), and shall be
reimbursed for hotels equivalent to Hyatt, Hilton and Sheraton.
(D) Stock Option Plan: As of the Effective Date, Thal shall
receive a qualified stock option ("Option") for 35,000 shares of common stock
("Common Stock") of JFD under the terms of JFD's 1995 Amended and Restated Stock
Option Plan ("Option Plan"), at an exercise price per share equal to one hundred
and one (101%) percent of the fair market value of the Common Stock as
determined by the closing bid price for the Common Stock reported by the NASDAQ
National Market for the day immediately preceding the Effective Date. The Option
shall have a term of ten (10) years, and (i) as to 10,000 shares thereof, shall
vest as to one-third (1/3) of the shares subject to the Option on each of the
first, second and third anniversaries of the Effective Date, and (b) as to
25,000 shares thereof, shall vest as of the Effective Date. All other terms of
the Option shall be as set forth in the form of Incentive Stock Option Agreement
attached hereto as Exhibit A and made a part hereof.
(E) Other Benefits: Thal shall be entitled to one (1) free
parking space.
7. EARLY TERMINATION BY NDC:
(A) Termination by NDC: Thal's employment by NDC shall terminate
on the death of Thal or may be terminated by NDC at any time: (i) upon the
disability of Thal (as defined below); or (ii) for cause (as defined below) as
determined by NDC after ten (10) days' written notice of such cause is given
Thal where same is curable by Thal or immediately upon written notice where such
cause is not curable by Thal, the determination of whether or not the same is
curable being in the reasonable discretion of NDC; or (iii) upon the sale of the
company (as defined below); or (iv) without cause, after ten (10) days' written
notice. Notwithstanding anything contained herein to the contrary, if Thal is
terminated pursuant to subparts (iii) or (iv) above, Thal shall be entitled to
the compensation provided in Section 5 through the expiration of Year 3
(calculated at the rate of $200,000 per annum) and to the compensation provided
in Section 3(B) for Years 4 & 5 (calculated at the rate of $100,000 per annum),
and any unreimbursed expenses pursuant to Sections 3(B) and 6(C).
(B) Definitions: For the purposes of Section 7(A), the following
definitions shall apply:
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(i) the term "disability" shall mean (a) any
adjudication by a court of competent jurisdiction of insanity or incompetence,
or (b) any illness or injury which may cause the failure of Thal to perform the
usual and customary duties provided herein or contemplated hereby; provided that
such failure to perform has continued for a total of more than sixty (60) days
in any twelve (12) month period, or any consecutive period of forty-five (45)
days;
(ii) the term "cause" shall include (a) any willful
breach by Thal of the performance of any of his material duties pursuant to this
Employment Agreement (subject to Thal's appeal right to JFD's chief executive
officer); (b) any disclosure (other than in the normal pursuit of the business
of NDC) by Thal to any person, firm or corporation other than NDC, JFD, their
subsidiaries and affiliates of any Confidential Information (as defined in
Section 9(C)) or trade secret of NDC, JFD or any of their subsidiaries or
affiliates; (c) any attempt by Thal to secure any personal profit at the expense
of NDC or JFD; (d) the engaging by Thal in any business other than the business
of NDC, JFD or their subsidiaries or affiliates (and other than hobbies or
passive investments which do not conflict or interfere with the duties of Thal
or the business of NDC or JFD), and (e) the conviction of Thal for any felony
(provided however, if Thal shall be indicted for any felony, then, as of the
date of such indictment, at the discretion of NDC, Thal shall be placed on
indefinite leave, during which time Thal shall not be entitled to any
compensation or benefits, and if the indictment shall not be discharged within
three (3) months thereafter (or if Thal shall any time sooner not maintain his
innocence of such felony), such occurrence shall be deemed "cause"); and
(iii) the term "sale of the company" shall mean (a)
the sale by NDC of substantially all of the Epicure Business or NDC's assets to
a single purchaser or to a group of associated purchasers; (b) the sale,
exchange, or other disposition, in one transaction or series of related
transactions, of a majority of the outstanding common stock of NDC; (c) a bona
fide decision by the NDC to terminate the Epicure Business and liquidate its
assets; or (d) the merger or consolidation of NDC in a transaction in which
NDC's shareholders receive less than fifty (50%) percent of the outstanding
voting shares of the new or continuing corporation.
(C) Effect of Termination: Upon the termination of Thal's
employment pursuant to this Section 7, NDC and JFD thereafter shall have no
further obligation or liability whatsoever to Thal hereunder provided they are
not in default hereof, except for monies as provided in Section 5 hereof which
are then accrued and unpaid, and any then NDC approved unreimbursed expenses
that are reimbursable pursuant to Section 6 hereof, and any monies owed if and
as provided in Section 7(A), which shall be payable to Thal within fifteen (15)
days after such termination. The limitations contained in this Section 7(C)
shall not affect any vested rights under any separate employee benefit or
welfare plan or stock option plan in which he participates subject to and in
accordance with the provisions thereof.
8. EARLY TERMINATION BY THAL: Thal may terminate this Agreement "for
cause" only upon delivery of ten (10) days' written notice to NDC specifying the
grounds therefor, provided that within such ten (10) days NDC shall not have
cured the same. Grounds for termination "for cause" by Thal shall only be NDC's
and JFD's (i) willful failure after the aforesaid notice to materially perform
NDC's obligations hereunder (provided Thal is not in default hereof), or (ii)
relocation of Thal outside of Miami, Florida without Thal's consent, or (iii)
significant change in Thal's duties without Thal's consent. Upon the termination
of this Agreement pursuant to this Section 8, NDC and JFD thereafter shall have
no further obligation or liability to Thal hereunder, except for monies payable
as provided in Section 5 hereof through Year 3
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(had there not been termination, and provided such monies have not been
previously paid), monies payable as provided in Section 3(B) hereof for Years 4
& 5 (calculated at the per annum rate of $100,000, assuming there had not been
termination, and provided such monies have not been previously paid), and any
then unreimbursed expenses incurred pursuant to Sections 3(B) or 6(C) hereof.
Such monies shall be due and payable within fifteen (15) days after termination
by Thal, with the termination being in accordance with the terms hereof. The
limitations contained in this Section 8 shall not affect any vested rights under
any separate employee benefit or welfare plan or stock option plan in which he
participates subject to and in accordance with the provisions thereof.
9. NON-COMPETE, NON-DISCLOSURE AND NON-SOLICITATION:
(A) Definitions: For the purposes of this Section 9, the
following terms shall have the meanings ascribed to them below: (i) "Covenant
Term" shall mean the period beginning on the Effective Date and ending five (5)
years from the earlier termination of this Agreement pursuant to Sections 3(A)
or 8; and (ii) "Covenant Territory" shall mean (a) any state other than
California, Florida, New York and Illinois in which Buyer may conduct a grocery
or restaurant business prior to the operation of such business by Thal, and (b)
the states of California, Florida, New York and Illinois.
(B) Non-Compete: During the Covenant Term, provided this
Agreement has not been terminated by Thal pursuant to Section 8 hereof and
provided this Agreement has not been wrongly terminated by NDC in violation of
this Agreement, Thal covenants and agrees that, directly or indirectly, he shall
not own (except for an interest of one (1%) percent or less, or five (5%)
percent in the case of a publicly traded company), operate, manage or consult to
any (i) grocery store or supermarket or (ii) Jewish style delicatessen
restaurant or Jewish style delicatessen restaurant chain or (iii) bagel
restaurant or bagel restaurant chain, or (iv) any business, other than a "white
tablecloth" restaurant or fast food (but non-bagel) restaurant, that sells food
and/or beverages for on or off premises consumption, in any case of (i), (ii),
(iii) or (iv) having any operation in the Covenant Territory.
(C) Non-Disclosure of Information: Except as required in his
duties hereunder, Thal will not, during the Covenant Term, directly or
indirectly, use, disseminate or disclose any Confidential Information (as
defined below) to any person or entity for any reason or purpose whatsoever.
Upon the expiration or sooner termination of his employment with NDC, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including all copies thereof, then in Thal's
possession, whether prepared by him or others, shall be delivered to NDC, and is
and shall be deemed the exclusive property of NDC. "Confidential Information"
means any and all information disclosed to Thal or known by Thal as a
consequence of or through his employment with NDC or the Epicure Business (prior
or subsequent to the purchase thereof by NDC), not generally known in the
industry in which NDC or JFD is or may become engaged or which has previously
been disseminated to the general public by a third party, and includes without
limitation, all "Property" purchased by NDC pursuant to the Purchase Contract
and all "Confidential Information" as defined therein. All Confidential
Information held by Thal shall be held in a fiduciary capacity for NDC. As used
herein, the term "trade secret" shall have the meaning ascribed to it in Fla.
Stat. Setion 812.081(1)(c).
(D) Non-Solicitation. During the Covenant Term, Thal covenants
and agrees that, directly or indirectly, he shall not (i) induce or encourage,
or attempt to, any employee, supplier or customer to terminate his or her
relationship with NDC, JFD or the
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Epicure Business, (ii) employ or attempt to employ any employees of the Epicure
Business, employed at any time during the Covenant Term.
(E) Limitations on Scope. In the event that the provisions of
this Section 9 should ever be deemed to exceed the scope of business, time or
geographic limitations permitted by applicable law, or otherwise shall be deemed
unenforceable by any law, then such provisions shall be and are hereby reformed
to the maximum scope, time, geographic or other limitations permitted by such
applicable law. Thal hereby expressly agrees that this Section 9 is a material
and substantial part of this Agreement and that (i) the geographic limitations
are reasonable; (ii) the time limitations are reasonable; and (iii) after
reviewing the presumptions identified in Fla. Stat. Setion 542.335(1), the
covenants are not made for the purpose of eliminating competition per se and are
reasonably related to a legitimate business interest, as provided in all of Fla.
Stat. Setion 542.335(1)(b). In light of the direct benefit that Thal has
received from the sale of assets pursuant to the Purchase Contract, Thal is
intended to be characterized as a seller of all or a part of the assets of a
business, as provided in Fla. Stat. Setion 542.335(1)(d)3 [and it is not
intended that these covenants come within the ambit of Fla. Stat. Setion
542.335(1)(d)1]. Additionally, because the sale of assets pursuant to the
Purchase Contract expressly included the sale of trade secrets and because this
Agreement shall require Thal to learn and utilize NDC and/or JFD trade secrets,
the parties hereto further intend that the provisions of Fla. Stat. Setion
542.335(1)(e) shall apply.
(F) NDC/JFD Remedies: Because a breach of the provisions of this
Section 9 could not be adequately compensated by money damages, NDC and JFD
shall be entitled, in addition to any other right and remedy available to it, to
an injunction restraining such breach or a threatened breach, and in either case
no bond (if permitted by law) or other security shall be required in connection
therewith. Thal hereby consents to the issuance of such injunction. Nothing
herein shall be construed as prohibiting NDC or JFD from pursuing any other
remedies available to it for such breach or threatened breach, consistent with
the provisions of Section 10(G).
(G) Separate Covenants. NDC, JFD and Thal intend that the
covenants contained in this Section 9 shall be construed as a series of separate
covenants (with identical terms except geographic coverage) for each county
specified herein.
10. MISCELLANEOUS:
(A) Confidentiality: The terms and provisions of this Agreement
shall be kept in complete confidence by Thal. Thal acknowledges that JFD is a
public company with listed securities, and improper disclosure of the contents
of this Agreement or related information could have an adverse effect on JFD and
its securities holders, and may constitute a violation of law.
(B) Entire Agreement/No Waiver: This Agreement constitutes the
entire agreement between the parties hereto and may not be changed, modified,
extended, terminated or discharged orally, but only by an agreement in writing,
signed by authorized officers of JFD, NDC (other than Thal) and Thal. There
shall be no third party beneficiaries arising out of this Agreement. The parties
acknowledge that they or parties affiliated with them are also parties to a
certain Lease of even date herewith ("Lease") respecting the Epicure Location.
No default by either party under the Lease shall be deemed a default hereunder;
nor shall any such default give rise to setoff rights or other remedies under
this Agreement.
(C) Governing Law/Jurisdiction: The Agreement shall be construed
and enforced in accordance with the internal laws of the
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State of Florida. Venue shall lie in Dade County, Florida.
(D) Successors and Assigns: Subject to other provisions of this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, personal
representatives, successors and assigns. However, this Agreement shall not be
assignable by Thal. Notwithstanding the foregoing, upon the death or
adjudication of incompetence of Thal, any sums then due and unpaid to Thal shall
be paid to Thal's personal representative or other legal guardian, as
applicable. In the event of any assignment of this Agreement by NDC, neither JFD
nor NDC shall be relieved of its obligations hereunder.
(E) Notices: All notices or other communications required or
permitted hereunder shall be in writing and shall be either personally delivered
or sent by Federal Express or other national overnight air courier with
receipted delivery, as follows:
TO JFD and
NDC: Jerry's Famous Deli, Inc.
12711 Ventura Boulevard, Suite 400
Studio City, California 91604
Attention: Isaac Starkman
COPY TO: Katz, Barron, Squitero, Faust & Berman, P.A.
2699 South Bayshore Drive, 7th Floor
Miami, Florida 33l33
Attention: Howard L. Friedberg, Esq.
TO THAL: Mitchell Thal
3100 Prairie
Miami Beach, Florida 33140
or in each case to such other address as shall have last been furnished by like
notice. Each notice or communication shall be deemed to have been given as of
the date so delivered.
(F) Attorneys' Fees: In the event of a dispute hereunder or in
the event the parties hereto shall employ an attorney to enforce or defend any
of the provisions hereof, the parties hereto agree that the prevailing party
shall be entitled to reasonable attorneys' fees and costs (including those
incurred at all levels and at arbitration) from the non-prevailing party.
(G) Arbitration: Except for matters involving equitable relief,
any claims or disputes arising out of or relating to this Agreement (including
without limitation, those pertaining to "cause" as provided in Sections 7 & 8
hereof) shall be settled by binding arbitration conducted in Dade County,
Florida in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, and judgment upon the award entered by
the arbitrator(s) may be entered, in any court having jurisdiction thereof.
Neither party's right to file a lawsuit seeking an injunction or other equitable
relief or such party's right to injunctive or other equitable relief is subject
to arbitration or to the provisions of this Section.
(H) No Partnership: This Agreement is solely an agreement for
employment, and is not and shall not be construed in any way as a partnership
agreement or any derivation thereof, and further, Thal hereby expressly
acknowledges that he shall not be entitled to any rights or remedies arising out
of this Agreement of whatsoever kind or nature which would or may be afforded to
a partner or joint venturer under the laws of the State of Florida, or
otherwise.
(I) Authority of JFD: JFD is duly organized, validly existing and
in good standing under the laws of the State of California and has all requisite
power and authority to enter into
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this Agreement and to consummate the transactions contemplated
hereby.
(J) Authority of NDC: NDC is duly organized, validly existing and
in good standing under the laws of the State of Florida and has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
11. GUARANTY BY JFD: NDC and JFD represent to Thal that NDC is a
wholly owned subsidiary of JFD. JFD acknowledges that this Agreement directly
benefits JFD. JFD agrees unconditionally and fully to guarantee to Thal the
prompt payment and performance of each and every obligation of NDC under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
WITNESSES:
JERRY'S FAMOUS DELI, INC., a
California corporation
- --------------------------
/s/ ISAAC STARKMAN
- -------------------------- ----------------------------------------
By: Isaac Starkman
Chief Executive Officer
NATIONAL DELI CORPORATION, a
Florida corporation
- --------------------------
/s/ ISAAC STARKMAN
- -------------------------- ----------------------------------------
By: Isaac Starkman
Chief Executive Officer
- --------------------------
/s/ HARRY THAL
- -------------------------- ----------------------------------------
HARRY THAL
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