EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 16th day of
June, 1998, by and between Sam Yong ("Employee") and Au Bon Pain, Co., Inc., a
Delaware corporation with a principal place of business in Boston, Massachusetts
(the "Company").
WHEREAS, the Company wishes to employ and engage the services of the
Employee in an executive capacity for the Company, upon the terms, conditions
and provisions of this Agreement; and
WHEREAS, the Employee desires to provide services to the Company in
accordance with the terms, conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. Definitions
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For all purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1 unless the context clearly requires
otherwise:
(a) "Base Salary" means the Employee's annualized base salary set forth in
Section 3 of this Agreement, and such increases thereto as may be established by
the Company from time to time. In no event, however, shall Employee's Base
Salary be less than the amount set forth in Section 3 of this Agreement. "Base
Salary" shall not include any bonus, incentive compensation or employee
benefits;
(b) "Benefits" means all employee benefits provided to the Employee by the
Company, including medical, dental, long-term disability, life insurance, and
such other benefits as may be provided from time to time by the Company
generally to its employees;
(c) "Incentive Compensation" means additional compensation provided to the
Employee by the Company during the term of this Agreement, if any, other than
Base Salary and Benefits;
(d) "Severance" means payments made by the Company to the Employee after
termination of employment, pursuant to this Agreement, at the rate of the
Employee's annualized Base Salary (and car allowance, if any) as of the date of
Employee's termination. Severance is payable, commencing after the last day of
active employment with the Company, on a weekly basis in substantially equal
installments following Employee's termination, in such increments and for such
period(s) of time designated in
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this Agreement ("Severance Period"). Severance shall not include any bonuses or
other Incentive Compensation. Except as set forth in the immediately preceding
sentence, Severance shall also include the continuation of Employee's Benefits
existing at the time of Employee's termination for the Severance Period.
Employee shall be responsible for making all required contributions to continue
Benefits during the Severance Period on the same basis as existed at the time of
the Employee's termination. Severance shall be reduced (dollar for dollar) by
any compensation and benefits Employee receives or earns during the Severance
Period from any source other than the Company including, without limitation,
salary, employee benefits, consulting fees, income from self-employment or
otherwise;
2. Employment
----------
The Company agrees to employ the Employee to render services to the Company
in an executive capacity, consistent with the typical duties and
responsibilities of an Executive Vice President with the Company, and to
maintain the Employee's title as President, Au Bon Pain Brands. Employee
understands and agrees that Employee's duties and responsibilities may change
from time to time, in the sole discretion of the Company. Effective as of the
date hereof, Employee hereby accepts such employment subject to the terms and
conditions set forth herein. Employee agrees to devote his full attention, best
talents and abilities to the job and to perform faithfully his duties and
responsibilities hereunder.
3. Compensation
------------
The Company shall pay Employee a Base Salary at the rate of $300,000.00
annualized, Incentive Compensation, and Benefits, subject to federal and state
withholdings and customary payroll deductions.
4. Term
----
Unless terminated as provided in Section 5, or as otherwise provided in
this Agreement, this Agreement shall continue for a two-year period from the
effective date of this Agreement; thereafter, this Agreement shall automatically
renew for additional one-year periods, unless either party notifies the other in
writing of its intent not to renew this Agreement at least thirty (30) days
prior to its expiration. In the event the Employee gives notice of intent not to
renew this Agreement, the Employee shall not be entitled to Severance. In the
event the Company gives notice of intent not to renew this Agreement, at the
expiration of the Agreement the Employee shall be entitled to fifty-two (52)
weeks' Severance.
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5. Termination
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(a) Termination for Cause
---------------------
The Company may terminate Employee's employment at any time for cause, upon
written notice specifying the reasons. As used herein, the term "cause" shall
mean:
(i) The commission by Employee of (A) any act of embezzlement, fraud,
larceny, theft, or (B) other willful misconduct or gross negligence
in connection with the performance of Employee's duties which
adversely affects the affairs of the Company;
(ii) Employee's conviction of a felony, or conviction of a misdemeanor
involving moral turpitude;
(iii) A material breach of the terms of this Agreement which continues
uncured for fifteen (15) days after the Company has given written
notice to the Employee specifying in reasonable detail the material
breach.
(b) Termination Without Cause
-------------------------
Notwithstanding any other provision of this Agreement, the Company may
terminate Employee's employment, without cause, at any time, for any reason,
effective upon thirty (30) days' written notice to the Employee. In the event of
a termination without cause, the Employee shall be entitled to fifty-two (52)
weeks' Severance.
(c) Resignation
-----------
The Employee may at any time during the term of this Agreement resign
employment, effective upon ninety (90) days' written notice to the Company, or
upon such shorter period of notice as the parties may agree in writing. Upon
such resignation, the Employee shall not be entitled to any Severance, and,
except as otherwise specifically set forth herein, the obligations of the
Company to the Employee under this Agreement shall terminate upon the effective
date of such resignation. Employee agrees to continue to perform his duties
hereunder, and otherwise assist the Company in an orderly transition, during
such ninety-day period.
(d) Disability
----------
The Company may terminate Employee's employment if, at any time during the
term of this Agreement, the Employee shall become disabled so that he is unable
to perform the Employee's regular duties of employment, with reasonable
accommodation, for a period of ninety (90) days in the aggregate during any
180-day period. The determination of the Employee's disability for purposes of
this Section 5(d) shall be made
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by a qualified physician acceptable to both parties. In the event that the
Company and the Employee are unable to agree upon a qualified physician, each
party shall select a qualified physician, and in the event those two physicians
are unable to agree upon a determination as to the Employee's disability, a
third neutral physician ("Neutral Physician") acceptable to the parties shall be
selected. The determination of disability by the Neutral Physician shall be
final and binding for purposes of this Agreement. In the event this Agreement is
terminated pursuant to this Section 5(d), the Employee shall be entitled to
fifty-two (52) weeks' Severance. Such Severance shall be offset dollar for
dollar by any payments made in the aggregate to the Employee under the Company's
existing Salary Continuation and Long-Term Disability Plan(s).
(e) Death
-----
This Agreement and all obligations of the Company hereunder shall terminate
upon the death of the Employee. In the event of a termination upon the death of
the Employee, monies or compensation owed by the Company to the Employee up to
the date of termination shall be paid to the Employee's estate or designee.
(f) Accrued Vacation
----------------
All accrued vacation owed by the Company to the Employee upon termination
of employment shall be included in the Employee's last paycheck following active
employment.
6. Confidential Nature of this Agreement
-------------------------------------
Employee agrees to keep confidential the terms of this Agreement. A
violation of this provision shall entitle the Company to terminate this
Agreement immediately, for cause, as set forth in Section 5(a)(iii).
Notwithstanding the above, the Employee may disclose the terms of this Agreement
to his/her immediate family, bankers, accountants, attorneys, and other
financial advisers, the Internal Revenue Service, the Massachusetts Department
of Revenue, in the event such disclosure is required by prospective employers or
others to review the restrictive covenants contained herein, in the event of
litigation or arbitration involving this Agreement, or in the event that such
disclosures shall be compelled by law.
7. Confidential and Proprietary Information
----------------------------------------
(a) The Employee understands and acknowledges that in the course of
employment with the Company, Employee will have access to confidential and
proprietary information of the Company and its Affiliates (which shall mean
entities controlling, controlled by or under common control with the Company,
including without limitation, Saint Louis Bread Company, Inc. and its
Affiliates) which constitute valuable, special and unique assets of the Company
and its Affiliates. For purposes of this Agreement, such
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confidential and proprietary information shall include, without limitation, the
following: trade secrets; operating techniques; procedures and methods; product
specifications; customer lists; account information; price lists; discount
schedules; budgets; strategic plans; financial and other projections;
correspondence with customers, vendors, lenders, employees, partners or others;
drawings; software; leads from suppliers; marketing techniques; procedures and
methods; employee lists; internal financial reports of the Company and its
Affiliates; sourcing lists; and recruiting lists (collectively, "Confidential
Information"), but shall not include any information which is commonly known or
in the public domain.
(b) The Employee agrees that during the term of this Agreement and at any
time thereafter, Employee will not, without the authorization of the Company:
(i) disclose any Confidential Information to any person or entity for any
purpose whatsoever; or (ii) make use of any Confidential Information for
Employee's own purposes or for the benefit of any other person or entity, other
than the Company and its Affiliates.
(c) The Employee agrees that upon the request of the Company or upon
termination of employment, Employee shall return to the Company all documents or
other materials, including electronic or computerized data, containing or
relating to Confidential Information, along with all other Company property.
8. Restrictive Covenant
--------------------
The Employee shall not, other than in the course of employment with the
Company, directly or indirectly, either as an individual, employee, partner,
officer, owner, director, shareholder, advisor or consultant, or in any other
capacity whatsoever, on behalf of any person, firm, corporation, partnership or
entity:
(a) during the term of this Agreement, and for one (1) year after its
termination, for whatever reason, be employed by or retained as a consultant or
advisor to a competitive entity in the bakery/coffee/deli business. For purposes
of this Agreement, "competitive entity" includes, without limitation, the
following companies doing business as: Paradise Bakery, Inc.; Starbucks;
Bruegger's Bagel Bakery; Finagle-A-Bagel; Le Boulangerie; Great Harvest;
Einstein's/Noah's; Corner Bakery; Big Sky; AFC Enterprises, Inc. and their
respective parents, subsidiaries, franchisees, affiliates, successors or
assigns. Additionally, "competitive entity" shall include, without limitation,
any company which generates in the aggregate more than 50% of its revenues from
the retail sales of baked goods and coffee, and their respective parents,
subsidiaries, franchisees, affiliates, successors or assigns. Notwithstanding
the above, the direct or indirect ownership of one percent (1%) or less of the
stock of a competitive entity whose shares are listed on a national securities
exchange or are quoted on the National Association of Securities Dealers
Automated Quotation System or so-called Bulletin Board shall not, in and of
itself, be deemed to be a violation of this Section 8(a);
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(b) during the terms of this Agreement and for one (1) year after its
termination, for whatever reason, recruit, solicit, hire, or assist any other
person or party in recruiting, soliciting, or hiring any employee of the Company
or any of its Affiliates or any of their respective franchisee.
The Company may, in its sole discretion, waive enforcement of any of the
provisions of this Section 8, which waiver shall be evidenced solely by the
execution and delivery to the Employee of a written document setting forth the
terms of such waiver, executed by an authorized representative of the Company.
9. Enforcement
-----------
Employee agrees and acknowledges that a violation of Sections 7 or 8 of
this Agreement shall entitle the Company to terminate this Agreement
immediately, which termination shall be conclusively deemed to be a termination
for cause, as set forth in Section 5(a) hereunder. In the event of a violation
of Sections 7 or 8 of this Agreement, any further Severance, salary
continuation, Benefits or other future compensation otherwise owed to the
Employee pursuant hereto shall be forfeited.
The Employee acknowledges and agrees that the Company's remedies at law for
a breach of Sections 7 or 8 of this Agreement are inadequate and that the harm
caused thereby is irreparable. The Employee expressly agrees that in the event
of a violation of Sections 7 or 8 of this Agreement, the Company shall be
entitled to equitable relief enforcing the terms of this Agreement, including
without limitation, specific performance, a temporary restraining order,
preliminary injunction or permanent injunction to prevent any breach or
attempted breach thereof. The provisions of Sections 7, 8 and 9 shall survive
the termination of this Agreement, in addition to any others which may survive
pursuant to the terms of this Agreement.
10. Severability
------------
If any provision of this Agreement including, without limitation,
Sections 7, 8 or 9 hereof, is declared or found to be illegal, unenforceable,
void, overbroad, or unreasonable in scope, territory, or duration, in whole or
in part, then both parties will be relieved of all obligations arising under
such provision, but only to the extent it is illegal, unenforceable, void,
overbroad, or unreasonable in scope, territory or duration. The intent and
agreement of the parties to this Agreement is that this Agreement will be deemed
amended by modifying any such illegal, unenforceable, void, overbroad or
unreasonable provision to the extent necessary to make it legal and enforceable
while preserving its intent, or if such is not possible, by substituting
therefor another provision that is legal, enforceable and achieves the same
objectives. The foregoing notwithstanding, if the remainder of this Agreement
will not be affected by such declaration or finding and is capable of
substantial performance, then each provision not so affected will be enforced to
the extent permitted by law.
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11. Arbitration
-----------
Any controversy or claim arising out of or relating to this Agreement or
Employee's employment with the Company, except for claims of violation by the
Employee of Sections 7 and 8 hereof which may be enforced by the Company in a
court of competent jurisdiction pursuant to Section 9 hereof, shall be settled
exclusively by binding arbitration before a single arbitrator in the City of
Boston, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The provisions hereof shall be a complete bar and
defense to any suit, action or proceeding instituted by the Employee in any
federal, state or local court or before any administrative tribunal with respect
to any matter which is arbitrable as herein set forth. This Section shall
survive the termination or expiration of this Agreement. Nothing herein
contained shall be deemed to give any arbitrator any authority, power, or right
to alter, change, amend, modify, add to, or subtract from any provisions of this
Agreement. The arbitrator shall have no authority to award punitive damages or
attorney's fees to any party. The decision of the arbitrator shall be final and
conclusive. Judgment on an award rendered by the arbitrator may be entered in
any court of competent jurisdiction.
12. No Conflicting Agreements
-------------------------
Employee hereby represents and warrants that neither the entry into this
Agreement nor its performance by Employee will conflict with or result in a
breach of the terms, conditions or provisions of any other agreement or other
obligation of any nature to which Employee is a party, or by which he is
otherwise bound, including, without limitation, any other employment agreement,
non-competition agreement, or confidentiality agreement.
13. Governing Law
-------------
The terms hereof shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to its conflict of laws rules which may otherwise require the application
of the law of another jurisdiction.
14. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
Company and the Employee and their respective successors, assigns, heirs, legal
representatives, executors and administrators.
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15. Notices
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(i) All notices to the Employee shall be addressed to Employee at:
Sam Yong
P.O. Box 812903
Wellesley, MA 02181-0027
or to such other place(s) as may be designated by written notice to the Company.
(ii) All notices to the Company shall be addressed to the Company at:
19 Fid Kennedy Avenue
Boston, MA 02210
Attention: C.F.O.
With copies to:
Walter D. Wekstein, Esq.
Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110-2811
or to such other place(s) as may be designated by written notice to Employee.
(iii) Notice shall be sufficient if given by hand or by certified mail,
postage prepaid, return receipt requested, addressed to the party at its address
described above. Unless otherwise notified in writing, each party shall direct
all sums payable to the other party at its address for notice purposes.
16. Headings
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The captions and headings in this Agreement are for convenience and
reference only, and they shall in no way be held or deemed to define, modify or
add to the meaning, scope or intent of any provision of this Agreement.
17. Entire Agreement
----------------
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, written or oral on the
subject matter hereof including, but not limited to, offer letters, employment
letters, and agreements concerning severance pay.
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18. Amendments
----------
This Agreement may be modified only by written agreement signed by both the
Employee and the Company.
19. Waiver
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The failure of any party at any time to require the performance of any
provision(s) hereof shall in no manner affect the right(s) of such party at a
later time to require the performance of said provision(s), and shall not be
deemed a waiver of any obligations hereunder.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement under seal, as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Ronald Shaich Date: June 16, 1998
Witness: /s/ Mariel Clark Date: June 16, 1998
SAM YONG
/s/ Sam Yong Date: June 16, 1998
Witness: _________________________ Date: _____________________