Employment Agreement

Amendment to Agreement

 

 

 

EXHIBIT 10.07

                                      2001

                              EMPLOYMENT AGREEMENT

 

                     EMPLOYMENT  AGREEMENT,  dated as of the 1st day of April,

2001 (the "Effective Date"), by and among BENIHANA INC., a Delaware corporation

(the "Company") and JOEL A. SCHWARTZ (the "Executive").

 

                     The Executive has heretofore for many years been employed

by the Company and by its  predecessor,  Benihana  National  Corp.,  as its

President and Chief Operating Officer and, since 1998, as its President and

Chief Executive Officer. The Company and the Executive desire to enter into an

employment agreement which will set forth the terms and conditions upon which

the Executive shall serve in the employ of the Company and upon which the

Company shall compensate the Executive and to replace and supersede the

Employment Agreement (the "Prior Agreement"), dated as of May 15, 1995 and

amended as of December 11, 1997, September 1, 1998 and January 25, 2000, between

the Executive and the Company.

 

                     NOW THEREFORE, in consideration of the premises and of the

mutual covenants hereinafter set forth, the parties hereto have agreed, and

do hereby agree, as follows:

 

                     1.   EMPLOYMENT TERM

 

                               1.1 The Company will employ the  Executive in its

business and the  Executive  will work for the Company as President and Chief

Executive Officer for a term commencing as of the Effective Date and continuing

until March 31, 2006. Executive also agrees to serve as director of the Company

and as an officer and director of any subsidiary, if so elected. Employment

Period shall mean the term hereof. Executive may terminate this Agreement upon

not less than three months prior written notice to the Company in the event that

Executive would be required, in order to perform his services hereunder, to move

his principal residence from the metropolitan Miami area.

 

                               1.2 The term "Company" as used in this Agreement

shall be deemed to include any and all present and future  subsidiaries  and

affiliates of the Company

 

                     2.   DUTIES

 

                               2.1 During the Employment Period, the Executive

shall perform the duties of President  and Chief  Executive  Officer of the

Company and such further executive duties consistent with such position as

shall, from time to time, be reasonably delegated or assigned to him by the

Board of Directors of the Company consistent with the Executive's abilities.

 

<PAGE>

 

                     3.   DEVOTION OF TIME

 

                               3.1 During the Employment Period, the Executive

shall expend  substantially  all of his working time for the Company;  shall

devote his best efforts, energy and skill to the services of the Company and the

promotion of its interests; and shall not take part in activities detrimental to

the best interests of the Company.

 

                     4.   COMPENSATION

 

                               4.1 In respect of services to be  performed by

the  Executive  during the  Employment  Period,  the Company  agrees to pay the

Executive an annual salary of Three Hundred thirty thousand ($300,000) Dollars

("Basic Compensation"), payable in accordance with the Company's customary

payroll practices for executive employees.

 

                               4.2 The Basic Compensation shall be increased by

an amount  established  by reference to the "Consumer  Price Index for Urban

Wage Earners and Clerical Workers, New York, New York- Northern New Jersey area

published by the Bureau of Labor Statistics of the United States Department of

Labor (the "Consumer Price Index"). The base period shall be the month ended

December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month

of December in any year, commencing in 2001, is greater than the Consumer Price

Index for the Base Period, Basic Compensation shall be increased, commencing on

April 1 of the next following year, to the amount obtained by multiplying Basic

Compensation by a fraction, the numerator of which is the Consumer Price Index

for the month of December of the year in which such determination is being made

and the denominator of which is the Consumer Price Index for the Base Period.

 

                               4.3 The Executive shall also be entitled to such

additional increments and bonuses as shall be determined from time to time

by the Board of Directors of the Company.

 

                               4.4 If during the term hereof Executive owns any

options to purchase securities of the Company which securities are publicly

traded and which options were granted to him in connection with his service as

an employee, officer or director of the Company, the Executive shall have the

right at any time after a "Change in Control", as defined in Section 7.1 to

cause the Company to repurchase such options from him at a purchase price equal

to the difference between (i) the closing price of the appropriate security of

the Company (if traded on the New York or American Stock Exchange or quoted in

the NASDAQ National Market) or the average between the closing bid and asked

prices (if traded on the over-the-counter market) on the date immediately prior

to the date on which Executive exercises such right and (ii) the exercise price

of such option; provided however, that in no fiscal year of the Company shall

the aggregate purchase price of such options exceed five percent (5%) of the

total stockholders equity (net worth) of the Company as shown on its audited

financial statements for the fiscal year immediately preceding the year in which

such right is exercised. Such right shall be exercised by Executive giving the

Company written notice thereof and the purchase and sale shall be consummated

not more than ten (10) business days after receipt by the Company of the notice

of exercise.

<PAGE>

 

 

                     5.   USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES

 

                               5.1 The Company shall pay directly, or reimburse

the Executive,  for all other  reasonable and necessary  expenses (other than

the automobile expenses described in Section 5.2) and disbursements incurred by

him for and on behalf of the Company in the performance of his duties during the

Employment Period upon submission of vouchers or other evidence thereof in

accordance with the Company's usual policies of expense reimbursement.

 

                               5.2 In addition to the  reimbursement described

in  Section 5.1,  Executive  shall  receive an allowance of $300 per month for

automobile expenses, including lease costs or purchase price, gasoline and oil

and garaging.

 

                     6.   DISABILITY OR DEATH

 

                               6.1 If, during the Employment Period, the

Executive shall die, the Company shall pay to such person or persons as

Executive shall from time to time designate in writing as the beneficiary of

such payment, or, in the absence of such designation, to Executive's estate,

("Beneficiary") the amount of Three Hundred and Fifty Thousand ($350,000)

Dollars less the amount of any insurance on Executive's life which has been

purchased by the Company for the payment to the Beneficiary. Such payment shall

be made in a lump sum within Ninety (90) days of the death of the Executive.

 

                               6.2 In the event Executive's employment hereunder

shall  terminate  because  Executive  has  incurred  a  "Disability",  as

hereinafter defined, then there shall be paid to Executive the amount of "Long

Term Compensation" set forth in Section 9. In such case such amount shall be

paid to Executive in Sixty (60) equal monthly installments. Such payments shall

commence on the first day of month next following such termination of

employment. In the event Executive shall suffer an event which might reasonably

be considered a Disability, either the Company or the Executive (or the

Executive's legal representative) shall have the right to give to the other

party written notice of such termination on 15 days notice. In the event the

parties shall in good faith disagree on whether Executive is suffering a

Disability, final determination shall be made by a doctor reasonable acceptable

to both parties. "Disability" shall mean the inability of Executive, for a

continuous period of more than twelve (12) months, to perform substantially all

of his regular duties and carry out substantially all of his responsibilities

hereunder because of physical or mental incapacity. The Company shall have the

right to have Executive examined by a competent doctor for purposes of

determining his physical or mental incapacity.

 

                               6.3 The  obligations  of the Company  under

Section 6.2 may be satisfied, in whole or in part, by payments to the Executive

under disability insurance provided by the Company, and under laws providing

disability benefits for employees.

<PAGE>

 

 

                     7.   CHANGE IN CONTROL

 

                               7.1 In the event at any time after the Effective

Date,  a majority of the Board of  Directors  is composed of persons who are

not "Continuing Directors", as hereinafter defined, which event is defined to

mean a "Change in Control", Executive shall have the option, to be exercised by

written notice to the Company, to resign as an employee and terminate this

Agreement, effective as of such date specified in the notice of exercise and

immediately upon such termination to receive payment of a sum equal to the

product of (A) the Basic Compensation in effect on the date of such termination

multiplied (B) by the number of years (both full and partial) remaining in the

term hereof had such termination not occurred. The payment to be made upon the

exercise of the option by the Executive in accordance with the provisions of the

preceding sentence is defined as the "Severance Payment". The Severance Payment

shall be made to Executive not later than twenty (20) days after the date

designated by the Executive as the date upon which Executive's resignation as an

employee and termination of his Employment is to be effective. The Severance

Payment shall constitute liquidated damages and not a penalty, and Executive

shall not be obligated to seek employment to mitigate his damages; nor shall any

compensation the Executive receives from any party subsequent to such

termination be an offset to the amount of the Severance Payment.

 

                               7.2  "Continuing  Directors"  shall mean (i) the

directors of the Company at the close of business on April 1, 2001,  and (ii)

any person who was or is recommended to (A) succeed a Continuing Director or (B)

become a director as a result of an increase in the size of the Board, in each

case, by a majority of the Continuing Directors then on the Board.

 

                               7.3 In the event that payments to Executive under

this Section 7, plus payments made under Section 9 on account of a Change

in Control, plus any other payments or other benefits made by the Company to

Executive on account of a Change in Control would, in the opinion of tax counsel

selected by the Company and reasonably acceptable to the Executive ("Tax

Counsel"), be subject, in whole or in part, to the excise tax (the "Excise Tax")

imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the

"Code"), as determined as provided below, the total amount of such payments

shall be reduced (with the Executive having the option as to which payments are

to bear the burden of such reduction) until no portion of such payments would be

subject to the Excise Tax. For the purpose of this provision, (i) only the

portion of such payments which in the opinion of Tax Counsel constitute a

"parachute payment" within the meaning of Section 280G(b)(2) of the Code shall

be taken into account and (ii) such payments shall be reduced only to the extent

necessary so that such payments would not be subject to the Excise Tax, in the

opinion of Tax Counsel.

<PAGE>

 

 

                     8.   TERMINATION OF EMPLOYMENT WITHOUT CAUSE

 

                     Upon any termination of the Executive's employment without

"Cause" as hereafter defined, the Executive shall be entitled to receive an

amount computed in the same manner as the Severance Payment not later than 20

days after any such termination. This payment shall constitute liquidated

damages and not a penalty, and Executive shall not be obligated to seek

employment to mitigate his damages; nor shall any compensation the Executive

receives from any party subsequent to such termination be an offset to the

amount of such payment. As used herein, the term "Cause" shall mean:(i)

Executive's deliberate and intentional refusal (except by reason of incapacity

due to mental or physical illness or disability) to comply with the provisions

of Section 3.1 of this Agreement relating to the time and effort to be devoted

by the Executive to the business and affairs of the Company after demand for

performance by the Company that specifically identifies the manner in which the

Company alleges the Executive has not performed his duties, (ii) the Executive's

proven dishonesty with respect to the Company, disloyalty, Executive's gross

negligence or willful misconduct which, in any case, results in demonstrable

material harm to the Company, (iii) the breach by the Executive of his covenant

not to compete contained in Section 10.4 hereof, (iv) the continuing breach of

any of the other covenants on the Executive's part herein set forth resulting

in, or which may reasonably be expected to result in a substantial adverse

effect on the Company, or (v) Executive's conviction of a crime involving moral

turpitude.

 

                     9.     LONG TERM COMPENSATION

 

                     In recognition of Executive's many years of service to the

Company and its predecessors, in the event Executive's employment with the

Company is terminated (i) involuntarily during the term of this agreement other

than for Cause in accordance with Section 8, (ii) as a result of a Change of

Control in accordance with Section 7, (iii) as a result of Executive's incurring

a Disability as contemplated by Section 6.2 or (iv) as a result of the failure

of the Company and Executive to reach agreement on a renewal, extension or

replacement of this Agreement upon expiration of the term hereof, the Company

shall pay Executive, as additional long term compensation, an amount equal to

Five (5) times Executive's Basic Compensation in effect as at the time of such

termination of employment. Such payments shall be in addition to the payments

contemplated by Sections 7 or 8, respectively. In the case of termination by the

Company for reasons other than Cause or termination on account of a Change in

Control, such payment shall be made in two installments - 50% at the time of

termination and the remaining 50% on the first anniversary of such date. In the

case of termination on account of Disability or termination because of the

failure to renew, extend or replace this Agreement, such payment shall be made

in 60 equal monthly installments. Nothing in this provision shall imply any

obligation of Executive to enter into an extension, renewal or replacement of

this Agreement or to be reasonable in negotiating any such extension, renewal or

replacement.

<PAGE>

 

 

                     10.   CONFIDENTIAL INFORMATION; INVENTIONS;

                           RESTRICTIVE COVENANT

 

                               10.1 The Executive agrees not to divulge, furnish

or make available to anyone (other than in the regular course of business of

the Company) any knowledge or information with respect to the Company, or with

respect to any other confidential or secret aspect of the Company's activities.

 

                               10.2 Any methods, developments, inventions and/or

improvements,  whether patentable or unpatentable,  which the Executive may

conceive or make along the lines of the Company's business while in its employ

as an employee or consultant, shall be and remain the property of the Company.

The Executive further agrees on request to execute patent applications based on

such methods, developments, inventions and/or improvements, including any other

instruments deemed necessary by the Company for the prosecution of such patent

application or the acquisition of Letters Patent of this and any foreign

country.

 

                               10.3 The Executive agrees to communicate and

make known to the  Company  all  knowledge  possessed  by him  relating to any

methods, developments, inventions and/or improvements, whether patented,

patentable or unpatentable, which concern in any way the business of the

Company, whether acquired by him before or during the term hereof, provided,

however, that nothing herein shall be construed as requiring any such

communication where the method, development, invention and/or improvement is

lawfully protected from disclosure as the trade secret of a third party or by

any other lawful bar to such communication.

 

                               10.4 The services of the  Executive  are unique

and  extraordinary  and  essential  to the business of the Company,  especially

since the Executive shall have access to the Company's customer lists, trade

secrets and other privileged and confidential information essential to the

Company's business. Therefore, the Executive agrees that if his employment

hereunder shall at any time be terminated for any reason (other than by the

Company. without Cause), the Executive will not at any time within one (1) year

after such termination, without the prior written approval of the Company,

directly or indirectly, within the United States of America, or any other area

in which the Company shall then conduct substantial operations, engage in any

business activity "competitive with the business of the Company", as hereinafter

defined, and further, the Executive agrees that during such one (1) year period

he shall not solicit, directly or indirectly, any employee or customer or

account of the Company who at the time of such termination was then actively

being solicited by the Company. For the purpose of this agreement a business

activity competitive with the business of the Company shall include only (i) the

operation or franchising of restaurants of a type then being operated, or under

construction, by the Company and (ii) the sale, at wholesale or retail, of

products similar in type and quality to those being marketed by the Company at

the time of Executive's termination of employment.

<PAGE>

 

 

                     11.   VACATIONS

 

                               The Executive shall be entitled to reasonable

vacations during each twelve-month period of the term hereof, the time and

duration thereof to be determined by mutual agreement between the Executive

and the Company.

 

                     12.   PARTICIPATION IN EMPLOYEE BENEFIT PLANS

 

                               The Executive and any  beneficiary of the

Executive shall be accorded the right to participate in and receive benefits

under and in accordance with the provisions of any pension, profit-sharing,

insurance, bonus, deferred compensation, medical and dental insurance or

reimbursement, stock option, or other plan or program of the Company now in

existence or hereafter adopted for the benefit of its executive employees.

 

                     13.  INJUNCTIVE RELIEF

 

                               The Executive acknowledges and agrees that, in

the event he shall violate any of the restrictions of Section 10 hereof, the

Company will be without adequate remedy at law and will therefor be entitled to

enforce such restrictions by temporary or permanent injunctive or mandatory

relief obtained in an action or may have at law or in equity, and the Executive

hereby consents to the jurisdiction of such Court for such purpose, provided

that reasonable notice of any proceeding is given, it being understood that such

injunction shall be in addition to any remedy which the Company may have at law

or otherwise.

 

                     14.  ASSIGNMENT, ETC.

 

                               This Agreement,  as it relates to the employment

of the Executive, is a personal  contract and the rights and interests of the

Executive hereunder may not be sold, transferred, assigned, pledged or

hypothecated. Except as otherwise expressly provided, this Agreement shall inure

to the benefit of and be binding upon the Company and its successors and

assigns.

 

                     15.  RIGHT TO PAYMENTS, ETC.

 

                               The Executive shall not under any circumstances

have any option or right to require payments hereunder otherwise than in

accordance with the terms hereof. To the extent allowed by law, the Executive

shall not have any power of anticipation, alienation or assignment of payments

contemplated hereunder, and all rights and benefits of the Executive, and no

other person shall acquire any right, title or interest hereunder by reason of

any sale, assignment, transfer, claim or judgment or bankruptcy proceedings

against the Executive.

<PAGE>

 

 

                     16.  NOTICES, ETC.

 

                               Any notice required or permitted to be given to

the Executive pursuant to this Agreement shall be sufficiently given if sent

to the Executive by certified mail addressed to him at the following address:

4100 North 36th Avenue, Hollywood, Florida, 33021, or at any such other address

as he shall designate by notice to the Company, and any notice required or

permitted to be given to the Company pursuant to this Agreement shall be

sufficiently given if sent to the Company by certified mail addressed to it at

8685 Northwest 53rd Terrace, Miami, Florida 33166, attention of Corporation

Secretary, or such other address as the Company shall designate by notice to the

Executive, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch

Mandelstam & Schaeffer, LLP, 747 Third Avenue, New York, New York, 10017.

 

                     17.  GOVERNING LAW

 

                               This  Agreement  shall be  governed  by, and

construed in accordance with the laws of the State of Florida, applicable to

agreements made and to be performed solely within such state.

 

                     18.  WAIVER OF BREACH; PARTIAL INVALIDITY

 

                               The waiver by either party of a breach of any

provision of this Agreement shall not operate or be construed as a waiver of

any subsequent breach. If any provisions of this Agreement shall be held to be

invalid or unenforceable, such invalidity or unenforceability shall attach only

to such provision and not in any way affect or render invalid or unenforceable

any other provisions of this Agreement, and this Agreement shall be carried out

as if such invalid or unenforceable provision were not embodied therein.

 

                     19.  ENTIRE AGREEMENT

 

                               This Agreement  constitutes the entire agreement

between the parties hereto and there are no  representations,  warranties or

commitments except as set forth herein. This Agreement supersedes all prior and

contemporaneous agreements, understandings, negotiations and discussions,

including the Prior Agreement, whether written or oral, of the parties hereto

relating to the transactions contemplated by this Agreement. This Agreement may

be amended only in writing executed by the parties hereto affected by such

amendment.

 

                     IN WITNESS WHEREOF, the undersigned have executed this

Agreement as of the day and year first above written.

 

                                BENIHANA INC.

 

 

                                By: /s/ Taka Yoshimoto

                                ------------------------------------

                                        Taka Yoshimoto, Executive Vice President

 

 

                                 /s/    Joel A. Schwartz

                                 ------------------------------------

                                        Joel A. Schwartz

 

Top of the Document

                       AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

 

 

                     Amendment No. 1 dated May 27, 2004 to Employment Agreement

           dated April 1, 2001 (the  "Agreement") by and between  Benihana Inc.

           and Joel A. Schwartz.

 

                     Unless otherwise defined herein, capitalized terms shall

           have the respective meanings assigned to them in the agreement.

 

                     The parties agree that the Agreement shall be amended as

           follows:

 

                     Section 1.1 of the Agreement is amended by modifying the

           first sentence of that section to read in its entirety as follows:

 

                               1.1 The Company will employ the Executive in its

                     business and the Executive will continue to work for the

                     Company as President and Chief Executive Officer for a term

                     commencing the Effective Date and continuing until March

                     31, 2009.

 

                     Except as modified herein, the Agreement remains in full

           force and effect in accordance with its terms without revocation or

           change.

 

                     IN WITNESS WHEREOF, the undersigned have executed this

           Amendment No. 3 as of the date and year first above written.

 

 

                                        BENIHANA INC.

 

 

 

                                        /s/ Taka Yoshimoto

                                        ---------------------------------------

                                         Taka Yoshimoto

                                         Executive Vice President

 

 

                                        /s/ Joel A. Schwartz

                                        ---------------------------------------

                                         Joel A. Schwartz

                                         President and

                                         Chief Executive Officer