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Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, is made as of January 12, 2009
(this " Agreement "), by and among MidOcean SBR Holdings,
LLC, a Delaware limited liability company (" Parent "),
Sbarro, Inc., a New York corporation and a wholly-owned subsidiary
of Parent (the " Company " and, together with Parent, "
Sbarro "), and Daniel G. Montgomery ( "Executive
").
WHEREAS, each of Parent and the Company desire to employ
Executive as its Vice-President and Chief Financial Officer,
subject to the terms and conditions of this Agreement and its
Exhibits; and
WHEREAS, each of Parent and the Company has determined that it
is in the best interests of Parent and the Company to enter into
this Agreement with Executive and Executive is willing to serve as
an employee of Parent and the Company.
NOW, THEREFORE, in consideration of the mutual promises,
agreements and covenants contained herein, the parties agree as
follows:
1. Term . Executive’s employment by Sbarro
hereunder shall commence effective as of the date hereof (the "
Commencement Date" ) and continue until the 1st anniversary
of the date hereof, unless earlier terminated as provided elsewhere
in this Agreement (the period from the Commencement Date until the
relevant employment termination date is referred to herein as the "
Term "); provided that the Term shall renew
automatically for successive one-year periods unless either party
gives the other party written notice of its intentions not to renew
this Agreement no later than 90 days prior to the expiration of the
then current Term.
2. Duties .
2.1 Executive shall, during the Term, use his best efforts to
faithfully perform the duties of Vice-President and Chief Financial
Officer of Sbarro pursuant to which he shall assist in the overall
management, implementation of strategy and the day-to-day
operations and business of Parent and its subsidiaries (including
the Company’s quick service, franchising, quick casual and
strip center operations) in accordance with the budgets and
business plans that have been approved by Parent’s Board of
Directors (the " Parent Board "), shall have responsibility
for the financial reporting of Parent and its subsidiaries, and
shall perform such other duties, commensurate with his position, as
shall be specified and designated from time to time by the
President and Chief Executive Officer, the Parent Board, or the
Board of Directors of the Company (the " Company Board "
and, together with the Parent Board, the " Boards "), as
applicable. Executive shall, during the Term, devote his full
business time, effort, skills and loyalty to effectively perform
his duties and further the business of Sbarro; provided that
Executive shall be permitted to (i) invest his personal assets
and (ii) serve on any civic, community, charitable or
corporate board to the extent that such activities, individually or
in the aggregate, do not materially interfere with the conduct of
Executive’s duties. Executive shall report directly to the
President and Chief Executive Officer, and shall promptly disclose,
at appropriate times, all material developments relating to Sbarro
known to him so as to enable Sbarro to obtain the most effective
use of Executive’s services and the business opportunities
that come to Executive’s attention.
2.2 Executive shall be subject to the written
rules, regulations and policies of Parent and the Company involving
the general conduct of business of Sbarro in force from time to
time, as applicable to senior executives of Parent or the Company,
and shall adhere in all material respects to such applicable rules,
regulations and policies; provided , however, that
such rules, regulations and policies are not illegal and that
Executive has been made aware thereof by delivery to him of a
written document(s) containing such rules, regulations and
policies. In performing Executive’s duties hereunder,
Executive shall comply, in all material respects, with applicable
laws, rules and regulations applicable to Parent and its
subsidiaries and their businesses.
2.3 During the Term, and any time thereafter until the
expiration of applicable statute of limitations, Executive agrees
to fully cooperate in good faith and to the best of
Executive’s ability with Sbarro in connection with all
pending, potential or future claims, litigations, arbitrations,
proceedings, investigations or actions involving or relating to
Sbarro or their subsidiaries which directly or indirectly relate to
any transaction, event or activity about which Executive has
knowledge. Such cooperation shall include all assistance that
Sbarro, its counselor, its representatives may reasonably request,
including reviewing and interpreting documents, meeting with
counsel at a mutually and reasonably convenient time and location
(depending on the circumstances), providing factual information and
material, and appearing or testifying as a witness. After the Term,
Executive’s assistance shall be given telephonically, unless
the same is not reasonably practicable, in which case such
assistance shall be given in person (provided reasonable
advance notice of the need for his assistance is given to the
extent practicable). To the extent reasonably practicable (as
determined by Sbarro in good faith), Sbarro will try to limit
Executive’s participation to regular business hours. In any
event, in making any request for such cooperation, Sbarro will take
into consideration (i) the significance of the matters at
issue in the claim, litigation, arbitration, proceeding,
investigation or action and (ii) after the Term,
Executive’s other personal and business commitments. Sbarro
will reimburse Executive for all reasonably incurred expenses and
costs actually incurred by him in connection with rendering
assistance hereunder upon the submission of the appropriate
documentation to Sbarro. Executive’s entitlement to
reimbursement of such expenses and costs pursuant to this
Section 2.3 shall in no way affect Executive’s rights to
be indemnified and/or advanced expenses in accordance with
Sbarro’s limited liability company or corporate documents,
any applicable insurance policy, and/or in accordance with this
Agreement.
2.4 Although Executive will perform his duties at the
Company’s principal headquarters in the greater New York City
metropolitan area, he understands that his responsibilities require
substantial travel in connection with Sbarro’s national and
international operations.
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3. Compensation .
3.1 Base Salary . In consideration for acting as the
Vice-President and Chief Financial Officer of the Company, the
Company shall pay Executive during the Term a base salary, payable
in accordance with the customary payroll practices of the Company,
of $350,000 per annum, which amount may be increased (but not
decreased) from time to time at the sole discretion of the Board
(such amount, as may be so increased, the " Base Salary
").
3.2 Annual Bonus . In addition to the Base Salary,
Executive shall be eligible to earn an annual bonus (the "
Annual Bonus ") from the Company pursuant to such annual
bonus plans as may be adopted by the Company Board for executive
officers of the Company (as applicable, the "Annual Bonus
Plan "). The Annual Bonus Plan shall be promptly established by
the Company and shall specify Executive’s target bonus (the "
Target Bonus "), which shall be earned based upon the
Company Board’s determination, in its sole discretion, of the
attainment of stated objectives (to be established by the Company
Board with input from management, including Executive) and which
may vary by executive class or executive. Executive, together with
other members of management, shall develop and propose to the
Boards a strategic business plan (containing, among other items and
on a Company fiscal quarter basis, stated business objectives to be
accomplished and an EBITDA goal) and a proposed budget no later
than the regularly scheduled December meeting of the Boards of each
year for the next succeeding fiscal year and in time for the Boards
to consider, review, discuss, modify and approve for such next
ensuing year (the " Strategic Business Plan "). The Annual
Bonus, if any, will be paid to Executive by the Company promptly
after the Company Board determines the amount payable to Executive,
but in any event on or before May 1.
3.3 Withholding . All payments of compensation and
benefits shall be subject to applicable withholding taxes and other
legally required payroll deductions. Executive shall provide the
Company with all information reasonably requested by the Company
with respect thereto.
3.4 Benefits . Executive (and his eligible dependents)
shall, during the Term, be entitled to participate in all of the
Company’s employee benefits plans, to the extent permitted by
the terms of each such plan, on the same terms and conditions made
available to other executive level employees of the Company.
Nothing herein shall be construed to require the Company to
establish any plans not in existence on the date hereof, or to
prevent the Company from modifying or terminating any such plans;
provided that any modification or termination shall not adversely
affect any accrued or vested benefits at the time of the
modification or termination. Executive shall comply with the
conditions attendant to coverage by such plans (which conditions
shall be the same as applicable to participants in the plans
generally). Executive affirms that, to his knowledge, he currently
is in good health, with no chronic or recurring illness, is
physically and mentally able to perform his duties under this
Agreement and is insurable at normal rates.
3.5 Equity Compensation .
(a) After six months you will be eligible to participate in the
equity sharing plan currently in effect for other Senior Executives
of the Company, eligibility and extent of such participation will
be in the Chief Executive Officer’s sole discretion.
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3.6 Expenses . The Company shall pay, or
reimburse Executive, in accordance with the applicable Company
policy, for all reasonable out-of-pocket expenses actually incurred
by Executive during the Term in the performance of
Executive’s services under this Agreement and for all lodging
expense Executive incurs for hotel or apartment expense designated
by the Company, which shall be in relative proximity to the
corporate offices. Executive shall submit proof of such expenses
(including, in the case of reimbursements, proof of payment), with
the properly completed forms as prescribed from time to time by the
Company once each month; provided, however, that such
proof is submitted within a reasonable time after such expenses
have been so incurred (and, in the case of reimbursements, have
been actually paid).
3.7 Vacation . During the Term, Executive shall be
entitled to four (4) weeks of annual vacation in accordance
with the Company’s standard policies in effect from time to
time regarding vacation time and accrual thereof. Vacation shall be
taken at times when reasonably appropriate, given Executive’s
responsibilities and consistent with the needs of Sbarro. Executive
shall be entitled to sick and personal days in accordance with the
Company’s policy and shall be entitled to such other
perquisites as were provided to Executive by the Company prior to
the date hereof.
3.8 Automobile . During the Term, the Company shall
provide Executive a monthly cash payment of $1,250 representing a
car allowance which shall be exclusive of the costs of insurance,
gas, repairs, maintenance, etc.
4. Disability or Death .
4.1 Disability . If Executive fails, due to disability or
incapacity, either physical or mental, to perform substantially and
continuously all of the material and essential duties assigned to
him for a period of more than 180 consecutive days or for 270
nonconsecutive days out of any consecutive 1 year period, Sbarro
may terminate Executive’s employment by written notice to
Executive delivered at least 10 calendar days prior to the
effective date of his termination. The determination as to whether
Executive is disabled or incapable of performing his duties
hereunder shall be made by a disinterested physician jointly
selected by Executive and the Parent Board; provided ,
however , that if a disinterested physician cannot be
selected within 15 calendar days of Sbarro’s written request
therefore, Sbarro shall have the right to request the Medical
Society of Suffolk or Nassau County to select a qualified
disinterested physician to conduct an appropriate examination and
such physician’s determination as to Executive’s
disability or incapacity shall be final and binding. Executive
shall submit to examination by such physician at such reasonable
times and places as may be requested by Sbarro, and any failure by
Executive to submit to such examination schedule shall be deemed a
binding admission by Executive of his disability or incapacity.
4.2 Death or Disability Termination Payments . Upon death
or termination of employment by virtue of disability or incapacity,
neither Executive, nor Executive’s estate, executors,
administrators or beneficiaries in the case of the death of
Executive, shall have any right to receive any compensation or
benefit hereunder on and after the effective date of the
termination of employment other than (i) Base Salary earned
and accrued under this Agreement prior to the effective date of
termination, (ii) continuation of Base Salary for a
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period of 12 months; provided,
however, that the Company may deduct there from any
disability payments received by Executive from the Company or from
insurance paid for by the Company, (iii) any then earned, but
unpaid, Annual Bonus with respect to the year prior to the year in
which termination occurs, and a pro rata Target Bonus for
the portion of the year in which termination occurs,
(iv) accrued benefits (including compensation for accrued
vacation, sick and personal days) in accordance with and subject to
the terms of Sbarro’s benefit plans and policies, and
(v) reimbursement, in accordance with the terms of this
Agreement, for business expenses properly incurred prior to the
effective date of termination.
4.3 Payment After Death . In the event of
Executive’s death, any payments by the Company shall be made
to the executors or administrators of Executive’s estate upon
the delivery of such documents as the Company may reasonably
request confirming such person’s appointment and
authority.
4.4 Termination of this Agreement . In the event of
termination of Executive’s employment pursuant to this
Article 4, this Agreement, except for the provisions of
Section 4.2 "Termination Payments," Section 4.3 "Payment
After Death," Article 6 "Restrictive Covenants" (to the extent
applicable in accordance with its terms) and Article 7 "Other
Provisions," shall otherwise terminate upon (a) the effective
date of the termination of employment if termination has been
effected by disability or incapacity, and (b) upon
Executive’s death, and Executive and his estate shall have no
further rights hereunder.
5. Certain Terminations of Employment .
5.1 Termination for Cause . Sbarro may terminate
Executive for Cause; provided , however , that either
Parent or the Company has given prior written notice of such Cause
to Executive (specifying in detail the nature of the Cause) and the
same has not been cured in all material respects or waived by the
Parent Board within 15 calendar days after the giving of such
notice. During such time period, authorized representatives of the
Parent Board will be available to meet with Executive (and
Executive’s legal counsel if requested by Executive) upon 3
calendar days’ prior written notice, if requested by
Executive, which meeting, may be held telephonically. As used in
this Agreement, " Cause " means and shall be deemed to exist
if, without the prior written consent of the Parent Board,
Executive: (a) is convicted of, or pleads guilty or nolo
contendere to, a felony (including fraud or embezzlement) or
other crime involving moral turpitude; (b) while acting on
behalf of Sbarro or otherwise in the performance of his duties for
Sbarro, knowingly (i) submits false reports (whether oral or
in writing) or lies to either of the Boards or (ii) commits a
willful act of gross misconduct or gross negligence;
(c) knowingly partakes of illegal substances; (d) engages
in alcohol abuse to such an extent that Executive’s ability
to properly fulfill his responsibilities to Sbarro in a manner
reasonably expected is impaired in any material respect;
(e) fails in any material respect to follow any written policy
affecting all employees of Parent and/or the Company, which policy
provides that such failure may result in termination of employment;
or (f) fails to comply in any material respect with the lawful
and reasonable written direction of either of the Boards.
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5.2 Termination Without Cause . Sbarro may
terminate Executive’s employment at any time, and for any
reason or for no reason, upon 30 days’ prior written notice
to Executive, which notice shall specify the effective date of such
termination.
5.3 Termination for Any Reason or for Good Reason by
Executive . Executive shall have the right to terminate his
employment with Sbarro for any reason at any time upon 30
days’ prior written notice to Parent, which notice shall
specify the effective date of such termination. In addition,
Executive may terminate his employment with Sbarro for Good Reason;
provided , however , that Executive has given, within
30 days of his obtaining knowledge of the event purported to
constitute Good Reason, 30 calendar days prior written notice of
such Good Reason to the Boards (specifying in detail the nature of
the Good Reason) and the same shall not have been cured in all
material respects or waived by Executive within such period of 30
calendar days. As used in this Agreement, " Good Reason "
means and shall be deemed to exist if, without the prior express
written consent of Executive: (a) Executive suffers a material
change in his reporting obligations; (b) Executive suffers a
material decrease in the duties or responsibilities associated with
his titles and positions, as set forth in Section 2.1;
(c) Executive’s Base Salary, Target Bonus or any future
incentive equity opportunity provided by Sbarro after the date
hereof is reduced; (d) the Company fails to pay
Executive’s Base Salary, Annual Bonus or benefits to which
Executive is entitled under Sections 3.2 or 3.4 when due;
(e) the Company’s principal headquarters is relocated
outside of the greater New York City metropolitan area;
(f) either Parent or the Company sells, transfers or otherwise
disposes of all or substantially all of its assets or business, and
transfers its obligations under this Agreement to a successor,
which successor fails to expressly assume in writing all of
Sbarro’s obligations to Executive under this Agreement; or
(g) the Parent Board provides notice to Executive pursuant to
Section 1 of Sbarro’s election not to extend the
Term.
5.4 Effects of Termination .
(a) Termination for Cause . Notwithstanding any other
provision of this Agreement, if Sbarro terminates Executive’s
employment for Cause, such action shall be without prejudice to any
other rights or remedies that Sbarro may have at law or in equity;
and Sbarro shall have no further obligation to Executive and
Executive shall have no right to receive any compensation or
benefit from Sbarro, on and after the effective date of such
termination, other than: (i) Base Salary earned and accrued
under this Agreement prior to such effective date of termination;
(ii) accrued benefits (including compensation for accrued
vacation) in accordance with and subject to the terms of
Sbarro’s benefit plans and policies; (iii) any then
earned, but unpaid, Annual Bonus with respect to the year prior to
the year in which termination occurs, payable on its normal payment
date; and (iv) reimbursement, in accordance with the terms of
this Agreement, for business expenses properly incurred prior to
the effective date of termination. This Agreement, except for the
provisions of, this Section 5.4(a), Article 6 "Restrictive
Covenants" (to the extent applicable in accordance with its terms)
and Article 7 "Other Provisions," shall otherwise terminate upon
the effective date of the termination of employment and Executive
shall have no further rights hereunder.
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