Employment Agreement - Diedrich Coffee Inc. and Steven A. Lupinacci
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of June 29, 1995, by and between DIEDRICH COFFEE, a California corporation
("Employer"), and STEVEN A. LUPINACCI ("Employee").
R E C I T A L S :
Employer and Employee desire to enter into this Agreement to establish
the terms and conditions of Employee's employment by Employer during the term
hereof.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing recital, and subject
to the conditions and covenants set forth herein, the parties agree as follows:
1. Employment and Term.
(a) Employer hereby employs Employee as its President and
Chief Executive Officer and Employee hereby accepts such employment
upon the terms and subject to the conditions set forth in this
Agreement. Unless earlier terminated as provided in this Agreement, the
term of Employee's employment under this Agreement shall commence on
the date hereof and shall continue for a period of three (3) years from
the date hereof (the "Term").
(b) Employee shall perform such duties and functions
consistent with his role as President and Chief Executive Officer as
assigned to him by the Board of Directors of the Employer (the
"Board"). Employee agrees that during the course of the Employer's
business hours throughout the Term, he will devote the whole of his
time, attention and efforts to the performance of his duties and
obligations hereunder. Employee shall not, during the Term, without
the written approval of the Board first had and obtained in each
instance, directly or indirectly (a) accept employment or receive any
compensation for the performance of services from any business
enterprise other than Employer or (B) enter into or be concerned or
interested in any trade or business or public or private work (whether
for profit or otherwise and whether as partner, principal, shareholder
or otherwise), which may, in the absolute discretion of the Board,
hinder or otherwise interfere with the performance by the Employee of
his duties and obligations hereunder, except as a holder of not more
than five percent (5%) of any class of stock or other securities in
any company which is listed and/or traded on any securities market.
2. Compensation. Employee shall be paid a salary (the "Base Salary") in
an amount that initially shall be equal to One Hundred Twenty-Five Thousand
Dollars ($125,000) per year, payable in semi-monthly installments, less all
amounts required by law to be withheld or deducted. During the Term of this
Agreement, the Board shall review Employee's Base Salary on or about each
anniversary date of the date of this Agreement. The Board, in its sole and
absolute discretion from time to time, may increase (but not decrease without
Employee's written consent) Employee's Base Salary. The Board, in its sole and
absolute discretion, also may pay Employee performance bonuses based on
Employer's performance and Employee's contribution thereto in such amounts and
at such times as the Board may determine.
3. Employee Benefits. During the Term of Employee's employment
hereunder:
(a) Employee shall be entitled to vacation leave consistent
with Employer's policies for other senior executives of Employer.
(b) Employer shall pay or reimburse Employee for all
reasonable and necessary travel and other business expenses incurred or
paid by Employee in connection
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with the performance of his services under this Agreement consistent
with Employer's policies for other senior executives of Employer.
(c) Employer shall provide and pay for the annual cost of
premiums for health, dental and medical insurance coverage for Employee
and Employee's dependents consistent with the coverage generally made
available by Employer to senior executives of Employer and providing
benefits at least as favorable to Employee as the coverage that is in
effect at the date of this Agreement.
(d) In addition to the benefits set forth above, Employee
shall be entitled to participate in any other policies, programs and
benefits which Employer may, in its sole and absolute discretion, make
generally available to its other senior executives from time to time
including, but not limited to, life insurance, disability insurance,
pension and retirement plans, stock plans and other similar programs.
4. Termination of Employment.
(a) Notwithstanding any other provision of this Agreement,
Employee's employment under this Agreement may be terminated as
follows:
(i) Upon the death of Employee, this Agreement and
Employee's employment hereunder shall terminate immediately
and without notice by Employer; or
(ii) In the event of the inability of Employee to
perform his duties or responsibilities hereunder, as a result
of mental or physical ailment or incapacity, for an aggregate
of ninety (90) calendar days during any calendar year (whether
or not consecutive) (a "Disability") during which period of
Disability the Employee shall be entitled to his compensation
pursuant to this Agreement, this Agreement and Employee's
employment hereunder shall terminate upon delivery of written
notice to Employee; or
(iii) By Employer for Cause (as defined below) in
accordance with the provisions of Section 4(b) hereof.
(b) The parties agree that for purposes of this Agreement, the
term "Cause" shall mean the following:
(i) Employee's willful and repeated failure to
satisfactorily perform his job duties under this Agreement;
(ii) Failure by the Employee to comply with all
material applicable laws in performing his job duties or in
directing the conduct of Employer's business; and
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(iii) Commission by the Employee of any felony or
intentionally fraudulent act against Employer, or its
employees, agents or customers.
(c) With respect to events described in subparagraph 4(b)(i)
and (ii) above, Employer shall give written notice to Employee of any
such event and Employee shall have thirty (30) days beginning on the
date of delivery of such written notice to cure same, or if such event
cannot be cured within said thirty (30) day period, Employee shall
commence his efforts to cure the event within the thirty (30) day
period and diligently work to cure such event within a reasonable time
period. If Employee within said thirty (30) day period or within a
reasonable time period, as applicable, does not cure the event for
which notice has been provided under subparagraphs 4(b)(i) or (ii)
above, then Employee's employment under this Agreement may be
terminated by Employer by delivery to Employee of written notice of
termination and such termination will be effective as of the date of
delivery of such written notice. With respect to events described in
subparagraph 4(b)(iii) above, Employee's employment under this
Agreement may be terminated by Employer by delivery to Employee of
written notice of termination and such termination will be effective as
of the date of delivery of such written notice. Upon the effectiveness
of termination as set forth in this subparagraph 4(c), the Employee
shall not be entitled to receive any further compensation or benefits
pursuant to this Agreement except for payment within ten days after his
termination date of all accrued but unpaid Base Salary.
(d) In addition to its rights to terminate the Employee's
employment under this Agreement pursuant to subparagraph 4(a), the
Employer may also terminate the Employee's employment under this
Agreement for any other reason, provided that, in such event, the
Employee shall be entitled to receive an amount equal to the product of
Employee's Base Salary on the termination date times a fraction, the
numerator of which shall be the total number of days left in the Term
and the denominator of which shall be 365 and the Employee shall not be
entitled to receive any other compensation or benefits hereunder. The
Employee acknowledges and agrees that the provisions of this paragraph
4 state his entire and exclusive rights, entitlements, and remedies
against the Employer, its successors, assigns, affiliates, officers,
directors, employees and representatives for termination without any
cause shown by the Employer.
(e) The Employee may terminate his employment for good cause
or without any cause. In the event the Employee terminates his
employment for "good cause" (as defined below), he shall be entitled to
receive the severance benefits described in subparagraph 4(d) above. If
he terminates his employment for any other reason, he shall not be
entitled to receive any compensation except for payment within ten days
after his termination date of all accrued but unpaid Base Salary. For
purposes of this Agreement, "good cause" for termination of employment
by the Employee shall mean: failure to maintain the Employee in the
position of an officer of the Employer or a material breach of the
provisions of this Agreement by the Employer. The Employee acknowledges
and agrees that the provisions of this subparagraph 4(e) state his
entire and exclusive rights and remedies under this Agreement against
the Employer, its
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successors, assigns, affiliates, officers, directors, employees and
representatives if he terminates this Agreement.
5. Arbitration. Any controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance or breach of
this Agreement or otherwise arising out of the execution hereof, including any
claim based on contract, tort or statute, shall be resolved, at the request of
any party, by submission to binding arbitration at the Orange County, California
offices of Judicial Arbitration & Mediation Services, Inc. ("JAMS"), and any
judgment or award rendered by JAMS shall be final, binding and unappealable, and
judgment may be entered by any state or federal court having jurisdiction
thereof. Any party can initiate arbitration by sending written notice of
intention to arbitrate (the "Demand) by registered or certified mail to all
parties and to JAMS. The Demand shall contain a description of the dispute, the
amount involved, and the remedy sought. The arbitrator shall be a retired or
former judge agreed to between the parties from the JAMS' panel. If the parties
are unable to agree, JAMS shall provide a list of three available judges and
each party may strike one. The remaining judge shall serve as the arbitrator.
Each party hereto intends that the provisions to arbitrate set forth herein be
valid, enforceable and irrevocable. In his award, the arbitrator shall allocate,
in his discretion, among the parties to the arbitration all costs of the
arbitration, including the fees of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the parties. The parties hereto agree
to comply with any award made in any such arbitration proceedings that has
become final and agree to the entry of a judgment in any jurisdiction upon any
award rendered in such proceeding becoming final.
6. Notices. All notices, requests, demands and other communications
under this Agreement must be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the date indicated on the return receipt as the date of
receipt or refusal if mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid, return receipt requested,
and properly addressed as follows:
To the Employer: Diedrich Coffee
2144 Michelson Drive
Irvine, California 92612
Attention: Chairman of the Board
To the Employee: Steven A. Lupinacci
2144 Michelson Drive
Irvine, California 92612
Any party may change its address for the purpose of this Paragraph 6 by
giving the other party written notice of the new address in the manner set forth
above.
7. Enforceability. If any of the covenants contained in this Agreement,
for any reason and to any extent, are construed to be invalid or unenforceable,
the remainder of this Agreement, and the application of the remaining covenants
to other persons or circumstances shall not be affected hereby, but rather shall
be enforced to the greatest extent permitted by law.
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8. Assignment; Binding Effect. This Agreement shall inure to the
benefit of, and be enforceable by, the Employer and its successors and assigns;
however, this Agreement is personal to Employee and may not be assigned by
Employee in whole or in part. In the event of the sale of all or substantially
all of the assets of Employer or other transaction in which Employer will not
continue as a surviving corporate entity engaged in a substantially similar
business as it is engaged in prior to such transaction, Employer will use
commercially reasonable efforts to obtain from the acquiring person or entity,
before the succession takes place, an agreement to assume and perform all of the
terms and conditions of this Agreement.
9. Entire Agreement; Amendment. This Agreement contains the entire
agreement between Employer and Employee with respect to the subject matters
hereof and supersedes all prior or contemporaneous agreements, arrangements or
understandings, written or oral, with respect to the subject matters hereof.
This Agreement may not be amended, waived, changed, modified or discharged
except by an instrument in writing executed by or on behalf of the party or
parties against whom any amendment, waiver, change, modification or discharge is
sought to be enforced.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
11. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"EMPLOYER" DIEDRICH COFFEE, a California corporation
By:____________________________________
Name:______________________________
Title______________________________
"EMPLOYEE" ______________________________________
STEVEN A. LUPINACCI
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