Key Employee Agreement - Peet's Coffee & Tea Inc. and Thomas Cawley
PEET'S OPERATING COMPANY, INC.
KEY EMPLOYEE AGREEMENT
FOR
CHIEF FINANCIAL OFFICER
This Key Employee Agreement ("Agreement") is entered into as of the 25th
day of June, 2003, by and between Thomas Cawley ("Executive") and PEET'S
OPERATING COMPANY, INC. (the "Company"), a Washington corporation and a
wholly-owned subsidiary of Peet's Coffee & Tea, Inc. (successor in interest to
PEET'S COMPANIES, INC.) (the "Parent").
WHEREAS, the Company desires to employ Executive to provide personal services to
the Company, and wishes to provide Executive with certain compensation and
benefits in return for his services;
WHEREAS, the Company has adopted the Peet's Coffee & Tea Key Employee Severance
Benefit Plan (the "Key Employee Plan") and the Parent has adopted the Peet's
Coffee & Tea, Inc. (as successor in interest to Peet's Companies, Inc.) Change
of Control Option Acceleration Plan (the "Option Acceleration Plan"); and
WHEREAS, Executive wishes to be employed by the Company and provide personal
services to the Company in return for certain compensation and benefits,
including the benefits provided under the Key Employee Plan and the Option
Acceleration Plan;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 TITLE AND RESPONSIBILITIES. Subject to terms set forth herein, the
Company agrees to employ Executive in the position of chief financial officer
and Executive hereby accepts employment effective as of the date set forth above
(the "Effective Date"). During his employment with the Company, Executive will
devote his best efforts and substantially all of his business time and attention
(except for vacation periods as set forth herein and reasonable periods of
illness or other incapacity permitted by the Company's general employment
policies) to the business of the Company.
1.2 EXECUTIVE POSITION. Executive will serve in an executive capacity and
shall perform such duties as are customarily associated with his then current
title, consistent with the Bylaws of the Company and as required by the
Company's or the Parent's Board of Directors, as the case may be (the "Board").
1.3 COMPANY EMPLOYMENT POLICIES. The employment relationship between the
parties shall also be governed by the general employment policies and practices
of the Company, including those relating to protection of confidential
information and assignment of inventions, except that when the terms of this
Agreement differ from or are in conflict with the Company's general employment
policies or practices, this Agreement shall control.
1
<PAGE>
2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be rendered
hereunder the base salary specified in that certain employment letter dated June
16, 2003 (the "Employment Letter"), a copy of which is attached hereto and
incorporated by this reference herein. Such salary shall be payable on a
biweekly basis. Executive will be considered for annual increases in base
salary in accordance with Company policy and subject to review and approval by
the Compensation Committee of the Board (the "Compensation Committee").
2.2 BONUS. Executive shall be eligible for a bonus for the calendar year
2003, in the form of a grant of options to purchase stock of the Parent, on a
pro rata basis in an amount to be determined by the Chief Executive Officer of
the Company pursuant to the executive level bonus plan in effect for the
calendar year 2003. Executive may be eligible to participate in the Company's
executive level bonus plan, if any, throughout the duration of Executive's
employment with the Company, solely upon the discretion of the Chief Executive
Officer and the Board. No bonus other than as specified in the Employment
Letter is guaranteed to Executive. Any bonus is subject to the approval of the
Board, which retains the authority to review, grant, deny or revise any bonus in
its sole discretion.
2.3 STOCK OPTIONS. Executive will receive an initial grant of options to
purchase stock of the Parent in the amount specified in the Employment Letter,
the terms of such options to be governed by the terms and conditions of the
Parent's applicable stock option plan pursuant to which such options are
granted. Executive and the Company each acknowledge that Executive's options(s)
to purchase stock of the Parent (the "Options") shall remain in effect and
continue to vest during the period of Executive's employment with the Company
pursuant to the terms of the Options; provided, however, that upon termination
of Executive's employment with the Company for any reason (except Change of
Control Termination), including but not limited to a termination for Cause, by
resignation in the absence of a Constructive Termination, involuntary
termination of Executive's employment by the Company without Cause, or voluntary
termination by the Executive due to Constructive Termination, the Options shall
cease vesting as of the termination or resignation date and be exercisable
thereafter only pursuant to the terms of the Options and the Parent's applicable
stock option plans, unless otherwise provided in the Key Employee Plan or the
Option Acceleration Plan. Upon a Change of Control Termination, all Options
held by Executive shall have their vesting accelerated in full so as to become
one hundred percent (100%) vested and immediately exercisable in full as of the
date of such termination. Subject to the Compensation Committee's approval,
Executive will be considered for additional grants of options to purchase shares
of the Parent, pursuant to the terms and conditions set forth in the Parent's
2000 Equity Incentive Plan, a copy of which is available upon Executive's
request or any successor plan.
2
<PAGE>
2.4 STANDARD COMPANY BENEFITS. Executive shall be entitled to all rights
and benefits for which he is eligible under the terms and conditions of the
standard Company benefits and compensation practices which may be in effect from
time to time and provided by the Company to its employees generally.
2.5 SEVERANCE AND CHANGE OF CONTROL PLANS. Executive is eligible for
participation in, and benefits pursuant to, the Key Employee Plan and the Option
Acceleration Plan. Executive acknowledges receipt of a copy of the Key Employee
Plan and the Option Acceleration Plan. Pursuant to the Key Employee Plan,
Executive shall be eligible to participate in an outplacement program for up to
six (6) months, at a cost not exceeding ten thousand dollars ($10,000.00),
provided, however, that the provider of such outplacement program must be
reasonably acceptable to the Company and Executive provides to the Company
adequate proof of the expenses incurred.
3. CONFIDENTIAL INFORMATION, RIGHTS AND DUTIES.
3.1 AGREEMENT.
(A) CONFIDENTIAL INFORMATION. Executive specifically agrees that he
shall not at any time, either during or subsequent to the term of the Employee's
employment with the Company, in any fashion, form or manner, either directly or
indirectly, unless expressly consented to in writing by the Company, use,
divulge, disclose or communicate to any person or entity any confidential
information of any kind, nature or description concerning any matters affecting
or relating to the business of the Company, including, but not limited to, the
Company's sales and marketing methods, programs and related data, or other
written records used in the Company's business; the Company's computer
processes, programs and codes; the names, addresses, buying habits or practices
of any of its clients or customers; compensation paid to other employees and
independent contractors and other terms of this employment or contractual
relationships; or any other confidential information of, about or concerning the
business of the Company, its manner of operations, or other data of any kind,
nature or description. The parties to this Agreement hereby stipulate that, as
between them, the above information and items are important, material and
confidential trade secrets that affect the successful conduct of the Company's
business and its good will, and that any breach of any term of this section is a
material breach of this Agreement. All equipment, notebooks, documents,
memoranda, reports, files, samples, books, correspondence, lists or other
written and graphic records, and the like, including tangible or intangible
computer programs, records and data, affecting or relating to the business of
the Company, which the Employee might prepare, use construct, observe, posses or
control, shall be and shall remain the Company's sole property.
(B) EXCLUSIVE PROPERTY. Executive agrees that all business procured by the
Executive while employed by the Company is and shall remain the permanent and
exclusive property of the Company. Executive further agrees that the
relationship with the Company of each of the employees and independent
contractors of the Company is a significant and valuable asset of the Company
and all such relationships shall at all times, both during and subsequent to the
termination of Executive's employment, be treated as the sole and exclusive
property of the Company.
3
<PAGE>
(C) NON-INTERFERENCE. Any interference with the Company's business,
property, confidential information, trade secrets, clients, customers, employees
or independent contractors by the Executive or any of Executive's agents during
or after the term of Executive's employment shall be treated and acknowledged by
the parties as a material breach of this Agreement.
3.2 REMEDIES. Executive's duties under this Section 3 shall survive
termination of Executive's employment with the Company. Executive acknowledges
that a remedy at law for any breach or threatened breach by Executive of the
provisions of the Proprietary Information and Inventions Agreement would be
inadequate, and Executive therefore agrees that the Company shall be entitled to
injunctive relief in case of any such breach or threatened breach.
4. OUTSIDE ACTIVITIES.
4.1 ACTIVITIES. Except with the prior written consent of the Board,
Executive will not during his employment with the Company undertake or engage in
any other employment, occupation or business enterprise, other than ones in
which Executive is a passive investor. Executive may engage in civic and
not-for-profit activities so long as such activities do not materially interfere
with the performance of his duties hereunder.
4.2 INVESTMENTS AND INTERESTS. Executive agrees not to acquire, assume or
participate in, directly or indirectly, any position, investment or interest
known by him to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise.
4.3 NON-COMPETITION. During his employment by the Company, except on behalf
of the Company, Executive will not directly or indirectly, whether as an
officer, director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever which were
known by him to compete directly with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company.
5. TERMINATION OF EMPLOYMENT.
5.1 TERMINATION WITH OR WITHOUT CAUSE.
(A) AT-WILL EMPLOYMENT. Executive's relationship with the Company is
at-will. The Company shall have the right to terminate Executive's employment
with the Company at any time with or without Cause and with or without notice.
4
<PAGE>
(B) DEFINITION. For purposes of this Agreement, "Cause" will be determined
in the sole discretion of the Company, based upon its objective reasonable
belief that Executive has committed or there has occurred one or more of the
following: (i) conviction of, a guilty plea with respect to, or a plea of nolo
contendere to a charge that the Executive has committed a felony under the laws
of the United States or of any state or a crime involving moral turpitude,
including, but not limited to, fraud, theft, embezzlement or any crime that
results in or is intended to result in personal enrichment at the expense of the
Company; (ii) material breach of any agreement entered into between the
Executive and the Company that impairs the Company's interest therein; (iii)
willful misconduct, significant failure of the Executive to perform the
Executive's duties, or gross neglect by the Executive of the Executive's duties;
or (iv) engagement in any activity that constitutes a material conflict of
interest with the Company.
(C) TERMINATION FOR CAUSE. If the Company terminates Executive's employment
at any time for Cause, Executive's salary shall cease on the date of
termination, and Executive will not be entitled to severance pay, pay in lieu of
notice or any other such compensation.
5.2 VOLUNTARY OR MUTUAL TERMINATION.
(A) VOLUNTARY TERMINATION. Executive may voluntarily terminate his
employment with the Company at any time, after which no further compensation
will be paid to Executive, except as specifically set forth herein, in the Key
Employee Plan or in the Option Acceleration Plan.
(B) NO SEVERANCE PAY. In the event Executive voluntarily terminates his
employment other than due to a Constructive Termination, he will not be entitled
to severance pay, pay in lieu of notice or any other such compensation, except
as provided in the Key Employee Plan or the Option Acceleration Plan.
(C) DEFINITION. For purposes of this Agreement, "Constructive Termination"
shall mean any one of the following events which occurs on or after the
Effective Date of this Agreement: (i) reduction of the Executive's annual base
salary by greater than ten percent (10%), except to the extent the annual base
salary of all other executive officers of the Company is similarly reduced; (ii)
material reduction in the package of welfare benefit plans, taken as a whole,
provided to the Executive (except that employee contributions may be raised to
the extent of any cost increases imposed by third parties) or any action by the
Company which would materially adversely affect the Executive's participation or
reduce the Executive's benefits under any such plans; (iii) change in the
Executive's responsibilities, authority, title, reporting relationship or
offices that results in a significant diminution of position under the
circumstances, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith which is remedied by the Company
promptly after notice thereof is given by the Executive; (iv) request that the
Executive relocate to a work site that is more than thirty-five (35) miles from
his prior work site, unless the Executive accepts such relocation opportunity;
(v) any material breach by the Company of its obligations under this Agreement;
or (vi) any failure by the Company to obtain the assumption of this Agreement by
any successor or assign of the Company.
5
<PAGE>
5.3 SEVERANCE BENEFITS. In the event the Company terminates
Executive's employment without Cause, or if Executive terminates his employment
due to a Constructive Termination, Executive shall be eligible for the severance
benefits provided pursuant to a Covered Termination under the Key Employee Plan
(as identified in the Key Employee Plan's Schedule of Benefits for the Company's
Vice Presidents), subject to Executive's signing and making effective a Release
Agreement as set forth in Section 9 below. This Section 5.3 shall not apply if
Executive's employment is terminated in a Change of Control Termination or due
to death or Disability (as such terms are defined in the Key Employee Plan).
Notwithstanding anything to the contrary set forth in this Agreement or the
Key Employee Plan, in the event Executive is eligible for the severance benefits
provided pursuant to a Covered Termination, Executive shall only be entitled to
receipt of a Pro Rata Bonus if the Company's executive level bonus plan for the
year in which such termination occurs is a cash bonus plan (as distinguished
from a stock option plan).
5.4 CESSATION. If Executive violates any provision of Sections 3, 7 or
8 of this Agreement, any severance payments or other benefits being provided to
Executive will cease immediately, and Executive will not be entitled to any
further compensation from the Company.
6. CHANGE OF CONTROL.
6.1 DEFINITION. For purpose of this Agreement, Change of Control means
the occurrence of any of the following: (i) a sale of sixty percent (60%) or
more of the assets of the Company or the Parent; (ii) a merger or consolidation
involving the Company or the Parent in which the Company or the Parent is not
the surviving corporation and the shareholders of the Parent immediately prior
to the completion of such transaction hold, directly or indirectly, less than
fifty percent (50%) of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or comparable successor rules) of the securities of the
surviving corporation (excluding any shareholders who possessed a beneficial
ownership interest in the surviving corporation prior to the completion of such
transaction); (iii) a reverse merger involving the Company or the Parent in
which the Company or the Parent, as the case may be, is the surviving
corporation but the shares of common stock of the Company or the Parent (the
"Common Stock") outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, and the shareholders of the Parent, immediately prior to the
6
<PAGE>
completion of such transaction hold, directly or indirectly, less than fifty
percent (50%) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rules) of the
surviving entity or, if more than one entity survives the transaction, the
controlling entity; (iv) an acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Exchange Act or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or an Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rules) of securities of the Company or of
the Parent representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors; or, (v) in the event that
the individuals who, as of the Effective Date, are members of the Parent's Board
of Directors (the "Incumbent Board"), cease for any reason to constitute at
least fifty percent (50%) of the Parent's Board of Directors. (If the election,
or nomination for election by the Parent's shareholders, of any new member of
the Parent's Board of Directors is approved by a vote of at least fifty percent
(50%) of the Incumbent Board, such new member of the Parent's Board of Directors
shall be considered as a member of the Incumbent Board.) Notwithstanding the
foregoing, for the purposes of this Agreement and with respect to any and all
clauses of this Section of this Agreement, an initial public offering of the
securities of the Company (an "IPO") or any transactions or events constituting
part of an IPO shall not be deemed to constitute or in any way effect a Change
of Control.
6.2 CHANGE OF CONTROL TERMINATION. In the event Executive's employment with
the Company terminates due to a Change of Control Termination (as such term is
defined in the Key Employee Plan), then Executive shall be eligible for the
benefits provided under a Change of Control Termination pursuant to the Key
Employee Plan.
6.3 STOCK OPTIONS. In the event of a Change of Control, Executive's
outstanding Options shall have their vesting accelerated to the extent provided
in the Option Acceleration Plan or in applicable option agreements evidencing
such outstanding Options.
6.4 PARACHUTE PAYMENTS. In the event that the severance, acceleration of
stock options and other benefits provided for in this Agreement or otherwise
payable to Executive (i) constitute "parachute payments" within the meaning of
Section 280G (as it may be amended or replaced) of the Internal Revenue Code of
1986, as amended or replaced (the "Code") and (ii) but for this Section 6.4,
would be subject to the excise tax imposed by Section 4999 (as it may be amended
or replaced) of the Code (the "Excise Tax"), then Executive's benefits hereunder
shall be either
(A) provided to Executive in full, or
(B) provided to Executive only as to such lesser extent which would result
in no portion of such benefits being subject to the Excise Tax,
7
<PAGE>
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by
Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
the Excise Tax. Unless the Company and Executive otherwise agree in writing, any
determination required under this Section 6.4 shall be made in writing in good
faith by the Company's independent public accountants (the "Accountants"). In
the event of a reduction in benefits hereunder, Executive shall be given the
choice of which benefits to reduce. For purposes of making the calculations
required by this Section 6.4, the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of the Code. The Company and
Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section 6.4. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section 6.4.
7. RESTRICTIVE COVENANT.
In the event Executive's employment with the Company is terminated due to a
Change in Control Termination (as such term is defined in the Key Employee
Plan), then for two (2) years immediately following the termination date,
Executive shall not, without first obtaining the prior written approval of the
Company, directly or indirectly engage or prepare to engage in the coffee
business in any way or in any place, or directly or indirectly engage or prepare
to engage in any other activities in competition with the Company, or accept
employment or establish a business relationship with a business engaged in or
preparing to engage in competition with the Company, in any geographical
location in which the Company as of the termination date either conducts or
plans to conduct business. If Executive violates this Section 7, it is agreed
that any severance benefits otherwise due to be received by Executive after such
violation will immediately cease, and further that (a) despite the cessation of
such benefits, the release provided by Executive in connection with such
benefits will remain in full force and effect and (b) the Company's remedy of
cessation of payment of severance benefits to Executive is non-exclusive.
8. NONINTERFERENCE.
While employed by the Company, and for two (2) years immediately following
the termination of Executive's employment, Executive shall not to directly or
through others solicit, attempt to solicit, induce, or otherwise cause any
employee or independent contractor or consultant to terminate his or her
relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or entity. For two (2) years
immediately following the termination of Executive's employment, Executive shall
not directly or indirectly solicit (for a business competitive with the Company)
the business of any customer of the Company that at the time of the termination
of Executive's employment or one (1) year immediately prior thereto was listed
on the Company's customer list. If Executive violates this Section 8, it is
8
<PAGE>
agreed that any severance benefits otherwise due to be received by Executive
after such violation will immediately cease, and further that (a) despite the
cessation of such benefits, the release provided by Executive in connection with
such benefits will remain in full force and effect and (b) the Company's remedy
of cessation of payment of severance benefits to Executive is non-exclusive.
9. RELEASE. In exchange for the benefits and other consideration under
this Agreement to which Executive would not otherwise be entitled, Executive
shall enter into and execute a release substantially in the form attached hereto
as Exhibit A (the "Release") upon his termination of employment. Unless the
Release is executed by Executive and delivered to the Company within twenty-one
(21) days after the termination of Executive's employment with the Company,
Executive shall not receive any severance benefits provided under this Agreement
or under the Key Employee Plan. Additionally, unless the Release is executed by
Executive and delivered to the Company within twenty-one (21) days after the
termination of Executive's employment with the Company, the acceleration of
Executive's Options upon a Change of Control Termination as provided in this
Agreement shall not apply and Executive's Options in such event may be exercised
following the date of Executive's termination only to the extent provided under
their original terms in accordance with the Peet's Companies, Inc. 1997 Equity
Incentive Plan (or other applicable stock option plan), the applicable option
agreements and the Option Acceleration Plan.
10. GENERAL PROVISIONS.
10.1 NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by facsimile transmission or the third day after mailing by
first class mail, to the Company at its primary office location and to Executive
at his address as listed on the Company payroll.
10.2 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
10.3 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
10.4 COMPLETE AGREEMENT. This Agreement, together with Key Employee Plan
and the Option Acceleration Plan, constitutes the entire agreement between
Executive and the Company and it is the complete, final, and exclusive
embodiment of their agreement and supersedes any prior agreement written or
otherwise between Executive and the Company with regard to this subject matter.
It is entered into without reliance on any promise or representation other than
those expressly contained herein, and it cannot be modified or amended except in
a writing signed by an officer of the Company.
9
<PAGE>
10.5 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
10.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and the Parent
and their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may not
assign any of his rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.
10.8 ATTORNEY FEES. If either party hereto brings any action to enforce his
or its rights hereunder, the prevailing party in any such action shall be
entitled to recover his or its reasonable attorneys' fees and costs incurred in
connection with such action.
10.9 ARBITRATION. To provide a mechanism for rapid and economical dispute
resolution, you and the Company agree that any and all disputes, claims, or
causes of action, in law or equity, arising from or relating to this Agreement
(including the Release) or its enforcement, performance, breach, or
interpretation, will be resolved, to the fullest extent permitted by law, by
final, binding, and confidential arbitration held in San Francisco, California
and conducted by Judicial Arbitration & Mediation Services/Endispute ("JAMS"),
under its then-existing Rules and Procedures. Nothing in this Section 10.9 or in
this Agreement is intended to prevent either you or the Company from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion of
any such arbitration.
10.10 GOVERNING LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California as applied to contracts made and to be performed entirely within
California.
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
PEET'S OPERATING COMPANY, INC. EXECUTIVE
By: /s/ Patrick J. O'Dea /s/ Thomas Cawley
----------------------- -------------------
Patrick J. O'Dea Thomas Cawley
President and CEO Chief Financial Officer
Date: June 25, 2003 Accepted and agreed this
----------------- 25th day of June, 2003
--------------------------
Exhibit A - Release Agreement
Exhibit B - Peet's Coffee & Tea Key Employee Severance Benefit Plan
Exhibit C - Peet's Companies, Inc. Change of Control Option Acceleration Plan
11
<PAGE>
EXHIBIT A
RELEASE AGREEMENT
I understand that my position with Peet's Operating Company, Inc. (the
"Company") terminated effective ___________, _____ (the "Separation Date"). The
Company has agreed that if I choose to sign this Agreement, the Company will pay
me severance benefits (minus the standard withholdings and deductions) pursuant
to the terms of the Key Employee Agreement entered into as of the _____ day of
________, ____ between myself and the Company and the Peet's Coffee & Tea Key
Employee Severance Benefit Plan and the Peet's Coffee & Tea, Inc. (as successor
in interest to Peet's Companies, Inc.) Change of Control Stock Option
Acceleration Plan. I understand that I am not entitled to this severance
payment unless I sign this Agreement. I understand that in addition to this
severance, the Company will pay me all of my accrued salary and vacation, to
which I am entitled by law.
In consideration for the severance payment I am receiving under this Agreement,
I agree not to use or disclose any of the Company's proprietary information
without written authorization from the Company, to immediately return all
Company property and documents (including all embodiments of proprietary
information) and all copies thereof in my possession or control, and to release
the Company and its officers, directors, agents, attorneys, employees,
shareholders, and affiliates from any and all claims, liabilities, demands,
causes of action, attorneys' fees, damages, or obligations of every kind and
nature, whether they are known or unknown, arising at any time prior to the date
I sign this Agreement. This general release includes, but is not limited to:
all federal and state statutory and common law claims, claims related to my
employment or the termination of my employment or related to breach of contract,
tort, wrongful termination, discrimination, wages or benefits, or claims for any
form of compensation. In releasing claims unknown to me at present, I am
waiving all rights and benefits under Section 1542 of the California Civil Code,
and any law or legal principle of similar effect in any jurisdiction: "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"). I also acknowledge that the consideration given for
the waiver in the above paragraph is in addition to anything of value to which I
was already entitled. I have been advised by this writing, as required by the
ADEA that: (a) my waiver and release do not apply to any claims that may arise
after my signing of this Agreement; (b) I should consult with an attorney prior
to executing this release; (c) I have twenty-one (21) days within which to
consider this release (although I may choose to voluntarily execute this release
earlier); (d) I have seven (7) days following the execution of this release to
revoke the Agreement; and (e) this Agreement will not be effective until the
eighth day after this Agreement has been signed both by me and by the Company
("Effective Date").
This Agreement constitutes the complete, final and exclusive embodiment of the
entire agreement between the Company and me with regard to the subject matter
hereof. I am not relying on any promise or representation by the Company that
is not expressly stated herein. This Agreement may only be modified by a
writing signed by both me and a duly authorized officer of the Company.
12
<PAGE>
I accept and agree to the terms and conditions stated above:
Date [EMPLOYEE]
Date PEET'S OPERATING COMPANY, INC.
13
<PAGE>
EXHIBIT B
PEET'S COFFEE & TEA
KEY EMPLOYEE SEVERANCE BENEFIT PLAN
14
<PAGE>
EXHIBIT C
PEET'S COFFEE & TEA, INC. (SUCCESSOR IN INTEREST TO PEET'S COMPANIES, INC.)
CHANGE OF CONTROL OPTION ACCELERATION PLAN
15
<PAGE>