EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), is made as of the 8th day of May,
1997, by and between My Favorite Muffin, Too, Inc. ("MFM" or the "Corporation"),
a New Jersey corporation and wholly-owned subsidiary of BAB Holdings, Inc.
("BAB"), an Illinois corporation, both having executive offices at 0000 Xxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, and Xxxx X. Xxxxx ("Executive")
residing at 0 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000.
BACKGROUND
A. The Corporation desires to employ Executive in connection with the conduct
of the business of the corporation, and Executive desires to accept such
employment on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other valuable consideration, the parties hereto,
intending legally to be bound, hereby agree as follows:
1. Employment. The Corporation hereby employs Executive and Executive hereby
accepts such employment, upon the terms and conditions hereinafter set forth.
2. Term. The guaranteed term of employment of Executive under this Agreement
shall commence on May 8, 1997, and shall continue, unless terminated for cause
only, in accordance with the provisions of Paragraph 5 hereof, through May 8,
2001 (the "Base Term"). After expiration of this Base Term, the parties may
agree to renew this Agreement. During such period after expiration of the
Base Term, and prior to the undertaking of a new agreement between the parties,
the Corporation's employment of Executive shall continue on a month-to-month
basis.
3. Office and Duties.
(a) Executive shall initially serve as Vice President of Operations.
Subject to the direction of the Board of Directors and the corporation's
officers designated by the Board, Executive shall perform and discharge well
and faithfully the duties which may be assigned to him from time to time by the
Corporation in connection with the conduct of its business or the business
of any subsidiary of affiliate of the Corporation. Nothing herein shall
preclude the board from changing the Executive's title and duties
if the Board has determined in its reasonable judgment that such change
is in the Corporation's best interest, provided, without Executive's
consent, such duties will not be substantially diminished from those
duties initially assigned. Executive's primary duty shall be to facilitate
all matters in operations as they arise for the MFM side of the business
of BAB, as well as product development for all BAB companies.
(b) During the term hereof, Executive shall devote substantially all of his
business time, attention and energies to the business of the corporation and
its affiliates and shall not during the term of this Agreement be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain,
profit or other pecuniary advantage, if such activity is likely to or has
interfered in any way with Executive's duties; provided that this section shall
not be construed as preventing the Executive from investing his personal
assets in businesses which do not compete with the corporation in
such form or manner as will not require any services on the part of
the Executive in the operations or the affairs of the companies in
which such investments are made in which his participation is
solely that of an investor. Corporation agrees that from time to
time as may be necessary, Executive may retain flexibility in the
specific time Executive begins and ends his daily employment
duties.
(c) During the term hereof, the principal place of employment
of Executive shall be in the Chicago area. It is understood that
in connection with his duties under this agreement, Executive
may be required to travel to and perform services at other
locations. Executive and Executive's spouse will not be required
to travel simultaneously.
4. Compensation. As compensation for the services to be
rendered hereunder by Executive, the Corporation agrees to
pay or provide to Executive:
(a) Salary. Executive's annual salary will be (i) $80,000 for
the first year of the Base Term; (ii) $100,000 for the second
year of the Base Term; (iii) $120,000 for the third and fourth
years of the Base Term. Executive may be entitle to receive
bonuses on the same basis as the Corporation, BAB or other
BAB subsidiaries may from time to time make bonuses
generally available to other executives of the Corporation,
BAB or the other BAB subsidiaries.
(b) Executive Stock Options. Executive Stock Options.
Executive may be granted stock options on the same basis
as the Corporation, BAB or other BAB subsidiaries may
from time to time grant stock options to other executives
of the Corporation, BAB or other BAB subsidiaries.
(c) Moving and Relocation Expenses. The Corporation
agrees to reimburse Executive for all moving and relocation
expenses incurred by Executive in connection with this
Agreement, including without limitation, transportation
costs associated with housing search in anticipation
relocation, mover's fees, temporary housing costs as may
be necessary, broker's commissions, real estate closing
costs in New Jersey and Chicago and any income
taxes payable upon the foregoing, as necessitated by
Executive's relocation to the Chicago, area as required
by the terms of Executive's employment by the
Corporation. Full payment to Executive, of the expenses
enumerated in this Paragraph 4 [c] shall constitute
payment of these similar expenses owed to Executive's
spouse pursuant to an Employment Agreement of
even date herewith, between Executive's spouse and
the Corporation.
(d) Expenses. The Corporation agrees to reimburse
Executive in full for all necessary business,
entertainment and travel expenses incurred or
expended by him in connection with the performance
of his duties hereunder, provided Executive submits to
the corporation vouchers or expense statements
satisfactorily evidencing such expenses as may be
reasonable required by the corporation and such
expenses are in accordance with any corporate
policy with respect thereto.
(e) Vacation: Sick Leave. Executive shall be
entitled to a paid vacation (taken consecutively or
in segments) of three (3) weeks during each fiscal
year, adjusted pro rata for any partial year during
the term hereof, during which time he shall receive
full compensation as provided in Paragraphs 4(a)
and 4(b). Such vacation may be taken at such
times as is reasonably consistent with proper
performance by Executive of his duties and responsibilities
hereunder. In addition to the foregoing vacation,
Executive shall be entitle to take sick or medical
leave, from time to time as may be reasonable necessary.
(f) Benefits. In addition to the compensation under
Paragraph 4(a), Executive, during the term of this
Agreement, shall be entitled to participate in all
pension, retirement, and profitsharing plans, all
medical, hospital, major medical, life insurance, and statutory
disability coverage plans and all other employee benefit plans, in
each case, which the Corporation may from time to time make
generally available to other executives of the Corporation,
on the same basis as such plan or plans and benefits are
made generally available to such individuals.
5. Termination of Employment.
(a) Termination for Cause. The Corporation may terminate this
Agreement for cause immediately upon written notice to Executive.
"Termination for cause" shall mean discharge by the Corporation on
the following grounds:
(i) Executive's conviction in a court of law for a felony.
(ii) Dishonesty or willful misconduct, including without
limitation Executive's embezzlement or theft from the Corporation.
(iii) Executive's gross insubordination.
(iv) Executive's unsatisfactory job performance as determined by
the board of directors of the Corporation or BAB, which performance
continues for six (6) months after Executive has received written
notice of such unsatisfactory job performance from the Corporation or BAB.
Upon such termination for cause, Executive shall lose all right,
title and interest in and to all payment required to be made in accordance
with the provisions of this Agreement, and the Corporation shall have no
further obligation to Executive hereunder, except for compensation in which
Executive has a vested right under the terms and conditions of any plan
or program pursuant to which such benefits were granted.
(b) Termination by Corporation Without Cause.
If the Corporation shall terminate Executive's employment for any
reason which is not for cause as specifically identified in Paragraph 5(a)
hereof, then the Corporation shall pay Executive severance pay, such payment
to be made, as determined by Executive at the time of termination without
cause, in either of the following methods: (i) one-half (1/2) of the
payment due Executive for the remainder of the Base Term to be paid in one lump
sum cash payment to Executive and such payment to be made within three (3)
business days of the date of termination without cause; or (ii) the full
compensation due Executive for the remainder of the Base Term, such payment
to be made in continuing monthly cash payments, commencing with the first
employee payroll date following termination without cause. In addition
to the foregoing, Executive shall receive any compensation in which Executive
has a vested right under the terms and conditions of any plan or program under
which such benefits were granted.
(c) Executive's Termination of Employment.
If Executive terminates this Employment Agreement at any time, Executive shall
forfeit his right to severance pay under this Paragraph 5.
6. Restrictive Covenants and Confidentiality: Injunctive Relief.
(a) Executive agrees as a condition to the Corporation agreeing to
employ Executive and to the performance by the Corporation of its obligations
hereunder, particularly it's obligations under Paragraph 4 hereof and for a
period of two (2) years thereafter, Executive will not (i) in any way , directly
or indirectly, whether for his account or for the account of any other person,
firm, corporation or other entity, engage in, represent, furnish consulting
services to, be employed by, or have any interest in (whether as owner,
principal, director, officer, partner, agent, consultant, stockholder or
otherwise) any busniess which is a direct competitor, (ii) induce or
attempt to induce any person or entity which is a customer or franchisee
of the Corporation or any of its affiliates as of the date of termination of
Executive's employment (or was a customer thereof within the one year prior
to such termination) to cease doing business in whole or in part with the
Corporation, or (iii) solicit, entice or induce any person who shall then be an
employee of the Corporation to become employed by any other person, firm or
corporation or to leave their employment with the Corporation, and Executive
shall not approach any such employee for such purpose of authorize or knowingly
approve the taking of such actions by any other person. Notwithstanding the
foregoing, the Corporation acknowledges that an actions taken by Executive to
take over the operation of a certain bakery shop located in the State of New
York, in its capacity as Payee under a certain promissory Note delivered in
favor of Executive, for the purposes of selling such bakery, will not
constitute a breach of the foregoing covenant against competition by which
Executive is bound.
The restrictions contained in this Paragraph 6(a) shall apply in the specific
geographic areas and customer markets within such geographic areas
served by the Corporation or its affiliates or franchisees at any time
during, or upon termination of, Executive's employment.
Nothing in the foregoing shall prohibit Executive from engaging in any business
that is not in competition with the corporation after termination of
employment for cause by the corporation, or investing in the securities of
any corporation having securities listed on a national securities exchange,
provided that such investment does not exceed 5% of any class of securities
of any corporation engaged in business in competition with the Corporation,
and provided that such ownership represents a passive investment and that
neither Executive nor any group of persons including him, in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part
in its business, other than exercising his rights as a shareholder, or
seeks to do any of the foregoing.
(b) Executive acknowledges that during the term of his employment,
he will have access to confidential information of the corporation,
including information about business plans, costs, customers, profits,
markets, sales, products, key personnel, pricing policies,operational
methods, other business affairs and methods and other information not
available to the public or in the public domain (hereinafter
referred to as a "Confidential Information"). In recognition of the
foregoing, Executive covenants and agrees that (I) except required
by his duties to the Corporation, Executive will keep secret all
Confidential Information of the corporation and will not, directly or
indirectly, either during the term of his employment hereunder or for
a period of two years after corporation's termination of Executive's
employment for cause, disclose or disseminate to anyone or make use of,
for any purpose whatsoever except for the benefit of the corporation
and (ii) Executive will promptly deliver to the Corporation all tangible
materials and objects containing Confidential Information (including
all copies thereof, whether prepared by Executive or others)
which he may possess or have under his control. The term "Confidential
Information" shall not include any information which an be demonstrated
(i) to be generally known in the industry or to the public other than through
breach of Executive's obligations hereunder, (ii) to have been in Executive's
possession prior to his employment with the corporation and not assigned
to the Corporation, or (iii) to have been disclosed to Executive by an
independent third party not under any obligation or confidentiality.
(c) The parties agree that either party may assert a claim arising
under this Agreement, in the United States District Court for the Northern
District of Illinois, or if such court does not have subject matter
jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in the State of Illinois, and both parties consent to the non-
exclusive jurisdiction of any such court in any such suit, action or proceeding.
(d) In the event of any breach or violation of the restriction contained
in subparagraph (a) above, the period therein specified shall xxxxx
during the time of any violation thereof and that portion remaining a the
time of commencement of any violation shall not begin to run until such
violation has been fully and finally cured.
(e) Executive represents that he has, prior to the execution of this
Agreement, reviewed this Agreement thoroughly with his legal counsel.
8. Survival. The provisions of paragraphs 6 and 7 shall survive the
termination of employment under this Agreement for any reason whatsoever.
9. Miscellaneous.
(a) Any and all notices or other communications given under this Agreement
shall be in writing and shall be deemed to have been duly given on the
date of delivery, if delivered in person, or three days after mailing,
if mailed within the continental United States, postage prepaid, by
registered or certified mail, to the party entitled to receive same,
at his or its address set forth in the preamble hereto, or such other
address or addresses as either party shall specify in a notice given in
conformity with the provisions of this paragraph.
(b) This Agreement cancels and supersedes any
and all prior agreements and understandings between the parties hereto
with respect to the employment of Executive by the Corporation.
This Agreement constitutes the entire agreement between the parties
with respect to the matters herein provided, and no modifications, amendments
or waiver of any provision hereof shall be effective unless in writing and
signed by the parties hereto.
(c) All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities
of Executive hereunder are of a person nature and shall not be assignable
or delegable in whole or in part by Executive.
(d) If any provision of this Agreement or application thereof to anyone,
under any circumstances is adjudicated to be invalid or unenforceable in
any jurisdiction, such invalidity or unenforeability shall not affect any
other provision of application of this Agreement which can be given
effect without the invalid or unenforceable provision or applicant and
shall not invalidate or render unenforceable such provision or application
in any other jurisdiction.
(e) No remedy conferred upon any party by this Agreement is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity. No delay or omission by
any party in exercising any right, remedy or power hereunder or existing
at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by the party possessing
the same from time to time and as often as may be deemed expedient
or necessary by such party in its sole discretion.
(f) This Agreement may be executed in several counterparts, each which is an
original and all of which shall constitute one instrument. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
(g) The validity, interpretation, construction performance and enforcement
of the Agreement shall be governed by the laws of the State of Illinois.
(h) The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
IN WITNESS HEREOF, the parties have executed this Agreement as of the
date and year first above written.
CORPORATION:
My Favorite Muffin, Too, Inc.
Attest: s/Xxxxxxxx X. Xxxxxx By: s/Xxxxxxx Xxxxx
------------------------ ---------------------------
EXECUTIVE:
Witness:s/Xxxxxxxx X. Xxxxxx s/Xxxx X. Xxxxx
------------------------ ----------------------------
Xxxx X. Xxxxx
The Corporation's parent,
BAB Holdings, Inc.,
hereby consents to the foregoing
Employment Agreement.
BAB HOLDINGS, INC.
Attest:s/Xxxxxxxx X. Xxxxxx By :s/Xxxxxxx Xxxxx
-------------------------- ------------------------------
