EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of December 16, 1996, by and between MAIN STREET AND MAIN INCORPORATED,
a Delaware corporation ("Employer"), and XXXX X. XXXXX, XX. ("Employee").
WHEREAS, Employer desires to employ Employee as its President and Chief
Executive Officer; and
WHEREAS, Employee requires, as a condition to accepting such
employment, the opportunity to acquire a meaningful interest in Employer's
common stock (the "Common Stock") and the added incentive to advance the
interests of Employer by possessing an option to purchase additional shares of
Common Stock; and
WHEREAS, in order to encourage Employee to accept employment with
Employer, Employer desires to sell shares of its Common Stock to Employee and to
issue to Employee options to acquire additional shares of its Common Stock; and
WHEREAS, Employer desires to employ Employee and Employee desires to
accept such employment, all on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth in this Agreement, the parties hereto agree as follows:
1. Employment; Duties. Employer hereby employs Employee, and Employee
hereby accepts such employment, as President and Chief Executive Officer of
Employer and in such other executive capacities and for such other executive
duties and services as shall from time to time be mutually agreed upon by
Employer and Employee.
2. Extent of Services. Employee shall devote such of Employee's
business time, attention, and efforts to the performance of Employee's duties
under this Agreement as may be reasonably necessary for the performance of such
duties, shall serve Employer faithfully and diligently, and shall not engage in
any other employment while employed by Employer that would prevent Employee from
carrying out Employee's duties to Employer.
3. Compensation and Other Benefits.
(a) Salary. Commencing January 1, 1997, Employer shall pay to
Employee, as compensation for the services rendered by Employee during
Employee's employment under this Agreement, a salary at a rate of $250,000.00
per annum, to be paid in equal bi-weekly installments or in such other periodic
installments upon which Employer and Employee shall mutually agree.
(b) Bonus. Employee shall be eligible to receive an annual
bonus in an amount to be determined in accordance with a salary and bonus plan
to be approved by Employer's Board of Directors.
(c) Stock Option Grants.
(i) As an essential element of Employee's agreement
to enter into this Agreement, Employer shall grant to Employee, as of the date
of this Agreement, an option to purchase an aggregate of 250,000 shares of
Employer's Common Stock at $2.00 per share exercisable at any time or from time
to time within 30 days of the commencement of Employee's employment. As a
condition to the grant of the options pursuant to this
Section 3(c)(i), Employee will execute and deliver to Employer a stock option
agreement in the form attached as Exhibit A hereto.
(ii) As an essential element of Employee's agreement
to enter into this Agreement, Employer also shall grant to Employee, as of the
date of this Agreement, options to purchase an aggregate of 250,000 shares of
Employer's Common Stock (the "Vesting Options"). The Vesting Options shall have
the following exercise prices and shall vest and become exercisable in the
following amounts on the following dates:
Per Share
Vesting Number of Exercise
Date Vesting Options Price
----------- --------------- ---------
December 16, 1996 100,000 $2.00
December 31, 1997 50,000 $3.00
June 30, 1998 50,000 $4.00
December 31, 1998 50,000 $5.00
Except as otherwise provided herein, the Vesting Options will vest and become
exercisable on the foregoing dates only if Employee's employment with Employer
has not terminated prior to such dates. Any Vesting Options granted pursuant to
this Section 3(c) that have not vested prior to the termination of Employee's
employment with Employer will be forfeited immediately upon the termination of
employment for any reason other than a termination as a result of the
circumstances specified in Sections 4(b)(i), (ii), (iii) or (vi). In the event
of a termination of employment under the circumstances specified in Sections
4(b)(i), (ii), (iii), or (vi), any unvested Vesting Options will become fully
vested and exercisable immediately upon such a termination of employment. As a
condition to the grant of the Vesting Options pursuant to this Section 3(c)(ii),
Employee shall be required to enter into a stock option agreement in the form as
set forth as Exhibit B hereto.
(d) Reimbursement. Without limiting the foregoing,
Employer shall reimburse Employee for all travel and entertainment expenses and
other ordinary and necessary business expenses incurred by Employee in
connection with the business of Employer and Employee's duties under this
Agreement. The term "business expenses" shall not include any item not at least
partially deductible by Employer for federal income tax purposes. To obtain
reimbursement, Employee shall submit to Employer receipts, bills, or sales slips
for the expenses incurred. Reimbursements shall be made by Employer monthly
within 10 business days of presentation by Employee of evidence of the expenses
incurred.
(e) Fringe Benefits. Employee shall be entitled to
participate in any group insurance, pension, retirement, vacation, expense
reimbursement, and other plans, programs, and benefits approved by the Board of
Directors and made available from time to time to executive employees of
Employer generally during the term of Employee's employment hereunder. The
foregoing shall not obligate Employer to adopt or maintain any particular plan,
program, or benefit.
4. Term of Employment.
(a) Employment Term. The term of Employee's
employment (the "Employment Term") hereunder shall commence on the date of this
Agreement and shall continue until December 31, 1998 and from year to year
thereafter, unless and until terminated by either party giving written notice to
the other not less than 60 days prior to the end of the then current term.
(b) Termination Under Certain Circumstances.
Notwithstanding anything to the contrary herein contained:
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(i) Death. Employee's employment shall be
automatically terminated, without notice, effective upon the date of Employee's
death;
(ii) Disability. If Employee shall fail, for
a period of more than 90 consecutive days, or for 90 days within any 180 day
period, to perform any of Employee's duties under this Agreement as the result
of illness or other incapacity, Employer may, at its option, upon notice to
Employee, terminate Employee's employment effective on the date of that notice;
(iii) Unilateral Decision of Employer.
Employer may, at its option, upon notice to Employee, terminate Employee's
employment effective on the date of that notice;
(iv) Unilateral Decision by Employee.
Employee may, at his option, upon notice to Employer, terminate Employee's
employment effective on the date of that notice;
(v) Termination "For Cause". Employer may,
at its option, upon notice to Employee, terminate Employee's employment "for
cause" effective on the date of such notice if Employee engages in an act or
acts involving a crime, moral turpitude, fraud, or dishonesty; or
(vi) Change in Control. Employee may, at his
option, upon notice to Employer, terminate Employee's employment effective on
the date of the notice in the event of a Change of Control of Employer.
(c) Result of Termination. In the event of the
termination of Employee's employment pursuant to Section 5(b)(iv) or (v) above,
Employee shall receive no further compensation under this Agreement. In the
event of the termination of Employee's employment pursuant to Section 5(b)(i) or
(ii) above, Employee shall continue to receive Employee's fixed cash
compensation for a period of one year following the date of such termination. In
the event of termination of Employee's employment pursuant to Section 5(b)(iii)
or (vi), Employer shall pay Employee his fixed salary for the balance of the
then current term of Employee's employment under this Agreement as if such
employment had not terminated.
(d) Change in Control. The term "Change in Control"
of Employer shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date
of this Agreement or, if Item 6(e) is no longer in effect, any regulations
issued by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 that serve similar purposes; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if and
when (i) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) other than a current director or officer of
Employer becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) directly or indirectly of securities of
Employer representing 15% or more of the combined voting power of Employer's
then-outstanding securities, except that this provision shall not apply to any
public or private offering of Employer's common stock nor shall this provision
apply to an acquisition that has been approved by at least two-thirds of the
members of the Board of Directors who are not affiliates or associates of such
person or by at least 80% of the issued and outstanding shares of Employer's
common stock beneficially owned by non-affiliates of such person; (ii) during
the period of this Agreement, individuals who, at the beginning of such period,
constituted the Board of Directors of Employer (the "Original Directors") cease
for any reason to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved (an "Approved
Director") by the unanimous vote of a Board of Directors constituted entirely of
Original Directors and Approved Directors; (iii) a tender offer or exchange
offer is made whereby the effect of such offer is to take over and control
Employer and such offer is consummated for the ownership of securities of
Employer representing 20% or more of the combined voting power of Employer's
then-outstanding voting securities; (iv) Employer is merged, consolidated, or
enters into a reorganization transaction with another person and as the result
of such merger, consolidation, or reorganization 3
less than 75% of the outstanding equity securities of the surviving or resulting
person shall then be owned in the aggregate by the former stockholders of
Employer; or (v) Employer transfers substantially all of its assets to another
person or entity that is not a wholly owned subsidiary of Employer; provided,
however, that notwithstanding the foregoing no Change of Control shall be deemed
to have occurred if such a Change of Control is a "Consented Change of Control."
A "Consented Change of Control" is any transaction described in clauses (i),
(iii), (iv) or (v) of this Section 4(d) if such transaction has been unanimously
approved by Employer's Board of Directors. Sales of Employer's Common Stock
beneficially owned or controlled by Employee shall not be considered in
determining whether a Change in Control has occurred.
5. Competition and Confidential Information.
(a) Interests to be Protected. The parties
acknowledge that Employee will perform essential services for Employer during
the term of Employee's employment with Employer. Employee will be exposed to,
have access to, and be required to work with, a considerable amount of
Confidential Information (as defined below). The parties also expressly
recognize and acknowledge that the personnel of Employer have been trained by
and are valuable to Employer and that it will incur substantial expense in
recruiting and training personnel, if Employer must hire new personnel or
retrain existing personnel to fill vacancies. The parties expressly recognize
that it could seriously impair the goodwill and diminish the value of Employer's
business should Employee compete with Employer in any manner whatsoever. The
parties acknowledge that this covenant has an extended duration; however, they
agree that this covenant is reasonable, and it is necessary for the protection
of Employer, its stockholders, and employees. For these and other reasons, and
the fact that there are many other employment opportunities available to
Employee if he should terminate his employment, the parties are in full and
complete agreement that the following restrictive covenants are fair and
reasonable and are entered into freely, voluntarily, and knowingly. Furthermore,
each party was given the opportunity to consult with independent legal counsel
before entering into this Agreement.
(b) Non-Competition. During the term of Employee's
employment with Employer and for the period ending 12 months after the
termination of Employee's employment with Employer, regardless of the reason
therefor, Employee shall not (whether directly or indirectly, as owner,
principal, agent, stockholder, director, officer, manager, employee, partner,
participant, or in any other capacity) engage or become financially interested
in any competitive business conducted within the Restricted Territory (as
defined below). As used herein, the term "competitive business" shall mean any
business that owns, operates, or franchises full-service casual dining
establishments; and the term "Restricted Territory" shall mean any area in which
Employer conducts its restaurant business during Employee's employment
hereunder.
(c) Non-Solicitation of Employees. During the term of
Employee's employment and for a period of 12 months after the termination of
Employee's employment with Employee, regardless of the reason therefor, Employee
shall not directly or indirectly, for himself, or on behalf of, or in
conjunction with, any other person, company, partnership, corporation, or other
entity, seek to hire or hire any of Employer's personnel or employees for the
purpose of having such employee engage in services that are the same, similar,
or related to the services that such employee provided for Employer.
(d) Confidential Information. Employee shall maintain
in strict secrecy all confidential or trade secret information, whether
patentable or not, relating to the business of Employer (the "Confidential
Information") obtained by Employee in the course of Employee's employment, and
Employee shall not, unless first authorized in writing by Employer, disclose to,
or use for Employee's benefit or for the benefit of any person, firm, or entity
at any time either during or subsequent to the term of Employee's employment,
any Confidential Information, except as required in the performance of
Employee's duties on behalf of Employer. For purposes hereof, Confidential
Information shall include without limitation any construction plans and drawings
or other reproductions or materials of any kind; any trade secrets, knowledge,
or information with respect to products and services provided, menu selection,
site selection, the purchase or lease and use of equipment, fixtures,
furnishings,
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signs, inventory, ingredients, and other products and materials required for or
related to the development, operation, or franchising of its restaurants; any
operating procedures, techniques, or know-how; any business methods or forms;
any names, addresses, and data on suppliers; and any business policies or other
information relating to or dealing with the purchasing, sales, advertising, or
promotional, or distribution policies or practices of Employer and its
Franchisor.
(e) Return of Books and Papers. Upon the termination
of Employee's employment with Employer for any reason, Employee shall deliver
promptly to Employer all samples or demonstration models, catalogues, manuals,
memoranda, drawings, formulae, specifications, and operating procedures; all
cost, pricing, and other financial data; all supplier information; all other
written or printed materials that are the property of Employer (and any copies
of them); and all other materials which may contain Confidential Information
relating to the business of Employer, which Employee may then have in his
possession whether prepared by Employee or not.
(f) Disclosure of Information. Employee shall
disclose promptly to Employer, or its nominee, any and all ideas, designs,
processes and improvements of any kind relating to the business of Employer,
whether patentable or not, conceived or made by Employee, either alone or
jointly with others, during working hours or otherwise, during the entire period
of Employee's employment with Employer, or within six months thereafter.
(g) Assignment. Employee hereby assigns to Employer
or its nominee, the entire right, title, and interest in and to all inventions,
discoveries, and improvements, whether patentable or not, that Employee may
conceive or make during Employee's employment with Employer, or within six
months thereafter, and which relate to the business of Employer. Whenever
requested to do so by Employer, whether during the period of Employee's
employment or thereafter, Employee shall execute any and all applications,
assignments, and other instruments that Employer shall deem necessary or
appropriate to apply for, obtain, or maintain Letters Patent of the United
States or of any foreign country, or to protect otherwise the interest of
Employer therein.
(h) Equitable Relief. In the event a violation of any
of the restrictions contained in this Section is established, Employer shall be
entitled to preliminary and permanent injunctive relief as well as damages and
an equitable accounting of all earnings, profits, and other benefits arising
from such violation, which right shall be cumulative and in addition to any
other rights or remedies to which Employer may be entitled. In the event of a
violation of any provision of Sections (b), (c), (f), or (g) of this Agreement,
the period for which those provisions would remain in effect shall be extended
for a period of time equal to that period beginning when such violation
commenced and ending when the activities constituting such violation shall have
been finally terminated in good faith.
(i) Restrictions Separable. If the scope of any
provision of this Section is found by a Court to be too broad to permit
enforcement to its full extent, then such provision shall be enforced to the
maximum extent permitted by law. The parties agree that the scope of any
provision of this Section may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. Each and every restriction set forth in this Section is
independent and severable from the others, and no such restriction shall be
rendered unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part.
6. Miscellaneous.
(a) Notices. All notices, requests, demands, and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received (i) if
personally delivered, on the date of delivery, (ii) if by facsimile
transmission, 24 hours after transmitter's confirmation of the receipt of such
transmission, (iii) if mailed, three days after deposit in the United States
mail,
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registered or certified, return receipt requested, postage prepaid and addressed
as provided below, or (iv) if by a courier delivery service providing overnight
or "next-day" delivery, on the next business day after deposit with such service
addressed as follows:
(i) If to Employer:
Main Street and Main Incorporated
0000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
(ii) If to Employee:
Xxxx X. Xxxxx, Xx.
0000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this paragraph for the giving of notice.
(b) Indulgences; Waivers. Neither any failure nor any
delay on the part of either party to exercise any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude
any other or further exercise of the same or of any other right, remedy, power,
or privilege, nor shall any waiver of any right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of such right, remedy,
power, or privilege with respect to any other occurrence. No waiver shall be
binding unless executed in writing by the party making the waiver.
(c) Controlling Law. This Agreement, and all
questions relating to its validity, interpretation, performance and enforcement,
shall be governed by and construed in accordance with the laws of the state of
Arizona, notwithstanding any Arizona or other conflict-of-interest provisions to
the contrary.
(d) Binding Nature of Agreement, Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors,
and assigns; provided that because the obligations of Employee hereunder involve
the performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement, successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity that acquires a majority of the stock or assets of Employer by sale,
merger, consolidation, liquidation, or other form of transfer. Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform it if no such succession had taken place.
(e) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as the
signatories.
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(f) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
(g) Entire Agreement. This Agreement contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings, inducements and conditions, express or implied,
oral or written, except as herein contained. The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof. This Agreement may not be modified or amended
other than by an agreement in writing.
(h) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
MAIN STREET AND MAIN
INCORPORATED
By
--------------------------------------
Xxxx Xxxxxxx, Chairman
----------------------------------------
Xxxx X. Xxxxx, Xx.
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