EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
January 1, 1999, by and between MAIN STREET AND MAIN INCORPORATED, A Delaware
corporation ("Employer"), and XXXX X. XXXXX, XX. ("Employee").
WHEREAS, Employer desires to continue to employ Employee as its
President and Chief Executive Officer; and
WHEREAS, Employer desires to employ Employee and Employee desires to
accept such employment on all 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, 1999, 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 $300,000.00 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) 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.
(d) FRINGE BENEFITS. Employee shall be entitled to participate in any
group insurance, pension, retirement, vacation, stock option
grants, 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, 2000 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:
(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 l3d-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
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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: /s/ Xxxx X. Xxxxxxx, Chairman
---------------------------------------
Xxxx X. Xxxxxxx, Chairman
/s/ Xxxx X. Xxxxx, Xx.
---------------------------------------
Xxxx X. Xxxxx, Xx.
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