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EXHIBIT 10.4.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
________________, 1998, by and between Newriders, Inc., a Nevada corporation
(the "Company") and Xxxxxxx Xxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Company and its affiliates are engaged in a combined
publishing, entertainment, apparel, accessory and restaurant business which
markets services and products to persons who identify with the "freedom of the
road" lifestyle surrounding the American-made cruiser motorcycle;
WHEREAS, the Executive has executed that certain LLC Interest Contribution
Agreement dated June ____, 1998, by and among the Executive, the Company and
other parties therein named (the "Contribution Agreement") pursuant to which the
Executive has agreed to contribute to Easyriders, Inc., ("Easyriders") all of
the Executive's interest in M&B Restaurants, L.C., a Texas limited liability
company, subject to, among other things, the execution of this Agreement;
WHEREAS, the Executive, by education and experience, possesses
extraordinary qualifications to serve as chief executive officer of the Company
and Easyriders; and
WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept such employment with the Company, in each case upon the terms
and subject to the conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, it is agreed as follows:
1. EMPLOYMENT. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, subject to the terms and
conditions set forth herein. This Agreement shall become effective only upon the
closing date of the transactions contemplated by the Contribution Agreement (the
"Effective Date").
2. TERM. Subject to the provisions hereof, the term of the Executive's
employment by the Company under this Agreement shall be for a period of five (5)
years commencing on the Effective Date, provided that such term of employment
shall continue thereafter unless and until terminated by either the Company or
the Executive upon no less than sixty (60) days' prior written notice to the
other of the desire to terminate such employment. The term of the Executive's
employment hereunder, including any continuation of the original term, is
hereinafter referred to as the "Employment Period."
3. POSITION AND DUTIES. During the Employment Period, the Executive agrees
to be employed by and to serve the Company as its President and Chief Executive
Officer,
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and the Company agrees to employ and retain the Executive in such capacities.
The Executive shall also perform similar services as chief executive officer for
Easyriders and other any other Affiliates (as hereinafter defined) of the
Company without additional compensation, as may be requested from time to time
by the Board of Directors of the Company. In such capacities, the Executive
shall render such managerial, administrative and other services as are
customarily associated with or incident to such positions and shall have the
authority necessary or appropriate to perform such duties and responsibilities.
The Executive shall devote his business time, energy, and skill to the affairs
of the Company on a full-time basis and the Executive shall report to the
Company's and Easyriders' board of directors. The Company shall not appoint any
individual to whom the Executive shall report, or who shall have the right to
supervise the Executive, provided, however, that the Company's board of
directors may appoint one or more members of the board of directors to
coordinate the reporting from the Executive to the board of directors.
4. DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Affiliate" of the Company means any person, corporation or other
entity that, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control
with the Company.
(b) "Termination For Cause" shall mean termination by the Company of the
Executive's employment by the Company by reason of the Executive's
willful dishonesty towards or fraud upon the Company, or by reason of
the Executive's willful material breach of this Agreement which has
resulted in material injury to the Company. No act or failure to act
shall be considered "willful" if it is done by the Executive in the
good faith belief that his act or omission furthered the interests of
the Company.
(c) "Termination Other Than For Cause" shall mean termination by the
Company of the Executive's employment by the Company (other than a
Termination For Cause).
(d) "Voluntary Resignation" shall mean termination by the Executive of
the Executive's employment by the Company other than (i) a
Resignation for Sufficient Reason and (ii) a termination by reason of
the Executive's death or disability as described herein.
(e) "Resignation For Sufficient Reason" means termination by the
Executive of the Executive's employment by the Company (i) within six
(6) months following a "Change in Control," or (ii) at any time after
the Company changes the Executive's title, working conditions,
duties, status or authority in a manner that is not consistent with
the office of chief executive officer of the Company and Easyriders
or otherwise breaches this Agreement in any material respect.
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(f) "Change in Control" shall mean (i) the time that the Company first
determines that any person (and all other persons who constitute a
group within the meaning ofSection 13 (d) (3) of the Securities
Exchange Act of 1934 ("Exchange Act")), other than a person who is a
director or officer of the Company or Easyriders on the Effective
Date, has acquired direct or indirect beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of twenty percent
(20%) or more of Easyriders' outstanding securities, or (ii) the
first day on which a majority of the members of Easyriders' board of
directors are not "Continuing Directors."
(g) "Continuing Directors" shall mean, as of any date of determination,
any member of Easyriders' board of directors who (i) was a member of
that board of directors on the Effective Date, (ii) has been a member
of that board of directors for the two years immediately preceding
such date of determination, or (iii) was nominated for election or
elected to Easyriders' board of directors with the affirmative vote
of a majority of the Continuing Directors who were members of
Easyriders' board of directors at the time of such nomination or
election.
5. TERMINATION FOR CAUSE. Termination For Cause may be effected by the Company
at any time during the Employment Period, effective upon written notification to
the Executive which specifies the reasons therefor. Upon Termination For Cause,
the Executive shall promptly be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Company or its Affiliates in which
the Executive is a participant to the full extent of the Executive's rights
under such plans, accrued vacation pay and any appropriate business expenses
incurred by the Executive in connection with his duties hereunder, all to the
date of termination, but the Executive shall not be paid any other compensation
or reimbursement of any kind, including without limitation, Severance
Compensation.
6. RESIGNATION FOR SUFFICIENT REASON OR TERMINATION OTHER THAN FOR CAUSE. The
Company may effect a Termination Other Than For Cause at any time upon giving
written notice to the Executive at least sixty (60) days prior to the effective
date of termination specified in such notice. Resignation for Sufficient Reason
may be effected by the Executive at any time, effective upon written notice of
resignation to the Company which specifies the reasons therefor. Upon any
Termination Other Than For Cause or upon any Resignation For Sufficient Reason,
the Executive shall promptly be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company or its Affiliates
in which the Executive is a participant to the full extent of the Executive's
rights under such plans (including accelerated vesting, if any, of awards
granted to the Executive under Easyriders' stock option plan), accrued vacation
pay and any appropriate business expenses incurred by the Executive in
connection with his duties hereunder, all to the date of termination, and all
Severance Compensation as hereinafter provided.
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7. TERMINATION BY REASON OF DISABILITY. If, during the Employment Period, the
Executive, in the reasonable judgment of the Company's board of directors, has
failed to perform his duties under this Agreement on account of illness or
physical or mental incapacity, and such illness or incapacity continues for a
period of more than ninety (90) consecutive days, the Company shall have the
right to terminate the Executive's employment hereunder by written notification
to the Executive and payment to the Executive of all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of the Company or its
Affiliates in which the Executive is a participant to the full extent of the
Executive's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Executive in connection with his duties
hereunder, all to the date of termination, with the exception of medical and
dental benefits which shall continue through the expiration of the initial
five-year Employment Period, but the Executive shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
Severance Compensation.
8. DEATH. In the event of the Executive's death during the Employment Period,
Executive's employment shall be deemed to have terminated as of the last day of
the month during which his death occurs and the Company shall promptly pay to
his estate or such beneficiaries as the Executive may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Company or its Affiliates in which the Executive is a
participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but the Executive's estate shall not be paid any other compensation
or reimbursement of any kind, including without limitation, Severance
Compensation.
9. VOLUNTARY RESIGNATION. The Executive shall give the Company written notice of
his Voluntary Resignation at least sixty (60) days prior to the effective date
of termination of employment. In the event of a Voluntary Resignation, the
Company shall promptly pay all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Company or its Affiliates in which the Executive
is a participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind, including
without limitation, Severance Compensation.
10. BASE SALARY. As payment for the services to be rendered by the Executive as
provided in Section 3, the Company agrees to pay to the Executive during the
Employment Period a base salary at the annual rate of two hundred thousand
dollars ($200,000) payable in installments in accordance with the Company's
customary payroll practices. The Executive's base salary shall be reviewed
annually by the Compensation Committee of Easyriders' board of directors
("Compensation Committee"), and the Base Salary for each year (or portion
thereof)
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beginning on the first anniversary of the Effective Date, may be increased (but
not decreased) to conform to the Company's compensation policies for senior
management.
11. BONUSES. The Executive shall be eligible to receive a discretionary bonus
for each year (or portion thereof) during the Employment Period, with the actual
amount of any such bonus to be determined in the sole discretion of the
Company's board of directors based upon its evaluation of the Executive's
performance during such year. All such bonuses shall be reviewed annually by the
Compensation Committee.
12. ADDITIONAL BENEFITS. During the term of this Agreement, the Executive shall
be entitled to the following fringe benefits:
(a) Executive Benefits. The Executive shall be eligible to participate in
such of the Company's and Easyriders' benefits and deferred compensation plans
as are now generally available or later made generally available to executive
officers or senior employees of the Company or Easyriders, including, without
limitation, the Company's and Easyriders' stock option plan, profit sharing
plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, financial planning, retirement plans and
supplementary executive retirement plans, if any.
(b) Vacation. The Executive shall be entitled to four (4) weeks of
vacation during each year during the Employment Period, prorated for partial
years.
(c) Life Insurance.During the Employment Period, the Company or an
Affiliate thereof shall at its expense procure and keep in effect term life
insurance on the life of the Executive payable to the Employee's designated
beneficiaries in the aggregate amount of $1,000,000. The Company or an Affiliate
thereof shall also maintain at its cost all life insurance policies on the
Executive's life which are required by the Company's (or its Affiliates')
lenders and, at any such time as such policy is no longer so required, the
Company shall offer to assign and transfer such policy to the Executive for an
amount equal to its then cash value (if any).
(d) Reimbursement for Expenses. During the Employment Period, the
Corporation shall reimburse the Executive for reasonable and properly documented
out-of-pocket business and/or entertainment expenses incurred by the Executive
in connection with his duties under this Agreement. The Company also shall
furnish the Executive, without charge, with all necessary or appropriate office
facilities and secretarial support.
13. SEVERANCE COMPENSATION. In the event the Executive's employment is
terminated by a Termination Other Than For Cause or by a Resignation For
Sufficient Reason within the initial five-year term of the Employment Period,
the Executive shall be paid as severance compensation ("Severance Compensation")
his base salary (at the rate payable at the time of such termination), for a
period equal to the remaining portion of the initial five-year Employment
Period, not to exceed thirty (30) months. The Severance Compensation payable to
the Executive during such period shall NOT be reduced by the amount of any
compensation that the Executive actually receives from any new employer after
the date of termination and the Executive is under no obligation to mitigate the
amount owed the Executive pursuant to this
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Section by seeking other employment or otherwise. Notwithstanding anything in
this Section to the contrary, the Executive may in the Executive's sole
discretion, by delivery of a notice to the Company within sixty (60) days
following a Termination Other Than For Cause or a Resignation For Sufficient
Reason, elect to receive from the Company a lump sum Severance Compensation
payment by bank cashier's check equal to the present value (discounted at the
rate of 5% per annum) of the flow of cash payments that would otherwise be paid
to the Executive as Severance Compensation under this Section. The Executive
shall also be entitled to an accelerated vesting of any awards granted to the
Executive under the Company's or Easyriders' stock option plan to the extent
provided in the stock option agreement entered into at the time of grant. The
Executive shall continue to accrue retirement benefits and shall continue to
enjoy any medical, dental, disability and other benefits under any plans of the
Company or its Affiliates in which the Executive is a participant to the full
extent of the Executive's rights under such plans, including any perquisites
provided under this Agreement, through the remaining term of the initial
five-year Employment Period not to exceed thirty (30) months; provided, however,
that the benefits under any such plans of the Company or its Affiliates in which
the Executive is a participant, including any such perquisites, shall cease upon
re-employment of Executive by a new employer.
14. REGISTRATION RIGHTS. Within 90 days after the request of the Executive
following a Termination Other Than For Cause or a Resignation For Sufficient
Cause, the Company shall cause Easyriders to file (and cause Easyriders to use
its best efforts to cause to become effective within 120 days after such
request), maintain, supplement and update for a period of at least 30 days from
its effective date, a registration statement in accordance with the applicable
rules and regulations of the Securities and Exchange Commission which permits
the Executive to sell or distribute all of the Executive's shares of Easyriders'
common stock which constitute Restricted Securities (as defined below) or such
lesser number of shares specified in the Executive's request; provided that
Easyriders shall have no obligation to file more than one such registration
statement. "Restricted Securities" means all of Easyriders common stock received
by Executive pursuant to the Contribution Agreement; provided, however, that any
Restricted Securities shall cease to be Restricted Securities when such
Restricted Securities may be sold under Rule 144 (or any similar provision then
in force) under the Securities Act of 1933, as amended. In connection with the
offering of any of Easyriders' shares pursuant to this section, the Company
shall also take such action as may be reasonably necessary to qualify or
register such shares under the "blue sky" or securities laws of such states as
may be reasonably requested by the Executive. All reasonable costs and expenses
of registration (excluding underwriter's compensation) of the Executive's shares
of Easyriders' stock shall be borne by the Company or Easyriders. The rights and
obligations of the Executive and the Company under this Section 14 shall be
subject to such other terms and conditions, mutually satisfactory to the
Executive and the Company, as are customarily contained in registration rights
agreements, including, but not limited to, with respect to priorities,
holdbacks, blackouts, selection of underwriters, registration procedures and
indemnification.
15. OUTSIDE ACTIVITIES. Nothing in this Agreement shall preclude the Executive
from devoting time during reasonable periods required for investing personal
assets and/or those of family members in such form or manner that will not
violate this Agreement, including but not limited to Sections 3 and 18 hereof.
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16. PAYMENT OBLIGATIONS. The Company's obligation to pay the Executive the
Severance Compensation and to make the arrangements provided herein shall be
unconditional, and the Executive shall have no obligation whatsoever to mitigate
damages hereunder. If litigation after a Termination Other Than For Cause or a
Registration For Sufficient Reason shall be brought to enforce or interpret any
provision contained herein, the Company, to the extent permitted by applicable
law and the Company's articles of incorporation and bylaws, hereby indemnifies
and agrees to reimburse the Executive for the Executive's reasonable attorneys'
fees and disbursements incurred in such litigation if the Executive prevails in
such litigation.
17. COVENANT NOT TO DISCLOSE. The Executive covenants and agrees that he will
not, at any time during or after the termination of his employment by the
Company, communicate or disclose to any person, corporation or other entity, or
use for his own account, or advise, discuss with, or in any way assist any other
person, corporation or entity in obtaining or learning about, without the prior
written consent of the Company, confidential information concerning the business
and affairs of the Company or any of its Affiliates. The Executive further
covenants and agrees that he shall retain all such knowledge and information
concerning the foregoing in trust for the sole benefit of the Company and its
Affiliates and their respective successors and assigns.
18. AGREEMENT NOT TO COMPETE.For a period beginning on the Effective Date and
ending on the later of (i) the expiration or other termination (for any reason)
of the Employment Period or (ii) the expiration of the period, if any, for which
the Executive is entitled to receive Severance Compensation under Section 13
hereof, Executive agrees that he shall not, for any reason, directly or
indirectly, engage or be interested in, and shall not, directly or indirectly,
have any interest in, own, manage, operate, control, be connected with as a
stockholder, joint venturer, officer, partner, employee or consultant, or
otherwise engage or invest or participate in any restaurant business that
specializes in barbecue menu items, or that utilizes a motorcycle-based theme or
decor, at any location which is within five (5) miles of any restaurant owned or
operated by the Company or any of its Affiliates on the date of expiration or
other termination of the Employment Period. Executive agrees that the duration
and area for which the covenant set forth in this Section 18 is to be effective
are reasonable. In the event that any court determines that the time period or
the geographical areas provided for in this Section 18, or both of them are
unreasonable and that such covenant is to that extent unenforceable, such
covenant shall remain in full force and effect for the greatest time period and
in the greatest geographical area that would not render it unenforceable.
19. ESSENTIAL NATURE OF COVENANTS. The covenants contained in Sections 17 and 18
of this Agreement shall be construed as independent of any other provision of
this Agreement and the existence of any claim or cause of action of the
Executive against the Company or any of its Affiliates, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of said covenant. The Executive understands that the covenants
contained in Sections 17 and 18 are essential elements of the transactions
contemplated by this Agreement and, but for the agreement of the Executive in
Sections 17 and 18, the Company would not have agreed to enter into such
transactions. The Executive has been advised to consult with his counsel in
order to be informed in all respects
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concerning the reasonableness and propriety of Sections 17 and 18 with specific
regard to the nature of the business conducted by the Company, and the Executive
acknowledges that Sections 17 and 18 are reasonable in all respects.
20. REMEDIES. In the event of a breach or threatened breach by the Executive of
Section 17 or 18, the Company shall be entitled to make application for a
temporary restraining order and an injunction restraining the Executive from the
commission of such breach. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of money damages.
21. WAIVER OF BREACH. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by the other party.
22. BINDING EFFECT.This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective permitted successors,
assigns, heirs and legal representatives. The Company may assign this Agreement
to an Affiliate only with the prior written consent of the Executive, which
consent shall not be unreasonably withheld. The Executive may not assign this
Agreement.
23. SEVERABILITY. The invalidity of all or any part of any section of this
Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
24. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall, when executed, be deemed to be an original, but all of
which together shall constitute one and the same instrument.
25. GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with the laws of the state of California.
26. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, understandings and
arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NEWRIDERS, INC.
By: -------------------------------- ----------------------------------------
Name: XXXXXXX XXXXXXX
Title:
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