PRETZEL TIME, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of September 2, 1997,
by and between Pretzel Time, Inc., a Pennsylvania corporation (the "Company"),
and Xxxxxx X. Xxxxxxxxx (the "Employee").
In consideration of the promises and mutual covenants contained
herein, the parties hereto agree as follows:
1. Employment; Location
The Company hereby employs Employee and Employee hereby accepts
such employment and agrees to perform his duties at such location(s) as may be
mutually agreed between the parties.
2. Term
The Company agrees to employ Employee and Employee agrees to accept
employment with the Company commencing on the date of this Agreement and
terminating on the earlier of any of the following events:
2.1 the termination of this Agreement pursuant to Section 6 below; or
2.2 the termination of the Shareholders Agreement of even date entered into by
and among
Employee, Xxx. Xxxxxx' Holding Company, Inc. and the Company.
3. Duties
Employee shall be an employee of the Company. Employee shall
diligently execute his duties to the Company. Those duties include attending
Board of Directors' meetings in person or by telephone, counseling with the
other executive officers of the Company and performing such other duties
assigned to him by the Board of Directors of the Company. No material change in
scope of employment shall occur after the date hereof without the mutual consent
of the Parties. Employee shall devote such time, attention, skills and efforts
as mutually agreed upon for the discharge of Employee's obligations in
accordance with this Agreement. Employee shall perform such duties subject to
the general supervision and control of the Company's Board of Directors.
4. Compensation and Benefits
The Company shall pay Employee, and Employee accepts as full
compensation for all services to be rendered to the Company, the following
compensation and benefits:
4.1 Salary. During the term of this Agreement, the Company shall
pay Employee a monthly salary of Sixteen Thousand Six Hundred Sixty-Six and
67/100 Dollars ($16,666.67). Employee's salary will be payable in equal
installments at least monthly on the last day of each month.
4.2 Bonus. The Company shall pay to Employee a monthly bonus
calculated in accordance with the formula therefore set forth in the Budget (as
defined in that certain Management Agreement of even date between Xxx. Xxxxxx'
Original Cookies, Inc. and the Company).
4.3 Additional Benefits. The Company at its expense shall continue
those benefits as Employee is currently receiving from the Company. The Company
shall satisfy any deficiency owed upon termination of the lease of Employee's
automobile, provided that this sentence will not apply in the event that
Employee will purchase the vehicle at the end of the lease term.
4.4 Vacation, Sick Leave, and Holidays. Employee shall be entitled
to an aggregate of up to three (3) weeks leave for vacation each calendar year
at full pay or such increased leave as may be allowed by the Company's Board of
Directors for members of management generally.
4.5 Deductions. The Company shall have the right to deduct from the
compensation due to Employee hereunder any and all sums required for social
security and withholding taxes and for any other federal, state, or local tax or
charge which may be hereafter enacted or required by law as a charge on the
compensation of Employee.
5. Business Expenses
The Company shall promptly reimburse Employee for reasonable
out-of-pocket expenses he incurs for meals, lodging and travel incurred in
attending meetings of the Board of Directors or otherwise incurred at the
request of the Company. Such expenses shall be reimbursed to the extent they are
consistent with the Company's written travel policies. The Employee shall
furnish to the Company adequate records and other documentary evidence required
by all federal and state statutes and regulations issued by the appropriate
taxing authorities for the substantiation of each such business expense as a
deduction on the federal or state income tax returns of the Company.
6. Termination
6.1 Termination by Death or Disability. This Agreement and
Employee's employment hereunder shall terminate upon Employee's death or
permanent disability. Permanent disability shall be determined by a physician
selected by the board of directors of the Company (with the concurrence of one
(1) director previously selected by Employee, and director previously selected
by Xxx. Xxxxxx' Holding Company, Inc.).
6.2 Termination for Cause. This Agreement is immediately terminable
for "cause" (as defined below) upon written notice from the Company to Employee.
As used in this Agreement, "cause" shall include (i) Employee's material breach
of his duties and obligations under this Agreement, (ii) fraudulent, grossly
negligent or criminal activities, or (iii) any activity that causes substantial
harm to the Company, its reputation, or to its directors or employees. A
determination of whether Employee's actions justify termination for cause, and
the date on which such termination is effective, shall be made by arbitration
pursuant to Section 13 below.
6.3 Termination by Employee. Employee may terminate this Agreement
and his employment with the Company upon thirty (30) days prior written notice
to the Company.
6.4 Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and Employee under this
Agreement shall cease except as provided in Sections 7 through 17 below. Upon
such termination, Employee or his representative or estate shall be entitled to
receive only the compensation, benefits, and reimbursement earned or accrued by
him under Sections 4 and 5 above prior to the date of termination, computed pro
rata up to and including the date of termination, but shall not be entitled to
any further compensation, benefits, or reimbursement from such date, other than
as required by law.
7. Covenant Not to Compete
7.1 Covenant. Employee hereby agrees that, while he is employed by
the Company pursuant to this Agreement, and, in any event, during the three-year
period following the termination of his employment hereunder, he will not
directly or indirectly compete (as defined in Section 7.2 below) with the
Company in the United States or internationally. The Parties hereby stipulate
that the three-year time period and the world-wide territorial restriction are
necessary to protect the Company's substantial investment in marketing,
feasibility studies, and servicing both current and expansion markets.
7.2 Direct and Indirect Competition. As used herein, the phrase
"directly or indirectly compete" shall include owning, managing, operating or
controlling, or participating in the ownership, management, operation or control
of, or being connected with or having any interest in, as a stockholder,
director, officer, employee, agent, consultant, assistant, advisor, sole
proprietor, partner or otherwise, any business (other than the Company's) which
is the same as, or similar to, or competitive with any retail Pretzel and/or
cookie business conducted or to be conducted by the Company or any of the
Company's subsidiaries; provided, however, that this prohibition shall not apply
to ownership of less than one percent (1%) of the voting stock in companies
whose stock is traded on a national securities exchange or in the
over-the-counter market. "Directly or indirectly compete" shall also include:
(i) the hiring away of employees of the Company whether to work for or with
Employee, or otherwise, and (ii) inducing any customer of Company to terminate
its business relationship with Company in favor of a third party, whether or not
Employee is an employee, officer, director, consultant to, shareholder or
otherwise, of such third party. The parties agree that "directly or indirectly
compete" shall not include performance by Employee of his rights or obligations
pursuant to that certain Area Developer Agreement and Franchise Agreement
between the Parties of even date herewith.
7.3 Enforceability. If any of the provisions of this Section 7 is
held unenforceable, the remaining provisions shall nevertheless remain
enforceable, and the court making such determination shall modify, among other
things, the scope, duration, or geographic area of this Section to preserve the
enforceability hereof to the maximum extent then permitted by law. In addition,
the enforceability of this Section is also subject to the injunctive and other
equitable powers of a court as described in Section 11 below.
8. Confidential Information
8.1 Employee acknowledges that as a result of his past and
continuing employment or consultancy with the Company, he possesses and will
develop, discover, have access to, and become acquainted with, technical,
financial, operational, marketing, personnel, and other proprietary,
confidential or trade secret information relating to the present or contemplated
products or the conduct of business of the Company which is of a confidential
and proprietary nature ("Confidential Information"). Confidential Information
shall also include all "trade secrets" as defined in the Uniform Trade Secrets
Act, Utah Code Xxx. " 13-24-1 et seq. (1996, as amended).
8.2 Employee agrees that all files, records, documents, and the
like relating to such Confidential Information, whether prepared by him or
otherwise coming into his possession, shall remain the exclusive property of the
Company, and Employee hereby agrees to promptly disclose such Confidential
Information to the Company upon request and hereby assigns to the Company any
rights which he may acquire in any Confidential Information. Employee further
agrees not to disclose or use any Confidential Information and to use his best
efforts to prevent the disclosure or use of any Confidential Information either
during the term of his employment or consultancy or at any time thereafter,
except as may be necessary in the ordinary course of performing his duties under
this Agreement. Upon termination of Employee's employment or consultancy with
the Company for any reason, Employee shall promptly deliver to the Company all
materials, documents, data, equipment, and other physical property of any nature
containing or pertaining to any Confidential Information, and Employee shall not
take from the Company's premises any such material or equipment or any
reproduction thereof.
9. Inventions
9.1 Disclosure of Inventions. Employee hereby agrees that if, in
the scope of his employment relationship with the Company, he conceives, learns,
makes or first reduces to practice, either alone or jointly with others, any
"Employment Inventions" (as defined in Section 9.3 below) while he is employed
by the Company, he will promptly disclose such Employment Inventions to the
Company or to any person designated by it. Employee acknowledges the prior
invention of a pretzel twisting machine, the rights to which are owned by the
Company.
9.2 Ownership, Assignment, Assistance, and Power of Attorney. All
Employment Inventions (as defined in Section 9.3 below) shall be the sole and
exclusive property of the Company, and the Company shall have the right to use
and to apply for patents, copyrights, or other statutory or common law
protection for such Employment Inventions in any country. Employee hereby
assigns to the Company any rights which he may acquire in such Employment
Inventions. Furthermore, Employee agrees to assist the Company in every proper
way at the Company's expense to obtain patents, copyrights, and other statutory
common law protections for such Employment Inventions in any country and to
enforce such rights from time to time. Specifically, Employee agrees to execute
all documents as the Company may desire for use in applying for and in obtaining
or enforcing such patents, copyrights, and other statutory or common law
protections together with any assignments thereof to the Company or to any
person designated by the Company. Employee's obligations under this Section 9
shall continue beyond the termination of his employment under this Agreement,
but the Company shall compensate Employee at a reasonable rate after such
termination for the time which Employee actually spends at the Company's request
in rendering such assistance. In the event the Company is unable for any reason
whatsoever to secure Employee's signature to any lawful document required to
apply for or to enforce any patent, copyright, or other statutory or common law
protections for such Employment Inventions, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agents and attorneys-in-fact to act in his stead to execute such
documents and to do such other lawful and necessary acts to further the issuance
and prosecution of such patents, copyrights, or other statutory or common law
protection, such documents or such acts to have the same legal force and effect
as if such documents were executed by or such acts were done by Employee.
9.3 Employment Inventions. The definition of Employment Invention
as used in this Section 9 is the definition found in Section 2 of the Utah
Employment Inventions Act, Utah Code Xxx. " 34-39-2 (1996 as amended) as
follows:
"Employment invention" means any invention or part thereof
conceived, developed, reduced to practice, or created by an
employee which is:
(a) conceived, developed, reduced to practice, or created by the employee:
(i) within the scope of his employment;
(ii) on his employer's time; or
(iii) with the aid, assistance, or use of any of his
employer's property, equipment, facilities,
supplies, resources, or intellectual property;
(b) the result of any work, services, or duties performed by an employee for his
employer;
(c) related to the industry or trade of the employer; or
(d) related to the current or demonstrably anticipated
business, research, or development of the employer.
9.4 No Prior Inventions. Employee hereby represents and warrants
that there are no inventions which he has conceived, learned, made, or first
reduced to practice, either alone or jointly with others, prior to his
employment with the Company which would be an Employment Invention if Employee
had worked for the Company in its business as presently contemplated at the time
such inventions were conceived, learned, made, or first reduced to practice,
other than as provided in Section 9.1, above.
9.5 Inventions of Third Parties. Employee shall not disclose to the
Company, use in the course of his employment, or incorporate into the Company's
products or processes any confidential or proprietary information or inventions
that belong to a third party, unless the Company has received authorization from
such third party and Employee has been directed by the President to do so.
10. No Conflicts
Employee hereby represents that, to the best of his knowledge, his
performance of all the terms of this Agreement and his work as an employee or
consultant of the Company does not breach any oral or written agreement which he
has made prior to his employment with the Company.
11. Equitable Remedies
Employee acknowledges and agrees that the breach or threatened
breach by him of certain provisions of this Agreement, including without
limitation Sections 7, 8, and 9 above, would cause irreparable harm to the
Company for which damages at law would be an inadequate remedy. Accordingly,
Employee hereby agrees that in any such instance the Company shall be entitled
to seek injunctive or other equitable relief in addition to any other remedy to
which it may be entitled.
12. Submission to Jurisdiction.
Each of the parties submits to the jurisdiction of any state or
federal court sitting in Salt Lake City, Utah, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court, to the extent such disputes are not resolved pursuant to Section 11 or
Section 13, hereof. Each party also agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other party with respect thereto. Each party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
.3. Arbitration
Except for equitable relief pursuant to Section 11, all disputes
hereunder shall be resolved by binding arbitration in Salt Lake City, Utah
conducted in accordance with the terms of this arbitration clause. Arbitrations
conducted pursuant to this Agreement, including selection of arbitrators, shall
be administered by the American Arbitration Association (the "Administrator")
pursuant to the Commercial Arbitration rules of the Administrator. Judgment upon
any award rendered hereunder may be entered in any court having jurisdiction.
Any party who fails to submit to binding arbitration following a lawful demand
by the opposing party shall bear all costs and expenses, including reasonable
attorney's fees, incurred by the opposing party in compelling arbitration of any
dispute hereunder.
14. Assignment
This Agreement is for the unique personal services of Employee and
is not assignable or delegable in whole or in part by Employee without the
consent of the Board of Directors of the Company. This Agreement may be assigned
or delegated in whole or in part by the Company to an affiliate thereof and,
with the consent of the Employee, to a third party. In such case, the terms of
this Agreement shall inure to the benefit of, be assumed by, and be binding upon
the entity to which this Agreement is assigned.
15. Waiver or Modification
Any waiver, modification, or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the parties hereto.
16. Entire Agreement
This Agreement constitutes the full and complete understanding and
agreement of the parties hereto with respect to the subject matter covered
herein and supersedes all prior oral or written understandings and agreements
with respect thereto.
17. Severability
If any provision of this Agreement (other than Section 7) which
provides a separate mechanism in the event of unenforceability) is found to be
unenforceable by a court of competent jurisdiction, the remaining provisions
shall nevertheless remain in full force and effect.
18. Notices
Any notice required hereunder to be given by either party shall be
in writing and shall be delivered personally or sent by certified or registered
mail, postage prepaid, or by private courier, with written verification of
delivery, or by facsimile or other electronic transmission to the other party.
Notices to the Company shall be sent to the offices of the Company, and notices
to the Employee shall be sent to the address of the Employee shown in the
records of the Company, or to such other address or telephone number as either
party may designate from time to time according to this provision. A notice
delivered personally or by facsimile or electronic transmission shall be
effective upon receipt. A notice delivered by mail or by private courier shall
be effective on the third day after the day of mailing.
19. Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Utah.
IN WITNESS WHEREOF, Employee has signed this Agreement personally
and the Company has caused this Agreement to be executed by his duly authorized
representative.
PRETZEL TIME, INC., a Pennsylvania
corporation
By:/s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, President
EMPLOYEE
By:/s/Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
