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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of
this 1 day of January, 1996, between X.X. XXXXX'X CHINA BISTRO,INC., a Delaware
corporation ("Company") and XXXX X. XXXXXXX ("Executive"), Company and
Executive agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Cause" shall mean a termination of the Executive's employment during
the Term which is a result of (i) violation by Executive of any law carrying
penalty of imprisonment for more than one (1) year or one thousand dollars
($1,000) in fines, dishonesty, insubordination, gross misconduct, or aiding a
competitor, (ii) the Executive's disclosure to third parties of material trade
secrets or other material confidential information related to the business of
the Company and its subsidiaries in violation of Section 6, or (iii) the
Executive's failure to perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure resulting from a
resignation by the Executive for Good Reason) after a written demand for
substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not performed his duties, and which performance is not
substantially corrected by the Executive within ten (10) days of receipt of
such demand.
1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor provisions thereto.
1.3 "Common Stock" shall mean the common stock of the Company.
1.4 "Disability" shall mean (i) the Executive's incapacity due to
physical or mental illness which causes him to be absent from the full-time
performance of his duties with the Company for six (6) consecutive months or
for one hundred eighty (180) days or more in any twelve month (12) period, and
(ii) the Executive's failure to return to full-time performance of his duties
for the Company within thirty (30) days after written Notice of Termination due
to Disability is provided by the Company to the Executive. Any question as to
the existence of the Executive's Disability upon which he and the Company
cannot agree shall be determined by a qualified independent physician mutually
agreed upon by the Executive (or, if the Executive is unable to make such
selection, such selection shall be made by any adult member of the Executive's
immediate family) and the Company. The determination of such physician made in
writing to the Company and to the Executive shall be final and conclusive for
all purposes of this Agreement.
1.5 "Good Reason" shall mean a resignation of the Executive's employment
during the Term as a result of any of the following:
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(a) A meaningful and detrimental alteration in the Executive's
position, his titles, or the nature or status of his responsibilities
(including the Executive's reporting responsibilities) from those previously in
effect;
(b) A reduction by the Company in the Executive's annual Base
Salary as set forth herein or as the same may be increased from time to time
thereafter, except pursuant to a salary reduction program as described in
Section 3.1;
(c) The failure by the Company to provide any compensation plan to
the Executive consistent with similarly situated senior executives of the
Company as determined from time to time by the Board of Directors on a
nondiscriminatory basis;
(d) The failure by the Company to provide the Executive with fringe
benefits (including, without limitation, life insurance, health, medical,
dental, accident and disability plans and programs, and other fringe benefits)
consistent with similarly situated senior executives of the Company as
determined from time to time by the Board of Directors on a nondiscriminatory
basis; or the failure by the Company to provide the Executive with the number
of paid vacation days to which the Executive is entitled on the basis of years
of service with the Company in accordance with the Company's normal vacation
policy previously in effect.
(e) A material breach by the Company of the provisions of this
Agreement;
provided, however, that an event described in the above clauses, shall not
constitute Good Reason unless it is communicated by the Executive to the
Company in writing and is not corrected by the Company in a manner which is
reasonably satisfactory to the Executive (including full retroactive correction
with respect to any monetary matter) within sixty (60) days from the date of
the Company's receipt of such written notice from the Executive.
1.6 "Retirement" shall mean normal retirement at age 65 or in accordance
with retirement rules generally applicable to the Company's senior executives.
2. DUTIES AND TERM
2.1 Employment.
(a) The Executive is employed as the Chief Executive Officer of the
Company. The Executive shall have such duties and responsibilities as shall be
assigned to the Executive from time to time by the Board of Directors of the
Company ("Board") in the Executive's capacity as the Chairman of the Board and
Chief Executive Officer of the Company and as is consistent with the Bylaws of
the Company.
(b) The Executive shall serve as a director of the Company.
(c) During the period of his employment hereunder, the Executive
shall devote not less than eighty-five percent (85%) of his normal business
time, attention, skill and efforts
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to the faithful performance of his duties hereunder; provided, however, that the
Executive may serve or continue to serve on the board of directors or hold other
offices or positions in companies or organizations if they involve no conflict
of interest with the interests of the Company and may engage in customary
professional activities which in the judgment of the Board will not materially
affect the performance by the Executive of his duties hereunder. The Executive
has disclosed to the Board all material business ventures in which he is
currently involved, Board acknowledges they have no objection to same and, that
Executive may in the future have other business investments and participate in
other business ventures which may, from time to time, require portions of his
time, but shall not interfere with his duties hereunder.
2.2 Term. The term of this Agreement shall commence on the date first
written above and shall continue, unless sooner terminated, until the third
anniversary of the date of this Agreement ("Initial Term"). Thereafter, the
term of this Agreement shall automatically be extended for successive one (1)
year periods ("Renewal Terms") unless either the Board or the Executive gives
written notice to the other at least ninety (90) days prior to the end of the
Initial Term or any Renewal Term, as the case may be, of its or his intention
not to renew the term of this Agreement. The Initial Term and any Renewal Terms
of this Agreement shall be collectively referred to as the "Term."
2.3 Location. During the Term of this Agreement, the Executive shall be
based in the principal offices of the Company in Phoenix, Arizona, and shall not
be required to be based anywhere other than Phoenix, Arizona except for travel
reasonably required in the performance of his duties hereunder and except as may
be otherwise agreed to by the Executive.
3. COMPENSATION
3.1 Base Salary. Subject to the further provisions of this Agreement, the
Company shall pay the Executive during the Term of this Agreement a base salary
at an annual rate of not less than $150,000 ("Base Salary"). The Base Salary
shall not be reviewed at least annually by the Board and the Board may, in its
discretion, increase the Base Salary. The Base Salary of the Executive shall not
be decreased at any time during the term of this Agreement from the amount of
Base Salary then in effect, except in connection with across-the-board salary
reductions similarly affecting all senior executives of the Company.
Participation in deferred compensation, discretionary bonus, retirement, stock
option and other employee benefit plans and in fringe benefits shall not reduce
the Base Salary payable to the Executive under this Section 3.1. The Base Salary
under this Section 3.1 shall be payable by the Company to the Executive in
installments not less frequently than twice a month.
3.2 Discretionary Bonuses. Subject to the further provisions of this
Agreement, during the Term of this Agreement the Executive shall be entitled to
participate in an equitable manner with all other senior executives of the
Company in such discretionary bonuses, including, but not limited to, bonuses
provided pursuant to any management bonus plan that the Company may adopt
(based upon the performance of the participant and the Company), as may be
authorized and declared by the Board to the Company's senior executives.
Nothing in this section shall be deemed to limit the ability of the Executive
to be paid and receive discretionary
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bonuses from the Company, based solely on the Executive's performance, without
regard to the payment of discretionary bonuses to any other officers of the
Company.
3.3 Participation in Retirement and Employment Benefit Plans; Fringe
Benefits. The Executive shall be entitled to participate in all plans of the
Company relating to stock options, stock purchases, pension, thrift, profit
sharing, life insurance, hospitalization and medical coverage, disability,
travel or accident insurance, education or other retirement or employee benefits
that the Company has adopted or may adopt for the benefit of its senior
executives. Executive shall be entitled to stock options pursuant to a stock
option plan to be adopted by the Company to exercise options to purchase up to
five percent (5%) of the Company Stock of the Company after issuance of the
Series A Convertible Preferred Stock described in that certain Stock Purchase
Agreement ("Stock Purchase Agreement") dated as of even date herewith by and
among the Company and the Purchasers named therein on a fully diluted basis for
an exercise price equal to the purchase price per share of Series A Convertible
Preferred Stock paid by the Purchasers named in the Stock Purchase Agreement.
3.4 Vacations. The Executive shall be entitled, without loss of pay, to be
absent voluntarily for four (4) weeks from the performance of his duties and
responsibilities under this Agreement. All absences in excess of four (4) weeks
shall not count as paid vacation time, unless the Board otherwise determines.
The timing of paid vacations shall be scheduled in a manner reasonably
acceptable to the Company.
4. TERMINATION OF EMPLOYMENT
4.1 Death or Retirement of Executive. This Agreement shall automatically
terminate upon the death or Retirement of the Executive.
4.2 By the Executive. The Executive shall be entitled to terminate this
Agreement by giving written notice to the Company:
(a) at least ninety (90) days prior to the end of the Initial Term
or any Renewal Term of this Agreement;
(b) for Good Reason; and
(c) at any time without Good Reason.
4.3 By the Company. The Company shall be entitled to terminate this
Agreement by giving written notice to the Executive:
(a) at least ninety (90) days prior to the end of the Initial Term
or any Renewal Term of this Agreement;
(b) in the event of the Executive's Disability;
(c) for Cause; and
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(d) at any time without Cause.
4.4 Date of Termination. Any termination of the Executive's employment by
the Company or by the Executive during the Term shall be communicated by a
notice of termination to the other party hereto ("Notice of Termination"). The
Notice of Termination shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated. The date of termination of
employment with the Company and its subsidiaries ("Date of Termination") shall
be determined as follows: (i) if the Executive's employment is terminated for
Disability, thirty (30) days after a Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of
duties during such thirty (30) day period), and (ii) if employment is
terminated for any other reason, the later of the date specified in the Notice
of Termination or five (5) days following the date such notice is received by
the Executive.
5. COMPENSATION UPON TERMINATION OF EMPLOYMENT
5.1 Upon Termination for Death or Disability, by the Company for Cause or
by the Executive Without Good Reason. If the Executive's employment is
terminated by reason of the Executive's death or Disability, by the Company for
Cause or by the Executive without Good Reason, the Company shall:
(a) pay the executive (or his estate or beneficiaries) any Base
Salary which has accrued but which has not been paid as of the termination date
("Accrued Base Salary");
(b) reimburse the Executive (or his estate or beneficiaries) for
expenses incurred by him prior to the date of termination which are subject to
reimbursement pursuant to applicable Company policies then in effect ("Accrued
Reimbursable Expenses");
(c) provide to the Executive (or his estate or beneficiaries) any
accrued and vested benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs ("Accrued Benefits"), together with
any benefits required to be paid or provided in the event of the Executive's
death or Disability under applicable law;
(d) pay the Executive (or his estate or beneficiaries) any
discretionary bonus with respect to a prior fiscal year which has accrued and
been earned but has not been paid ("Accrued Bonus");
(e) allow the Executive (or his estate or beneficiaries) to exercise
all vested, unexercised stock options outstanding at the termination date
within sixty (60) days from the Date of Termination, in accordance with the
terms of the plans and agreements pursuant to which such options were issued;
and
(f) at the request of the Executive, to the extent permitted by the
terms of the policies then in effect, transfer to the Executive all key-man
life insurance policies maintained
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by the Company on the Executive to the Executive at the Executive's sole cost
and expense ("Right of First Refusal").
5.2 Upon Termination at Expiration of Term. If the Executive's employment
is terminated upon the expiration of the Term of this Agreement, the Company
shall:
(a) pay the Executive the Accrued Based Salary;
(b) pay the Executive the Accrued Reimbursable Expenses;
(c) pay the Executive the Accrued Benefits;
(d) pay the Executive the Accrued Bonus;
(e) allow the Executive the right to exercise all vested,
unexercised stock options in accordance with Section 5.1(e); and
(f) grant the Executive the Right of First Refusal.
5.3 Upon Termination by the Company Without Cause or by the Executive for
Good Reason. If the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason the Company shall:
(a) pay the Executive the Accrued Based Salary;
(b) pay the Executive the Accrued Reimbursable Expenses;
(c) pay the Executive the Accrued Benefits;
(d) pay the Executive the Accrued Bonus;
(e) pay the Executive his Base Salary, as and when the same would
have been paid to the Executive pursuant to Section 3.1 had the termination not
occurred, until the expiration of a period equal to the earlier of (i) one (1)
year or (ii) the Initial Term;
(f) pay the Executive on or prior to the thirtieth (30th) day
following the Date of Termination a lump sum payment equal to the average of
all annual performance bonuses paid to the Executive for the three (3) fiscal
years immediately preceding the fiscal year in which the termination occurs (or
if less than three (3), the average of the two (2) and if less than two (2),
the amount of his single Annual Bonus) ("Lump Sum Bonus Payment");
(g) maintain in full force and effect, for the continued benefit of
the Executive and his eligible beneficiaries, until the first to occur of (i)
his attainment of comparable benefits upon alternative employment or (ii) twelve
(12) months following the termination date, the employee benefits pursuant to
Company-sponsored benefit plans, programs or other arrangements in which the
Executive was entitled to participate immediately prior to such
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termination, but only to the extent that the Executive's continued participation
is permitted under the general terms and provisions of such plans, programs and
arrangements;
(h) allow the Executive the right to exercise in full all unvested stock
options granted to him in accordance with the terms of the Stock Option Plan
(except the vesting terms with respect to the accelerated options) referred to
in the Letter of Intent dated October 10, 1995, as amended among Xxxxxxxxx
Partners Corporation, Oak Investment Partners and Xxxx X. Xxxxxxx; and
(i) grant the Executive the Right of First Refusal.
6. RESTRICTIVE COVENANTS
6.1 Confidentiality.
(a) The Executive shall keep all trade secrets and/or proprietary
information ("Confidential Information") of the Company in strict confidence and
shall not disclose any Confidential Information to any other person, firm,
association, partnership, corporation or other entity for any reason except as
such disclosure may be required in connection with his employment hereunder. The
Executive shall not use any Confidential Information for any purpose except on
behalf of the Company.
(b) For purposes of this Agreement, "Confidential Information" shall
mean any information, concept or idea relating to (i) historical and projected
financial information of the Company and Company Affiliates, (ii) the
development of Chinese food menus by the Company and Company Affiliates, (iii)
the preparation and execution of Chinese food and the operation of the kitchens
with respect thereto by the Company and Company Affiliates, and (iv) any other
concept or idea related to the preparation and sale of Chinese food products,
which is not generally known in the restaurant industry and that the Company
considers confidential, and/or that gives the Company a competitive advantage.
If the Executive is unsure whether certain information or material is
Confidential Information, the Executive shall treat that information or material
as confidential unless the Executive is informed by the Company, in writing, to
the contrary. "Confidential Information" shall not include any information
which: (x) is or becomes publicly available through no act or failure of the
Executive; (y) was or is rightfully learned by the Executive from a source other
than the Company before being received from the Company; or (z) becomes
independently available to the Executive as matter of right from a third party.
If only a portion of the Confidential Information is or becomes publicly
available, then only that portion shall not be Confidential Information
hereunder.
(c) Upon termination of his employment with the Company, for whatever
reason, the Executive will surrender to the Company all of the property,
customer lists, notes, manuals, reports, documents and other things in the
Executive's possession, including copies or computerized records thereof, which
relate directly or indirectly to Confidential Information.
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6.2 Competition.
(a) During his employment with the Company and for a period of two (2)
years following the date of termination of his employment hereunder
("Non-Competition Period"), for any reason (whether such termination shall be
voluntary or involuntary), the Executive shall not:
(i) except as a holder of not more than 3% of the total
outstanding stock of a publicly-held company, and except for investments in the
restaurants listed in Section 6.1(b), held as of the date hereof, directly or
indirectly own, operate, manage, consult with, control, participate in the
management or control of, be employed by, maintain or continue any interest
whatsoever in any company in the business of preparation and distribution of
Chinese food or other food concepts existing during the non-competition period
within 100 miles of any restaurant then existing or under consideration by the
Company; or
(ii) employ, or directly or indirectly solicit, or cause the
solicitation of, any management level employees of the Company who are in the
employ of the Company on the termination date of his employment hereunder for
employment by others.
(b) The Executive expressly agrees and acknowledges that:
(i) this covenant not to compete is reasonably necessary for the
protection of the interests of the Company and is reasonable as to time and
geographical area and does not place any unreasonable burden upon him;
(ii) the general public will not be harmed as a result of
enforcement of this covenant not to compete;
(iii) his personal legal counsel has reviewed this covenant not to
compete.
6.3 Remedies. The Executive expressly acknowledges that the covenant not
to compete set forth in Section 6.2 is necessary for the Company's and its
affiliates' protection because of the nature and scope of their business and
his position with the Company. Further, the Executive acknowledges that, in the
event of his breach of his covenant not to compete, money damages will not
sufficiently compensate the Company for its injury caused thereby, and he
accordingly agrees that in addition to such money damages he may be restrained
and enjoined from any continuing breach of the covenant not to compete without
any bond or other security being required. The Executive acknowledges that any
breach of the covenant not to compete would result in irreparable damage to the
Company. The Executive acknowledges that the remedy at law for any breach or
threatened breach of Sections 6.1 and 6.2 will be inadequate and, accordingly,
that the Company shall, in addition to all other available remedies (including
without limitation, seeking such damages as it can show it has sustained by
reason of such breach), be entitled to injunctive relief or specific
performance. The venue for any litigation to enforce any award in arbitration
or for injunctive relief shall be Maricopa County, Arizona.
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7. MISCELLANEOUS
7.1 No Assignments. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto, except
that this Agreement shall be binding upon and inure to the benefit of any
successor corporation to the Company.
(a) The Company shall use reasonable efforts to 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 the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as defined herein and any successor to its business
and/or assets which assumes this Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees. If the
Executive should die while any amount would still be payable to him hereunder
had he continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legates or other designee, or if there is no such designee, to his estate.
7.2 Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or three (3) days
after mailing mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other addresses as either party may have furnished to
the other in writing in accordance herewith, except that notice of a change of
address shall be effective only upon actual receipt:
To the Company: 0000 X. Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
To the Executive: Xxxx X. Xxxxxxx
c/o Xxxx'x Xxxxx Steakhouse
0000 X. Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Notices pursuant to Article 4 of this Agreement shall comply with the
provisions thereof.
7.3 Amendments or Additions. No amendments or additions to this
Agreement shall be binding unless in writing and signed by each of the parties
hereto.
7.4 Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
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7.5 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If, in
any judicial proceedings, a court shall refuse to enforce one or more of the
covenants or agreements contained herein because the duration thereof is too
long, or the scope thereof is too broad, it is expressly agreed between the
parties hereto that such scope or duration shall be deemed reduced to the
extent necessary to permit the enforcement of such covenants or agreements.
7.6 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
7.7 Arbitration and Legal Fees.
(a) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in Phoenix, Arizona in accordance with the rules
of the American Arbitration Association then in effect. The decision of the
arbitrators shall be final and binding on the parties, and judgment may be
entered on the arbitrators' award in any court having jurisdiction. The costs
and expenses including, but not limited to, legal fees of such arbitration
shall be borne in accordance with the determination of the arbitrators. The
amounts, if any, determined by the arbitrators to be owed by either party to
the other shall be paid within five (5) days after the decision by the
arbitrators is rendered.
(b) All papers, documents, briefs, written communication, testimony
and transcripts, as well as any and all arbitration decisions, shall be
confidential and not disclosed to anyone other than the arbitrators, the
parties or the parties' attorneys and expert witnesses (where applicable to
their testimony) except that upon prior written consent of all parties, such
information may be disclosed to additional third parties. All third parties
shall agree in writing to keep such information confidential.
7.8 No Mitigation or Offset. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer or by pension
benefits paid by the Company or another employer after the date of termination
or otherwise, except that on the date that the Executive and his dependents are
eligible and elect health care coverage under the plans of a subsequent
employer which provide substantially equivalent or greater benefits to the
Executive and his dependents, any health care coverage provided by the Company
shall terminate.
7.9 Modification and Waivers. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer of the
Company as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such
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other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
7.10 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Arizona without regard to its conflicts of law principles.
7.11 Taxes. Any payments provided for hereunder shall be paid net of any
applicable withholding or other employment taxes required under federal, state
or local law.
7.12 Survival. The obligations of the Company under Article 5 hereof and
the obligations of the Executive under Article 6 hereof shall survive the
expiration of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first indicated above.
X.X. XXXXX'X CHINA BISTRO, INC.,
a Delaware corporation
By:
--------------------------------
Its:
-------------------------------
-----------------------------------
XXXX X. XXXXXXX
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[X.X. XXXXX'X CHINA BISTRO LETTERHEAD]
September 2, 1998
Xx. Xxxx X. Xxxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
Dear Xxxx:
The purpose of this letter (this "Agreement") is to set forth a binding
agreement between you and X.X. Xxxxx'x China Bistro, Inc. (the "Company") with
respect to the transition of your employment position with the Company to
service as a Company consultant.
1. Employment Agreement. Your Employment Agreement with the Company dated
January 1, 1996 (the "Employment Agreement") will expire in accordance with its
terms on December 31, 1998 (the "Expiration Date"). To ensure a smooth
transition, and in consideration of your agreement to continue service to the
Company as a consultant after the Expiration Date, we agree that beginning July
1, 1998, your time commitment to the Company under your Employment Agreement
will be reduced from 85% to 50%. In addition, we agree that beginning July 1,
1998, your base compensation will be reduced from $18,750 per month to $15,000
per month, and your bonus for 1998 (to the extent otherwise earned) will equal
50% of your aggregate base compensation for 1998 (i.e., $101,250, which is equal
to six months at $18,750 per month plus six months at $15,000 per month,
multiplied by 50%). Your vacation and other fringe benefits will remain as
specified in your Employment Agreement, and except as otherwise provided in this
Agreement all other terms and conditions of your Employment Agreement will
remain in full force and effect until the Expiration Date. Before the Expiration
Date, at a time we mutually agree, you will move from the Company's offices to
alternate space that accommodates your needs. The Company will provide
reasonable assistance in connection with this move, but you agree to bear all
rent, utility and other customary office expenses.
2. Engagement as a Consultant. The Company agrees to retain you as a
consultant during the period beginning January 1, 1999 and ending December 31,
2000 (the "Consulting Period"). Your consulting services (the "Services") will
consist of: (a) traveling with Xxxx Xxxxxxxx each quarter to visit existing
operations, focusing on operating standards, culinary standards and providing
"Market Partner" feedback; (b) independently visiting the Company's restaurants
for these same purposes as your schedule reasonably permits; (c) visiting and
evaluating the Company's new openings either during role-play or within the
first 30 days of business; (d) attending quarterly design meetings to provide
feedback, direction and guidance; (e) reviewing and providing input on menu
additions, deletions and adjustments and attending
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formal tastings and presentations of new products; (f) assisting with the
development of Xxx Xxx'x if the Company chooses to pursue that opportunity;
(g) meeting with Xxxx Xxxxxxxx and Xxxx Xxxxxx on a monthly basis to review the
Company's overall business strategies; and (h) performing such other services as
we mutually agree to from time to time. We anticipate that without your prior
consent, your time commitment to the Company under this Agreement will not
exceed 80 hours per month. To enable you to perform the Services, the Company
will provide you with reasonable advance notice of and work with you to schedule
the meetings, tastings, presentations, openings and other events at which your
Services will be performed. In performing your Services, you will report to Xxxx
Xxxxxxxx (or the Company's president, if Xx. Xxxxxxxx is not then serving in
that capacity).
3. No Control by the Company. Unless otherwise agreed, you will not be
obligated to perform the Services at fixed hours of the day or on particular
days of the week, and this Agreement shall not be construed to obligate you to
devote any particular number of hours to performing the Services. The Company
will not have any right to direct the manner or means by which you provide the
Services, or the hours you work, your time off, your vacations or similar
matters, so long as you fulfill your responsibilities under Section 2 and
elsewhere in this Agreement.
4. Compensation as a Consultant. For Services rendered by you under this
Agreement up to 80 hours per month, the Company will pay you $12,000 per month
during 1999 and $8,000 per month during 2000, each case on the 1st day of each
month without deduction for payroll or other employment taxes. If you and the
Company agree that you will spend more than 80 hours per month rendering
Services, your additional time will be compensated at a mutually-agreed rate.
The Company will also reimburse all actual, out-of-pocket expenses you
reasonably incur in providing Services to the Company upon presentation by you
from time to time, but no less often than every 30 days, of a reasonably
itemized statement therefor in accordance with the Company's standard expense
reimbursement policies. As an "independent contractor," you agree to pay all
taxes required to be paid on the compensation payable to you hereunder, and
further agree to indemnify and hold harmless the Company for any liability it
incurs to taxing authorities if you fail to properly pay your taxes.
5. Options. You and the Company are parties to an Immediately
Exercisable Incentive Stock Option Agreement dated August 2, 1996 (the "Option
Agreement"). We agree that the Option Agreement shall remain in full force and
effect notwithstanding the expiration of your Employment Agreement, except that
at the Expiration Date your options will convert from "Incentive Stock Options"
to "Nonstatutory Stock Options" (as defined in the Company's 1996 Stock Option
Plan). More particularly, the Company acknowledges and agrees that your
"Service" (as defined in the Option Agreement) for option vesting and all other
purposes shall be deemed to continue without interruption throughout the
Consulting Period.
6. Continuation of Restrictive Covenants. Notwithstanding the expiration
of your Employment Agreement on the Expiration Date, you acknowledge and agree
that the covenants you made in Sections 6.2 and 6.3 of the Employment Agreement
will continue, subject to the following modifications which will become
effective immediately:
14
(a) The Non-Competition Period (as defined in your Employment
Agreement) is extended to continue during the Consulting Period and for a period
of two years following the end of the Consulting Period; and
(b) Section 6.2(a)(i) is amended to restrict the scope of the
non-competition covenant to cover only "Chinese and Asian foods and Chinese and
Asian food concepts."
7. Service as a Director. The Company agrees to nominate you as a Director
each year during the Consulting Period and to recommend to the stockholders
that they vote in favor of your election.
8. Ownership of Property. You agree that all concepts, menu items,
marketing plans and other information, materials and intangible properties
developed by you in connection with the performance of Services hereunder shall
be owned by the Company, and you further agree to execute and deliver such
documents or instruments reasonably requested from time to time by the Company
to fully vest in the Company ownership of such properties.
We are pleased that you have agreed to continue your involvement with the
Company, and look forward to your continued service. If the foregoing is in
accordance with your understanding, please sign and return to me the enclosed
copy of this letter.
Sincerely,
X.X. XXXXX'X CHINA BISTRO, INC.
/s/ Xxxx Xxxxxxxx
--------------------------------
Xxxx Xxxxxxxx, President
I have read the foregoing
Agreement and agree to be
bound by the same.
/s/ Xxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxx
