Exhibit 10.1
EMPLOYMENT AGREEMENT
This Agreement is made as of July 25, 2003 by and between FAMOUS DAVE'S
OF AMERICA, INC., a Minnesota corporation (the "Company"), and XXXXX XXXXXXXX
(the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive in accordance with
the terms and conditions stated in this Agreement; and
WHEREAS, Executive desires to accept that employment pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 EMPLOYMENT AS CHIEF EXECUTIVE OFFICER. The Company hereby employs
Executive as Chief Executive Officer and Executive accepts such employment
pursuant to the terms of this Agreement. Executive shall report to and take
direction from the Chairman of the Board of Directors (the "Board") and the
Board. All other employees of the Company will report, directly or indirectly,
to Executive. Executive will perform those duties which are usual and customary
for a Chief Executive Officer of a restaurant enterprise. Executive shall be
employed at the Company's corporate offices. He shall perform his duties in a
manner reasonably expected of a Chief Executive Officer of a restaurant company
and as directed by the Board and its Chairman.
1.2 TERM. Unless terminated by Executive or the Company pursuant to
Article III hereof, Executive's employment pursuant to this Employment Agreement
shall be for a term of two (2) years, such term to commence on August 11, 2003.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the term and effectiveness of this Agreement,
the Company shall pay Executive an annualized base salary ("Base Salary") at the
annual rate of Four Hundred Fifty Thousand Dollars ($450,000). The Base Salary
shall be payable in equal installments in the time and manner that other
employees of the Company are compensated. The Board will review the Base Salary
at least annually and may, in its sole discretion, increase (but not decrease)
it to reflect performance, appropriate industry guideline data or other factors.
2.2 BONUS. Executive may receive a performance-based bonus (the
"Incentive Bonus") of up to fifty percent (50%) of Base Salary (prorated for any
partial year), the amount of which, if any, will be determined and paid at the
sole discretion of the Board's compensation committee (the "Compensation
Committee") at the end of each fiscal year of service based upon Executive's
satisfaction of certain criteria mutually agreed upon by Executive and the
Board, including without limitation, the accomplishment by the Company of
certain expectations regarding the Company's budget, restaurant and franchise
development and performance, and management retention. The Compensation
Committee and Executive will review and, if mutually agreed, revise the criteria
for the Incentive Bonus at least annually.
2.3 VACATION. Executive shall be entitled to four (4) weeks' paid
vacation, or such greater amount of time as determined by the Board.
2.4 EMPLOYEE BENEFITS. Throughout the term of this Agreement, Executive
shall be entitled to the usual and customary benefits and perquisites which the
Company generally provides to its other senior executives under its applicable
plans and policies (including, without limitation, health, medical, dental,
vision and disability insurance coverage and retirement benefits). If the
Company adopts a benefit plan, Executive shall be entitled to the benefits which
the Company provides to its other executives under such plan. Executive shall
pay any contributions which are generally required of executives to receive any
such benefits. The Company also agrees to pay for an annual physical health
examination at the Mayo Clinic in Rochester.
2.5 LIFE INSURANCE. The Company agrees to purchase and provide
Executive with $1 million of term life insurance with beneficiaries of
Executive's choice. Executive agrees that the Company shall have the right to
obtain life insurance on executive's life, at its expense and with the Company
as the sole beneficiary thereof. Executive shall cooperate in a reasonable
manner with the Company or such affiliate in obtaining such life insurance,
including signing all necessary consents, applications or other related forms
and taking any required medical examinations. To the extent that any such life
insurance policy permits, upon Executive ceasing to be employed by the Company,
the Company shall assign any such policy to Executive or his designee if so
requested by Executive (net of any cash value). Executive represents that for
purposes of obtaining such life insurance, to his knowledge, he is in good
health and eligible to be insured on a non-rated basis, generally consistent
with other healthy individuals of his age.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT.
(a) Executive's employment under this Agreement may be
terminated by Executive at any time for any reason. This Agreement
shall terminate in its entirety immediately upon the death of
Executive.
(b) Executive's employment under this Agreement may be
terminated by the Company at any time for any reason; provided,
however, that if (i) Executive's employment is terminated by the
Company at any time during the term of this Agreement for a reason
other than for death, disability (pursuant to Section 3.3), or "Cause"
as defined in Section 3.2, or (ii) Executive resigns for "Good Reason"
as defined in Section 3.2, Executive shall continue to receive as a
severance payment (the "Severance Payment"), his Base Salary (and
continuation of health, dental, life and vision benefits ("Insurance
Benefits"))for a period of eighteen (18) months (nine (9) months in the
event that such termination or resignation occurs during the ninety
(90) day period following August 11, 2003) following such termination
or resignation, and shall not receive any additional compensation or
bonuses; provided however, that if Executive obtains other employment
during such eighteen (18) months (or nine (9) months, as the case may
be), the Insurance Benefits will cease and the Company shall receive a
dollar-for-dollar credit against its severance obligation hereunder
with respect to compensation and benefits received by Executive in his
new employment..
(c) If, during the term of this Agreement, Executive's
employment with the Company is terminated by the Company for any
reason, or no reason, within six (6) months following a "Change of
Control" of the Company, Executive shall continue to receive his Base
Salary and Insurance Benefits for a period of eighteen (18) months
following such termination; provided however, that if Executive obtains
other employment during such eighteen (18) months, the Insurance
Benefits will cease and the Company shall receive a dollar-for-dollar
credit against its severance obligation hereunder with respect to
compensation and benefits received by Executive in his new employment.
(d) Any termination shall be effective as of the date
specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the
date such notice is delivered to the other party. Except as expressly
provided to the contrary in this section or applicable law, Executive's
rights to pay and benefits shall cease on the date his employment under
this Agreement terminates.
3.2 DEFINITIONS. For purposes of this Article III,
(a) "Cause" shall mean only the following: (i) the failure by
Executive to perform his duties under this Agreement (excluding
nonperformance resulting from Executive's disability) which failure is
not cured within 30 days after written notice from the Chairman of the
Board specifying the act of nonperformance ; (ii) any drunkenness or
use of drugs that interferes with the performance of Executive's
obligations under this Agreement, and continues for more than ten (10)
days after a written notice to Executive; provided; however, that the
Company shall have the right to prevent Executive from performing his
duties hereunder and from entering the offices of the Company during
any such period; (iii) Executive's indictment for or conviction of
(including entering a guilty plea or plea of no contest to) a felony or
any crime involving moral turpitude, fraud, dishonesty or theft; (iv)
any material dishonesty of Executive involving or affecting the
Company, or any willful misappropriation of the funds or property of
the Company; (v) any willful or intentional act of Executive having the
effect or reasonably likely to have the effect of injuring the
reputation, business or business relationships of the Company in a
material way; (vi) any willful or intentional breach by Executive of a
fiduciary duty to the Company; (vii) any material breach (not covered
by any of the above clauses) of any material term, provision or
condition of this Agreement, if such breach is not cured (to the extent
curable) with ten (10) days after written notice thereof is received by
Executive from the Chairman of the Board.
(b) "Good Reason" shall mean only the following: (i) Executive
has been demoted; or (ii) Executive has incurred a substantial
reduction in his authority or responsibility.
(c) "Change of Control" shall mean the occurrence of any of
the following events: (i) any person or group of persons becomes the
beneficial owner of thirty-five percent (35%) or more of any equity
security of the Company entitled to vote for the election of directors;
(ii) a majority of the members of the board of directors of the Company
is replaced within the period of less than two (2) years by directors
not nominated and approved by the board of directors; or (iii) the
stockholders of the Company approve an agreement to sell or otherwise
dispose of all or substantially all of the Company's assets (including
a plan of liquidation) or to merge or consolidate with or into another
corporation except for a merger whereby the stockholders of the Company
prior to the merger own more than 50% of the equity securities entitled
to vote for the election of directors of the surviving corporation
immediately following the merger.
3.3 DISABILITY. If Executive has become disabled such that he cannot
perform the essential functions of his job with or without reasonable
accommodation, and the disability has continued for a period of more than 90
days, the Board may, in its discretion, terminate his employment under this
Agreement. Upon any such termination for disability, Executive shall be entitled
to such disability, medical, life insurance, and other benefits as may be
provided generally for disabled employees of the Company during the period he
remains disabled.
3.4 NOTICE. Executive must provide the Company with at least 30 days'
written notice if Executive desires to terminate his employment under this
Agreement.
IV. CONFIDENTIALITY
4.1 PROHIBITIONS AGAINST USE. Executive acknowledges and agrees that
during the term of this Agreement he will have access to various trade secrets
and confidential business information ("Confidential Information") of the
Company. Executive agrees that he shall use such Confidential Information solely
in connection with his obligations under this Agreement and shall maintain in
strictest confidence and shall not disclose any such Confidential Information,
directly or indirectly or use such information in any other way during the term
of this Agreement or for a period of two (2) years after the termination of this
Agreement. Executive further agrees to take all reasonable steps necessary to
preserve and protect the Confidential Information. The provisions of this
Section shall not apply to information which (i) was in possession of an
Executive prior to receipt from the Company, or (ii) is or becomes generally
available to the public other than as a result of a disclosure by the Company,
its directors, officers, employees, agents or advisors, or (iii) becomes
available to Executive from a third party having the right to make such
disclosure.
4.2 REMEDIES. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of Section 4.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
V. NON-COMPETITION
5.1 AGREEMENT NOT TO COMPETE. Executive agrees that, on or before the
date which is two (2) years after the date Executive's employment under this
Agreement terminates, he will not, unless he receives the prior approval of the
Board, directly or indirectly engage in any of the following actions:
(a) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any entity
whose primary business is the retail sale of barbequed food. However,
nothing in this subsection (a) shall preclude Executive from holding
(i) less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed on
any securities exchange, quoted on the National Association of
Securities Dealers Automated Quotation System or traded in the
over-the-counter market, or (ii) holding an interest in the restaurant
concepts which Executive was involved with in the last year preceding
the date of this Agreement.
(b) Intentionally solicit, endeavor to entice away from the
Company, or otherwise interfere with the relationship of the Company,
any person who is employed by or otherwise engaged to perform services
for the Company (including, but not limited to, any independent sales
representatives or organizations), whether for Executive's own account
or for the account of any other individual, partnership, firm,
corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
5.2 REMEDIES. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of Section 5.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
VI. INTELLECTUAL PROPERTY
In consideration of the Company's employment of Executive hereunder,
Executive acknowledges that any and all patents, licenses, copyrights, trade
names, trademarks, assumed names, service marks,
promotional/marketing/advertising campaigns, designs, logos, slogans, computer
software and other intellectual property developed, conceived or created by
Executive in the course of his employment by the Company, either individually or
in collaboration with others, and whether or not during normal working hours or
on the premises of the Company (collectively, "Developments") shall be, as
between the Company and Executive, the sole and absolute property of the Company
and Executive agrees that he will at the Company's request and cost take
whatever action is necessary to secure the rights thereto by patent, copyright,
assignment or otherwise to the Company. Executive agrees to make full and prompt
disclosure to the Company of all such Developments arising during the term of
this Agreement.
VII. STOCK OPTION AGREEMENT
Contemporaneously herewith and in connection with this Agreement, the
parties hereto have entered into a Stock Option Agreement, pursuant to which the
Company granted to Executive the right and option (the "Option") to purchase up
to Two Hundred Thousand (200,000) shares of the Company's common stock, subject
to the terms, conditions and exercise price set forth in the form of Stock
Option Agreement attached hereto as Exhibit A.
VIII. MISCELLANEOUS
8.1 AMENDMENT. This Agreement may be amended only in writing, signed by
both parties.
8.2 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with regard to all matters contained herein. There are no other
agreements, conditions or representations, oral or written, expressed or
implied, with regard thereto. This Agreement supersedes any prior agreements
relating to the employment of Executive by the Company.
8.3 ASSIGNMENT. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties and their respective successors, assigns, heirs
and personal representatives and any entity with which the Company may merge or
consolidate or to which the Company may sell substantially all of its assets,
provided that this Agreement may not be assigned by Executive.
8.4 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) three days after the date of
deposit in the mails, postage prepaid, if mailed by certified or registered
mail, or (c) the next business day if sent by facsimile transmission (if receipt
is electronically confirmed) or by a prepaid overnight courier service, and in
each case at the respective addresses or numbers set forth below or such other
address or number as such party may have fixed by notice:
If to the Company, to:
Famous Dave's of America, Inc.
0000 Xxxxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Attention: Chairman of the Board
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
3300 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
If to Executive, to:
Xxxxx Xxxxxxxx
00000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
or to such other addresses as either party may designate in writing to the other
party from time to time.
8.5 WAIVER OF BREACH. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
8.6 SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
8.7 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota, without giving effect to
conflict of law principles.
8.8 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach of this Agreement shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and a judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. The arbitration award shall be subject
to review only in the manner provided in the Uniform Arbitration Act as adopted
in Chapter 572, Minnesota Statutes, as the Act is amended at the time of
submission of the issue to arbitration. The arbitrator(s) shall have the
authority to award the prevailing party its costs and reasonable attorney's fees
which shall be paid by the non-prevailing party. In the event the parties hereto
agree that it is necessary to litigate any dispute hereunder in a court, the
non-prevailing party shall pay the prevailing party its costs and reasonable
attorney's fees.
8.9 NO CONFLICT. Executive represents and warrants that he is not
subject to any agreement, instrument, order, judgment or decree of any kind, or
any other restrictive agreement of any character, which would prevent him from
entering into this Agreement or which would be breached by Executive upon his
performance of his duties pursuant to this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts, but
each of these counterparts shall, for all purposes, be deemed to be an original,
but both counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
FAMOUS DAVE'S OF AMERICA, INC.:
By: /s/ Xxxxx X. Xxxxxxxx
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Its: Chairman
/s/ Xxxxx Xxxxxxxx
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XXXXX XXXXXXXX
