EXHIBIT 10.12
FORM OF MANAGEMENT INCENTIVE AGREEMENT
--------------------------------------
THIS MANAGEMENT INCENTIVE AGREEMENT (the "Agreement"), is made
and entered into this____ day of___________ by and between_________, whose
address is______________________________________, and NE Restaurant Co., Inc.
having its principal office at 300 Pond Street, Randolph, Massachusetts 02368
(the "Corporation");
W I T N E S S E T H:
-------------------
This Agreement is made and entered into under the following circumstances:
WHEREAS, the Corporation is a Delaware corporation and
WHEREAS, the Corporation is engaged in the business of owning and
operating, as a franchisee of___________________________, a casual restaurant
to be located at___________________________(the "Restaurant");
WHEREAS, the Corporation desires, on the terms and conditions stated
herein, to receive incentive from the Corporation as General Manager of the
Restaurant; and
WHEREAS, the Employee will perform his/her duties subject to the
supervision and training of the Corporation;
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
promises, covenants, terms, and conditions contained herein, the parties hereto
agree as follows:
1. Duties. As General Manager of the Restaurant, Employee shall
------
supervise the operations of the Restaurant. Employee shall use his/her best
efforts, skill and knowledge to serve the Corporation in a competent manner,
shall maintain the operations of the Restaurant in accordance with the
_______________________ concept, and shall diligently and faithfully perform all
other functions as may be assigned to his/her in such capacity by the
Corporation. Employee shall be required hereunder to devote one hundred percent
(100%) of his/her full business time and effort to the business affairs of the
Corporation.
Employee shall: (I) devote his/her entire business time, attention, and
energies to the business of the Corporation and operation of the Restaurant,
and, (ii) faithfully and competently perform his/her duties hereunder; and,
Employee shall not, during the Term of Employment, engage in any other
business activity; provided, however, that Employee shall be permitted to
--------- --------
invest his/her personal assets and manage his/her personal investment portfolio
in such a form and manner as will not require any business services on his/her
part to any third party or conflict with the provisions of Sections 6 or 7
hereof.
2. Compensation. Employee shall be entitled to a bi-weekly base salary
------------
of ONE THOUSAND, SEVEN HUNDRED THIRTY-ONE AND NO/100 DOLLARS ($1,731.00),
payable in bi-weekly installments, or the then current exempt employee pay cycle
of the Corporation. In addition, the Employee shall be entitled to receive
Incentive Compensation of________ of Restaurant contribution (see attached
definition) payable monthly or the then current exempt Employee Incentive
Compensation pay cycle of the Corporation.
3. Fringe Benefits. Employee shall be entitled to receive those fringe
----------------
benefits, including, but not limited to, life insurance, medical benefits, etc.,
----
if any, as may be approved by the Corporation based on the then current exempt
employee fringe benefits.
4. Termination. Notwithstanding the provisions of Section 1 hereof,
-----------
the Term of Employment shall terminate prior to the end of the period of time
specified in such Section 1, upon:
(a) the death of Employee; or,
(b) upon Employee's "disability" during the Term of Employment (For
purposes of this paragraph (b), the term "disability" shall mean the inability
of Employee, arising out of any medically determinable physical or mental
impairment, to perform the services required of him/her hereunder for a period
of sixty (60) consecutive days during which sixty (60) day period Employee's
compensation will be based on the then current Exempt Employee Disability
Benefit); or,
(c) immediately upon the existence of "cause" (For purposes of this
Agreement, the term "cause" shall be defined as:
(i) failure of Employee to perform the duties required of
him/her in this Agreement in a manner satisfactory to the Corporation, in its
sole discretion; provided, however, that the Term of Employment shall not be
terminated pursuant to this subparagraph (i) unless the Corporation first gives
Employee a written notice ("Action Plan"). The Action Plan shall specify the
deficiencies in Employee's performance of his/her duties. Employee shall have a
period of thirty (30) days, commencing on receipt of the Action Plan, in which
to cure the deficiencies contained in the Action Plan. In the event Employee
does not cure the deficiencies to the satisfaction of the Corporation, in its
sole discretion, within such thirty (30) days period, the corporation shall have
the right to immediately terminate the Term of Employment. The provisions of
this subparagraph (i) may be invoked by the Corporation any number of times and
cure of deficiencies contained in any Action Plan shall not be construed as a
waiver of this subparagraph (i) nor prevent the Corporation from issuing any
subsequent Action Plans; or
(ii) any dishonesty by Employee in his/her dealings with the
Corporation, the commission of fraud by Employee, negligence in the performance
of the duties of Employee, or the conviction (or plea of guilty or nolo
contendere) of Employee of any crime involving dishonesty or moral turpitude; if
the Employee is found to be committed an act of
fraud in the representation of the financial performance of the restaurant, its
resulting impact will be deducted from outstanding monies owed to the employee;
or,
(iii) any violations or any covenant or restriction contained in
Section 6 or Section 7 hereof; or,
(d) at the election of the Corporation, upon the sale of a majority
interest in the capital stock of either the Corporation or of substantially all
of the assets of the Corporation; or,
(e) at the election of the Corporation, upon the sale of a majority
of ownership interest in the Corporation or of substantially all of the assets
of the Corporation; or,
(f) at the election of the Corporation, upon the determination by the
Corporation to cease the Corporation business operations.
For all purposes of this Agreement, termination for "cause" shall be
deemed to have occurred in the event of Employee's resignation when, because of
existing facts and circumstances, subsequent termination for "cause" can be
reasonably foreseen.
Except as otherwise provided in Section 4(b), in the event of
termination of this Agreement pursuant to this Section 4, Employee or his/her
estate, as appropriate, shall be entitled to receive (in addition to any fringe
benefits payable upon death in the case of Employee's death) the base salary
provided for herein up to and including the effective date of termination,
prorated on a daily basis.
5. Investment Option on Termination. The parties acknowledge that
--------------------------------
Employee is the owner of a TWENTY THOUSAND DOLLAR ($20,000.00) cash investment
in the Corporation, to be entirely funded by the Employee upon the execution of
this agreement. This cash investment will be recorded as a liability by the
Corporation due to the Employee and will be used as normal and customary working
capital by the Corporation, subject to all normal and customary creditor rights
by law.
If during the first three years from the date of execution of the
Agreement, the Employee's Employment ceases for any cause, the principal without
interest will be promptly returned to the Employee or his/her estate in the case
of death. At the end of the third year, THIRTY THOUSAND DOLLARS ($30,000.00)
will be returned. At the end of the fourth year, FORTY THOUSAND DOLLARS
($40,000.00) will be returned, and upon the end of this Agreement at the end of
the fifth year, FIFTY THOUSAND DOLLARS ($50,000.00) will be returned. The
difference between the initial cash investment and the amount repaid to the
Employee shall be deemed interest income to the Employee and interest expense by
the Corporation.
6. Non-Competition. During the term of Employment and for two (2)
----------------
years thereafter, regardless of any termination pursuant to Section 4 or any
voluntary termination or
resignation by Employee, Employee shall not, individually or jointly with
others, directly or indirectly, whether for his/her own account or for that of
any other person or entity, own or hold any ownership interest in any person or
entity engaged in a restaurant business the same as or similar to any restaurant
business of the Corporation, and which is located or intended to be located
anywhere within a radius of fifteen (15) miles of any restaurant owned or
operated by the Corporation, and employee shall not act as an officer, director,
employee, partner, independent contractor, consultant, principal, agent,
proprietor, or in any other capacity for, nor lend any assistance (financial or
otherwise) or cooperation to, any such person, or entity; provided, however,
-------- -------
that it shall not be a violation of this section for Employee to own a one
percent (1%) or smaller interest in any corporation required to file periodic
reports with the Securities and Exchange Commission. For purposes of this
Section 6, restaurants owned or operated by the Corporation shall also include
the restaurants operated or owned by an affiliate.
7. Non-Disclosure; Non-Solicitation. Except in the performance of
---------------------------------
his/her duties hereunder, at no time during the Term of Employment, or at any
time thereafter, shall Employee, individually or jointly with others, for the
benefit of Employee or any third party, publish, disclose, use or authorize
anyone else to publish, disclose, or use, any secret or confidential material or
information relating to any aspect of the business or operations of the
Corporation or the Restaurant, including, without limitation, any secret or
confidential information relating to the business, customers, trade or
industrial practices, trade secrets, technology, recipes or know-how of either
of the Corporation or the Restaurant. Moreover, during the Term of Employment
and for a period of two (2) years thereafter, Employee shall not act as an
officer, director, employee, partner, independent contractor, consultant,
principal, agent, proprietor, owner, or part owner, or in any other capacity, to
any person or entity which employs any person or hires or contracts with, as a
consultant or other independent agent or independent contractor, any person or
entity (other than Employee) who was employed by or acted as an agent for,
consultant to, or independent contractor of the Corporation at any time during
the Term of Employment.
8. No Remedy at Law. Employee agrees that the remedy at law for any
-----------------
breach by him/her of the covenants contained in Sections 6 and 7 hereof will be
inadequate and would be difficult to ascertain and therefore, in the event of
the breach or threatened breach of any such covenants, the Corporation, in
addition to any other remedy, shall have the right to enjoin Employee from any
threatened or actual activities in violation thereof; and Employee hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such covenants
without the necessity of proof of actual damages.
9. Assignability. This Agreement and the rights and duties created
--------------
hereunder shall not be assignable or delegable by Employee. This Agreement and
the rights and duties hereunder may be assigned or delegated by the Corporation
to any successor to the Corporations interest as owner of the Restaurant.
10. Notices. All notices or other communications provided for herein
-------
to be given or sent to a party by the other party shall be deemed validly given
or sent if in writing and mailed, postage prepaid, by registered or certified
United States mail, addressed to the parties at their addresses herein above set
forth. Either party may give notice to the other party at any time,
by the method specified above, of a change in the address at which, or the
person to whom, notice is to be addressed.
11. Specific Performance. With respect to the covenants and agreements
---------------------
of Employee set forth in Sections 6 and 7 hereof, the parties agree that a
violation of such covenants and agreements will cause irreparable injury to the
Corporation and that the Corporation shall be entitled, in addition to any other
rights and remedies it may have, at law or in equity, to obtain an injunction to
restrain Employee from violating, or continuing to violate, such covenants and
agreements. In the event the Corporation shall apply for such an injunction,
Employee shall not raise as a defense thereto that the Corporation have an
adequate remedy at law.
12. Severability. Each section, subsection, and lesser section of this
------------
Agreement constitutes a separate and distinct undertaking, covenant, or
provision hereof. In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, such provision shall be deemed
limited by construction in scope and effect to the minimum extent necessary to
render the same valid and enforceable, and, in the event such a limiting
construction is impossible, such invalid unenforceable provision shall be deemed
severed from this Agreement, but every other provision of this Agreement shall
remain in full force and effect.
13. Effect of Termination. The termination of this Agreement, for
---------------------
whatever reason, shall not extinguish those obligations of Employee specified in
Sections 6 and 7 hereof, nor shall the same extinguish the right of either party
to bring an action, either in law or in equity, for breach of this Agreement by
the other party.
14. Waiver. The failure of a party to enforce any term, provision, or
-------
condition of this Agreement at any time or times shall not be deemed a waiver of
that term, provision, or condition for the future, nor shall any specific waiver
of a term, provision, or condition at one time be deemed a waiver of such term,
provision, or condition for any future time or times.
15. Parties. This Agreement shall be binding upon, and shall inure to
-------
the benefit of, the parties hereto and their legal representatives, and proper
successors or assigns, as the case may be. The covenants contained in Sections 6
and 7 hereof shall inure to the benefit of, and be enforceable by, the
Corporation and their legal representatives, successors and assigns.
16. Governing Law. The validity, interpretations, and performance of
--------------
this Agreement shall be governed by the laws of the State of Massachusetts
without giving effect to the principals of comity or conflicts of laws thereof.
17. Employment Dispute Resolution Arbitration Agreement. In
----------------------------------------------------
consideration of employment by N.E. Restaurant Co., Inc. and this Management
Incentive Agreement, and in consideration of the company's reciprocal promise to
arbitrate, the employee understands and agrees that any and all claims will be
resolved by final and binding arbitration before a neutral, third-party
arbitrator.
18. Captions. The captions of this Agreement have been assigned
--------
thereto for convenience only, and shall not be construed to limit, define, or
modify the substantive terms hereof.
19. Entire Agreement; Counterparts. This Agreement constitutes the
------------------------------
entire agreement between the parties hereto concerning the subject matter
hereof, and supersedes all prior memoranda, correspondence, conversations, and
negotiations. This Agreement may be executed in several counterparts that
together shall constitute but one and the same agreement.
20. Costs of Enforcement. In the event it is necessary for any party
--------------------
to retain the services of an attorney or to initiate legal proceedings to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover from the nonprevailing party, all costs of such enforcement, including
reasonable attorneys fees and including trial and appellate proceedings.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the date first written above.
"Employee"
_____________________________ _____________________________
Witness
_____________________________
Witness
"Corporation"
NE RESTAURANT COMPANY, INC.
By:
_____________________________ __________________________
Witness
As its:
_____________________
_____________________________
Witness