Employment Agreement - Robert G. King

EXHIBIT 10.6


EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement") is entered into as of this 1st day of November, 1996, by and between CLF2, Inc., a Rhode Island corporation with its principal place of business at 216 Weybosset Street, Providence, Rhode Island 02903 (the "Company"), and Robert G. King, an individual with a residence address of 40 Walker Road, Duxbury, Massachusetts 02332 ("Employee").


INTRODUCTION


1. The Company is in the business of operating and managing cafe restaurants. Employee possesses skills and knowledge advantageous to the Company.


2. The Company desires to employ Employee and Employee desires to accept such employment on the terms and conditions set forth herein.


AGREEMENT


In consideration of the premises and mutual promises hereinbelow set forth, the parties hereby agree as follows:


1. Employment; Duties. Subject to the terms and conditions set forth herein, the Company hereby employs Employee, on a full-time basis, to act as Vice President - Finance of the Company during the Employment Period, and to perform such acts and duties and furnish such services to the Company in connection with and related to that position as is customary for persons with similar positions in like companies, as the Company's Board of Directors shall from time to time reasonably direct. Employee hereby accepts such employment and agrees to perform such acts, duties and services for the Company diligently, competently, and in good faith manner.


2. Employment Period. The term of this Agreement (the "Employment Period") shall commence on the date hereof and shall terminate thirty-six (36) months thereafter, unless terminated earlier pursuant to Sections 4 or 5 below, provided, however, that the Employment Period shall automatically renew for additional one year periods thereafter unless the Company shall provide Employee with not less than sixty (60) days' prior written notice of its intention not to renew prior to the expiration of the initial Employment Period or any annual extension thereof. In the event that the Company shall not renew this Agreement as provided in the preceding sentence, the Company shall continue to pay Employee's salary, at his then current rate, for a twelve (12) month period following termination.


3. Compensation and Benefits.


3.1 Salary. During the initial months of the Employment Period, the Company agrees to pay Employee at the rate of $100,000 per year, payable in equal installments pursuant to the Company's customary payroll policies in force at the time of payment, less required payroll deductions. Employee's salary will thereafter increase to $108,000 effective at such time the Company completes an initial public offering of its Common Stock, and will thereafter be increased annually by 5% in the sole discretion of the Board of Directors of the Company.


3.2 Stock Options/Bonus.


3.2.1 Stock Options. Employee as of the date of this Agreement has received an incentive stock option under the company's 1996 Stock Incentive Plan to purchase 43,500 shares of common stock at a price per share equal to $3.45, of which options to purchase 10,875 shares are immediately exercisable and of which options to purchase 32,625 shares vest at the rate of 1208.33 shares on the last day of each month hereafter commencing November 30, 1996 such that the entire option shall be fully vested as of January 31, 1999. Employee shall also receive, on January 31, 1997, an option to purchase 60,000 shares of common stock at the price per share of common stock offered to the public in an initial public offering of common stock, which option shall vest at the rate of 1,666.66 shares per month over a three year period such that the entire option shall be fully vested as of January 31, 2000 provided that said option shall terminate in the event the Company has not succesfully completed an initial public offering of its common stock by September 30, 1997.


3.2.2 Bonus. During the Employment Period, Employee shall be entitled to receive cash bonuses in the sole discretion of the Company's Board of Directors provided that the Company has achieved positive net income and met its budget for the fiscal year preceding the date of payment of any such bonus.


3.3 Health Benefits. During the Employment Period, the Company agrees to pay for the cost of family health care coverage for Employee as currently provided by the Company's health care provider(s) or by such other health care provider(s) to be selected by the Company.


3.4 Vacation. Employee may take three(3) weeks paid vacation each year during the Employment Period.


3.5 Reimbursement of Expenses. The Company shall reimburse Employee for all reasonable expenses in connection with Employee's duties hereunder and the promotion of the Company's business in general, upon presentation by Employee of appropriate supporting documentation.


3.6 Miscellaneous. The Company agrees to provide Employee with such other benefits in its discretion as it may provide to other similarly situated employees, including but not limited to pension or other retirement benefits, life insurance and disability insurance.


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3.7 Severance Payments.


3.7.1 Termination by the Company. In the event the Company terminates this Agreement pursuant to Section 4.2 (Disability) the Company shall, prior to the effective date of the termination, pay Employee, in one lump sum, an amount equal to 50% of Employee's annual cash salary, at his then current rate, less applicable taxes. In the event the Company terminates this Agreement pursuant to Section 5 (Termination without Cause) in connection with a "Change in Control" or an "Approved Change in Control" (both as hereinafter defined), the Company shall, prior to the effective date of termination, pay Employee 100% of Employee's annual cash salary, at his then current rate, less applicable taxes, if termination shall occur in connection with a Change in Control. The Company shall also pay Employee's health insurance benefits as described in Section 3.3 for a period of 6 months in the event of termination pursuant to Section 4.2 or 5, and, in the event of a Change of Control, all options granted to Employee shall become fully vested as of such date of termination.


3.7.2 Termination by Employee for "Good Reason".


(a) After a Change in Control and provided Employee has "Good Reason" (as hereinafter defined), Employee may terminate his employment hereunder upon fifteen (15) days written notice to the Company and the Company shall continue to pay Employee his annual salary, at his then current rate, for a six (6) month period.


(b) After an Approved Change in Control and provided Employee has Good Reason, Employee may terminate his employment hereunder upon fifteen (15) days written notice to the Company and the Company shall continue to pay Employee his annual salary, at his then current rate, for a twelve three (3) month period.


3.7.3 Definitions.


(a) Change in Control. A "Change in Control" shall be deemed to have occurred in any of the following events:


(i) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" or group (as such terms are defined in Section 13(d)(3) of the Securities Exchange Act of 1934) acquires more than 30% of the combined voting power of the Company's then outstanding securities, or (c) a r ...