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Exhibit 10.1  


[CONFORMED COPY]  


 
 

EMPLOYMENT AGREEMENT    
    


        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this 7th day of May 2003, by and among STEPHEN RUSSO ("Employee"), MRS. FIELDS'
ORIGINAL COOKIES, INC., a Delaware corporation ("MFOC"), and MRS. FIELDS FAMOUS BRANDS, INC., a Delaware corporation (the "Company"). 


RECITAL  


        Whereas, each of the Company and MFOC has determined that it is in their interest to employ Employee, and Employee has agreed to be employed by the Company and
MFOC, on the terms set forth in this Agreement. 


        NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee, the Company and MFOC hereby agree as follows: 


AGREEMENT  


        1.    DUTIES.    Effective as of May 15, 2003 (the "Effective Date"), the Company and
MFOC do hereby hire, engage, and employ Employee as the President and Chief Executive Officer of the Company and MFOC, and Employee does hereby accept and agree to such hiring, engagement, and
employment, and effective as of May 11, 2003, Employee will be employed by the Company and MFOC on a transitional basis. Employee shall serve the Company and MFOC in such positions fully,
diligently, competently, and in conformity with provisions of this Agreement and the corporate policies of the Company and MFOC as they presently exist, and as such policies may be amended, modified,
changed, or adopted during the Period of Employment, as hereinafter defined. 



        During
the Period of Employment, Employee shall also serve as the Chief Executive Officer and President of each subsidiary or affiliate of the Company that is now or that becomes a part
of the Mrs. Fields Company Group. As used in this Agreement, the term the "Mrs. Fields Company Group" shall mean and refer to the Company and the Company's subsidiaries from time to
time. 


        Subject
to specific elaboration by the Board of Directors of the Company as to the duties (which shall be consistent herewith and with Employee's offices provided for hereunder) that are
to be performed by Employee and the manner in which such duties are to be performed, the duties of Employee shall entail those duties customarily performed by a president and chief executive officer
of a company with a sales volume and the number of employees commensurate with those of the Company. Provided, however, that at all times during the Period of Employment, Employee shall perform those
duties and fulfill those responsibilities and refrain from those activities that are reasonably prescribed or proscribed by the Board of Directors of the Company to be performed or refrained from by
him consistent with his positions with the Company. 


        Employee
shall be responsible and report only to the Company's full Board of Directors and to said Board's Executive Committee. 


        Effective
as of the Effective Date and during the Period of Employment, the Company shall cause Employee to be elected a member of the Company's Board of Directors (the "Board"),
provided Employee is legally qualified to so serve, and Employee shall, if so elected, serve as a member of the Board for no additional consideration. 


        Throughout
the Period of Employment, Employee shall devote his full time, energy, and skill to the performance of his duties for the Company and for the benefit of the Company and the
Mrs. Fields Company Group, vacations and other leave authorized under this Agreement excepted. The foregoing

 
notwithstanding, Employee shall be permitted to (i) engage in charitable and community affairs, (ii) act as a director of any corporations or organizations outside the Mrs. Fields
Company Group not in competition with the Company or any member of the Mrs. Fields Company Group, not to exceed three (3) in number, and receive compensation therefor, and
(iii) to make investments of any character in any business or businesses not in competition with the Company or any member of the Mrs. Fields Company Group and to manage such investments
(but not be involved in the day to day operations of any such business), provided, in each case and collectively, that the same does or do not constitute or involve Employee in a conflict of interest
vis-à-vis the Company or any member of the Mrs. Fields Company Group or interfere with the performance of Employee's duties under this Agreement. 



        Employee
shall exercise due diligence and care in the performance of his duties for and the fulfillment of his obligations to the Company and MFOC under this Agreement. 


        The
Company shall furnish Employee with office, secretarial and other facilities and services as are reasonably necessary or appropriate for the performance of Employee's duties
hereunder and consistent with his positions as the President and Chief Executive Officer of the Company. 


        The
Company, MFOC and Employee agree that Employee does not plan to relocate to Salt Lake City until such time as the Company and Employee may mutually determine and that instead
Employee will commute from his residences in Rhode Island, New York City or Orlando, Florida to either the Company's headquarters or other locations where he needs to go on the Company's business.
MFOC agrees to reimburse Employee for his air travel commuting costs on regularly scheduled flights of commercial airlines and Employee agrees to use his best judgment in planning his commuting so as
to minimize the expense to MFOC. If Employee and the Company later determine that he should relocate to Salt Lake City, MFOC will provide an appropriate executive relocation program. 


        2.    PERIOD OF EMPLOYMENT.    The Period of Employment shall, unless sooner terminated as
provided herein, be three (3) years commencing on the Effective Date. 



        Unless
the Company or Employee gives notice of termination as provided under this Agreement, this Agreement will automatically renew on each annual anniversary from the Effective Date
for a successive three-year period. 


        3.    COMPENSATION.    



        (a)    BASE SALARY.    During the Period of Employment, MFOC shall pay Employee, and Employee
agrees to accept from MFOC, in payment for his services a base salary of Four Hundred Thirty Thousand
Dollars ($430,000) per year ("Base Salary"), payable in equal semi-monthly installments or at such other time or times as Employee and MFOC shall agree. Upward adjustment to the Base
Salary shall be considered by the Company's Board of Directors not less frequently than annually. 


        (b)    PERFORMANCE BONUS.    MFOC shall also pay Employee an annual performance bonus with a
target of 60% of Base Salary, and a range of 0% to 100% of Base Salary, with such performance bonus for fiscal 2003 being guaranteed at 60% of the aggregate amount of Base Salary payable during the
period from May 15, 2003 through December 31, 2003 and such performance bonus for fiscal 2004 being guaranteed at 60% of the aggregate amount of Base Salary payable during the period
from January 1, 2004 through May 15, 2004. The performance bonus in subsequent years will be based upon the performance of the Company against mutually agreed targets and the
Board of Directors' assessment in its sole discretion of Employee's performance and the impact of Employee's performance on the financial, operational and strategic performance of the Company.
Performance bonuses are typically paid on or about March 15 of each calendar year with respect to the preceding calendar year.

 




        4.    FRINGE BENEFITS.    During the Period of Employment, Employee shall be entitled to the
following fringe benefits. 



        (a)    BENEFIT PLANS.    Employee shall be entitled to participate in all benefit plans and
programs generally available to all other senior management employees of the Company or to all employees of the Company working in Salt Lake City, Utah, subject to any restrictions specified in such
plans and to receive such other benefits and conditions of employment as are provided to all other senior officers, or executives of the Company as of the date of this Agreement. 


        (b)    EQUITY PLAN.    As of the Effective Date, Employee shall be awarded an initial option
grant under the Company's Employee Stock Option Plan (the "Equity Plan") to purchase 250,000 shares of the Company's Common Stock (the "Common Stock"), representing approximately 4% of the common
equity of the Company on the date of this Agreement. Such options will provide for a purchase price per share of Common Stock of $18.12, the most recent Board valuation, will vest
331/3% per year on the anniversary dates of the Effective Date and will have the other terms and conditions set forth in the Equity Plan and the standard form of option award agreement,
copies of which have been provided to Employee. Based on Employee's performance, the Board may determine to grant additional options in the future. 


        Anything
in this Agreement or in such plan or arrangement to the contrary notwithstanding, the inclusion in such plan or arrangement of any provision(s) addressing participation by
Employee in such plan or arrangement for a period of years shall not be interpreted as a promise of continued employment by the Company for such period of years or any other period of time. 



        The
plan or arrangement to be proposed by Employee shall provide that any payments made thereunder, in conjunction with any other payments that constitute "parachute payments" (as
defined in Section 280G(b)(A) of the Internal Revenue Code) (the "Code"), shall be limited such that no such payments or portions thereof constitute an "excess parachute payment" (as
defined in Section 280G(b)(1) of the Code) or are otherwise nondeductible by the Company for tax purposes under any other provision of the Code. 


        (c)    VACATION AND OTHER LEAVE.    Employee shall be entitled to such amounts of paid
vacation and other leave, but not less than four (4) weeks vacation per twelve-month period of employment, as from time to time may be allowed to the Company's senior management personnel
generally, with such vacation to be scheduled and taken in accordance with the Company's standard vacation policies applicable to such personnel. 


        (d)    HOUSING ALLOWANCE & CAR RENTAL.    For so long as Employee is commuting to Salt
Lake City, he shall receive from MFOC a housing allowance for each full year of the Term equal to $20,000, payable in advance in pro rata installments throughout the Term on the dates that Employee
receives payments of his Base Salary. In lieu of an automobile allowance, while in Salt Lake City on business, Employee may rent an automobile at MFOC's expense. 


        (e)    VESTING ON DEATH OR DISABILITY.    Upon any termination of this Agreement and
Employee's employment hereunder by reason of Employee's death or Permanent Disability, as defined in Section 7(b) ("Death or Disability—Definition of Permanently Disabled and
Permanent Disability"), provided that the terms and provisions of such plan and applicable law permit, any theretofore deferred or unvested portion of any award made to Employee in respect of any
retirement, pension, profit sharing, long term incentive, and similar plans automatically shall become fully vested in Employee, shall be nonforfeitable, and shall continue in effect and be redeemable
by or payable to Employee (or his designated beneficiary or estate) at the time and on the same conditions as would have applied had Employee's employment not been so terminated. It is expressly
provided, however, that nothing in this Section 4(e) shall obligate the Company to

 
provide full vesting upon death or disability in connection with participation by Employee in the Equity Plan or other arrangement contemplated under Section 4. 




        5.    BUSINESS EXPENSES.    During the Period of Employment, MFOC shall pay, or in case paid
by Employee in the first instance, reimburse Employee for, any and all necessary, customary, and usual expenses incurred by him in connection with the performance of his duties hereunder, including,
without limitation, all traveling expenses, and entertainment expenses, upon submission of appropriate vouchers and documentation and provided that the expenses are incurred in accordance with MFOC's
travel and reimbursement policies from time to time in effect. 


        6.    NO OTHER BENEFITS OR COMPENSATION.    Employee, as a result of his employment by the
Company, shall be entitled to only the compensation and benefits provided for in this Agreement, subject to the terms thereof, and no others. 


        7.    DEATH OR DISABILITY.    



        (a)    TERMINATION OF EMPLOYMENT.    If Employee dies during the Period of Employment,
Employee's employment shall automatically cease and terminate as of the date of Employee's death. 


        If
Employee becomes Permanently Disabled (as hereinafter defined) while employed by the Company, (i) Employee's employment and the Company's and MFOC's obligations hereunder,
including the payment of Base Salary pursuant to Section 3(a) ("Compensation—Base Salary") shall continue for a period of ninety (90) days from the date on which the Employee
is determined to be Permanently Disabled ("Employee's Disability Date"), and (ii) ninety (90) days after the Employee's Disability Date, Employee's employment and all obligations of the
Company and MFOC hereunder shall automatically cease and terminate. 


        In
the case of Employee's death or Permanent Disability (as hereinafter defined), MFOC shall be obligated to pay to Employee (or to Employee's estate in the case of Employee's death) any
Base Salary and any incentive compensation accrued to Employee as of the date of the Employee's death, or in the case of Employee's Permanent Disability, as of the Employee's Disability Date. In the
event Employee's employment is terminated on account of Employee's Permanent Disability, he shall, so long as his Permanent Disability continues, remain eligible for all benefits provided under any
long-term disability programs of the Company in effect at the time of such termination, subject to the terms and conditions of any such programs, as the same may be changed, modified, or
terminated for or with respect to all senior management personnel of the Company. 


        (b)    DEFINITION OF PERMANENTLY DISABLED AND PERMANENT DISABILITY.    For purposes of this
Agreement (other than Sections 4(a) ("Fringe Benefits—Benefit Plans"), 4(e) ("Fringe Benefits—Vesting on Death or Disability"), and the provisions relating to
disability insurance contained in the last sentence of Section 7(a) ("Death or Disability—Termination of Employment"), the terms "Permanently Disabled" and "Permanent
Disability" shall mean Employee's inability, because of physical or mental illness or injury, to perform substantially all of his customary duties pursuant to this Agreement, and the continuation of
such disabled condition for a period of ninety (90) continuous days, or for not less than one hundred eighty (180) days during any continuous twenty-four
(24) month period. Whether Employee is Permanently Disabled shall be certified to the Company by a Qualified Physician (as hereinafter defined), or if requested by Employee a panel of three
Qualified Physicians. If Employee requests such a panel, Employee and the Company shall each select a Qualified Physician who together shall then select a third Qualified Physician. The determination
of the individual Qualified Physician or the panel, as the case may be, shall be binding and conclusive for all purposes. As used herein, the term "Qualified Physician" shall mean any medical doctor
who is licensed to practice medicine in the State of Utah and is reasonably acceptable to each of Employee and the Company. Employee and the Company

 
may in any instance, and in lieu of a determination by a Qualified Physician or panel of Qualified Physicians, agree between themselves that Employee is Permanently Disabled. The terms Permanent
Disability and Permanently Disabled as used herein may have meanings different from those used in any disability insurance policy or program maintained by Employee or the Company. 




        8.    TERMINATION BY THE COMPANY.    



        (a)    TERMINATION FOR CAUSE.    The Company, by action of its Board of Directors, may, by
providing written notice to Employee, terminate the employment of Employee under this Agreement for "cause" at any time. The term "cause" for purpose of this Agreement shall mean: 



        (i)    The
refusal of Employee to implement or adhere to lawful policies or directives of the Board of Directors of the Company consistent with this Agreement; or 


        (ii)   Employee's
conviction of or entrance of a plea of nolo contendere to (A) a felony, (B) to any other crime,
which other crime is punishable by incarceration for a period of one (1) year or longer, or (C) other conduct of a criminal nature that may have an adverse impact on the Company's
reputation and standing in the community; or 


        (iii)  conduct
that is in violation of Employee's common law duty of loyalty to the Company; or 



        (iv)  fraudulent
conduct by Employee in connection with the business affairs of the Company, regardless of whether said conduct is designed to defraud the Company or others;
or 


        (v)   theft,
embezzlement, or other criminal misappropriation of funds by Employee, whether from the Company or any other person; or 


        (vi)  any
breach of or Employee's failure to fulfill any of Employee's obligations, covenants, agreements, or duties under this Agreement. 





Provided,
however, that "cause" pursuant to clause (i) or (vi) shall not be deemed to exist unless the Company has given Employee written notice thereof specifying in reasonable
detail the facts and circumstances alleged to constitute "cause", and thirty (30) days after such notice such conduct or circumstances has not entirely ceased or been entirely remedied. If
Employee's employment is terminated for "cause," the termination shall take effect upon the effective date (pursuant to Section 24 ("Notices")) of written notice of such termination to
Employee. In the event Employee's employment is terminated for "cause," neither the Company nor MFOC shall have any obligation to pay Employee any amounts, including, but not limited to Base Salary or
performance bonus, for or with respect to any period after the effective date of the termination of Employee's employment for "cause," including any obligation under the Equity Plan. 



        If
the Company attempts to terminate Employee's employment pursuant to this Section 8(a) and it is ultimately determined that the Company lacked "cause," the provisions of
Section 8(b) ("Termination by the Company—Termination Without Cause") shall apply, and Employee's sole and exclusive remedy for such breach of this Agreement by the Company
and/or any other damages that Employee shall have suffered or incurred of any nature whatsoever, shall be to receive the payments expressly called for by Section 8(b) ("Termination by
the Company—Termination Without Cause") with interest on any past due payments at the rate of eight percent (8%) per year from the date on which the applicable payment would have been made
pursuant to Section 8(b) ("Termination by the Company—Termination Without Cause") plus Employee's costs and expenses (including but not limited to reasonable attorneys' fees)
incurred in connection with such dispute.

 


        (b)    TERMINATION WITHOUT CAUSE.    The Company may, with or without reason, terminate
Employee's employment under this Agreement without "cause" at any time, by providing Employee thirty (30) days prior written notice of such termination. If Employee's employment is terminated
pursuant to this Section 8(b), Employee shall not be obligated to render services to the Company following the effective date of such notice (the "Notice Date") except such services as are
requested by the Company pursuant to Section 11 ("Transition Period Services"), and as its sole and exclusive obligation and duty to Employee resulting directly or indirectly from the
termination of Employee's employment with the Company and in full and complete settlement of any and all claims that
Employee may have or claim to have arising directly or indirectly out of the termination of his employment with the Company, MFOC shall, subject to Section 12 ("Non Competition") pay Employee,
as severance pay, an amount (the "Severance Amount") equal to the product of multiplying the then current semi-monthly base salary by forty-eight (48). The Severance Amount shall be
payable by MFOC as follows: (i) Employee shall receive an amount equal to the Base Salary payable in twelve (12) equal monthly installments commencing on the Notice Date and
(ii) the balance of the Severance Amount is payable on the first anniversary of the Notice Date. MFOC shall also pay to the Employee a portion of any performance bonus (the "Bonus Portion"), as
determined by the Company's Board of Directors, referred to in Section 3(b), that, but for the termination of Employee's employment, would have been paid to Employee for or with respect to the
calendar year in which Employee's employment is terminated. The Bonus Portion shall consist of that percentage of the said performance bonus determined by dividing the number of full or partial
calendar months during the calendar year in which Employee's employment is terminated that Employee was in the employ of the Company by twelve (12). Until the second anniversary of the Notice
Date or until Employee is gainfully employed by another employer, which ever time period is less, the Company shall allow Employee to continue participation in the Company's group health insurance
plan at the Company's expense and, if permitted by such plan, in the Company's dental plan at Employee's expense. 




        9.    TERMINATION BY EMPLOYEE.    



        (a)    TERMINATION WITHOUT GOOD REASON.    Employee shall have the right to terminate this
Agreement and his employment hereunder at any time upon thirty (30) days prior written notice of such termination to the Company. Except as expressly set forth in Section 11 ("Transition
Period Services"), upon the effective date of any such termination all obligations and rights of Employee and the Company hereunder shall terminate and cease. 


        (b)    TERMINATION WITH GOOD REASON.    If: 



        (i)    MFOC
fails to provide Employee with the compensation and benefits called for by this Agreement; or 



        (ii)   the
Company or MFOC assign Employee to a lower organizational level than the level at which he is on the date of this Agreement assigned, or substantially diminishes
Employee's assignment, duties, responsibilities, or operating authority from those specified in Section I ("Duties"); or 


        (iii)  the
Company is divested, by sale, closure, liquidation, foreclosure, or other means, of any substantial part of its assets or business as now held or conducted; or 


        (iv)  the
Company or MFOC breaches this Agreement and such breach continues for a period of thirty (30) days after written notice thereof given by Employee to the
Company, 





then
any one or more of such circumstances shall constitute "Good Reason", and, subject to the provisions of Section 10 ("Means and Effect of Termination"), Employee shall have the right to
terminate this Agreement and his employment hereunder for Good Reason, if, thirty (30) days after the effective date of Employee's notice to the Company of such circumstances constituting Good

 
Reason, such circumstances continue to exist, and for all purposes of this Agreement any such termination of this Agreement by Employee shall have the same effects under this Agreement as the
termination of the Employee's employment under this Agreement by Company without "cause." 



        10.    MEANS AND EFFECT OF TERMINATION.    Any termination of Employee's employment under this
Agreement shall be communicated by written notice of termination from the terminating party to the other parties. The notice of termination shall indicate the specific provision(s) of this Agreement
relied upon in effecting the termination and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination, if any such basis is required by the
applicable provision(s) of this Agreement. Any notice of termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office. The
burden of establishing the existence of "cause" or Good Reason shall be upon the terminating party. If Employee's employment is terminated by either party, then promptly after the effective date of
such termination or in the manner and at the time or times provided in the relevant Section of this Agreement, MFOC promptly shall provide and pay to Employee, or in case of his death his
estate or heirs, all compensation, benefits, and reimbursements due or payable to Employee for the period to the effective date of the termination. To the extent permitted by applicable law, the
calendar month in which Employee's employment is terminated shall be counted as a full month in determining amount and vesting of any benefits under benefit plans of the Company. 



        11.    TRANSITION PERIOD SERVICES.    In the event Employee's employment is terminated by the
Company pursuant to section 8(b) ("Termination by the Company—Termination Without Cause") or by Employee pursuant to Section 9(a) ("Termination by
Employee-Without Good Reason"), if requested by the Company in writing, Employee shall render such services, on a part-time basis for a period not to exceed sixty (60) days after
the effective date of the notice of termination (whether given by the Company or by Employee), as the Company's Board of Directors reasonably requests for transition purposes. Employee shall receive
no compensation for such services, other than the payment of the Severance Amount as provided in Section 8(b) ("Termination by the Company—Termination Without Cause") and
reimbursement for expenses incurred by Employee in providing such services as provided in, and subject to the provisions of, Section 5 ("Business Expenses"). 


        12.    NON COMPETITION.    



        (a)   For
a period of one year from the date of the termination of Employee's employment hereunder, Employee shall not become an employee, owner (except for passive
investments of not more than three percent (3%) of the outstanding shares of, or any other equity interest in, any company or entity listed or traded on a national securities exchange or in an
over-the-counter securities market), officer, agent or director of any firm or person which either directly competes with a line of business of the Company at the Notice Date
accounting individually for ten percent (10%) or more of the Company's gross sales, revenues or earnings before taxes or derives ten percent (10%) or more of such firm's or person's gross sales,
revenues or earnings before taxes. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included in this paragraph, the parties intend that those of
such covenants which, if eliminated, would permit the remaining separate covenants to be enforced in such proceedings shall, for the purpose of such proceedings, be deemed eliminated from the
provisions of this Section 12. 


        (b)   In
addition to any other remedies that may otherwise be available for a breach of Section 12 hereof by Employee, Employee agrees that in the event of such breach
he shall irrevocably forfeit any right he may have to any remaining severance payment to be made under Section 8(b) ("Termination by the Company—Termination Without Cause")
subsequent to such breach. 




        13.    ASSIGNMENT.    This Agreement is personal in its nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations

 
hereunder; provided, however, that, in the event of the merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company and MFOC with or to any other individual or
entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants,
duties, and obligations of the Company and MFOC hereunder. 


        14.    GOVERNING LAW.    This Agreement and the legal relations hereby created between the
parties hereto shall be governed by and construed under and in accordance with the internal laws of the State of Utah, which internal laws exclude any law or rule of the State of Utah, or any
interpretation thereof, that would require or call for the application of the laws of any other state or jurisdiction hereto. 


        15.    ENTIRE AGREEMENT.    Except for the Equity Plan, the related option award agreement and
the Stockholders' Agreement to which any shares of Common Stock issued under the Equity Plan would be subject, this Agreement embodies the entire agreement of the parties hereto respecting the matters
within its scope. This Agreement supersedes all prior agreements of the parties hereto on the subject matter hereof. Any prior negotiations, correspondence, agreements, proposals, or understandings
relating to the subject matter hereof shall he deemed to be merged into this Agreement and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or
understandings shall be deemed to be of no force or effect. There are no representations, warranties, or agreements, whether express or implied, or oral or written, with respect to the subject matter
hereof, except as set forth herein. 


        This
Agreement shall not be modified by any oral agreement, either express or implied, and all modifications hereof shall be in writing and be signed by the parties hereto. The
provisions of this and the immediately preceding sentence themselves may not be modified, either orally or by conduct, either express or implied, and it is the declared intention of the parties hereto
that no provision of this Agreement, including said two sentences, shall be modifiable in any way or manner whatsoever other than through a written document signed by the parties hereto. 


        16.    WAIVER.    Failure to insist upon strict compliance with any of the terms, covenants,
or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power
hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 


        17.    NUMBER AND GENDER.    Where the context requires, the singular shall include the
plural, the plural shall include the singular, and any gender shall include all other genders. 


        18.    SECTION HEADINGS.    The section headings in this Agreement are for the purpose
of convenience only and shall not limit or otherwise affect any of the terms hereof. 


        19.    DISPUTE RESOLUTION.    



        (a)    NEGOTIATION AND MEDIATION.    In the event any dispute arises hereunder, the parties
shall first attempt to resolve the dispute by negotiation in good faith. If the dispute cannot be timely resolved through negotiation, the parties will, before resorting to any of their remedies at
law or in equity, try to settle the dispute in good faith by mediation in Salt Lake City, Utah or such other location as the parties may agree, under the then operative mediation rules of the American
Arbitration Association or such other mediation tribunal or private mediator or mediation services provider as the parties agree. The mediator shall be such person as the parties mutually agree, but
if the parties have failed to agree on a mediator within seven (7) days after the date on which any party demands that the parties proceed to mediation, the mediator shall be selected by the
American Arbitration Association or such other mediation services provider as the parties agree.

 


        (b)    OTHER REMEDIES.    Failing settlement of the dispute by negotiation or mediation, the
parties shall, unless they mutually agree to resolve the dispute finally by arbitration, be entitled to pursue their legal
and equitable remedies (subject to the provisions at Section 20 ("Liquidated Damages-Breach by the Company or MFOC")) in any court having jurisdiction. 




        20.    LIQUIDATED DAMAGES—BREACH BY THE COMPANY OR MFOC.    Because the damages
suffered by Employee in such an event would be difficult or impossible to estimate, establish, ascertain, or prove, and in order to provide Employee with a remedy in such an event without the
necessity and associated cost of Employee having to establish or prove the damages suffered by Employee as a result thereof (which remedy the parties hereto have and do agree would be appropriate and
adequate compensation to Employee in such event), in the event that this Agreement and Employee's employment hereunder shall be terminated (whether by the Company or Employee) and thereafter Employee
shall prevail in any dispute between Employee and the Company or MFOC relative to, involving, or concerning the legality of or justification for the termination of this Agreement and Employee's
employment hereunder and any other issues or matters directly or indirectly arising out of or in connection with such termination and Employee's employment by the Company, subject to Section 12
("Non Competition") Employee shall he entitled to the continued payment of the Base Salary by MFOC as provided in Section 8(b) ("Termination by the Company—Termination Without
Cause") as liquidated and exclusive damages and not as a penalty, and in such case this Agreement and Employee's employment hereunder, shall for all purposes be treated as having been terminated by
the Company without "cause" pursuant to Section 8(b) ("Termination by the Company—Termination Without Cause"). 



        In
the event Employee files any claim, complaint, charge, action, or lawsuit against the Company, MFOC or their respective employees, agents, officers, directors, or any other person
affiliated or associated with the Company, with any governmental agency, any state or federal court, or any mediation or arbitration body or group, for or with respect to a matter, claim, or incident,
known or unknown, which has occurred or arisen or which shall hereafter occur or arise relative to, involving, or concerning the termination of this Agreement and Employee's employment hereunder
(whether as a result of action of Employee, the Company or MFOC) and any other issues or matters directly or indirectly arising out of or in connection with such termination and Employee's employment
by the Company and MFOC, and in such claim, complaint, action, charge, or lawsuit, Employee alleges or asserts the right to recover, receive, or be awarded damages from the Company, MFOC or its
employees, agents, officers, directors, or any other person affiliated or associated with the Company in addition to or in lieu of the liquidated damages expressly provided for in this
Section 20, Employee hereby stipulates, agrees, and consents to the dismissal or withdrawal, with prejudice, of any such claim, complaint, action, charge, or lawsuit (collectively, a
"Dismissable Claim"). In the event that Employee files any Dismissable Claim, Employee shall be liable to the party or parties against whom the Dismissable Claim is filed (the "Nonfiling Party") and
shall indemnify and save the Nonfiling Party harmless from all costs and expenses, including, but not limited to, attorney's fees, incurred by the Nonfiling Party and/or the Nonfiling Party's
officers, agents, employees, directors, and/or any other person affiliated or associated with the Nonfiling Party, if any, in defending or responding to any such Dismissable Claim, regardless of
whether such defense or response is before a state or federal court or administrative agency or a mediation or arbitration body and regardless of who might ultimately be deemed to be the prevailing
party as to any such Dismissable Claim. 


        21.    ATTORNEY'S FEES.    Employee and the Company agree that in any dispute resolution
proceedings arising out of this Agreement, the prevailing party shall be entitled to its or his reasonable attorney's fees and costs incurred by it or him in connection with resolution of the dispute
in addition to any other relief granted, it being understood that MFOC rather than the Company would make such payment if Employee is the prevailing party.

 


        22.    INDEMNIFICATION.    If Employee is made a party to, is threatened to be made a party
to, or is otherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding") by reason of the fact that he is or was a director, officer,
or employee of the Company or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether before, during or after expiration or termination of this Agreement, each of the Company and MFOC shall indemnify and hold
Employee harmless to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company and MFOC to provide broader indemnification rights than such law permitted the Company and MFOC to provide prior to such amendment), against all expense,
liability, and loss (including attorneys' fees, judgment fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by Employee in connection therewith, and
such indemnification shall continue after Employee ceases to be a director, officer, employee, or agent of the Company and MFOC and shall inure to the benefit of Employee's heirs, executors, and
administrators. The right to indemnification conferred hereby shall include the right to be paid by MFOC the reasonable expenses incurred in defending any Proceeding in advance of its final
disposition as such expenses are incurred. The indemnification provided herein shall not be deemed exclusive of any other rights to which Employee may be entitled under the Certificate of
Incorporation, Bylaws, any agreement, or vote of stockholders or disinterested directors of the Company, or otherwise, both as to action in his official capacity and as to action in another capacity
while holding such office or position, and shall continue with respect to action in such capacities even if Employee has thereafter ceased to be a director, officer, employee, or agent of the Company
and MFOC, and shall inure to the benefit of Employee's heirs, executors and administrators. Notwithstanding anything to the contrary in this Section 22, Employee agrees that the obligation to
make any payments in respect of the Company's and MFOC's indemnification hereunder rests solely with MFOC and the Company shall not be obligated to make any payments in respect of such
indemnification. 


        23.    SEVERABILITY.    In the event that a court of competent jurisdiction determines that
any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of
this Agreement which do not violate any statute or public policy shall continue in full force and effect. Furthermore, any court order striking any portion of this Agreement shall modify the stricken
terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Agreement. 


        24.    NOTICES.    All notices under this Agreement shall be in writing and shall be either
personally delivered or mailed postage prepaid, by certified mail, return receipt requested, (a) if to the Company,
to it at c/o Capricorn Investors III, L.P., 30 East Elm Street, Greenwich, Connecticut 06830 or (b) if to Employee to him at 5 Timberland Drive, Lincoln, Rhode Island 02865 by the same means,
or in either party's case to such other address or to the attention of such person as the party has specified by prior written notice to the other party. Notice shall be effective when personally
delivered, or five (5) business days after being so mailed. 


        25.    COUNTERPARTS.    This Agreement may be executed in counterparts collectively containing
the signatures of each of the parties. 


[Remainder of Page Intentionally Left Blank.] 




 


        IN
WITNESS WHEREOF, the Company and MFOC have caused this Agreement to be executed by its duly authorized officer, and Employee has hereunto signed this Agreement, on the date first
written above. 



	

 	
 	

MRS. FIELDS FAMOUS BRANDS, INC., a Delaware Corporation (the "Company")
	

 	
 	

By:	
 	

/s/  HERBERT S. WINOKUR, JR.      
 Name: Herbert S. Winokur, Jr.

Title: Director
	

 	
 	

MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware Corporation ("MFOC")
	

 	
 	

By:	
 	

/s/  DUDLEY C. MECUM      
 Name: Dudley C. Mecum

Title: Director
	

 	
 	

/s/  STEPHEN RUSSO      
 Stephen Russo ("Employee")














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EMPLOYMENT AGREEMENT