**Exhibit10.1**

 

 

 

**EMPLOYMENT AGREEMENT**

 

THISAGREEMENT is entered into effective the 11th day of September, 2007,by and between WESTERN SIZZLIN CORPORATION (“Company”), and Robyn B. Mabe (“Executive”).

 

WHEREAS,Company is a corporation organized under the laws of the State of Delaware,with its principal place of business in Roanoke, Virginia; and

 

WHEREAS,Executive is now and desires to continue to be employed by the Company on theterms set forth in this Agreement; and

 

WHEREAS,the Board of Directors of the Company has determined that appropriate stepsshould be taken to reinforce and encourage the continued attention, anddedication of members of the Company’s management, including Executive, totheir assigned duties without distraction.

 

NOW,THEREFORE, in consideration of the above premises and the mutual covenantscontained in this Agreement and other good and valuable consideration, theparties agree as follows:

 

**1.             Dutiesand Obligations**.  The Company and Executive agree thatExecutive shall serve as Vice President and Chief Financial Officer of theCompany and its wholly-owned subsidiaries. Such duties and powers shall beconsistent with those normally expected of persons holding similarpositions.  Executive’s duties, however,are subject to reasonable modifications based on future developments of theCompany.

 

**2.             Compensationand Bonus**.  Executive’s base salary is at the currentrate of $125,000 per annum. Executive’s base salary will be determined by theBoard, but shall not be less than $125,000 per annum.  Executive’s base salary shall be paid intwenty-six (26) equal bi-weekly payments.

 

Inaddition to base salary, Executive will be eligible to receive an annual bonus,determined annually by the Board of Directors of Company.

 

**3.             Benefits**.  In addition to salary, Executiveshall be entitled to participate in benefit plans which Company adopts andoffers to employees, subject to the same terms, conditions and eligibilityrequirements as other Company employees, including, without limitation healthinsurance, and retirement, whether pension or profit sharing, plans.  Executive’s participation 

 

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under any groupinsurance programs, retirement plans, or other benefit programs, shall besubject to the applicable terms and conditions of the particular plans orprograms.

 

**4.             Term and Termination**. The term of this Agreement shall be one (1) year from the datehereof.  Unless otherwise terminated inaccordance with this Agreement, the Agreement shall automatically renew forsubsequent one year terms (“Renewal Terms”) unless either party provideswritten notice of termination to the other party more than 30 days in advanceof the beginning of any Renewal Term.

 

Executive’semployment shall be terminated only in one of the following ways:

 

A.                                   At any time by mutual written agreement of both parties to thisAgreement; or

 

B.                                     Upon thirty (30) days written notice from the Company to Executive; or

 

C.                                     Automatically and immediately should one of the following events occur:

 

1.                                       Death.  Executive dies; or

 

2.                                       Disability.  Executive becomes totally and permanentlydisabled, meaning Executive’s inability for a period of three (3) months, toperform her duties contemplated by this Agreement, such that she does notconstitute a Qualified Individual with a Disability under the terms of theAmericans with Disabilities Act of 1990. Such total and permanent disability shall be determined by the Companybased on medical and other evidence satisfactory to it; or

 

D.                                    For Cause.  At any time by the Company, by written noticeto Executive, terminating this Agreement and discharging Executive for Cause,as defined in this section of this Agreement.

 

1.                                       Cause.    Termination by the Company of Executive’s employment for “Cause”means:

 

i.                                          Executive has materially breached this Agreement.  A material breach of this Agreement shallinclude but shall not be limited to a habitual or repeated neglect of Executive’sduties (illness, injury or incapacity of the Executive, or Executive’s failureto meet the performance criteria established for and communicated to Executive,in writing, by the 

 

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                                                Company shall not constitute “Cause”);

 

ii.                                       Executive has breached her duty of loyalty to the Company;

 

iii.                                    Executive has committed an act of gross negligence, in connection withthe performance of her duties that is injurious to the business of the Company;

 

iv.                                   Executive has committed an act of gross misconduct relating to heremployment or the Company’s business, including, but not limited to, theft orembezzlement of the Company’s property or money, or an act of fraud against theCompany;

 

v.                                      Executive is convicted of a felony, or a crime involving moral turpitude.

 

2.                                       If Company believes Cause exists, as defined herein, a written noticewill be delivered to Executive by the Chairman of the Board or of theCompensation Committee, that specifically identifies the manner in which theChairman believes that Executive has given the Company Cause for termination ofExecutive’s employment, and giving Executive an opportunity for Executive,together with Executive’s counsel, to be heard before the Board of Directors ofthe Company.  The meeting of the Board ofDirectors shall not be sooner than fifteen (15) calendar days from the date ofthe written notice and shall be at a location determined by the Board ofDirectors, or via telephone, in either case within the discretion of theBoard.  After granting Executive theopportunity to be heard, the Board of Directors of the Company may then make afinding that, in the good faith opinion of a majority of the Board of Directorsthe Executive acted (or failed to act when she should have acted) in a mannerconstituting Cause as defined herein, and specifying the particulars of thatfinding.  Following the opportunity forthe Executive, together with the Executive’s counsel, to be heard, the Board ofDirectors may excuse the Executive from any further Board of Directors’proceeding where the finding is discussed or made.  Pending an opportunity for Executive,together with Executive’s counsel, to be heard before the Board of Directors ofthe Company, Executive may be immediately placed upon an indefinite suspensionwithout pay and shall be required to immediately leave the Company’spremises.  In the event that a majorityof the Board of Directors (excluding the Executive if she is then a 

 

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Director),do not find that Executive acted (or failed to act when she should have acted)in a manner constituting Cause as defined herein, then Executive shall bereimbursed for any compensation lost during said suspension.

 

Inthe event Executive’s employment is terminated at any time by mutual writtenagreement of both parties, voluntarily terminated by Executive, automaticallyand immediately terminated upon Executive’s death or total and permanentdisability, or terminated for “Cause”, as defined in this Agreement, thenfollowing termination, Executive shall not be entitled to payment of furthercompensation (whether salary or bonus) or benefits of any type (other Executive’sright to “vested” benefits under the Company’s benefit plans or continuinginsurance coverage under the Company’s Health Benefit Plan pursuant to theConsolidated Omnibus Budget Reconciliation Act (“COBRA”) at Executive’s soleexpense) under this Agreement.  In theevent Executive’s employment is terminated by the Company without “Cause,” asdefined in this Agreement, then Executive shall be entitled to a SeveranceBenefit as set forth in Section 5, below. If the Company terminates this Agreement without Cause, the Companyshall have the right at its option, to require Executive to immediately leavethe Company’s premises.

 

Inthe event that Employee is successful in subsequently challenging the Company’sfinal determination to terminate her employment for Cause, her damages shall belimited solely to that compensation she would have received hereunder had heremployment been terminated without Cause. To the maximum extent permitted by law, the Company shall not be liablefor any special, incidental, indirect, consequential, punitive, or exemplarydamages, whether based upon contract, tort, negligence, short liability, orotherwise, even if the Company has been advised of the possibility of suchdamages.

 

**5.****                                     ****Severance for Termination Without Cause**.  In the event that the Companyterminates Executive’s employment at any time, upon thirty (30) days’ writtennotice, without Cause and not under circumstances amounting to a Change inControl, then Executive’s sole remedy shall be payment of the following “SeveranceBenefit”.

 

A.                                   If the Company terminates this Agreement without Cause, the Company shallhave the right at its option, to require Executive to immediately leave theCompany’s premises; provided, that the Company shall be obligated to pay (asadditional severance) Executive’s base salary during the 30-day notice period.

 

B.                                     Executive shall be entitled to a severance payment in an amount equal tosix (6) months base salary at the rate then in effect.  If the Company terminates this Agreementwithout Cause, the Company shall have the right at its option, to requireExecutive to immediately leave the Company’s premises; provided, that the 

 

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Company shall be obligated to pay (as additionalseverance) Executive’s base salary during the 30-day notice period.

 

C.                                     Executive shall not be entitled to, and shall not receive any cash bonuspaid for any year in which the termination occurs, on a pro rata basis orotherwise.  The base salary portion ofthe severance shall be payable, at the Executive’s option, in a lump sum or inequal monthly installments consistent with the Company’s ordinary payrollpractices.

 

D.                                    In the event Executive elects continuing insurance coverage under theCompany’s Health Benefit Plan pursuant to the Consolidated Omnibus BudgetReconciliation Act (“COBRA”) following any Termination Without Cause, then, inaddition to payment of salary as set forth above, the Company shall reimburseExecutive for all premiums paid by Executive for said continuation coverage fora period of six (6) months.

 

**6.****                                     ****Severance for Termination in Connection with Change in Control.**

 

A.                                   **Change in Control****.**

 

The Company recognizes that,as is the case with many publicly held corporations, the possibility of achange in control exists, and that possibility, along with the uncertainty andquestions which may arise among management, may result in the departure ordistraction of management personnel to the detriment of the Company and itsshareholders.  In order to induceExecutive to remain in its employ, the Company agrees to provide Executive thepayments and benefits described in this Agreement if Executive’s employment with the Company isterminated subsequent to a “Change in Control” of the Company as defined inSection 6B, under the circumstances described in Section 6C.

 

B.                                     **Definition of Change in Control****.**

 

For purposes of thisAgreement, a Change in Control of the Company means the occurrence of any ofthe following events during the period in which this Agreement remains ineffect.  A Change in Control will bedeemed to occur on the date the event occurs:

 

1.                                       Change inVoting Power. Any person or persons acting together which wouldconstitute a “group” for purposes of Section 13(d) of the Exchange Act (otherthan the Company, or any Subsidiary, or any entity beneficially owned by any ofthe foregoing) beneficially own (as defined in Rule 13(d)-3 under the ExchangeAct) without Board approval or consent, directly or indirectly, at least thirty****percent (30%) of the total 

 

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voting power of the Companyentitled to vote generally for the election of the Board.

 

2.                                       Change in Boardof Directors. Either:

 

i.                                          the CurrentDirectors (as hereinafter defined) cease for any reason to constitute at leasta majority of the members of the Board (for these purposes, a “Current Director”means any member of the Board as of the date of this Agreement, and anysuccessor of a Current Director whose election or nomination for election bythe Company’s stockholders was approved by at least a majority of the CurrentDirectors then on the Board); or

 

ii.                                       at any meetingof the stockholders of the Company called for the purpose of electingDirectors, a majority of the persons nominated by the Board for election asDirectors fail to be elected; or

 

3.                                       Liquidation,Merger or Consolidation. The stockholders of the Company approve:

 

i.                                          a plan ofcomplete liquidation of the Company; or

 

ii.                                       an agreementproviding for the merger or consolidation of the Company (i) in which theCompany is not the continuing or surviving corporation (other thanconsolidation or merger with a wholly owned subsidiary of the Company in whichall shares outstanding immediately prior to the effectiveness thereof arechanged into or exchanged for the same consideration) or (ii) pursuant towhich the shares are converted into cash, securities or other property, excepta consolidation or merger of the Company in which the holders of the shares immediatelyprior to the consolidation or merger have, directly or indirectly, at least amajority of the common stock of the continuing or surviving corporationimmediately after such consolidation or merger, or in which the Boardimmediately prior to the merger or consolidation would, immediately after themerger or consolidation, constitute a majority of the board of directors of thecontinuing or surviving corporation; or

 

4.                                       Sale of Assets. Thestockholders of the Company approve an agreement (or agreements) providing forthe sale or other disposition (in one transaction or a series of transactions)of 

 

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all or substantially all ofthe assets of the Company.

 

C.                                     **Termination Following Change in Control****.**

 

Ifany of the events described in Section 6B constituting a Change in Controloccur, Executive will be entitled to the payments and benefits provided for inSection 6D if a subsequent termination of Executive’s employment occurs within one (1) year from the date of thatChange in Control, unless that termination is otherwise pursuant to Section 4Cor D.

 

Those payments and benefitswill be in lieu of any severance payments Executive would otherwise receive inaccordance with Section 5 of this Agreement.

 

D.                                    **Payments and Benefits Upon Certain Terminations Following a Change inControl****.**

 

Ifwithin one (1) year following the Change in Control, Executive’s employment is terminated other thanfor Death, Disability or Cause, then the following provisions will apply:

 

1.                                       CompensationThrough Date of Termination. The Company will payExecutive within thirty (30) days after termination:

 

i.                                          Any unpaidamount of Executive’s base salary through the Date of Termination; and

 

ii.                                       With respect toany year then completed, any unpaid amount of her bonus accrued to Executive.

 

2.                                       AdditionalSeverance. In lieu of any further salary and bonus paymentsto Executive for periods subsequent to the date of termination, or otherseverance payments, the Company will pay as severance pay to Executive the additionalsum equal to:  Executive’s annual base salary as of the dateof Change in Control, or as of the date of termination, whichever is greater.

 

Theseverance pay provided for in this Section 6D shall be transferred to a “RabbiTrust,” effective as of the Date of Termination, and paid to Executive intwelve (12) equal monthly installments commencing on the first day of the nextmonth following the date of termination, and on the first day of eachsubsequent month, until fully paid.

 

3.                                       Benefit Plans.  In the event of a Change in Control, unlessExecutive’s employment isterminated for Cause, the

 

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Company will, at the Companyexpense, maintain in full force and effect for Executive’s continued benefit, for a period of one (1) year following thedate of termination, the health, dental, disability and other welfare benefits,plan, programs and arrangements substantially equivalent to the most valuablecoverage provided under any plan maintained by the Company from time to timeduring such period.  In addition,Executive will continue to be provided during the one (1) year following thedate of termination, with the same life insurance coverage maintained on herlife immediately prior to the date of termination.  These benefits shall be reduced by the amountof similar benefits provided to Executive during such period by a subsequentemployer, as determined solely by the Board. For the purposes of enforcing this offset provision, Executive shallnotify the Board as to the terms and conditions of any subsequent employmentand the corresponding benefits received pursuant thereto, and shall provide, orcause to provide the Board, correct, complete, and timely informationconcerning the same.

 

4.                                       No MitigationRequired.  Executivewill not be required to mitigate the amount of any payment provided for in thisSection 6D by seeking other employment or otherwise, nor will the amount of anypayment provided for in this Section 6D be reduced by any compensation earnedby Executive as the result of employment with another employer after the dateof termination or otherwise, except for a reduction in benefits as set forth insubsection 3.

 

5.                                       Tax Gross-upPayment.  If any payments or benefitsprovided pursuant to this Section 6D are subject to an excise tax on an “excessparachute payment” under Section 4999 of the Internal Revenue Code of 1986 (the“Code”), or any successor provision of the Code, or are subject to an excise orpenalty tax under any similar provision of any other revenue system to whichExecutive may be subject, the Company will provide a gross-up payment toExecutive in order to place Executive in the same after-tax position Executivewould have been in had no excise or penalty tax become due and payable underCode Section 4999 (or any successor provision) or any similar provision ofanother revenue system.  No gross-uppayment will be made for any excise or penalty tax attributable to any stockoptions granted to Executive, or for any other payments or benefits provided toExecutive under other sections of this Agreement.

 

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**7.            ****WorkingFacility.**

 

Executive will perform herservices hereunder at the principal office of the Company, located in Roanoke,Virginia, except as travel to other locations is warranted by the business ofthe Company.  The Company shall provideExecutive with such office space, secretarial help, and other facilities andservices as may be suitable to her position and appropriate for the performanceof her duties.

 

**8.            ****Modification and Waiver****.**

 

Noprovision of this Agreement may be modified, waived or discharged unless thatwaiver, modification or discharge is agreed to in writing by Executive and suchofficer as may be specifically designated by the Board of Directors of theCompany. No waiver by either party at any time of any breach by the other partyof, or compliance with, any condition or provision of this Agreement to beperformed by that other party will be deemed a waiver of similar or dissimilarprovisions or conditions at the time or at any prior or subsequent time.

 

**9.            ****Severability****.**

 

Ifany one or more of the provisions of this Agreement, including but not limitedto Section 12 hereof, or any word, phrase, clause, sentence or other portion ofa provision is deemed illegal or unenforceable for any reason, that provisionor portion will be modified or deleted in such a manner as to make thisAgreement as modified legal and enforceable to the fullest extent permittedunder applicable laws. The validity and enforceability of the remainingprovisions or portions will remain in full force and effect.

 

**10.         ****Counterparts****.**

 

ThisAgreement may be executed in two or more identical counterparts, each of whichwill take effect as an original and all of which will evidence one and the sameagreement.

 

**11.         ****Arbitration****.**

 

Exceptfor the rights and duties of the parties set forth in Section 12 of thisAgreement, any dispute or controversy arising under or in connection with thisAgreement shall be settled exclusively by arbitration in Roanoke, Virginia,according to the rules of the American Arbitration Association then in effect.Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, thatExecutive shall be entitled to seek specific performance of her right to bepaid for all periods up to the date of termination during the pendency of anydispute or controversy arising under or in connection with this Agreement.

 

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**12.         ****RestrictiveCovenant****.**

 

A.                                   Need forProtection.  Executiveacknowledges that, because of her senior executive position with the Company,her knowledge of the affairs of the Company and her relations with itssuppliers and customers, she could do serious damage to the financial welfareof the Company, should she compete or assist others in competing with thebusiness of the Company.  Accordingly,the parties agree as follows:

 

B.                                     ConfidentialInformation.

 

1.                                       Non-Disclosure.  Except as the Company may permit or direct inwriting, during the term of this Agreement and thereafter, Executive agreesthat she will never disclose to any person or entity any confidential orproprietary information, knowledge, or data of the Company, which she may haveobtained while in the employ of the Company, relating to any customers,customer lists, methods of distribution, sales, prices, profits, costs, contracts,inventories, suppliers, dealers, distributors, business prospects, businessmethods, formulas, plans or techniques, research, trade secrets, or know how ofthe Company.

 

2.                                       Return ofRecords.  All records, documents,software, computer disks, and any other form of information relating to thebusiness of the Company, which are or were prepared or created by Executive, orwhich may or did come into her possession during the term of her employmentwith the Company, including any and all copies thereof, shall be returned tothe Company, or as the case may be, shall remain in the possession of theCompany, upon termination of employment for any reason.

 

3.                                       FutureEmployment.  Nothing inthis section shall limit the Executive’s right to carry Executive’s accumulatedcareer knowledge and professional skills to any future employment, subject tothe specific limitations of the foregoing provisions of this section and thecovenants set forth below.

 

C.                                     Non-Competition.

 

1.                                       Scope ofOperations.  The partieshereto acknowledge that the Company’s operations are within the continentalUnited States, and that it conducts business throughout the continental UnitedStates, thus, the Company’s need for 

 

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                                                protection againstunfair competition is throughout the continental United States.

 

2.                                       Covenant Not ToCompete.  Executive agrees that she willnot, during the term of this Agreement and for a period of six (6) months afterher employment with the Company has terminated:

 

i.                                          engage directlyor indirectly, for her own personal benefit or the benefit of any person orentity other than the Company, which would result in direct competition withthe Company, anywhere in the continental United States; or

 

ii.                                       develop,promote, invest in, provide financing for, be employed by, or operate anybusiness on her own behalf, or for any other person or entity, which wouldresult in direct competition with the Company, or, assist any other person indoing so.

 

iii.                                    For thepurposes of this Section 12C the phrase “direct competition” shall meanemployment with a restaurant or chain providing family steaks and/or buffet.

 

D.                                    TerminationWithout Cause.  It isunderstood and agreed that in the event the Company terminates Executive’semployment without Cause, Section 12C hereof shall be null and void.  Notwithstanding the foregoing provision,however, if Executive’s employment is terminated under circumstances whichentitle her to receive the payments and benefits provided in Section 6 of thisAgreement, then in such event, the provisions of Section 12C hereof shallremain in full force and effect.

 

E.                                      JudicialModification.  In theevent that any court of law or equity shall consider or hold any aspect of thisSection 12 to be unreasonable or otherwise unenforceable, the parties heretoagree that the aspects of this section so found may be reduced, reformed ormodified by appropriate order of the court, and shall thereafter continue, asso modified, in full force and effect.

 

F.                                      Injunctive Relief.  The parties hereto acknowledge that theremedies at law for breach of this section will be inadequate, and the Companyshall be entitled to injunctive relief for violation thereof; provided,however, that nothing herein shall be construed as prohibiting the Company frompursing any other remedies available for such breach or threatened breach,including the recovery of damages from Executive.

 

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**13.         ****Exclusivityof Services.**

 

Executiveagrees that her employment with the Company will be full time, and that shewill devote her best efforts and attention to the business of the Company.

 

**14.          ApplicableLaw.**  The validity and construction of thisAgreement or any of its provisions shall be governed by and determined inaccordance with the laws of the State of Virginia.

 

**15.          Notices.**  Any notice to be delivered underthis Agreement shall be given in writing and delivered, personally, via telefaxor similar electronic transmission, or by certified mail, postage prepaid,addressed to the Company or to Executive at its or his last known address.  Any such notice shall be deemed given whenactually received by the party to whom the notice is directed.

 

**16.          Survival.**  The provisions of this agreementshall survive the termination of Executive’s employment.

 

**17.          Reviewand Execution.**  Executive acknowledges that she has read andunderstands all of the terms of this Agreement, that she is executing theAgreement voluntarily with full knowledge of its significance.

 

**18.          Terminationof Change in Control Agreement**.  This Agreement replaces that certain Changein Control Agreement between Executive and the Company dated September 7, 2004,which is hereby terminated.

 
|   | Western Sizzlin Corporation |
|--------|-----------------------------|
|   |                        |   |
|   | By:                         | /s/ Sardar Biglari |
|   |                        |   |
|   | Its:                        | Chairman and Chief Executive Officer |
|   |                        |   |
|   |                        |   |
|   | ROBYN B. MABE               |
|   |                        |   |
|   | /s/ Robyn B. Mabe           |

 

 

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