**EXHIBIT 10.12**

 

EMPLOYMENT AGREEMENT

 

Agreement madeeffective as of the 23rd day of April, 2004 by and among BostonRestaurant Associates, Inc. (the “Company”), a Delaware corporation with itsprincipal place of business in Saugus, Massachusetts and George R. Chapdelaine(the “Employee”) of Essex County, Massachusetts.

 

WHEREAS,Employee has served as President and Chief Executive Officer of the Companysince April 1994;

 

WHEREAS, inorder to assure itself of the benefits to be obtained from the special talentsand abilities of Employee resulting from Employee’s involvement and knowledgeof the business of the Company and relative to the continued operation of thebusiness of the Company, the Company desires to continue Employee’s employmentas an executive officer of the Company on the terms and conditions containedherein;

 

NOW,THEREFORE, in consideration of the mutual covenants and promises hereincontained, the receipt and sufficiency of which is acknowledged, and intendingto be legally bound, it is hereby agreed by and between the parties as follows:

 

# 1                                          Employment.  The Company hereby continues to employEmployee as President and Chief Executive Officer of the Company.  Employee shall have general management andcontrol of the business, affairs and property of the Company and its direct andindirect subsidiaries and shall perform such duties of such offices as areprovided for in the bylaws of the Company subject to the general supervisionand direction of, and any policies and procedures established from time to timeby, the Board of Directors of the Company. Employee shall also serve as a director of the Company.  Employee hereby accepts such employment.

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# 2                                          Term.  Employee’s employment pursuant to the termsof this Agreement shall commence on the date hereof and shall continue for aperiod of two (2) years or until earlier terminated in accordance with thetermination provisions provided for in Section 10 herein (the “InitialTerm”).  Unless earlier terminated inaccordance with the termination provisions provided for in Section 10 herein,Employee’s employment pursuant to this Agreement shall automatically renew foradditional periods of one (1) year each (each an “Additional Term”) at theexpiration of the Initial Term and at the expiration of each Additional Term(the Initial Term and Additional Terms are collectively referred to herein asthe “Term”).

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# 3                                          Salary.  (a) The Company shall pay Employee, duringthe Term of this Agreement, an annual salary of $232,500 (which amountrepresents Employee’s existing salary as adjusted for the Consumer Price Indexas described below for the first year of the Term) payable in installments noless often than monthly.  A salaryreview shall be conducted by the Compensation Committee of the Board ofDirectors of the Company no later than twelve (12) months after thecommencement date of this Agreement with yearly reviews thereafter on theanniversary date of such first review (each a “Review”).  In connection with such Review, theCompensation Committee may increase, but (subject to Section 3(b), below) notdecrease, the then current salary of Employee by such amount as it determines,in its sole discretion, provided however, that effective as of the date of eachReview, Employee’s then current salary shall be adjusted to an amount at leastequal to Employee’s then

 

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current salary multiplied by afraction, the numerator of which shall be the Consumer Price Index (ashereinafter defined) for the month immediately prior to the applicable Reviewdate, and the denominator of which shall be the Consumer Price Index for themonth that is twelve months prior to the month used as the numerator.  The Consumer Price Index referred to aboveis the Consumer Price Index of the United States Bureau of Labor Statistics(Urban Wage Earners and Clerical Workers, U.S. City Average, all items) on the1982-84 equals 100 standard.

 

(b)                                 Employeeacknowledges and agrees that the annual salary is subject to reduction in theevent of a general reduction in executive salaries of the Company due to budgetrestrictions.

 

# 4                                          AutomobileDuring the term of this Agreement, Employee shall be paid the sum of $1,000plus the amount necessary to pay insurance and parking each month to defray thecost of the leasing or purchasing of, and gas, mileage, insurance, repairs andparking for one automobile for his use in connection with his employmenthereunder.

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# 5                                          Bonus.  Following each Review date but in no eventlater than one hundred (100) days after the Company’s fiscal year end, Employeeshall be paid a performance bonus based on the performance criteria determinedeach year by mutual agreement of the Compensation Committee of the Company’sBoard of Directors and the Employee. The target bonus shall be equal to 25% of Employee’s annual salary, withthe actual amount of such bonus, if any, to be measured by the extent to whichEmployee meets the performance criteria agreed to for each particular year ofthe Term.

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# 6                                          Expenses.  Employee shall be reimbursed for allreasonable expenses incurred by Employee in connection with his employmentunder this Agreement, including expenses for travel and entertainment.  Employee shall furnish the Company with theappropriate documentation relating to such expenses.

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# 7                                          FringeBenefits.  Employee shall beentitled to the fringe benefits generally made available to employees orofficers of the Company of standing comparable to that of Employee, on the sameor more favorable terms and conditions as such benefits are made available orfurnished to those employees or officers. The Company shall continue, at its cost, health insurance for Employeeduring any Severance Period.

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# 8                                          Vacation.  Employee shall be entitled to at least five(5) weeks of paid vacation during each year of employment with the Company,which vacation may be taken by Employee at any time at the sole discretion ofEmployee.

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# 9                                          Full-TimeDuties.  Employee shall devote allof his business time, attention and efforts necessary and appropriate tofulfill his duties hereunder.  Thisprovision shall not serve to prevent Employee from engaging in investmentactivity that is passive in nature.

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# 10                                    Termination.

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## (a)                                  Terminationby the Company.  At the election ofthe Company, this Agreement shall terminate and any and all rights andobligations of the Company and Employee hereunder shall cease and be completelyvoid except as specifically set forth in this Agreement, upon the earliest tooccur of the following: (i) the death or “long-term

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## disability” of Employee; or (ii) the termination ofEmployee by the Company for “just cause” pursuant to written notice thereof; or(iii) at any time, without cause, upon thirty (30) days prior written notice.

 

For purposesof this Agreement, “long-term disability” shall mean the disability of Employeewhich prevents Employee from devoting to the business of the Company hisfull-time, best efforts, skill and attention, and such condition continues fora period of one hundred eighty (180) consecutive days.

 

For purposeshereof, “just cause” shall include, without limitation, the occurrence of anyof the following events during the Term of this Agreement:

 

### (A)                        habitualneglect of material duties assigned to Employee hereunder which is not remediedwithin thirty (30) days of receipt of written notice thereof from the Company;

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### (B)                          fraud,embezzlement or similar act of dishonesty committed by Employee against theCompany; and

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### (C)                          convictionof a crime classified as a felony under any Federal, state or local law withall appeals relating thereto having been unsuccessfully exhausted and all appealperiods being lapsed.

 

## (b)                                 Terminationby Employee.  At the election of theEmployee, this Agreement shall terminate and any and all rights and obligationsof the Company and Employee under this Agreement shall cease and be completelyvoid except as specifically set forth in this Agreement, upon the earlier tooccur of (i) termination by Employee of his employment with the Company,pursuant to thirty (30) days prior written notice thereof to the Company forany reason, or (ii) termination by Employee of his employment with the Companyat any time in the event the Employee has “good reason”, pursuant to writtennotice thereof, or (iii) a “change in control” of the Company.

 

For purposeshereof, “good reason” shall mean (A) the Company has taken action that servesto adversely change Employee’s status by a reduction in title or a reduction induties without Employee’s consent, or (B) without the Employee’s consent theCompany’s corporate offices are relocated to a place that is more thanthirty-five (35) miles from Boston, Massachusetts.

 

For purposeshereof a “change of control” of the Company shall be deemed to have occurredif:

 

#### (I)                                    anyperson (as defined in Section 13(d) or 14(d)(2) of the Securities Exchange Actof 1934, as amended (the “Exchange Act”) shall have become the beneficial ownerof 20% or more of the combined voting power of the Company’s voting securities(other than any person who is a beneficial owner of such 20% threshold as atthe date of this Agreement), not counting for purposes of such 20% thresholdany voting securities acquired from the Employee;

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#### (II)                                thestockholders or directors approve by the requisite vote any BusinessCombination; or

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#### (III)                            thestockholders or directors approve the complete liquidation or dissolution of theCompany.

 

“BusinessCombination” means any of the following transactions:  (x) a merger or consolidation of the Company (except for a mergerthat Employee consents to and supports or a merger in respect of which,pursuant to Section 251(f) of the Delaware General Corporation law, as now ineffect and as the same may be amended from time to time, no vote of thestockholders of the Company is required); (y) a sale, lease, exchange,mortgage, pledge, transfer or other disposition (in one transaction or a seriesof transactions), whether as part of a dissolution or otherwise, of assets ofthe Company or of any direct or indirect majority-owned subsidiary of theCompany (other than to any direct or indirect wholly-owned subsidiary or to theCompany) having an aggregate market value equal to 50% or more of either thataggregate market value of all of the assets of the Company determined on aconsolidated basis or the aggregate market value of all the outstanding stockof the Company; or (z) a proposed tender or exchange offer for 50% or more ofthe outstanding voting stock of the Company.

 

## (c)                                  Effectof Termination. (i) It is expressly acknowledged and agreed that, if theEmployee’s employment shall terminate at any time pursuant to paragraph (a)above, the Company will pay to Employee or his estate any salary and bonuspursuant to Sections 3 and 5, respectively, hereof, and any perquisites andfringe benefits, which shall be paid proportionately to the time of termination(which payment shall be made at the time it would be normally paid) withoutfurther recourse or liability to the Company, except that, in the event suchtermination of Employee by the Company is pursuant to clause (a)(iii), above,or in the event such termination is at the election of Employee and is pursuantto clause (b)(ii) or (b)(iii), above or if the term of this Agreement is evernot renewed by the Company as contemplated by Section 2, then the Company shallpay to Employee his then current annual base salary payable in equal monthlyinstallments on the first business day of each month (prorated for any partialmonth) (the “Severance Payment”) from the date of such termination until thelater of (A) May 1, 2006 or (B) the second business day of the month nextfollowing the expiration of twelve (12) months following the date of suchtermination (the “Severance Period”); provided, however, that during suchSeverance Period Employee shall not, within the Territory (as such term isdefined in Section 12 hereof), whether as owner, partner, shareholder(excluding as a passive shareholder of not more than 1% in a class ofsecurities of any business enterprise registered under the Exchange Act),director, consultant, agent, employee, or otherwise, or through any person,engage in any employment, consulting or other activity which competes, directlyor indirectly with the business of the Company (as such phrase is defined inSection 12 hereof); provided, further that in the event the Company does notmake any past due portion of the Severance Payment hereunder within ten (10)business days of written demand therefor by Employee, then the entire remainingportion of the Severance Payment to be paid hereunder shall become immediatelydue and payable and the non-competition covenant set forth above shall ceaseand be of no further effect against Employee. Notwithstanding the foregoing, if Employee’s employment is terminated inconnection with a “change in control” of Employer, as that term is used inSection 280G of the Internal Revenue Code of 1986 as amended (“Section 280G”), 

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## Employee is a “disqualified individual” as that termis used in Section 280G, and such payment, or portion thereof, would otherwisebe considered an “excess parachute payment”, as that term is used in Section280G, then the aggregate present value of the payments or portion thereof,which are in the nature of compensation to (or for the benefit of) Employee,which are contingent on such change in control, and which would otherwise beconsidered an excess parachute payment, shall be the lesser of (x) the resultof the proceeding sentence, or (y) one dollar ($1.00) less than three (3) timesEmployee’s annualized compensation which was includable in Employee’s incomeand which was paid by the Company during the five (5) most recent taxable yearsending before the change in control. The foregoing calculations shall be made by the Company, provided thatif Employee provides the Company with a calculation thereof reasonably preparedby an independent certified public accountant then, within thirty (30) days ofreceipt thereof, the Company shall pay Employee the amount of such calculation,reduced by the amount, if any, previously paid by the Company as the SeverancePayment pursuant to this provision.

 

(ii)                                  Itis further expressly acknowledged and agreed that if the Employee’s employmentshall terminate at any time pursuant to paragraph (b) above, the Company willpay to Employee or his estate any salary and bonus pursuant to Sections 3 and5, respectively, hereof and any perquisites and fringe benefits, which shall bepaid proportionately to the time of termination (which payment shall be made atthe time it would be normally paid) without further recourse or liability tothe Company, except that, in the event such termination is pursuant to clause(b)(ii) or (b)(iii) above, then the Employee shall be entitled to receive theSeverance Payment in accordance with paragraph (c)(i) above.

 

(iii)                               Forpurposes of this subsection (c), Employee’s bonuses will be determined by theCompensation Committee of the Company’s Board of Directors, in good faith.  To the extent any perquisite or fringebenefit that the Company is obligated to continue hereunder after thetermination of Employee’s employment cannot be so continued due to legalimpediment then, in such event, the Company shall, in lieu thereof, pay in cashto the Employee the equivalent cost to the Company of such perquisite or fringebenefit, with any such payments to be made at the time the payment of suchperquisite or fringe benefit would normally be paid.  It is further expressly acknowledged and agreed that,notwithstanding the termination of this Agreement pursuant to paragraph (a) or(b) above or otherwise, the provisions of this Section 10 shall survive suchtermination for the periods of time provided therein.

 

# 11                                    StockOptions.  By separate agreement ofeven date (the “Stock Option Agreement”), Employee is being granted the optionto purchase up to 100,000 shares of the Company’s common stock at a price of$0.75 per share, which options shall vest during the next two years asdescribed therein, with such options being exercisable during the five-yearperiod commencing on the date hereof.

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# 12                                    Notices.  Any notice or other communication inconnection with this Agreement shall be deemed to be delivered if in writing(or in the form of a telegram addressed as provided below) and if either (a)actually delivered (electronically or physically) at said address, or (b) inthe case of a letter, three (3) business days shall have elapsed after the sameshall have been deposited in the United States mail, postage prepaid andregistered or certified, return receipt requested:

 

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If toEmployee, to:

 

Mr. George R.Chapdelaine

20 NicholsonStreet

Marblehead,MA  01945

 

If to theCompany to:

 

Boston RestaurantAssociates, Inc.

999 Broadway

Saugus,Massachusetts  01906

 

and in any case at such otheraddress as the addressee shall have specified by written notice.

 

# 13                                    Noncompetitionand Confidentiality.

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## (a)                                  Aslong as Employee is an employee of the Company or any successor in interestand, if Employee’s employment is terminated pursuant to either clause 10(a)(ii)or 10(b)(i), then for an additional period of twenty-four (24) monthsthereafter, Employee shall not, within the Territory, whether as owner, partner,shareholder, director, consultant, agent, employee, or otherwise, or throughany person, engage in any employment, consulting or other activity whichcompetes, directly or indirectly, with the business of the Company.  The “Territory” shall be each ten (10) mileradius surrounding any Italian or pizza-style restaurant operated by theCompany.  The “business of the Company”shall be limited to mean the operation of Italian and pizza-style restaurants.  The involvement of Employee with a businessor enterprise that operates restaurants that specialize in foods other thanItalian food or pizza shall not be deemed to be competitive with the businessof the Company.

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## (b)                                 Nothingin this Agreement shall preclude Employee from making passive investments of notmore than 1% in a class of securities of any business enterprise registeredunder the Exchange Act.

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## (c)                                  Employeerecognizes that the Company is and will be engaged in a continuous program ofresearch and development relating to its business opportunities, operatingprocedures, products, methods, service techniques, engineering andmanufacturing data, machines, devices, apparatus, “know-how”, formulas, secretprocesses, plans, designs, specifications, trade secrets, marketing and Companydata regarding costs, profits, markets, sales, customer lists, plans forpresent and future development and acquisitions and other proprietaryinformation not available to the public (collectively, the “ProprietaryInformation”) which gives it a special competence in its various fields ofendeavor, all of which have been or may be acquired or developed atconsiderable expense to the Company. Employee understands that in connection with his employment with theCompany the Employee is expected to make contributions to the development ofProprietary Information.  Employeeacknowledges that his employment creates a relationship of confidentiality andtrust between Employee and the Company with respect to information of aconfidential or secret nature which is discovered, made known to, or learned byEmployee during his employment with the Company including, without limitation,Proprietary Information.

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## (d)                                 Employeewill not, while he is or after he ceases to be an employee of the Company,disclose any of the Proprietary Information referred to above to any person,firm, corporation, association or other entity for any reason or purposewhatsoever, other than in furtherance of the business of the Company or inresponse to court order.

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## (e)                                  Employeefurther agrees that in the event of the termination of his employment with theCompany, for any reason, or at any time upon the request of the Company,Employee will deliver to the Company all documents and other material items ofany nature pertaining to any Proprietary Information.  When Employee terminates employment with the Company, Employeewill sign a certificate confirming that he has complied with the requirementsof this subparagraph.

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## (f)                                    Inthe event of any breach or threatened breach by Employee of the provisions ofthis Agreement, the Company shall be entitled to an injunction restraining suchbreach.   Nothing herein shall beconstrued as prohibiting the Company from pursuing any other remedies availableto the Company for such breach or threatened breach, including the recovery ofdamages from Employee.

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# 14                                    EntireAgreement.  This Agreementconstitutes the entire agreement between the parties with respect to thesubject matter hereof, and all promises, representations, understandings,warranties and agreements with reference to the subject matter hereof andinducements to the making of this Agreement relied upon by any party heretohave been expressed herein.

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# 15                                    GoverningLaw.  This Agreement shall be deemeda contract made and entered into in the Commonwealth of Massachusetts and,together with the rights and obligations of the parties hereunder, shall beconstrued under and governed by the laws of such state.

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# 16                                    Counterparts.  This Agreement may be executed in multiplecounterparts, each of which shall be deemed an original but all of whichtogether shall constitute one and the same instrument.

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# 17                                    Effectof Headings.  Any title of anarticle or section heading herein contained is for convenience of referenceonly, and shall not affect the meaning of construction of any of the provisionshereof.

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# 18                                    Successorsand Assigns.  All covenants,promises and agreements by or on behalf of the parties contained in thisAgreement shall inure to the benefit of, and be binding upon, the successorsand assigns of the parties hereto.

 

IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be executed inmultiple counterparts as of the date set forth above by their duly authorizedrepresentative.

 

 
|   | BOSTON  RESTAURANT ASSOCIATES, INC. |
|--------|-------------------------------------|
|   |                                |
|   |                                |
|   | By:                                 |   |   |
|   |                                | Name: |
|   |                                | Title:  Director,  Member of the Compensation Committee |

 

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|   | EMPLOYEE               |
|--------|------------------------|
|   |                   |
|   |                   |   |
|   | George R.  Chapdelaine |

 

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