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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made as of August 11, 1997 by and between The Delicious Frookie
Company, Inc., a Delaware corporation ("Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("Executive").
WHEREAS, Company desires to employ Executive and to enter into an
agreement embodying the terms of Executive's employment by Company, and
Executive desires to accept such employment and to enter into such agreement.
IT IS AGREED:
1. Employment:
1.1 General. Company shall employ Executive and Executive accepts
employment as Chief Executive Officer and President of Company upon the terms
and conditions described herein. During the Employment Term (as defined in
Section 2.1 hereof), Executive shall devote all of his business time, attention
and skills to the business and affairs of Company.
1.2 Executive shall not, without the prior written consent of
Company, during the Employment Term, be engaged in any other activity whether or
not pursued for gain, profit or other pecuniary advantage; but this shall not be
construed as preventing Executive from making and supervising personal
investments, provided they:
(a) will not require any substantial services on his part in
the operation of the affairs of the companies in which such investments are
made;
(b) will not cause a breach of Section 4.4 hereinafter set
forth; and
(c) will not interfere with the performance of Executive's
duties hereunder.
1.3 Duties. Executive shall at all times render his services at the
direction of the Board of Directors, and the duties will be consistent with his
position as Chief Executive Officer and President and generally will include
those required for the day-to-day and long-term planning, development, operation
and advancement of the business of Company and its affiliates. Company may
assign to Executive such other executive and financial administrative duties for
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Company or any affiliate as may be determined by the Board of Directors of
Company, consistent with Executive's status as Chief Executive Officer and
President. Executive agrees to diligently use his best efforts to perform his
services and to promote and further the reputation and good name of Company.
2. Term and Termination
2.1 Term. The term of employment by Company of Executive shall
commence on August 11, 1997 and terminate on December 31, 1999 ("Employment
Term"), subject to earlier termination pursuant to the provisions of Paragraph
2.2.
2.2 Premature Termination. Notwithstanding anything to the contrary
contained in this Agreement, Executive's employment may be terminated prior to
the end of the Employment Term as follows:
2.2.1 Termination Upon Death of Executive. Executive's
employment shall terminate upon the death of Executive; provided, however, that
Company shall pay to Executive's estate or designated beneficiary the base
salary due Executive pursuant to Section 3 hereof, prorated through the date of
such termination.
2.2.2 Termination Upon Disability of Executive. Executive's
employment shall terminate if, in good faith, and with the advice of a qualified
and independent physician, the Board of Directors of Company determines that
Executive has become, by reason of accident, illness, mental or physical
disability, disabled so as to be incapable of satisfactorily performing his
duties hereunder for a period of sixty (60) consecutive days or ninety (90) days
in any annual period whether or not related to habitual use of alcohol or
illicit substances, which condition is incapable of reasonable accommodation
under applicable law, including but not limited to the Americans with
Disabilities Act of 1990, as amended; provided, however, that Executive shall
continue to receive his Base Salary until the time of such termination, less any
amount Executive receives for such period from any source of insurance,
disability compensation or government program. Any termination under this
Section 2.2.2. shall take effect immediately upon notice from the Board of
Directors of Company to Executive.
2.2.3 Termination Upon Mutual Consent. Executive's employment
may be terminated by the mutual consent of Company and Executive on such terms
as they may agree.
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2.2.4 Termination For Cause. Executive's employment shall
terminate immediately on notice to Executive upon finding of the Board of
Directors of Company that Executive has (i) failed in all material respects to
perform his duties in accordance with the provisions of this Agreement after
Company has given written notice to Executive stating the nature of any
performance deficiency and Executive has had not less than fifteen (15) days in
which to cure any such deficiency and such deficiency remains uncured. Such
performance deficiency shall include the following: if during the first eighteen
(18) months of the Employment Term Company's net sales from continuing
operations during any trailing twelve (12) month period are below $20 million
and net losses, as determined by the application of generally accepted
accounting principles consistently applied, exceed $2.0 million, (ii) committed
a breach of any provision of Section 4 hereof, (iii) misappropriated assets or
perpetrated fraud against Company, (iv) been convicted of or plead nolo
contendere to a crime which constitutes a felony or which involves an act of
moral turpitude, (v) engaged in the illegal use of habit-forming substances, or
(vi) willfully and materially refused or failed to carry out specific directions
of the Board of Directors as required by this Agreement. In the event of
termination for cause, Company shall pay Executive his base salary through the
date of termination.
2.2.5 Termination by Company Without Cause. Company may
terminate Executive's employment at any time, without cause, upon Company's
written notice to Executive. In the event of termination pursuant to this
paragraph, Company shall pay Executive a "Severance Salary" in accordance with
Company's standard payroll policies. The "Severance Salary" shall equal (i) two
(2) months base salary if the date of Termination occurs during the first six
(6) months of the Employment Term, (ii) six (6) months' base salary if the date
of termination occurs during the second six (6) months of the Employment Term,
or (iii) twelve (12) months' base salary if Executive is terminated thereafter.
Under no circumstances shall this Severance Salary exceed $130,000. In the event
that this Agreement expires without renewal, Executive shall receive no
Severance Salary. Such Severance Salary shall be subject to the continued
satisfaction after termination of Section 4 of this Agreement. If Executive,
after his termination from Company, conducts himself in a manner that adversely
affects Company, as determined by the Board of Directors of Company in its sole
discretion, then all payments under this Section 2.2.5 shall cease.
3. Compensation. During the Employment Term, Company shall pay, in full
payment for all of Executive's services rendered hereunder, including, without
limitation, any services
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rendered for, as consultant to, or as officer or director of, Company or any
affiliate, the following compensation:
3.1 Base Salary. Company shall pay Executive an annual base salary,
less income taxes and other applicable withholdings, of $130,000 in Company's
standard payroll installments. The Board of Directors of Company will review the
annual base salary amount as soon as practicable after the end of each fiscal
year of Company to consider whether it should be increased, and the Board of
Directors of Company may base its decision upon such criteria as it deems
relevant, including, but not limited to, the performance of Company and
Executive. Notwithstanding the foregoing, Executive will be given an annual base
salary increase equal to 10% of his then base salary if he meets or exceeds the
financial budgets approved by the Board for each year.
3.2 Cash Bonuses:
3.2.1 Sign On Bonus. One of the following bonuses in total
will be paid as follows: If Company's initial public offering of equity
securities ("IPO") closes on or before (i) December 31, 1997, a $20,000 cash
bonus will be paid; (ii) if the IPO closes after December 31, 1997, but before
March 30, 1998, a $10,000 cash bonus will be paid. It is agreed that the bonuses
described in clauses (i) and (ii) above are not cumulative; if one is paid, the
other will not be.
3.2.2 Incentive Cash Bonus. A cash bonus up to a maximum of
$30,000 for the first year of the Employment Term will be paid based on the
extent to which Company's performance exceeds Executive's budget as established
by the Board of Directors in good faith with Executive. After the first year,
the Board and Executive will mutually agree upon a reasonable performance bonus
for Executive, provided that, if Executive has met or exceeded his budget in the
first year, then the maximum bonus to be earned during the second year of
Employment Term shall be greater than $30,000.
3.2.3 Relocation Bonus. A maximum of $25,000 shall be paid to
Executive as a reimbursement of relocation expenses towards realtors, closing
costs, fees or points for sale of current home and purchase of new home in
Chicago/Des Plaines area and relocation or moving expenses. Such expenses will
be reimbursed only as incurred and only upon presentation to the Board of
Directors of appropriate receipts and invoices documenting such expenses;
however, Company agrees to forward $5,000 cash to Executive upon the signing of
this Agreement as an
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advance against such relocation expenses. In no case shall such expenses exceed
$25,000 and Company will not pay any such expenses incurred after the first year
of the Employment Term.
3.2.4 Automobile Allowance. Company shall pay Executive the
sum of $600 per month in respect of his owning or leasing and operating a
vehicle for use in his employment with Company. In consideration of this
allowance, Company shall not reimburse Executive for insurance, taxes, state
toll charges or any other expense of owning, operating, maintaining or repairing
any vehicle owned or leased by Executive.
3.2.5 Buy-out Bonus. After the date of this Agreement, in the
event of a dissolution or liquidation of Company or upon any merger,
consolidation or other form of reorganization whereby at least eighty percent
(80%) of the stockholders participate in a cash buy-out of Company in which
Company is not the surviving entity, or upon the sale of all of Company's assets
for cash or liquid consideration (in either case, a "Buy-out"), upon the closing
date or effective date ("Effective Date") of any such Buy-out, Executive will be
paid a one-time severance payment of $130,000 ("Buy-out Bonus") on or after the
Effective Date and pursuant to Company's payroll policy as outlined in Section
3.1. However, Executive agrees that if within the twelve (12) months following
such Effective Date he signs a contract of employment or is employed with the
surviving entity of such Buy-out, he will forgo any such Buy-out Bonus or return
it to Company. Moreover, Executive agrees that this Buy-out Bonus and the
Severance Salary described in Section 2.2.5 are not cumulative and only one of
these payments will be paid to Executive. The vesting of Executive's Stock
Options will accelerate upon any such Buy-out as outlined in the Stock Option
Agreement between Company and Executive.
3.3 Vacation. Executive shall be entitled to three (3) weeks of
vacation in each twelve (12) month period during the Employment Term.
3.4 Executive Benefit Plans. Executive shall be entitled to
participate in all plans or programs sponsored by Company for employees and/or
executives in general, including, without limitation, any group health, medical
reimbursement, disability or life insurance plans.
3.5 Expense Reimbursement. Company shall reimburse Executive for all
reasonable and necessary expenses incurred by him from time to time in the
performance of his duties hereunder, against receipts therefore in accordance
with the then-effective policies and requirements of Company. Company agrees to
reimburse Executive for a period of up to three (3)
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months after the date of this Agreement for reasonable temporary living expenses
and reasonable travel expenses for Executive to travel round trip to St.
▇▇▇▇▇▇▇, Missouri, up to three (3) times per month to visit his family.
3.6 Election as a Director. As soon as is practicable after the date
hereof, the Board of Directors will appoint Executive to the Board of Directors
as a director and thereafter during the Employment Term nominate Executive as a
candidate and use all reasonable efforts to cause Executive to be elected a
member of the Board of Directors. If Executive's employment is terminated for
any reason, then Executive will be deemed to have resigned from the Board of
Directors and from any boards of directors of any affiliates of Company on which
he then sits, and any director(s) nominated by him will also be deemed to have
resigned. Company agrees to include Executive in any officer and directors'
liability insurance coverage that Company institutes for its directors, and
Company agrees to cover the costs, during the Employment Term, of legal counsel
to defend Executive against any causes of actions, suits, or legal claims filed
by stockholders against directors or officers of Company in the ordinary course
of business in the same manner as all other officers and directors, provided
that such complaints are not the result of any gross negligence, fraud or wilful
misconduct on the part of Executive.
4. Protection of Confidential Information/Non-Competition.
4.1 Acknowledgments. Executive acknowledges that:
(a) Executive has obtained and, during his employment by
Company, will obtain secret and confidential information concerning the business
of Company and its affiliates, including, without limitation, customer lists and
sources of supply, their needs and requirements, the nature and extent of
contracts with them, and related costs, price and sales information.
(b) Company and its affiliates will suffer substantial damage
that will be difficult to compute if, during the period of his employment with
Company or thereafter, Executive should enter a competitive business or should
divulge secret and confidential information relating to the business of Company
and its affiliates heretofore or hereafter acquired by him in the course of his
employment with Company.
(c) The provisions of this Agreement are reasonable and
necessary for the protection of the business of Company and its affiliates.
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4.2 Confidentiality. Executive agrees that he will not at any time,
either during the Employment Term or thereafter, divulge to any person, firm or
corporation any information obtained or learned by him during the course of his
employment with Company, with regard to the operational, financial, business or
other affairs of Company and its affiliates, and their respective officers and
directors, including, without limitation, trade secrets, customer lists, sources
of supply, pricing policies, operational methods or technical processes, except
(i) in the course of performing his duties hereunder, (ii) with Company's
express written consent; (iii) to the extent that any such information is in the
public domain other than as a result of Executive's breach of any of his
obligations hereunder; or (iv) when required to be disclosed by court order,
subpoena or other government process. In the event that Executive shall be
required to make disclosure pursuant to the provisions of clause (iv) of the
preceding sentence, Executive promptly, but in no event more than 48 hours after
learning of such subpoena, court order or other government process, shall notify
Company, by personal delivery or by cablegram, confirmed by mail, and at
Company's expense, Executive shall: (a) take all reasonably necessary steps
requested by Company to defend against the enforcement of such subpoena, court
order or other government process, and (b) permit Company to intervene and
participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Return of Property. Upon termination of his employment with
Company, or at any time Company may so request, Executive will promptly deliver
to Company all non-public memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the business
of Company and its affiliates, and all property associated therewith, which he
may then possess or have under his control.
4.4 Non-Competition. During the Employment Term and, unless
Executive is terminated without cause pursuant to Section 2.2.5, for a period of
one (1) year thereafter, Executive shall not, without the prior written
permission of Company, in the United States, its territories and possessions,
directly or indirectly, (i) enter into the employ of or render any services to
any person, firm or Company engaged in any Competitive Business (as defined
below); (ii) engage in any Competitive Business for his own account; (iii)
become associated with or interested in any Competitive Business as an
individual, partner, stockholder, creditor, director, officer, principal, agent,
employee, trustee, consultant, advisor or in any other relationship or capacity;
(iv) employ or retain, or have or cause any other person or entity to employ or
retain, any person who was employed or retained by Company or its affiliates
while Executive was employed
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by Company; or (v) solicit, interfere with, or endeavor to entice away from
Company or its affiliates any of their customers or sources of supply. However,
nothing in this Agreement shall preclude Executive from investing his personal
assets in the securities of any Competitive Business if such securities are
traded on a national stock exchange or in the over-the-counter market and if
such investment does not result in his beneficially owning, at any time, more
than 4.5% of the publicly-traded equity securities of such competitor.
"Competitive Business" shall mean any business or enterprise, or affiliate or
subsidiary of any such enterprise which: (a) designs, manufactures, markets
and/or distributes cookies, healthy or health food snacks, rice cakes, cereals,
granola bars, fruit tarts (pop tarts), popcorn, baby food, candies, other
similar products, or any other products marketed by Company during the
Employment Term--whether branded, store brand, premium brand, value brand, or
private label products; or (b) engages in any other business in which Company or
its affiliates is involved at any time during the twelve-month period
immediately prior to the termination of Executive's employment.
4.5 Enforcement. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 4.2 or 4.4, Company shall
have the right and remedy (a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that the services being rendered hereunder
to Company are of a special, unique and extraordinary character and that any
such breach or threatened breach will cause irreparable injury to Company and
that money damages will not provide an adequate remedy to Company, or (b) to
require Executive to account for and pay over to Company all compensation,
profits, monies, accruals, increments or other benefits (collectively
"Benefits") derived or received by Executive as the result of any transactions
con stituting a breach of any of the provisions of Sections 4.2 or 4.4, and
Executive hereby agrees to account for and pay over such Benefits to Company.
Each of the rights and remedies enumerated in this Section 4.5 shall
be independent of the other, and shall be severally enforceable, and such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to Company under law or equity.
4.6 Modification. If any provision of Sections 4.2 or 4.4 is held to
be unenforceable because of the scope, duration or area of its applicability,
the tribunal making such determination shall have the power to modify such
scope, duration, or area, or all of them, and such provision or provisions shall
then be applicable in such modified form.
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5. Representations of Executive. Executive represents and warrants to
Company that Executive is not a party to or bound by any agreement,
understanding or restriction that would or may be breached by Executive's
execution and full performance of this Agreement. Executive expressly undertakes
and agrees that he will do nothing in furtherance of this Agreement or his
duties hereunder that will violate any obligations he may have to any prior
employer (or that will impose on Company any liability to any prior employer)
and that he will comply with all requirements of notice applicable to the
termination of any prior employment before he commences his employment under
this Agreement.
6. Options. On the date of this Agreement, Executive shall be granted
options ("Options") to purchase an aggregate of 180,000 shares of Common Stock
of Company. The Options shall be exercisable pursuant to the terms of the Stock
Option Agreement to be executed simultaneously herewith.
7. Construction of this Agreement::
7.1 Choice of Law. This Agreement is to be construed pursuant to the
laws of the State of Illinois, including Illinois' law regarding choice of law.
7.2 Invalid Agreement Provisions. Except as provided in Section 4.6,
should any provisions of this Agreement become legally unenforceable, no other
provision of this Agreement shall be affected, and this Agreement shall continue
as if the Agreement had been executed absent the unenforceable provision.
7.3 No Other Agreements. This Agreement and the Stock Option
Agreement represent the full agreement between Company and Executive with
respect to the subject matter hereof and Company and Executive have made no
agreements, representations or warranties relating to the subject matter of this
Agreement that are not set forth herein or in the Stock Option Agreement. On the
date this Agreement is signed by Executive, this Agreement and the Stock Option
Agreement will supersede any and all other agreements, oral or written, that may
define the employment relationship between Executive and Company. This Agreement
may be modified only by written agreement of Executive and Company and may not
be modified by any oral agreement.
7.4 Notices. All notices provided for in this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
party to receive the same,
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when mailed first class, postage prepaid by certified mail, return receipt
requested, addressed to the party to receive the same at the applicable
addresses set forth below or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 7.4. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof:
If to Executive: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Company: The Delicious Frookie Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
7.5 Assignment: This Agreement shall be binding upon and inure to
the benefit of Company's successors and assigns.
8. Disputes and Controversies: The parties hereto agree that if any
controversy or claim arises out of or relating to this Agreement, other than
pursuant to Sections 4 and 6 hereof, the controversy or claim shall be
determined by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association in Chicago, Illinois and the determination
of the arbitrator(s) shall be conclusive and binding on the parties hereto, and
any judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
COMPANY: THE DELICIOUS FROOKIE COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇, Treasurer and
Chief Financial Officer
EXECUTIVE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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