EMPLOYMENT AGREEMENT, dated June 16, 1997, among Tasty Fries, Inc, a Nevada
Corporation ("TFries" or the "Company"), having its principal offices at 000
Xxxxxx Xxxxxxx, Xxxxx Xxx, Xxxx Xxxx, Xxxxxxxxxxxx, 00000, and Xxxxxxxxxxx X.
Xxxxxxxx ("Xxxxxxxx"), residing at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 00-X, Xxx
Xxxx, XX 00000.
Whereas, Tasty Fries, Inc, desires to employ Xxxxxxxxxxx X. Xxxxxxxx as its
Executive Vice President;
Now, Therefore, the two parties do hereby agree as follows:
1. Employment:
1.1 Xxxxxxxx shall serve in the capacity of Executive Vice President, and
perform services for TFries, including but not limited to, oversight for all
marketing, administrative and financial matters, including relations with the
investment community.
1.2 Xxxxxxxx shall devote his best efforts, including his full-time
attention during reasonable business hours to the affairs and business of
TFries.
2. Term: The term of this Employment Agreement shall be two (2) years commencing
on June 16, 1997. This Agreement will also include a one-year renewal period,
that extends beyond the original term of two years; such renewal will
automatically extend Xxxxxxxx'x employment, on a year to year basis, unless
either party serves notice of intent to terminate this Agreement upon the other
party at least 30 days prior to the expiration of the then current term.
3. Compensation:
3.1 Base compensation. TFries will compensate and pay Xxxxxxxx for his
services during the term of this Agreement a base salary of One Hundred and
Fifty Thousand Dollars ($150,000) per year. The compensation shall be paid
bi-weekly. In the renewal period, the base salary amount shall be subject to an
annual increase, based on the percentage increase of the Consumer Price Index
For All Urban Areas for the prior calendar year.
3.2 Bonus compensation. TFries shall also make available to Xxxxxxxx an
annual performance bonus, which may consist of a cash payment, a stock option
grant or a combination of both. Such annual bonus program is to be determined
mutually by Xxxxxxxx and TFries.
3.3 Stock options.
3.3.1 Upon execution of this Agreement, TFries will provide Xxxxxxxx
with incentive stock options to purchase one million
(1,000,000) shares of TFries' common stock. Such options will
have a term of five (5) years and an exercise price equal to
the closing bid price of the Company's stock on
the Effective Date of this Agreement. These options will vest
in twelve (12) equal installments on the fifteenth day of each
month, beginning July 15, 1997 and extending over the first 12
months of Xxxxxxxx'x employment.
3.3.2 Upon execution of this Agreement, TFries will provide Xxxxxxxx
with a second incentive stock option grant to purchase one
million (1,000,000) shares of TFries' common stock, which will
have a performance-based acceleration component. This second
grant will also have a five (5) year term and an exercise
price equal to the closing bid price of the Company's stock on
the Effective Date of this Agreement. These options will vest
in four (4) equal, semi- annual installments, on December 15,
1997, June 15, 1998, December 15, 1998 and June 15, 1999, over
the two (2) year term of this Agreement. The vesting of these
options may be accelerated upon the achievement of certain
share price levels for the Company's common stock. The
schedule for this accelerated vesting program is attached as
Schedule A hereto.
3.4 Withholding. All compensation paid to Xxxxxxxx shall be subject to the
customary withholding tax and other employment taxes as required with respect to
compensation paid by an employer to an employee.
4. Benefits and insurance:
4.1 TFries shall provide Xxxxxxxx with full family medical and dental
coverage, or reimburse Xxxxxxxx for the costs of such insurance coverage.
4.2 TFries shall provide vacation benefits in accordance with company
policy.
4.3 Xxxxxxxx will also be offered the opportunity to participate in any
other pension, bonus, stock option or other benefit plans provided to any
employee of TFries.
5. Expenses: TFries shall reimburse Xxxxxxxx or otherwise provide or pay for all
reasonable expenses incurred by Xxxxxxxx in furtherance of or in connection with
the business of TFries, including, but not by way of limitation, all phone calls
(home, mobile and automobile) and all reasonable expenses in accordance with
TFries' travel and entertainment policy. Xxxxxxxx agrees that he will furnish
TFries with adequate records and other documents bearing evidence of such
expenses. If such expenses are paid first by Xxxxxxxx, TFries will reimburse
him. Payment for such expenses shall be made within thirty (30) days of the end
of each calendar month in which expenses were incurred, provided that Xxxxxxxx
submits supporting statements therefor prior to the expiration of said calendar
month.
6. Termination:
6.1 Anything to the contrary contained herein notwithstanding, TFries
shall have the right to terminate Xxxxxxxx'x employment during the term of this
Agreement, for "Cause" (as defined herein) or in the event of Xxxxxxxx'x death
or "Disability" (as defined herein). For the purposes of this Agreement, the
term "Cause" shall mean:
6.1.1 Xxxxxxxx is convicted of any felony or other serious crime,
indicating that as a result of moral turpitude, he is unfit to
serve in his capacity as Executive Vice President;
6.1.2 Repeated and extensive abuse of drugs or alcohol by Xxxxxxxx;
6.1.3 Any fraud, embezzlement or misappropriation by Xxxxxxxx of
TFries' assets.
The term "Disability" shall be defined as Xxxxxxxx'x inability, through
physical or mental illness or other cause, to perform the majority of his usual
duties for at least a period of three (3) contiguous months or more.
6.2 Any termination under this paragraph 6 will be without damages or
liability to TFries for compensation other than benefits which would have
accrued hereunder after termination, but all compensation and benefits accrued
through the date of termination will be paid to Xxxxxxxx within thirty (30) days
of such termination.
6.3 Either party to this Agreement may terminate the Agreement during the
term thereof, upon 30-days written notice. In the event that TFries terminates
Xxxxxxxx'x employment without cause during the term of this Agreement: (i) all
of Xxxxxxxx'x unvested stock options shall immediately be vested and (ii) TFries
shall make a one-time severance payment of Fifty Thousand Dollars ($50,000) to
Xxxxxxxx. In the event that the Company shall terminate Xxxxxxxx'x employment
for cause in accordance with the terms of this Agreement, Xxxxxxxx shall not be
entitled to receive any severance pay pursuant to this Agreement.
7. Company's Authority: Xxxxxxxx agrees to observe and comply with the rules and
regulations of TFries as adopted by the Board, either orally or in writing,
respecting performance of his duties, and to carry out and perform orders,
directions, and policies stated by TFries to him, from time to time, either
orally or in writing.
8. Competitive Activities: Anything to the contrary contained herein
notwithstanding, Xxxxxxxx agrees that, during Xxxxxxxx'x employment with TFries,
except with the express consent of TFries, he will not, directly or indirectly,
engage or participate in or become employed by, become an officer or director
of, any firm, corporation, business entity or business enterprise
who's business is competitive with TFries'. In the event that Xxxxxxxx
terminates this Agreement at his option, then for a period of one year after
such termnination, he shall abide by the terms of this section of the Agreement.
9. Restrictions on Use of Confidential Information:
9.1 Xxxxxxxx recognizes and acknowledges that certain confidential
information of various kinds including lists of the Company's customers,
confidential records and confidential information with respect to the business
and future plans of the Company and with respect to the Company's business
policies and procedures and other trade secrets, are valuable, special and
unique assets of the Company. Xxxxxxxx shall not, during or after the term of
this Agreement, except in accordance with his employment hereunder, disclose or
cause or permit to be disclosed any patent information, proprietary
technological information, or other trade secret which is not readily available
in the public domain, to any person, firm, corporation, association, or other
entity for any reasons whatsoever.
9.2 Xxxxxxxx agrees that upon the termination of his employment hereunder,
for any reason, voluntary or involuntary, with or without cause, he will
immediately return any property, customer lists, information, forms, plans,
documents, patent information, proprietary technological information, or other
written or computer material, belonging to the Company or any other affiliated
company within his possession.
10. Non-Assignability: Xxxxxxxx'x rights and benefits under this Agreement are
personal to him, and no such right or benefit shall be subject to voluntary or
involuntary alienation, assignment or transfer.
11. Indemnification: TFries agrees to indemnify, defend and hold harmless
Xxxxxxxx from any and all claims, litigation, suits and legal matters that may
result from Xxxxxxxx'x services or actions performed within the scope of his
duties at TFries.
12. D&O Insurance. TFries represents that it either is presently, or will be in
the immediate future, in possession of Directors and Officers liability
insurance with a minimum of $1 million coverage, and that all of Xxxxxxxx'x
actions and duties at TFries will be covered under such policy.
13. Miscellaneous:
13.1 Notices. Any and all notices, demands, requests, or other
communication required or permitted by this Employment Agreement or by law to be
served on, given to, or delivered to any party hereto by any other party to this
Employment Agreement shall be in writing and shall be deemed duly served, given,
or delivered when personally delivered to Xxxxxxxx or to an officer
of TFries, or in lieu of such personal delivery, when deposited in the United
States mail, registered or certified mail, return receipt requested, via the two
parties' respective addresses listed above.
13.2 Amendment. This Employment Agreement may not be modified, changed,
amended, or altered except in writing signed by Xxxxxxxx or his duly authorized
representative, and by the Chairman of the Board or Chief Executive Officer of
TFries.
13.3 Governing Law. This Employment Agreement shall be interpreted in
accordance with the laws of the Commonwealth of Pennsylvania. It shall inure to
the benefit of and be binding upon TFries, and its successors and assigns. This
Employment Agreement, being for the personal services of Xxxxxxxx, shall not be
assignable or subject to alienation by him.
13.4 Attorney's Fees. Should any litigation be commenced between the
parties to this Employment Agreement concerning any provision of this Employment
Agreement, each party shall be responsible for bearing the expense of their own
attorney's fees and other costs incurred in connection therewith.
13.5 Severability. Should any provision or portion of this Employment
Agreement be unenforceable or invalid for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected by such holding.
13.6 Section Headings. The Article and Section headings used in this
Employment Agreement are for reference purposes only, and should not be used in
construing this Employment Agreement.
13.7 Effective Date. The Effective Date of this Employment Agreement is
June 16, 1997.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
the day and year as set forth below.
June 16, 1997
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Xxxxxxxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxx
Chairman & Chief Executive Officer
Tasty Fries, Inc.
Schedule A
Accelerated Vesting Schedule for Xxxxxxxx'x 1,000,000 Options
I. 25% of the yet unvested options vest once TFries common stock has a
closing price at or in excess of $4.00 for a period of 5 consecutive
trading days.
II. An additional 25% of the total of the yet unvested options vest once
TFries common stock has a closing price at or in excess of $6.00 for a
period of 5 consecutive trading days.
III. An additional 25% of the total of the yet unvested options vest once
TFries common stock has a closing price at or in excess of $8.00 for a
period of 5 consecutive trading days.
IV. An additional 25% of total of the yet unvested options vest once TFries
common stock has a closing price at or in excess of $10.00 for a period of
5 consecutive trading days.
