EMPLOYMENT AGREEMENT
This
Employment Agreement is made and entered into by and between Spicy Pickle
Franchising, Inc. (the "Company") and Xxxx Xxxxx (the "Employee") on October
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2006.
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1.
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POSITION
AND DUTIES: The Employee shall be employed by the Company and shall
be
governed by this Employment Agreement. The Employee shall be employed
by
the Company as its President and Chief Executive Officer (the
“President/CEO”) reporting only to the Company's Board of Directors (the
“Board”) beginning no later than January 1, 2007 (the "Effective Date").
The duties shall include those customarily performed by the President
and
Chief Executive Officer, as well as those duties that may be assigned
by
the Board from time to time
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2.
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TERM
OF EMPLOYMENT. The Employee's employment with the Company shall commence
on the Effective Date and shall continue for a period of thirty six
(36)
full calendar months thereafter, unless sooner
terminated.
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3.
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COMPENSATION:
The Employee shall be compensated by the Company for his services
as
follows:
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a.
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Base
Salary. For all services rendered by Employee in any capacity during
his
employment under this Agreement, including, without limitation, services
as an employee, executive officer, director, or member of any committee
of
the Company, related companies or subsidiaries of the Company, commencing
the Effective Date, the Company shall pay Employee a gross salary
before
taxes of Three Hundred Sixty Thousand Dollars ($360,000.00) per annum.
Salary payments net of deductions for applicable taxes shall be payable
in
equal semi monthly installments in accordance with the Company’s normal
payroll procedures.
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b.
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Temporary
Base Salary: Employee acknowledges that the Company currently has
limited
cash resources available to fund the payments required in Section
3 (a)
above. Accordingly, Employee agrees that the Base Salary he will
receive
will be no more than twelve thousand five hundred dollars ($12,500)
per
month until the earlier of (i) the Company receives an additional
equity
funding of at least $3,000,000 or (ii) the Company has thirty seven
(37)
Spicy Pickle restaurants open for business including any Company
restaurants, whichever is sooner. Employee shall not be entitled
to and
there shall be no accrual of the difference between the Base Salary
and
the Temporary Base Salary. The payment by the Company of the Temporary
Base Salary pursuant to this Section 3 (b) shall not give rise to
Resignation for Good Reason defined in Section 5 (b)
below.
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c.
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Benefits:
The Employee shall have the right, on the same basis as other members
of
the Company's senior management team, to participate in and receive
benefits under any of the Company's Employee Benefit Plans, as such
plans
may be adopted or modified from time to time. The Employee shall
be
entitled to the benefits afforded to other members of the Company’s senior
management team under the Company's vacation, holiday and business
expense
reimbursement policies. The Employee will be entitled to four (4)
weeks
vacation. To the extent the Employee is unable in the execution of
his
duties and responsibilities to take the allotted (and any
previously-carried-over) vacation in any given year, the Employee
will be
eligible to roll-over up to five (5) weeks of vacation
annually.
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d.
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Annual
Incentive Bonus: By way of description and not limitation, the Employee
shall be entitled to the benefits afforded to other members of the
Company’s senior management team under a Company Discretionary Bonus
Program which will be based upon company performance in any given
fiscal
year. The Discretionary Bonus Program shall be defined no later than
the
effective date of this agreement and shall, in any case, contain
a target
bonus pool amount to be shared by all participants of 10% of the
Pre-tax
profits of the Company and its subsidiaries. The amount of the percentage
of the Discretionary Bonus Program that the Employee shall receive
shall
be determined by the Board or a committee of the Board at their
discretion.
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e.
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Facilities
and Expenses: The Employee shall be furnished with reasonable facilities
and services during the performance of his duties. In addition, the
Company shall reimburse the Employee for all authorized expenses
incurred
by him in furtherance of the Company's business upon the Employee's
presentation of detailed vouchers evidencing a valid business purpose
for
such expenses. Company shall also provide Employee with a major credit
card for use in payment of said
expenses.
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4.
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STOCK
OPTIONS: From time to time the Employee will be eligible to receive
Stock
Options at amounts and exercise prices as determined by the Board
of the
Company.
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5.
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DEFINITIONS
APPLICABLE TO TERMINATIONS: For the purposes of terminations as described
in Paragraph 6, the following definitions shall
apply:
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a.
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A
"Change of Control" is defined as and shall be deemed to have occurred
if
any of the following occurs with respect to the Company (except as
may
occur with a re-incorporation of the Company in advance of an initial
public offering of the Company's stock): (i) the direct or indirect
sale
or exchange in a single or series of related transactions by the
stockholders of the Company of more than thirty percent (30%) of
the
voting stock of the Company; (ii) a merger or consolidation in which
the
Company is not the surviving party; (iii) the sale, exchange, or
transfer
of all or substantially all of the assets of the Company; (iv) a
liquidation or dissolution of the Company or (v) during any year,
individuals who, at the beginning of such year constituted the entire
Board of the Company, cease for any reason (other than death) to
constitute a majority of the directors, unless the election, or the
nomination for election, by the Company's stockholders, of each new
director was approved by a vote of a least a majority of the directors
then still in office who were directors at the beginning of the
year.
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2
The
re-incorporation of the Company without a material change in voting rights
of
the stockholders of the Company shall not be deemed a Change in
Control.
1.
"Good
Reason" shall be defined as, and shall be deemed to exist, if any of the
following conditions occur, provided that such conditions persist for fifteen
(15) business days after written notice to the Board from the Employee and
reasonable opportunity for the Company to cure if the cure cannot be affected
within 15 business days: (i) the Company, its successors or assigns decreases
the Employee's Base Salary; (ii) the Company, its successors or assigns makes
a
material, adverse change in the Employee's title, authority, responsibilities
or
duties, as measured against the Employee's title, authority, responsibilities
or
duties immediately prior to such change (provided that the Company or its
successor may provide an equivalent position); (iii) the Company, its successors
or assigns requires the relocation of the Employee's work place to a location
not agreed to by the Employee; (iv) Change of Control as defined above (v)
the
Company, its successors or assigns materially breaches any provision of this
Employment Agreement; or (vi) the Company fails to obtain the assumption of
this
Employment Agreement by any successor or assign of the Company.
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b.
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Termination
for "Cause" is defined as a termination of the Employee based upon:
(i)
theft of the Company's assets; (ii) falsification of any employment
applications; (ii) conviction of a felony or conviction of a crime
involving fraud or dishonesty; (iii) improper and willful disclosure
of
the Company's confidential or proprietary information that could
materially harm the Company; or (iv) gross
incompetence.
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6.
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BENEFITS
UPON TERMINATION: The Employee agrees that his employment may be
terminated by the Company at any time, for any reason, with or without
cause, and he shall be entitled as his sole remedy and compensation
only
the compensation provided, below, in this Section 6. In the event
of the
termination of the Employee's employment by the Company for any reasons
set forth below, he shall be entitled to the
following:
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a.
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Termination
for Cause: If the Employee's employment is terminated by the Company
for
Cause as described above, the Employee shall be entitled to no
compensation or benefits from the Company other than those under
Paragraph
3 earned up until such termination.
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b.
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Voluntary
Resignation: In the event of the Employee's voluntary resignation
from
employment with the Company, other than for Good Reason as described
above, the Employee shall be entitled to no compensation or benefits
from
the Company other than those under Paragraph 3, earned up until such
termination.
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c.
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Death
or Disability: In the event that the Employee's employment terminates
as a
result of his death or continued disability for ninety (90) days
("disability" being defined as the inability to perform specifically
the
essential functions of the Employee's position as President/CEO),
the
Employee shall be entitled to the following as of the date of death
or
disability.
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i.
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all
accrued compensation and benefits earned through such
date;
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ii.
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a
lump-sum severance payment equal to four months of the Employee's
base
salary and any discretionary bonus determined by the Board at their
discretion, less applicable withholding, payable within ten (10)
days of
termination or resignation;
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iii.
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the
Company shall cause the Board to fix the Expiry Date, as defined
in the
Plan, of any Stock Option to be a date that coincides with the original
Expiry date.
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d.
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Termination
Without Cause and/or Resignation for Good Reason: If the Employee's
employment is terminated by the Company without Cause, or if the
Employee
resigns as an Employee of the Company for Good Reason (provided that
the
underlying conditions persist for fifteen (15) business days after
written
notice to the Company), then the Employee shall be entitled, on such
date,
to all of the following:
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i.
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all
accrued compensation, benefits and vesting earned through the date
of
termination or resignation;
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ii.
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a
lump-sum severance payment equal to twelve months of the Employee's
base
salary and any discretionary bonus determined by the Board at their
discretion less applicable withholding, payable within ten (10) days
of
termination or resignation;
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iii.
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the
Company shall cause the Board to fix the Expiry Date, as defined
in the
Plan, of any Stock Option to be a date that coincides with the original
Expiry date; and
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7.
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COVENANT
NOT TO COMPETE: During the term of this Agreement and for a period
of one
(1) year after expiration hereof, or for a period of one (1) year
after
Employee leaves his position with the Company for reasons other than
Termination Without Cause or Resignation for Good Reason, Employee
covenants that he will not, without the prior written consent of
the
Company which shall specifically refer to this covenant, directly
or
indirectly for any reason participate or engage in, assist or have
any
interest in, as principal, consultant, advisor, agent, financier
or
employee, any business entity which is, or which is about to become,
engaged in, providing goods and/or services in a Competitive Business
with
the Company. The term “Competitive Business” as used in this Employment
Agreement shall mean any business operating, whether retail, wholesale
or
otherwise, or granting franchises or licenses to other to operate,
a food
service business categorized as “fast casual or quick service” featuring
submarine, deli, or panini or other sandwiches, breakfast panini,
or
Neapolitan thin crust pizza and deriving more than 10% of its gross
sales
from any of those items. Nothwithstanding the foregoing, the Employee
shall not be prohibited from owning securities in a Competitive Business
if such securities are listed on a stock exchange or traded on the
over-the-counter market and represent 5% or less of that class of
securities issued and outstanding..
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8.
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CONFIDENTIALITY:
During the term of this Agreement and thereafter, Employee covenants
that
he shall keep secret and confidential the "confidential information"
of
the Company, and shall not use or disclose such information for any
purpose not authorized by the Company unless the information becomes
public through no activity on his part. For purposes of this paragraph,
"confidential information" includes information disclosed to or known
by
Employee as a consequence of or through his employment with the Company
(including information conceived, originated, discovered or developed
by
Employee) not generally known about the Company's business, products,
services and operations, including without limitation any trade secrets,
know how, inventions, discoveries and improvements and ideas, whether
of
not patentable.
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9.
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EMPLOYEE
INVENTIONS AND PROPRIETARY RIGHTS ASSIGNMENT AGREEMENT: The Employee
agrees that during the term of this agreement, if Employee develops
any
proprietary technology; any patents and patent rights (including
all
information or discoveries covered thereby and all enhancements,
modifications, improvements, divisions, continuations, continuations
in
part, reissues, re-examinations or extensions thereof), trademarks
and
trademark rights, copyrights and copyright rights, trade secrets
and trade
secret rights, and applications, registrations or their equivalents
for
any of the same; recipes, mixes, or other food related products,
or any
other intellectual property rights (collectively, the "Intellectual
Property"), relating to the supplying of products or services in
which the
Company is or is likely to be involved, such Intellectual Property
shall
automatically become the property of the Company. The Employee agrees
to
cooperate with the Company to perfect the Employee’s respective claims to
such Intellectual Property and to execute and deliver any and all
documents reasonably necessary in order to effectuate the intent
of this
paragraph, and the Employee hereby grants to the Company an irrevocable
power of attorney to execute any such
documents.
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10.
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NON-SOLICITATION:
The Employee agrees that for a period of one (1) year after the date
of
the termination of his employment for any reason, he shall not, either
directly or indirectly; (i) solicit the services, or attempt to solicit
the services, of any employee of the Company to any other person
or
entity; or (ii) solicit or otherwise encourage any supplier or other
business contract of the Company to withdraw, curtail or cancel their
business with the Company.
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11.
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INDEMNIFICATION:
The Company agrees to make the Employee a party to an indemnification
agreement which shall be defined no later than than the Effective
Date. If
Company-obtains a Directors' and Officers' Liability Insurance Policy,
,
Employee will be covered in the same manner as other senior
management..
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12.
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DISPUTE
RESOLUTION: DISPUTE RESOLUTION: In the event of any dispute or claim
relating to or arising out of this Employment Agreement (including,
but
not limited to, and claims of breach of contract, wrongful termination
or
age, sex, race or other discrimination), the Employee and the Company
agree that all such disputes shall be fully and finally resolved
by a
court of competent jurisdiction.
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13.
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ATTORNEY'S
FEES: In the event that the Employee brings an action against the
Company
to remedy breaches of the above Agreement, or to enforce any right
arising
out of this Agreement, the following shall apply: (i) if the action
brought by the Employee fails to win the decision in the court, the
Company shall not be liable to reimburse any costs incurred by the
Employee; (ii) if the action brought by the Employee prevails in
the
arbitration, in whole or in part, the Company shall be liable to
reimburse
the Employee his incurred attorney's fees, litigation costs and/or
other
costs associated with the action or
actions.
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14.
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FAILURE
TO EXERCISE RIGHTS: Failure for one party to exercise a right conferred
by
this Agreement does not constitute in any way a renunciation to the
exercise of that right.
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15.
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RETURN
OF INFORMATION: Upon termination of this Agreement, for any reason,
the
Employee will remit to the Company without delay all documents, objects,
goods (including computers, diskettes or any data storage device)
owned by
the Company and any copies thereof, and will destroy without delay
any
data they might have on personal computers, diskettes, or any other
data
storage device, related to the
foregoing.
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16.
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INTERPRETATION:
The Employee and the Company agree that this Employment Agreement
shall be
interpreted in accordance with and governed by the laws of the State
of
Colorado.
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17.
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SUCCESSORS
AND ASSIGNS: This Employment Agreement shall inure to the benefit
of and
be binding upon the Company and its successors and assigns. In view
of the
personal nature of the services to be performed under this Employment
Agreement by the Employee, he shall not have the right to assign
or
transfer any of his rights, obligations or benefits under the Employment
Agreement, except as otherwise noted herein. This agreement may be
assigned to the Company's successor without consent of the Employee
(understanding Change in Control provisions still
apply).
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18.
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ENTIRE
AGREEMENT: This Employment Agreement constitutes the entire employment
agreement between the Employee and the Company regarding the terms
and
conditions of his employment with the Company. To the extent that
there is
any inconsistency between this Employment Agreement and any other
agreement between the Employee and the Company, the terms of this
Employment Agreement will govern. This Employment Agreement supersedes
all
prior negotiations, representations or agreements between the Employee
and
the Company, whether written or oral, concerning the Employee's employment
by the Company.
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19.
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VALIDITY:
If any one or more of the provisions (or any part thereof) of this
Employment Agreement shall be held invalid, illegal or unenforceable
in
any respect, the validity, legality and enforceability of the remaining
provisions (or any part thereof) shall not in any way be affected
or
impaired thereby.
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20.
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ATTORNEYS'
FEES IN NEGOTIATING AGREEMENT: Each party to this agreement has had
the
opportunity to consult legal advisor of their choice before signing
this
agreement. In connection therewith, the Company shall reimburse Employee
for all reasonable attorneys fees incurred in the review and negotiation
of this Agreement up to a maximum of
US$1,000.
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21.
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MODIFICATION:
This Employment Agreement may only be modified or amended by a
supplemental written agreement signed by the Employee and the
Company.
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22.
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COUNTERPARTS:
This Employment Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall
constitute one instrument.
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6
IN
WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the
date and year written below.
| Date: October __, 2006 | Spicy Pickle Franchising, Inc.. | |
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| By: | ||
| Xxxxxx Xxxxxx | ||
| Its: Secretary | ||
| Date: October __, 2006 | Xxxx Xxxxx | |
| EMPLOYEE | ||
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