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EXHIBIT 10.17
CONSULTING, LOAN REPAYMENT AND
NONCOMPETITION AGREEMENT
Consulting, Loan Repayment and Noncompetition Agreement ("Agreement")
dated as of August 13, 1997 between Xxxxxx Worth ("Consultant") and The
Delicious Frookie Company, Inc., a Delaware corporation ("Company").
RECITALS
A. Consultant has been an executive officer and director of the Company
and is familiar with all of its activities.
B. Contemporaneously with the execution of this Agreement, Consultant is
resigning all offices Consultant holds with the Company.
C. The Company desires to retain Consultant as an independent contractor
to render advice to the Company in connection with its business for one year.
D. Consultant is willing to advise the Company on certain matters and
provide the services set forth in this Agreement.
E. The parties desire to provide for the repayment of certain obligations
of the Consultant to the Company.
F. The Company desires to prevent the Consultant from competing with the
Company in the business of manufacturing, marketing and/or distributing cookies
and/or crackers as described in Section 4 below.
G. Contemporaneously with the execution of this Agreement,
(a) the Consultant and/or Xxxxxxx X. Worth is executing and
depositing into escrow, pursuant to a Master Escrow Agreement dated as of August
13, 1997 by and among Xxxxxxx X. Worth, the Consultant, Xxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, the Company and Xxxxxxxx Mollen & Xxxxxx, as escrow agent
("Master Escrow Agreement"), the following agreements:
(i) Common Stock and Option Purchase Agreement ("Stock and
Option Agreement") among Xxxxxxx X. Worth, the Consultant, each of the Investors
listed on the signature page and Schedule A thereto ("Investors") and the
Company;
(ii) Purchase Options ("Purchase Options") covering an
aggregate of 1,000,000 shares of Common Stock of the Company owned beneficially
or held of record by the Consultant and/or Xxxxxxx X. Worth, between the
Consultant and/or Xxxxxxx X. Worth and certain of the Investors;
(iii) Asset Purchase Agreement ("Asset Purchase Agreement")
between the Company and Xxxxxxx X. Worth;
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(iv) Option Escrow Agreement ("Option Escrow Agreement"),
among Xxxxxxx X. Worth, the Consultant, the Company, the holders of the Purchase
Options and Xxxxxxxx Xxxxxx & Xxxxxx, as escrow agent; and
(v) Voting Trust Agreement ("Voting Trust Agreement") among
the Worths, Xxxxxxxx Mollen & Xxxxxx, the Company and the Voting Trustee named
therein; and
(b) Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx are depositing into
escrow pursuant to the Master Escrow Agreement their respective Director
Resignations (as defined in the Stock and Option Agreement).
IT IS AGREED:
1. Engagement, Duties and Acceptance.
1.1 The Company hereby retains Consultant as a consultant to the
Company from the date hereof until the first anniversary of the closing
contemplated by the Stock and Option Agreement ("Consulting Period") upon the
terms and conditions hereinafter set forth.
1.2 Consultant hereby agrees to provide consulting services to the
Company in connection with the Company's business during the Consulting Period,
including, but not limited to, (i) assistance in the formulation of products,
(ii) support of the Company's chief executive officer ("CEO") and board of
directors ("Board") in connection with the transition to new management, (iii)
assistance in the promotion of new brands or products through attendance at
special events or trade meetings, and (iv) such other services as may be
reasonably requested by the CEO or Board.
1.3 Consultant shall render her services only upon specific request
of the Company's CEO or Board for same, consistent with the type of services
requested from a senior consultant to the Company.
1.4 Consultant shall have no authority to commit or bind the Company
under any oral or written agreement or contract without the prior written
approval of the Company.
1.5 Other than as specifically requested by the CEO or the Board,
Consultant will not participate in the day-to-day operations of the Company, and
Consultant may not discuss the Company or its business with anyone, including
the Company's stockholders, officers or employees, and any analysts or other
investment professionals, without the supervision or approval of the CEO, unless
undertaken solely in furtherance of the performance of her specific duties under
this Agreement. Any money damages recoverable by the Company for breach or
violation by Consultant of this Section 1.5 during the Consulting Period shall
be limited to $25,000 for each such breach or violation. The Consultant and the
Company agree that it is impossible to determine with any reasonable accuracy
the amount of prospective damages to Company upon breach or violation of this
Section 1.5.
1.6 The Consultant acknowledges and agrees that the Company may
require services of Consultant hereunder of up to 10 hours per week (including
travel time away from the city in which the Consultant maintains her office in
Florida) and agrees to make herself available to provide such services. The
Company and Consultant acknowledge and agree that the
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services to be provided hereunder shall require performance primarily in the
city in which Consultant maintains her office in Florida, although it is
anticipated that Consultant's services may require infrequent travel, including
multiple-day stays, to other locations.
2. Compensation.
2.1 As full compensation during the term of this Agreement for all
Consultant's services to be rendered hereunder, the Company agrees to pay to
Consultant an amount equal to $106,261 per annum, $100,000 of which shall be
paid in equal monthly installments and $6,261 of which shall be credited towards
repayment of the Loan (as hereinafter defined) after each year of service under
this Agreement.
2.2 The Company shall provide Consultant with medical and
hospitalization insurance coverage during the term of this Agreement to the same
extent as it provides for its executive employees.
2.3 The Company shall provide Consultant with an automobile
allowance of up to $6,300 per year for three years from the date of this
Agreement, which allowance shall be payable on a monthly basis. Consultant
agrees that within 60 days after the date of this Agreement the present lease on
the automobile leased by the Company for Consultant's use shall be transferred
to Consultant or terminated.
2.4 The Company shall pay Consultant a non-accountable expense
allowance of $5,000 during the Consulting Period, payable on a monthly basis, to
cover telephone expenses.
2.5 The Company shall pay or reimburse Consultant for all valid
business expenses (including travel and entertainment) reasonably incurred by
Consultant in the conduct of her duties hereunder during the Consulting Period
upon presentation of appropriate receipts and expense reports detailing the
amounts and purposes of any expenditures. No expenditure or series of similar
expenditures in excess of $500 shall be incurred by Consultant without the prior
consent of the CEO or the Board, and the Consultant shall not incur any
expenditures in the name of the Company.
3. Term and Termination.
3.1 The term of this Agreement shall commence on the date hereof and
shall continue until August 13, 2002 ("Expiration Date"), unless sooner
terminated as herein provided.
3.2 This Agreement shall terminate immediately if, after the date
hereof, Consultant is reappointed or reelected to the Company's board of
directors and is reappointed or reelected an executive officer of the Company.
3.3 Provided that the insurance policy described in this Section 3.2
is in effect, if Consultant dies during the term of this Agreement the Company
shall have no further obligation to make any payments under Section 2 of this
Agreement, except that the Company shall pay to the legal representative of
Consultant's estate all monies due hereunder up to the date of her death (less
all amounts to be credited towards repayment of the Loan). For the term of this
Agreement, the Company shall pay the premiums for a term life insurance policy
on the life of
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the Consultant, which shall provide for a benefit equal to the remaining
payments due under this Agreement at the time of Consultant's death (except for
the payments described in Sections 2.3 and 2.4 of this Agreement) net of all
amounts due to the Company in accordance with Section 7 hereof, and which shall
be payable to the beneficiaries named by Consultant on such policy. Consultant
agrees to comply with all reasonable requests of the Company and its
representatives in order to enable the Company to obtain such policy.
3.4 The Company, by notice to Consultant, may terminate this
Agreement for proper cause. As used herein, "proper cause" shall mean that
Consultant has:
(a) during the Consulting Period, continually refused or
failed to carry out specific reasonable directions of the CEO or
Board, or refused or failed to perform a material part of her duties
hereunder, which refusal or failure has not been corrected within 30
days after notice has been given to Consultant specifying such
refusal or failure;
(b) committed a material breach of any of the provisions of
this Agreement or of the Stock and Option Agreement, Purchase
Options, Asset Purchase Agreement, Option Escrow Agreement or Voting
Trust Agreement, which breach has not been corrected within 30 days
after notice has been given to Consultant specifying such breach;
(c) acted fraudulently or dishonestly in her relations with
the Company;
(d) during the Consulting Period, committed larceny,
embezzlement, conversion or any act involving the misappropriation
of funds in the course of her engagement hereunder; or
(e) been convicted of or plead nolo contendere to any crime
con stituting a felony in the jurisdiction in which the act
constituting the crime occurred, constituting an alleged civil
charge of sexual harassment which has caused monetary harm to the
Company or which could tend to injure the reputation of the Company
or expose it to unfavorable publicity, or involving an act of moral
turpitude, but only if the act constituting such crime, sexual
harassment or act of moral turpitude occurred during the Consulting
Period.
3.5 During the Consulting Period the Company may, by notice to
Consultant, terminate this Agreement if Consultant shall, because of illness or
incapacity, fail to render services requested by the CEO or the Board of the
character contemplated by this Agreement for 90 successive days or for shorter
periods aggregating 180 days or more. Notwithstanding such termination, the
Company shall pay to Consultant all monies due hereunder up to the date of such
notice of termination (less all amounts to be credited towards repayment of the
Loan).
4. Protection of Confidential Information; Non-Competition.
4.1 Consultant acknowledges that:
(a) As a result of her prior employment by the Company and her
engagement as a Consultant to the Company, Consultant has obtained
and will
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obtain secret and confidential information concerning the business
of the Company and its affiliates, including, without limitation,
the identity of customers and sources of supply, their needs and
requirements, the nature and extent of contracts with them, and
related cost, price and sales information.
(b) The Company and its affiliates will suffer substantial
damage which will be difficult to compute if, during the term of
this Agreement or thereafter, Consultant should enter a competitive
business or should divulge secret and confidential information
relating to the business of the Company heretofore or hereafter
acquired by her in the course of her engagement as a consultant to
the Company.
(c) The provisions of this Agreement are reasonable and
necessary for the protection of the business of the Company and its
affiliates.
4.2 Consultant agrees that she will not at any time, either during
the term of this Agreement or thereafter, divulge to any person, firm or
corporation any information obtained or learned by her during the course of her
engagement as a consultant to the Company, or prior to the commencement thereof
in the course of her employment with the Company, with regard to the
operational, financial, business or other affairs of the Company or its
affiliates, their officers and directors, including, without limitation, trade
"know how," secrets, customer lists, sources of supply, pricing policies,
operational methods or technical processes, except (i) in the course of
performing her duties hereunder and with the express written consent of the CEO
or the Board; (ii) to the extent that any such information is in the public
domain other than as a result of Consultant's breach of any of her obligations
hereunder; or (iii) where required to be disclosed by court order, subpoena or
other government process. In the event that Consultant shall be required to make
disclosure pursuant to the provisions of clause (iii) of the preceding sentence,
Consultant promptly, but in no event more than 48 hours after learning of such
subpoena, court order, or other government process, shall notify, by personal
delivery or by cablegram, confirmed by mail, the Company and, at the Company's
expense, Consultant shall: (a) take all reasonably necessary steps requested by
the Company to defend against the enforcement of such subpoena, court order or
other government process, and (b) permit the Company to intervene and
participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Consultant agrees that she will not at any time, either during
the term of this Agreement or thereafter, use the trademarks "Frookie" or
"Delicious" or the term "The Good For You," or any logo using such trademarks or
term, with reference to any edible product for any purpose except in the course
of performing her duties hereunder and with the express written consent of the
CEO or the Board.
4.4 Upon termination of this Agreement, or at any time the Company
may so request, Consultant will promptly deliver to the Company all memoranda,
notes, records, reports, manuals, drawings, blueprints and other documents (and
all copies thereof) relating to the business of the Company and its affiliates
and all property associated therewith, which she may then possess or have under
her control.
4.5 In connection with and consideration for the transactions
contemplated by this Agreement and the Stock and Option Agreement, the Purchase
Options and the Asset Purchase Agreement, Consultant agrees that, until August
13, 2002, Consultant shall not, without
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the prior written permission of the Company, in the United States, its
territories and possessions, or any other countries where the Company currently
or at termination of this Agreement sells its products, directly or indirectly,
(i) enter into the employ of or render any services to any person, firm or
corporation engaged in any Competitive Business (as defined in Section 6); (ii)
engage in any Competitive Business for her own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) solicit the
employment or retention by any Competitive Business of any person who was
employed or retained by the Company or any of its affiliates while Consultant
was employed by, or serving as a consultant to, the Company; or (v) solicit,
interfere with, or endeavor to entice away from the Company or any of its
affiliates any of its or their customers or sources of supply. However, nothing
in this Agreement shall preclude Consultant from investing her personal assets
in the securities of any corporation or other business entity which is engaged
in a Competitive Business if such securities are traded on a national stock
exchange or in a public over-the-counter market and if such investment does not
result in her beneficially owning, at any time, more than 5% of the
publicly-traded equity securities of such competitor.
4.6 If Consultant commits a breach, or threatens to commit a breach,
of any of the provisions of this Section 4, the 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 Consultant that the services being
rendered hereunder to the Company are of a special, unique and
extraordinary character and that any such breach will cause
irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Consultant to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or
other benefits (col lectively "Benefits") derived or received by
Consultant as the result of any transactions constituting a breach
of any of the provisions of Sections 4.2 or 4.5, and Consultant
hereby agrees to account for and pay over such Benefits to the
Company.
Each of the rights and remedies enumerated in this Section 4.6 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 the Company under law or equity.
4.7 If Consultant shall violate any covenant contained in Section
4.5, the duration of such covenant so violated shall be extended automatically
for a period of 2 years from the date on which Consultant permanently ceases
such violation or for a period of two years from the date of the entry by a
court of competent jurisdiction of a final order or judgment enforcing such
covenant, whichever period is later.
4.8 If any provision of this Section 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. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, the making, interpretation or the breach thereof,
other than a claim solely for injunctive relief for any alleged breach of the
provisions of Section 4.2 or 4.5, as to which the parties shall have the right
to apply for specific performance to any court having equity jurisdiction, shall
be submitted to arbitration in New York City before a panel of three arbitrators
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof and any party to the
arbitration may, if she or it so elects, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The powers
of the arbitrators shall include, but not be limited to, the awarding of
injunctive relief. The arbitrators shall include in any award in the prevailing
party's favor the amount of her or its reasonable attorneys' fees and expenses
and all other reasonable costs and expenses of the arbitration. In the event
that the arbitrators do not rule in favor of the prevailing party in respect of
all the claims alleged by such party, the arbitrators shall include in any award
in favor of the prevailing party the amount of her or its reasonable attorneys'
fees and other expenses and such other reasonable costs and expenses of the
arbitration as they deem just and equitable under the circumstances. Except as
provided above, each party shall bear her or its own attorneys' fees and
expenses and the parties shall bear equally all other costs and expenses of the
arbitration.
6. Definitions. As used in this Agreement:
(a) "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control
with the Company.
(b) "Competitive Business" shall mean any business engaged in
the manufacture, marketing and/or distribution of cookies and/or
crackers.
7. Loan. Consultant hereby acknowledges that she is indebted to the
Company in the aggregate amount of $31,305.05 for monies advanced to Consultant
by the Company prior to the date hereof and agrees that such Loan shall be fully
repaid to the Company within five years from the date hereof as provided in
Section 2.1 of this Agreement; provided, however, that upon termination of this
Agreement for any reason other than pursuant to Section 3.2, the entire
remaining principal amount of the Loan shall be forgiven and deemed to have been
paid to Consultant as compensation, and the Company shall thereupon issue to
Consultant a Form 1099 with respect to such compensation at the appropriate
time.
8. Miscellaneous Provisions.
8.1 Any notice required or permitted under this Agreement shall be
given in writing and shall either be delivered personally or sent by certified
mail, return receipt requested, postage prepaid, or by Federal Express next
business day service with signed receipt required, to the parties at their
respective addresses set forth below, or to such other address as either shall
have specified by notice in writing to the other, and shall be deemed duly given
hereunder when so delivered. Any notice to Consultant shall be sent to her at
0000 Xxxxx Xxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx 00000, and any notice to the
Company shall be sent to the Company at 0000 Xxxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxx 00000, or at such other address as such party may designate by ten (10)
days' advance written notice to the other parties, with copies to Xxxxxx
Xxxxxxx, Esq., Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx
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Xxxx 00000 and Xxxxx Xxxx Xxxxxx, Esq., Xxxxxxxx Mollen & Xxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
8.2 This Agreement, together with the Stock and Option Agreement,
Purchase Options, Asset Purchase Agreement, Option Escrow Agreement, Master
Escrow Agreement, Voting Trust Agreement and Director Resignations, sets forth
the entire agreement of the parties and is intended to supersede all prior
negotiations, understandings and agreements with respect to the subject matter
hereof. No provision of this Agreement may be waived or changed except by a
writing by the party against whom such waiver or change is sought to be
enforced. The failure of any party to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce such
provision.
8.3 This Agreement and all amendments thereof shall, in all
respects, be governed by and construed and enforced in accordance with the
internal law of the State of New York without regard to principles of conflicts
of laws.
8.4 The article headings are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
or intent of any provision of this Agreement.
8.5 This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company. This Agreement shall not be
assignable by Consultant and shall inure to the benefit of and be binding upon
Consultant and her legal representatives.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
CONSULTANT:
/s/ Xxxxxx Worth
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Xxxxxx Worth
THE DELICIOUS FROOKIE COMPANY, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: XXXXXX XXXXXX
Title: CHIEF FINANCIAL OFFICER
