EXHIBIT 10.28
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of August 3, 1995 is
made and entered into by and between XXXXX NURSERIES INC., a California
corporation ("Xxxxx"), having its principal office at 00000 Xxxxxxx Xxxx,
Xxxxxx, Xxxxxxxxxx 00000, and E.G. "XXX XXXXXXX", an individual ("Employee").
A. Madison Dearborn Capital Partners, L.P. has recently acquired a
majority of the voting common stock of Macluan Capital (Nevada) Inc., which in
turn owns all of the stock of Xxxxx (the "Acquisition");
B. Employee has been and on the date hereof continues to be a valued
executive employee of Xxxxx, pursuant to that certain EMPLOYMENT AGREEMENT dated
July 16, 1990 as amended by AMENDMENT NO. 1 to EMPLOYMENT AGREEMENT (such
agreement as amended is referred to herein as the "Prior Employment Agreement");
C. Prior to the Acquisition, Xxxxx maintained certain employee benefit
programs which Xxxxx has agreed to continue with certain modifications agreeable
to Employee;
X. Xxxxx desires to continue the employment of Employee and Employee
desires to continue to perform the duties and obligations hereinafter described
for Xxxxx upon the terms and conditions hereinafter set forth; and
E. The purpose of this Agreement is to supersede the Prior Employment
Agreement from and after the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and their performance, Xxxxx and Employee agree as follows:
1. EMPLOYMENT. Xxxxx hereby continues the employment of Employee and
Employee agrees to serve Xxxxx in the capacity of General Manager, Houston (or
in such other capacity as may be assigned to Employee by the Board, provided
that such other capacity is at least equal to or greater in rank and
responsibility), subject to the direction of the Board of Directors of Xxxxx
(the "Board") and the further terms and conditions of this Agreement. Employee
shall, during the term of this Agreement, in good faith perform such duties as
may be assigned to him by the Board and shall implement the policies of Xxxxx
and directions provided by the Board from time to time.
2. EMPLOYMENT TERM. Commencing as of the date first written above, this
Agreement is on an "at-will" basis and may be terminated by either party in
accordance with the provisions of Section 7.
3. COMPENSATION AND BENEFITS. From and after the date first written
above and so long as Employee is employed by Xxxxx, Employee shall be entitled
to the following compensation and benefits:
(a) SALARY. Employee shall continue to receive an annual
salary from Xxxxx at his current salary rate or such greater amount as may be
determined by the Board from time to time (but no less frequently than
annually), the same to be paid in periodic, but not less than monthly,
installments in accordance with Xxxxx' standard payroll practice. Such amount,
as may be increased from time to time, shall be referred to herein as the "base
salary."
(b) ADDITIONAL COMPENSATION. In addition to the salary
provided in Section 3(a) above, Employee shall participate in Xxxxx' Executive
Variable Compensation Plan (the "Bonus Plan"). The Bonus Plan and Employee's
participation therein shall be an amount determined and paid by the Board
annually no later than April 30 of each year (the "Bonus Date") after
consultation with senior management, under which Bonus Plan an amount equal to
six percent (6%) of Xxxxx' Annual Net Cash Flow (as defined in the Bonus Plan
and which shall not include the earnings of Agri Holdings Inc. and its
subsidiaries) shall be available for bonuses to the Bonus Plan participants. A
copy of the current Bonus Plan is attached hereto as Exhibit X. Xxxxx reserves
the right to modify or amend the Bonus Plan or substitute therefore other bonus
compensation arrangements as shall be approved by the Board from time to time.
(c) SENIOR MANAGEMENT EQUITY INCENTIVE PLAN. Employee shall
participate in any stock option, stock purchase, or other equity ownership or
incentive plan which Xxxxx may adopt for senior management, but not including
the sale to certain employees of an aggregate of up to $1,000,000 of Junior
Preferred Stock and Class B Common Stock.
(d) DEATH BENEFITS. Employee shall be entitled to participate
in Xxxxx employee's life insurance program to an extent appropriate for his
level of employment.
(e) DISABILITY. In the event of a disability not constituting
a Long-Term Disability as defined in Section 7(c), Xxxxx shall pay to Employee
any difference between the actual receipts from disability insurance paid for by
Xxxxx and Employee's base salary as set forth in Section 3(a) above for a
maximum period of three hundred sixty-five (365) days (whether or not
consecutive) after the commencement of Employee's disability.
(f) VACATION. Employee shall receive vacation in accordance
with Xxxxx'x standard vacation policy for executives employed at Employee's
facility; provided, however, in no event shall Employee receive less than the
greater of (i) three (3) weeks, or (ii) an amount in excess of three (3) weeks
as may be granted from time to time and deemed "earned" pursuant to the Xxxxx
vacation policy in effect as of the date of this Agreement. Employee shall not
be permitted to accumulate vacation from year to year but instead must use all
vacation time during the year in which it is first accrued.
(g) AUTOMOBILE. Xxxxx shall provide Employee an automobile
under the Xxxxx automobile policy as established by the Board from time to time.
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(h) EXPENSES. In addition to the base salary provided in
Section 3(a) above, Employee shall be entitled to reimbursement for necessary
and reasonable business expenses incurred in connection with the performance of
his duties hereunder pursuant to procedures and policies adopted by the Board.
(i) SEVERANCE BENEFITS. Employee shall receive certain
severance benefits upon the termination of his employment hereunder in
accordance with the provisions of Section 7 below ("Termination and Severance
Benefits").
4. OTHER OBLIGATIONS OF XXXXX.
(a) Xxxxx shall provide for Employee workspace, equipment and
supplies generally reasonable and sufficient for performance of the tasks
assigned to Employee.
(b) Xxxxx shall provide Employee with all such additional
benefits as are generally provided to employees of Xxxxx.
5. RELOCATION. If Xxxxx requires Employee to relocate to a metropolitan
area outside the area in which he now lives, Xxxxx will pay all reasonable
relocation expenses incurred by Employee, including real estate broker's fees,
costs of moving household goods and personal effects to a new residence, and
travel, lodging and meal costs incurred while searching for a new residence.
6. DUTIES. Employee shall (i) faithfully devote full-time attention,
skill and ability to discharge the duties assigned to him by the Board from time
to time, (ii) use best efforts to promote and protect the interests of Xxxxx,
(iii) comply with all reasonable and lawful instructions that the Board gives
from time to time, and (iv) provide information and assistance as requested by
the Board. During the term of this Agreement Employee shall not engage in any
work, enterprise or activity which is, in the opinion of the Board, not in the
best interests of Xxxxx, or contrary to, or detracting from the due performance
of the business of Xxxxx or the discharge of Employee's duties for Xxxxx.
7. TERMINATION AND SEVERANCE BENEFITS.
(a) GENERAL. Commencing as of the date first written above,
continued employment pursuant to this Agreement shall be on a "at-will" basis,
meaning that Xxxxx may terminate Employee at any time for any reason with or
without Cause (as defined below), and Employee may terminate his employment with
Xxxxx at any time for any reason with or without Cause, in either case upon 30
days advance written notice; PROVIDED HOWEVER, that Employee shall be entitled
to the Severance benefits specified in Section 7(d).
In addition to termination of the "at-will" employment
relationship as provided above, Employee's employment hereunder shall terminate
upon the occurrence of any of the following: (i) the death of Employee; (ii)
termination of Employee by the Board for Long-Term Disability (as defined
below); or (iii) termination of Employee by the Board for Cause. Employee shall
have the option, but shall not be required, to consider his employment hereunder
terminated other than for Cause (as defined below) in the event that (i) he is
required to accept a diminution in base salary or material diminution of other
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benefits described herein, or an assignment of employment duties which are not
commensurate with his office as specified above and (ii) he has notified Xxxxx
in writing of his intention to terminate his employment on account of such
diminution or assignment and Xxxxx has failed to cure the situation within 15
days of receipt of such notice.
(b) DEFINITION OF LONG-TERM DISABILITY. As used herein, the
term "Long-Term Disability" shall mean a physical or mental illness or other
condition which prevents Employee from performing his material duties hereunder
for a period of six (6) consecutive months or two hundred forty (240)
nonconsecutive days in any three hundred sixty-five (365) day period. Any
shorter period of disability shall be deemed short-term disability.
(c) DEFINITION OF CAUSE. As used herein, the term "Cause"
shall mean (i) willful and habitual breach of the duties in effect on the date
first written above or otherwise required of him pursuant to Section 1 of this
Agreement, (ii) habitual neglect of the duties in effect on the date first
written above or obligations required of him by the terms of this Agreement,
(iii) commission of fraud, embezzlement or misappropriation, or other willful
acts of dishonesty or willful misconduct, or commission of a crime of moral
turpitude involving Xxxxx whether or not a criminal or civil charge is filed in
connection therewith, or (iv) information or trade secrets of Xxxxx.
(d) SEVERANCE PAYMENTS AND BENEFITS.
(i) If Employee's employment with Xxxxx is terminated
for any reason (including Long-Term Disability) other than Employee's voluntary
"at-will" termination, termination by Xxxxx for Cause or death (for 3(e)
hereof), then Xxxxx shall pay to Employee (1) a lump sum cash payment within
thirty (30) days of Employee's termination equal to two times Employee's annual
base salary as of the date of such termination ("Base Salary Payment") and (2) a
lump sum cash payment delivered by the Bonus Date equal to a pro rata portion of
Employee's bonus for the fiscal year in which such termination occurs
(determined upon the basis of the pro rata portion of Xxxxx' sales to the date
of termination as compared to the sales for the full fiscal year) (clauses (1)
and (2), collectively, the "Severance Payment").
(ii) If Employee terminates his "at-will" employment
or if Xxxxx terminates Employee for Cause, then Employee shall not receive the
Severance Payment.
(iii) Employee agrees that the Severance Payment
shall fully compensate him for, and he agrees fully and forever to release any
and all claims, if any then exist, arising out of his employment and the
termination thereof with the sole exception of any alleged violation(s) of
applicable state or federal employment statutes, and upon payment of the
Severance Payment Xxxxx shall be fully released and discharged as to any and all
such claims.
(iv) Upon Employee's termination for any reason other
than Employee's own voluntary "at-will" termination, Xxxxx shall continue to pay
Employee's health insurance benefits for a one-year period following such
termination.
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8. GENERAL PROVISIONS.
(a) NOTICES. All notices and other communications hereunder
shall be in writing and, unless otherwise provided herein
(i) If to Xxxxx: Xxxxx Nurseries, Inc.
00000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
With a copy to: Xxxx X. Xxxx
Madison Dearborn Capital Partners, L.P.
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to Employee: To the address listed below
Employee's name on the
signature page of this
Agreement.
With a copy to: Xxxxxxx X. Xxxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) ASSIGNMENT. The rights and duties of Employee under this
Agreement shall not be subject to alienation, assignment or transfer, whether
voluntary or involuntary.
(c) ENTIRE AGREEMENT.This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof, and no
changes in, additions to or modifications of this Agreement shall be valid
unless set forth in writing and signed by each of the parties.
(d) SUPERSEDES PRIOR AGREEMENTS. This Agreement supersedes all
prior employment agreements, understandings, oral or written between Xxxxx and
Employee, specifically including, without limitation, the Prior Employment
Agreement.
(e) CAPTIONS. The captions used in this Agreement are intended
solely for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the construction or interpretation of any of the
provisions hereof.
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(f) SEVERITY. If any term of this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining terms contained herein and any
other application of said terms shall not in any way be affected or impaired
thereby.
(g) APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of California.
In the event of litigation arising out of this Agreement, jurisdiction shall be
proper either in the State of California or in the State in which Employee is
employed.
(h) ARBITRATION. All disputes under or relating to this
Agreement or to Employee's employment by Xxxxx shall be resolved by and through
an arbitration proceeding to be conducted under the auspices of and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (or any like organization successor thereto) at Santa Ana,
California, except that the parties and arbitrators will also have all of the
rights and duties provided by Section 1283.05 of the California Code of Civil
Procedure, which is hereby made a part of this Agreement. Both the foregoing
agreement of Employee and Xxxxx to arbitrate any and all such claims, and the
results, determination, finding, judgment and/or award rendered through such
arbitration, shall be final and binding on each of Employee and Xxxxx.
(i) PROCEDURE. Such arbitration may be initiated by written
notice from either Employee or Xxxxx to the other, which shall be compulsory and
binding proceeding on each of Employee and Xxxxx. The arbitration shall be
conducted before a panel of three arbitrators. Each of Employee and Xxxxx shall
select from a list of arbitrators provided by the American Arbitration
Association one arbitrator; the two arbitrators so selected shall appoint the
third arbitrator from said list. The costs of said arbitrators and the
arbitration shall be borne equally by Employee and Xxxxx. Each of Employee and
Xxxxx shall bear separately the cost of respective attorneys, witnesses and
experts in connection with such arbitration. Time is of the essence of this
arbitration procedure, and the arbitrators shall be instructed and required to
render their decision within 30 days of completion of the arbitration.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
EMPLOYER:
XXXXX NURSERIES, INC.,
a California corporation
By: /S/ XXXXXXX X. XXXXX
----------------------------
Title:
---------------------
EMPLOYEE:
/S/ XXX XXXXXXX
---------------------------------
E.G. "Bud" Xxxxxxx
0000 Xxxxx Xxxx
Xxx Xxxxxxxx, XX 00000
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EXHIBIT A
to Employment Agreement
XXXXX NURSERIES INC.
EXECUTIVE VARIABLE CONPENSATION PLAN
x Xxxxx Nurseries Inc. ("Xxxxx") has adopted this Executive Variable
Compensation Plan (the "Bonus Plan"). Xxxxx reserves the right to
modify or amend the Bonus Plan or substitute therefore other bonus
compensation arrangements as shall be approved by the Board of
Directors (the "Board") from time to time.
o The Bonus Plan is a long-term incentive which is results oriented and
directly tied to Net Cash Flow (as defined below) performance. It has
been designed to be self-regulating and a significant portion of a key
manager's total wages whenever significant results are achieved.
o The Bonus Plan has been effective since January 1, 1990.
o The variable compensation pool will be equivalent to 6% of Net Cash
Flow in each fiscal year. This percentage will be applied to all
dollars of Net Cash Flow greater than $0.
o "Net Cash Flow" means earnings before interest, taxes, depreciation and
amortization, plus any management fees mutually approved by Xxxxx and
the participants in this Bonus Plan, plus expenses relating to any
merger, acquisition or other corporate reorganization of Xxxxx or
expenses of any public or private offering of Xxxxx' equity securities,
minus any increase in inventory, plus any decrease in inventory, minus
capital expenditures, exclusive of expenditures for acquisitions,
expansions and replacement of existing acreage.
o The total variable compensation pool will be allocated to participants
as determined by the Board after consultation with senior management.
o The Board will determine any additions or reductions in the number of
participants (currently 16 members) after consultation with senior
management.
o The relative proportion of each participant's share in the total bonus
pool developed in accordance with the descriptions, formulas, and
examples given herein is as follows:
President = 1.2
7 Key Managers = 1.0
(excluding the President)
3 Sales Managers = 1.0
6 Other Site Managers = 0.5
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o The allocation formula will be performance based and will reward
Central Resource Managers based 100% on consolidated performance and
will reward Site Managers based 75% on specific site performance and
25% on consolidated performances.
o Two measures will be used to evaluate performance:
Net Cash Flow
Return on Sales = Nest Cash Flow divided by Net Sales
o The Board will measure performance under the performance formulas in
consultation with senior management.
o A description of the bonus calculation follows:
I. Central Resource Managers/1.0 shares
a. Net Cash Flow
Consolidated Net Cash Flow / $300,000 = 1% Bonus
b. Return on Sales
Consolidated Net Cash Flow / Net Sales = Return on
Sales 1% R.O.S. = 1.5% Bonus
II. President /1.2 Shares same as above except that the
calculated bonus percentages are multiplied by 1.2
III. Site General Managers and Sales Managers/1.0 shares
75% Site Performance /25% Consolidated Performance
a. Site Net Cash Flow / $100,000 = 1% Bonus
b. Return on Sales
Site Net Cash Flow / Site Net Sales = Return on
Sales 1% R.O.S. s 1.5% Bonus
IV. Site Production Managers/0.5 Shares
75% Site Performance/25% Consolidated Performance
a. Net Cash Flow / $200,000 = 1% Bonus
b. Return on Sales
Site Net Cash Flow + Site Net Sales = Return on
Sales 1% R.O.S. = .75% Bonus
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o If the total amount of incentive compensation developed in accordance
with the descriptions, formulas, and examples provided herein exceeds
6% of Net Cash Flow then the relative proportion of each participant's
originally calculated share will be reduced proportionately until the
total amount of the bonus pool equals 6% of Net Cash Flow.
Example: Calculated bonus pool = 6.3% of Net Cash Flow
The calculated pool is too high by 0.3% of Net Cash Flow or
4.76% of the originally calculated amount (0.3% / 6.3% =
4.76%)
Each participant's originally calculated bonus will be reduced
by 4.76%
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