EXHIBIT 10.14
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EMPLOYMENT AGREEMENT
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Entered into as of September 12, 2002
between
LIFEWAY FOODS, INC.
and
XXXXX XXXXXXXXXX
THIS AGREEMENT, made in the City of Xxxxxx Grove and State of Illinois, as of
the 12th day of September, 2002 (the "Agreement Effective Date"), between
Lifeway Foods, Inc., an Illinois corporation, and any successors in interest
thereto (hereinafter called the "Company"), and Xxxxx Xxxxxxxxxx of Chicago,
Illinois (hereinafter called the "Executive").
RECITALS
Executive has assumed the role of Chief Executive Officer ("CEO") of the Company
on June 10, 2002 by decision of the Board of Directors of the Company and
pursuant to the succession instructions of the Company's late Chairman of the
Board ("Chairman") and CEO, Xxxxxxx Xxxxxxxxxx.
Company and Executive are desirous of entering into a new employment agreement
with a term commencing on September 12, 2002.
IT IS AGREED by and between the parties hereto as follows:
ARTICLE I
EMPLOYMENT
1.1 TERM AND DUTIES. the Company agrees to and does employ the Executive to
perform the duties of CEO in accordance with the terms of this Agreement. The
period (the "Term") of such employment shall begin on September 12, 2002. The
duties of the Executive shall be those commensurate with the office of CEO of
the Company. In such capacity she shall have general charge of the business and
affairs of the Company. Neither the Executive's title nor any of her functions
shall be changed without her consent. While it is understood that the right to
elect directors and officers of the Company is by law vested in the stockholders
and directors of the Company, it is nevertheless mutually contemplated, subject
to such rights, that the Executive shall, at all times during her employment, be
CEO of the Company and shall be a member of the Board of Directors of the
Company.
1.2 COMPENSATION. In consideration of Executive's services during the Term, the
Company agrees to pay the Executive (a) an annual salary ("Base Salary") and (b)
an annual bonus subject to such incentive bonus targets and plans which the
Company may adopt and amend from time to time. Nothing in this Agreement shall
preclude or in any way affect the grant by the Company or the receipt by the
Executive of increases in such salary or any such bonuses or other forms of
additional compensation, including additional equity or equity-based awards, any
such salary and/or bonus increases and additional compensation, contingent or
otherwise. The Executive's salary shall never be reduced during the Term without
the Executive's consent.
1.3 PAYMENT SCHEDULE. The Base Salary shall be payable as current salary, in
installments not less frequently than monthly, and at the same rate for any
fraction of a month unexpired at the end of the Term.
1.4 EXPENSES. During the Term the Executive shall be allowed reasonable
traveling, lodging and entertainment expenses and shall be furnished office
space, assistance and accommodations suitable to the character of her position
with the Company and adequate for the performance of her duties hereunder.
1.5 BENEFITS. The Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under
savings and retirement programs, welfare benefit plans, fringe benefit programs
and perquisites provided by the Company and its affiliates, at least as
favorable as the most favorable of such plans and programs provided to employees
of the Company in effect from time to time.
1.6 TERMINATION IN CASE OF DISABILITY. The Executive shall not be in breach of
this Agreement if she shall fail to perform her duties hereunder because of
physical or mental disability. If for a continuous period of twelve (12) months
during the Term the Executive fails to render services to the Company because of
the Executive's physical or mental disability, the Board or its delegate may end
the Term. If there should be any dispute between the parties as to the
Executive's physical or mental disability at any time, such question shall be
settled by the opinion of an impartial reputable physician agreed upon for the
purpose by the parties or their representatives, or failing agreement within
sixty (60) days of a written request therefor by either party to the other, then
one designated by the then president of the local Academy of Medicine.
1.7 TERMINATION OF SERVICES. If, prior to the end of the Term, the Company shall
terminate the Executive's employment other than for Cause, the Executive
terminates her employment for Good Reason or the Executive terminates her
employment due to death, then the Company shall immediately thereupon pay the
Executive or Executive's spouse, or other beneficiary if so designated, a lump
sum in cash (a) twice the full amount of salary that would be payable to the
Executive under Section 1.2, and subject to any salary increases awarded to the
Executive since the date of this Agreement, and (b) the aggregate of the annual
bonus for which the Executive is eligible under Section 1.2(b) of this Agreement
and such incentive bonus target plan(s) the Company may adopt and amend from
time to time.
1.8 TERMINATION FOR CAUSE. The Company may terminate the employment of the
Executive and this Agreement and all of its obligations hereunder, except for
obligations accrued but unpaid to the effective date of termination, for Cause
upon notice given pursuant to this Section. As used in this Agreement, the term
"Cause" shall mean (a) the willful breach of duty by the Executive in the course
of her employment, (b) the Executive's habitual neglect of her duties, (c) a
material willful breach by the Executive of her duties under this Agreement
which breach is not cured by the Executive within sixty (60) days of receipt of
written notice thereof from the Company to the Executive, or (d) the Executive's
final conviction of a felony, which conviction is nonappealable or for which the
period of filing an appeal has expired
"Cause" shall not include (a) bad judgment or negligence of the Executive, or
(b) any act or omission believed by the Executive in good faith to have been in
or not opposed to the interests of the Company and reasonably believed by the
Executive not to have been improper or unlawful, or (c) an act or omission with
respect to which notice of termination is given more than six (6) months after
the earliest date on which any non-employee director of the Company who was not
a party to such act or omission knew or should have known of such act or
omission.
1.9 The Term "Good Reason" Means:
A. The assignment to the Executive of any duties materially inconsistent with
the Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated in Article
I of this Agreement, or any other action by the Company which results in a
material diminution in such position, authority, duties or responsibilities,
excluding for this purpose an action not taken in bad faith and which is
remedied by the Company within ten (10) days after receipt of written notice
thereof given by the Executive, provided that repeated instances of such action
shall be evidence of the bad faith of the Company;
B. any material failure by the Company to comply with any of the provisions of
this Agreement, other than a failure not occurring in bad faith and which is
remedied by the Company within ten (10) days after receipt of written notice
thereof given by the Executive, provided that repeated failures shall be
evidence of the bad faith of the Company;
C. failure of the Executive to be elected or reelected Chief Executive Officer
of the Company or to be elected or reelected to membership on the Company's
Board of Directors; or
D. any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by this Agreement.
1.10 LOCATION OF EMPLOYMENT. Company shall not require Executive to be based in
any office or location other than within the Chicago, Illinois Metropolitan Area
without her agreement, except for travel reasonably required in the performance
of the Executive's responsibilities.
ARTICLE II
OTHER PROVISIONS
2.1 PERFORMANCE OF DUTIES. The Executive agrees that during the Term (a) she
will faithfully perform the duties of her employment hereunder, and that she
will devote to the performance of said duties all such time and attention as
they shall reasonably require, taking, however, from time to time (as the
Company agrees that she may) reasonable vacations; and (b) she will not become
actively associated with or engaged in any competing business (as hereinafter
defined), unless in the context of a merger, acquisition or joint venture
conducted in the best interests of the Company, while she is employed by the
Company and she will do nothing inconsistent with her duties to the Company.
In the event that (i) the Executive is advised at any time by the Company in
writing that her services will no longer be required during the Term or (ii) the
employment of the Executive is terminated by the Executive for Good Reason,
Executive shall be free to become actively engaged with another business
regardless of whether it is a competing business. Executive agrees that during
the Term she will not disclose to anyone outside of the Company, or use in other
than the Company's business, confidential information relating to the Company's
business. It is understood that violation of this provision would cause
irreparable harm to the Company and that Company may seek to enjoin any such
violation or to take any other applicable action. As used in this Section 2.1 a
"competing business" shall be any business which at the time of determination,
is the business of manufacturing, selling or marketing kefir products conducted
by Company, or any of its subsidiaries, or subsidiaries of subsidiaries, or
affiliates, or divisions.
ARTICLE III
MISCELLANEOUS
3.1 ASSIGNMENT. This Agreement shall not be assignable by the Company without
the written consent of the Executive. The Executive may not assign, pledge, or
encumber her interest in this Agreement, or any part thereof, without the
written consent of the Company.
3.2 GOVERNING LAW. This Agreement and all questions arising in connection
herewith shall be governed by the internal substantive and procedural laws of
the State of Illinois. The Company and the Executive each consent to the
jurisdiction of, and agree that any controversy between them arising out of this
Agreement shall be brought in the Circuit Court of Xxxx County, Illinois or such
other court venued within Xxxx County, Illinois as may have subject matter
jurisdiction over the controversy.
3.3 SEVERABILITY. If any portion of this Agreement is held to be invalid or
unenforceable, such holding shall not affect any other portion of this
Agreement.
3.4 ENTIRE AGREEMENT. This Agreement comprises the entire agreement between the
parties hereto and as of the date hereof, supersedes, cancels and annuls any and
all prior agreements between the parties hereto. This Agreement may not be
modified, renewed or extended orally, but only by a written instrument referring
to this Agreement and executed by the parties hereto.
3.5 GENDER AND NUMBER. Words in the masculine herein may be interpreted as
feminine or neuter, and words in the singular as plural, and vice versa, where
the sense requires.
3.6 NOTICES. Any notice or consent required or permitted to be given under this
Agreement shall be in writing and shall be effective when given by personal
delivery or five business days after being sent by certified US mail, return
receipt requested, to the Company at its principal place of business in the City
of Xxxxxx Grove or to the Executive at her last known address as shown on the
records of the Company.
3.7 WITHHOLDING TAXES. The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
3.8 WAIVER AND RELEASE. In consideration of the Company's entering into this
Agreement, and the receipt of other good and valuable consideration, the
sufficiency of which is expressly acknowledged, the Executive, for himself and
her successors, assigns, heirs, executors and administrators, hereby waives and
releases and forever discharges the Company and its affiliates and their
officers, directors, agents, Executives, shareholders, successors and assigns
from all claims, demands, damages, actions and causes of action whatsoever which
she now has on account of any matter, whether known or unknown to her and
whether or not previously disclosed to the Executive or the Company, that
relates to or arises out of any existing or former employment agreement (written
or oral) entered into between the Executive and the Company or any of its
affiliates (or any amendment or supplement to any such agreement).
3.9 ENFORCEMENT OF AGREEMENT. If the Executive incurs legal or other fees and
expenses in an effort to establish entitlement to benefits under this Agreement,
regardless of whether the Executive ultimately prevails, the Company shall
reimburse her for such fees and expenses, unless a court of competent
jurisdiction determines that the Executive made such effort in bad faith.
Reimbursement of fees and expenses described in the preceding paragraph shall be
made monthly during the course of any action upon the written submission of a
request for reimbursement together with proof that the fees and expenses were
incurred
3.10 MISCELLANEOUS. Except as specifically provided herein, all accounts payable
pursuant to this Agreement shall be paid without reduction regardless of any
amounts of salary, compensation or other amounts which may be paid or payable to
Executive from any source or which Executive could have obtained upon seeking
other employment; provided that the Company shall be permitted to make all
payments pursuant to this Agreement net of any legally required tax
withholdings. Executive shall not be required to seek other employment, and
there shall be no offset to amounts due hereunder as a result of any salary,
compensation or other amounts Executive may be paid from other sources.
IN WITNESS WHEREOF, the parties hereto have hereunto and to a duplicate hereof
set their signatures as of September 12, 2002.
LIFEWAY FOODS, INC. XXXXX XXXXXXXXXX
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxx Xxxxx Xxxxxxxxxx
On behalf of the Board of Directors
