EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into effective as of January 1, 1999, by and between Oregon Baking
Company, an Oregon corporation dba Xxxxxx Baking (the "Company"), and Xxx
Xxxxxxxx ("Executive"). The Company and Executive are hereinafter referred to as
the "Parties," and may individually be referred to as a "Party."
RECITALS
A. The Executive is presently employed by the Company as Chief
Executive Officer and has agreed to assume the position of President of the
Company effective as of the date of this Agreement.
B. The Board of Directors (the "Board") of the Company desires
to provide for the continued employment of the Executive and to reinforce and
encourage the continued attention and dedication to the Company of the Executive
as a member of the Company's management.
C. The Executive desires to continue his employment with the
Company, and is willing to accept such continued employment on the terms and
conditions set forth in this Agreement.
AGREEMENT
In consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
1. EMPLOYMENT.
1.1 The Company hereby agrees to continue to employ Executive, and
Executive hereby accepts continued employment by the Company, upon the terms and
conditions set forth in this Agreement, effective as of the date first set forth
above ("Effective Date").
1.2 Executive shall serve as President and Chief Executive Officer of the
Company, its subsidiaries and successors (if any) and their subsidiaries.
Executive shall also serve in such other capacity or capacities, with the
consent of the Executive, as the Board may from time to time prescribe.
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1.3 Executive shall do and perform all services, acts or things necessary
or advisable to manage and conduct the business of the Company and which are
normally associated with the position of President and Chief Executive Officer.
However, at all times during his employment, Executive shall be subject to the
direction and policies from time to time established by the Board.
Notwithstanding the foregoing, Executive shall have such corporate power and
authority as shall be reasonably required to enable the Executive to discharge
the Executive's duties in any office that Executive may hold.
1.4 Unless the Parties otherwise agree in writing, prior to Executive's
termination in accordance with this Agreement, Executive shall perform the
services he is required to perform pursuant to this Agreement at the Company's
offices located xx0000 XX Xxxxxxxxxx, Xxxxxxxx, Xxxxxx, at the various
production and retail outlets, or at any other place at which the Company
conducts business; provided, however, that the Company may from time to time
reasonably require Executive to travel temporarily to other locations in
connection with the Company's business.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During his employment by the Company, Executive shall devote his full
business energies, interest, abilities and productive time to the proper and
efficient performance of his duties under this Agreement. The foregoing shall
not preclude Executive from engaging in civic, charitable or religious
activities, or from serving on boards of directors of companies or organizations
which will not present any direct conflict of interest with the Company or
affect the performance of Executive's duties hereunder.
2.2 During the term of this Agreement, Executive shall not engage in
competition with the Company, either directly or indirectly, in any manner or
capacity, as adviser, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any phase of the business of
developing, producing and marketing of food and beverage which are in the same
field or which otherwise directly compete with the business or proposed business
of the Company; provided, however, nothing in this Section 2.2 shall in any way
prohibit ownership by Executive, as a passive investment, of less than one
percent (1%) of the outstanding shares of capital stock of any corporation with
one or more classes of its capital stock listed on a national securities
exchange or publicly traded in the over-the-counter market.
3. COMPENSATION OF EXECUTIVE.
3.1 The Company shall pay Executive a base salary of $150,000 per year,
payable in regular periodic payments in accordance with Company policy but in no
event less frequent than semi-monthly; provided, however, that at Executive's
sole discretion payment of up to fifty percent (50%) of Executive's base salary
may be deferred until the sooner of (i) the date on which the Company obtains
equity financing of one million dollars ($1,000,000) or more; or (ii) October 1,
1999.
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3.2 Executive's base salary shall increase to $200,000 per year on the
sooner of (i) the first of the month following the second consecutive month
during which the Company achieved EBITDA of ten percent (10%) of gross revenues
or more; or (ii) October 1, 1999.
3.3 As further compensation, and so long as Executive is employed by
Company as provided in this Agreement and Executive is not otherwise in default
of any of the provisions herein, Executive shall be granted by the Company an
incentive stock option ("ISO") under the Company's 1997 Stock Option/Stock
Issuance Plan (the "Plan") so that Executive shall be entitled to purchase up to
140,000 shares of Company's Common Stock ("ISO Grant"). The exercise price shall
be the fair market value of the Company's Common Stock as of the grant date, as
determined by the Board at its discretion. Executive shall be permitted, at
Executive's discretion, to exercise the ISO Grant by executing and delivering a
three-year promissory note secured by a pledge of the purchased shares, which
note shall be on such terms and conditions as are approved by the Plan
administrator. Further, so long as Executive is employed by Company as provided
in this Agreement and Executive is not otherwise in default of any of the
provisions herein, Executive shall be granted by the Company nonqualified stock
options ("NQSOs") under the Company's 1998 Nonqualified Stock Option Plan so
that the Executive shall be entitled to purchase (i) up to 200,000 shares of
Company's Common Stock at an exercise price of seven dollars ($7.00) per share
("NQSO Grant I"); (ii) up to 200,000 shares of Company's Common Stock at an
exercise price of eleven dollars ($11.00) per share ("NQSO Xxxxx XX"); and (iii)
up to 100,000 shares of Company's Common Stock at an exercise price equal to
fair market value at the time the option is earned ("NQSO Grant III"). NQSO
Grant III shall be earned as of the date that Company achieves EBITDA of ten
percent (10%) of gross revenues or more for three consecutive months by December
31, 2000. If NQSO Grant III is not earned by December 31, 2000, it shall be
deemed canceled. The shares granted pursuant to this Section 3.3 are referred
to hereafter as the "Option Shares."
The shares granted to Executive under the ISO Grant, NQSO Grant I and NQSO
Xxxxx XX shall vest as follows: Twelve and one-half percent (12.5%) of the
shares vest six months from the date the options are granted and the balance of
shares equally in successive monthly installments over 42 months of service
thereafter.
The shares granted to Executive under NQSO Grant III shall vest fully as of
the date NQSO Grant III is earned.
3.4 Executive is eligible for a cash incentive bonus equal to forty percent
(40%) of base salary for the period May 1, 1999 through December 31, 1999,
payable on a pro rata basis, if Company achieves performance goals to be
determined by the Board in its discretion.
3.5 Executive shall be entitled to at least four (4) weeks of paid vacation
each twelve-month period during Executive's employment hereunder, in addition to
all national holidays. Any accrued vacation time shall be forfeited if not taken
by the end of the calendar year following the year in which it accrued.
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3.6 Executive shall, in the discretion of the Board and in accordance with
Company policy, be entitled to participate in benefits under any employee
benefit plan or arrangement made available by the Company now or in the future
to its executives and key management employees. Notwithstanding the foregoing,
during Executive's employment hereunder, the Company shall continuously provide
Executive, at the Company's sole cost and expense, with medical, dental and
vision care/insurance for Executive, and shall pay the premiums due and owing on
Executive's one million dollar ($1,000,000) life insurance policy currently in
effect.
3.7 Executive shall be entitled to receive prompt reimbursement of all
reasonable expenses incurred by Executive in performing Company services,
including reimbursement of lodging expenses of up to $125 per night when
Executive stays overnight in Portland in connection with Company business, and
reimbursement of up to $300 per month for automobile expenses and mileage.
4. TERMS OF EMPLOYMENT.
4.1 The term of this Agreement shall be effective as of the date first
written above and shall terminate two (2) years from such date, unless earlier
terminated as hereinafter provided.
4.2 This Agreement may be renewed only by written consent of both parties.
4.3 The continued employment after the expiration shall not constitute an
extension of the term of this Agreement or any of its provisions for any period
of time.
5. TERMINATION BY COMPANY.
Executive's term of employment with the Company may be earlier terminated
by the Company under the following conditions:
5.1 DEATH. Upon Executive's death, in which case termination shall be
effective on the last day of the month in which Executive's death occurs.
5.2 DISABILITY. If Executive becomes, for six (6) consecutive months,
completely disabled due to physical or mental illness as defined under Section
5.2.1, or if Executive shall be absent from duties as required under the terms
of this Agreement on a full-time basis due to illness for six (6) consecutive
months, and shall not have returned to the performance of duties within thirty
(30) days after receiving written notice of termination following such six-month
period.
5.2.1 The term "completely disabled" as used in this Agreement shall
mean the inability of Executive to perform the essential functions of his
position under this Agreement by reason of any physical or mental impairment
which the Board, based upon medical advice or an opinion provided by a licensed
physician acceptable to the Board and approved by Executive, which approval
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shall not be unreasonably withheld, determines to have incapacitated Executive
from satisfactorily performing any or all essential functions of his position
for the Company during the foreseeable future. Based upon such medical advice or
opinion, the determination of the Board shall be final and binding and the date
such determination is made shall be the date of such complete disability for
purposes of this Agreement.
5.3 FOR CAUSE. The Company may terminate Executive's employment under this
Agreement and may terminate this Agreement For Cause, as that term is defined in
Sections 5.3.1 through 5.3.5, by (i) delivery of written notice to Executive
specifying the cause or causes relied upon for such termination; and (ii) giving
Executive, together with his counsel, an opportunity to be heard before the
Board. Any notice of termination given pursuant to this Section 5.3 shall effect
termination as of the date specified in such notice or, in the event no such
date is specified, on the last day of the month in which such notice is
delivered or deemed delivered as provided in Section 10 below.
If Executive's employment under this Agreement is terminated by the Company
For Cause under this Section, Executive shall be entitled to receive only
accrued base salary and other accrued benefits required by law, prorated to the
date of termination. Grounds for the Company to terminate this Agreement For
Cause shall be limited to the occurrence of any of the following events without
Board consent:
5.3.1 Executive is in material breach of any provision of this Agreement
and, except as otherwise provided in this Section 5.3, such breach continues for
a period of thirty (30) days after notice of such breach is given to Executive
by the Company;
5.3.2 Executive's engaging or in any manner participating in any
activity which is directly competitive with or intentionally injurious to the
Company or which violates any provision of Section 8 of this Agreement and such
violation continues for a period of ten days after notice of such violation is
given to Executive by the Company;
5.3.3 Executive's commission of any fraud against the Company;
5.3.4 Executive's intentional improper use or appropriation for his
personal use or benefit of any funds or properties of the Company not authorized
by the Board to be so used or appropriated and the same has not been remedied
within thirty (30) days after notice of such violation is given to Executive by
the Company; or
5.3.5 Executive's conviction of any crime involving dishonesty or moral
turpitude.
5.4 WITHOUT CAUSE. The Company may terminate the Executive's employment
without cause upon delivery of written notice to the Executive at any time. Any
notice of termination given pursuant to this Section 5.4 shall effect
termination not less than sixty (60) days after the date of such notice.
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6. TERMINATION BY EXECUTIVE. Executive may terminate his employment with the
Company for any reason or for no reason upon delivery of written notice not less
than sixty (60) days in advance of the effective date of such termination.
7. COMPENSATION UPON TERMINATION.
7.1 BASE SALARY. If Executive employment is terminated by the Company for
Cause or without Cause, or by reason of Executive's death or disability, the
Company shall pay Executive his base salary through the date of Executive's
termination date at the rate in effect at the time of the notice of termination,
and the Company shall thereafter have no further obligations to Executive under
this Agreement other than as required by law or by Section 7.3 below (if
applicable).
7.2 BONUSES. If Executive's employment is terminated by the Company or by
Executive during the term of this Agreement, Executive shall be eligible to
receive the bonus provided for in section 3.4 of this Agreement, or any other
bonus as may be awarded by the Board from time to time, only if Executive was
employed by the Company through the end of the applicable bonus period.
7.3 ACCELERATED VESTING OPTIONS UPON TERMINATION WITHOUT CAUSE OR UPON
DEATH. If the Company terminates Executive's employment without Cause during the
term of this Agreement, then upon Executive's furnishing to the Company an
executed waiver and release of claims in a form acceptable to the Company,
vesting on Executive's ISO and NQSO Grants I and II, shall be accelerated as if
Executive had been employed with the Company through the end of the term of this
Agreement as provided in Section 4.1. In the event of Executive's death during
the term of this Agreement, vesting of such number of options, granted pursuant
to Executive's ISO and NQSO Grants I and II, as would have vested during the
twelve month period following the date of Executive's death shall accelerate and
become vested effective as of the date of Executive's death.
8. CONFIDENTIAL INFORMATION; NONSOLICITATION.
8.1 Executive recognizes that his employment with the Company will involve
contact with information of substantial value to the Company, which is not old
and generally known in the trade, and which gives the Company an advantage over
its competitors who do not know or use such information, including but not
limited to, recipes, techniques, processes, sales and customer information, and
business and financial information relating to the business, products, practices
and techniques of the Company (hereinafter referred to as "Confidential
Information"). Executive will at all times regard and preserve as confidential
such Confidential Information obtained by Executive from whatever source and
will not, either during his employment with the Company or thereafter, publish
or disclose any part of such Confidential Information in any manner at any time,
or use the same except on behalf of the Company, without the prior written
consent of the Company. Notwithstanding the foregoing sentence, disclosure of
Confidential Information shall not be precluded if such information (i) is now,
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or hereafter becomes, through no act or failure to act on the part of the
Executive, generally known or available, or (ii) is required to be disclosed by
law.
8.2 While employed by the Company and for one (1) year thereafter,
Executive agrees that, in order to protect the Company's confidential and
proprietary information from unauthorized use, Executive will not, either
directly or through others, solicit or attempt to solicit (i) any employee,
consultant or independent contractor of the Company to terminate his or her
relationship with the Company in order to become an employee, consultant or
independent contractor to or for any other person or business entity; or (ii)
the business of any customer, vendor or distributor of the Company which, at the
time of termination or one (1) year immediately prior thereto, was listed on the
Company's customer, vendor or distributor list.
9. SUCCESSORS. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
10. ASSIGNMENT AND BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Executive and Executive's heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of
the unique and personal nature of Executive's duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assignable by Executive. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors, assigns and legal
representatives.
11. NOTICES. All notices or demands of any kind required or permitted to be
given by the Company or Executive under this Agreement shall be given in writing
and shall be personally delivered (and receipted for) or mailed by certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: Oregon Baking Company
dba Xxxxxx Baking
0000 XX Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
With a copy to: Xxxxxxx X. XxXxxxxxx, Esq.
Xxxxxx Xxxx LLP
1600 Pioneer Tower
000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
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If to Executive: Xxx Xxxxxxxxx
0000 XX 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either party may change its address for notices by giving notice to the other
Party in the manner specified in this Section.
12. CHOICE OF LAW; VENUE. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Oregon without regard to the conflict
of laws provisions thereof. If any suit or action is filed by any party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, jurisdiction and venue shall be in the federal or state courts
located in Multnomah County, Oregon.
13. INTEGRATION. This Agreement contains the complete, final and exclusive
agreement of the Parties relating to the subject matter of this Agreement, and
supersedes all prior oral and written employment agreements or arrangements
between the Parties.
14. AMENDMENT. This Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
15. WAIVER. No term, covenant or condition of this Agreement or any breach
thereof shall be deemed waived, except with the written consent of the Party
against whom the waiver is claimed, and any waiver of any such terms, covenant,
condition or breach shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.
16. SEVERABILITY. The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the Parties' intention with respect to the
invalid or unenforceable term or provision.
17. HEADINGS; CONSTRUCTION. The headings set forth in this Agreement are for
convenience of reference only and shall not be used in interpreting this
Agreement. The Parties acknowledge that each Party and its counsel has reviewed
and revised, or had an opportunity to review and revise, this Agreement, and the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
18. REPRESENTATIONS AND WARRANTIES. Executive represents and warrants that, to
the best of Executive's knowledge, he is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the terms
and covenants contained in this Agreement, and that his execution and
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performance of this Agreement will not violate or breach any other agreements
between Executive and any other person or entity.
19. ATTORNEY FEES. If any suit or action is filed by any Party to enforce this
Agreement or otherwise with respect to the subject matter of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney fees incurred
in preparation or in prosecution or defense of such suit or action as fixed by
the trial court, and if any appeal is taken from the decision of the trial
court, reasonable attorney fees as fixed by the appellate court.
20. COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
THE COMPANY: EXECUTIVE:
OREGON BAKING COMPANY
dba XXXXXX BAKING
/s/ Xxxxxx Xxxxxxxxxx /s/ Xxx Xxxxxxxxx
------------------------------------- -----------------------------------
By: Xxxxxx Xxxxxxxxxx Xxx Xxxxxxxxx
Title: Executive Vice President
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