EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT is entered into as of February 19, 2009 (the “Effective Date”) by and among
XXXXX XXXXX (“Executive”), ORGANIC TO GO
FOOD CORPORATION, a Delaware corporation (“Corporation”), and ORGANIC TO
GO, INC., a Delaware corporation and a wholly-owned subsidiary of the
Corporation (“Subsidiary” and collectively
with Corporation, the “Company”).
In
consideration of the mutual covenants in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Duties and Scope of
Employment.
(a) Position. Corporation
and Subsidiary shall each employ Executive as its President and Chief Executive
Officer for the term of his employment under this Agreement (“Employment”). Executive
shall report to the Boards of Directors (the “Board”) of Corporation and
Subsidiary.
(b) Obligations. Executive
shall devote his full business efforts and time to the Company and shall not
render services to any other person or entity without the express prior approval
of the Board. Executive represents and warrants to the Company that
he is under no contractual obligations or commitments inconsistent with his
obligations under this Agreement.
2. Cash and Incentive
Compensation.
(a) Salary. The Company
shall pay Executive as compensation for his services a base salary at an annual
rate of $250,000, subject to annual increases by the Board. Such
salary shall be payable in accordance with the Company’s standard payroll
procedures. The annual compensation specified in this subsection (a)
is referred to in this Agreement as “Base
Compensation.”
(b) Incentive
Bonuses. Executive shall be eligible for a cash bonus (the
“Incentive Bonus”) of
35% of his Base Compensation per year. The Board may, in its
discretion, pay additional bonuses. 50% of the Incentive Bonus will be based on
achievement by Executive of performance goals (“Executive Performance Goals”),
and 50% of the Incentive Bonus will be based on achievement of performance goals
by the Company (“Company
Performance Goals”); provided that the Executive Performance Goals for
2009 shall be deemed to be fully met, and the Company shall pay Executive the
full bonus payable for achievement of the Executive Performance Goals for 2009,
when the Corporation de-registers its Common Stock under the Securities Exchange
Act of 1934 and terminates the quotation of its Common Stock on the OTC Bulletin
Board. Except as specifically described in this paragraph, all goals
described in this paragraph shall be mutually agreed upon by Executive and the
Board within sixty (60) days after the Effective Date (with respect to 2009) and
by December 31, 2009 and December 31 of each year thereafter (with respect to
2010 and each succeeding year).
(c) Stock Options.
(i) New Stock
Options. Promptly after the closing date under the Note
Purchase Agreement dated as of February 11, 2009 between Corporation and
X.Xxxxxx L.P. (the “Note
Purchase Agreement”), Corporation shall issue to Executive options to
purchase Seven Million Nine Hundred Ninety Thousand Seven Hundred Fifty-Six
(7,990,756) shares of Corporation’s Common Stock pursuant to its stock option
plan (the “First Executive
Stock Options”), representing 4.5% of Corporation’s capitalization,
calculated on a fully-diluted basis, for $0.14 per share. In
addition, in the event that either the $5,000,000.00 Secured Convertible
Promissory Note dated February 19, 2009 will be converted at a future date into
shares of the Corporation’s Common Stock (the “Conversion Stock”) or there
shall be an equity investment in the Company in an amount of at least $5 million
(in one transaction or a series of transactions) on or before March 17, 2010,
then, promptly after such conversion or such equity investment, the Corporation
shall issue to Executive additional options to purchase One Million Six Hundred
Eighty Two Thousand Eight Hundred Seventy-Two (1,682,872) shares of
Corporation’s Common Stock pursuant to its stock option plan (the “Second Executive Stock
Options”; and, together with the First Executive Stock Options, the
“New Stock Options”),
representing 4.5% of the Conversion Stock, and having an exercise price equal to
the fair market value of the Corporation’s Common Stock as of such
time.
(ii) Vesting. Twenty
percent (20%) of the New Stock Options shall be vested and exercisable upon the
issuance of the New Stock Options. The balance of the New Stock
Options shall vest and become exercisable in equal annual installments over four
(4) years, commencing on the first anniversary of the Effective Date (in the
case of the First Executive Stock Options) and commencing on the first
anniversary of the issuance date (in the case of the Second Executive Stock
Options) (in all cases, subject to acceleration in accordance with the stock
option agreement described below).
(iii) Form of Stock Option
Agreement. Except as described in this Section, the New Stock
Options shall be represented by a Notice of Stock Option Grant and Stock Option
Agreement in the same form as the Notice of Stock Option Grant and Stock Option
Agreement between the Corporation and Executive dated as of March 11,
2008.
3. Executive
Benefits. During his employment, (i) Executive shall be
entitled to 15 working days of vacation for each 12 months of employment, to be
scheduled in advance; (ii) the Company shall pay the full cost of health, dental
and vision coverage for Executive and his family (excluding any copayments),
subject in each case to the generally applicable terms and conditions of the
plan in question and to the determinations of any person or committee
administering such plan (“Health Benefits”); and (iii)
the Company will purchase and pay the premiums for an insurance policy or
policies in an aggregate amount of not less than $4,000,000 insuring the life of
Executive, the beneficiaries of which shall be selected by
Executive. Executive shall be paid for any unused
vacation. Executive shall be paid a car allowance of $750 per
month.
4. Business
Expenses. Executive shall be authorized to incur necessary and
reasonable travel, entertainment and other business expenses in connection with
his duties. The Company shall reimburse Executive for all such
expenses upon presentation of appropriate supporting documentation.
5. Term of
Employment.
(a) Basic Rule. The
Company shall employ Executive during the period commencing on the Effective
Date and ending on the third anniversary of the Effective Date (the “Expiration Date”), provided
that (i) Executive’s employment may be terminated at any time as described
below; and (ii) after the Expiration Date, this Agreement shall automatically
renew for successive one (1) year terms unless either party gives the other
written notice of its election not to renew this Agreement not less than ninety
(90) days before the Expiration Date or any anniversary of the Expiration
Date.
(b) Involuntary Termination, Resignation
or Death. The Company may terminate Executive with or without Cause (as
defined below). Executive may resign at any time and for any reason
(or no reason) effective upon delivery of written notice of
termination. Executive’s Employment shall terminate automatically in
the event of his death.
(c) Rights Upon
Termination. Except as expressly provided in Section 6, upon
the termination of Executive’s Employment, he shall only be entitled to the
compensation, benefits and reimbursements described in Sections 2, 3 and 4 for
the period preceding the effective date of the termination.
(d) Termination of
Agreement. This Agreement shall terminate when all obligations
of the parties hereunder have been satisfied. The termination of this
Agreement shall not limit or otherwise affect any of Executive’s obligations
under Sections 7 and 8.
6. Benefits Upon Resignation for Good
Reason, Termination for Reasons Other than Cause, or Permanent
Disability.
(a) Eligibility for Termination
Benefits. This Section 6 shall apply if, during the term of
this Agreement, the Company terminates Executive’s Employment because of
Executive’s Permanent Disability (as defined below), for any other reason other
than Cause (as defined below), or if Executive terminates his Employment for
Good Reason.
(b) Severance Payments and
Benefits. If this Section 6 applies, then the Company shall
(i) continue to provide and pay for Health Benefits to Executive and his family
for the Continuation Period (as defined below), (ii) immediately upon such
termination, pay Executive a lump sum equal to his monthly compensation at the
then-applicable monthly Base Compensation rate multiplied by the number of
months in the Continuation Period, and (iii) except in the case of Executive’s
Permanent Disability, during the Continuation Period, provide Executive with
outplacement services and assistance customarily provided to former chief
executive officers of corporations whose shares are publicly traded, provided
that the cost of such outplacement services and assistance shall not exceed
$20,000. The above described payments and actions shall be made or
taken in exchange for a general release of all claims Executive and his
successors may have against the Company in a form acceptable to the Company
which Executive shall execute and deliver before any payment is made or benefit
provided pursuant to this Section 6.
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(c) Definition of
“Cause.” For all purposes under this Agreement, “Cause” shall
mean:
(i) An
unauthorized use or disclosure by Executive of the Company’s confidential
information or trade secrets, which use or disclosure causes material harm to
the Company;
(ii) Executive’s
conviction of, or plea of “guilty” or “no contest” to, a felony under the laws
of the United States or any state thereof; or
(iii) A
continued failure by Executive to perform assigned duties, comply with the
Company’s written policies or rules, or comply with any written agreement
between the Company and the Executive, which continues for more than thirty (30)
days after receiving written notification of such failure from the
Board.
(d) Definition of “Permanent
Disability.” For all purposes under this Agreement, “Permanent Disability” shall
mean that Executive, when notice of termination is given, has failed to perform
his duties under this Agreement for not less than 120 days (whether or not
consecutive) in any 365-day period as a result of his incapacity due to physical
or mental illness or injury.
(e) Definition of “Good
Reason.” For all purposes under this Agreement, “Good Reason” shall mean that
Executive voluntarily terminates his Employment after any of the following
occur:
(i) The
assignment to Executive of any duties or responsibilities which result in any
diminution or adverse change in Executive's position, status or circumstances of
employment;
(ii) Any
failure by the Company to continue in effect any benefit plan or arrangement,
including incentive plans or plans to receive securities of the Company, in
which Executive is participating, or the taking of any action by the Company
which would adversely affect Executive's participation in or reduce Executive's
benefits under such plans or arrangements;
(iii) a
relocation of Executive or the Company's principal executive offices to a
location more than 90 miles from the current location of the Company’s principal
executive offices;
(iv) any
breach by the Company of any provision of this Agreement; or
(v) any
failure by the Company to obtain the assumption of this agreement by any
successor or assign of the Company.
(f) Definition of “Continuation
Period.” For all purposes under this Agreement “Continuation Period” shall
mean a period commencing on the date of the termination of Employment and ending
on the date which is twelve (12) months following the termination of
Employment.
7. Non-Competition and
Non-Sollicitation.
(a) Non-Competition.
(i) While
employed by the Company and for three (3) years after the termination of his
Employment for any reason, Executive shall not, directly or indirectly,
throughout the United States, (i) engage primarily in the business of selling
prepared food either through cafes or corporate catering operations (the “Business”); (ii) render any
services to any person or entity engaged in activities which compete with the
Business; or (iii) become interested in any entity which competes with the
Business in any capacity, including, without limitation, as an individual,
partner, shareholder, officer, director, member, principal, employee, agent,
trustee, consultant, creditor or financier.
(ii) Executive
shall not, directly or indirectly, assist or encourage any other person in
carrying out, directly or indirectly, any activity that would be prohibited by
the above provisions of this Section 7 if such activity were carried out by
Executive, either directly or indirectly, and in particular Executive shall not,
directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity.
(iii) Ownership
by Executive, as a passive investment, of less than 1% of the outstanding shares
of capital stock of any Company listed on a national securities exchange or
publicly traded in the over-the-counter market shall not constitute a breach of
this Section 7(a).
(b) Non-Solicitation. While
employed by the Company and for the Non-Solicitation Period (as defined below),
Executive shall not, either directly or indirectly, on his own behalf or in the
service or on behalf of others (i) solicit or divert, or attempt to solicit or
divert (A) any person then employed by the Company or (B) any person then
serving as a sales representative of, or a consultant to the Company, or (ii)
solicit, divert or do business with, or attempt to solicit, divert or do
business with, any customer of or supplier to the Company. For
purposes of this Agreement, the “Non-Solicitation Period” shall
mean the three (3) year period immediately after the termination of Executive’s
Employment by Executive or by the Company.
8. Nondisclosure.
Executive
has previously entered into an Employee Proprietary Information and Inventions
Assignment Agreement with the Company (the “Proprietary Information
Agreement”), which is incorporated herein by reference.
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9. Successors.
(a) Company’s
Successors. This Agreement shall be binding upon any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company’s business and/or assets. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets which becomes bound by this Agreement.
(b) Executive’s
Successors. This Agreement and all rights of Executive
hereunder shall inure to the benefit of, and be enforceable by, Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
10. Miscellaneous
Provisions.
(a) Notice. Notices and
all other communications contemplated by this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or when mailed
by U.S. registered mail, return receipt requested and postage
prepaid. In the case of Executive, mailed notices shall be addressed
to him at the home address that he most recently communicated to the Company in
writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
(b) Modifications and
Waivers. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer of the Company
or other person designated by the Board. No waiver by either party of
any breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision at another time.
(c) Whole
Agreement. This Agreement supersedes any prior agreement
between Executive and the Company in its entirety. No other
agreements, representations or understandings (whether oral or written and
whether express or implied) which are not expressly set forth in this Agreement
have been made or entered into by either party with respect to the subject
matter hereof. This Agreement and the Proprietary Information
Agreement contain the entire understanding of the parties with respect to their
subject matter.
(d) Withholding
Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes and other charges required to be withheld by
law.
(e) Choice of Law. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Washington.
(f) Severability. The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled in Seattle, Washington, by arbitration in accordance
with the JAMS Employment Arbitration Rules and Procedures. The
decision of the arbitrator shall be final and binding on the parties, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator shall be empowered to
enter an equitable decree mandating specific enforcement of the terms of this
Agreement. The Company and Executive shall share equally all fees and
expenses of the arbitrator; provided, however, that arbitrator shall award to
the prevailing party all fees and expenses of the arbitrator and all of the
legal fees and out-of-pocket expenses.
(h) No Assignment. This
Agreement and all rights and obligations of Executive hereunder are personal to
Executive and may not be transferred or assigned by Executive at any
time. The Company may assign its rights under this Agreement to any
entity that assumes the Company’s obligations hereunder in connection with any
sale or transfer of all or a substantial portion of the Company’s assets to such
entity.
(i) Counterparts. This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(j) Joint and Several
Obligation. All obligations of Company under this Agreement
shall be the joint and several obligations of Corporation and
Subsidiary.
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of
the Company by its duly authorized officer, as of the day and year first above
written.
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ORGANIC
TO GO FOOD CORPORATION
a
Delaware corporation
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By:___________________________________
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________________________________
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XXXXX
XXXXX
“Executive”
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ORGANIC
TO GO, INC.
a
Delaware corporation
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By:___________________________________
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