EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into
effective as of the 10th day of April, 1997 ("Effective Date"), by and between
XXXXX BROTHERS, INC. ("Company"), a Delaware corporation, and XXXXXX X. XXXXXX
("Employee"), a married man.
In consideration of the mutual promises and covenants contained herein,
and other good and valuable consideration, the receipt of which is acknowledged,
Company and Employee agree as provided in this Agreement.
1. Employment. Company hereby employs Employee, and Employee accepts
employment by Company, upon the terms and conditions contained in this
Agreement.
2. Term. Employee's employment by Company shall commence on April 10,
1997, and shall continue until either Company or Employee gives to the other
party written notice of termination. Employee shall be an employee at will and
if Employee's employment is terminated, Employee's status as officer of Company
shall also be terminated. Either Company or Employee may terminate Employee's
employment by Company with or without cause upon written notice of termination
to the other party.
3. Title. During the period of Employee's employment by Company,
Employee shall be Vice President, Chief Financial Officer, Secretary and
Treasurer of Company and shall have all rights, powers and authority inherent in
such positions including, without limitation, the authority to direct and
monitor the day-to-day financial operations and status of Company, subject at
all times, to overriding Board of Directors' ("Board") authority and/or policy.
4. Compensation. During the initial year of Employee's employment by
Company, Employee shall receive from Company an annual salary of $105,000.00,
which shall be payable proportionately on Company's regular payroll payment
dates for its employees. Employee's annual salary shall be subject to change at
the discretion of Company's compensation committee.
5. Bonuses. During and for the period of Employee's employment by
Company, Employee shall receive such bonuses, whether incentive, merit or
otherwise and whether cash, stock or otherwise, as Company's compensation
committee shall determine from time to time. Although Employee's first-year
bonus is yet to be determined by Company's compensation committee, Employee
acknowledges that, based upon, and subject to, Employee's and Company's
performance, a target amount of thirty percent (30%) of base salary is
reasonable and such bonus could be up to forty-five percent (45%) of base
salary.
6. Fringe Benefits/Vacation. During the period of Employee's employment
by Company, Employee shall be entitled to participate in all of Company's
qualified retirement plans and welfare benefit plans (e.g., group health
insurance) on the same basis as Company's other employees. In addition, during
the period of Employee's employment by Company, Employee shall be entitled to
participate in all non-qualified deferred compensation and similar compensation,
bonus and stock plans offered, sponsored or established by Company on
substantially the same or a more favorable basis as any other employee of
Company.
Employee shall be entitled to three weeks vacation (prorated for part
years) during each year of his employment with Company.
7. Telephone and Credit Card. During the period of Employee's
employment by Company, Company shall furnish to Employee the following:
(a) Company shall furnish to Employee a mobile or cellular
telephone for Employee's use and shall pay all charges in connection therewith
(except Employee shall reimburse Company for the charges each month that are in
excess of $200 of charges in such month which are not accounted for by Employee
as charges for the purposes of Company). The telephone to be furnished to
Employee shall be agreed upon by Company and Employee from time to time.
(b) Company shall furnish to Employee a Company credit card
for Employee to use solely for purposes of Company.
8. Options.
Company hereby grants to Employee the right and option to
purchase 125,000 shares of Company's $0.01 par value voting common stock
("Common Stock"), in accordance with Company's 1995 Stock Option Plan ("Plan"),
at a price per share equal to the average closing bid price per share of
Company's stock for the five (5) consecutive day trading period ending on the
Effective Date hereof. These options will vest in equal 41,667 (41,666 shares in
the final year) share increments on the first, second and third anniversaries of
the Effective Date. Employee acknowledges receipt of a copy of the Plan and
agrees to the terms set forth therein. Employee further recognizes that the Plan
is subject to change from time to time by the Board of Directors of Company. All
of the terms and conditions of the options described herein shall otherwise be
governed by the terms of the Plan including, without limitation, exercise dates
and times, payment of option prices, revisions of the Options, expiration and
the like, all of the terms and conditions of which Plan are incorporated by
reference into this portion of this Agreement as if fully rewritten herein.
Notwithstanding the foregoing, all of the options granted to Employee hereunder
shall immediately, and without further action of
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any party, vest upon a "change of control" of Company. When used herein, the
term "change of control" shall mean the change of hands, within any consecutive
one-month period, of more than fifty-one percent (51%) of the voting stock of
the Company, with the concomitant result that the new owner or owners of such
stock exercise their voting rights to "control" the identities of the members of
the Board, as the term "control" is defined, or to which reference is made, in
the regulations promulgated under the Securities Exchange Act of 1934.
9. Confidentiality.
(a) During the period of Employee's employment by Company and
for a one year period thereafter, Employee shall hold in confidence and shall
not disclose or publish, except in the performance of his duties under this
Agreement, any Confidential Information (as defined below) that is presented or
disclosed to him in connection with his employment by Company.
(b) Subject to the provisions of Section 9(c) below, for
purposes of this Agreement the term "Confidential Information" shall mean
information or material that is proprietary to and owned by Company. Such
Confidential Information shall include, without limitation, Company's recipes
for specialty potato chips, manufacturing processes, customer lists, supplier
lists and pricing information.
(c) Notwithstanding the foregoing, the term Confidential
Information shall not include any information or material that:
(i) is in, or has passed into, the public domain;
(ii) is lawfully received by Employee from a third party;
(iii) is required to be disclosed by Employee by law or
pursuant to an order determination issued by a court or any federal, state or
municipal regulatory or administrative agency; or
(iv) was in the possession of, or known by, Employee prior to
his Employment by Company.
(d) Employee acknowledges that the Confidential Information of
Company is unique in character and that Company would not have an adequate
remedy at law for a material breach or threatened material breach by Employee of
his covenants under this Section 9. Employee therefor agrees that, in the event
of any such material breach or threat thereof, Company may obtain a temporary
and/or permanent injunction or restraining order to enjoin Employee from such
material breach or threat thereof, in addition to any other rights or remedies
available to Company at law or in equity.
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(e) Notwithstanding the foregoing, Employee may disclose
Confidential Information to his attorneys and other advisors on a need to know
basis provided the recipient is directed and required to maintain the disclosed
Confidential Information in confidence.
10. Noncompete. During the period of Employee's employment by Company,
Employee shall not, directly or indirectly, whether as principal, consultant,
employee, agent, officer, director, trustee or otherwise, engage in the business
of manufacturing specialty potato chips, salted snack foods or popcorn or engage
in the business of distributing specialty potato chips, salted snack foods or
popcorn. In addition, Employee shall not, for a period of one year beginning on
the date of termination of his employment, directly or indirectly, whether as
principal, consultant, employee, agent, officer, director, trustee or otherwise,
engage in the United States in the business of manufacturing specialty potato
chips, salted snack foods or popcorn or engage in the United States in the
business of distributing specialty potato chips, salted snack foods or popcorn.
Employee acknowledges that the foregoing limitations are minimum limitations
which are necessary to protect the legitimate interests of Company because of
Employee's sensitive executive position with Company. Therefore, if a breach of
the foregoing shall occur, in addition to any action for damages which Company
may have, Company shall have the right to obtain an injunction as a matter of
right prohibiting Employee's competition in violation of the foregoing. In the
event that the time period of non-competition is deemed to be unreasonable,
Employee acknowledges that 11 months shall be deemed reasonable. In the event 11
months is deemed unreasonable, then 10 months is deemed reasonable, and so on,
until the foregoing covenant is enforceable to the fullest extent permitted by
law. Similarly, in the event the entire United States is deemed unreasonable,
states shall be eliminated one by one beginning with Maine, continuing down the
east coast of the United States and in roughly in north to south linear fashion
across the United States until the geographical limit set forth above is deemed
reasonable to the fullest extent permitted by law.
11. Severance. Although Employee is an employee at will, and Employee's
status as employee and officer of Company may be terminated at any time for any
reason or for no reason at all, Company agrees that, if Employee is terminated
by Company (as opposed to Employee resigning) without "cause" (to which
reference is made below), Employee shall be entitled to receive the greater of
the then-common Company policy compensation as regards severance pay for
individuals employed by Company in similar positions, if any, or four months'
salary ("Severance Compensation"), which Severance Compensation shall be paid as
regular compensation would be paid over said four-month period after Employee's
employment is terminated. Employee shall further be entitled to retain all
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vested options and Employer shall pay reasonable (in Employer's reasonable
determination) out-placement fees (not to exceed the greater of the then-common
Company policy as regards payment of out-placement expenses upon termination for
individuals previously employed by Company in similar positions or $5,000.00)
regarding Employee's future employment during the four month period following
the termination. Employee's right to receive such Severance Compensation shall
be conditioned upon Employee executing such documents (including reasonable
mutual releases which also must be executed by Employee's spouse, if any) in
such forms as may be prescribed by Company from time to time.
Employee acknowledges if Employee's employment is terminated by Company
for "cause," Employee shall be due no Severance Compensation or out-placement
assistance and may further be liable to Company for damages caused by the
existence of such cause, to the extent permitted by law and this Agreement. When
used herein, the term "cause" shall mean and refer to any of the following:
(i) Employee's continued insubordination or failure to follow
Company directives after notice from Company or its Board;
(ii) Employee conducting himself in a manner which is not
reasonably calculated to be in the best interest of Company or which brings
disrepute or disdain upon Company and/or its reputation and/or products, after
Employee has received notice from Company or the Board of such conduct and has
continued to persist in such conduct;
(iii) Any acts of gross negligence, willful malfeasance,
theft, fraud or dishonesty of Employee or the bankruptcy or insolvency of
Employee;
(iv) The death or disability of Employee, Employee
acknowledging that such events are covered by Company's general benefit package;
or
(v) Employee's breach of any other term of this Agreement,
which breach persists after ten (10) days written notice to Employee of such
breach.
12. Additional Provisions.
(a) This Agreement shall not be assigned by either Company or
Employee without the other party's prior written consent; otherwise, this
Agreement shall be binding upon, and shall inure to the benefit of, the heirs,
personal representatives, successors and assigns of Company and Employee
respectively.
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(b) This Agreement and the rights and obligations of Company
and Employee shall be governed by, and shall be construed in accordance with,
the laws of the State of Arizona without the application of any laws of
conflicts of laws that would require or permit the application of the laws of
any other jurisdiction.
(c) Time is of the essence of this Agreement and each
provision hereof.
(d) This Agreement sets forth the entire understanding of
Company and Employee with respect to the matters set forth herein and cannot be
amended or modified except by an instrument in writing signed by the party
against whom enforcement is sought.
(e) This Agreement is the result of negotiations between
Company and Employee, and Company and Employee hereby waive the application of
any rule of law that otherwise would be applicable in connection with the
interpretation and construction of this Agreement that ambiguous or conflicting
terms or provisions are to be interpreted or construed against the party who (or
whose attorney) prepared the executed Agreement or any earlier draft of the
same.
(f) If any provision or any portion of any provision of this
Agreement shall be deemed to be invalid, illegal or unenforceable, the same
shall not alter the remaining portion of such provision or any other provision
of this Agreement, as each provision of this Agreement and portion thereof shall
be deemed severable.
(g) Except as may be otherwise required by law, any notice
required or permitted to be given under this Agreement shall be given in writing
and shall be given either by (i) personal delivery, or (ii) overnight courier
service, or (iii) facsimile transmission, or (iv) United States certified or
registered mail, in each case with postage prepaid to the following address or
to such other address as Company or Employee may designate by notice given to
the other party pursuant to this section. Notice shall be effective on (v) the
day notice is personally delivered, if notice is given by personal delivery, or
(vi) the first business day after the date of delivery to the overnight delivery
service, if notice is given by such a delivery service, (vii) the day notice is
received, if notice is given by facsimile, or (viii) the fourth business day
after notice is deposited in the United States mail, if notice is given by
United States certified or registered mail.
Company: Xxxxx Brothers, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000-0000
Fax No. (000) 000-0000
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Employee: Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxxx.
Xxxxxxx, XX 00000
Fax No. (000) 000-0000
(h) If any action, suit or proceeding is brought in connection
with this Agreement, or on account of any breach of this Agreement, or to
enforce or interpret any of the terms, covenants and conditions of this
Agreement, the prevailing party shall be entitled to recover from the other
party or parties, the prevailing party's reasonable attorneys' fees and costs,
and the amount thereof shall be determined by the court (not by a jury) or the
arbitrator and shall be made a part of any judgment or award rendered. All
actions arising hereunder or out of Employee's employment of Company shall be
adjudicated in the Superior Court of the State of Arizona in and for the County
of Maricopa, Phoenix, Arizona, in which Court the parties irrevocably and
unconditionally stipulate jurisdiction and venue. No action shall be commenced
elsewhere.
XXXXX BROTHERS, INC.
By /s/ Xxxx X. Xxxxx
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Its President/CEO
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[Company]
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
[Employee]
