Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of May 5, 2001between Color Spot Nurseries, Inc.
a Delaware Corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Executive").
This Agreement provides for the employment of Executive as Chief Executive
Officer of the Company upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual undertakings contained herein,
the parties agree as follows:
ARTICLE 1. EMPLOYMENT
1.1 EMPLOYMENT.
The Company agrees to employ Executive, and Executive hereby accepts employment
with the Company, upon the terms and conditions set forth in this Agreement for
the period beginning on May 5, 2001 (the "Effective Date") and ending as
provided in Section 1.5 (the "Employment Period").
1.2 POSITION AND DUTIES
(a) During the Employment Period, Executive shall serve as Chief Executive
Officer of the Company.
(b) Executive shall be responsible for the operation and performance of the
Company and will have the responsibilities and carry out the customary functions
of a Chief Executive Officer. For so long as Executive is the Chief Executive
Officer of the Company.
(c) Executive shall devote his best efforts and his full business time and
attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company and its
Subsidiaries. Executive shall perform his duties and responsibilities to the
best of his abilities in a diligent, trustworthy, businesslike and efficient
manner.
1.3 SALARY, BONUS, OPTIONS AND BENEFITS.
(a) During the Employment Period, Executive's base salary (the "Base Salary")
shall be $275,000 per annum which salary shall be payable in regular
installments in accordance with the Company's general payroll practices. The
Base Salary may be increased annually by the Compensation Committee (the
"Compensation Committee") of the Board in its' discretion.
(b) During the Employment Period, in addition to the Base Salary, Executive
shall be eligible to participate in the Company's bonus program as established
by the Board. The Company's fiscal year ends December 31st. Based upon the plan
levels established for each year, approved by the
Board and achieved by the Company, the bonus level of participation for the
Executive will be a minimum level of 50% of salary with a maximum level payout
of 100% of base salary.
To the extent achieved, such bonus shall be paid following the delivery and
approval of the Company's signed audited financial statements for such year by
the Company's independent accountants.
(c) Executive shall be entitled to participate in the Company's 1997 Stock Plan
(the "Plan"). Executive shall be awarded options under the Plan to purchase
225,000 shares of common stock, par value $.001 per share of the Company, at a
price per share determined by the Board to be fair market value at the date of
such grant (the "Options"). The Options will be evidenced by an option award and
vest 25% annually in arrears over a 4-year period from the date of your
employment, subject to Executive's continued employment with the Company. The
Options will be subject to the Company' s Employee Stockholders Agreement dated
as of July 1, 1998 (the "Stockholders Agreement"). Executive's option award
shall provide for (i) accelerated vesting in the event of a sale of the Company
(as defined in the option award), (ii) the right to exercise the vested portion
of your Option for a 90 day period following termination of your employment
(other than for Cause in which case the Options shall automatically terminate),
and (iii) the right for the Company to repurchase your vested Options at fair
market value (as determined by the Board as of the date of the termination of
the Employment Period) over the exercise price as provided in the Stockholders
Agreement.
(d) During the Employment Period, Executive shall be entitled to participate in
all of the Company's employee benefit programs for which senior executive
employees of the Company and its Subsidiaries are generally eligible, including
4 weeks paid time off per year (which may not be carried forward to subsequent
years). In addition, you shall be entitled to participate in the Company's
relocation benefit program; provided that the benefits with respect to interest,
taxes and insurance premiums set forth in Section 211.2 of the relocation
program shall be increased to 360 days from 30 days.
1.4 TRANSITION LOAN
The Company will loan to Executive $250,000 cash on the Effective Date (the
"Start Date Loan"). At such time as the Employment Period is terminated for any
reason, the Start Date Loan will be deemed to have been repaid at the rate of
$4,166.67 per month (i.e., $50,000 per year) on the last day of each month. The
Executive shall bear any taxes on the amount forgiven. In the event that the
Employment Period is terminated for any reason prior to the fifth anniversary of
the Effective Date, Executive shall be required to repay to the Company by the
60th day after the termination of the Employment Period, $250,000 less the
amount which has been deemed to have been repaid.
1.5 EMPLOYMENT PERIOD OR TERM
(a) The Employment Period shall terminate on the earlier to occur of (i) the
date of Executive's death or Disability (as determined by the Board), (ii) the
date determined by the Board by
resolution of the Board for Cause, (iii) the date determined by the Board by
resolution of the Board without Cause, (iv) or the date of voluntary resignation
by Executive.
(b) If the Employment Period is terminated without Cause, Executive shall be
entitled to continue to receive an amount equal to twelve months of Executive's
then current Base Salary plus benefits plus a pro rata portion of any bonus
payable for the fiscal year in which termination occurs. Executive hereby agrees
that no severance compensation shall be payable in the event Executive's
employment is terminated under Section 1.5(a)(i),(ii), or (iv) and Executive
waives any claim for severance or other compensation. Any amount payable under
this Section 1.5(b) shall be (i) payable in installments in accordance with the
Company's normal payroll practices over the period following the termination of
the Employment Period in which such payments are to be made (with the pro rata
portion of any bonus paid when such bonus would otherwise have been paid). The
payment of any severance compensation under this Section 1.5(b) is conditional
upon Executive entering into the Company's standard form release agreement. For
purposes hereof, Executive shall be deemed to have been terminated without Cause
in the event following a Change of Control, Executive's responsibilities, title
or duties are materially diminished. A Change of Control means the acquisition
of a majority of the outstanding Common Stock of the Company by persons other
than affiliates of Kohlberg & Company, LLC. or bankruptcy of Color Spot
Nurseries, Inc. In the event of a Change of Control the "Executive" is also
eligible for relocation benefits as detailed in Color Spot Nurseries Employee
Relocation Policy (Section 211) to move to the "Executive's" U.S. city of
choice.
(c) Except as expressly set forth in this Section 1.5, all compensation and
other benefits shall cease to accrue upon termination of the Employment Period.
1.6 CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company and its
Subsidiaries that are not generally available to the public other than as a
result of a breach of this Agreement by Executive ("Confidential Information")
are the property of the Company and its Subsidiaries. Executive agrees that he
shall not disclose to any unauthorized person or use for his own account any
Confidential Information without the prior written consent of the Company
unless, and in such case only to the extent that, such matters become generally
known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Notwithstanding the foregoing, in the
event Executive becomes legally compelled to disclose Confidential Information
pursuant to judicial or administrative subpoena or process or other legal
obligation, Executive may make such disclosure only to the extent required, in
the opinion of counsel for Executive, to comply with such subpoena, process or
other obligation. Executive shall, as promptly as possible and in any event
prior to the making of such disclosure, notify the Company of any such subpoena,
process or obligation and shall cooperate with the Company in seeking a
protective order or other means of protecting the confidentiality of the
Confidential Information.
1.7 INVENTIONS AND PATENTS
Executive agrees that all copyrights, works, inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports, and
all similar or related information which relate to the actual or anticipated
business, research and development or existing or anticipated future products or
services of the Company or its Subsidiaries and which are conceived, developed
or made by Executive while employed by the Company ("Work Product") belong to
the Company. Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Company (whether during or after
the Employment Period) to establish and confirm such ownership at the Company's
expense (including, without limitation, assignments, consents, powers of
attorney and other instruments).
1.8 NON-COMPETE; NON-SOLICITATION
(a) Executive acknowledges that in the course of his employment with the Company
he will become familiar with the Company's trade secrets and with other
confidential information concerning the Company and its predecessors and that
his services have been and will be of special, unique and extraordinary value to
the Company. Executive agrees that, in consideration of the payments made to
Executive hereunder, in the event that Executive voluntarily terminates his
employment, for the one year period following such voluntary termination (the
"Non-compete Period"), he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business in which the Company or its Subsidiaries is engaged any where in
the United States. Nothing herein shall prohibit Executive from being a passive
owner of not more than 5% of the outstanding stock of another corporation, so
long as Executive has no active participation in the management or the business
of such corporation.
(b) During the Employment Period and for the one year period thereafter,
Executive shall not directly or indirectly induce or attempt to induce any
officer of the Company or any Subsidiary of the Company to leave the employ of
the Company or such Subsidiary, or in any way interfere with the relationship
between the Company or any such Subsidiary and any employee thereof.
ARTICLE 2. DEFINITIONS
As used in this Agreement, the following terms shall have the definitions set
forth below:
"CAUSE" means (i) a material breach of this Agreement by Executive, (ii)
Executive's willful and repeated failure to comply with the lawful directives of
the Board or supervisory personnel, (iii) gross negligence or willful misconduct
by Executive in the performance of his duties hereunder, or (iv) the commission
by Executive of theft or embezzlement of Company property or any other act
(including but not limited to a felony or a crime involving moral turpitude)
that is injurious in any significant respect to the property, operations,
business or reputation of the Company or its Subsidiaries, as determined in good
faith by the Board.
"DISABILITY" means Executive's inability to substantially perform his normal
duties hereunder for six months or more during any twelve-month period as
determined in good faith by the Board.
"SUBSIDIARY" of an entity shall mean any corporation, limited liability company,
limited partnership or other business organization of which the securities
having a majority of the normal voting power in electing the board of directors,
board of managers, general partner or similar governing body of such entity are,
at the time of determination, owned by such entity directly or indirectly
through one or more Subsidiaries.
ARTICLE 3. GENERAL PROVISIONS
3.1 ENFORCEMENT. If, at the time of enforcement of Sections 1.6, 1.7 or 1.8, a
court holds that the restrictions stated herein are unreasonable under the
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. In the event of a breach or threatened
breach of this Agreement, the Company, its Subsidiaries and their respective
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violation of, the provisions hereof (without posting a bond or other
security).
3.2 SURVIVAL. Sections 1.6, 1.7 and 1.8 shall survive and continue in full force
and effect in accordance with their terms notwithstanding any termination of the
Employment Period.
3.3 NOTICES. All notices or other communications to be given or delivered under
or by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally, one business day following
when sent via a nationally recognized overnight courier, or when sent, when sent
via facsimile confirmed in writing to the recipient. Such notices and other
communications will be sent to the addresses indicated below:
To the Company:
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxxx Hyatt & Xxxxxx, P.C.
000 - 00xx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
To Executive:
To the address on the Company's records or such other address or to the
attention of such other person as the recipient party shall have specified by
prior written notice to the sending party.
3.4 SEVERABILITY Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
3.5 ENTIRE AGREEMENT. This Agreement and those documents expressly referred to
herein embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
3.6 AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive.
3.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California.
3.8 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
3.9 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or of any term or provision hereof.
*****
For Color Spot Nurseries, Inc. The "Executive"
Print Name ____________________________ Print Name____________________
Date __________________________________ Date _________________________
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
Color Spot Nurseries, Inc.
By:
Print Name: ________________________________________________
Print Title: _________________________________________________
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
Color Spot Nurseries, Inc.
By:
Print Name: _______________________________________________
Print Title: ________________________________________________*
