SILVER STAR FOODS, INC.
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of this 15TH day of September,
1998 by and between SILVER STAR FOODS, INC., a New York corporation, having an
office at 0000 Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000 (hereinafter referred
to as "Employer") and XXXXXXX XXXXXX, an individual residing at 0000 Xxxxxx X,
Xxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as President; and
WHEREAS, Employee is willing to be employed as the President in the
manner provided for herein, and to perform the duties of the President upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of the President. Employer hereby employs Employee as
---------------------------
President.
2. Term.
----
a. Subject to Section 10 below and further to Section 2(b) below, the
term of this Agreement shall commence upon the execution hereof(the
"Commencement Date") and expire three years from such date. Each 12 month period
from the Commencement Date forward during the term hereof shall be referred to
as an "Annual Period." During the term hereof, Employee shall devote
substantially all of his business time and efforts to Employer and its
subsidiaries and affiliates.
b. Subject to Section 10 below, unless the Board of Directors of the
Company (the "Board") of Employer shall determine to the contrary and shall so
notify Employee in writing on or before the end of any Annual Period or unless
the Employee notifies Employer in writing on or before the end of any Annual
Period of his desire not to renew this Agreement, then at the end of each Annual
Period, the term of this Agreement shall be automatically extended for one (1)
additional Annual Period to be added at the end of the then current term of this
Agreement.
3. Duties. The Employee shall perform those functions generally
------
performed by persons of such title and position, shall attend all meetings of
the stockholders and the Board, shall perform any and all related duties and
shall have any and all powers as may be prescribed by resolution of the Board,
and shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly and solely to the Board.
4. Compensation.
------------
a. (i) Employee shall be paid a minimum of $104,000 during the
initial Annual Period. Thereafter, Employee shall receive annual increases equal
to the greater of (i) Ten (10%) percent or (ii) the cost of living adjustment
recognized in the area where the Employee resides. Employee shall be paid
periodically in accordance with the policies of the Employer during the term of
this Agreement, but not less than monthly.
(ii) Employee is eligible for an annual bonus, if any, which
will be determined and paid in accordance with policies set from time to time by
the Board.
b. Employer shall include Employee in its health insurance program
available to Employer's executive officers and shall pay 100% of the premiums
for such program.
c. Employee shall have the right to participate in any other employee
benefit plans established by Employer.
d. Employee shall receive from Employer Options to purchase up to 10%
of the outstanding shares of Employer's common stock, exercisable at the fair
market price of Employer's common stock as listed on Nasdaq SmallCap at the
close of business on the day immediately preceding the date of the option
agreement. The terms of the option agreement will include, in part, that (i) if
Employee's employment is terminated for any reason other than cause (as
discussed in Section 9(a)(i)), the options will vest immediately and will be
exercisable for one year from the date of termination, (ii) if, within one year
of the date of the option agreement, the market price of Employer's common stock
falls below the exercise price in the option agreement, Employer will amend the
terms of the option agreement to lower the exercise price to the lower market
price, and (iii) upon written request of Employee, Employer agrees to use its
best efforts to file with the Securities and Exchange Commission, on or before
the first date on which any of said options become exercisable, a registration
statement on Form S-8 (or any replacement therefor) to register under the
Securities Act of 1933, as amended, all shares of Employer's common stock
underlying said options, including those not yet exercisable.
5. Expenses. Employee shall submit to Employer reasonably detailed
--------
receipts with respect thereto which substantiate the expenses. Employer shall
also provide Employee with a company car for Employee's use in furthering the
business of Employer of the kind and type similar to that previously provided to
Employee. Employee shall be allowed an allowance of $750.00 per month for such
car.
6. Vacation. Employee shall be entitled to receive four (4) weeks paid
--------
vacation time after each year of employment upon dates agreed upon by Employer.
Upon separation of employment, for any reason, vacation time accrued and not
used shall be paid at the salary rate of Employee in effect at the time of
employment separation.
7. Secrecy. At no time shall Employee disclose to anyone any
-------
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary business
operations of Employer or (b) any trade secrets, new product developments,
patents, programs or programming, especially unique processes or methods.
8. Covenant Not to Compete. Employee will not, at any time, anywhere in
-----------------------
the areas where Employer does business during the term of this Agreement, and
for one (1) year thereafter, either directly or indirectly, engage in, with or
for any enterprise, institution, whether or not for profit, business, or
company, competitive with the business (as identified herein) of Employer as
such business may be conducted on the date thereof, as a creditor, guarantor, or
financial backer, stockholder, director, officer, consultant, advisor, employee,
member, inventor, producer, director, or otherwise of or through any
corporation, partnership, association, sole proprietorship or other entity;
provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange or through
the Nasdaq Stock Market.
9. Termination.
-----------
a. Termination by Employer
(i) Employer may terminate this Agreement upon written notice
for Cause. For purposes hereof, "Cause" shall mean (A) engaging by the Employee
in conduct that constitutes activity in competition with Employer; (B) the
conviction of Employee for the commission of a felony against the Employer;
and/or (C) the habitual abuse of alcohol or controlled substances.
Notwithstanding anything to the contrary in this Section 9(a)(i), Employer may
not terminate Employee's employment under this Agreement for Cause unless
Employee shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such acts or
omissions continue after Employee shall have had a reasonable opportunity (at
least 10 days from the date Employee receives the notice from the Board) to
correct the acts or omissions so complained of. In no event shall alleged
incompetence of Employee in the performance of Employee's duties be deemed
grounds for termination for Cause.
(ii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and the pro-rata amount payable under
Section 4(e) for the period prior to Employee's death and any other amount to
which Employee was entitled of the time of his death.
b. Termination by Employee
(i) Employee shall have the right to terminate his employment
under this Agreement upon sixty (60) days' notice to Employer
10. Consequences of Breach by Employer;
Employment Termination
----------------------
a. If this Agreement is terminated pursuant to Section 9(b)(i)
hereof, or if Employer shall terminate Employee's employment under this
Agreement in any way that is a breach of this Agreement by Employer, the
following shall apply:
(i) Employee shall be entitled to payment of any
previously declared bonus and additional compensation as provided in Section
4(a) and (b) above.
b. In the event that Employee's employment is terminated for
any of the following (i) for cause as set forth in Section 9(b)(i) of this
Agreement, (ii) the expiration of the term of this Agreement, or (iii)
resignation by the Employee, then the provisions of Section 8 shall apply to
Employee.
11. Remedies
--------
Employer recognizes that because of Employee's special talents, stature
and opportunities in the frozen food industry, in the event of termination by
Employer hereunder (except under Section 9(a)(i) or (ii), or in the event of
termination by Employee under Section 9(b)(i) before the end of the agreed term,
the Employer acknowledges and agrees that the provisions of this Agreement
regarding further payments of base salary, bonuses and the exercisability of
Rights constitute fair and reasonable provisions for the consequences of such
termination, do not constitute a penalty, and such payments and benefits shall
not be limited or reduced by amounts' Employee might earn or be able to earn
from any other employment or ventures during the remainder of the agreed term of
this Agreement.
12. Excise Tax. In the event that any payment or benefit received or to
----------
be received by Employee in connection with a termination of his employment with
Employer would constitute a "parachute payment" within the meaning of Code
Section 280G or any similar or successor provision to 280G and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.
13. Arbitration. Any controversies between Employer and Employee
-----------
involving the construction or application of any of the terms, provisions or
conditions of this Agreement, save and except for any breaches arising out of
Sections 7 and 8 hereof, shall on the written request of either party served on
the other be submitted to arbitration. Such arbitration shall comply with and be
governed by the rules of the American Arbitration Association. An arbitration
demand must be made within one (1) year of the date on which the party demanding
arbitration first had notice of the existence of the claim to be arbitrated, or
the right to arbitration along with such claim shall be considered to have been
waived. An arbitrator shall be selected according to the procedures of the
American Arbitration Association. The cost of arbitration shall be borne by the
losing party or in such proportions as the arbitrator shall decide. The
arbitrator shall have no authority to add to, subtract from or otherwise modify
the provisions of this Agreement, or to award punitive damages to either party.
14. Attorneys' Fees and Costs. If any action at law or in equity is
-------------------------
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
15. Entire Agreement; Survival. This Agreement contains the entire
--------------------------
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this Agreement
shall not effect the enforceability of any other provision. This Agreement may
not be amended except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as sought. Waiver of
or failure to exercise any rights provided by this Agreement and in any respect
shall not be deemed a waiver of any further or future rights.
b. The provisions of Sections 4, 7, 8, 9(a)(ii), 10, 11, 12,
13, 14, 17, 18, 19 and 20 shall survive the termination of this Agreement.
16. Assignment. This Agreement shall not be assigned to other parties.
----------
17. Governing Law. This Agreement and all the amendments hereof, and
-------------
waivers and consents with respect thereto shall be governed by the internal laws
of the State of New York, without regard to the conflicts of laws principles
thereof.
18. Notices. All notices, responses, demands or other communications
-------
under this Agreement shall be in writing and shall be deemed to have been given
when
a. delivered by hand;
b. sent be telex or telefax, (with receipt confirmed),
provided that a copy is mailed by registered or certified mail, return receipt
requested; or
c. received by the addressee as sent by express delivery
service (receipt requested) in each case to the appropriate addresses, telex
numbers and telefax numbers as the party may designate to itself by notice to
the other parties:
(i) if to the Employer:
SILVER STAR FOODS, INC.
0000 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telefax: (000) 000-0000
Telephone: (000) 000-0000
Xxxxxxx X. Xxxxxx & Associates
0000 Xxxxx 0, Xxxxx X
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telefax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxxxxx Xxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
19. Severability of Agreement. Should any part of this Agreement for
-------------------------
any reason be declared invalid by a court of competent jurisdiction, such
decision shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of
the day and year first above written.
SILVER STAR FOODS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx
Vice President
/s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx
