EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of July 31, 2003, effective as of
March 1, 2003, (this "Agreement") by and between Centennial Specialty Foods
Corporation, a Delaware corporation (the "Company"), and J. Xxxxxxx Xxxxxx
("Executive").
RECITALS
In order to induce Executive to serve as the Chief Executive Officer of
the Company and the Company's subsidiary, Xxxxx Foods, Inc., the Company desires
to provide Executive with compensation and other benefits on the terms and
conditions set forth in this Agreement.
Executive is willing to accept such employment and perform services for
the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Position. Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive during the Term (as
defined herein) as its Chief Executive Officer. In his capacity as the
Chief Executive Officer of the Company, Executive shall report to the
Board of Directors of the Company (the "Board") and shall have the powers,
responsibilities and authorities of chief executive officers of
corporations of the size, type and nature of the Company, as it exists
from time to time, and as are assigned by the Board consistent with
Executive's position. In his capacity as Chief Executive Officer of the
Company's subsidiary, Xxxxx Foods, Inc., Executive shall report to the
Board of Directors of Xxxxx Foods and shall have the powers,
responsibilities and authorities of chief executive officers of
corporations of the size, type and nature of Xxxxx Foods, as it exists
from time to time, and as are assigned by the Board of Directors of Xxxxx
Foods consistent with Executive's position. At the request of the Company,
Executive will serve as an officer and/or director of any of the Company's
other subsidiaries for no additional compensation.
1.2 Duties. Subject to the terms and conditions of this Agreement,
Executive hereby agrees to be employed as the Chief Executive Officer of
the Company and Xxxxx Foods and agrees to devote such working time and
efforts (except for permitted vacation periods and reasonable periods of
illness and other incapacity), to the best of his ability, experience and
talent, to the performance of services, duties and responsibilities in
connection therewith so that such performance shall be his primary
business activity. Executive shall perform such duties and exercise such
powers with respect to the activities of the Company, commensurate with
his positions, as the Chief Executive Officer of the Company and as a
member of the Board, as the Board shall from time to time reasonably
delegate to him.
1.3 Other Service. Nothing in this Agreement shall preclude
Executive from serving on boards of directors of other companies or trade
organizations and participating in charitable, community or religious
activities that do not substantially interfere with his duties and
responsibilities hereunder or conflict with the interest of the Company.
1.4 Office. Executive's primary office will be located in the
Company's office facility located in Denver, Colorado or any other
location reasonably acceptable to Executive.
2. Term.
2.1 Term of Employment. Executive's term of employment under this
Agreement shall commence as of the Effective Date (as defined below), and,
subject to the terms hereof, shall terminate on the earlier of (i) the
third anniversary of the Effective Date, or (ii) termination of
Executive's employment pursuant to this Agreement (the "Term"); provided,
however, that any termination of employment by Executive (other than for
death or Permanent Disability) or by the Company may only be made upon 90
days prior written notice to the other party hereto. Executive
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shall resign from any and all positions, including board memberships, held
by him with the Company or any subsidiary of the Company upon any
termination of employment.
2.2 Effective Date. This Agreement shall be effective March 1, 2003
(the "Effective Date").
3. Compensation.
3.1 Salary. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $175,000 per annum commencing on the beginning of
Executive's term of employment hereunder. Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company. The
Compensation Committee of the Board will review Executive's salary at
least annually and may increase (but not reduce) Executive's Base Salary
in its sole discretion. Once increased, such Base Salary shall not be
reduced and, as so increased, shall constitute "Base Salary" hereunder.
3.2 Annual Bonus. In addition to his Base Salary, Executive shall,
commencing with the 2003 year and continuing each year (or fiscal year, if
the Company shall use or adopt a fiscal year differing from the calendar
year) hereafter, be afforded an opportunity to earn an annual cash bonus
(the "Bonus") during the Term. The amount of such Bonus shall be
determined in the sole discretion of the Compensation Committee of the
Board. In determining Executive's Bonus, the Compensation Committee will
consider the actual and projected performance of the Company, the
Executive's contribution to such performance, the compensation paid to
chief executive officers of other companies in the food industry that are
similar in size and profitability to the Company, and other factors that
the Compensation Committee shall in its sole judgment consider to bear on
the Bonus.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. Once the
Company adopts or establishes any employee pension and welfare benefit
programs, plans and practices (to the extent permitted under any employee
benefit plan) that are made available to its senior executives, the
Executive shall have the right to participate in such programs to the same
extent, and on the same terms, as other senior executives of the Company.
4.2 Vacation. While employed hereunder, Executive shall be
entitled to no less than 20 business days paid vacation in each calendar
year, which shall be taken at such times as are consistent with
Executive's responsibilities hereunder.
5. Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement. The Company
will reimburse Executive for such expenses upon presentation by Executive from
time to time of appropriately itemized and approved (consistent with the
Company's policy) accounts of such expenditures.
6. Termination of Employment.
6.1 Termination Without Cause. Except as provided in Section 6.3,
if Executive's employment is terminated by the Company (other than for
Permanent Disability, death or Cause), Executive shall receive such
payments, if any, under applicable plans or programs, including but not
limited to those referred to in Section 4.1 hereof, to which he is
entitled pursuant to the terms of such plans or programs, and any unpaid
payments of Base Salary previously earned, and accrued vacation and
expenses incurred for which Executive is entitled to reimbursement
hereunder. If Executive is terminated under this Section 6.1, Executive
shall also be entitled to receive:
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(a) severance equal to six months' of Executive's Base Salary paid
as normal payroll over the six months following such termination of
employment; and
(b) continued coverage for a 12-month period under any employee
medical, health and life insurance plans in accordance with the respective
terms thereof applicable to active employees (other than the requirement
of continued employment); provided, however, that payments and benefits
due hereunder shall be reduced by any amounts owed by Executive to the
Company.
In no event shall Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to
Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment.
6.2 Termination For Good Reason. Except as provided in Section
6.3, if Executive resigns for Good Reason (as defined below), Executive
shall receive such payments, if any, under applicable plans or programs,
including but not limited to those referred to in Section 4.1 hereof, to
which he is entitled pursuant to the terms of such plans or programs, and
any unpaid payments of Base Salary previously earned, and accrued vacation
and expenses incurred for which Executive is entitled to reimbursement
hereunder. If Executive resigns under this Section 6.2, Executive shall
also be entitled to receive:
(a) an amount (the "Section 6.2 Termination Amount") in lieu of
any other cash compensation beyond that provided in the immediately
preceding sentence, which amount shall be equal to the Executive's Base
Salary for a 12 month period payable in a lump sum within 30 days
following such termination of employment; provided that if such
resignation occurs within 90 days prior to calendar year end, Executive
shall have the option to defer payment, without interest, of the Section
6.2 Termination Amount to January 1 of the next year; and
(b) continued coverage for a 18-month period under any employee
medical, health and life insurance plans in accordance with the respective
terms thereof applicable to active employees (other than the requirement
of continued employment); provided, however, that payments and benefits
due hereunder shall be reduced by any amounts owed by the Executive to the
Company.
"Good Reason" shall be defined as (i) a reduction in Executive's Base Salary,
(ii) a diminution of Executive's titles, offices, positions or authority,
excluding for this purpose an action not taken in bad faith and which is
remedied within twenty (20) days after receipt of written notice thereof given
by Executive; or the assignment to Executive of any duties inconsistent with
Executive's position (including status or reporting requirements), authority, or
material responsibilities, or the removal of Executive's authority or material
responsibilities, excluding for this purpose an action not taken in bad faith
and which is remedied by the Company within twenty (20) days after receipt of
notice thereof given by Executive, (iii) a transfer of Executive's primary
workplace by more than fifty (50) miles from the current workplace unless agreed
to by the Executive in his sole discretion, excluding a transfer to the Phoenix,
Arizona metropolitan area, (iv) a material breach of this Agreement by the
Company which is not remedied within twenty (20) days after receipt of written
notice thereof given by Executive, (v) Executive is not the Chief Executive
Officer of Xxxxx Foods, or (vi) Executive is not the Chief Executive Officer of
the Company and a member of the Board.
6.3 Termination During a Non-Negotiated Change of Control.
Notwithstanding Section 6.1 or 6.2, if within three months prior to or one
year after a Non-Negotiated Change of Control (as defined below),
Executive's employment is terminated by the Company (other than for
Permanent Disability, death or Cause) or the Executive resigns for Good
Reason, Executive shall receive such payments, if any, under applicable
plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such
plans or programs, and any unpaid payments of Base Salary previously
earned and accrued vacation and expenses incurred for which Executive is
entitled to reimbursement hereunder. If Executive is terminated or resigns
under this Section 6.3, Executive shall also be entitled to receive:
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(a) an amount (the "Section 6.3 Termination Amount") in lieu of
any other cash compensation beyond that provided in the immediately
preceding sentence, which amount shall be equal to two and ninety nine one
hundredths (2.99) times Executive's annual Base Salary; provided that if
such termination or resignation occurs within 90 days prior to calendar
year end, Executive shall have the option to defer payment, without
interest, of the Section 6.3 Termination Amount to January 1 of the next
year; and
(b) continued coverage for a 30-month period under any employee
medical, health and life insurance plans in accordance with the respective
terms thereof applicable to active employees (other than the requirement
of continued employment); provided, however, that payments and benefits
due hereunder shall be reduced by any amounts owed by the Executive to the
Company.
A Non-Negotiated Change of Control shall be deemed to have occurred upon both of
the following occurring after the date of the Company's initial public offering,
subject in each case to the requirement that the Board of Directors of the
Company shall have failed and/or refused to approve the Change of Control
transaction and, regardless of such failure or refusal, a Change in Control
occurs, defined as: (A) any individual, entity, or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than Xxxxx X. Xxxxx or any entity or organization
controlled by such person (collectively, the "Xxxxx Affiliates"), beneficially
owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) or
acquires 20% or more of the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors ("Voting Power"); and (B) such beneficial ownership (as so defined) by
such individual, entity or group of more than 20% of the Voting Power then
exceeds the beneficial ownership (as so defined) by the Xxxxx Affiliates of the
Voting Power.
6.4 Permanent Disability. If Executive is unable to engage in the
activities required by Executive's job by reason of any medically
determined physical or mental impairment which has lasted or can be
expected to last for a continuous period of not less than six (6)
consecutive months ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive
shall receive or commence receiving, as soon as practicable accrued but
unpaid Base Salary and such payments under applicable plans or programs,
including but not limited to those referred to in Sections 4.1, 4.2 and 5
hereof, to which he is entitled pursuant to the terms of such plans or
programs. The Company shall obtain a disability insurance policy in an
amount that shall entitle Executive to be paid a minimum of 15 months'
Base Salary if Executive is found to have a Permanent Disability. If the
Company has no such policy in effect at the time Executive is determined
to have a Permanent Disability, the Company shall pay Executive's Base
Salary for a 15 month period following such determination. The benefits
described above are payable to Executive only in the event Executive is
employed by the Company at the time the Permanent Disability arises.
6.5 Death. In the event of Executive's death during the Term,
Executive's estate or designated beneficiaries shall receive or commence
receiving, as soon as practicable, accrued but unpaid Base Salary and such
payments under applicable plans or programs, including but not limited to
those referred to in Sections 4.1, 4.2 and 5 hereof, to which Executive's
estate or designated beneficiaries are entitled pursuant to the terms of
such plans or programs. The Company shall obtain a life insurance policy
on the life of the Executive as to which the Company shall pay the
premiums and as to which the Executive shall have the right to determine
the beneficiary. The benefits payable under such policy shall be equal to
a minimum of 18 months' Base Salary being paid to the Executive at the
time of his death. If the Company has no such policy in effect at the time
Executive dies, the Company shall pay Executive's Base Salary to the
Executive's estate for an 18 month period following Executive's death. The
foregoing benefits are payable only so long as the Executive's death
occurs while he is employed by the Company.
6.6 Termination for Cause; Resignation by Executive.
(a) The Company shall have the right to terminate the employment
of Executive for Cause. In the event that Executive's employment is
terminated by the Company for Cause or by Executive for any reason (other
than by Executive for Good Reason or as a result of the Executive's
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Permanent Disability or death) during the Term, Executive shall not be
entitled to the payment of any compensation otherwise included under this
Agreement. After the termination of Executive's employment under this
Section 6.6, the obligations of the Company under this Agreement to make
any further payments, or provide any benefits specified herein, to
Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to any of
the following from and after the date hereof: (i) any willful breach of
any material written policy of the Company that results in material and
demonstrable liability or loss to the Company; (ii) the engaging by
Executive in conduct involving moral turpitude that causes material and
demonstrable injury, monetarily or otherwise, to the Company, including,
but not limited to, misappropriation or conversion of assets of the
Company (other than immaterial assets); (iii) the charging of Executive
with, or conviction of or entry of a plea of nolo contendere to, a felony;
or (iv) a material breach of this Agreement by engaging in action in
violation of the restrictive covenants in this Agreement. No act or
failure to act by the Executive shall be deemed "willful" if done, or
omitted to be done, by him in good faith and with the reasonable belief
that his action or omission was in the best interest of the Company.
7. Indemnification. To the fullest extent permitted by the
indemnification provisions of the certificate of incorporation and bylaws of the
Company in effect as of the date of this Agreement and the indemnification
provisions of the corporation statute of the jurisdiction of the Company's
incorporation in effect from time to time (collectively, the "Indemnification
Provisions"), and in each case subject to the conditions hereof, the Company
shall (i) indemnify Executive, as a director and officer of the Company or a
subsidiary of the Company or a trustee or fiduciary of an employee benefit plan
of the Company or a subsidiary of the Company, or, if Executive shall be serving
in such capacity at the Company's written request, as a director or officer of
any other corporation (other than a subsidiary of the Company) or as a trustee
or fiduciary of an employee benefit plan not sponsored by the Company or a
subsidiary of the Company, against all liabilities and reasonable expenses that
may be incurred by Executive in any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal or administrative, or investigative
and whether formal or informal, because Executive is or was a director or
officer of the Company, a director or officer of such other corporation or a
trustee or fiduciary of such employee benefit plan, and against which Executive
may be indemnified by the Company, and (ii) pay for or reimburse the reasonable
expenses incurred by Executive in the defense of any proceeding to which
Executive is a party because Executive is or was a director or officer of the
Company, a director or officer of such other corporation or a trustee or
fiduciary of such employee benefit plan. The rights of Executive under the
Indemnification Provisions shall survive the termination of the employment of
Executive by the Company.
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Centennial Specialty Foods Corporation
000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Secretary
with copies to:
Xxxxxx X. Xxxxxx, Esq.
Berliner, Xxxxxx, Xxxxxx & XxXxxxxx, P.C.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
To Executive:
Mr. J. Xxxxxxx Xxxxxx
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Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duty delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. The non-prevailing party shall bear the costs
of any legal fees and other fees and expenses which may be incurred by the
prevailing party in respect of enforcing its respective rights under this
Agreement except as otherwise provided herein.
10. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns, and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written agreement
of the parties hereto.
12. Nondisclosure of Confidential Information: Non-Competition.
(a) Executive shall not, without the prior written consent of the
Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential
Information pertaining to the business of the Company or any of its
affiliates, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) as required by law. For
purposes of this Section 12(a), "Confidential Information" shall mean
non-public information concerning the financial data, strategic business
plans, product development (or other proprietary product or recipe data),
customer lists, marketing, acquisition and divestiture plans and other
non-public, proprietary and confidential information of the Company, its
subsidiaries, its affiliates, retained marketing firms or retailing or
foodservice customers (the "Restricted Group") or suppliers (including,
without limitation, any co-pack operator) or vendors that, in any case, is
not otherwise available to the public (other than by Executive's breach of
the terms hereof).
(b) During the period of his employment hereunder and for one year
thereafter (except in the case where Executive terminates his employment
with the Company for the Good Reason event described in clause (v) of the
definition of "Good Reason"), Executive agrees that, without the prior
written consent of the Company, (A) he will not, directly or indirectly,
either as principal, manager, agent, consultant, officer, stockholder,
partner, investor, lender or employee or in any other capacity, carry on,
be engaged in, or have any financial interest in, any business in
Competition (as defined in Section 12(c)) with the business of the
Restricted Group and (B) he shall not, on his own behalf or on behalf of
any person, firm or company, directly or indirectly, solicit or hire for
the benefit of anyone, other than the Restricted Group, any person who is,
or was at any time during the six (6) months immediately preceding the
time of the solicitation or hiring by Executive employed by the Restricted
Group (other than Executive's secretary or other administrative employee
who worked directly for him).
(c) For purposes of this Section 12, a business shall be deemed to
be in "Competition" with the Restricted Group if it manufactures, sells or
distributes ethnic Southwestern or Mexican foods or sauces through retail
locations within ten (10) miles of any manufacturing, co-packing or retail
location in which the Company's ethnic Southwestern foods or sauces are
sold, manufactured or co-packed by a member of the Restricted Group.
Nothing in this Section 12 shall be construed so as to preclude Executive
from investing in a publicly or privately held company, provided
Executive's beneficial ownership of any class of such company's securities
does not exceed 4% of the outstanding securities of such class.
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(d) Executive and the Company agree that this covenant not to compete
is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this
covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Executive agrees that any breach
of the covenants contained in this Section 12 would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in addition
to pursuing any other remedies it may have in equity, obtain an injunction
against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive and cease
making any payments otherwise required by this Agreement; provided,
however, that in the event a court of competent jurisdiction, which
recognizes the validity of the provisions of this Section 12, finds
Executive not to be in violation of the provisions of this Section 12,
then the Company shall pay to Executive, in a lump sum, within ten days of
such determination, all amounts that would have been payable to Executive
hereunder through the date of such determination and continue making any
other payments due with respect to periods of time subsequent to such
determination in accordance with the provisions of this Agreement.
13. Change of Control Expenses. In the event the Executive is required to
hire counsel to negotiate on his behalf in connection with his termination or
resignation from the Company upon the occurrence of a Change of Control, or in
order to enforce the rights and obligations of the Company as provided herein,
the Company shall reimburse to the Executive all reasonable attorneys' fees
which may be expended by the Executive in seeking to enforce the terms hereof.
Such reimbursement shall be paid every 30 days after the Executive provides
copies of invoices from the Executive's counsel to the Company. Such invoices
may be redacted to preserve the attorney-client privilege, client
confidentiality or work product.
14. Section 6.3 Termination Amount Adjustment.
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment (within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), or
distribution to or for the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company (a "Payment" or "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax, interest
and penalties collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount, such that after payment by the Executive of all such
taxes (including any interest or penalties imposed with respect to such
taxes) including any Excise Tax imposed upon the Gross-Up Payment, equal to
the Excise Tax imposed upon the Payments; provided, that the Executive shall
not be entitled to receive any additional payment relating to any interest or
penalties attributable to any action or commission by the Executive in bad
faith.
(b) An initial determination shall be made by an accounting firm
mutually agreeable to the Company and the Executive and, if not agreed to
within ten days after the date of termination, a national independent
accounting firm selected by the Executive (the "Accounting Firm") as to
whether a Gross-Up Payment is required pursuant to this Paragraph 14 and the
amount of such Gross-Up Payment. To permit the Accounting Firm to make the
initial determination, the Company shall furnish the Accounting Firm with all
information reasonably required for such firm to complete such determination
as soon as practicable after the date of termination, but in no event more
than twenty-five (25) days thereafter. All fees, costs and expenses
(including, but not limited to, the cost of retaining experts) of the
Accounting Firm shall be borne by the Company and the Company shall pay such
fees, costs and expenses as they become due. The Accounting Firm shall
provide detailed supporting calculations, reasonably acceptable both to the
Company and the Executive within thirty (30) days of the date of termination,
if applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax). The Gross-Up Payment, if any, as
determined pursuant to this Paragraph 14 shall be paid by the Company to the
Executive within five (5) business days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the
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Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably satisfactory to the Executive that no
Excise Tax will be imposed with respect to any such Payment or Payments. Any
such initial determination by the Accounting Firm of the Gross-Up Payment
shall be binding upon the Company and the Executive subject to the
application of this Paragraph 14.
(c) As a result of the uncertainty in the application of Sections
4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a
portion thereof) will be paid which should not have been paid (an
"Overpayment") or a Gross-Up Payment or a portion thereof which should have
been paid will not have been paid (an "Underpayment"). An Underpayment shall
be deemed to have occurred upon a "Final Determination" (as hereinafter
defined) that the tax liability of the Executive (whether in respect of the
then current taxable year of the Executive or in respect of any prior taxable
year of the Executive) will be increased by reason of the imposition of the
Excise Tax on a Payment or Payments with respect to which the Company has
failed to make a sufficient Gross-Up Payment. An Overpayment shall be deemed
to have occurred upon a "Final Determination" (as hereinafter defined) that
the Excise Tax shall not be imposed (or shall be reduced) upon a Payment or
Payments with respect to which the Executive had previously received a
Gross-Up Payment. A Final Determination shall be deemed to have occurred when
(i) in the case of an Overpayment, the Executive has received from the
applicable government tax liability authority a refund of tax or other
reduction in his tax liability imposed as a result of a Payment or, in the
case of an Underpayment, the Executive receives notice from a competent
governmental taxing authority that his tax liability imposed as a result of a
Payment will be increased, and (ii) in the case of an Overpayment or an
Underpayment, upon either (x) the date a determination is made by, or an
agreement is entered into with, the applicable governmental taxing authority
which finally and conclusively binds the Executive and such taxing authority,
or in the event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has been made by such
court and either all appeals have been taken and finally resolved or the time
for all appeals have been taken and finally resolved or the time for all
appeals has expired, or (y) the statute of limitations with respect to the
Executive's applicable tax return has expired. If an Underpayment occurs, the
Executive shall promptly notify the Company and the Company shall promptly
pay to the Executive an additional Gross-Up Payment equal to the amount of
the Underpayment plus an interest and penalties imposed on the Underpayment
(other than interest and penalties attributable to any action or omission by
the Executive in bad faith). If an Overpayment occurs, the amount of the
Overpayment shall be treated as a loan by the Company to the Executive and
Executive shall, within ten (10) business days of the occurrence of such
overpayment, pay the Company the amount of the Overpayment, with interest
computed in the same manner as for an Underpayment.
(d) Notwithstanding anything contained in this Agreement to the
contrary, in the event it is determined that an Excise Tax will be imposed on
any Payment or Payments, the Company shall pay to the applicable governmental
taxing authorities as Excise Tax withholding, the amount of the Excise Tax
that the Company has actually withheld from the Payment or Payments.
15. Inventions Assignment. During the Term, the Executive shall promptly
disclose, and hereby grant and assign to the Company for its sole use and
benefit any and all recipes, inventions, improvements, technical information and
suggestions reasonably relating to the business of the Company or any of its
subsidiaries (collectively, the "Inventions") which the Executive may develop or
acquire during the Term (whether or not during usual working hours), together
with all trademarks, service marks, patent applications, letters patent,
copyrights and reissues thereof that may at any time be granted for or with
respect to the Inventions. In connection therewith, (a) the Executive shall, at
the expense of the Company (including a reasonable payment based on the
Executive's last per diem earnings with the Company) for the time involved if
the Executive is not then in the Company's or any of its subsidiaries' employ,
promptly execute and deliver such applications, assignments, descriptions and
other instruments as may be necessary or proper in the opinion of the Company to
vest title to the Inventions and any patent applications, patents, copyrights,
reissues or other proprietary rights related thereto in the Company and to
enable it to obtain and maintain the entire right and title thereto throughout
the world, and (b) the Executive shall render to the Company, at its expense
(including a reasonable payment based on the Executive's last per diem earnings
with the Company) for the time involved if the Executive is not then in the
Company's or any of its
8
subsidiaries' employ, such reasonable assistance as the Company may require in
the prosecution of applications for said patents, copyrights, reissues or other
proprietary rights, in the prosecution or defense of interferences which may be
declared involving any said applications, patents, copyrights or other
proprietary rights and in any litigation in which the Company or any of its
subsidiaries may be involved relating to the Inventions.
16. Assistance in Litigation. At the request and expense of the Company
(including a reasonable payment based on the Executive's last per diem earnings
with the Company) for the time involved if the Executive is not then in the
Company's or any of its subsidiaries' employ or receiving severance payments
from the Company or any of its subsidiaries pursuant to Section 8(c)(ii)) and
upon reasonable notice, the Executive shall, at all times during and for a
period of five years after the Employment Period, furnish such information and
assistance to the Company as it may reasonably require in connection with any
issue, claim or litigation in which the Company or any of its subsidiaries may
be involved (other than any such issue, claim or litigation with respect to
which the Executive is a party adverse to the Company). During such period, the
Executive shall provide such assistance at those times and places as may be
reasonably requested by the Company and not unreasonably inconvenient to the
Executive. The Executive shall not, pursuant to this Section 16 or Section 15
hereof, be required to provide such assistance under this Section 16 or Section
15 hereof for more than three consecutive days or for an aggregate of 15 days or
more in any consecutive six-month period.
17. Provisions Concerning Acceleration of Option Vesting. Unless
otherwise provided in the Company's stock option plans then in effect, upon the
occurrence of a Non-Negotiated Change of Control, the vesting period of any
options then held by the Executive shall automatically be accelerated unless the
option grant agreement issued to the Executive by the Compensation Committee of
the Board of Directors or the entire Board of Directors of the Company
specifically prohibits accelerated vesting. Any vesting periods applicable to
options held by the Executive will automatically be accelerated if, after
occurrence of a Non-Negotiated Change of Control, the duties or
responsibilities, working facilities or benefits provided to the Executive prior
to the date of such Non-Negotiated Change of Control are in any manner
materially diminished. In the event the Company terminates this Agreement
without cause, the vesting periods for any options then held by the Executive
shall be accelerated and the Executive shall be provided a two-year period in
which to exercise such accelerated options.
18. Beneficiaries: References. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative, and the Company shall pay amounts payable under this
Agreement, unless otherwise provided herein, in accordance with the terms of
this Agreement, to Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees or estate, as the case
may be. Any reference to the masculine gender in this Agreement shall include,
where appropriate, the feminine.
19. Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
20. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Colorado, without reference
to rules relating to conflicts of law.
21. Effect on Prior Agreements. Except for any amendments to this
Agreement agreed to by the parties in writing from and after the date hereof,
this Agreement contains the entire understanding between the parties hereto and
supersedes in all respects any prior or other agreement or understanding between
the Company or any affiliate of the Company and Executive.
22. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
9
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
24. Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO
APPLY (RATHER THAN ARBITRATION RULES) AND THE PARTIES DESIRE THAT THEIR DISPUTES
BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph.
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
-------------------------------------
EXECUTIVE
/s/ J. Xxxxxxx Xxxxxx
-------------------------------------------------
J. Xxxxxxx Xxxxxx
