EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT is entered into as of February 7, 2008 (the “Effective
Date”)
by and
between XXXXX XXXXX (“Executive”)
and
ORGANIC TO GO FOOD CORPORATION, a Delaware 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.
The
Company shall employ Executive as its Chairman, President and Chief Executive
Officer and as the Chairman, President and Chief Executive Officer of Organic
To
Go, Inc. (the Company’s wholly-owned subsidiary) for the term of his employment
under this Agreement (“Employment”).
Executive shall report to the Board of Directors (the “Board”)
of the
Company.
(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. 25% of the Incentive Bonus will be based on achievement
by
Executive of performance goals which will be mutually agreed upon by Executive
and the Board each year, 25% of the Incentive Bonus will be subject to the
discretion of the Board, and 50% of the Incentive Bonus will be based on
achievement of performance goals by the Company. All goals described in this
paragraph shall be mutually agreed upon by Executive and the Board by February
28, 2008 (with respect to 2008) and by December 31, 2008 and December 31 of
each
year thereafter (with respect to 2009 and each succeeding year).
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 vis8ion 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;
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(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.
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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.
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.
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(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.
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
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a
Delaware corporation
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By:
/s/ Xxxxxxx Xxxx
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/s/
Xxxxx Xxxxx
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Xxxxxxx
Xxxx, Chief Financial Officer
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XXXXX
XXXXX
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“Executive”
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By:/s/
Xxxxxxxx Xxxxx
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Xxxxxxx
Xxxxx, Director
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