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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made as of the 1st day of January, 1998, between
Authentic Specialty Foods, Inc., a Texas corporation (the "Corporation"), and
Xxxxxx X. Xxxxxx, Xx. (the "Executive").
W I T N E S S E T H:
WHEREAS, Corporation is desirous of employing Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set
forth and Executive is desirous of being employed by Corporation on such terms
and conditions and for such consideration;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, covenant and agree as follows:
Section 1. Employment. (a) During the Term (as defined below), the
Corporation shall employ Executive in the position of President of the
Corporation's DSD Operating Division or in such other positions as the parties
shall mutually agree. Executive agrees to serve in such positions and to perform
diligently and to the best of his abilities the duties and services appertaining
to such office, as well as such additional duties and services appropriate to
such office as shall be specified by the Board of Directors from time to time.
Executive's employment shall also be subject to the policies maintained and
established by Corporation, as the same may be amended from time to time.
(b) The Executive hereby accepts such employment and agrees that during
the continuance thereof he will devote all of his business time, effort, skill
and attention to the affairs of, and for the benefit of, the Corporation and its
affiliates (as defined below) and that he will not engage, directly or
indirectly, in any other business or businesses, whether or not similar to that
of Corporation. The foregoing notwithstanding, the parties recognize and agree
that Executive may engage in passive personal investments that do not conflict
with the business and affairs of Corporation or interfere with Executive's
performance of his duties hereunder. Executive acknowledges and agrees that
Executive owes a fiduciary duty of loyalty, fidelity and allegiance to act at
all times in the best interests of the Corporation and to do no act which would
injure the business, interests or reputation of the Corporation or any of its
subsidiaries or affiliates. In keeping with these duties, Executive shall make
full disclosure to the Corporation of all business opportunities pertaining to
the Corporation's business and shall not appropriate for Executive's own benefit
business opportunities concerning the subject matter of the fiduciary
relationship. For purposes of this Agreement, the term "affiliate" shall mean
with respect to a specified entity, an entity that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with the entity specified.
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Section 2. Term. Unless sooner terminated pursuant to other provisions
hereof, the term of this Agreement shall be one year commencing on the date
hereof (the "Term"); provided, however, that the Term shall automatically be
extended for an additional one year period after the scheduled expiration
thereof (including any expiration date that results from one or more automatic
renewals provided for in this Section) unless either the Corporation or the
Executive gives the other party a notice of non-renewal at least 60 days prior
to the scheduled expiration of the Term.
Section 3. Compensation.
(a) Base Salary. As compensation for the services to be rendered by the
Executive under this Agreement, the Corporation agrees to pay the Executive a
salary ("Base Salary") of $175,000 per year, which shall be payable in equal
installments on the customary payroll periods of the Corporation; provided,
however, that for the fiscal year ending December 31, 1998, $25,000 of the Base
Salary has already been paid to the Executive, and the payments of Base Salary
for the remainder of such fiscal year shall be adjusted accordingly. The Board
of Directors of the Corporation will review the Base Salary at the beginning of
each fiscal year and determine whether to increase the Base Salary; provided,
however, that the Corporation shall be under no obligation to increase the Base
Salary.
(b) Annual Bonus. In addition to compensation provided for in Section
3(a), the Compensation Committee (the "Compensation Committee") of the
Corporation, may, but shall not be obligated to, grant in its sole discretion an
annual bonus of up to 50% of Base Salary to the Executive for each year during
the Term. If the Compensation Committee shall elect to grant such a bonus, the
amount of any such bonus shall be based upon such factors as the Compensation
Committee, in its sole discretion, shall deem appropriate, including without
limitation, the performance of the Executive, the financial performance of the
Corporation and the DSD Operating Division and the consolidated financial
performance of the Corporation and its subsidiaries.
Section 4. Fringe Benefits.
(a) Subject to Corporation's standard policies and procedures with
respect to expense reimbursement as applied to its executive employees
generally, Corporation shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive for
business-related purposes.
(b) The Executive will be entitled each year to three weeks paid
vacation, to be taken at such time or times as may be reasonably convenient to
the Corporation and to the Executive. In addition, the Executive will be
entitled to all legal holidays observed by office closings at the Corporation's
headquarters.
(c) The Executive will be reimbursed for the premiums paid by the
Executive in order to obtain a term life insurance policy with up to a $500,000
benefit; provided, however, that the Corporation shall not be required to pay
aggregate premiums for any year in excess of $5,000.
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(d) The Executive will be reimbursed for (i) the lease payments for an
automobile to be used primarily in the business of the Corporation and (ii) the
cost of insurance for such automobile; provided, however, that the amount of
such reimbursement shall be approved by the Compensation Committee.
(e) The Executive acknowledges that he has previously received a grant
of options to acquire 25,000 shares of the Common Stock of the Corporation (the
"Options"). The Company agrees that if the Executive ceases to be an employee of
the Corporation for any reason, the Company will take such action as shall be
necessary to vest the greater of (i) the applicable percentage vested under the
applicable stock option agreement and (ii) 50% of the Options. Notwithstanding
the foregoing, the Options shall become fully exercisable on the occurrence of a
Change of Control. For purposes of this Agreement, "Change of Control" means
when (i) any merger or consolidation in which the Company is not the surviving
corporation or survives as a wholly owned subsidiary of another company or (ii)
any person or entity, including a "group" as contemplated by Section 13(d)(3) of
the Securities Exchange of 1934 Act, as amended, other than TSG2 L.P. or any
partner or other affiliate of TSG2 L.P. (a "Shansby Entity"), acquires more than
50% of the outstanding shares of the Company's voting stock (based upon voting
power).
Section 5. Termination. (a) This Agreement shall terminate upon the
resignation, death or disability (as defined herein) of the Executive, in which
case no compensation or benefits or other payments shall be payable under this
Agreement (except for amounts accrued through the date of such resignation,
death or disability); provided, however, that the confidentiality,
noncompetition and other obligations set forth in Sections 6, 7 and 8 shall
survive the Executive's resignation or disability. As used herein "disability"
means an illness, injury or incapacity that prevents the Executive from
performing the essential functions of his position for a period of three
consecutive months, with reasonable accommodation.
(b) The Corporation may terminate the Executive's employment
hereunder for "Cause." Such termination shall be effective immediately upon
notice of termination. For purposes of this Agreement, "Cause" is defined as
follows: a determination by the Board of Directors that one of the following
events shall have occurred: (i) the Executive's neglect of his duties hereunder;
(ii) the refusal by the Executive to follow reasonable and lawful directions
from the Board of Directors of the Corporation; (iii) any violation by the
Executive of the provisions of Section 6, 7 or 8 hereof that results or could
reasonably be expected to result in a material harm to the Corporation or its
financial condition, prospects or results of operations or (iv) the engaging by
the Executive in misconduct, or in acts of moral turpitude, that in the judgment
of the Board of Directors is or are injurious to the Corporation or its
financial condition, prospects or results of operations. If the Executive's
employment is terminated for Cause, no additional compensation, benefits or
other payments shall be payable to the Executive (except for amounts accrued
through the date of such termination); provided, however, that the
confidentiality, noncompetition and other obligations set forth in Sections 6, 7
and 8 shall survive such termination.
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(c) The Corporation may terminate the Executive's employment
for reasons other than Cause upon written notice. If the Corporation terminates
the Executive's employment for reasons other than Cause, the Executive shall be
entitled to receive his Base Salary for the remainder of the Term following such
termination (or, if longer, for a period of six months after termination), which
shall be paid over the course of such period in the same installments required
by Section 3, in full and final satisfaction of all amounts due from the
Corporation; provided, however, that the confidentiality, noncompetition and
other obligations set forth in Sections 6, 7 and 8 shall survive such
termination.
(d) Executive shall have the right to resign as an employee of
the Corporation upon written notice. In the event of such resignation, no
additional compensation, benefits or other payments shall be payable to the
Executive; provided, however, that the confidentiality, noncompetition and other
obligations set forth in Sections 6, 7 and 8 shall survive such termination.
Section 6. Confidentiality; Statements regarding the Corporation.
(a) Executive will not, at any time during or after Executive's
employment by the Corporation, make any unauthorized disclosure of any
confidential business information or trade secrets of the Corporation or its
affiliates, or make any use thereof, except in the carrying out of Executive's
employment responsibilities hereunder. Affiliates of the Corporation shall be
third party beneficiaries of Executive's obligations under this paragraph. As a
result of Executive's employment by the Corporation, Executive may also from
time to time have access to, or knowledge of, confidential business information
or trade secrets of third parties, such as customers, suppliers, partners, joint
venturers, and the like, of the Corporation and its affiliates. Executive also
agrees to preserve and protect the confidentiality of such third party
confidential information and trade secrets to the same extent, and on the same
basis, as the Corporation's confidential business information and trade secrets.
(b) Executive shall refrain, both during the employment relationship
and after the employment relationship terminates, from publishing any oral or
written statements about the Corporation, any of its affiliates, or any of such
entities' officers, directors, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or confidential
information about the Corporation, any of its affiliates, or any of such
entities' business affairs, officers, directors, employees, agents, or
representatives; or that constitute an intrusion into the seclusion or private
lives of the Corporation, any of its affiliates, or any of such entities'
officers, directors, employees, agents, or representatives; or that give rise to
unreasonable publicity about the private lives of the Corporation, any of its
affiliates, or any of such entities' officers, directors, employees, agents, or
representatives; or that place the Corporation, any of its affiliates, or any of
such entities' officers, directors, employees, agents, or representatives in a
false light before the public; or that constitute a misappropriation of the name
or likeness of the Corporation, any of its affiliates, or any of such entities'
officers, directors, employees, agents, or representatives. A violation or
threatened violation of this prohibition may be enjoined by the courts. The
rights
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afforded the Corporation and its affiliates under this provision are in addition
to any and all rights and remedies otherwise afforded by law.
Section 7. Trademarks, Patents, etc. All information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, which are
conceived, made, developed, or acquired by Executive, individually or in
conjunction with others, during Executive's employment by the Corporation
(whether during business hours or otherwise and whether on the Corporation's
premises or otherwise) which relate to the Corporation's business, products, or
services (including, without limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations, acquisitions prospects, the identity of
customers or suppliers or their requirements, the identity of key contacts
within the customer's or supplier's organizations or within the organization of
acquisition prospects, or marketing and merchandising techniques, prospective
names and marks) shall be disclosed to the Corporation and are and shall be the
sole and exclusive property of the Corporation. Moreover, all documents,
drawings, memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, E-mail, voice mail, electronic databases,
maps and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries and inventions are and
shall be the sole and exclusive property of the Corporation. Upon termination of
Executive's employment by the Corporation, for any reason, Executive promptly
shall deliver the same, and all copies thereof, to the Corporation.
Section 8. Noncompetition; Corporation Employees. (a) The Executive
agrees that during the period that the Executive is employed by the Corporation
and for a two-year period thereafter:
(i) Executive shall not, directly or indirectly, for his own
account or for the account of others, as an officer, director, passive
stockholder, owner, partner, promoter, consultant, advisor, employee,
manager or otherwise, participate in the promotion, financing,
ownership, operation or management of, or assist in, furnish advice
with respect to, or carry on through a proprietorship, partnership,
joint venture, corporation, other form of business entity or otherwise,
any business activity in a geographic market within the State of Texas
involving or relating to the food distribution, food packaging and food
processing businesses in connection with Mexican food products;
provided, however, that nothing in this clause (i) shall prohibit the
Executive's beneficial ownership of not in excess of 1% of any class of
common stock that is listed for trading on a national securities
exchange;
(ii) Executive shall not furnish advice to, solicit, or do
business with any customer (or any previous customer within the last
year) of the Corporation or any of its subsidiaries relating to the
business of the Corporation in any state where such customer is doing
business with Corporation or any of its subsidiaries; and
(iii) Executive shall not encourage or induce any current or
former employee of the Corporation or any of its subsidiaries or
affiliates to leave the employment of the
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Corporation or any of its subsidiaries or affiliates, offer employment,
retain, hire or assist in the hiring of any such employee by any
person, association, or entity not affiliated with the Corporation or
any of its subsidiaries or affiliates.
(b) Although the parties to this Agreement have, in good
faith, used all reasonable efforts to make this covenant reasonable in
both geographic area and in duration, and it is not anticipated, nor is
it intended, by either of the parties to this Agreement that any court
of competent jurisdiction would find it necessary to reform this
covenant to make it reasonable in both scope and in duration, or
otherwise, the parties to this Agreement agree that any court of
competent jurisdiction making a determination that it is necessary to
reform this covenant to make it reasonable in either scope or duration,
or otherwise, shall be, and hereby is, empowered and directed to reform
this Agreement to a reasonable restriction rather than invalidating
this covenant or otherwise rendering it unenforceable.
(c) In the event of breach by Executive of this covenant, it
is understood and agreed (i) that the Corporation shall be entitled to
injunctive relief as well as any and all other applicable remedies at
law and in equity; and (ii) that damages, if any, for the breach of
this covenant will accrue and be recoverable by the Corporation or any
subsidiary as of and from the date of the breach insofar as the damages
for such breach relate to an action that occurred within the scope and
duration of the covenant determined to be reasonable (whether or not
the covenant is reformed in connection with such determination).
Section 9. Waiver; Remedies for Breach. A waiver by either party hereto
of any breach of any provision of this Agreement shall not operate or be
construed as a waiver of similar or dissimilar provisions at the same time or at
any prior or subsequent time. It is agreed that the Executive's services are
unique and that any breach or threatened breach by the Executive of any
provision of Xxxxxxx 0, 0 xx 0 xxxxxx xx remedied solely by damages. Therefore,
if there is a breach or threatened breach of the provisions of Section 6, 7 or
8, the Executive acknowledges that the Corporation shall be entitled to an
injunction restraining the Executive from such breach. Nothing herein shall be
construed as prohibiting the Corporation from pursuing any other remedies for
any breach or threatened breach.
Section 10. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the employment of the Executive by the
Corporation, and no agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. Without limiting the
generality of the foregoing, this Agreement supersedes the Executive's existing
Employment Agreement dated June 23, 1997.
Section 11. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect, and any provision of this Agreement shall
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be construed to render such provision valid and enforceable to the maximum
extent possible by law in the event of any challenge.
Section 12. Binding Agreement. This Agreement shall be binding on and
shall inure to the benefit of the Corporation and its successors and assigns.
This Agreement and all rights of the Executive hereunder shall inure to the
benefit of and be enforceable by the Executive's person or legal
representatives, executors, or administrators. Neither this Agreement nor any
right hereunder may be assigned by the Executive.
Section 13. Relationship of the Parties. Nothing herein contained shall
be deemed to constitute a partnership between or a joint venture by the parties,
nor shall anything herein contained be deemed to constitute either the Executive
or the Corporation the agent of the other except as is provided herein. Neither
the Executive nor the Corporation shall be or become liable or bound by any
representation, act or omission whatsoever of the other made contrary to the
provisions of this Agreement.
Section 14. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to principles of conflict of laws.
Section 15. Notice. Any notice, communication, request, instruction or
other document required or permitted hereunder shall be given in writing and
delivered in person or sent by U.S. Mail postage prepaid, return receipt
requested, or by telex, facsimile or telecopy to the addresses of the
Corporation and the Executive set forth below. Any such notice shall be
effective upon receipt or 3 days after placed in the mail, whichever is earlier.
To the Corporation:
Authentic Specialty Foods, Inc.
c/o The Shansby Group
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
To the Executive:
0000 Xxxxxxxxx Xx.
Xxxxxxxxx, Xxxxx 00000
or to such other address as any party shall hereafter designate by written
notice.
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Section 16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Section 17. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
any provision or provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AUTHENTIC SPECIALTY FOODS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
/s/ XXXXXX X. XXXXXX, XX.
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XXXXXX X. XXXXXX, XX.
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