EXHIBIT 10.28
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 10, 1999 between COLOR SPOT
NURSERIES, INC., a Delaware corporation (the "Company"), and XXXXXX X.
X'XXXXX ("Executive").
This Agreement provides for the employment of Executive as Executive
Vice President and Chief Financial Officer of the Company upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual undertakings
contained herein, the parties agree as follows:
ARTICLE 1. EMPLOYMENT
1.1 EMPLOYMENT. The Company agrees to employ Executive,
and Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on June 10,
1999 (the "Effective Date") and ending as provided in Section 1.4 (the
"Employment Period").
1.2 POSITION AND DUTIES.
(a) During the Employment Period, Executive shall
serve as Executive Vice President and Chief Financial Officer of the Company.
(b) Executive shall be responsible for the operation
and performance of the Company and will have the responsibilities and carry
out the customary functions of an Executive Vice President and Chief
Financial Officer. Executive shall report direct to the Company's Chief
Executive Officer.
(c) Executive shall devote his best efforts and his
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and
affairs of the Company and its Subsidiaries. Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.
1.3 SALARY, BONUS, OPTIONS AND BENEFITS.
(a) During the Employment Period, Executive's base
salary (the "Base Salary") shall be $175,000 per annum which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices. The Base Salary may be increased annually by the
Compensation Committee (the "Compensation Committee") of the Board in its
discretion.
(b) During the Employment Period, in addition to the
Base Salary, Executive shall be eligible to participate in the Company's
bonus program as established by the Board. The Company's fiscal year ends
June 30. To the extent achieved, such bonus shall be paid following the
delivery and approval of the Company's signed audited financial statements
for such year by the Company's independent accountants. In addition,
Executive shall be eligible to participate in the Company's Mid-Term
Incentive Plan on terms established by the Compensation Committee. Since
Executive is beginning at the conclusion of the first fiscal year he will be
entitled to only 50% of the applicable bonus amount had he been employed by
the Company since the beginning of fiscal 1999.
(c) Executive shall be entitled to participate in
the Company's 1997 Stock Plan (the "Plan"). Executive shall be awarded
options under the Plan to purchase 75,000 shares of common stock, par value
$.001 per share of the Company, at $4.00 per share (the "Options"). The
Options will be evidenced by an option award and vest 25% annually in arrears
over a 4 year period from the date of your employment, subject to Executive's
continued employment with the Company. The Options will be subject to the
Company's Employee Stockholders Agreement dated as of July 1, 1998 (the
"Stockholders Agreement"); provided that the definition of "Cause" shall be
deemed to be the definition contained in this Agreement. Executive's option
award shall provide for (i) accelerated vesting in the event of a sale of the
Company (as defined in the option award), (ii) the right to exercise the
vested portion of your Option for a 90 day period following termination of
your employment (other than for Cause in which case the Options shall
automatically terminate), and (iii) the right for the Company to repurchase
your vested Options at fair market value (as determined by the Board as of
the date of the termination of the Employment Period) over the exercise price
as provided in the Stockholders Agreement.
(d) During the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit programs for
which senior executive employees of the Company and its Subsidiaries are
generally eligible, including 3 weeks paid time off per year (which may not
be carried forward to subsequent years). In addition, you shall be entitled
to participate in the Company's relocation program; provided that the
benefits with respect to interest, taxes and insurance premiums set forth in
Section 211.2 of the relocation program shall be increased to 360 days from
30 days.
1.4 LOAN. The Company will loan to Executive $250,000 in
cash on the Effective Date (the "Start Date Loan"). At such time as the
Employment Period is terminated for any reason, the Start Date Loan will be
deemed to have been repaid at the rate of $4,166.67 per month (i.e., $50,000
per year) on the last day of each month. The Executive shall bear any taxes
on the amount forgiven. In the event that the Employment Period is terminated
for any reason prior to the fifth anniversary of the Effective Date,
Executive shall be required to repay to the Company by the 60th day after the
termination of the Employment Period, $250,000 less the amount which has been
deemed to have been repaid.
1.5 TERM. (a) The Employment Period shall terminate on
the earlier to occur of (i) the date of Executive's death or Disability (as
determined by the Board), (ii) the date determined by the Board by resolution
of the Board for Cause, (iii) the date determined by the Board by resolution
of the Board without Cause, (iv) the date of voluntary resignation by
Executive or (v) the second anniversary of the date of this Agreement.
-2-
(b) If the Employment Period is terminated without
Cause, Executive shall be entitled to continue to receive an amount equal to
twelve months of Executive's then current Base Salary plus a pro rata portion
of any bonus payable for the fiscal year in which termination occurs.
Executive hereby agrees that no severance compensation shall be payable in
the event Executive's employment is terminated under Section 1.5(a)(i), (ii),
(iv) or (v) and Executive waives any claim for severance or other
compensation. Any amount payable under this Section 1.5(b) shall be (i) payable
in installments in accordance with the Company's normal payroll practices
over the period following the termination of the Employment Period in which
such payments are to be made (with the pro rata portion of any bonus paid
when such bonus would otherwise have been paid) and (ii) reduced by the gross
amount of any salary received by Executive from a new employer during the
period in which severance is payable under this Section 1.5(b). The payment
of any severance compensation under this Section 1.5(b) is conditional upon
Executive entering into the Company's standard form release agreement. For
purposes hereof, Executive shall be deemed to have been terminated without
Cause in the event following a Change of Control, Executive's
responsibilities, title or duties are materially diminished. A Change of
Control means the acquisition of a majority of the outstanding Common Stock
of the Company by persons other than affiliates of Kohlberg & Company, LLC.
(c) Except as expressly set forth in this Section 1.5,
all compensation and other benefits shall cease to accrue upon termination of
the Employment Period.
1.6 CONFIDENTIAL INFORMATION. Executive acknowledges that
the information, observations and data obtained by him while employed by the
Company and its Subsidiaries concerning the business or affairs of the
Company and its Subsidiaries that are not generally available to the public
other than as a result of a breach of this Agreement by Executive
("Confidential Information") are the property of the Company and its
Subsidiaries. Executive agrees that he shall not disclose to any unauthorized
person or use for his own account any Confidential Information without the
prior written consent of the Company unless, and in such case only to the
extent that, such matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions to act.
Notwithstanding the foregoing, in the event Executive becomes legally
compelled to disclose Confidential Information pursuant to judicial or
administrative subpoena or process or other legal obligation, Executive may
make such disclosure only to the extent required, in the opinion of counsel
for Executive, to comply with such subpoena, process or other obligation.
Executive shall, as promptly as possible and in any event prior to the making
of such disclosure, notify the Company of any such subpoena, process or
obligation and shall cooperate with the Company in seeking a protective order
or other means of protecting the confidentiality of the Confidential
Information.
1.7 INVENTIONS AND PATENTS. Executive agrees that all
copyrights, works, inventions, innovations, improvements, developments,
methods, designs, analyses, drawings, reports, and all similar or related
information which relate to the actual or anticipated business, research and
development or existing or anticipated future products or services of the
Company or its Subsidiaries and which are conceived, developed or made by
Executive while employed by the Company ("Work Product") belong to the
Company. Executive will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Company (whether during or
after the Employment Period) to establish and confirm such ownership at the
Company's expense (including, without limitation, assignments, consents,
powers of attorney and other instruments).
-3-
1.8 NON-COMPETE; NON-SOLICITATION.
(a) Executive acknowledges that in the course of
his employment with the Company he will become familiar with the Company's
trade secrets and with other confidential information concerning the Company
and its predecessors and that his services have been and will be of special,
unique and extraordinary value to the Company. Executive agrees that, in
consideration of the payments made to Executive hereunder, in the event that
Executive voluntarily terminates his employment, for the one year period
following such voluntary termination (the "Noncompete Period"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business in which the
Company or its Subsidiaries is engaged any where in the United States.
Nothing herein shall prohibit Executive from being a passive owner of not
more than 5% of the outstanding stock of another corporation, so long as
Executive has no active participation in the management or the business of
such corporation.
(b) During the Employment Period and for the one year
period thereafter, Executive shall not directly or indirectly induce or
attempt to induce any officer of the Company or any Subsidiary of the Company
to leave the employ of the Company or such Subsidiary, or in any way
interfere with the relationship between the Company or any such Subsidiary
and any employee thereof.
ARTICLE 2. DEFINITIONS
As used in this Agreement, the following terms shall have
the definitions set forth below:
"CAUSE" means (i) a material breach of this Agreement by
Executive, (ii) Executive's willful and repeated failure to comply with the
lawful directives of the Board or supervisory personnel, (iii) gross
negligence or willful misconduct by Executive in the performance of his
duties hereunder, or (iv) the commission by Executive of theft or
embezzlement of Company property or any other act (including but not limited
to a felony or a crime involving moral turpitude) that is injurious in any
significant respect to the property, operations, business or reputation of
the Company or its Subsidiaries, as determined in good faith by the Board.
"DISABILITY" means Executive's inability to substantially
perform his normal duties hereunder for six months or more during any
twelve-month period determined in good faith by the Board.
"SUBSIDIARY" of an entity shall mean any corporation,
limited liability company, limited partnership or other business organization
of which the securities having a majority of the normal voting power in
electing the board of directors, board of managers, general partner or
similar governing body of such entity are, at the time of determination,
owned by such entity directly or indirectly through one or more Subsidiaries.
-4-
ARTICLE 3. GENERAL PROVISIONS
3.1 ENFORCEMENT. If, at the time of enforcement of
Sections 1.5, 1.6 or 1.7, a court holds that the restrictions stated herein
are unreasonable under the circumstances then existing, the parties hereto
agree that the maximum period, scope or geographical area reasonable under
such circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that
money damages would be an inadequate remedy for any breach of this Agreement.
In the event of a breach or threatened breach of this Agreement, the Company,
its Subsidiaries and their respective successors or assigns may, in addition
to other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violation of, the provisions
hereof (without posting a bond or other security).
3.2 SURVIVAL. Sections 1.6, 1.7 and 1.8 shall survive and
continue in full force and effect in accordance with their terms
notwithstanding any termination of the Employment Period.
3.3 NOTICES. All notices or other communications to be
given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, one business day following when sent via a nationally recognized
overnight courier, or when sent, when sent via facsimile confirmed in writing
to the recipient. Such notices and other communications will be sent to the
addresses indicated below:
To the Company:
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxxx Hyatt & Xxxxxx, P.C.
000 - 00xx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
To Executive:
To the address on the Company's records
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
-5-
3.4 SEVERABILITY. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
3.5 ENTIRE AGREEMENT. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
3.6 AMENDMENTS AND WAIVERS. Any provision of this
Agreement may be amended or waived only with the prior written consent of the
Company and Executive.
3.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
3.8 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
3.9 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement or of any term or provision hereof.
* * * * *
-6-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
COLOR SPOT NURSERIES, INC.
By: /s/ BOLIGALA RAJU
------------------------------------------
Name: Boligala Raju
Title: President & Chief Operating Officer
/s/ XXXXXX X. X'XXXXX
------------------------------------------
Name: Xxxxxx X. X'Xxxxx
-7-
