Exhibit 10.5
EMPLOYMENT AGREEMENT dated as of
December 31, 1996, between CFP HOLDINGS,
INC., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXXX (the
"Executive").
The Company and the Executive are parties to the Employment
Agreement dated as of March 31, 1993 (the "Original Employment Agreement"). The
Company and the Executive desire to terminate the Original Employment Agreement
as of the date hereof and to continue the employment relationship between the
Company and the Executive from and after the date hereof pursuant to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
SECTION 1. Employment. The Company hereby employs the Executive and
the Executive hereby accepts employment by the Company upon the terms and
conditions hereinafter set forth.
SECTION 2. Term. The employment of the Executive hereunder shall be
for the period (the "Employment Period") commencing on the date hereof (the
"Commencement Date") and ending on (a) December 31, 1999 (the "Scheduled
Termination Date"), or (b) such earlier date (the "Termination Date") upon which
the employment of the Executive shall terminate in accordance with the
provisions hereof. Upon not less than 30 days written notice prior to the
Scheduled Termination Date, the Employment Period may be extended at the sole
discretion of the Company for an additional 30-day period (a "Renewal Period")
to facilitate contract negotiations in the event the Company desires to retain
the services of the Executive following the expiration of the Employment Period.
SECTION 3. Duties. During the Employment Period, the Executive shall
be employed as President and Chief Executive Officer of Custom Food Products,
Inc., a wholly-owned subsidiary of the Company ("Custom Food"), and as Vice
Chairman of the Company and CFP Group, Inc., the parent of the Company (the
"Parent"), and shall perform such duties as are consistent therewith. The
Executive shall further serve as a member of the Board of Directors of the
Company (the "Board"), the Parent, Custom Food and the successor to the business
of Quality Foods and shall have such other titles and duties, consistent with
the status of a senior level executive of the Company, as the Board shall in its
sole discretion designate. The Executive shall use his best efforts to perform
well and faithfully the foregoing duties and responsibilities.
SECTION 4. Time to be Devoted to Employment. During the Employment
Period, the Executive shall devote all of his working time, attention and
energies to the business of the Company and its subsidiaries (except for
vacations to which he is entitled pursuant to Section 6(b) and except for
illness or incapacity). During the Employment Period, the Executive shall not
engage in any business activity which, in the reasonable judgment of the Board,
conflicts with the duties of the Executive hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage. Nothing
contained in this Section 4 shall prohibit the Executive from (a) owning up to
1% of the outstanding capital stock or other class of securities of any
corporation whose shares are traded on a national securities exchange or are
listed on NASDAQ or (b) making other passive investments in entities which do
not compete in any manner with the Company after obtaining the prior written
consent of the Board.
SECTION 5. Compensation; Bonus. (a) The Company (or at the Company's
option, any subsidiary or affiliate thereof) shall pay to the Executive an
annual base salary (the "Base Salary") during the Employment Period of $300,000
per annum, payable in such installments (but not less often than monthly) as is
generally the policy of the Company with respect to its officers.
(b) In addition to the Base Salary, the Executive shall be
eligible to participate in the Company's annual cash bonus plan based upon
achieving and exceeding the annual performance targets for Custom Food as
follows:
(i) In respect of each of the 1997 through 1999 fiscal
years (each, a "Bonus Year"), the Company shall award a cash bonus (the
"Annual Cash Bonus"), if any, of between 30% and 100% of the Executive's
Base Salary, depending upon the percentage of Annual Budgeted EBITDA of
Custom Food (as hereinafter defined) attained, according to the following
schedule:
Annual Budgeted EBITDA
of Custom Food Cash Bonus as % of
% Attained Base Salary
-------------------------------- ----------------------------
less than 80% 0%
80% 30%
90% 40%
100% 50%
110% 75%
125% and above 100%
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, provided, however, that in each Bonus Year (as long as the Employee has been
continuously employed throughout such year), the Executive's Annual Cash Bonus
shall be at least $25,000 (the "Minimum Annual Bonus").
(ii) As used herein, the following terms shall have the
following meanings:
(A) "Annual Budgeted EBITDA" for Custom Food for
the fiscal year ended December 31, 1997 equals $12,200,000 and for each
subsequent fiscal year means the figure set by the Board on a yearly
basis.
(B) "EBITDA" means, with respect to any person,
the net income (after provision for all bonuses) of such person,
determined on a consolidated basis excluding the effect of any Stipulated
Items (as hereinafter defined) before payment or provision for payment of
(1) interest expense; (2) any Federal, state, local or other taxes based
on income; (3) depreciation expense and (4) amortization of goodwill and
other tangible assets.
(C) "Stipulated Items" means, with respect to any
person, income or expense items of a character significantly different
from those incurred in the typical or customary business activities of
such person and any of its subsidiaries or that would not be considered
recurring factors in any evaluation of the ordinary operations of the
business of Custom Food, including, but not limited to, (1) the sale or
abandonment of a plant or significant segment of the business of such
person; (2) the sale of an investment not acquired for resale; (3) the
writeoff of goodwill due to unusual events or developments within the
fiscal year being considered; (4) the condemnation or expropriation of
properties; (5) certain adjustments to the reserve accounts recorded by
such person; and (6) any management fees payable to First Atlantic
Capital, Ltd. and its affiliates.
(iii) The Company shall, promptly following the
Company's receipt from its certified public accountants of the audited
consolidated financial statements of the Company for each Bonus Year,
compute and promptly pay the Annual Cash Bonus based upon the EBITDA of
Custom Food as reflected in such audited consolidated financial
statements.
(c) In addition to the Base Salary, the Executive shall be
entitled to participate in the incentive stock option plan to be formulated by
the Board of Directors of the Parent.
(d) Subject to the last sentence of this Section 5(d), as of
July 1 of each year during the Employment Period (each such year, an "Adjustment
Year") commencing July 1, 1997, the Executive's Base Salary shall be subject to
increase by a
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percentage of the Executive's Base Salary equal to the percentage increase, if
any, in the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners, "all items" for the city or
metropolitan area to which Montebello, California bears the closest geographic
proximity, or any successor or substitute index reasonably selected by the
Company (the "Index Year"). The Company shall calculate any increase as soon as
practicable after the Consumer Price Index information for June of the Index
Year is made available and any such increase shall be effective on July 1 of the
Adjustment Year. Any increase in Base Salary pursuant to this Section 5(d) shall
be added to the Base Salary then being paid to the Executive, and the sum
thereof shall then become the Base Salary for each successive year, until
further adjusted in accordance with the provisions of this Section 5(d).
Anything contained herein to the contrary notwithstanding, any increase in Base
Salary pursuant to this Section 5(d) shall be offset against any other increase
in Base Salary to which the Executive might, in the discretion of the Board of
Directors of the Company, become entitled.
SECTION 6. Business Expenses; Benefits. (a) The Company (or, at the
Company's option, any subsidiary or affiliate thereof) shall reimburse the
Executive, in accordance with the practice from time to time for officers of the
Company, for all reasonable and necessary expenses and other disbursements
incurred by the Executive for or on behalf of the Company in the performance of
his duties hereunder. The Executive shall provide such appropriate documentation
of expenses and disbursements as may from time to time be reasonably required by
the Company.
(b) During the Employment Period, the Executive shall be
entitled to five weeks paid vacation during each twelve-month period worked
beginning on the Commencement Date.
(c) During the Employment Period, the Company shall provide
the Executive with group health, hospitalization and other employee benefits in
amounts and with terms consistent with the policies of the Company with respect
to its officers.
(d) During the Employment Period, the Company shall (i) from
the date hereof through the expiration date (September 1997) of the current
lease with respect to the Executive's automobile, continue to pay or reimburse
the Executive for the monthly lease payments therefor and (ii) at the expiration
of such lease, at the option of the Executive, either (A) obtain a new lease for
a comparable automobile at an aggregate maximum annual cost (including lease
payments, insurance, gas, repairs and maintenance) of $20,300 or (B) pay to the
Executive, in lieu of providing an automobile as aforesaid, $20,300 per annum in
equal monthly installments of $1,691.67.
SECTION 7. Involuntary Termination. (a) If the Executive is
incapacitated or disabled by accident, sickness or
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otherwise so as to render him mentally or physically incapable of performing the
services required to be performed by him under this Agreement (such condition
being hereinafter referred to as a "Disability") for a period of 180 consecutive
days or longer, or for an aggregate of 210 days during any twelve-month period,
the Company may, at any time after such 180 or 210 day period of Disability, at
its option, terminate the employment of the Executive under this Agreement
immediately upon giving him written notice to that effect (such termination, as
well as a termination under Section 7(b), being hereinafter referred to as an
"Involuntary Termination"). Until the Executive's employment hereunder shall
have been terminated in accordance with the foregoing, the Executive shall be
entitled to receive his compensation notwithstanding any such Disability.
(b) If the Executive dies during the Employment Period, his
employment hereunder shall be deemed to cease as of the date of his death.
SECTION 8. Termination For Cause. The Company may terminate the
employment of the Executive hereunder at any time for Cause (as hereinafter
defined)(such termination being referred to herein as a "Termination for Cause")
by giving the Executive written notice of such termination, effective
immediately upon the giving of such notice to the Executive. As used in this
Agreement (a) "Cause" means (i) the Executive's material breach of this
Agreement and, if such breach is capable of being cured, the failure to cure
such breach within 30 days of notice thereof from the Company to the Executive,
(ii) the Executive's disregard of lawful instructions of the Board that are
consistent with the Executive's position, or neglect of duties or failure to
act, which, in either case, may reasonably be anticipated to have a Material
Adverse Effect, and the continuance of such condition for a period of 30 days
after notice thereof from the Company to the Executive, (iii) alcohol or drug
abuse by the Executive or (iv) the commission by the Executive of a felony or an
act involving fraud, theft or dishonesty; and (b) "Material Adverse Effect"
means a material adverse effect on the business, operations, financial
condition, results of operations, assets, liabilities or prospects of the
Company or any of its subsidiaries or affiliates.
SECTION 9. Termination Without Cause. The Company may terminate the
employment of the Executive hereunder without Cause (such termination being
hereinafter referred to as a "Termination Without Cause") by giving the
Executive written notice of such termination, which notice shall be effective on
the date specified therein but not earlier than the date on which such notice is
given. For purposes of this Agreement, "Termination Without Cause" shall also
include the following:
(a) any material reduction, in the absence of the Executive's
consent, of the Executive's title, duties or responsibilities;
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(b) any material breach by the Company of its obligations
under this Agreement; and
(c) the Company's relocation of the Executive, in the absence
of the Executive's consent, to a location other than the metropolitan Los
Angeles, California area, provided that the Executive acknowledges that as part
of his duties hereunder, it may be necessary for him to make periodic business
trips of short duration (including, for example, trips to attend meetings of
boards of directors of which he is a member), which trips shall not be
considered the relocation of the Executive for purposes of this Section 9(c);
provided, however, that a Termination Without Cause pursuant to clauses (a), (b)
or (c) of this Section 9 shall not be deemed to have occurred unless, within 30
days of the occurrence (or, in the case of an event described in clause (b) of
this Section 9, the Executive's actual knowledge of such occurrence) of any of
the events described in said clauses (a), (b) or (c), the Executive shall have
given the Company notice (with reasonable specificity) of his intention to claim
a Termination Without Cause pursuant to this Section 9 and the basis therefor,
and the Company shall have failed to cure the act or omission described in the
notice within 30 days of receipt of such notice from the Executive.
SECTION 10. Voluntary Termination. Any termination of the employment
of the Executive hereunder other than as a result of an Involuntary Termination,
a Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination", including the expiration of this Agreement at the end
of the Employment Period and the failure of the Executive and the Company to
extend the term hereof beyond the Scheduled Termination Date or the expiration
of the Renewal Period, if applicable (a "Nonrenewal").
SECTION 11. Effect of Termination. (a) Upon the termination of the
Executive's employment hereunder due to a Termination for Cause or a Voluntary
Termination, neither the Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except to
receive (i) the unpaid portion, if any, of the Base Salary provided for in
Section 5(a), computed on a pro rata basis to the Termination Date (based on the
actual number of days elapsed over a year of 365 or 366 days, as applicable),
(ii) any unpaid accrued benefits due the Executive, (iii) reimbursement for any
expenses for which the Executive shall not have been reimbursed as provided in
Section 6(a) and (iv) in the case of a Voluntary Termination resulting from
Nonrenewal following the extension of the Employment Period beyond the Scheduled
Termination Date (as contemplated by the last sentence of Section 2), a pro rata
portion of the Minimum Annual Bonus computed by multiplying (A) the amount of
the Minimum Annual Bonus by (B) a fraction, the numerator of which is the number
of days elapsed in the Renewal
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Period from the beginning of such year to and including the effective date of
such termination and the denominator of which is 365, such portion of the
Minimum Annual Bonus to be payable at such time and in such manner as is
consistent with the Company's historical practice regarding the payment of
bonuses to the Executive or to its officers generally.
(b) Upon the termination of the Executive's employment
hereunder due to an Involuntary Termination, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above, (ii) to continue to receive the Base Salary, payable in
such installments as it was paid to the Executive prior to such termination of
employment for a period of six (6) months, (iii) to receive the pro rata portion
of the bonus to which the Executive would be entitled for the fiscal year of the
Company in which such termination occurred, computed by multiplying (A) the
bonus that would have been payable to the Executive for the entire year if his
employment had not been terminated by (B) a fraction, the numerator of which is
the number of days elapsed from the beginning of such year to and including the
effective date of such termination and the denominator of which is 365, such
portion of the bonus to be payable at such time and in such manner as is
consistent with the Company's historical practice regarding the payment of
bonuses to the Executive or to its officers generally and (iv) to participate in
all group health and hospitalization plans as contemplated by Section 6(c)
hereof until the earlier to occur of the Scheduled Termination Date and the date
which is six (6) months after the Termination Date.
(c) Upon the termination of the Executive's employment
hereunder due to a Termination Without Cause, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above, (ii) to continue to receive the Base Salary, payable in
such installments as it was paid to the Executive prior to such termination of
employment, through the earlier to occur of the Scheduled Termination Date and
the date which is eighteen (18) months after the Termination Date, (iii) to
receive the pro rata portion of the bonus to which the Executive would be
entitled for the fiscal year of the Company in which such termination occurred,
computed by multiplying (A) the bonus that would have been payable to the
Executive for the entire year if his employment had not been terminated by (B) a
fraction, the numerator of which is the number of days elapsed from the
beginning of such year to and including the effective date of such termination
and the denominator of which is 365, such portion of the bonus to be payable at
such time and in such manner as is consistent with the Company's historical
practice regarding the payment of bonuses to the Executive or to its officers
generally and (iv) to participate in all group health and hospitalization plans
as contemplated by Section 6(c) hereof
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until the earlier to occur of the Scheduled Termination Date and the date which
is eighteen (18) months after the Termination Date; provided, however, that any
such rights under clauses (ii) and (iv) of this Section 11(c) shall be reduced,
to the extent the Executive shall obtain other employment during the period such
payments are required to be made, by the amount of the salary and benefits
received by the Executive in connection with such new employment.
SECTION 12. Right to Sell Securities. (a) In the event (the "Trigger
Event") of (i) the expiration of this Agreement on the Scheduled Termination
Date or the last day of the Renewal Period, if applicable, and the Nonrenewal of
this Agreement or (ii) if earlier, a Termination Without Cause or an Involuntary
Termination, the Executive shall have the right and option (the "Put Option"),
during the 90-day period (the "Put Period") following the date of the Trigger
Event, to sell to the Parent up to 20% of the shares of Class A Nonvoting Common
Stock, $.01 par value (the "Class A Nonvoting Stock"), and/or options (the
"Options") to acquire such shares of Class A Nonvoting Stock which are then
vested and exercisable, in each case owned by the Executive on the date of the
Trigger Event (collectively, the "Put Securities"). Notwithstanding anything to
the contrary contained herein, if a Termination Without Cause or Involuntary
Termination shall occur within 18 months after the date hereof, the Trigger
Event shall not be deemed to have occurred, and the Put Period shall not
commence, until the date that is 18 months from the date hereof. The Put Option
shall be exercisable by the Executive by written notice to the Company and the
Parent during the Put Period, and upon receipt thereof, the Parent shall be
obligated to purchase the Put Securities which are the subject of such notice on
the following basis:
(A) The price (the "Put Price") of the Put Securities
shall be equal to the Stipulated Put Price Per Share (as hereinafter
defined);
(B) The Put Price shall be payable in cash or, in the
event and to the extent that such payment is not permitted by any
covenants set forth in agreements with its lenders, by delivery of a
subordinated promissory note of the Parent that (1) matures ratably on a
quarterly basis over a three year period; (2) is subordinated to all other
current or future indebtedness of the Parent; (3) bears interest, payable
on a quarterly basis, at a fluctuating annual rate equal to that rate
announced by NationsBank, N.A. from time to time as its prime rate; (4)
shall be secured with the Stock repurchased by delivery of such note; and
(5) shall otherwise contain such terms and provisions as may be required
by the Parent's lenders; provided, however, that in the event the Put
Price is payable by the Parent with promissory notes as provided in this
Section 12(a) (B), the Parent shall give notice to the Executive to such
effect within ten (10) days of receipt by the Company and the
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Parent of the notice exercising the Put Option and the Executive shall
have the right, during the ten (10) day period following receipt of the
aforesaid notice, to withdraw his exercise of the Put Option by giving
notice thereof to the Parent; provided further, however, that any such
withdrawn exercise of such Put Option shall be deemed, automatically and
without any further action on the part of the Executive or the Parent, to
be re-instated in the event that, following any such withdrawal, the
Company makes a cash payment to either Xxxxxx X. Xxxxx or Xxxxx Xxxxx
under the circumstances contemplated by Section 1 of the Special Agreement
dated as of the date hereof among the Company, the Parent, the Executive
and the other signatories thereto.
(C) The Put Price shall be paid within 90 days of the
exercise by the Executive of the Put Option;
(D) The Put Option shall be utilized first, with respect
to shares of Class A Nonvoting Common Stock, and thereafter, with respect
to options to purchase such Class A Nonvoting Common Stock;
(E) The option agreement(s) relating to the Option shall
provide that, in addition to the rights of the Executive currently set
forth therein, the Executive may exercise the vested and exercisable
Options as of the Trigger Date at any time prior to the second anniversary
of the Trigger Date;
(F) "Parent EBITDA" shall mean the EBITDA of the Parent
for the last 12 months of operations immediately preceding the
commencement of the Put Period;
(G) "Stipulated Put Price Per Share" shall mean the
quotient obtained by dividing (1) four (4) times Parent EBITDA, LESS
consolidated indebtedness and the liquidation value of preferred stock of
the Parent and its subsidiaries, PLUS unrestricted consolidated cash and
cash equivalents of the Parent and its subsidiaries, LESS any other
adjustments necessary to determine the consolidated equity value of the
Parent and its subsidiaries by (2) the aggregate number of shares of Class
A Voting Common Stock, $.01 par value (the "Class A Voting Stock"),
outstanding or deemed outstanding as of the date of calculation, after
giving effect to all securities (including the Class A Nonvoting Stock and
Class B Nonvoting Common Stock, $.01 par value, of the Parent) convertible
into, or exchangeable or exercisable for, Class A Voting Stock (regardless
of whether such securities are at the time convertible into, or
exchangeable or exercisable for, such Class A Voting Stock), as determined
by the Board of Directors of the Parent from time to time; and
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(H) As it relates to Options, the Put Price shall be the
Stipulated Put Price Per Share, LESS the exercise price per share of the
Options which are the subject of the Put Option.
(b) The Executive shall have the additional right and option,
on each of the first, second, third and fourth anniversaries of the date of the
Trigger Event and during the 90-day periods following such anniversaries, to
exercise the Put Option for up to 20% of the Put Securities then owned by the
Executive in the same manner, and on the same terms, as set forth above.
(c) Anything contained herein to the contrary notwithstanding,
(i) the Put Option of the Executive shall terminate and be of no further force
or effect simultaneously with the consummation by the Parent of the initial
public offering of shares of its capital stock (the "IPO") and (ii) in the event
of any inconsistency between the provisions of this Section 12 and the transfer
restrictions set forth in the Stockholders' Agreement (as hereinafter defined),
the provisions of this Section 12 shall govern.
SECTION 13. Right to Purchase Securities. (a) Upon the occurrence of
the Trigger Event, the Parent shall have the right and option (the "Call
Option"), during the 90-day period (the "Call Period") following the Put Period,
to purchase from the Executive up to 20% of the Class A Nonvoting Stock and/or
Options which are then vested and exercisable, in each case owned by the
Executive on the date of the commencement of the Call Period (collectively, the
"Call Securities"). The Call Option shall be exercisable by the Parent by notice
to the Executive during the Call Period, and upon receipt thereof, the Executive
shall be obligated to sell the Call Securities which are the subject of such
notice on the following basis:
(A) The price (the "Call Price") of the Call Securities
shall be equal to the Stipulated Call Price Per Share (as hereinafter
defined);
(B) The Call Price shall be payable in cash or, in the
event and to the extent that such payment is not permitted by any
covenants set forth in agreements with its lenders, and subject to the
prior written consent of the Executive, by delivery of a subordinated
promissory note of the Parent that (1) matures ratably on a quarterly
basis over a three year period; (2) is subordinated to all other current
or future indebtedness of the Parent; (3) bears interest, payable on a
quarterly basis, at a fluctuating annual rate equal to that rate announced
by NationsBank, N.A. from time to time as its prime rate; (4) shall be
secured with the Stock repurchased by delivery of such note; and (5) shall
otherwise contain such terms and provisions as may be required by the
Parent's lenders;
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(C) The Call Price shall be paid within 90 days of the
exercise by the Parent of the Call Option;
(D) The Call Option shall be utilized first, with
respect to shares of Class A Nonvoting Common Stock, and thereafter, with
respect to options to purchase such Class A Nonvoting Common Stock;
(E) The option agreement(s) relating to the Options
shall provide that, in addition to the rights of the Executive currently
set forth therein, the Executive may exercise the vested and exercisable
Options as of the Trigger Date at any time prior to the second anniversary
of the Trigger Date;
(F) "Parent EBITDA" shall mean EBITDA of the Parent, for
the last 12 months of operations immediately preceding the commencement of
the Put Period.
(G) "Stipulated Call Price Per Share" shall mean the
quotient obtained by dividing (1) five (5) times Parent EBITDA, LESS
consolidated indebtedness and the liquidation value of Preferred Stock of
the Parent and its subsidiaries, PLUS unrestricted consolidated cash and
cash equivalents of the Parent and its subsidiaries, LESS any prepayment
penalties and other adjustments necessary to determine the consolidated
equity value of the Parent and its subsidiaries by (2) the aggregate
number of shares of Class A Voting Common Stock, $.01 par value (the
"Class A Voting Stock"), outstanding or deemed outstanding as of the date
of calculation, after giving effect to all securities (including the Class
A Nonvoting Stock and Class B Nonvoting Common Stock, $.01 par value, of
the Parent) convertible into, or exchangeable or exercisable for, Class A
Voting Stock (regardless of whether such securities are at the time
convertible into, or exchangeable or exercisable for, such Class A Voting
Stock), as determined by the Board of Directors of the Parent from time to
time; and
(H) As it relates to Options, the Call Price shall be
the Stipulated Call Price Per Share, LESS the exercise price per share of
the Options which are the subject of the Put Option.
(b) The Parent shall have the additional right and option, on
each of the first, second, third and fourth anniversaries of the date of the
expiration of the applicable Put Period and during the 90-day periods following
such anniversaries, to exercise the Call Option for up to 20% of the Call
Securities then owned by the Executive in the same manner, and on the same
terms, as set forth above.
(c) Anything contained herein to the contrary notwithstanding,
(i) the Call Option of the Parent shall
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terminate and be of no further force or effect simultaneously with the
consummation by the Parent of the IPO and (ii) in the event of any inconsistency
between the provisions of this Section 13 and the provisions of the
Stockholders' Agreement dated as of December 31, 1996 (the "Stockholders'
Agreement") among the Parent, the Executive and the other signatories thereto,
the provisions of this Section 13 shall govern.
SECTION 14. Insurance. The Company may, for its own benefit,
maintain "key-man" life and disability insurance policies (collectively, the
"Insurance Policies") covering the Executive. The Executive will cooperate with
the Company and provide such information or other assistance as the Company may
reasonably request in connection with the Company's obtaining and maintaining
the Insurance Policies. Upon payment by the Executive of the applicable premiums
therefor, and upon completion of other customary and reasonable arrangements
with respect thereto, the Executive may name his estate or other beneficiary as
the named insured with respect to up to $2 million of life insurance coverage
under the Insurance Policies (which currently provide $7 million of life
insurance coverage). Upon the termination of the Executive's employment
hereunder, at the sole expense of the Executive, the Company shall cooperate
with the Executive to divide the life insurance policy included in the Insurance
Policies to provide for a separate $2 million life insurance policy for the
benefit of the Executive's estate or other beneficiary designated by the
Executive, provided the payment of all premiums for such $2 million policy shall
be the sole responsibility of the Executive (and not the Company or any of its
affiliates) and neither the Company nor any of its affiliates shall have any
obligation to pay any premiums, costs or expenses related to establishing or
maintaining, or arising as a result of, such separate $2 million life insurance
policy.
SECTION 15. Disclosure of Information. The Executive agrees that he
will not, at any time during the Employment Period or thereafter, disclose to
any person, firm, corporation or other business entity, except as required by
law, any non-public information concerning the business, clients or affairs of
the Company or any subsidiary or affiliate thereof for any reason or purpose
whatsoever nor shall the Executive make use of any of such non-public
information for his own purpose or for the benefit of any person, firm,
corporation or other business entity except the Company or any subsidiary or
affiliate thereof. For purposes of this Section 15, "non-public" information
shall not include any information that:
(i) is now, or hereafter becomes, through no act or failure to
act on the part of the Executive that constitutes a breach of this Section 15,
generally known or available to the public;
(ii) is known to the Executive at the time of the disclosure
of such information;
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(iii) is hereafter furnished to the Executive by a third
party, who, to the knowledge of such party, is not under any obligation of
confidentiality to the Company or any of its affiliates, without restriction on
disclosure;
(iv) is disclosed with the written approval of the party to
which such information or materials pertain;
(v) is required to be disclosed by law, court order, or
similar compulsion; provided, however, that such disclosure shall be limited to
the extent so required or compelled; and provided further, however, that if the
Executive is required to disclose such confidential information, he shall give
the Company notice of such disclosure and cooperate in seeking suitable
protections; or
(vi) is required to be provided pursuant to or in connection
with any legal proceeding involving the parties hereto.
SECTION 16. Right to Inventions. (a) The Executive shall promptly
disclose, grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business actually conducted by the
Company, which he may develop or which may be acquired by the Executive during
the Employment Period (whether or not during normal working hours), together
with all trademarks, patent applications, letters patent, copyrights and
reissues thereof that may at any time be granted for or upon any such xxxx,
design, logo, invention, improvement or technical information.
In connection therewith:
(i) the Executive shall without charge, but at the
expense of the Company, promptly at all times hereafter 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 any such marks, designs, logos, inventions, improvements, technical
information, trademarks, patent applications, patents, copyrights or
reissues thereof in the Company and to enable it to obtain and maintain
the entire right and title thereto throughout the world;
(ii) the Executive shall render to the Company at its
expense (including a reasonable payment for the time involved in case he
is not then in its employ based on his last per diem earnings) all such
assistance as it may require in the prosecution of applications for said
trademarks, patents, copyrights or reissues thereof, in the prosecution or
defense of interferences which may be declared involving any said
trademarks, applications, patents or copyrights and in
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any litigation in which the Company may be involved relating to any such
trademarks, patents, inventions, improvements or technical information;
and
(iii) for the avoidance of doubt, it is hereby agreed
that the foregoing provisions shall be deemed to include an assignment of
future copyright in accordance with Section 37 of the Copyright Act of
1986 and any amendment or re-enactment thereof.
(b) Any provision of this Agreement requiring the Executive to
assign his rights in any invention shall not apply to an invention which
qualifies fully under the provisions of Section 2870 of the California Labor
Code. That Section provides that the requirement to assign "shall not apply to
any invention for which no equipment, supplies, facility or trade secret
information of the employer was used and which was developed entirely on the
employee's own time, and (a) which does not relate (i) to the business of the
employer or (ii) to the employer's actual or demonstrably anticipated research
or development, or (b) which does not result from any work performed by the
employee for the employer." The Executive understands that he bears the full
burden of proving to the Company that an invention qualifies fully under Section
2870. By signing this Agreement, the Executive acknowledges receipt of a copy of
this Agreement and of written notification of the provisions of Section 2870.
SECTION 17. Enforcement; Severability; Etc. It is the desire and
intent of the parties that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
SECTION 18. Remedies. The Company and the Executive acknowledge and
understand that the provisions of this Agreement are of a special and unique
nature, the loss of which cannot be adequately compensated for in damages by an
action at law, and that the breach or threatened breach of the provisions of
this Agreement would cause the Company or the Executive irreparable harm. In the
event of a breach or threatened breach by the Company or the Executive of the
provisions of this Agreement, the Company or the Executive shall be entitled to
an injunction restraining such party from such breach. Nothing contained in this
Agreement shall be construed as prohibiting the Company or the Executive from or
limiting the Company or the Executive in pursuing any other remedies available
for any breach or threatened breach of this Agreement.
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SECTION 19. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to it at:
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
with a copy to:
First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000; and
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
if to the Executive, to him at:
00000 Xxxxxxxx Xxxxxxxxx, #000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
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with a copy to:
Xxxxx Xxxxx, Esq.
Xxxx & Xxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and in the
case of mailing, on the third business day following that on which the piece of
mail containing such communication is posted.
SECTION 20. Binding Agreement; Benefit. Subject to Section 25
hereof, the provisions of this Agreement will be binding upon, and will inure to
the benefit of, the respective heirs, legal representatives, successors and
assigns of the parties.
SECTION 21. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of California
(without giving effect to principles of conflicts of laws).
SECTION 22. Waiver of Breach. The waiver by either party of a breach
of any provision of this Agreement must be in writing and shall not operate or
be construed as a waiver of any other breach.
SECTION 23. Entire Agreement; Amendments. This Agreement contains
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings between the parties
with respect thereto, including, without limitation, the Original Employment
Agreement. This Agreement may be amended only by an agreement in writing signed
by the parties.
SECTION 24. Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 25. Assignment. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
Company may assign this Agreement to any of its subsidiaries and affiliates
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and the provisions of this Agreement shall inure to the benefit of, and be
binding upon, each successor of the Company, whether by merger, consolidation,
transfer of all or substantially all of its assets, or otherwise (no such
assignment shall relieve the Company from its obligations hereunder).
SECTION 26. Counterparts. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 27. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
SECTION 28. Unlimited Guaranty. As a condition to the execution of
this Agreement and the performance by the Executive of its obligations
hereunder, Custom Food is delivering a guaranty to the Executive in the form of
Exhibit A simultaneously with the execution and delivery hereof.
SECTION 29. Attorney Fees. In connection with any action, suit or
proceeding arising under or in connection with this Agreement, the prevailing
party in such action, suit or proceeding shall be entitled to the reasonable
attorneys' fees incurred in connection with such action, suit or proceeding.
* * * *
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the date first written above.
CFP HOLDINGS, INC.
By:________________________________
Name:
Title:
___________________________________
XXXXXXX X. XXXXXXXX
Agreed to as to Sections 12 and 13:
CFP GROUP, INC.
By:________________________________
Name:
Title:
EXHIBIT A
Unlimited Guaranty
In consideration of the management advice to be obtained by Custom
Food Products, Inc., a California corporation ("CFP"), pursuant to the
Employment Agreement dated as of December 31, 1996, (the "Employment
Agreement"), between Xxxxxxx X. Xxxxxxxx and CFP Holdings, Inc., a Delaware
corporation ("Holdings"), CFP hereby unconditionally guarantees the payment and
performance in full of all of the obligations of Holdings arising in connection
with the Employment Agreement.
IN WITNESS WHEREOF, CFP has caused this Unlimited Guaranty to be
duly executed as of this 31st day of December 1996.
CUSTOM FOOD PRODUCTS, INC.
By:________________________________
Name:
Title:
