EMPLOYMENT AGREEMENT
Exhibit
10.5
AGREEMENT made as of the 31st
day of December, 2008, by and between Innovative Food Holdings, Inc., a Florida
corporation with its principal offices at 0000 Xxxxx Xxxxxx Xxx, Xxxxxx, Xxxxxxx
00000 (the “Corporation” or “IVFH”), and Xxx Xxxxxxxx, an individual (the
“Executive”).
W
I T N E S S E T H:
In
consideration of the mutual covenants contained herein, the parties hereto agree
as follow:
1. Employment. The
Corporation hereby employs the Executive as an executive of the Corporation, and
the Executive agrees to serve the Corporation as such, upon the terms and
conditions set forth in this Agreement for the period commencing as of the date
hereof and, unless Executive's employment under the Agreement is otherwise
terminated in accordance with the provisions hereof, ending on December 31,
2009.
2. Duties. (a) Executive
shall serve as the Chief Executive Officer of the corporation and its’
subsidiaries, with such duties and authority as are generally incident to such
position, or in such other management position as the Corporation shall
determine, without limiting the generality of the foregoing, the Executive shall
manage the overall strategic direction and operations of the corporation and
it’s subsidiaries. In performing his duties hereunder, the Executive
shall be subject to the direction of the Corporation's Board.
(b) The
Executive agrees that he will devote his time and attention to the affairs of
the Corporation, that he will use his best efforts to promote the business and
interests of the Corporation. It is understood, however, that the
foregoing will not prohibit the Executive from engaging in investment activities
and other activities that do not interfere with the performance of his duties
hereunder.
3. Compensation. (a) The
Corporation will pay the Executive for all services to be rendered by the
Executive hereunder (including, without limitation, all services to be rendered
by him as an officer of the Corporation and its subsidiaries and affiliates) an
annual base salary (hereinafter referred to as the "Base Salary") at the rate
of: (i) $130,000 per annum from the date hereof through Dec 31, 2009;
until the one-year anniversary of the date hereof; payable in equal, weekly
installments in accordance with customary payroll practices for executives of
the Corporation.
(b) Executive
shall also be entitled to receive an annual bonus based upon the incremental
revenues of the Coorporation and its subsidiaries, over the 12-month period
beginning January 2, 2009. Bonus shall be payable one-half in cash
and one-half in stock. The equity component shall be valued based upon the
average closing price of the Corporation’s common stock over the 30 trading days
ended December 31, 2008 but under no circumstance will be below .005 per share
or above .0115. The bonus shall be paid in full as long as an average
gross margin (as calculated historically) of 20% or greater is maintained on all
revenues of the Corporation and its subsidiaries. Any decline in average gross
margin below 20% on all revenues of the Corporation and its subsidiaries shall
reduce the bonus payout by 20% for each ½ percent decline.
The bonus
shall be payable according to the following schedule:
7 % of
the then current Base Salary if IVFH achieves $500,000 of
additional revenues
14 % of
the then current Base Salary if IVFH achieves $1,000,000 of additional
revenues
21 % of
the then current Base Salary if IVFH achieves $1,500,000 of additional
revenues
28 % of
the then current Base Salary if IVFH achieves $2,000,000 of additional
revenues
35 % of
the then current Base Salary if IVFH achieves at least $2,500,000 of additional
revenues
50 % of
the then current Base Salary if IVFH achieves at least $3,000,000 of additional
revenues
4. Expenses. The
Executive shall be entitled to reimbursement by the Corporation, in accordance
with the Corporation's policies then applicable to executives at the Executive's
level, against appropriate vouchers or other receipts for authorized travel,
entertainment and other business expenses reasonably incurred by him in the
performance of his duties hereunder.
5. Executive
Benefits. The Executive shall be entitled to participate in,
and receive either personal or family Health insurance and all benefits
currently offered to employees of the company or the cash equivalent of such
health insurance and other benefits. The company shall be responsible for paying
50% of the cost of such personal or family Health Insurance and benefits and
shall pay 50% of the cost, at the choice of the Executive, either through direct
payments to the Health insurance and benefit providers or through weekly direct
cash payments to the Executive in the cash amount of 50% of the cost of such
Personal or Family Health Insurance and benefits had the executive participated
in such personal or family health insurance plan and benefit plans.
6. Death; Permanent Disability;
Termination. (a) Upon the death of the Executive
during the term of this Agreement, this Agreement shall terminate. If
during the term of this Agreement the Executive fails because of illness or
other incapacity to perform the services required to be performed by him
hereunder for any consecutive period of more than 30 days, or for shorter
periods aggregating more than 45 days in any consecutive twelve-month period
(any such illness or incapacity being hereinafter referred to as “permanent
disability”), then the Corporation, in its discretion, may at any time
thereafter terminate this Agreement upon not less the 10 days’ written notice
thereof to the Executive, and this Agreement shall terminate and come to an end
upon the date set forth in said notice as if said date were the termination date
of this Agreement; provided, however, that no such
termination shall be effective if prior to the date set forth in such notice,
the Executive’s illness or incapacity shall have terminated and he shall be
physically and mentally able to perform the services required hereunder and
shall have taken up and be performing such duties. If there shall be
any dispute as to whether the Executive has a permanent disability, the dispute
shall be submitted to a panel of three physicians, one of whom shall be selected
by each of the parties, and the third of whom shall be a physician selected by
the first two. The written decision of such panel shall be
determinative of the issue as to whether the Executive has a permanent
disability, and shall be binding upon both parties.
(b) If
the Executive’s employment shall be terminated by reason of his death or
permanent disability, the Executive or his estate, as the case may be, shall be
entitled to receive (i) any earned and unpaid salary
accrued through the date of termination, (ii) a pro rata
portion of any annual bonus which the Executive would otherwise have been
entitled to receive pursuant to any bonus plan or arrangement for senior
executives of the Corporation (such pro rata portion to be payable at the time
such annual bonus would otherwise have been payable to the Executive),
and (iii) subject to the terms thereof, any benefits which
may be due to the Executive on the date of termination under the provisions of
any employee benefit plan, program or policy.
(c) In
the event the Corporation terminates this Agreement without Cause (as defined in
Section 9), Executive shall be paid in a lump sum, on the date of termination,
an amount equal to the Base Salary he would have earned hereunder for the four
(4) months following the date of termination . The company shall have no other
obligations to the Executive.
7. Termination for
Cause. The Corporation may at any time during the term of this
Agreement, by written notice, terminate the employment of the Executive for
cause, the cause to be specified (in reasonable detail) in the
notice. For purposes of this Agreement, “cause” shall mean any
malfeasance of the Executive in connection with the performance of any of his
duties hereunder, including, without limitation, misappropriation of funds or
property of the Corporation wrongfully, securing or attempting to secure
personally any profit in connection with any transaction entered into on behalf
of the Corporation or any intentional act having the effect of injuring the
reputation, business or business relationships of the Corporation; the failure,
neglect or refusal to perform the Executive's duties hereunder in any material
respect, or the breach of any material covenants contained in this Agreement
(provided,
however, that
the Executive shall be entitled to thirty days from the date on which the
Corporation gives written notice of termination to cure such conduct or breach);
and conviction (or nolo contendere plea) in
connection with a felony or misdemeanor involving moral
turpitude. Termination for cause shall be effective upon the giving
of such notice or, where applicable, the expiration of the cure period without
such a cure having been affected by Executive in all material respects; and the
Executive shall be entitled to receive any earned and unpaid salary accrued
through the date of termination. The Executive hereby disclaims any
right to receive a pro rata portion of any annual bonus with respect to the
fiscal year in which such termination occurs.
8. Insurance. The
Executive agrees that the Corporation may procure insurance on the life of the
Executive, in such amounts as the Corporation may in its discretion determine,
and with the Corporation named as the beneficiary under the policy or
policies. The Executive agrees that upon request from the Corporation
he will submit to a physical examination and will execute such applications and
other documents as may be required for the procurement of such
insurance. The Executive shall be granted the right to purchase such
policy at its cash surrender value upon the termination of his employment
hereunder.
9. Non-Competition;
Solicitation. (a) The Executive agrees that during his
employment with the Corporation and for a period of two years after Executive
leaves the Corporation’s employ for any reason, he shall not, without the
written consent of the Corporation, directly or indirectly, either individually
or as an employee, agent, partner, shareholder, consultant, option holder,
lender of money, guarantor or in any other capacity, participate in, engage in
or have a financial interest or management position or other interest in any
business, firm, corporation or other entity if it competes directly with any
business operation conducted by the Corporation or its subsidiaries or
affiliates or any successor or assign thereof at the time the Executive’s
employment with the Corporation is terminated, nor will he solicit any other
person to engage in any of the foregoing activities. Participation in
the operation of any business other than in connection with the operation of a
business which is in direct competition with the Corporation or its subsidiaries
or affiliates or any successor or assign thereof shall not be deemed to be a
breach of this Section 9(a). The foregoing provisions of this Section
9(a) shall not prohibit the ownership by the Executive (as the result of open
market purchase) of 1% or less of any class of capital stock of a corporation
which is regularly traded on a national securities exchange, on the NASDAQ
System or on an over-the-counter system.
(b) The
Executive will not at any time during his employment with the Corporation and
for a period of two years after Executive leaves the Corporation’s employ for
any reason, solicit (or assist or encourage the solicitation of) any employee of
the Corporation or any of its subsidiaries or affiliates to work for Executive
or for any business, firm, corporation or other entity in which the Executive,
directly or indirectly, in any capacity described in Section 9(a) hereof,
participates or engages (or expects to participate or engage) or has (or expects
to have) a financial interest or management position.
(c) If
any of the covenants contained in this Section 9 or any part thereof, is held by
a court of competent jurisdiction to be unenforceable because of the duration of
such provision, the activity limited by or the subject of such provision and/or
the area covered thereby, then the court making such determination shall
construe such restriction so as to thereafter be limited or reduced to be
enforceable to the greatest extent permissible by applicable law.
(d) If the
Executive is terminated without cause the Non-compete; Solicitation agreement
will be null and void.
10. Trade Secrets,
Etc. The Executive agrees that he shall not, during or after
the termination of this Agreement, divulge, furnish or make accessible to any
person, firm, corporation or other business entity, any information, trade
secrets, client lists, vendor lists, pricing information, technical data (with
the exception of technical data and code that does not compete with the
corporation or the corporation’s business) or know-how relating to the business,
business practices, methods, products, processes, equipment or other
confidential or secret aspect of the business of the Corporation and/or any
subsidiary or affiliate, except as may be required in good faith in the course
of his employment with the Corporation or by law, without the prior written
consent of the Corporation, unless such information shall become public
knowledge (other than by reason of Executive’s breach of the provisions
hereof).
11. Acceptance by Executive and
Corporation. The Executive and the Corporation each accept all
of the terms and provisions of this Agreement, and agree to perform all of the
covenants on their respective parts to be performed hereunder.
12. Equitable
Remedies. The Executive acknowledges that he has been employed
for his unique talents and that his leaving the employ of the Corporation during
the Term of this Agreement would seriously hamper the business of the
Corporation and that the Corporation will suffer irreparable damage if any
provisions of Sections 9 and 10 hereof are not performed strictly in accordance
with their terms or are otherwise breached. The Executive hereby
expressly agrees that the Corporation shall be entitled as a matter of right to
injunctive or other equitable relief, in addition to all other remedies
permitted by law, to prevent a breach or violation by the Executive and to
secure enforcement of the provisions of Sections 9 and 10
hereof. Resort to such equitable relief, however, shall not
constitute a waiver of any other rights or remedies that the Corporation may
have.
13. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto and there are no other terms other than those
contained herein. No waiver, amendment or modification hereof shall
be deemed valid unless in writing and signed by the parties hereto (or their
permitted successors and assigns) and no discharge of the terms hereof shall be
deemed valid unless by full performance of the parties hereto or by a writing
signed by the parties hereto. No waiver by the Corporation or any
breach by the Executive or the Corporation of any provision or condition of this
Agreement by either of them to be performed shall be deemed a waiver of a breach
of a similar or dissimilar provision or condition at the same time or any prior
or subsequent time.
14. Severability. In
case any provision in this Agreement shall be declared invalid, illegal or
unenforceable by any court of competent jurisdiction, the validity and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
15. Notices. All
notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be deemed to have been given at the
following times: (i) when delivered if given by hand, or (ii) three business
days after mailing in the United States enclosed in a registered or certified
post-paid envelope, return receipt requested, and addressed to the addressee at
the Company’s address listed above or to such changed addresses as such parties
may fix by notice with a copy to:
Xxxxxx X.
Xxxxx, Esq.
Feder, Kaszovitz, Isaacson, Weber,
Xxxxx, Bass & Rhine LLP
000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
provided,
however, that any notice of change of address shall be effective only upon
receipt.
16. Successors and
Assigns. This Agreement is personal in its nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder (except for an
assignment or transfer by the Corporation to its parent or an assignment by the
executive to a corporation managed by the executive.); provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon, any
successor of the Corporation, whether by merger, consolidation, transfer of all
or substantially all of the assets of the Corporation, or otherwise, and upon
the Executive, his heirs, executors, administrators and legal
representatives.
17. Governing
Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the internal laws of the State
of Florida without giving effect to any principles of conflict of
laws.
18. Headings. The
headings in this Agreement are for convenience of reference only and shall not
control or affect the meaning or construction of this Agreement.
19. Counterparts. This
Agreement may be executed in two counterparts, each of which shall be deemed an
original of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have hereunder set their hands and seals the
day and year first above written.
Innovative Food Holdings,
Inc.
By: _______________________________________
Name: Xxx
Xxxxxxxx
Title: Chief
Executive Officer
__________________________________________
Xxxx Xxxx Director
__________________________________________
Xxxxxx Xxxxxxx
Director
