EXHIBIT 10.85
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made by and between Vitafort International
Corporation., a Delaware Corporation ("Company") and Xxxx Xxxxxxxxx, an
individual ("Executive"), as of __________________ (the "Effective Date"), who
agree as follows:
1. Recitals. This Agreement is made with reference to the following material
--------
facts:
1.1 Executive is presently employed by Company pursuant to an oral
agreement, a previous written employment agreement having expired on December
31, 1996.
1.2 The parties desire to continue Executive's employment with the Company
pursuant to the written agreement set forth herein.
2. Employment.
----------
2.1 Company hereby engages and employs Executive in the capacity of
Executive Vice President and Director of Sales as of the Effective Date (the
"Employment"). The Company's Board of Directors (the "Board") may also provide
such additional designations of title to Executive as the Board, in its
discretion, may deem appropriate. Executive agrees to perform the executive
duties and functions customarily associated with the offices of Executive Vice
President and Director of Sales, and as specified from time to time by the
Board.
2.2 Except for legal holidays, vacations and absences due to temporary
illness or as otherwise permitted pursuant to company policy, Executive shall
devote his time, attention and energies to the business of the Company on a
full-time basis. Executive represents and warrants to the Company that he is
under no restriction, limitation or other prohibition to perform his duties as
described herein.
3. Term. The term of this Agreement (the "Term"), shall commence on the
----
Effective Date hereof and shall continue for a period of two (2) years
thereafter unless terminated earlier as provided hereinafter.
4. Compensation.
4.1. Base Salary. Executive's initial salary shall be $120,000 per annum.
-----------
This salary level will be reviewed at least annually by the Board, but will not
be reduced without Executive's prior written consent
4.2. Bonus. Any and all bonus payments shall be in the discretion of the
-----
Board. If the Company establishes a written bonus plan applicable to Executive,
he shall be entitled to receive bonus payments in accordance therewith. Such
plan, if adopted, shall be affixed to each original of this Agreement as Exhibit
A.
4.3 Incentive Stock Options. Any and all grants of Incentive Stock
-----------------------
Options or other options shall be in the discretion of the Board. If the Board
establishes a written option plan applicable to Executive, he shall be entitled
to receive Incentive Stock Options in
accordance therewith. Such plan, if adopted, shall be affixed to each original
of this Agreement as Exhibit B.
4.4 Retirement Benefits. Company shall provide Executive with the
-------------------
opportunity to participate in all of Company's qualified defined benefit and
defined contribution retirement plans, subject to the eligibility and
participation requirements of such plans.
4.5 Employee Benefits.
-----------------
(a) The Company shall, at its expense, provide Executive and his
immediate family with comprehensive medical insurance coverage at least
comparable to the coverage provided to the Company's other executive officers,
provided that Executive shall bear the cost of coverage for any dependents. The
Company shall also maintain Directors and Officers (D&O) insurance which shall
cover Executive with reasonable coverages and policy limits.
(b) During the term of this Agreement, and as otherwise provided
within the provisions of each of the respective plans, Company shall provide
Executive all benefits to which other executives and employees of Company are
generally entitled to receive, as commensurate with Executive's position. Such
benefits shall include, but not be limited to, group term life insurance, travel
insurance, dental insurance, vision insurance, and short-term and long-term
disability coverage. Executive shall likewise participate in any additional
benefits as may be established during the term of this Agreement, by standard
written policy of Company.
4.6 Vacation. Executive shall receive three (3) weeks paid vacation each
--------
year which shall be taken in accordance with the Company's vacation policy.
Executive shall also receive all the paid holidays observed by the Company, and
any other paid absence days established by Company policy.
4.7 Perquisites. Company shall provide Executive, at Company's cost, all
-----------
perquisites to which other executives of Company are entitled to receive in
accordance with Company policy. Such perquisites, if established, shall
include, but not be limited to, coverage of cost for auto allowance, cellular
telephone, and pager, provided that pursuant to this Agreement it is agreed that
Executive shall receive a monthly auto allowance of not less than $750.00 to
defray the cost of business automobile expense.
4.8 Expenses. Company shall pay, or reimburse Executive, for all ordinary
--------
and necessary expenses, in reasonable amounts, which Executive incurs in
performing his duties under this Agreement, including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all dues, fees
and expenses associated with membership in various professional business and
civic associations and societies of which Executive's participation is in the
best interests of Company, subject, however, to any limitations, rules and
procedures adopted by Company and which are applicable to executives generally.
4.9 Indemnification. The Company shall indemnify Executive, to the
---------------
maximum extent then permitted by applicable law, from and against any and all
claims, actions, suits,
2
losses, fines, judgments, interest, costs and expenses (including without
limitation actual attorney's fees and disbursements) arising out of or relating
to Executive's actions or omissions as an officer, director (if ever applicable)
or employee of the Company and/or any affiliate of the Company and/or as a
trustee or fiduciary of any plan, trust or other program established by the
Company. This Section 4.9 shall survive termination or expiration of this
Agreement.
5. Termination and Compensation Upon Termination.
---------------------------------------------
5.1 Notice and Date of Termination
------------------------------
(a) Any termination of Executive's Employment by Company or Executive
shall be communicated by a written notice to the other party (the "Notice of
Termination"). The Notice of Termination shall indicate the specific termination
provision in this Agreement that is applicable and is being relied upon, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employment under the provision so indicated.
(b) "Date of Termination" shall mean:
(i) In the case of termination under sections 5.2 (retirement)
or 5.3 (death), the date of retirement or death, as may be applicable.
(ii) In the case of termination initiated by the Executive under
section 5.5 (voluntary resignation) or 5.8 (termination for Good
Reason), the date specified in the applicable Notice of Termination, or
such earlier date, if any, determined by the Company.
(iii) In all other situations, the date specified in the
applicable Notice of Termination.
5.2. Termination Due to Retirement.
-----------------------------
(a) In the event Executive's employment is terminated, while this
Agreement is in force, by reason of Normal Retirement (as defined under the then
established rules of Company's tax-qualified retirement plan), Executive's
benefits shall be determined in accordance with Company's retirement, survivor's
benefits, insurance and other applicable programs then in effect.
(b) Upon the effective date of such termination, Company shall pay to
Executive his full Base Salary, at the rate then in effect as provided in
section 4.1 herein, through the effective date of termination, and Executive
shall receive all other benefits to which he has a vested right at that time,
including, but not limited to, the retirement benefits as described in section
4.4 herein. Company's obligation to pay and provide to Executive the Base
Salary as provided for in section 4.1 shall immediately thereafter expire and,
with the exception of the any covenants which by their terms survive
termination, Company and Executive thereafter shall have no further obligations
under this Agreement.
3
5.3 Termination Due to Death. In the event of Executive's death during
------------------------
the term of this Agreement, or during any period of Disability (as defined
herein) during which Executive is receiving compensation pursuant to section 5.4
herein, Company shall pay to Executive's beneficiary as so designated by
Executive during his lifetime, or to his estate, as appropriate, all benefits to
which Executive had a vested right pursuant to this Agreement, including, but
not limited to, the retirement benefits described in section 4.4 above.
Company's obligation to pay and provide to Executive Base Salary as provided for
in section 4.1 shall immediately thereafter expire and, with the exception of
the any covenants which by their terms survive termination, Company and
Executive thereafter shall have no further obligations under this Agreement.
5.4 Termination Due to Disability.
-----------------------------
(a) In the event Executive becomes Disabled during the term of this
Agreement and is, therefore, unable to perform his duties under this Agreement
for a period of more than 60 calendar days in the aggregate, during any period
of 120 consecutive days, or in the event of the Board's reasonable, good faith
determination that Executive's Disability is likely to last for more than a
period of 60 consecutive calendar days, Company shall have the right to
terminate Executive's active Employment upon the delivery to Executive of a
Notice of Termination stating Company's intent to terminate for Disability at
least 30 calendar days prior to the effective date of such termination
(b) Upon the Date of Termination (as defined by section 5.1), Company
shall pay to Executive his full Base Salary, at the rate then in effect, as
provided in section 4.1 herein, through the effective date of termination.
Company's obligation to pay and provide to Executive Base Salary shall
immediately thereafter expire, however, Executive shall receive all rights and
benefits in which he is vested, including, but not limited to, short and long-
term disability benefits, retirement benefits and options as described herein.
(c) The term "Disability" shall mean, for all purposes of this
Agreement, the incapacity of Executive due to injury, illness, disease, or
bodily or mental infirmity, to engage in the performance of substantially all of
the usual duties of employment with Company as contemplated by section 2 herein,
such Disability to be determined by the Board of Directors of Company upon
receipt of and reliance on competent medical advice from one or more
individuals, selected by the Board, who are qualified to give such professional
medical advice.
5.5 Voluntary Termination by Executive.
----------------------------------
(a) This section is applicable only to the voluntary resignation by
Executive, as opposed to resignation arising in the context of "Termination for
Good Reason," which is governed by section 5.8, below.
(b) Executive may terminate this Agreement at any time by giving the
Board of Directors of Company a Notice of Termination. The termination shall
automatically become effective upon the expiration of the period of notice
specified, or at anytime sooner at the discretion of Company. During such
notice period Company shall make no changes adverse to Executive with
respect to his compensation, benefits and perquisites in effect as of the
time such notice was given, and upon such termination, Company shall pay to
Executive all compensation due through the date of termination. Thereafter,
4
Executive shall retain all benefits which vested prior to termination in
accordance with the rules and procedures then in effect with respect to
vesting, including, without limitation all vested retirement benefits,
insurance, options, warrants and deferred compensation benefits. Otherwise,
with the exception of the any covenants which by their terms survive
termination, Executive and Company shall thereafter have no further
obligations under this Agreement.
5.6 Involuntary Termination by Company.
----------------------------------
(a) Company may terminate Executive's Employment at any time for any
reason other than death, Disability, Retirement, or for Cause (as defined in
section 5.7), by giving Executive a Notice of Termination.
(b) Upon the Date of Termination, Company shall pay to Executive his
Base Salary through the effective date of termination, plus all other benefits
to which Executive has a vested right at the time.
(c) In the event of termination pursuant to this section 5.6, Executive
shall be entitled to the "Severance Payment" (as defined in section 6.5) and
"Additional Benefits" provided for in section 6.6.
(d) With the exception of the payments and benefits described in this
section 5.6, and any covenants which by their terms survive termination, Company
and Executive thereafter shall have no further obligations under this Agreement.
5.7 Termination for Cause.
---------------------
(a) The Company may, at any time, discharge Executive "for Cause",
whereupon his employment shall terminate in accordance with the Company's Notice
of Termination. As used in this Agreement, the term "Cause" shall mean, (i) the
conviction of any crime involving dishonesty or resulting in imprisonment
without the option of a fine, (ii) the continuing material non-observance or the
material breach by Executive of any of the material provisions of this Agreement
after due written notice to Executive from the Board specifying with
particularity the nature of such non-observance or breach, or (iii) the
continuing neglect, failure or refusal of Executive to carry out the duties
properly assigned to him after due written notice to Executive from the Board
specifying with particularity the nature of such neglect, failure or refusal.
(b) In the event of termination for Cause, Company shall pay Executive
his full Base Salary and accrued vacation time though the Date of Termination,
plus all other benefits to which Executive has a vested right at the time. With
the exception of any covenants which by their terms survive termination, Company
and Executive shall thereafter have no further obligations under this Agreement.
5.8 Termination for Good Reason.
---------------------------
(a) Executive may terminate this Agreement at any time for "Good
Reason," by giving the Board a Notice of Termination stating such intent to
terminate. "Good Reason"
5
shall mean, without Executive's prior written consent, the occurrence of any one
or more of the following:
(i) Failure by the Company to honor any of its material
obligations under this Agreement; or
(ii) Any purported termination by the Company of Executive's
Employment that is not effected pursuant to a Notice of Termination as
required by 5.1 and, for purposes of this Agreement, no such purported
termination shall be effective; or
(iii) Failure to elect or reelect or otherwise to maintain
Executive to or in the office or the position (or a substantially
equivalent office or position) in the Company that Executive held as of
the date hereof; or
(iv) Executive's overall compensation or perquisites are reduced
or adversely modified in any material respect, or Executive's authority
or duties are materially changed, in either case without the prior and
voluntary written consent of Executive, which change is not fully
remedied within ten (10) calendar days after receipt by the Company of
written notice from Executive identifying such change(s). For purposes
of this Agreement, Executive's authority or duties shall be
conclusively considered to have been "materially changed" if, without
Executive's express and voluntary written consent, there is any
substantial diminution or adverse modification in Executive's title,
status, overall position, responsibilities, reporting relationship,
general working environment (including without limitation secretarial
and staff support, offices, and frequency and mode of travel); or
(v) A change in circumstances significantly affecting Executive's
position, including without limitation a change in the scope of the
business or other activities for which he was responsible as of the
Effective Date of this Agreement, and, as a result thereof, Executive
has been rendered substantially unable to carry out, has been
substantially hindered in the performance of, or has suffered a
substantial reduction in any of the authorities, powers, functions,
responsibilities or duties attached to the position held by Executive
as of the date hereof, which situation is not fully remedied within ten
(10) calendar days after written notice to the Company from Executive
of such determination, or
(vi) Company's requiring Executive to be based more than 100
miles from the location of his principal office at that time.
(c) In the event of termination pursuant to this section 5.8, Executive
shall be entitled to the "Severance Payment" (as defined in section 6.5) and
"Additional Benefits" provided for in section 6.6.
6
(d) With the exception of the payments and benefits described in this
section 5.8, and any covenants which by their terms survive termination, Company
and Executive thereafter shall have no further obligations under this Agreement.
6. Change of Control
-----------------
6.1 Survival. The provisions of this Section 6 shall (i) survive this
--------
Agreement and shall continue one (1) day past termination of Executive's
employment, and (ii) only become effective upon a "Change in Control," as
defined below. No termination or expiration of this Agreement shall limit,
alter or otherwise affect Executive's continuing rights hereunder with respect
to the benefits and rights afforded to him as provided herein.
6.2 Background.
----------
(a) The Company believes that because of its position in the industry,
financial resources and historical operating results there is a possibility that
the Company may become the subject of a Change in Control (as defined below),
either now or at some time in the future.
(b) The Company believes that it is in the best interest of the
Company and its shareholders to xxxxxx Executive's objectivity in making
decisions with respect to any pending or threatened Change in Control of the
Company and to assure that the Company will have the continued dedication and
availability of Executive, notwithstanding the possibility, threat or occurrence
of a Change in Control. The Company believes that these goals can best be
accomplished by alleviating certain of the risks and uncertainties with regard
to Executive's financial and professional security that would be created by a
pending or threatened Change in Control and that inevitably would distract
Executive and could impair his ability to objectively perform his duties for and
on behalf of the Company.
(c) Accordingly, the Company believes that it is appropriate and in
the best interest of the Company and its shareholders to provide to Executive
compensation arrangements upon a Change in Control that lessen Executive's
financial risks and uncertainties and that are reasonably competitive with those
of other corporations. With these and other considerations in mind, the Board
has authorized the Company to enter into these arrangements with Executive to
provide the protections set forth herein following a Change in Control.
6.3 Change in Control. As used in this Agreement, the phrase "Change in
-----------------
Control" shall mean:
(a) Except as provided by Paragraph (c) hereof, the acquisition by
any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of forty percent (40%) or more of the combined voting
7
power of the then outstanding securities entitled to vote generally in the
election of directors of the Company; or
(b) Individuals who, as of the Effective Date hereof, constitute the
Board of Directors of the Company (as of the Effective Date hereof the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors of the Company, provided that any person becoming a director
subsequent to the Effective Date hereof whose election, or nomination for
election by the Company's shareholders, is or was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) Approval by the stockholders of the Company of a reorganization,
merger or consolidation of the Company with any other person, entity or
corporation, other than:
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of another entity) more than sixty
percent (60%) of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company or such
other entity outstanding immediately after such merger or
consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person, entity or group (other than any employee benefit plan of any of
the Company) acquires beneficial ownership of forty percent (40%) or
more of the combined voting power of the securities entitled to vote
generally in the election of directors of the Company outstanding
immediately after such merger or consolidation; or
(d) Approval by the stockholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or other disposition by
the Company of all or substantially all of such Company's assets.
6.4 Qualifying Termination. If Executive's Employment is terminated within
----------------------
6 months following a Change of Control for any reason other than retirement,
death, disability or for Cause, such termination shall constitute a "Qualifying
Termination." In the event of a Qualifying Termination, the Company shall be
obligated to make the "Severance Payment" to Executive provided for in section
6.5 and provide the "Additional Benefits" described in section 6.6
8
6.5 Severance Payment.
-----------------
(a) For purposes of this Agreement, the "Severance Payment" shall
equal seventy five percent (75%) of Executive's "Compensation" (as defined
below). Executive shall be entitled to receive the Severance Payment in a cash
lump sum within five (5) calendar days after the later of Executive's Date of
Termination or the date of the Change in Control.
(b) For purposes of this Agreement, Executive's "Compensation" shall
equal the sum of (1) Executive's highest annual salary rate with the Company
within the three-year period ending on Executive's Date of Termination, plus (2)
the "Bonus Increment." The Bonus Increment shall equal the annualized average of
all bonuses and incentive compensation payments other than stock options paid or
payable to Executive during the three-year period immediately before Executive's
Date of Termination under all of the Company's bonus and incentive compensation
plans or arrangements, if any.
(c) In lieu of a cash lump sum, Executive may, in his sole discretion,
elect to receive the Severance Payment in equal annual installments over three
(3) years (or such lesser number of years as Executive may elect). Such
installments shall be paid to Executive on each anniversary of Executive's Date
of Termination, beginning with the first such anniversary and continuing on each
such anniversary thereafter until fully paid. Such election to receive the
Severance Payment in installments may be made and/or revoked by Executive at any
time prior to the termination of his employment by providing written notice to
the Board of such election. Any such election by Executive to receive the
Severance Payment in installments that has been made and not revoked prior to
Executive's termination shall, effective the date of such termination, be
irrevocable and binding on all parties hereto.
(d) In the event that at the time of Executive's Qualifying
Termination there is not in effect an election by Executive to receive the
Severance Payment in installments, such Severance Payment shall be paid to
Executive in a single cash lump sum. In the event that Executive has made an
appropriate election to receive the Severance Payment in annual installments,
and Executive becomes entitled to such Severance Payment as provided in this
Agreement, then such Severance Payment, to the extent at any time unpaid and/or
deferred, shall be deemed to bear interest at the base or prime rate in effect
from time to time as publicly announced by Bank of America NT&SA (the "Prime
Rate"). Accrued interest shall be due and payable together with each annual
installment of the Severance Payment.
6.6 Additional Benefits.
-------------------
(a) In the event of a Qualifying Termination, the Company agrees and
covenants that Executive and his dependents shall be entitled to continue to
participate in all benefit programs which had been made available to Executive
before the Qualifying Termination including without limitation, any and all
medical insurance, dental insurance, vision insurance, life insurance,
disability insurance, retirement and/or pension plans and other benefit programs
of the Company and/or its affiliates. These programs shall be continued at no
cost to Executive, except to the extent of Executive's income tax payable
thereon because tax rules require the inclusion of the value of such benefits in
Executive's income. The programs shall be continued
9
in the same way and at the same level as immediately prior to the Qualifying
Termination, and shall continue for the benefit of Executive for nine (9) months
(the "Benefit Period"). In the event that participation in any such plan or
program is barred or unavailable for any reason, the Company shall arrange to
provide Executive, at the expense of the Company, with benefits substantially
comparable to those which he was entitled to receive under such plans and
programs as were in effect immediately prior to the time of the Qualifying
Termination. The continuation of benefits provided for herein shall extend to
the dependents of Executive as permitted by the applicable plans, provided that
Executive shall continue to be responsible for the cost of any and all dependant
coverage.
(b) In the event of a Qualifying Termination, Executive or his
successors may, at the expense of the Company, utilize the reasonable services
of accountants and attorneys of his or their choice for assistance in
interpreting and enforcing this Agreement as well as for preparation of his tax
returns for the year of the Qualifying Termination and for each other year all
or any portion of which is included within the Benefit Period.
(c) In the event of a Qualifying Termination, Executive shall be
entitled, at the expense of the Company, to "Automobile Benefits" during the
entire term of the Benefit Period. For purposes hereof, "Automobile Benefits"
shall include a $750 per month allowance to defray automobile expenses and
costs.
(d) In the event any perquisite or benefit enjoyed by Executive or his
dependents is reduced or eliminated within six (6) months before a Qualifying
Termination, then for all purposes of this Agreement, the perquisite or benefit
as was in effect prior to such reduction or elimination shall be deemed to have
been in place immediately prior to the Date of Termination.
(e) In the event of a Qualifying Termination, any and all of
Executive's unvested stock options and equity-based incentives shall immediately
vest and be fully exerciseable.
7. Other Covenants of the Parties.
------------------------------
7.1 Indemnification for Golden Parachute Excise Tax.
-----------------------------------------------
(a) In the event that it shall be determined that any payment,
benefit or distribution provided, or to be provided, by the Company (or by any
person whose actions result in a Change in Control or any person affiliated with
the Company or such person) to or for the benefit of Executive under the terms
of this Agreement, or under any other agreement, plan or arrangement with the
Company (or with any person whose actions result in a Change in Control or any
person affiliated with the Company or such person), would be subject to any
excise tax imposed pursuant to Section 4999 of the Internal Revenue Code of
1976, as amended, or any comparable provision of state law (an "Excise Tax"),
the Company agrees that it will promptly pay or cause to be paid to Executive,
in addition to any other payments made or required to be made pursuant to the
terms of this Agreement, an additional amount in cash (a "Gross-Up
10
Payment") equal to the sum of (i) the amount of such Excise Tax plus (ii) all
Attributable Taxes and Penalties. For purposes of this Agreement, "Attributable
Taxes and Penalties" means all taxes, interest and penalties, including, without
limitation, any federal, state and local income taxes and any Excise Taxes,
which become payable by Executive as a result of the receipt of the Gross-Up
Payment or the assessment of any Excise Tax against Executive. It is intended
that under this provision the Company will indemnify Executive in such a manner
that Executive shall not suffer any loss or expense by reason of the assessment
of any Excise Tax or the reimbursement of Executive for payment of any such
Excise Tax.
(b) In determining the amount of any Gross-Up Payment payable
pursuant to Paragraph (i) above, Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made, and state and local taxes at
the highest marginal rates of taxation for such year in the state and locality
of Executive's residence. For such purposes, federal income taxes shall be
determined net of the maximum reduction in such federal income taxes that could
be obtained from the deduction of such state and local taxes.
(c) Within 30 days after Executive's Date of Termination, a mutually
agreed upon nationally recognized accounting firm (the "Accounting Firm"), shall
make a determination as to whether any Excise Tax should be reported and paid by
Executive for any period or periods by reason of any payment, benefit or
distribution under this Agreement or under any other agreement, plan or
arrangement with the Company (or with any person whose actions result in a
Change in Control or any person affiliated with the Company or such person). If
the Accounting Firm determines that any Excise Tax should be reported and paid
by Executive, the Accounting Firm shall also determine the amount of such Excise
Tax and the amount of the Gross-Up Payment required to be paid to Executive by
the Company with respect to such Excise Tax. In such event, the Company shall,
within five (5) business days after such determination, pay or cause to be paid
to Executive the amount of the Gross-Up Payment with respect to the Excise Tax
as determined by the Accounting Firm, and Executive shall report and pay the
Excise Tax as so determined. If the Accounting Firm determines that no Excise
Tax should be reported and paid by Executive, it shall furnish Executive with
its opinion that there is substantial authority not to report any Excise Tax,
and Executive shall prepare and file his tax returns in accordance with such
advice until such time as the Internal Revenue Service (the "IRS") or any
applicable state taxing authority shall notify Executive that such manner of
reporting is improper. The Company shall be responsible for all fees and
expenses connected with the determinations by the Accounting Firm pursuant to
this Paragraph 7.1.
(d) In the event that Executive is at any time required to pay any
Excise Tax (or any interest or penalties with respect to any Excise Tax) in
addition to any amount determined pursuant to Paragraph 7.1 (c) by reason of any
payment, benefit or distribution under this Agreement or under any other
agreement, plan or arrangement with the Company (or with any person whose
actions result in a Change in Control or any person affiliated with the Company
or such person), within five (5) business days after Executive notifies the
Company of such required additional Excise Tax (or additional interest or
penalties) the Company shall pay or cause to be paid to Executive a Gross-Up
Payment determined with respect to such additional
11
Excise Tax (and any such additional interest and penalties). In the event that
Executive receives any refund of any Excise Tax with respect to which Executive
has previously received a Gross-Up Payment hereunder, Executive shall promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).
(e) Executive agrees to notify the Company in a timely manner in the
event of any audit or other proceeding by the IRS or any state taxing authority
in which the IRS or the state taxing authority asserts that any Excise Tax
should be assessed against Executive and to cooperate with the Company (at the
Company's sole cost and expense) in contesting any such proposed assessment with
respect to such Excise Tax (a "Proposed Assessment"). Executive agrees not to
settle any Proposed Assessment without the consent of the Company. If, however,
Executive's tax liability for any year cannot be finally resolved principally by
reason of a failure to settle a Proposed Assessment, Executive may demand that
the Company settle the Proposed Assessment. If the Company does not settle the
Proposed Assessment, or does not consent to allow Executive to settle the
Proposed Assessment, within ten (10) days following such demand, the Company
shall indemnify and hold harmless Executive (i) with respect to any additional
interest and/or penalties that Executive is required to pay by reason of the
delay in finally resolving Executive's tax liability and (ii) with respect to
any taxes, interest and penalties that Executive is required to pay by reason of
any indemnification payment under this Paragraph.
7.2 Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
-------------------------
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan or program of the Company or any of
its affiliated companies at or subsequent to the date of any termination shall
be payable in accordance with such plan or program except as otherwise provided
herein.
7.3. Intellectual Property Rights.
----------------------------
(a) Executive shall promptly and fully inform Company of, and
disclose to Company, any and all ideas, concepts, themes, inventions, designs,
creations, improvements and discoveries that he makes during the term of this
Agreement, whether individually or jointly in collaboration with others, which
are, at the time any such item is conceived or reduced to practice, related to
Company's business or to actual or demonstrably anticipated research or
development of Company, or which result from any work performed by Executive for
Company.
(b) Executive agrees that any and all ideas, concepts, themes,
inventions, designs, creations, improvements or discoveries conceived, developed
or written by Executive either individually, or jointly in collaboration with
others, which are related to Company's business, whether patentable or
unpatentable or copyrightable or uncopyrightable, shall belong to and be the
sole and exclusive property of Company.
(c) Executive shall assist Company in obtaining patents or copyright
registration on such intellectual properties an execute all documents and do all
things necessary to enable Company to obtain and enforce full an exclusive title
to such properties which are related to Company's business.
12
8. General Provisions.
------------------
8.1 No Assignment. Neither party may assign this Agreement without the
-------------
prior written consent of the other.
8.2 Complete Agreement. This Agreement contains the entire agreement of
------------------
the parties with respect to the subject matter hereof and supersedes all
previous oral and written agreements and all contemporaneous oral negotiations,
commitments, writings and understandings.
8.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.4 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the internal laws of the State of California.
8.5 Modifications and Waivers. No waiver or modification of this Agreement
-------------------------
shall be binding unless it is in a writing signed by both parties hereto.
8.6 Severability. In the event any provision or provisions of this
------------
Agreement is or are to be held invalid, the remaining provisions of this
Agreement shall not be affected thereby.
8.7 Legal Fees. If any legal action, arbitration or other proceeding is
----------
brought for the enforcement of this Agreement, or because of any alleged
dispute, breach or default in connection with this Agreement, the successful or
prevailing party shall be entitled to recover all of its costs incurred in such
action or proceeding, including without limitation its actual attorneys' fees
and disbursements, in addition to any other relief to which it may be entitled.
8.8 Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing, served personally on, or mailed by
certified or registered United States mail to, the party to be charged with
receipt hereof. Notices and other communications served by mail shall be deemed
given hereunder seventy-two (72) hours after deposit of such notice or
communication in the United States Post Office as certified or registered mail
with postage prepaid and duly addressed to the receiving party as follows, or at
such other address as such party has designated in a written notice given as
provided herein:
To Company: To Executive:
Vitafort International Corporation Xxxx Xxxxxxxxx
Attention: Xxxx Xxxxxxx, President [Home address to be provided]
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
13
8.9 Construction. The language of this Agreement shall be construed
------------
simply and according to its fair meaning, and shall not be construed for or
against any party hereto as a result of the source of its draftsmanship.
8.10 Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or an alleged breach of this Agreement, shall be settled by
arbitration administered by JAMS/ENDispute, and judgment on the award rendered
by the arbitrator(s) may be entered in the Superior Court in and for the County
of Los Angeles, California. In case of a dispute, any party may commence
arbitration by giving written notice to the others of its desire to do so. Each
party hereto agrees that service of process for an arbitration proceeding will
be deemed completed when a notice of another party's desire to arbitrate is
received by such party. Each party hereby agrees that any such arbitration shall
be held in the County of Los Angeles, California and consents to the
jurisdiction of the Superior Court in and for the County of Los Angeles for
entering of any judgment. The arbitrator shall have authority equal to that of a
Superior Court Judge to grant equitable relief in an action pending in Los
Angeles County Superior Court in which all parties have appeared. Judgment upon
the Arbitrator's award may be entered as if after trial in accordance with
California law. Should any party fail to pay fees as required, any other party
may advance the same and shall be entitled to a judgment from the arbitrator in
the amount of such fees plus interest. Any award issued by the arbitrator shall
bear interest at the judgment rate in effect in the State of California from the
date determined by the arbitrator.
8.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, even though the parties
do not sign the same counterpart.
IN WITNESS WHEREOF the parties hereto do hereby execute and make effective this
Agreement as of the Effective Date.
Vitafort International Corporation
By: __________________________
Xxxx X. Xxxxxxx
Chief Operating Officer
Chief Financial Officer
_____________________________
Xxxx Xxxxxxxxx
14
EXHIBIT B
to
EMPLOYMENT AGREEMENT
DATED SEPTEMBER 3, 1997
This Exhibit B to the Employment Agreement dated as of September 3, 1997
(the "Agreement") by an between Vitafort International Corporation ("Company")
and Xxxx Xxxxxxxxx ("Executive") is hereby attached to the Agreement and made a
part thereof pursuant to section 4.3 of such Agreement.
Company hereby grants to Executive Stock Options to purchase up to 300,000
shares of Common Stock of the Company, at a purchase price of $0.87 per share,
provided that the right to exercise such options shall vest as follows:
Upon the Effective Date, Executive shall have the right to exercise the
option for up to 75,000 shares.
On March 3, 1998, Executive shall have the right to exercise the option for
up to 75,000 shares.
On September 3, 1998, Executive shall have the right to exercise the option
for up to 75,000 shares.
On March 3, 1999, Executive shall have the right to exercise the option for
up to 75,000 shares.
The grant of such options shall be confirmed by the delivery to Executive
of a written option agreement in the form of Company's standard Stock Option,
and shall further be subject to all applicable provisions of the Agreement.
