EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXXXX
THIS EMPLOYMENT AGREEMENT is made and entered into as of August 26,
1996, by and between XXXXXXXX FOODS OF DISTINCTION, INC., a Colorado
corporation ("Corporation"), and XXXXXX X. XXXXXXXX ("Employee") under the
following circumstances:
A. Corporation desires to employ Employee as its Vice President and Chief
Operating Officer because of his knowledge, experience and expertise.
B. Employee desires to become employed by Corporation in such capacity.
C. The parties hereto desire to set forth in writing the terms and
conditions of the employment relationship to be established.
NOW, THEREFORE, the parties hereto agree as follows:
A. EMPLOYMENT. Corporation shall employ Employee as the Vice
President and Chief Operating Officer of Corporation pursuant to the terms
and conditions hereinafter set forth, and Employee shall perform the duties
of such position.
1. TERMS OF EMPLOYMENT. Subject to the provisions of paragraph 7, the
initial term of employment shall be three (3) years, commencing as of August
26, 1996, and terminating on August 25, 1999. If, upon expiration of the term
of this Agreement a new written agreement has not been negotiated and
executed, Employee shall continue to be employed by Corporation on at-will
basis, subject to his resigning or Corporation terminating his employment for
any reason or no reason at all, at anytime, with or without notice, in the
Corporation's sole discretion.
2. DUTIES AND RESPONSIBILITIES.
a. Subject to the directives of the President and Chief
Executive Officer, Employee shall be responsible for all day-to-day
operational activities of Corporation. The duties and responsibilities of such
position are specifically set forth on the job description attached hereto as
Exhibit A. It is anticipated that Employee's duties and responsibilities as
set forth in such job description may be modified from time to time consistent
with Employee's duties as the Chief Operating Officer of Corporation in which
case an updated job description shall replace Exhibit A. Employee agrees to
perform his services conscientiously, effectively and to the best of his
ability.
3. BASE SALARY. In consideration of Employee's services under this
Agreement to Corporation, Employee's base salary shall be fixed at an annual
rate of One Hundred Forty Thousand Dollars ($140,000.00), from the effective
date of this Agreement through February 28, 1997 and at the annual rate of One
Hundred Fifty Thousand Dollars ($150,000.00) thereafter, payable in accordance
with Corporation's normal payroll practices. Such base salary shall be
reviewed annually for increases by the Board of Directors at the same time the
senior management group of employees of Corporation is reviewed.
4. INCENTIVE COMPENSATION. As further consideration for Employee's
services under this Agreement, Corporation shall pay Employee such incentive
compensation to which Employee may be entitled pursuant to Corporation's
Management Incentive Compensation Plan as may be adopted by the Board of
Directors of Corporation for the years 1996, 1997 and 1998. Employee shall be
entitled to a pro-rata distribution, if any, of Corporation's Management
Incentive Compensation Plan as in effect for the year 1996. Employee
acknowledges that he has received a copy of the Management Incentive
Compensation Plan as in effect for the year 1996.
5. BENEFITS. In consideration for Employee's accepting the employment
provided for herein, Corporation agrees to provide the following benefits:
a. All the standard benefits normally provided to the employees
of Corporation, including, but not limited to, social security benefits,
workers' compensation, 401(k) plan participation, long-term disability
insurance, health insurance of various kinds and similar benefits. Corporation
shall reimburse Employee for Employee's COBRA payments until Employee's health
insurance coverage is effective under Corporation's plan. Corporation's
standard ninety (90) day probation period applicable to vacation and sick
leave accrual, holiday pay and health insurance coverage, shall not apply to
Employee.
b. During 1996 Employee shall accrue vacation days at the rate
prescribed by Corporation's standard policies. Employee shall be entitled to
three (3) weeks paid vacation days for the first year and four (4) weeks paid
vacation per year thereafter.
c. Corporation shall reimburse Employee for reasonable and
necessary expenses incurred by him in the performance of his duties hereunder
upon presentation of vouchers in accordance with Corporation's policies.
d. Subject to board of director's approval, Employee shall be
granted 150,000 incentive stock options of Corporation, which shall vest in
accordance with the vesting schedule set forth in the Stock Option Agreement
attached hereto as Exhibit B. The exercise price shall be the mean between the
bid and asking price of Corporation's common stock on the date such options
are ratified by the Board of Directors. Such options shall be granted as
incentive stock options pursuant to the terms and conditions set forth in the
form of Stock Option Agreement attached hereto as Exhibit B and the 1993 Stock
Option Plan of Corporation, as amended.
e. Subject to board of director's approval, Employee shall be
granted 10,000 shares of common stock pursuant to the terms of a Restricted
Stock Agreement attached hereto as Exhibit C.
f. Such other flexible executive perquisites that may be
approved by the Board of Directors of Corporation for the senior management
group of employees of Corporation.
g. Corporation shall reimburse Employee for automobile expenses
incurred by Employee in carrying out his duties hereunder in an amount up to
$750 per month. Such reimbursement shall include, but not be limited to, gas,
oil, maintenance and insurance expenses. Employee shall furnish to Corporation
adequate records and other documentary evidence required by federal and state
statutes and regulations for the substantiation of such payments as deductible
business expenses of Corporation and not as deductible compensation to
Employee.
6. EARLY TERMINATION AND SEVERANCE.
a. BY CORPORATION. Corporation, acting through its President or
Board of Directors, may terminate this Agreement at any time for "just cause".
If such termination is for any reason other than "just cause", then all of the
rights, duties and obligations of the parties under this Agreement shall cease
upon the effective date of termination, except that Corporation shall pay to
Employee a sum equal to six (6) months' base salary if the effective date of
such termination is prior to March 1, 1997. If the effective date of such
termination is subsequent to March 1, 1997, Corporation shall pay to Employee
a sum equal to six (6) month's base pay plus one additional month of base pay
for each month subsequent to February 1997 in which the effective date of
termination occurs, up to a maximum of twelve (12) months' bonus pay. If such
termination is for "just cause," then all of the rights, duties and
obligations of the parties under this Agreement shall cease upon the effective
date of termination. For purposes of this Agreement, such termination shall be
deemed for "just cause" only if it is by reason of Employee's commission of
willful and material acts of neglect, dishonesty, fraud or other acts
involving moral turpitude which materially and adversely affect the business
or affairs of Corporation, such as: possession of weapons on Corporation
premises; actual or threatened physical violence to another employee or
customer or anyone else with whom the Corporation maintains a business
relationship; possession or use of illegal drugs, controlled substances, or
abuse of legal drugs or alcoholic beverages on Corporation premises or time as
set forth in the Corporation handbook; deliberate destruction or theft of
Corporation or employee owned property and illegal harassment of any form.
b. BY EMPLOYEE. Employee may terminate this Agreement in
his sole discretion for any reason upon thirty (30) days prior written notice
to the President of Corporation. Upon the effective date of such termination
by Employee, all of the rights, duties, and obligations of the parties under
this Agreement shall cease, including Employee's right to his base salary and
incentive compensation benefits.
7. CONFIDENTIALITY AND NON-DISCLOSURE: By reason of Employee's
duties, he shall become acquainted with confidential and proprietary
information belonging to Corporation, including but not limited to, (a)
processes, techniques, know-how and data; (b) plans for development, marketing
and selling, information regarding business plans, budgets and unpublished
financial statements; prices and costs; information concerning advertisers and
customers; and information regarding the skills and compensation of other
employees of Corporation; and (c) any other information designated by
Corporation as confidential. Employee shall not disclose any of the aforesaid
trade secrets and confidential information, directly or indirectly, or use
them in any way, either during his employment or at any time thereafter,
except as required in the course of his employment with Corporation. The
rights and remedies of Corporation under this section shall be in addition to
any, not in lieu of any, rights and remedies prescribed by law, including the
Uniform Trade Secrets Act.
8. ARBITRATION: Any dispute arising out of the termination of
Employee's employment (including, but not limited to, purported violations of
statute, claims based on any alleged breach of duty arising out of contract or
tort) or any other alleged violation of a statutory, contractual or common law
right(s) (but excluding workers' compensation, unemployment insurance claims
and wage and hour matters within the jurisdiction of the State Labor
Commissioner) or any claim for discrimination or harassment arising out of
Employee's employment, which cannot be resolved through either discussion or
mediation, shall be submitted to final and binding arbitration before a
neutral arbitrator pursuant to the American Arbitration Association Employment
Dispute Resolution Rules, as may be amended from time to time. Statutes and
laws covered by this Agreement, include, but are not limited to, equal
employment opportunity laws (which include claims for age, race, color,
disability, medical condition, marital status, religion, ancestry, national
origin, sexual harassment and discrimination, and sexual orientation), the
Federal Civil Rights Acts of 1964 and 1991, as amended, the Age Discrimination
in Employment Act, the Americans with Disabilities Act, the California Fair
Employment and Housing Act and California wrongful discharge law. Employee may
be represented by counsel of his choice, at his own expense.
Arbitration will be the exclusive means of resolving any dispute
described above. No other action will be brought by the Employee in any court
or other forum except those claims specifically excluded in the arbitration
procedures, or as otherwise provided by law. If any dispute should arise,
Employee agrees to deliver a written Request for Arbitration to the President
of Corporation within one (1) year of the date the dispute occurred. The
request for arbitration shall describe the dispute in sufficient detail to
advise the Corporation of the nature of the dispute, the date when the dispute
first arose, and the remedies sought. Employee agrees to respond within ten
(10) calendar days to each communication regarding the selection of an
arbitrator and scheduling of the hearing. If Employee does not file a written
Request for Arbitration within one year of the date of said occurrence or does
not respond to any communication about the arbitration proceeding within ten
(10) calendar days, such claims will be untimely and therefore barred. The
limitations period set forth herein shall not be subject to tolling. Employee
shall not have the right to raise any claims, in any forum, arising out of any
controversy that is subject to arbitration.
9. NOTICES. Notices required or permitted by this Agreement shall be
effective upon mailing, postage prepaid, or upon personal delivery, to the
following address:
To Corporation:Xxxxxxxx Foods of Distinction, Inc
00000 Xxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
To Employee: Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
10. MISCELLANEOUS PROVISIONS.
a. The law of the State of California shall govern the
interpretation and enforcement of this Agreement.
b. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
c. This Agreement contains all of the covenants and agreements
between the parties on the matter stated herein. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other agreement,
statement, or promise on the subject matter stated herein not contained in
this Agreement shall be valid or binding.
d. Any modification of this Agreement shall be effective only
if it is in writing and executed by the party or parties to be charged.
e. This Agreement shall be binding upon and inure to the
benefit of the parties and their spouses, successors, assigns, personal
representatives, heirs and legal representatives.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first hereinabove written.
XXXXXXXX FOODS OF DISTINCTION, INC.,
a Colorado corporation
By:/s/ Xxxxxxx X. Xxxxxxxx
XXXXXXX X. XXXXXXXX
Its: President
"Corporation"
/s/ Xxxxxx X. Xxxxxxxx
XXXXXX X. XXXXXXXX
"Employee"
EXHIBIT A
JOB DESCRIPTION
EXHIBIT B
STOCK OPTION AGREEMENT
XXXXXXXX FOODS OF DISTINCTION, INC., a Colorado corporation
("Corporation") grants to XXXXXX X. XXXXXXXX ("Employee"), effective as of
September 12, 1996, the date of approval by the Board of Directors of
Corporation (the "Effective Date"), a stock option ("Option") to purchase up
to an aggregate of 150,000 Shares of the par value common stock of Corporation
for a purchase price of $1.735 per Share. This Option may be exercised as
follows:
(a) Up to 5,000 of the Shares may be purchased on or after December
31, 1996 and up to an additional 20,000 of the Shares may be purchased on or
after March 1, 1997 and up to an additional 1/36th of the Shares may be
purchased for each additional month on or after April 1, 1997, if Employee is
still employed by Corporation on such dates; provided, however, and
notwithstanding the above, that upon "change in control" of Corporation, as
defined below, all Shares subject to the Option may be purchased by Employee.
This Option shall expire on September 11, 2006.
For purposes of this Agreement, a "change in control" shall mean (i)
consolidation or merger of Corporation in which Corporation is not the
surviving entity or in which there is a change in the ownership of more than
fifty percent (50%) of the outstanding capital stock of Corporation in one
transaction or a series of related transactions, (ii) the sale of
substantially all of the assets of Corporation, or (iii) a change in more than
fifty percent (50%) of the directors of Corporation which occurs as a result
of a contested election for the board of directors.
The purchase price of the Shares as to which this Option is exercised
shall be paid in full in cash or certified funds at the time of exercise.
When this Option or a portion of the Option is exercised, Corporation is
authorized to deduct from any payment of any kind owed to Employee any
federal, state, local or other taxes required by law to be withheld with
respect to the Shares being purchased upon exercise of this Option.
Alternatively, Employee may remit to Corporation an amount necessary to
satisfy any federal, state, local or other withholding tax requirements prior
to the delivery of any certificate or certificates for the Shares purchased
upon exercise of this Option or portion of this Option.
The grant and exercise of this Option shall be governed by Corporation's
1993 Stock Option Plan, as amended, as it relates to Incentive Stock Options,
which is incorporated by reference into this Option. Employee by his signature
below, agrees to abide by the applicable provisions of Corporation's 1993
Stock Option Plan, as amended.
Dated this ____ of ________, 1996.
XXXXXXXX FOODS OF DISTINCTION, INC.
By:_____________________________________
Xxxxxxx X. Xxxxxxxx, President
"Corporation"
________________________________________
XXXXXX X. XXXXXXXX
"Employee"
EXHIBIT C
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT is made and entered into as of the 12th
day of September, 1996, by and between XXXXXXXX FOODS OF DISTINCTION, INC. a
Colorado corporation ("Xxxxxxxx"), and XXXXXX X. XXXXXXXX ("Employee") under
the following circumstances:
RECITALS:
X. Xxxxxxxx and Employee have entered into an Employment Agreement
(the "Agreement") pursuant to which Employee shall serve as the Vice President
and Chief Operating Officer of Xxxxxxxx.
B. In consideration of Employee's services under the Agreement,
Xxxxxxxx desires to issue to Employee shares of restricted common stock of
Xxxxxxxx pursuant to the terms of this Agreement. Employee agrees to receive
such shares upon the terms and conditions of this Agreement.
AGREEMENT:
In consideration of the mutual covenants and representations herein set
forth, Xxxxxxxx and Employee agree as follows:
1. ISSUANCE OF STOCK.
a. Subject to the terms and conditions of this Agreement, Xxxxxxxx
hereby agrees to issue to Employee and Employee agrees to receive from
Xxxxxxxx Ten Thousand (10,000) shares of Xxxxxxxx common stock upon execution
of this Agreement.
The foregoing shares of Xxxxxxxx'x common stock shall be referred to
herein as the "Stock".
b. Employee agrees that for purposes of this Agreement, the Stock
shall be valued at the mean between the closing bid and ask prices for the
Stock as reported by NASDAQ on the business day immediately preceding the date
of this Agreement, less a discount of 35% attributable to the transferability
restrictions of the Stock as set forth herein and as imposed under federal and
state securities laws the (the "Issue Price").
2. DELIVERY OF STOCK. The delivery of the certificates representing the
Stock shall occur within thirty (30) business days after the Stock is required
to be issued, or as promptly thereafter as is practicable.
3. PURCHASE OPTION.
a. All of the Stock shall be subject to the right and option of
Xxxxxxxx to repurchase the Stock (the "Purchase Option") (as set forth in this
Section 3) in the event (i) Employee terminates the Agreement prior to the
expiration of its term or (ii) the Agreement is terminated by Xxxxxxxx for
just cause prior to the expiration of its term (collectively, a
"Termination"). The Purchase Option shall come into effect immediately upon a
Termination as follows:
(1) If a Termination giving rise to the right to exercise
the Purchase Option occurs on or prior to March 1, 1997 (the "Vesting
Commencement Date"), the Purchase Option shall apply to 100% of the Stock.
i. If a Termination giving rise to the right to exercise the
Purchase Option occurs after the Vesting Commencement Date, the Purchase
Option shall apply to that portion of the Stock which is a fraction of 100% of
the Stock, the numerator of which shall be a number equal to 36 minus the
total number of full calendar months elapsed from September 1, 1996 to the
date of Termination, and the denominator of which shall be 36.
b. The Purchase Option shall be exercisable at the Issue Price (the
"Option Price").
c. Within 90 days following a Termination, the Xxxxxxxx shall notify
Employee by written notice delivered or mailed as provided in subparagraph
8.c, as to whether it wishes to purchase the Stock pursuant to exercise of the
Purchase Option. If Xxxxxxxx (or its assignee) elects to purchase the Stock
hereunder, it shall set a date for the closing of the transaction at a place
and time specified by Xxxxxxxx, which date shall not be more than 30 days
after the date of such notice. At such closing, Xxxxxxxx (or its assignee)
shall tender payment for the Stock and Employee shall duly endorse to Xxxxxxxx
(or its assignee) the certificate or certificates representing the Stock, and
the certificates representing the Stock so purchased shall be cancelled.
d. Notwithstanding the above, upon "change in control" of
Corporation, as defined below, the Purchase Option shall immediately
terminate. For purposes of this Agreement, a "change in control" shall mean
(i) consolidation or merger of Corporation in which Corporation is not the
surviving entity or in which there is a change in the ownership of more than
fifty percent (50%) of the outstanding capital stock of Corporation in one
transaction or a series of related transactions, (ii) the sale of
substantially all of the assets of Corporation, or (iii) a change in more than
fifty percent (50%) of the directors of Corporation which occurs as a result
of a contested election for the board of directors.
4. STOCK SPLITS, ETC. If, from time to time during the term of this
Agreement:
a. There is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of Xxxxxxxx; or
b. There is any consolidation, merger or sale of all, or
substantially all, of the assets of Xxxxxxxx; then, in such event, any and all
new, substituted or additional securities or other property to which Employee
is entitled by reason of his ownership of Stock shall be immediately subject
to this Agreement and be included in the word "Stock" for all purposes with
the same force and effect as the shares of Stock presently subject to the
Purchase Option, right of first refusal and other terms of this Agreement.
While the aggregate Option Price shall remain the same after each such event,
the Option Price per share of Stock upon execution of the Purchase Option
shall be appropriately adjusted.
5. RESTRICTION ON TRANSFER; RIGHT OF FIRST REFUSAL.
a. Employee shall not sell, transfer, pledge, hypothecate or
otherwise dispose of any shares of the Stock during the initial term of the
Agreement or as long as the Stock remains subject to the Purchase Option.
b. During the term of the Agreement, before any shares of Stock
registered in the name of and subject to the Purchase Option may be sold or
transferred (including a transfer by operation of law), such shares shall
first be offered to Xxxxxxxx in accordance with the following terms and
conditions: (i) Employee shall deliver a notice ("Notice") to Xxxxxxxx stating
(A) his bona fide intention to sell or transfer such shares, (B) the number of
shares to be sold or transferred, (C) the price for which he proposed to sell
or transfer such shares, and (D) the name of the proposed purchaser or
transferee; (ii) Within thirty (30) days after receipt of the Notice, Xxxxxxxx
or its assignee may elect to purchase any or all shares to which the Notice
refers, at the price per share specified in the Notice; (iii) if all of the
shares to which the Notice refers are not elected to be purchased as provided
in subparagraph 5.b(2) hereof, Employee may sell the remaining shares to any
person named in the Notice at the price specified in the Notice or at a higher
price, provided that such sale or transfer is consummated within 60 days of
the date of said Notice to Xxxxxxxx, and, provided, further, that any such
sale is in accordance with all the terms and conditions hereof.
Xxxxxxxx shall not be required (i) to transfer on its books any shares
of Stock which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat such shares as owned
by any transferee to whom such shares shall have been so transferred.
6. LEGENDS. All certificates representing any of the shares of Stock
subject to the provisions of this Agreement shall have endorsed thereon the
following legends:
a. "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AND RIGHTS OF FIRST
REFUSAL AS SET FORTH IN AN AGREEMENT BETWEEN XXXXXXXX AND THE REGISTERED
HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF XXXXXXXX."
b. "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO XXXXXXXX
THAT SUCH REGISTRATION IS NOT REQUIRED."
c. Any legend required to be placed thereon by applicable securities
laws of any state.
7. EMPLOYEE'S REPRESENTATIONS. In connection with the purchase of the
Stock, Employee hereby represents and warrants to Xxxxxxxx as follows:
a. INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Employee is
receiving the Stock solely for his own account for investment and not with a
view to or for sale in connection with any distribution of the Stock or any
portion thereof and not with any present intention of selling, offering to
sell or otherwise disposing of or distributing the Stock or any portion
thereof in any transaction other than a transaction exempt from registration
under the Act. Employee also represents that the entire legal and beneficial
interest of the Stock is being purchased, and will be held, for Employee's
account only, and neither in whole or in part for any other person. Employee
either has a pre-existing business or personal relationship with Xxxxxxxx or
any of the its officers, directors or controlling persons or by reason of
Employee's business or financial experience or the business or financial
experience of Employee's professional advisors who are unaffiliated with and
who are not compensated by Xxxxxxxx or any affiliate or selling agent of
Xxxxxxxx, directly or indirectly, could be reasonably assumed to have the
capacity to evaluate the merits and risks of an investment in Xxxxxxxx and to
protect Employee's own interests in connection with this transaction.
b. INFORMATION CONCERNING XXXXXXXX. Employee has received all such
information as Employee has deemed necessary and appropriate to enable
Employee to evaluate the financial risk inherent in making an investment in
the Stock, and Employee has received satisfactory and complete information
concerning the business and financial condition of Xxxxxxxx in response to all
inquiries in respect thereof.
c. RESTRICTED SECURITIES. Employee understands and acknowledges that:
(i) the issuance of the Stock has not been registered under the Act, and the
Stock must be held indefinitely unless subsequently registered under the Act
or an exemption from such registration is available and Xxxxxxxx is under no
obligation to register the Stock; (ii) the share certificate representing the
Stock will be stamped with the legends specified in Section 6 hereof; and
(iii) Xxxxxxxx will make a notation in its records of the aforementioned
restrictions on transfer and legends.
d. DISPOSITION OF THE STOCK. Employee is familiar with the provisions
of Rule 144 promulgated under the Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering, subject to the satisfaction of
certain conditions. Employee understands that the securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the resale occurring not less than two years
after the party has been issued the securities and, in the case of an
affiliate, or of a non-affiliate who has held the securities less than three
years, (2) the availability of certain public information about Xxxxxxxx, (3)
the sale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a market maker (as that term is defined under
the Securities Exchange Act of 1934), and (4) the amount of securities being
sold during any three month period not exceeding the specified limitations
stated therein, if applicable.
e. FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
his representations set forth above, Employee further agrees that he shall in
no event make any disposition of all or any portion of the Stock, other than
to Xxxxxxxx as set forth herein, unless and until: (i) there is then in effect
a Registration Statement under the Act covering such proposed disposition and
such disposition is made in accordance with said Registration Statement; or
(ii) Employee shall have notified Xxxxxxxx of the proposed disposition and
shall have furnished Xxxxxxxx with a detailed statement of the circumstances
surrounding the proposed disposition, (2) Employee shall have furnished
Xxxxxxxx with an opinion of Employee's counsel to have the effect that such
disposition will not require registration of such shares under the Act, and
(3) such opinion of Employee's counsel shall have been concurred in by counsel
for Xxxxxxxx and Xxxxxxxx shall have advised Employee of such concurrence.
8. OTHER PROVISIONS.
a. VALUATION OF SHARES. Employee understands that the Stock have been
valued by the board of directors for the purpose of this sale, and that
Xxxxxxxx believes this valuation represents a fair attempt at reaching an
accurate appraisal of its worth. Employee also understands, however, that
Xxxxxxxx can give no assurances that such price is in fact the fair market
value of the Stock. Employee acknowledges that the Issue Price will be treated
as compensation paid to Employee for services rendered to Employee.
b. SECTION 83(b) ELECTION. Employee understands that Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary
income the difference between the amount paid for the Stock and the fair
market value of the Stock as of the date any restrictions on the Stock lapse.
In this context, "restriction" means the right of Xxxxxxxx to buy back the
unvested Stock pursuant to the Purchase Option. Employee understands that he
may elect to be taxed at the time the Stock are issued rather than when and as
the Stock become "vested" by filing an election under Section 83(b) of the
Code with the Internal Revenue Service within thirty (30) days after the date
of purchase. Employee understands that failure to make this filing in a timely
manner will result in the recognition of ordinary income by employee, as the
Shares become "vested" on any difference between the purchase price and the
fair market value of the Shares at the time such restrictions lapse.
EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE'S SOLE RESPONSIBILITY AND NOT
XXXXXXXX'X TO TIMELY FILE THE ELECTION UNDER SECTION 83(b), EVEN IF EMPLOYEE
REQUESTS XXXXXXXX OR ITS REPRESENTATIVES TO MAKE THIS FILING ON EMPLOYEE'S
BEHALF.
c. NOTICE OF TAX ELECTION. If Employee makes any tax election relating
to the treatment of the Stock under the Code, at the time of such election
Employee shall promptly notify Xxxxxxxx of such election.
9. MISCELLANEOUS.
a. Subject to the provisions and limitations hereof, Employee may,
during the term of this Agreement, exercise all rights and privileges of a
stockholder of Xxxxxxxx with respect to the Stock.
b. The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
c. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to Employee at its address shown on
Xxxxxxxx'x records and to Xxxxxxxx at the address of its principal corporate
offices (attention: President) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.
x. Xxxxxxxx may assign its rights and delegate its duties under this
Agreement, including paragraphs 3 and 5 hereof. If any such assignment or
delegation requires consent of any state securities authorities, the parties
agree to cooperate in requesting such consent. This Agreement shall inure to
the benefit of the successors and assigns of Xxxxxxxx and, subject to the
restrictions on transfer herein set forth, be binding upon Employee,
successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
XXXXXXXX FOODS OF DISTINCTION, INC.
a Colorado corporation
Date: ________________ By: ______________________________________
Xxxxxxx X. Xxxxxxxx, President
Date: ________________ By:______________________________________
Xxxxxx X. Xxxxxxxx
