EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into this 1st day of January,
1996, by and between VITAFORT INTERNATIONAL CORPORATION, a Delaware corporation
("Company") and XXXX XXXXXXXXX, an individual ("Xxxxxxxxx" or "Employee").
WHEREAS, Company represents that it is currently engaged in the business of
formulating, developing, manufacturing, marketing and distributing fat-free
foods. For purposes of this Agreement, Company's business shall be defined as
Company's current business and any other business Company develops during the
Term of this Agreement; and
WHEREAS, due to the special degree of skill, training and expertise of
Xxxxxxxxx, Company desires to employ Xxxxxxxxx, and Xxxxxxxxx is agreeable to
such employment upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
Company and Xxxxxxxxx agree as follows:
1. Employment.
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During the Term, and subject to the other terms hereof, Company agrees
to employ Xxxxxxxxx as its Vice-President of Sales, Xxxxxxxxx shall devote all
of his working time during Company business hours to the business activities of
Company on a full-time basis. During the Term hereof, except as set forth
herein, Xxxxxxxxx shall not directly or indirectly render services to any
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other person or organization, whether for compensation or otherwise, without the
prior written consent of Company.
2. Duties.
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During the term of this Agreement, subject to the direction of the
Board of Directors, Xxxxxxxxx shall, as Vice-President of Sales for Company,
have the general duties of directing and supervising the sales activities of the
Company, including interfacing with and maintaining the Company's broker and
distributor network and making sales presentations to customers and performing
such other duties as may reasonably be required by Company from time to time
consistent with his position as Vice-President of Sales.
3. Term.
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The term of this Agreement shall be one (1) year, commencing on January
1, 1996 (the "Commencement Date") and terminating on December 31, 1996 (the
"Initial Term"). The Term may be extended by the Company for two successive one
(1) year option periods ("the Initial Term and any extension thereof shall be
collectively designated the "Term") upon the same terms and conditions as set
forth herein or terminated as hereinafter set forth. Either party shall provide
the other party with sixty (60) days' written notice prior to the expiration of
the Term if the Term of the Agreement will not be extended.
a. This Agreement may be terminated by Company prior to the expiration
of the Term or any extension thereof under any of the following circumstances:
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(1) At any time, without cause, upon 60 days prior written notice;
(2) The death or disability of Xxxxxxxxx upon five (5) days' notice to
Xxxxxxxxx or his personal representative. For purposes hereof, "disability"
shall mean the physical or mental inability of Xxxxxxxxx to render the services
contemplated under this Agreement for more than thirty (30) consecutive days
during any year of the Term hereof;
(3) The entry by a court of competent jurisdiction of a decree or order
for relief in respect of Xxxxxxxxx in an involuntary case under any applicable
bankruptcy, insolvency or similar law then in effect or the appointment of a
receiver, liquidator, assignee, custodian, trustee or sequestrator of Xxxxxxxxx;
or a petition initiating an involuntary case under any such bankruptcy,
insolvency, or similar law is filed against Xxxxxxxxx and is pending for sixty
(60) days without a stay or dismissal; or Xxxxxxxxx commences a voluntary case
under any such bankruptcy, insolvency or similar law then in effect, or makes
any general assignment for the benefit of its creditors or fails generally to
pay its debts as such debts become due or takes corporate action in furtherance
of any of the foregoing;
(4) The breach of any warranty, representation, covenant or agreement
of Xxxxxxxxx under this Agreement;
(5) A conviction against Xxxxxxxxx of any felony or of any crime
involving moral turpitude; or
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(6) The occurrence of events which make it impossible or impractical
for the Company to remain in its current business; or
(7) The sale or transfer of all or a substantial portion of the assets
of Company.
b. This Agreement may be terminated by Xxxxxxxxx prior to the expiration
of the Term hereof only in the following circumstances:
(1) The entry by a court of competent jurisdiction of a decree or order
for relief in respect of Company in an involuntary case under any applicable
bankruptcy, insolvency or similar law then in effect or the appointment of a
receiver, liquidator, assignee, custodian, trustee or sequestrator of Company or
for any substantial part of its property or an order by any such court for the
winding-up or liquidation of Company's affairs; or a petition initiating an
involuntary case under any such bankruptcy, insolvency or similar law is filed
against Company and is pending for sixty (60) days without a stay or dismissal;
or Company commences a voluntary case under any such bankruptcy, insolvency or
similar law then in effect, or makes any general assignment for the benefit of
its creditors or fails generally to pay its debts as such debts become due or
takes corporate action in furtherance of any of the foregoing; or
(2) The failure of Company to pay Xxxxxxxxx any of the compensation due
and payable to Xxxxxxxxx under Paragraphs 4 and 5 hereof, provided that Company
shall have ten (10) days to curve any
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default in payment following written notice of default from Xxxxxxxxx.
c. It is understood and agreed that, if Xxxxxxxxx'x employment is
terminated for any reason, then Xxxxxxxxx shall be entitled to receive the
compensation which Xxxxxxxxx has earned or accrued prior to such termination.
d. If Company does not intend to renew Xxxxxxxxx'x employment after
the Term, Company shall provide Xxxxxxxxx sixty (60) days' written notice prior
to the end of the Term (i.e., on or before October 31, 1996).
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4. Salary.
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During the first twelve (12) months of Xxxxxxxxx'x employment,
Xxxxxxxxx'x salary shall be One-Hundred Two Thousand Dollars ($102,000), payable
semi-monthly less any applicable withholding taxes. Thereafter, during any
additional twelve (12) month period Xxxxxxxxx is employed, the salary shall be
increased by an amount equal to the greater of the following: (a) five percent
(5%); or (b) COLA, which shall not exceed six percent (6%). The salary shall be
paid through the date of termination if Xxxxxxxxx'x employment is terminated
before the end of the Term. As used herein, "COLA" means the Los
Angeles/Anaheim/Riverside consumer price index, as reported to the Bureau of
Labor Statistics of the U.S. Department of Labor for the preceding twelve (12)
months.
In lieu of the payment of salary due Employee pursuant to this
Paragraph 4, or Additional Benefits pursuant to Paragraph 5, Company may elect,
subject to and conditioned upon the consent of Employee
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in each instance, to permit Employee to exercise options pursuant to the formula
set forth in Exhibit A, without payment of the Exercise Price, in an amount
which when multiplied by the Exercise Price equals the amount due Employee.
5. Additional Benefits.
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While employed by the Company, Xxxxxxxxx shall be entitled to receive
the following "Additional Benefits":
a. Reimbursement for Xxxxxxxxx'x reasonable business expenses which
he incurs in the performance of his duties for Company with the Company's prior
written approval;
b. a bonus from a bonus pool as set forth in Exhibit A attached
hereto and incorporated by this reference or as amended or modified by the Board
of Directors in its sole and absolute discretion;
c. fourteen (14) days paid vacation during each year of the Term
plus holidays, personal and sick days in accordance with the policy established
by the Company. Xxxxxxxxx shall accrue his vacation pay proportionately
commencing from the first day of his employment. Xxxxxxxxx shall be paid for
any unused vacation time. Xxxxxxxxx shall provide Company with 30 days' notice
before he takes his vacation and shall make an effort to coordinate his vacation
schedule with the Company's needs;
d. paid parking or a comparable subsidy for mass transit commuting
expense;
e. an expense allowance in an amount up to, and not in excess of,
$750.00 a month, commencing July 1, 1996.
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On or before January 31, 1997, the Company shall review the foregoing
compensation package paid Xxxxxxxxx hereunder; provided, however, that the
Company assumes no duty or obligation, nor does it agree, to modify or increase
the compensation package.
6. Representations and Warranties of Xxxxxxxxx.
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In order to induce the Company to enter into this Agreement, Xxxxxxxxx
hereby represents and warrants to the Company as follows:
a. There is no action, suit, proceeding, or investigation pending,
or to the knowledge of Xxxxxxxxx, currently threatened against Xxxxxxxxx, in any
way relating to the validity of this Agreement or the right of Xxxxxxxxx to
enter into or to consummate this Agreement and the transactions contemplated
hereby.
x. Xxxxxxxxx will, at all times during the Term of this Agreement,
comply with all laws, rules and regulations established by the Company
applicable to Services hereunder.
7. Confidentiality and Non-Disclosure Covenant.
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Xxxxxxxxx hereby acknowledges that, during the Term of this Agreement,
he may obtain and be entrusted with unpublished confidential and proprietary
information relating to Company's present and proposed business and operations,
including, without limitation, financial information, formulas, patterns,
devices, inventions, processes, business records, the cost and pricing of
Company's goods and services, its sales and marketing plans and strategies, the
names and addresses of Company's customers and suppliers, the terms of all
material agreements to which Company is
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a party, and other business records and information relating to Company's
business. All of such information that is obtained by Xxxxxxxxx shall, for
purposes hereof, be referred to as "Confidential Information". The term
"Confidential Information" as used herein shall not include any knowledge or
business experience which Xxxxxxxxx has acquired or developed prior to the date
he commenced rendering services to Company. Xxxxxxxxx hereby agrees that,
unless the Confidential Information becomes publicly known through legitimate
origin not involving any improper act or omission of Xxxxxxxxx, Xxxxxxxxx shall
not, during the Term of this Agreement or for a period of three (3) years
thereafter, use for his own benefit or for the benefit of others for any purpose
and in any manner whatsoever, divulge to any person, firm, corporation or other
entity or otherwise publish or disclose any Confidential Information (except as
necessary in connection with the performance of the services under this
Agreement). This provision shall survive the expiration or termination of this
Agreement. Notwithstanding the foregoing, Xxxxxxxxx shall not be in breach of
this covenant with respect to any use or disclosure of any Confidential
Information by him which is required as a result of any legal process served
upon it in any judicial or administrative proceeding (provided that Company
shall be given notice in time to enable it to object to such disclosure).
All files, books, records, documents, drawings, specifications,
equipment, and similar items relating to the business of the Company, whether
prepared by Xxxxxxxxx, developed by
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Xxxxxxxxx, or otherwise coming into his possession, shall remain the exclusive
property of Company and shall not be removed from the premises of Company under
any circumstances whatsoever without the prior written consent of Company,
except as otherwise provided herein.
Xxxxxxxxx recognizes, understands and agrees that should Company be
required to pursue a claim against him under this paragraph, it may seek
injunctive relief as well as damages at law.
8. Restrictive Covenant.
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Xxxxxxxxx hereby agrees that, during the Term of this Agreement, he
will not, directly or indirectly, on his own behalf or in the service of or on
behalf of others, whether as an officer, director, stockholder, partner,
trustee, principal, employee, consultant, agent, or owner of any capital stock,
partnership interest or other interest in any corporation, partnership or other
entity, or in any other capacity, own an interest in or perform any services for
or on behalf of any entity which competes directly with the Company's business
("Precluded Business Activity"). Notwithstanding the foregoing, nothing
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contained in this paragraph is intended to nor shall preclude the ownership or
performance of services by Xxxxxxxxx of (a) not more than Two Percent (2%) of
the outstanding securities or warrants of any publicly owned corporation or
other entity, engaged in a Precluded Business Activity, provided that such
ownership is solely for investment purposes and is not coupled with any working
relationship between Xxxxxxxxx and such corporation or entity, or (b) any other
activity set forth in
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Paragraph 1. The foregoing restrictive covenant shall terminate upon the
expiration or termination of this Agreement.
Xxxxxxxxx recognizes, understands and agrees that should Company be
required to pursue a claim against him under this paragraph, it may seek
injunctive relief as well as damages at law.
9. Indemnification.
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Company shall, to the maximum extent permitted by law, defend,
indemnify and hold Xxxxxxxxx, his successors and representatives harmless from
and against all claims, causes of action, demands, damages, liabilities, costs
or expenses (including, without limitation, reasonable attorneys' fees and
disbursements) in connection with any proceeding arising from actions taken by
Xxxxxxxxx within the course and scope of his employment.
10. Records.
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The ownership and right of control of all records and reports and all
documents in support of or relating to the business of Company shall be and
remain the sole property of Company; provided, however, that Xxxxxxxxx shall
have access to, upon request, such reports, records and documentation (except
for financial and business records) as is reasonably necessary to enable him to
perform his services under this Agreement. Xxxxxxxxx hereby agrees that, upon
the termination or expiration of this Agreement, he will promptly return to
Company all records, reports and documents relating to Company's business which
are then in Xxxxxxxxx'x possession or control.
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11. Miscellaneous.
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11.1 This Agreement constitutes the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, representations, warranties, statements,
promises, information, arrangements and understandings, whether oral or written,
express or implied, between the parties hereto with respect to the subject
matter hereof and may not be changed, modified or waived, except by an
instrument in writing signed by the party to be bound thereby.
11.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of California with respect to contracts
made and to be fully performed therein, without regard to the conflicts of law
principles thereof.
11.3 This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
11.4 The parties hereto hereby agree that, at any time and from
time to time during the Term hereof, upon the reasonable request of the other
party hereto, they shall do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, such further acts, deeds,
assignments, transfers, conveyances and assurances as may be reasonably required
to more effectively consummate this Agreement and the transactions contemplated
thereby or to confirm or otherwise effectuate the provisions of this Agreement.
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11.5 Except as set forth herein, neither party shall be permitted
to assign this Agreement, or its rights and obligations hereunder, without the
prior written consent of the other party.
11.6 Each of the parties hereto has received independent legal
advise from attorneys or financial advisors of their own choice, with respect to
the advisability of executing this Agreement, including its Exhibit.
11.7 In negotiating this Agreement, each of the parties hereto
and their attorneys have made various statements and representations to other
parties and their attorneys. Nevertheless, no party relies upon any statements,
representation, legal opinion, or promise of any other party in executing this
Agreement or in making the Agreement provided for herein, except as expressly
stated in this Agreement.
11.8 The terms of this Agreement are contractual and not a mere
recital. This Agreement is the result of negotiation between the parties, each
of whom has participated in the drafting hereof through its or his or her
respective attorneys. Neither party shall, therefore, be deemed the drafter of
this Agreement.
11.9 This Agreement and its Exhibit has been carefully reviewed
by each party, with full understanding thereof, and voluntary execution thereof
without duress or coercion is hereby acknowledged.
11.10 Each of the parties hereto will bear all costs and expenses
incurred by them in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement.
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except that in the event that an action at law or in equity is brought to
enforce or interpret the provisions of this Agreement, or to prevent a breach
thereof, the party prevailing in such action shall be entitled to an award of
its attorneys' fees in such amount as shall be established by the court
presiding therein.
11.11 All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and delivered personally receipt acknowledged, or mailed by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the parties hereto as follows (or to such other address as either
of the parties hereto shall specify by notice given in accordance with this
provision) or sent by facsimile transmission (with a copy mailed by first class
mail) to the facsimile numbers set forth below (or to such other facsimile
number as either of the parties hereto shall specify by notice given in
accordance with this provision):
(a) If to Xxxxxxxxx:
Xxxx Xxxxxxxxx
(b) If to Company:
Vitafort International Corporation
1800 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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11.12 All such notices, consents, requests, demands and other
communications shall be deemed given when personally delivered as aforesaid, or,
if mailed as aforesaid, on the third business day after the mailing thereof or
on the day actually received, if earlier, except for a notice sent by facsimile
transmission or a notice of a change of address which shall be effective only
upon receipt.
11.13 This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which, when taken together,
shall constitute one and the same agreement.
11.14 The paragraph headings used in this Agreement have been used
for convenience of reference only and are not to be considered in construing or
interpreting this Agreement.
11.15 If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of this Agreement shall remain in full force and
effect.
11.16 The failure of either party to insist upon strict compliance
with any of the terms or conditions of this Agreement by the other party shall
not be deemed a waiver of that term or condition, nor shall any waiver or
relinquishment of any right or power at any one time or times be deemed a
waiver or relinquishment of that right or power for all or any other times.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
VITAFORT INTERNATIONAL CORPORATION
a Delaware corporation
By: /s/ Xxxx Xxxxxxx
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President
/s/ Xxxx Xxxxxxxxx
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XXXX XXXXXXXXX, an individual
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EXHIBIT "A"
Subject to the approval of the Board of Directors of the Company, and
provided that Employee is employed by the Company as of October 15, 1996 or
December 31 or the Initial Term, as extended, as applicable Employee shall be
entitled to the exercise of the Options ("Options") pursuant to the following
schedule, terms and conditions:
1. Number of Options 4,500,000
2. Exercise Price 15 cents
3. Vesting Schedule
a. 12 1/2% of the granted Options shall vest to Employee effective
1/1/96.
b. 12 1/2% of the granted Options shall vest to Employee effective
October 15, 1996, provided the Employment Agreement is in effect,
and Employee is not in default under said Agreement.
c. 25% of the granted Options shall vest to Employee on 3/1/97
subject to information being available provided that:
1. The annual sales of the Company in 1996 are 300% of sales in
1995 (stipulated to be 2.4 million dollars); and
2. the average weighted share price for the last quarter of
1996 is 50% higher than the average weighted share price for
the last quarter of 1995 (stipulated to be $.15 cents).
d. 25% of the granted Options shall vest to Employee effective
4/30/98 provided that:
1. The annual sales of the Company in 1997 are 600% of sales in
1995; and
2. the average weighted share price for the last quarter of
1997 is 100% higher than the average weighted share price
for the last quarter of 1995.
e. 25% of the granted Options shall vest to Employee effective
4/30/99 provided that:
1. The annual sales of the Company in 1998 are 1200% of sales
in 1995; and
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2. the average weighted share price for the last quarter of
1998 is 150% higher than the average weighted share price
for the last quarter of 1995.
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