EMPLOYMENT AGREEMENT
This
Employment Agreement (“Agreement”)
is
entered into by and between NutraCea, a California corporation with principal
offices at 0000 00xx
Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (“NutraCea”)
and
Xxxx Xxxxxxxxx Xxxxxx, 00000 X. 00xx
Xxx,
Xxxxxxx, XX 00000 (“Employee”)
effective as of November 6, 2008 (the
“CFO Effective
Date”),
as
follows:
AGREEMENT
1. Employment.
NutraCea wishes to employ Employee and Employee agrees to provide services
for
NutraCea on the terms and conditions set forth below.
2. Employment;
Scope of Employment.
Employee
shall be employed as Chief Financial Officer of NutraCea, and shall have the
authority, duties and responsibilities as are assigned or modified by
NutraCea’s
Chief
Executive Officer, provided, that such authority,
duties and responsibilities shall be commensurate and consistent with Employee’s
position as Chief Financial Officer of NutraCea.
2.1 Best
Efforts; Full Working Time. Employee
agrees to devote her full working time and best efforts to perform her duties
hereunder.
2.2 Supervision
and Direction of Services.
All of
Employee’s services hereunder shall be under the supervision and direction of
the Chief Executive Officer of NutraCea and the Board of Directors of NutraCea.
2.3 Rules. Employee
shall be bound by all the policies, rules and regulations of NutraCea now in
force and by all such other policies, rules and regulations as may be hereafter
implemented and shall faithfully observe and abide by the same. In the event
that there is any conflict between the terms of this Agreement and any of
NutraCea’s policies, rules and regulations, the terms of this Agreement shall
govern.
2.4 Exclusive
Services.
During
the Term of this Agreement and any extension of this Agreement, Employee shall
not, directly or indirectly, whether as a partner, employee, creditor,
shareholder, independent contractor or otherwise, promote, participate or engage
in any activity or other business which is competitive with NutraCea’s business
operations; provided, however, that this provision shall not preclude or
prohibit Employee from holding or obtaining an indirect and passive beneficial
ownership, through a mutual fund or similar arrangement, of up to one percent
of
any publicly-held company which is competitive with NutraCea as long as she
does
not otherwise promote, participate or engage in the business operations of
such
company. Employee agrees that Employee shall not enter into an agreement to
establish, form, contract with or become employed by a competing business of
NutraCea while Employee is employed by NutraCea.
2.5 Non-Solicitation.
To the
fullest extent permissible under applicable law, Employee agrees that both
during the term of this Agreement and for a period of two (2) year following
termination of this Agreement, Employee shall not take any action to induce
employees or independent contractors of NutraCea to sever their relationship
with NutraCea and accept an employment or an independent contractor relationship
with any other business.
3. Term and Termination; Payments upon Termination.
3.1 Term
and Termination.
Unless
earlier terminated as described below, NutraCea hereby employs the Employee
for
a period commencing on the CFO Effective Date and ending on November 6, 2011
(the “Term”).
The
twelve (12) month period commencing on the CFO Effective Date and ending on
the
day before the one-year anniversary of the CFO Effective Date and each
succeeding twelve (12) month period during the Term are each referred to herein
as a “Contract
Year.”
The
Term shall be extended automatically for successive one-year terms unless either
party notifies the other party in writing at least ninety (90) days prior to
the
expiration of the then-effective Term of such party’s intention not to renew
this Agreement. Other
than with respect to a termination for Good Reason (as defined below) as to
which the requirements of Section 3.1.2 shall apply, Employee agrees to provide
written notice of voluntary termination to NutraCea (“Voluntary
Termination Notice”)
at
least ninety (90) days before the effective date of such voluntarily termination
(“Voluntary
Termination”)
and
shall specify in such notice a fixed date for the Voluntary Termination. In
addition to any other remedies available to NutraCea, if in connection with
Employee’s Voluntary Termination Employee does not provide the Voluntary
Termination Notice to NutraCea in the time and manner set forth above, all
unvested stock options held by Employee, including the Options (as described
in
Section 4.3 below), shall immediately terminate at the time of Employee’s
termination.
3.1.1 Termination
for Cause.
“Cause”
for
termination of Employee’s employment shall mean the occurrence of any of the
following:
(a) Employee
has breached a material term hereof, which remains uncured for thirty (30)
days
after a written notice of breach (which notice shall describe the particulars
of
Employee’s breach in sufficient detail to allow Employee the reasonable
opportunity to cure the breach, if susceptible of being cured within such thirty
(30) day period) and written demand for performance are delivered to Employee
by
the CEO or Board;
(b) Employee
has been grossly negligent or engaged in material willful or gross misconduct
in
the performance of her duties;
(c) Employee
has committed, as determined by the Board of Directors of NutraCea, or has
been
convicted by a court of law of, fraud, moral turpitude, embezzlement, theft,
or
dishonesty, or other similar criminal conduct, and such misconduct is committed
in connection with Employee’s employment with NutraCea;
(d) Employee
has been convicted by a court of law of a felony involving fraud, moral
turpitude, embezzlement, theft, or dishonesty or other similar criminal conduct
or a felony that does not comprise misconduct covered by Section 3.1.1(c);
(e) Habitual
misuse of alcohol or drugs; or
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(f) Employee’s
breach of the Proprietary Information Agreement attached hereto as Exhibit
A,
and
described in paragraph 6 herein.
3.1.2 Termination
for Good Reason.
(a) Employee
may terminate this Agreement for “Good Reason.” As used herein, “Good
Reason”
means
(i) any material breach by NutraCea
of this
Agreement; (ii) the assignment of duties to Employee by NutraCea
that are
not consistent or commensurate with and her position as Chief Financial Officer
of NutraCea
(other than any duties that are consistent and commensurate with a higher
position, and not including any reduction in Employee’s duties during any
investigation or proceedings initiated by NutraCea in good faith pursuant to
Section 3.1.1 with regard to a possible termination of Employee for
Cause);
(iii)
the relocation of Employee’s primary office location to outside of the Phoenix
metropolitan area without Employee’s prior consent; (iv)
the
reduction of Employee’s Base Salary; (v) the failure of NutraCea to obtain at
least forty-five (45) days in advance of an event described in Section 4.3.1(x)
or (y) an agreement from a successor or purchaser to assume and perform the
terms of this Agreement; or (vi)
NutraCea’s termination of Employee’s status as Chief Financial Officer of
NutraCea.
(b) In
order
to terminate this Agreement for Good Reason, Employee shall provide NutraCea
with (i) written notice of the Good Reason (which notice shall describe the
particulars of NutraCea’s breach in sufficient detail to allow NutraCea the
reasonable opportunity to remedy or eliminate the Good Reason(s) if susceptible
of being remedied or eliminated); and (ii) shall allow NutraCea thirty (30)
days
within which to remedy or eliminate the Good Reason(s). In the event that
Employee provides such notice and NutraCea fails to remedy or eliminate the
Good
Reason(s) within such thirty-day period, Employee shall be entitled to provide
NutraCea with written notice (of not less that thirty (30) days) that Employee
is terminating this Agreement as a result of such Good Reason(s).
3.2 Payments
upon Termination.
3.2.1 For
Cause or Voluntary Termination.
Following a termination of this Agreement by NutraCea
for
Cause, or a Voluntary Termination by Employee, or any other termination by
Employee other than for Good Reason or due to her death, Employee shall be
entitled to receive in cash payment (less
normal and customary deductions and withholdings) an
amount
equal to all accrued but unpaid compensation (including accrued but unused
vacation leave) as of the date of such termination. By
way of
example, if NutraCea were to terminate this Agreement for Cause on June 30,
2009, Employee would be entitled to receive any compensation she had earned
through June 30, 2009, but which had not been paid to her as of June 30, 2009.
3.2.2 Without
Cause.
Following any termination of this Agreement by NutraCea other than for Cause,
or
a termination by Employee for Good Reason or due to Employee’s death,
Employee
(or Employee’s estate) shall be entitled to receive in cash payment an amount
equal to all previously accrued but unpaid compensation (including accrued
but
unused vacation leave) as of the date of such termination, and a lump sum
payment (less normal and customary deductions and withholdings) equal to the
amount of Base Salary that Employee would have earned if she had remained
employed with NutraCea during the remaining portion of the then-current Term
of
this Agreement. By way of example, if NutraCea were to terminate this Agreement
for no Cause on June 30, 2009, Employee would be entitled to receive any
compensation she had earned through June 30, 2009, but which had not been paid
to her as of June 30, 2009, and an amount equal to the Base Salary that Employee
would have earned under this Agreement if she had worked until November 6,
2011.
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4. Compensation;
Benefits.
4.1 Salary.
Employee
shall be paid at a rate which, on an annualized basis, equals two hundred thirty
thousand dollars ($230,000) per year, as adjusted pursuant to this Section
4.1
(“Base
Salary”).
The
Base Salary shall be
subject
to normal payroll withholdings and NutraCea’s standard payroll practices. On the
first anniversary of the
CFO
Effective
Date and
each anniversary date thereafter , Employee’s Base
Salary
shall be
increased annually by a minimum of a cost of living factor determined as
follows: (i) Employee’s Base Salary as of the last day of the prior Contract
Year shall be multiplied by a fraction equal to (A) the published Consumer
Price
Index selected by NutraCea (“CPI”)
for
the first day of the new Contract Year (“New
Year”),
divided by (B) the CPI for the first day of the Contract Year immediately
preceding such New Year, and (ii) the resulting product shall be added to
Employee’s Base Salary, and shall be the Base Salary for the New
Year.
4.2 Moving
Expense Reimbursement; Bonus Amounts.
4.2.1. Moving
Expense
Reimbursement. NutraCea
shall pay Employee a
moving
expense reimbursement of up to Forty Thousand dollars ($40,000) on the
CFO
Effective Date,
but
only after
Employee
has provided to NutraCea evidence of Employee’s commitment to relocate her
primary residence to Phoenix, Arizona (for example, an executed lease for
residential space or an executed contract to purchase a residential property).
Should Employee subsequently fail to relocate her primary residence to Phoenix,
Arizona within a reasonable time thereafter, then upon written demand from
NutraCea to Employee, Employee promptly shall return such moving expense
reimbursement amount to NutraCea.
4.2.2. Annual
Bonus.
Employee shall be eligible to participate in any NutraCea bonus program that
is
applicable to officers of NutraCea as may be adopted and in effect from time
to
time (subject to the terms and conditions of any such program). In addition,
Employee shall be eligible for an annual discretionary bonus of up to
one-hundred percent (100%) of her Base Salary, as then in effect pursuant to
Section 4.1 (and pro-rated for any partial year), as determined by the NutraCea
Compensation Committee or Board of Directors, after first obtaining the
recommendations of such third party compensation consultants as may be selected
by NutraCea, and the Chief Executive Officer of NutraCea.
4.3 Stock
Options.
Employee acknowledges that she has received those stock option grants described
in Section 4 of the Consulting and Employment Agreement previously entered
into
by Employee and the Company (“Consulting
Agreement”),
comprising the “Initial
Option”
as
defined in Section 4.1.1 of the Consulting Agreement and the “Second
Option”
as
defined in Section 4.1.2 of the Consulting Agreement (collectively the
“Options”).
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4.3.1. Change
of Control.
The
parties agree that upon a Qualifying Change of Control (as defined below):
(i)
the Initial Option shall vest and shall be exercisable; and (ii) the Second
Option shall vest with respect to the time vesting criteria for such Second
Option, but Consultant’s right to exercise the Second Option shall remain
subject to satisfaction of the “Performance Vesting Criteria”, as defined in the
Initial Option agreement, and the Second Option shall be exercisable if the
Performance Vesting Criteria established by NutraCea’s Board of Directors
pursuant to the terms of the Second Option have been satisfied. For purposes
of
this Section 4.3.1, a “Qualifying Change
of Control”
shall
mean (x) the consummation of a merger or consolidation of NutraCea with any
other corporation or other legal entity which results in the voting securities
of NutraCea outstanding immediately prior thereto failing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of NutraCea or such surviving entity
outstanding immediately after such merger or consolidation, or
(y) the
consummation of the sale or disposition by NutraCea of all or substantially
all
of its assets, and
(z) the
termination without Cause of Employee’s employment and/or of the employment of
Xxxx Xxxxx, the Chief Executive Officer of NutraCea, within sixty (60) days
prior to or ninety (90) days after the occurrence of an event described in
item
(x) or (y) above.
4.4 Car
Allowance.
Employer shall provide Employee with an automobile allowance in the amount
of
Eight Hundred dollars ($800.00) per month, payable in accordance with
NutraCea’s
payroll periods. Notwithstanding the foregoing, NutraCea shall not be obligated
to make any down payments for the purchase of any automobile by or on behalf
of
Employee.
4.5 Vacation
and other Standard Benefits.
Employee
shall be entitled to four (4) weeks of paid vacation time per year. Employee
may
not accrue vacation time in excess of such four (4) week maximum. Accrual of
vacation time shall be subject to the terms and conditions of NutraCea’s
vacation policy. Employee shall be entitled to health benefits in accordance
with NutraCea’s standard policies. In addition, Employee is entitled to paid
holidays, sick leave and other benefits in accordance with NutraCea’s standard
policies.
4.6 Business
Expenses.
Employee shall be reimbursed for reasonable business expenses which she incurs
in the performance of her duties hereunder, in accordance with NutraCea’s
standard reimbursement policies.
5. Employment
Information.
Employee represents and warrants to NutraCea that information provided by
Employee in connection with Employee’s employment and any supplemental
information provided to NutraCea is, to the best of Employee’s knowledge and
information after good faith diligence and investigation, complete, true and
materially correct. Employee has not omitted any information that is necessary
to evaluate the information provided by Employee to NutraCea. Employee shall
promptly notify NutraCea of any change in the accuracy or completeness of all
such information.
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6. Trade
Secrets.
Employee acknowledges that NutraCea has gone to great time and expense to
develop customers and to develop procedures and processes for development of
products and services and the sales of products and services. Such procedures
and processes in addition to various other types of proprietary information
are
included as part of the “confidential information” described in the “Proprietary
Information Agreement” attached hereto as Exhibit
A.
Employee has previously executed the Proprietary Information Agreement or agrees
to execute NutraCea’s Proprietary Information Agreement contemporaneously with
the execution of this Agreement and employment.
7. Remedies
for Breach of Covenant Regarding Confidentiality.
The
parties agree that the breach by Employee of any covenants contained in Sections
2.4, 2.5, and 6 will result in immediate and irreparable injury to NutraCea.
In
the event of any breach by Employee of the covenants contained in Sections
2.4,
2.5, or 6, NutraCea shall be entitled to seek recourse through all available
legal and equitable remedies necessary or useful to prevent any likelihood
of
immediate or irreparable injury to NutraCea. The parties agree that, in the
case
of such a breach or threat of breach by Employee of any of the provisions of
such Sections, NutraCea may take any appropriate legal action, including without
limitation an action for injunctive relief, consisting of orders temporarily
restraining and preliminarily and permanently enjoining such actual or
threatened breach.
8. Miscellaneous.
8.1 Choice
of Law, Jurisdiction, Venue.
The
rights and obligations of the parties and the interpretation and performance
of
this Agreement shall be governed by the laws of Arizona, excluding its conflict
of laws rules, except as such laws may be interpreted, enforced, or pre-empted
by federal law.
8.2 Entire
Agreement.
This
Agreement, the Proprietary Information Agreement dated November 6, 2008 and
described in Section 6, and the Option agreements referenced in Section 4.3,
contain the entire Agreement among the parties hereto with respect to the
subject matter hereof, and supersede all prior and contemporaneous oral and
written agreements, understandings and representations among the parties. There
are no representations, agreements, arrangements, or understandings, whether
oral or written, between or among the parties relating to the subject matter
of
this Agreement that are not fully expressed herein and therein.
8.3 Notices.
Any
notice under this Agreement shall be in writing, and any written notice or
other
document shall be deemed to have been duly given (i) on the date of personal
service on the parties, (ii) on the third business day after mailing, if the
document is mailed by registered or certified mail, (iii) one day after being
sent by professional or overnight courier or messenger service guaranteeing
one-day delivery, with receipt confirmed by the courier, or (iv) on the date
of
transmission if sent by telegram, telex, telecopy or other means of electronic
transmission resulting in written copies, with receipt confirmed. Any such
notice shall be delivered or addressed to the parties at the addresses set
forth
above or at the most recent address specified by the addressee through written
notice under this provision. Failure to conform to the requirement that mailings
be done by registered or certified mail shall not defeat the effectiveness
of
notice actually received by the addressee.
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8.4 Severability.
NutraCea and Employee agree that should any provision of this Agreement be
declared or be determined by any court or other tribunal (including an
arbitrator) of competent jurisdiction to be illegal, invalid or unenforceable,
the legality, validity and enforceability of the remaining parts, terms and
provisions shall not be affected thereby, and said illegal, unenforceable or
invalid part, term or provision shall be deemed not to be part of this
Agreement.
8.5 Intentionally
Omitted.
8.6 Amendment.
The
provisions of this Agreement may be modified at any time by agreement of the
parties; provided that such modification shall be ineffective unless in writing
and signed by the parties hereto.
8.7 No
Transfer or Assignment; No Third-Party Beneficiaries.
The
rights of Employee hereunder have been granted by NutraCea with the
understanding that this Agreement is personal to, and shall be performed by
Employee individually. This Agreement is not transferable or assignable by
Employee in any manner. No person or entity other than NutraCea and Employee
shall have any rights whatsoever under this Agreement or to recover damages
on
account of a breach of this Agreement. No person or entity other than NutraCea
or Employee shall have any right to enforce any provision of this Agreement.
No
heir, successor or assign of Employee, whether voluntarily or by operation
of
law, shall have or succeed to any rights of NutraCea or Employee
hereunder.
8.8 Waiver.
Any of
the terms or conditions of this Agreement may be waived at any time by the
party
entitled to the benefit thereof, but no such waiver shall affect or impair
the
right of the waiving party to require observance, performance or satisfaction
of
that term or condition as it applies on a subsequent occasion or of any other
term or condition.
8.9 Resolution
of Disputes.
8.9.1 Resolution
of Disputes.
NutraCea and Employee agree that, except as otherwise provided herein, any
claim
or controversy arising out of or pertaining to this Agreement or the termination
of Employee's employment, including but not limited to, claims of wrongful
treatment or termination allegedly resulting from discrimination, harassment
or
retaliation on the basis of race, sex, age, national origin, ancestry, color,
religion, marital status, status as a veteran of the Vietnam era, physical
or
mental disability, medical condition, or any other basis prohibited by law
("Dispute"),
shall
be resolved through binding arbitration, as provided in this Section 8.9.
8.9.2 Binding
Arbitration.
The
provisions of this Section 8.9 shall not preclude any party from seeking
injunctive or other provisional or equitable relief in order to preserve the
status quo of the parties pending resolution of a Dispute, and the filing of
an
action seeking injunctive or other provisional relief shall not be construed
as
a waiver of that party's arbitration rights. Except as provided herein, the
arbitration of any Dispute between the parties to this Agreement shall be
governed by the American Arbitration Association (“AAA”)
Commercial Arbitration Rules (the “AAA Rules”).
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8.9.3 Appointment
of Arbitrator.
Within
thirty (30) days of service of a demand for arbitration by a party to this
Agreement, the parties shall endeavor in good faith to select from the AAA
list
of labor and employment arbitrators a single arbitrator, who must be a licensed
attorney; if the parties fail to do so within such 30-day period, an arbitrator
shall be selected in accordance with the AAA Rules.
8.9.4 Initiation
of Arbitration.
In the
case of any Dispute between the parties to this Agreement, either party shall
have the right to initiate the binding arbitration process provided for in
this
paragraph by serving upon the other party a demand for arbitration within the
statutory time period from the date the Dispute first arose.
8.9.5 Location
of Arbitration.
Any
arbitration hearing shall be conducted in Phoenix, Arizona.
8.9.6 Applicable
Law.
The law
applicable to the arbitration of any Dispute shall be, as provided in Section
8.1 and the Federal Arbitrator Act (Title 9, US Code, Section 1 et
Seq.).
8.9.7 Arbitration
Procedures.
In
addition to any of the procedures or processes available under the AAA Rules,
the parties shall be entitled to conduct discovery sufficient to adequately
arbitrate their claims and/or defenses, including access to relevant documents
and witnesses, as determined by the arbitrator(s). In addition, either party
may
choose, at that party’s discretion, to request that the arbitrator(s) resolve
any dispositive motions prior to the taking of evidence on the merits of the
Dispute. In the event a party to the arbitration requests that the arbitrator(s)
resolve a dispositive motion, the arbitrator(s) shall receive and consider
any
written or oral arguments regarding the dispositive motion, and shall receive
and consider any evidence specifically relating thereto, and shall render a
decision thereon, before hearing any evidence on the merits of the Dispute.
8.9.8 Scope
of Arbitrators' Award or Decision.
NutraCea and Employee agree that if the arbitrators find any Disputed claim
to
be meritorious, the arbitrators shall have the authority to order all forms
of
legal and/or equitable relief that would otherwise be available in court and
that is appropriate to the claim. Any decision or award by the arbitrators
shall
be a reasoned opinion in writing citing facts and law and shall be specific
enough to permit limited judicial review if necessary.
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8.9.9 Costs
of Arbitration; Attorneys’ Fees.
NutraCea and Employee agree that the arbitrators, in their discretion and
consistent with applicable law, may award to the prevailing party the costs
and
attorneys’ fees incurred by that party in participating in the arbitration
process as long as they do not exceed those that would be incurred by Employee
in a court action.
8.9.10 Acknowledgment
of Consent to Arbitration.
NOTICE:
BY EXECUTING THIS AGREEMENT THE PARTIES AGREE TO HAVE ANY DISPUTE ARISING OUT
OF
THE MATTERS INCLUDED IN THE "RESOLUTION OF DISPUTES" PROVISION DECIDED BY
NEUTRAL ARBITRATION AS PROVIDED HEREIN AND WAIVE ANY RIGHTS THEY MAY HAVE TO
HAVE THE DISPUTE DECIDED BY A JUDGE OR A JURY. BY EXECUTING THIS AGREEMENT,
THE
PARTIES WAIVE THEIR JUDICIAL RIGHTS TO APPEAL. IF EITHER PARTY REFUSES TO SUBMIT
TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED
TO
ARBITRATE. THE PARTIES’ AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
THE PARTIES REPRESENT THAT THEY HAVE READ AND UNDERSTAND THE FOREGOING AND
AGREE
TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THIS PROVISION TO
NEUTRAL ARBITRATION.
8.10 Exhibits.
All
exhibits to which reference is made are deemed incorporated in this Agreement
whether or not actually attached.
| NUTRACEA | ||
| |
|
|
| /s/ Xxxxxxx X. Xxxxx | ||
|
By: Xxxxxxx X. Xxxxx |
||
| Title: CEO | ||
| Employee: | ||
| /s/ Xxxx Xxxxxxxxx Longan | ||
|
Xxxx Xxxxxxxxx Xxxxxx |
||
[SIGNATURE
PAGE TO EMPLOYMENT
AGREEMENT]
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