AGREEMENT REGARDING EMPLOYMENT, TRADE SECRETES, INVENTIONS, AND
COMPETITION
This Agreement regarding Employment, Trade Secrets, Inventions, and
Competition ("Agreement") is made and entered into effective May 26, 1997, by
and between MONTEREY PASTA COMPANY, a Delaware corporation (the "Company")
and ▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive").
WITNESSETH
WHEREAS, the Company is a Delaware corporation with its office located
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
WHEREAS, the Company desires to employ Executive as its President and
Chief Executive Officer, and Executive has agreed to accept such employment
upon the terms set forth herein; and
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. DUTIES. Subject to the terms and conditions below, the Company
hereby employs Executive and Executive accepts such employment. Initially,
Executive shall be given the title of President and Chief Operating Officer.
On July 31, 1997, Executive will become the President and Chief Executive
Officer of the Company. Upon execution of this Agreement, all Company
operating decisions are the responsibility of Executive. The interim Chief
Executive Officer, ▇▇▇▇▇▇▇ Steel, may not alter any of Executive's duties or
responsibilities without approval from a written majority of the Board of
Directors after a duly constituted meeting. ▇▇▇▇▇▇▇ Steel will, however, be
available to Executive to provide transitional information to Executive at
the request of Executive. During employment, the Executive agrees to devote
his full-time attention, energies and his best efforts to further the
Company's business with respect to such duties and services of an executive,
administrative, and managerial nature as shall be specified and designated
from time to time by the Company or its designated representative and which
are of the type of duties normally performed by a Chief Executive Officer of
a company of similar size and condition. The Executive will report directly
to the Company's Board of Directors and will promptly perform all duties and
tasks as may be directed by said Board.
2. AT-WILL EMPLOYMENT. The Parties acknowledge and agree that
Executive's employment is at-will and that either the Company or Executive
may, at any time, with or without cause and with or without notice, terminate
the employment relationship, including all compensation and benefits under
this Agreement. It is the express intent of the parties that Executive be
employed at-will; nothing in this Agreement or the relationship between the
parties now or in the future may be construed or interpreted to create an
employment relationship for a specific length of time or a right to continued
employment. Notwithstanding any termination of the parties' employment
relationship, this Agreement shall remain a valid and enforceable contract
with respect to all
remaining provisions, including but not limited to the terms and provisions
contained in Paragraphs 7 through 10.
3. COMPENSATION. The Company agrees to pay Executive a base salary
("Salary") in the gross amount of One Hundred Seventy-five Thousand Dollars
($175,000.00) annually (less deductions required by law or lawfully
authorized by Executive), payable in accordance with the Company's
procedures, as from time to time amended, regarding the payment of
compensation to senior management personnel. Provided Executive completes one
full year of service at the Company, Executive will receive a 35% bonus for
completing this first year of employment as President and Chief Executive
Officer. For every year of employment thereafter, Executive shall receive a
bonus equal to 15% of his Salary should the Company achieve Plan Income
(defined as the annual operating plan income as approved by the Board of
Directors), and an additional 20% of his Salary for exceeding Plan Income by
10%. Executive shall also receive 50,000 stock options for the stock of the
Company at the first anniversary date of the execution of this Agreement, and
50,000 additional stock options on the second anniversary date of execution
of this Agreement. Executive may also receive, at the sole discretion of the
Board of Directors, an additional 200,000 stock options during the first two
(2) years of employment, which shall be allocated as follows: (i) 120,000
options for achieving agreed upon business goals in the first year, and
80,000 options for achieving agreed upon business goals for the second year.
The first year goals shall be set by the Board of Directors within the first
30 days of Executive's employment. Such business goals shall be aggressive,
but reasonable. Executive shall be allowed to present such goals to the
Board. Each year, Executive shall present his business goals to the Board for
Board approval. The option price for all options granted herein shall be
closing price of the stock on the day this Agreement is executed by the
Executive and the Company. Except as expressly provided herein, Executive
understands and agrees that his compensation under this Paragraph 3 will
constitute the full and exclusive monetary consideration and compensation for
all services rendered by Executive and performance of all his promises and
obligations hereunder.
4. FRINGE BENEFITS. Executive may participate in all employee
benefit policies and plans for which Executive is eligible in accordance with
the terms of each such program, policy or plan, that the Company shall make
available from time to time at its sole discretion to its senior management
personnel. Executive's rights under any benefits policies or plans now in
force or later adopted by the company shall be governed solely by the terms
of such policies or plans. Executive acknowledges and agrees that the Company
and its designated benefit plan administrators have the exclusive authority
and discretion to determine all issues of eligibility and all questions of
interpretation of each Company benefit plan, program or policy. The following
is a list of current benefits that the Company will make available to the
Executive:
a. medical and dental insurance and disability insurance of
such coverage as shall be not less than that provided to other
eligible senior management personnel, with a $100 deductible on
medical insurance and a $50 deductible on dental insurance at no
cost to Executive:
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b. One week's paid vacation accrued for every three months of
employment;
c. participation in the Company's retirement plan; to be
defined by the Monterey Pasta Compensation Committee within the
next 60 days.
d. term life insurance equal to twice the base salary of
Executive.
e. coverage under all applicable Company insurance policies,
including directors and officer insurance. Employee is to be fully
indemnified up to limits of California law against any litigation
brought as a result of Company business.
5. OTHER COMPENSATION. Executive understands and agrees that any
additional compensation awarded to him, whether as a bonus, opportunity to
acquire stock, or other form of additional compensation, shall rest in the
sole discretion of the Board of Directors, and that by his employment
hereunder, Executive shall not earn or accrue any right to additional
compensation.
6. BUSINESS EXPENSES. Subject to the Company's policies and
procedures regarding corporate expenses as may be from time to time be
established or changed by the Company at its sole discretion, the Company
will reimburse Executive for all substantiated reasonable travel and
out-of-pocket expenses incurred or directly attributable to Executives
execution of his duties under this Agreement, including a $750 per month car
allowance, which includes the costs of insurance. Executive understands and
agrees to provide the Company with appropriate documentation of any such
expenses in accordance with Company policies and procedures. In addition,
should Executive relocate his principal residence from Los Gatos, California
to the Salinas/Monterey area within the first two (2) years of employment
hereunder, Company shall reimburse Executive for all reasonable relocation
costs and expenses.
7. INVENTIONS AND PATENTS. Executive agrees that all inventions,
innovations, discoveries, improvements, developments, methods, designs,
analyses, drawings, reports, and all similar or related imformation that
Executive has conceived or made or may conceive or make during his employment
herunder that relate to the Company's actual or anticipated business,
systems, research and development or existing or future products or
services, including but not limited to new contributions, improvements, ideas
and discoveries, whether patentable or not ("Work Product"), shall be the
sole and exclusive property of the Company, and Executive shall assign, and
hereby does assign, to the Company the Executive's entire right, title and
interest in and to all such Work Product. Executive will promptly disclose
and assign to the Company any such Work Product and perform all actions
reasonably requested by the Company to establish and conform the Company's
ownership. The obligations outlined in this Paragraph 7, except for the
requirement as to disclosure, do not apply to any invention that qualifies
fully under California Labor Code Section 2870. The Company agrees that any
inventions, discoveries or ideas that Executive has created or possesses
prior to his employment hereunder, and that are specified in Appendix A to
this Agreement signed by Executive and the Company, will not be considered to
be the property of the Company.
8. CONFIDENTIAL INFORMATION. Executive acknowledges and agrees that
the information, observations and data obtained by him during the course of
his performance under this Agreement
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the Company as confidential information with procedures designed to ensure
secrecy and none of which is readily available to the public. Executive
acknowledges and agrees that this information constitutes the Company's trade
secrets and that the Company has spent and spends substantial time, effort
and resources in discovering, creating, and/or protecting its trade secrets.
Executive agrees that he will not disclose to any unauthorized persons or use
for his own account or for the benefit of any party other than the Company
any of such confidential trade secret information, either during employment
hereunder or at any time thereafter without the Board of Directors' written
consent. Executive acknowledges and agrees that the reasons for the
requirements of confidentiality and secrecy in this Paragraph 8 are that the
totality and combination of this information and material gives the Company a
competitive advantage not possessed by the Company's competitors, is a part
of the good will of the Company's business, and is the sole property of the
Company.
9. COMPANY PROPERTY. Executive agrees to deliver to the Company at
the termination of his employment, or at any other time that the Company may
request, all files, documents, memoranda, notes, plans, records, reports,
inventions, equipment and similar items, including any and all abstracts,
copies and/or summaries thereof, relating to the business of the Company that
he may then possess or have under his control. Executive acknowledges and
agrees that all such information or material is and shall remain exclusively
the property of the Company and shall be removed from the premises of the
Company only with prior written consent of the Board of Directors. Executive
agrees that he shall not use or retain possession, custody or control of any
such Company property at any time following termination of Executive's
employment hereunder.
10. NON-COMPETITION AND RELATED AGREEMENTS
a. In further consideration of the compensation to be paid to
Executive hereunder and the severance compensation provided in Paragraph 14b
below, Executive agrees that during the period commencing as of the effective
date hereof and ending of the second anniversary of the date of termination
of his employment with the Company (the "Noncompetition Period"), he will
not directly or indirectly (whether as Executive, director, owner,
stockholder, consultant, partner (limited, general or otherwise) engage in
any business similar to the Company as now conducted, or as previously
conducted, or have any interest, directly or indirectly in any such business,
within the counties of the State of California, it being agreed that the
Company presently carries on substantial business in those counties;
provided, however, that nothing herein will prevent Executive from owning 1%
or less of the outstanding stock of any class of a corporation that is
publicly traded, so long as Executive does not have any participation in the
conduct of the business of such corporation.
b. The Agreement contained in this Paragraph 10 is intended as an
Agreement authorized by Section 16601 of the California Business and
Professions Code as it exists as of the date of this Agreement. If, at the
time of enforcement of any provisions of Paragraph 10a above, a court holds
that the restrictions stated therein go beyond the scope of restrictions
allowed under Section 16601, the parties hereto agree that the maximum
period, scope or geographical area allowable under Section 16601 will be
substituted for the stated period, scope or area.
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c. During the Noncompetition Period, Executive shall not (i) induce or
attempt to induce any other employee of the Company to leave the employ of
the Company, or (ii) in any way interfere with the relationship between the
Company and any other employee of the Company, or induce or attempt to induce
any customer, supplier, licensee, or other business relation of the Company
to cease doing business with the Company, or in any way interfere with the
relationship between any customer, supplier or other business relation and
the Company.
d. Executive agrees that the covenants made in this Paragraph 10 shall
be construed as an Agreement independent of any other provisions of this
Agreement, and shall survive the termination of Executive's employment under
this Agreement. Moreover, the existence of any claim or cause of action of
Executive against the Company or any of its affiliates, whether or not
predicated upon the terms of this Agreement, shall not constitute a defense
to the enforcement of this covenant.
e. The Company and Executive further agree that in the event the
Executive violates the provisions contained in Paragraph 10 hereof, and the
Company brings an action against the Executive to enforce such provisions,
payment of Executive's salary, benefits and severance shall be suspended,
without penalty to the Company, pending the outcome of such litigation or
arbitration. If it is determined by a court of competent jurisdiction or
arbitrator that Executive breached this Agreement, Executive's right to
severance shall cease.
11. WAIVER. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenants or
condition.
12. SUBMISSION TO JURISDICTION; ARBITRATION
a. Any action initiated by the Company seeking specific performance or
other equitable relief in connection with any breach or violation of this
Agreement may be maintained in any federal or state court having jurisdiction
over Monterey County, California. The parties hereby submit themselves to the
jurisdiction of any such court for the purpose of resolving all such actions,
waive any objections to the service of any such court, and agree not to
challenge the exclusive jurisdiction of such court. Executive and the Company
further agree that in the event Executive violates any of the provisions and
the Company brings an action against Executive to enforce such provisions,
Executive's employment and the Company's payment of salary and benefits
shall cease, without penalty to the Company, pending the outcome of such
action or, if the parties submit any such claim to arbitration hereunder
pending the outcome of such arbitration.
b. Except as provided in Paragraph 12a hereinabove, in the event that
there is any dispute arising out of Executive's employment with the Company,
the termination of that employment, or arising out of this Agreement, whether
such dispute gives rise or any give rise to a cause of action in contract or
tort or based on any other theory or statute, including but not limited to
the California Fair Employment & Housing Act, Title VII of the Civil Rights
Act of 1964, the Age Discrimination
5
in Employment Act, the Americans with Disabilities Act, or any other act or
statute, Executive and the Company agree that exclusive recourse shall be to
submit any such dispute to final and binding arbitration pursuant to the
provisions of Title 9 of Part III of the California Code of Civil Procedure,
commencing at Section 1280, or any successor or replacement statutes, upon a
request submitted in writing in accordance with the notice provisions of this
Agreement to the other party to this Agreement within one (1) year of the
date of dispute arose, or, in the case of a dispute arising out of the
termination of Executive's employment was terminated. The failure timely to
request arbitration hereunder shall constitute a complete waiver of all
rights to raise any claims in any forum, arising out any dispute described
herein. The one (1) year limitations period within which to request
arbitration shall not be subject to tolling, equitable or otherwise.
c. The Company and Executive further agree that in arbitration, the
exclusive remedy for alleged violation of this Agreement or the terms,
conditions, or covenants of employment, and for any harm alleged in
connection with any dispute subject to arbitration hereunder (including,
without limitation, causes of action arising in tort), shall be a money award
not to exceed the amount of actual damages for breach of contract, less any
proper offset or mitigation of such damages, and the parties shall not be
entitled to any other remedy at law or in equity, including but not limited
to other money damages, specific performance, and/or injunctive relief.
d. Prior to submitting any dispute to arbitration hereunder, the
parties shall attempt to settle such dispute themselves. If the parties
cannot settle the dispute, the parties will use best efforts for a period of
fifteen (15) days following delivery of the written request for arbitration
to the other party to agree upon a mutually acceptable attorney to act as a
neutral arbitrator of such claim or dispute. If the parties are not able to
agree on a mutually acceptable arbitrator within the foregoing fifteen (15)
day period, each party will designate an attorney, and the two attorneys so
designated shall select a third attorney to act as a neutral arbitrator of
such dispute. The decision of any arbitrator selected in accordance with this
Paragraph will be final and binding upon the parties. The fees of any
arbitrator will be borne by the parties hereto equally. The fees of any
attorney designated by a party for purposes of selecting an arbitrator will
be borne by such party. Any arbitration hereunder shall be held in Monterey
County, California. The arbitrator shall not have the power to alter, amend,
or modify any of the provisions of this Agreement. Nothing herein shall be
construed to abridge any party's rights and remedies under state workers'
compensation statutes.
13. SALE, CONSOLIDATION, OR MERGER. In the event of (i) any
consolidation or merger of the Company with or into another corporation or
entity, or (ii) the sale of substantially all of the operating assets of the
Company to another corporation, entity or individual (collectively, a
"Sale"), the Company may assign its rights and obligations under this
Agreement to its successor-in-interest, and such successor-in-interest shall
be deemed to have acquired all rights and assumed all obligations of the
Company hereunder. In the event of the occurrence of a Sale, Executive shall
be entitled to receive the Severance Compensation as defined in Paragraph 14b
of this Agreement if his employment is terminated. Executive shall become
fully and immediately vested in all stock options in the event of a Sale. In
the event Executive's services are continued after a Sale, Executive's
options shall be
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fully and immediately vested and Executive's severance benefits will continue
for a period of 12 months after sale.
14. TERMINATION OF EMPLOYMENT.
a. TERMINATION OF EMPLOYMENT FOR CAUSE. The Executive shall
not be entitled to any Severance Compensation (as defined in
Paragraph 13b below) if the Company terminates Executive's
employment hereunder for "cause".
"Cause" shall mean (i) Executive's theft or embezzlement,
or attempted theft or embezzlement, of money tangible or
intangible assets or property of the Company; (ii) any act
or acts of moral turpitude by Executive injurious to the
interest, property, operations, business or reputation of
the Company, or Executive's conviction of a crime the
commission of which results in a material injury to the
Company; (iii) any acts by Executive that establish
Executive's loyalty to a business or other conflict of
interest with the Company; (iv) gross negligence or
willful misconduct in the performance of Executive's
duties (v) conviction of a felony; or (vi) a material
breach of this Agreement.
b. TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE. If the
Company terminates Executive's employment hereunder other than
for "cause" as defined in Paragraph 14a herein, the Company will
pay Executive severance compensation in a total gross amount
equal to one (1) year of the Executive's Base Salary, and all
fringe benefits at the time of termination of employment (less
lawful deductions) to be paid in equal pro rata installments in
accordance with the Company's then current schedule for the
payment of compensation to senior management personnel until
said sum is paid in full ("Severance Compensation"). Said
payments are subject to the terms contained in Paragraphs 10
and 12 herein.
c. VOLUNTARY TERMINATION BY EXECUTIVE. If Executive
voluntarily terminates his employment, he shall not be entitled
to any Severance Compensation.
15. EFFECT OF DEATH OR DISABILITY.
a. EXECUTIVE'S DEATH. This Agreement shall terminate upon the
death of Executive. In the event of Executive's death, the
Company will pay Executive's estate a death benefit in an amount
equal to six (6) months Salary then in effect at the time of
Executive's death in addition to any other benefits that the
Company is obligated to pay pursuant to any benefit plan or
program in which Executive was a participant immediately prior
to his death. In the event of Executive's death, no other
payments or benefits will be due to Executive's estate, his
designated beneficiary, or
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any other person on behalf of Executive, including but not
limited to payments pursuant to the provisions of Paragraph 13b.
b. EXECUTIVE'S DISABILITY.
(i) If Executive shall become disabled due to non-work
related causes ("Disabled"), Executives employment shall
terminate, and the Company will pay Executive an amount equal
to six (6) months Salary then in effect at the time Executive
becomes Disabled. Said payments will be made in periodic, equal
installments in accordance with the Company's schedule for
payment of compensation to its senior management personnel. The
Company will also continue to provide Executive with health
insurance coverage provided to other senior management personnel
for a period of six (6) months following the date on which
Executive becomes Disabled. In the event Executive becomes
Disabled, no other payment or benefits will be paid to the
Executive, including but not limited to payments pursuant to
Paragraph 13b or Paragraph 14a.
(ii) The Company shall deduct from the amounts paid to
Executive under this Paragraph 15b, any amounts actually paid to
Executive pursuant to any Company sponsored benefit plan or
program or any benefits paid to Executive by the federal or state
government (or any agency thereof) related to Executive's
Disability. Executive agrees, within five (5) days of receipt of
such payment, to inform the Company of any payments received that
may result in a reduction of his benefits under this
Paragraph 15b.
(iii) For purposes of this Agreement, "Disabled" means
Executive's inability due to illness, injury, physical or mental
incapacity, or other disability to carry out his duties and
obligations hereunder fully and effectively or to participate
actively and effectively in the management of the Company for
four (4) months total, whether cumulative or consecutive,
of a single disability during any 12-month period. If Executive
shall not agree with the Company's determination that he is
Disabled, the question shall be submitted to a reputable
physician selected by the Company, and such physician's decision
shall be final and binding. The meaning of "Disabled" herein
shall be construed in a manner consistent with the Americans with
Disabilities Act.
16. COMPLETE AGREEMENT. This Agreement embodies the complete
agreement and understanding between the parties relating to trade secrets,
inventions, employment and competition, and supersedes and prior
contemporaneous understandings, agreements or representations by or between
the parties, written or oral, express or implied, that relate to the subject
matter hereof in any way. Each party hereto acknowledges and agrees that no
representations, inducements, promises or agreements, orally or otherwise,
have been made by a party or anyone acting on behalf of a party that
8
are not embodied herein and that no other agreement or promise not contained
herein, whether oral or written, express or implied, shall be valid or
binding.
17. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, mailed first class mail
(postage prepaid), or sent by facsimile or reputable overnight courier
service (charges prepaid) to the recipient at the following addresses (or at
such address as the recipient party has specified by prior written notice to
the sending party). Notice to the Company shall be to the following:
Monterey Pasta Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notice to Executive shall be to Executive's address in the records of the
Company at the time of the notice. Each party shall be responsible for
keeping such party's address current. Notices will be deemed to have been
given hereunder when delivered personally, three days after deposit in the
U.S. mail, on the date of delivery by facsimile, and/or one day after deposit
with a reputable overnight courier service.
18. SEVERABILITY. In the event that any provision of this Agreement
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the remaining covenants, restrictions and
provisions hereof shall remain in full force and effect; any court of
competent jurisdiction may so modify any invalid or unenforceable provision
to the extent necessary to make it valid and enforceable if the result is
consistent with the parties' intent at the time of contracting. The express
intention of the parties is that the employment relationship shall be
at-will. In the event of any change in the controlling law that would affect
the at-will status of Executive's employment relationship with the Company,
the parties agree to execute such amendment to this Agreement as may be
necessary in the judgement of the Company in insure the at-will status of
Executive's employment.
19. AMENDMENT. This Agreement may not be modified or amended by
oral Agreement, or course of conduct, but only by an Agreement in writing
signed by the parties hereto.
20. GOVERNING LAW. The parties agree that this Agreement shall be
construed and enforced in accordance with the law of the State of California,
excluding its choice of law rules. The parties agree that this Agreement
shall be interpreted in accordance with the plain meaning of its terms and
not strictly for or against either party.
21. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be original an all of which taken
together constitute one and the same Agreement.
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22. VOLUNTARY AGREEMENT. Executive and the Company represent and
agree that each has reviewed all aspects of this Agreement, has carefully
read and fully understands all provisions of this Agreement, and is
voluntarily entering into this Agreement. Each party represents and agrees
that such party has the opportunity to review any or all aspects of this
Agreement with the legal, tax or other advisor or advisors of such party's
choice before executing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day, month, and year first above written.
MONTEREY PASTA COMPANY
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
Date: 5/26/97 Title: Member, Board of Directors
------------------------ --------------------------
Date: 5/28/97
---------------------------
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇▇▇▇▇▇▇▇
Title: Member, Board of Directors
--------------------------
Date: May 26, 1997
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