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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement is made as of this 23rd day of June, 1997, between
Authentic Specialty Foods, Inc., a Texas corporation (the "Corporation"), and
Xxxxxx X. Xxxxxxxxxx, an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is an employee of the Corporation;
WHEREAS, the Corporation desires to continue to employ the Executive,
and the Executive desires to continue such employment, on the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the parties hereto,
intending to be legally bound, covenant and agree as follows:
Section 1. Employment. The Corporation hereby employs the
Executive to render services to the Corporation. The Executive shall devote
his time and attention to the management of the business of the Corporation and
its affiliates and perform such duties as may be specified from time to time by
the Board of Directors and shall be empowered to perform all such duties. The
Executive hereby accepts such employment and agrees that during the continuance
thereof he will devote his entire business time, effort, skill and attention to
the affairs of, and for the benefit of, the Corporation and its affiliates.
Section 2. Term. The term of this Agreement shall be three
years commencing on the date hereof.
Section 3. Compensation. (a) As compensation for the services
to be rendered by the Executive under this Agreement, the Corporation agrees to
pay the Executive a salary at an annual rate of $200,000 ("Base Salary"),
payable in equal installments on the customary payroll periods of the
Corporation. The Board of Directors of the Corporation will review the Base
Salary at the beginning of each fiscal year and determine whether to increase
the Base Salary; provided, however, that the Corporation shall be under no
obligation to increase the Base Salary.
(b) The Executive shall be eligible for an annual
incentive award. Such annual incentive award shall have a target of 40% of the
Base Salary and shall be subject to further increase up to 80% of the Base
Salary based upon attainment of performance targets for the Corporation and its
subsidiaries to be agreed upon by the Executive and the Board of Directors of
the Corporation.
Section 4. Fringe Benefits. (a) During the term of his
employment hereunder, the Executive shall be entitled to participate (on a
basis to be determined by the Board of Directors) in all of the Corporation's
employee benefit plans (to the extent he satisfies the eligibility requirements
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of the particular plans), including, without limitation, a stock option plan to
be developed by the Corporation, for which his level of employment makes him
eligible.
(b) The Executive will be entitled each year to three
weeks paid vacation, to be taken at such time or times as may be reasonably
convenient to the Corporation and to the Executive. In addition, the Executive
will be entitled to all legal holidays observed by office closings at the
Corporation's headquarters.
(c) The Executive will be reimbursed for the premiums
paid by the Executive in order to obtain a term life insurance policy with up
to a $500,000 benefit; provided, however, that the Corporation shall not be
required to pay aggregate premiums for any year in excess of $5,000.
(d) The Executive will be reimbursed for (i) the purchase
price or lease payments for an automobile to be used primarily in the business
of the Corporation and (ii) the cost of insurance for such automobile;
provided, however, that the amount of such reimbursement shall be approved by
the Board of Directors.
Section 5. Stock Subscription.
(a) Pursuant to Executive's prior employment agreement dated
February 7, 1994 (the "Prior Agreement"), the Executive was granted an
aggregate of 85,000 shares of Common Stock of the Corporation (after giving
effect to the 1,700-for-1 stock split effected by the Company on June 20, 1997)
on March 31, 1994 (the "Shares"). Subject to the remaining provisions hereof,
the Shares are subject to Forfeiture Restrictions (as defined below) that lapse
25% per year until March 31, 1998, and all Forfeiture Restrictions shall lapse
on such date, provided that the Executive is an employee of the Corporation on
the applicable lapse date. As of the date hereof, the Forfeiture Restrictions
have lapsed with respect to 63,750 of the Shares.
(b) The Shares may not be sold, assigned, pledged, exchanged,
hypothecated or otherwise transferred, encumbered or disposed of to the extent
then subject to the Forfeiture Restrictions (as hereinafter defined), and in
the event of termination of the Executive's services hereunder for any reason,
the Executive shall, for no consideration, forfeit to the Corporation all
Shares to the extent then subject to the Forfeiture Restrictions. The
prohibition against transfer and the obligation to forfeit and surrender Shares
to the Corporation for no consideration upon termination of the Executive's
services hereunder are herein referred to as the "Forfeiture Restrictions."
The Forfeiture Restrictions shall be binding upon and enforceable against any
transferee of Shares.
(c) If (A) the holders of a majority of the outstanding Common
Stock of the Corporation sell all of their stock or approve the sale by the
Corporation of all or substantially all of the assets of the Corporation, or if
the Corporation consummates a public offering of Common Stock, and (B) such
sale or public offering occurs prior to the time that all Forfeiture
Restrictions have lapsed with respect to the Shares, then the Forfeiture
Restrictions shall lapse immediately prior to the closing of
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such sale or public offering, as applicable; provided, however, that
notwithstanding the foregoing, the Executive acknowledges and agrees that the
Forfeiture Restrictions shall not lapse upon the closing of a merger between
the Corporation and another company or an acquisition by the Corporation of
another company. If the Executive's employment with the Corporation is
terminated or terminates for any reason, the Shares shall be forfeited to the
Corporation on the date of such termination pursuant to the terms of the
Forfeiture Restrictions.
(d) The Executive agrees that he will acquire the Shares for
investment for his own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Executive
agrees that he will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Shares (or solicit any offers to
buy), purchase, or otherwise acquire or take a pledge of any Shares, except as
provided in Section 5(e) and Section 5(f) hereof.
(e) If, in connection with a vote of the stockholders of the
Corporation, the holders of a majority of the outstanding common stock of the
Corporation approve either a sale of all or substantially all of the Shares or
a sale of all or substantially all of the assets of the Corporation or its
subsidiaries, the Executive agrees to sell all of the Shares of the Executive
in the event of a sale of Shares or to agree to the proposed sale in the event
of a sale of assets. The Executive shall be entitled to receive his pro rata
portion of the distributions to the Corporation's stockholders.
(f) If the Executive's active employment with the Corporation is
voluntarily or involuntarily terminated by the Corporation or the Executive for
any reason whatsoever (including by reason of death or disability), the
Corporation shall have the option, exercisable at any time after such
termination upon 10 days' written notice to the Executive, to repurchase, and
the Executive shall resell to the Corporation upon such notice, all of the
Shares of the Executive. The purchase price for Shares purchased by the
Corporation pursuant to this Section 5(f) shall be an amount equal to the Book
Value (as defined below); provided, however, that if shares of Common Stock are
traded or quoted on a national securities exchange or on the Nasdaq National
Market or Nasdaq Small Cap Market, then the purchase price per share shall be
the average of the last reported sales price for the Common Stock for the 20
trading days ending on the last full trading day immediately preceding the date
of notice of repurchase; provided further, that if there are no sales for any
such days or for any such market, then the average of the high and low bids for
such day shall be used (instead of the last reported sales price) for any such
day or with respect to any such market. For purposes of this Agreement, the
term "Book Value" shall mean (i) the book value of the Corporation and its
consolidated subsidiaries as of the end of the month immediately preceding the
date on which the Executive ceases to be employed by the Corporation determined
in accordance with generally accepted accounting principles ("GAAP"), applied
on a consistent basis, multiplied by (ii)(A) the number of shares repurchased
by the Corporation divided by (B) the number of Fully Diluted Outstanding
shares of Common Stock (as defined below) of the Corporation on the date the
Executive ceased to be employed by the Corporation (e.g., [5(i) x
[5(ii)(A)/(B)]). The purchase price for Shares purchased pursuant to this
Section shall be paid over a four-year period in equal monthly
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installments and shall bear interest at a simple rate per annum equal to eight
percent (8%). As used herein, "Fully Diluted Outstanding" shall mean, when
used with reference to the Common Stock of the Corporation, at any date as of
which the number of shares thereof is to be determined, all shares of Common
Stock outstanding at such date and all shares of Common Stock issuable in
respect of options or warrants to purchase, or securities convertible into,
shares of Common Stock outstanding on such date which would be deemed
outstanding in accordance with GAAP for purposes of determining book value or
net income per shares. Nothwithstanding the foregoing, the provisions of this
subsection (f) will terminate and cease to have any effect after the
consummation of any public offering of the Common Stock.
(g) The parties agree that Section 5 of this Agreement constitutes
a voting agreement within the meaning of the Texas Business Corporation Act.
The Executive agrees that any stock certificates for Shares issued to the
Executive shall bear such legends as shall be determined to be necessary or
appropriate in the Corporation's sole discretion.
(h) A certificate evidencing the Shares has been issued by the
Corporation in the Executive's name, pursuant to which the Executive has all of
the rights of a stockholder of the Corporation with respect to the Shares,
including, without limitation, voting rights and the right to receive dividends
(provided, however, that dividends paid in shares of the Corporation's stock
shall be subject to the Forfeiture Restrictions). The certificate was
delivered upon issuance to the Secretary of the Corporation as a depository for
safekeeping until the forfeiture of such Shares occurs or the Forfeiture
Restrictions lapse pursuant to the terms of this Agreement. Upon the request
of the Corporation, the Executive shall deliver to the Corporation a stock
power, endorsed in blank, relating to the Shares to the extent then subject to
the Forfeiture Restrictions. Upon the lapse of the Forfeiture Restrictions
without forfeiture, the Corporation shall cause a new certificate or
certificates to be issued without legend (except for any legend required
pursuant to applicable securities laws, the provisions of paragraph (g) or any
other agreement to which the Executive is a party) in the name of the Executive
in exchange for the certificate evidencing that the Shares are subject to the
Forfeiture Restrictions.
(i) It is understood that the consideration for the issuance of
the Shares shall be the services of the Executive rendered and to be rendered
to the Corporation, it being acknowledged that the services rendered prior to
the issuance of the Shares have a value not less than the par value of such
Shares.
Section 6. Termination. (a) This Agreement shall terminate
upon the death or disability (as defined herein) of the Executive, in which
case no compensation, benefits or additional Shares or other payments shall be
payable under this Agreement, except for payments which may become due pursuant
to Section 5(f); provided, however, that the repurchase rights set forth in
Section 5(f) shall survive such death or disability, and the confidentiality,
noncompetition and other obligations set forth in Sections 7, 8 and 9 shall
survive disability. As used herein "disability" means an illness,
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injury or incapacity which prevents the Executive from performing the essential
functions of his position for a period of three consecutive months, with
reasonable accommodation.
(b) The Corporation may terminate the Executive's
employment hereunder for "Cause". Such termination shall be effective
immediately upon notice of termination. For purposes of this Agreement,
"Cause" is defined as follows: a determination by the Board of Directors that
one of the following events shall have occurred: (i) the Executive's material
neglect of his duties hereunder; (ii) material deterioration in the
Corporation's financial performance; (iii) the refusal by the Executive to
follow reasonable and lawful directions from the Board of Directors of the
Corporation; (iv) the engaging by the Executive in misconduct, or in acts of
moral turpitude, that in the judgment of the Board of Directors is or are
injurious to the Corporation; or (v) the violation by the Executive of the
provisions of Section 8, 9 or 10 hereof. If the Executive's employment is
terminated for Cause, no additional compensation, benefits, additional Shares
or other payments shall be payable to the Executive.
(c) The Corporation may terminate the Executive's
employment for reasons other than Cause upon written notice. If the
Corporation terminates the Executive's employment for reasons other than Cause,
the Executive shall be entitled to receive his Base Salary for a one-year
period (which shall be paid over the course of such period in the same
installments required by Section 3(a)) in full and final satisfaction of all
amounts due from the Corporation (including, without limitation, the issuance
of any additional Shares); provided, however, that such amount shall be reduced
to the extent of any salary or other compensation received or deferred by the
Executive in connection with his employment by or consulting with any company
not affiliated with the Corporation.
Section 7. Confidentiality. The Executive understands and
agrees that all conversations, records, correspondence, files, customer or
distribution lists, data, including, but not limited to, purchasing and pricing
information, product formulation and costs of production and other information
pertaining to or concerning the Corporation, its principals, suppliers,
distributors and customers (except such information as is generally known or
known to the Executive prior to his commencing negotiations for employment with
the Corporation) are confidential information and, therefore, during the period
of employment hereunder and at all times thereafter, the Executive shall not
divulge or communicate any such confidential information to any person or
organization without the express authorization of the Board of Directors of the
Corporation. The Executive agrees that, on the termination of his employment,
he will immediately surrender to the Corporation any and all files, memoranda,
forms, customer lists and everything in his possession pertaining to the
Corporation and its business, it being distinctly understood that all such
lists, books and records are not the property of the Executive.
Section 8. Trademarks, Patents, etc. The Corporation shall be
entitled to and shall own, solely and exclusively, any interest in trademarks,
trade names, trade dress, patents, patent applications, trade secrets,
inventions, copyrights, writings, devices and products developed or
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created by the Executive or at the Corporation during the term hereof, and all
rights of every kind and character therein and thereto, that is in any way
related to the fields in which the Corporation may be engaged. The Executive
does hereby assign and transfer to the Corporation all of the foregoing without
reservation, condition or limitation.
Section 9. Noncompetition; Corporation Employees. The Executive
agrees that during the period that the Executive is employed by the Corporation
and for a two-year period thereafter:
(i) the Executive shall not, directly or
indirectly, for his own account or for the account of others,
as an officer, director, passive stockholder, owner, partner,
promoter, consultant, advisor, employee, manager or otherwise,
participate in the promotion, financing, ownership, operation
or management of, or assist in, furnish advice with respect
to, or carry on through a proprietorship, partnership, joint
venture, corporation, other form of business entity or
otherwise, any business activity in a geographic market within
the State of Texas involving or relating to the food
distribution, food packaging and food processing businesses in
connection with Mexican food products; provided, however, that
nothing in this clause (i) shall prohibit the Executive's
beneficial ownership of not in excess of 1% of any class of
common stock that is listed for trading on a national
securities exchange;
(ii) the Executive shall not furnish
advice to, solicit, or do business with any customer (or any
previous customer) of the Corporation or any of its
subsidiaries relating to the business of the Corporation in
any geographic market within the State of Texas involving or
relating to food distribution, food packaging and food
processing in connection with Mexican food products; and
(iii) the Executive will not, without the
prior written consent of the Corporation, solicit, or make or
cause to be made any offer of employment to, any officer or
official employed by the Corporation for the purpose of
inducing any such employee to terminate his employment with
the Corporation.
Section 10. Waiver; Remedies for Breach. A waiver by either
party hereto of any breach of any provision of this Agreement shall not operate
or be construed as a waiver of similar or dissimilar provisions at the same
time or at any prior or subsequent time. It is agreed that the Executive's
services are unique and that any breach or threatened breach by the Executive
of any provision of Section 8, 9 or 10 cannot be remedied solely by damages.
Therefore, if there is a breach or threatened breach of the provisions of
Section 8, 9 or 10, the Executive acknowledges that the Corporation shall be
entitled to an injunction restraining the Executive from such breach. Nothing
herein shall be construed as prohibiting the Corporation from pursuing any
other remedies for any breach or threatened breach.
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Section 11. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the employment of the Executive
by the Corporation, and no agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. Without
limiting the generality of the foregoing, this Agreement supersedes the Prior
Agreement.
Section 12. Severability. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect, and any provision of this Agreement shall be construed
to render such provision valid and enforceable to the maximum extent possible
by law in the event of any challenge.
Section 13. Binding Agreement. This Agreement shall be binding
on and shall inure to the benefit of the Corporation and its successors and
assigns. This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's person or legal
representatives, executors, or administrators. Neither this Agreement nor any
right hereunder may be assigned by the Executive.
Section 14. Relationship of the Parties. Nothing herein
contained shall be deemed to constitute a partnership between or a joint
venture by the parties, nor shall anything herein contained be deemed to
constitute either the Executive or the Corporation the agent of the other
except as is provided herein. Neither the Executive nor the Corporation shall
be or become liable or bound by any representation, act or omission whatsoever
of the other made contrary to the provisions of this Agreement.
Section 15. Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Texas, except to the extent that the laws of the United States
apply.
Section 16. Notice. Any notice, communication, request,
instruction or other document required or permitted hereunder shall be given in
writing and delivered in person or sent by U.S. Mail postage prepaid, return
receipt requested, or by telex, facsimile or telecopy to the addresses of the
Corporation and the Executive set forth below. Any such notice shall be
effective upon receipt or 3 days after placed in the mail, whichever is
earlier.
To the Corporation:
Authentic Specialty Foods, Inc.
c/o The Shansby Group
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: J. Xxxx Xxxxxxx
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Telecopy: (000) 000-0000
To the Executive:
0000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
or to such other address as any party shall hereafter designate by written
notice.
Section 17. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
Section 18. Headings. The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of any provision or provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AUTHENTIC SPECIALTY FOODS, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: Chief Executive Officer
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/s/ XXXXXX X. XXXXXXXXXX
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XXXXXX X. XXXXXXXXXX
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