[EXHIBIT 10.23]
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of July 30, 1998 between COLOR SPOT
NURSERIES, INC., a Delaware corporation (the "Company"), and RAJU BOLIGALA
("Executive").
This Agreement provides for the employment of Executive as President and
Chief Operating Officer of the Company, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, the parties agree as follows:
ARTICLE 1. EMPLOYMENT
1.1 EMPLOYMENT. The Company agrees to employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on August 12,
1998 (the "Effective Date") and ending as provided in Section 1.5 (the
"Employment Period").
1.2 POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as
President and Chief Operating Officer of the Company.
(b) Executive shall be responsible for the operation and
performance of the Company and will have the responsibilities and carry out the
customary functions of a President and Chief Operating Officer.
(c) Executive shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its Subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
1.3 SALARY, BONUS, OPTIONS AND BENEFITS.
(a) During the Employment Period, Executive's base salary
(the "Base Salary") shall initially be $200,000 per annum which salary shall be
payable in regular installments in accordance with the Company's general payroll
practices. The Base Salary may be increased annually by the Board of Directors
of the Company (the "Board") in its discretion.
(b) During the Employment Period, in addition to the Base
Salary, Executive shall be eligible to receive a cash bonus of between 50% and
200% of his Base Salary based on performance targets for each fiscal year of the
Company to be established by the Board. The Company's fiscal year ends June
30. To the extent achieved, such bonus shall be paid following the delivery of
the Company's signed audited financial statements for such year by the Company's
independent accountants, but only if Executive is employed by the Company as of
the end of such fiscal year and the Executive's employment has not terminated
voluntarily or for cause (as determined by the Board) on or prior to such
delivery of financial statements. Notwithstanding anything contained herein to
the contrary, Executive's bonus for the first year of the Employment Period
shall be guaranteed at $100,000 subject to Executive's being employed
continuously with the Company through the end of such year and the Executive's
employment has not terminated voluntarily or for cause (as determined by the
Board) on or prior to the last day of such year (the "Minimum Bonus").
(c) The Company will pay Executive a starting bonus of
$250,000 in cash on the Effective Date (the "Starting Bonus"). The Company will
pay to Executive an additional $250,000 in cash on August 12, 2000 if Executive
is still employed by the Company on such date and the Executive's employment has
not terminated voluntarily or for cause (as determined by the Board) on or prior
to such date.
(d) Executive shall be entitled to participate in the
Company's 1997 Stock Plan (the "Plan"). Executive shall be awarded options
under the Plan to purchase 100,000 shares of common stock, par value $.001 per
share of the Company, at $3.00 per share (the "Options"). The Options will
vest daily over a 4 year period, subject to Executive's continued employment
with the Company. The Options will be evidenced by an option award and will be
subject to the Company's 1998 Employee Stockholders Agreement dated as of July
1, 1998; provided that the definition of "Cause" shall be deemed to be the
definition contained in this Agreement. In addition, if Executive is still
employed by the Company on August 12, 2000, Executive shall be awarded options
under the Plan to purchase 50,000 shares of common stock, par value $.001 per
share of the Company, at the fair market value per share of common stock on such
date (as determined in good faith by the Board) (the "Additional Options").
The Additional Options will vest daily over a 4 year period, subject to
Executive's continued employment with the Company. The Additional Options will
be evidenced by an option award and will be subject to the Company's 1998
Employee Stockholders Agreement dated as of July 1, 1998; provided that the
definition of "Cause" shall be deemed to be the definition contained in this
Agreement.
(e) During the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit programs for
which senior executive employees of the Company and its Subsidiaries are
generally eligible. Executive shall be entitled to three weeks of paid vacation
per year, plus Company holidays. Nothing in this Agreement, however, shall be
deemed to prevent the
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Company from amending or terminating any employee benefit program on a
non-discriminatory basis to eliminate, reduce or otherwise change the terms
thereof or the benefits thereunder.
(f) The Company shall reimburse Executive for all
reasonable out-of-pocket expenses incurred by him in the course of performing
his duties under this Agreement upon completion of an expense report in
accordance with the Company's and its Subsidiaries' reimbursement, reporting and
documentation policies in effect from time to time with respect to travel,
entertainment and other business expenses. Executive shall be entitled to a car
allowance of $800 per month.
1.4 LOANS. The Company will loan to Executive $275,000 in cash
on the Effective Date (the "Start Date Loan"). The Start Date Loan will be
deemed to have been repaid at the rate of $4,583.333 per month (i.e., $55,000
per year) on the last day of each month. In the event that the Employment
Period is terminated for any reason prior to the fifth anniversary of the
Effective Date, Executive shall be required to repay to the Company by August 1,
2003, $275,000 less the amount which has been deemed to have been repaid.
1.5 TERM. (a) The Employment Period shall terminate on the date
(i) of Executive's death or Disability (as determined by the Board),
(ii) determined by the Board by resolution of the Board for Cause,
(iii) determined by the Board by resolution of the Board without Cause or
(iv) voluntary resignation by Executive.
(b) If the Employment Period is terminated without Cause,
Executive shall be entitled to continue to receive an amount equal to one times
the sum of Executive's then current Base Salary (the "Severance Amount") over
the following twelve month period. The Severance Amount shall be increased to
2 year's Base Salary (payable over a two year period) in the event the
Employment Period is terminated by the Company without Cause upon the
consummation of the acquisition of the Company by Xxxxx Horticulture, Inc.
Executive hereby agrees that no severance compensation shall be payable in the
event Executive's employment is terminated pursuant to Section 1.5(a)(i), (ii)
or (iv) and Executive waives any claim for severance or other compensation. Any
amount payable under this Section 1.5(b) shall be payable in installments in
accordance with the Company's normal payroll practices over the period following
the termination of the Employment Period in which such payments are to be made.
(c) Except as expressly set forth in this Section 1.5, all
compensation and other benefits shall cease to accrue upon termination of the
Employment Period.
1.6 CERTAIN REPAYMENTS. In the event that the Employment Period
is terminated for any reason prior to the second anniversary of the Effective
Date, Executive agrees to repay to the Company (without interest) the Starting
Bonus within 15 days of the termination date but in no event shall such amount
exceed the amount which is payable to Executive as a result of the Company
exercising its rights to repurchase any vested Options or other equity interests
in the Company issued to Executive plus the amount of any severance payable to
Executive hereunder. Following the termination of the Employment Period, the
Company shall have the right to offset any payments owing to Executive under
this Agreement, against any amount owing to the Company from Executive,
including without limitation, any amount owing under Sections 1.4 and 1.5 and
any amount payable to Executive in the event the Company exercises any right it
may have to repurchase any vested Options or other equity interests in the
Company issued to Executive.
1.7 CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
and its Subsidiaries concerning the business or affairs of the Company and its
Subsidiaries that are not generally available to the public other than as a
result of a breach of this Agreement by Executive ("Confidential Information")
are the property of the Company and its Subsidiaries. Executive agrees that he
shall not disclose to any unauthorized person or use for his own account any
Confidential Information without the prior written consent of the Company
unless, and in such case only to the extent that, such matters become generally
known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Notwithstanding the foregoing, in the
event Executive becomes legally compelled to disclose Confidential Information
pursuant to judicial or administrative subpoena or process or other legal
obligation, Executive may make such disclosure only to the extent required, in
the opinion of counsel for Executive, to comply with such subpoena, process or
other obligation. Executive shall, as promptly as possible and in any event
prior to the making of such disclosure, notify the Company of any such subpoena,
process or obligation and shall cooperate with the Company in seeking a
protective order or other means of protecting the confidentiality of the
Confidential Information.
1.8 INVENTIONS AND PATENTS. Executive agrees that all copyrights,
works, inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports, and all similar or related information which relate
to the actual or anticipated business, research and development or existing or
anticipated future products or services of the Company or its Subsidiaries and
which are conceived, developed or made by Executive while employed by the
Company ("Work Product") belong to the Company. Executive will promptly
disclose such Work Product to the Board and perform all actions reasonably
requested by the Company (whether during or after the Employment Period) to
establish and confirm such ownership at the Company's expense (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
1.9 NON-COMPETE; NON-SOLICITATION.
(a) Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and its
predecessors and that his services have been and will be of special, unique and
extraordinary value to the Company. Executive agrees that, in consideration of
the payments made to Executive hereunder, during the period in which Executive
is receiving compensation hereunder (including severance), or in the event that
Executive voluntarily terminates his employment, for the one year period
following such voluntary termination (the "Noncompete Period"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business in which
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the Company or its Subsidiaries is engaged any where in the United States.
Nothing herein shall prohibit Executive from being a passive owner of not
more than 5% of the outstanding stock of another corporation, so long as
Executive has no active participation in the management or the business of
such corporation.
(b) During the Noncompete Period, Executive shall not
directly or indirectly induce or attempt to induce any officer of the Company
or any Subsidiary of the Company to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any such Subsidiary and any employee thereof.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. Executive
represents and warrants to the Company that:
(i) this Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive will not
conflict with, violate or cause a breach of or default under any agreement,
contract or instrument, order, judgment or decree to which Executive is a
party or by which he is bound, and
(ii) Executive is not a party to or bound by any employment
agreement or noncompete agreement with any other person or entity.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Executive that:
(i) the execution, delivery and performance of this Agreement
by the Company does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment
or decree to which the Company is a party or by which it is bound, and
(ii) upon the execution and delivery of this Agreement by
Executive, this Agreement shall be the valid and binding obligation of the
Company enforceable in accordance with its terms.
ARTICLE 3. DEFINITIONS
As used in this Agreement, the following terms shall have the
definitions set forth below:
"CAUSE" means (i) a material breach of this Agreement by Executive,
(ii) Executive's willful and repeated failure to comply with the lawful
directives of the Board or supervisory personnel, (iii) gross negligence or
willful misconduct by Executive in the performance of his duties hereunder, or
(iv) the commission by Executive of theft or embezzlement of Company property or
any other act (including but not limited to a felony or a crime involving moral
turpitude) that is injurious in any significant respect to the property,
operations, business or reputation of the Company or its Subsidiaries, as
determined in good faith by the Board.
"DISABILITY" means Executive's inability to substantially perform his
normal duties hereunder for six months or more during any twelve-month period
determined in good faith by the Board.
"SUBSIDIARY" of an entity shall mean any corporation, limited
liability company, limited partnership or other business organization of which
the securities having a majority of the normal voting power in electing the
board of directors, board of managers, general partner or similar governing body
of such entity are, at the time of determination, owned by such entity directly
or indirectly through one or more Subsidiaries.
ARTICLE 4. GENERAL PROVISIONS
4.1 ENFORCEMENT. If, at the time of enforcement of Sections 1.7,
1.8 or 1.9, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. In the event of a breach or threatened
breach of this Agreement, the Company, its Subsidiaries and their respective
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violation of, the provisions hereof (without posting a bond or other
security).
4.2 SURVIVAL. Sections 1.7, 1.8 and 1.9 shall survive and
continue in full force and effect in accordance with their terms notwithstanding
any termination of the Employment Period.
4.3 NOTICES. All notices or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, one
business day following when sent via a
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nationally recognized overnight courier, or when sent, when sent via
facsimile confirmed in writing to the recipient. Such notices and other
communications will be sent to the addresses indicated below:
To the Company:
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
To Executive:
0000 - 000 Xxxxxx X.X.
Xxxxxxx, XX 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
4.4 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
4.5 ENTIRE AGREEMENT. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
4.6 AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended or waived only with the prior written consent of the Company and
Executive.
4.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
4.8 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
4.9 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or of any term or provision hereof.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
COLOR SPOT NURSERIES, INC.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------
Xxxxxxx Xxxxxxxx
Chief Executive Officer
/s/ RAJU BOLIGALA
-------------------------------
Raju Boligala
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