Exhibit 6.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of April
18, 1997, by and between Xxxxx X. Xxxxx ("Executive") and Food Extrusion, Inc.,
a Nevada corporation (the "Company") with its principle place of business in the
State of California.
W I T N E S E T H :
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Company and the Executive agree
as follows:
1. Employment and Duties. Commencing on April 14, 1997 (the
"Commencement Date"), the Company agrees to employ Executive as Chief Executive
Officer and Executive agrees to serve the Company in such capacity, with the
authority and responsibilities customarily afforded the principal executive of a
company. All other officers of the Company shall report to Executive, and
Executive shall have authority, among other things, to hire and fire employees.
Executive agrees to devote substantially all of his normal business time and
efforts during normal business hours to the performance of his duties under this
Agreement, provided that the devotion of time to personal investments or other
business matters will not be deemed a breach of this Agreement if it does not
substantially interfere with the performance of Executive's duties hereunder.
Executive shall report directly to the Board of Directors and shall be nominated
and elected to the Board of Directors on or before April 4, 1997.
2. Compensation.
(a) Base Salary: Withholding. The Company shall pay Executive
a base salary of $250,000 per year payable in accordance with the Company's
standard payroll practices, with such base compensation subject to increase from
time to time (but no less frequently than annually) in the good faith discretion
of the Board of Directors. The parties shall comply with all applicable
withholding requirements in connection with all compensation payable to
Executive hereunder.
(b) Annual Cash Bonus. The Company shall pay Executive an
annual cash bonus on April 1, 1998, and annually thereafter, in such amounts as
the Board of Directors may decide after good faith and reasonable determination
of Executive's efforts during the prior year and the results thereof.
(c) Stock Option. The parties acknowledge and agree that, as
additional incentive to Executive, Executive shall be granted, immediately upon
execution of this Agreement, an option (the "Option") to purchase 2,000,000
shares of Company common stock ("Shares") at an exercise price of $2.00 per
share (the "Option Price") pursuant to an option agreement attached hereto as
Exhibit A (the "Option Agreement"). The Option shall vest as set forth in the
Option Agreement, which Option Agreement provides, among other conditions, that
in the event of termination of Executive's employment by Company without Cause
(as defined below) or by Executive for Good Reason (as defined below), the
Option shall at such time be deemed fully vested. The Shares shall be subject to
the Registration Rights Agreement attached hereto as Exhibit B.
If the Company sells shares of its capital stock to any of its
shareholders pursuant to a rights offering, Executive shall have the right to
participate in such rights offering by having the Company grant him an option,
on the terms set forth in Exhibit A, to purchase that number of shares of
capital stock (the "Rights Shares") that he could purchase in such offering if
all of his Shares subject to the Option, whether or not vested, were issued and
outstanding shares of Common Stock. The exercise price for the Rights Shares
shall be the lesser of the Option Price or the price to be paid by shareholders
in such rights offering.
(d) Incentive Plans. In addition to all other benefits and
compensation provided by this Agreement, Executive shall be eligible to
participate in such of the Company's equity, compensation and incentive plans as
are generally available to any of the management executives of the Company,
including without limitation any executive bonus or incentive compensation
plans.
(e) Temporary Living and Relocation Expenses.
(i) The Company shall reimburse Executive for: (A)
all reasonable moving expenses relating to the relocation of Executive and his
family, including transportation and direct moving costs; (B) all reasonable
costs (including real estate commissions) incurred in connection with the search
by him for a new principal residence in the Sacramento metropolitan area; and
(C) all reasonable commuting and temporary housing costs incurred by Executive
until he is able to relocate, including, but not limited to, the rental cost of
a condominium in Sacramento and furniture for such condominium.
(ii) The Company shall pay Executive a "gross-up"
payment in the amount necessary to make him whole for the payment of any Federal
and state income taxes on the amounts described in clause (i) and on the
"gross-up" payment. The payment made pursuant to this clause (ii) shall be made
prior to April 15, 1998.
(f) Vacation. Executive shall be entitled to such annual
vacation time with full pay as the Company may provide in its standard policies
and practices for any other management executives; provided, however, that in
any event Executive shall be entitled to a minimum of four weeks annual paid
vacation time.
(g) Other Benefits. Executive shall participate in and have
the benefits of all present and future holiday, paid leave, unpaid leave, life,
accident, disability, dental, vision and health insurance plans, pension,
profit-sharing and savings plans, car allowance and all other plans and benefits
which the Company now or in the future from time to time makes available to any
of its management executives; in any event, however, the Company shall provide
Executive with: (i) a life insurance policy in the amount of $1,000,000, which
policy Executive may acquire from the Company upon termination of his employment
for the cash surrender value thereof; (ii) long-term disability insurance
coverage which provides Executive disability benefits of at least 60% of his
base salary and an elimination period of not more than ninety (90) days; and
(iii) a car allowance of $1,200 per month.
3. Business Expenses. The Company shall promptly reimburse Executive
for all appropriately documented, reasonable business expenses incurred by
Executive.
4. Termination by the Company Without Cause. The Company may, by
delivering sixty (60) days' prior written notice to Executive, terminate
Executive's employment at any time and without Cause (as defined below) by:
(a) paying to Executive, no later than the date of
termination, a lump sum equal to:
(i) Executive's base salary accrued through the date
of termination;
(ii) all accrued vacation pay and accrued bonuses, if
any, to the date of termination;
(iii) any bonus, if any, which would have been paid
but for the termination, prorated through the date of termination, based upon
the Company's performance and in accordance with the terms, provisions and
conditions of any Company incentive bonus plan in which Executive may be
designated a participant;
(iv) if the date of termination occurs within one
year of the Commencement Date, an amount equal to 12 months of Executive's base
salary at the rate in effect on the date of notice of termination (the
"Severance Amount"). The Severance Amount shall be increased to 18 months of
Executive's base salary as of the date of the notice of termination if the date
of termination is not less than one nor more than two years after the
Commencement Date, and the Severance Amount shall be further increased to 24
months of such base salary if the date of termination is more than two years
after the Commencement Date;
(b) providing, for a period of 12 months after the date of
termination, at the Company's expense, coverage to Executive under the Company's
life insurance and disability insurance policies and to Executive and his
dependents under the Company's health plan; if any of the Company's health, life
insurance, or disability insurance plans are not continued or if Executive is
not eligible for coverage thereunder because of the termination of his
employment, the Company shall pay the amount required for Executive to obtain
equivalent coverage;
(c) providing to Executive reasonable outplacement services;
and
(d) providing an office, secretarial support, and access to
equipment and supplies for a period of 6 months after termination.
In addition, notwithstanding anything to the contrary contained herein
or in any agreement with respect hereto, upon termination of Executive's
employment pursuant to this Section 4, all equity options, restricted equity
grants and similar rights held by Executive with respect to securities of the
Company, including without limitation the Option, shall automatically become
fully vested and shall become immediately exercisable.
In the event that any compensation paid to Executive under this
Agreement and the Stock Option Agreement would be considered a parachute payment
pursuant to Internal Revenue Code Section 280G, the Company shall pay Executive
the gross up amount necessary so that Executive will net the amount called for
under such agreements after payment of excise taxes under Internal Revenue Code
Section 4999 and Federal and state income taxes.
5. Definition of Cause. For purposes of this Agreement, "Cause" means:
(i) misappropriating any funds or property of the Company; (ii) attempting to
obtain any material personal profit from any transaction in which the Executive
has an interest that is adverse to the material interests of the Company, other
than a transaction disclosed to and approved by the Company; (iii) the
Executive's willful and continuing refusal to perform his duties pursuant to
this Agreement after reasonable written notice; (iv) the commission by the
Executive of any material act of misconduct or dishonesty or any wrongful act
which has a direct, substantial and adverse effect on the Company's business or
reputation; or (v) conviction of a felony.
6. Payments Upon Termination for Good Reason.
(a) Definition of "Good Reason". "Good Reason" shall mean:
(i) the assignment of Executive to any duties
inconsistent with, or any adverse change in, Executive's titles or positions,
duties, responsibilities or status with the Company, or the removal of Executive
from, or failure to reelect Executive to, any of such positions; or
(ii) the failure, for any reason, for Executive to be
elected to the Board of Directors by April 11, 1997, or the removal of Executive
from, or failure to reelect Executive to, the Board of Directors; or
(iii) any attempt to reduce, or a request by the
Company that Executive reduce, his base salary; or
(iv) the Company requiring or requesting Executive to
be based outside of San Francisco or more than fifty miles away from the
Company's current headquarters in El Dorado Hills, except for travel on Company
business; or
(v) the failure of the Company to provide support,
information, assistance and staffing reasonably appropriate for Executive to
carry out Executive's duties or to achieve the performance goals set by the
Company; or
(vi) the failure of the Company to continue in effect
for Executive any health insurance plan or other benefits specifically described
in Section 2(g) of this Agreement; or
(vii) the failure of the Company to obtain for
Executive directors and officers liability insurance coverage as more fully
described in Section 8 below;
(viii) any other material breach by the Company of
this Agreement which is not cured within ten (10) days of notice thereof by
Executive to Company; or
(ix) a Change in Control. A "Change in Control" means
the occurrence of any of the following:
(A) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, its existing shareholders, or Monsanto
Corporation or its subsidiaries or affiliates) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (or a successor to the Company)
representing 35% or more of the combined voting power of the then outstanding
securities of the Company or such successor;
(B) at any time the Company has registered
shares under the Exchange Act, at least 40% of the directors of the Company
constitute persons who were not at the time of their first election to the
Board, candidates proposed by a majority of the Board in office before such
first election; or
(C) the dissolution of the Company or
liquidation of more than 50% in value of the Company or a sale of assets
involving 50% or more in value of the assets of the Company, (ii) any merger or
reorganization of the Company whether or not another entity is the survivor,
(iii) a transaction (other than the initial public offering of Company's shares)
pursuant to which the holders, as a group, of all of the shares of the Company
outstanding before the transaction, hold, as a group, less than 50% of the
combined voting power of the Company or any successor company outstanding after
the transaction, or (iv) any other event or series of events which the Board
determines, in its discretion, would materially alter the structure of the
Company or its ownership.
(b) Termination. Executive may terminate his employment for
Good Reason at any time upon providing written notice of termination to the
Company. In the event of termination of Executive's employment for Good Reason,
the Company shall pay Executive all of the consideration the Company would be
obliged to pay to Executive under Section 4 of this Agreement if Executive were
terminated without Cause.
7. Voluntary Termination by Executive. In addition to the reasons set
forth in Section 6, Executive may terminate this Agreement at any time for any
reason or no reason upon delivering thirty (30) days' prior written notice to
the Company. No later than the date of termination, the Company shall pay
Executive a lump sum equal to his accrued base salary through the date of
termination, and all accrued vacation pay and bonuses.
8. Indemnification. As a director, officer and agent of the Company,
Executive shall be fully indemnified by the Company to the fullest extent
permitted by California law. To implement this provision, Company shall execute
and deliver to Executive its standard form of indemnification agreement for
officers and directors, and Executive shall thereafter be entitled to the
benefits of any subsequent amendments thereto made for any management
executives. In addition, Company agrees to obtain and maintain during the term
of Executive's employment, a directors and officers insurance policy with
customary policy limits and deductible, under which Executive is an insured.
9. Confidential Information. Executive shall execute and deliver to the
Company any standard and reasonable confidentiality and proprietary rights
agreement which the Company reasonably requires of all of its management
executives.
10. Assignment. The rights and obligations of the parties under this
Agreement shall be binding upon and inure to the benefit of their respective
successors, assigns, executors, administrators and heirs, provided, however,
that Executive may not delegate any of Executive's duties under this Agreement.
11. Additional Benefits. Company agrees promptly to reimburse Executive
for amounts Executive expends in legal and financial planning and accounting
fees in connection with the negotiation and preparation of this Agreement, the
Stock Option Agreement and the Registration Rights Agreement, and all other
documents related thereto.
12. Miscellaneous.
(a) Complete Agreement. This Agreement constitutes the entire
agreement between the parties and cancels and supersedes all other prior or
contemporaneous agreements between the parties which relate to the subject
matter contained in this Agreement.
(b) Modification, Amendment, Waiver. No modification or
amendment of any provisions of this Agreement shall be effective unless approved
in writing by both parties. The failure at any time to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of either party thereafter to enforce
each and every provision hereof in accordance with its terms.
(c) Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(e) Attorneys' Fees. In the event of dispute relating to this
Agreement (including enforcing judgments and appeals), the prevailing party
shall be entitled to reimbursement of its reasonable attorneys' fees and costs
of suit in addition to such other relief as may be granted.
(f) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given in person or by telegraph,
telefax or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered personally
or three days after mailing or one day after transmission of a telegram or
telefax, as the case may be, to the respective persons named below:
If to the Company: Food Extrusion, Inc.
0000 Xxxx'x Xxxxxx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. XxXxxx, Chairman
With a copy to:
If to the Executive: Xxxxx X. Xxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxx, Parachini, Steinberg,
Matzger & Xxxxxxx, LLP
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
COMPANY: Food Extrusion, Inc., a Nevada
corporation
By: /s/Xxxxxxxx Xxxxxx By:/s/ Xxxxxx X. XxXxxx
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Its:President Its: Chairman of the Board
EXECUTIVE: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
