EXHIBIT 10.18
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
February 1, 1998, by and between Cadiz Land Company, Inc., a Delaware
corporation (the "Company") and Keith Brackpool, an individual
("Brackpool").
WHEREAS, the Company wishes to employ Brackpool and Brackpool
wishes to accept such employment on the terms and conditions set forth
herein;
NOW, THEREFORE, the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby employs Brackpool and
Brackpool accepts such employment for an initial term of three (3) years
commencing as of the date of this Agreement (the "Commencement Date"),
and automatically continuing thereafter upon the same terms and
conditions until terminated in accordance with the termination
provisions of Section 6 below (the "Term").
2. DUTIES. Brackpool shall be employed as the Chief Executive
Officer of the Company. Brackpool's base of operations shall be at the
corporate headquarters office of the Company in Santa Monica, California
unless changed by mutual agreement. However, Brackpool shall also
render services at such other sites at which the Company's operations
are conducted as necessary to properly perform his duties. Brackpool's
duties and responsibilities shall relate, generally, to the operational
management of the Company. Brackpool shall report to, and take
direction from, the Board of Directors of the Company. Brackpool shall
also perform such other duties pertaining to the operations of the
Company as the Board of Directors of the Company (the "Board") may from
time to time direct. Brackpool hereby consents to serve in further
capacities as an officer and/or director of the Company or any
subsidiary or affiliate (including, without limitation, Chairman of the
Company's wholly owned subsidiary, Sun World International, Inc. ("Sun
World")) without any additional salary or compensation.
3. NECESSARY SERVICES.
a. PERFORMANCE OF DUTIES. Brackpool agrees that he will at
all times faithfully, industriously and to the best of his ability,
experience and talents, perform to the reasonable satisfaction of the
Company all of the duties that may be assigned to him hereunder and
shall devote such time to the performance of these duties as may be
necessary therefor.
b. FULL-TIME SERVICE. During the term of the
Agreement, Brackpool shall be available on a full-time basis to
perform the duties assigned him in accordance with paragraph 2
hereof; provided, however, that nothing herein shall preclude
Brackpool from spending a reasonable amount of time in the
management of his personal investments or with any charitable or
civic venture with which Brackpool may be involved as of the date
hereof; and provided, further, that such involvement shall not
detract from the performance of Brackpool's duties hereunder.
c. EXCLUSIVE SERVICES. Brackpool agrees that during
the period of his employment, Brackpool shall provide services
exclusively pursuant to this Agreement, and Brackpool will not,
without the prior written consent of the Company (which consent
may be granted or withheld in the sole and absolute discretion of
the Company), directly or indirectly:
(i) engage in the business of, or own or control
any interest in (except as a passive investor owning less than
10% of the equity securities of a publicly held company), or act
as director, officer of employee of, or consultant to, any
individual, partnership, joint venture, corporation or other
business entity, directly or indirectly engaged anywhere in the
United States, its possessions or territories, in any business
competitive with the business then being carried on by the
Company or any affiliate;
(ii) plan or organize any business activity
competitive with the business or planned business of the Company
or its affiliates, or combine, participate, or conspire with
other employees of the Company or its affiliates or other persons
or entities for the purpose of organizing any such competitive
business activity; or
(iii) divert or take away, or attempt to divert
or take away, any of the customers or potential customers of the
Company or its affiliates, either for himself or for any other
person, firm, partnership, corporation or other business entity.
4. BASIC COMPENSATION. Brackpool shall be paid an initial
base salary of $500,000 per annum, commencing as of the
Commencement Date. Payments shall be made in equal monthly
installments in accordance with the normal payroll practices of
the Company. Such base salary will be subject to annual increase
by the Compensation Committee of the Board, in its sole and
absolute discretion.
Brackpool agrees to accept the foregoing, along with any
other compensation to which Brackpool may be entitled under
Section 5 below, as payment in full for all services rendered by
him to or for the benefit of the Company and its subsidiaries.
Brackpool acknowledges and agrees that a portion of the
compensation payable to him pursuant to this Agreement may be
paid directly by Sun World or any other affiliate of the Company,
and that any compensation payments received by Brackpool from
such entities shall be credited against and applied to the total
compensation to which Brackpool is entitled under this Agreement.
5. OTHER COMPENSATION.
a. ANNUAL BONUS. Brackpool will be entitled to
receive an annual bonus comprised of an EBITDA Bonus, a Water
Development Bonus and a Discretionary Bonus (in the aggregate not
to exceed 120% of the annual base compensation payable to
Brackpool pursuant to Section 4 above) as follows:
i. EBITDA BONUS. Prior to the commencement of
each fiscal year during the term of this Agreement, the
Company's budgeted EBITDA Amount for such year shall be
established by the Board. For purposes hereof, the term
"EBITDA Amount" shall mean the Company's earnings before
interest, taxes, depreciation and amortization (subject to
such adjustments for extraordinary items as the Board may
establish at the time it establishes the budgeted EBITDA
Amount), as certificated by the independent outside auditors
of the Company. In the event of a change in the fiscal year
end of the Company, suitable pro-rata adjustments shall be
made to the foregoing EBITDA Amount. If the Company
achieves 100% of its budgeted EBITDA Amount for the year,
Brackpool will be paid a bonus equal to 20% of Brackpool's
annual base salary. The amount of this bonus will be
subject to increase if the EBITDA Amount for the year is
greater than 100% of budget, up to a maximum of 40% of
Brackpool's annual base salary if the EBITDA Amount is 120%
of budget. If the EBITDA Amount for the year is greater
than 100% of budget, but lower than 120% of budget, the
amount of the bonus payable shall be calculated on a pro-
rata basis. By way of example only, if the Company achieves
110% of budget, the bonus will equal 30% of Brackpool's
annual base salary. Similarly, the amount of this bonus
will be subject to decrease if the EBITDA Amount for the
year is less than 100% of budget, with no bonus payable
unless the EBITDA Amount exceeds 80% of budget. If the
EBITDA Amount for the year is greater than 80% of budget,
but lower than 100% of budget, the amount of the bonus
payable shall be calculated on a pro-rata basis. By way of
example only, if the Company achieves 90% of budget, the
bonus will equal 10% of Brackpool's annual base salary.
ii. WATER DEVELOPMENT BONUS. Prior to the
commencement of each fiscal year during the term of this
Agreement, the Board shall establish a set of criteria based
on advancements to be made during such year in fulfilling
the Company's water development business plan which, if met,
will result in the payment to Brackpool of a bonus in an
amount not to exceed 40% of Brackpool's annual base salary.
In establishing such criteria, the Board shall use 20% of
Brackpool's annual base salary as a target bonus; provided,
however, that the criteria shall be established by the Board
so that the actual amount of the bonus may range anywhere
from 0% to 40% of Brackpool's annual base salary depending
upon the degree to which such criteria are met during the
year.
iii. DISCRETIONARY BONUS. Following the
conclusion of each fiscal year during the term of this
Agreement, the Board shall make a good faith evaluation of
the performance of the Company under Brackpool's direction
during such year, on the basis of which Brackpool shall
receive a bonus in an amount not to exceed 40% of
Brackpool's annual base salary for such year. In
determining the amount of such bonus, the Board shall use
20% of Brackpool's annual base salary as a target bonus;
provided, however, that the actual amount of the bonus may
range anywhere from 0% to 40% of Brackpool's annual base
salary depending upon the Board's subjective evaluation of
the performance of the Company under Brackpool's direction
during the year.
iv. TIMING AND FORM OF BONUS PAYMENT. Any annual
bonus payments payable to Brackpool hereunder shall be paid
as soon as possible following the end of the fiscal year to
which such bonus relates and the determination of the
amounts owed; provided, however, that all such payments
shall be made within 90 days of the end of the appropriate
fiscal year. Bonus payments payable to Brackpool hereunder
shall be paid in cash except that the Board, in its
discretion, may pay up to 50% of the aggregate amount of any
annual bonus earned in the form of theretofore authorized
but unissued common shares of the Company, valued for such
purpose at a price equal to the market value of the
Company's common stock upon the date of the Board's
determination to issue shares in lieu of cash. Upon the
issuance of such shares, Brackpool shall provide to the
Company such written documentation, including
representations and warranties, as the Company may require
in order to establish compliance with any applicable state
or federal securities laws.
v. ADDITIONAL CONDITIONS TO BONUSES. It shall
be a further condition to the payment of any bonuses
described in this paragraph 5(a) that Brackpool be an
employee of the Company at the end of the fiscal year to
which such bonuses relate.
b. FRINGE BENEFITS. In addition to the compensation
set forth above, Brackpool shall be entitled to the following
benefits:
i. Four (4) weeks annual vacation, provided that
no more than two weeks are to be taken consecutively;
ii. Sick leave and personal leave with pay in
accordance with the prevailing policies of the Company;
iii. Medical coverage under the group medical
insurance plan of the Company (or COBRA coverage, at the election
of Brackpool);
iv. Participation in any life insurance plans
generally made available by the Company to its employees;
v. Additional life insurance through the
purchase, by the Company, of a $1,000,000 face-value term life
insurance policy for the benefit of Brackpool (or, alternatively,
the payment of premiums by the Company with respect to a policy
in such amount purchased by Brackpool);
vi. Participation in any disability plan
generally made available by the Company to its employees, which,
as of the date of this Agreement, provides for 60% of base
compensation after 90 days of disability up to $10,000 per month;
vii. Additional individual disability insurance
coverage providing for 75% of Brackpool's base compensation (or
such greater percentage as the Board may determine); provided,
however, that the additional monthly premium payable by the
Company for such coverage shall not exceed $750.00 per month;
viii. Participation in any retirement or pension
plan maintained by the Company for the general benefit of its
employees, including any nonqualified or supplemental retirement
plans that are implemented after the effective date of this
Agreement;
ix. A fully equipped automobile of Brackpool's
choice but at the Company's expense (with a retail value not to
exceed $85,000) for Brackpool's use during the term of this
Agreement;
x. Participation in any long term incentive
plans maintained by the Company for the general benefit of its
employees; provided, however that the terms and conditions of any
long-term incentive awards (including form, amount and vesting
conditions) shall be established by the Board in its sole and
absolute discretion;
xi. Participation in any other benefit plan
maintained by the Company for the general benefit of its
employees; and
xii. Any other benefits not specifically set forth
herein as may be granted by the Company in its sole and absolute
discretion.
c. VESTING OF RIGHTS UPON CHANGE IN CONTROL. As
further consideration for the execution by Brackpool of this
Agreement and the provision of services hereunder, the Company
hereby agrees that if a Change in Control of the Company (as
defined in the Company's 1996 Stock Option Plan) occurs, then any
conditions to (i) the vesting of Brackpool's right to exercise
outstanding stock options or (ii) the issuance to Brackpool of
shares of the Company's common stock pursuant to outstanding
stock bonus plans to which Brackpool is a party shall be deemed
to have been satisfied, and any such options shall become fully
exercisable and any such shares shall become immediately issuable
as of the date such Change in Control occurred; provided,
however, that the acceleration of exercisability or issuance
shall be subject to the imposition of such restrictions on
transferability of the subject shares of the Company's common
stock as are necessary to permit stock issued upon exercise of
such options or under such stock bonus plans to continue to
qualify for the exception from Section 16(b) of the Securities
Act of 1933, as amended, as provided under Rule 16(b)(3).
d. DEDUCTION AND REIMBURSEMENT. Brackpool hereby
agrees that the Company may deduct and withhold from the
compensation payable to Brackpool hereunder any amounts of money
required to be deducted or withheld by the Company under the
provisions of any and all applicable local, state or federal
statutes or regulations or any amendments thereto hereafter
enacted requiring the withholding or deducting of compensation.
In the event the Company makes any payments or incurs any charges
for Brackpool's account, the Company shall have the right, and
Brackpool hereby authorizes the Company, to deduct from any
compensation payable to Brackpool hereunder any charges so paid
or incurred by the Company, but such right of deduction shall not
be deemed to limit or exclude any other rights of credit or
recovery or any other remedies the Company otherwise may have.
Nothing hereinabove set forth shall be deemed to obligate the
Company to make any such payments or incur any such charges. If
it is determined that such deduction is unauthorized, the Company
agrees to reimburse Brackpool promptly, it being understood,
however, that notwithstanding the determination that any
deduction was unauthorized, the making of such deductions shall
not be deemed to be a breach by the Company of any of its
obligations to Brackpool hereunder.
6. TERMINATION.
a. INITIAL TERM AND AUTOMATIC EXTENSIONS. Except as
provided in subsection (b) below, this Agreement shall terminate
three (3) years from the date of this Agreement (the "Initial
Term"); provided, however, that in the event that neither
Brackpool nor the Company (acting through its Board of Directors)
has given the other party written notice at least 30 days prior
to the expiration of the Initial Term of such party's desire not
to extend this Agreement then, upon the expiration of the Initial
Term (and provided that this Agreement has not otherwise been
terminated pursuant to the provisions of subsection (b) below)
this Agreement shall automatically be extended for a period of
one (1) year. This Agreement shall continue thereafter to be
automatically extended for successive one (1) year periods unless
and until (i) Brackpool or the Company gives the other party
written notice at least 30 days prior to the expiration of any
one (1) year extension period of such party's desire not to
further extend this Agreement, or (ii) this Agreement is
otherwise terminated pursuant to the provisions of subsection (b)
below.
b. OTHER TERMINATION EVENTS. Notwithstanding the
provisions of subsection (a) above, this Agreement shall
terminate:
i. At the election of the Company, upon the
death or permanent disability of Brackpool, "permanent
disability" being defined as any continuous loss of one-half (1/2)
or more of the time spent by Brackpool in the usual daily
performance of his duties as a result of physical or mental
illness for a continuous period in excess of ninety (90) days.
ii. At the election of the Company, at such time,
if any, as the Company ceases to conduct business for any reason
whatsoever.
iii. At the election of the Company, upon the
breach by Brackpool of any term or condition of this Agreement or
upon the dismissal of Brackpool by the Company for cause. For
purposes of this Agreement, the Company shall have "cause" to
terminate Brackpool's employment if he (1) engages in one or more
acts constituting a felony; (2) engages in one or more acts
involving fraud or serious moral turpitude; (3) misappropriates
Company assets or engages in gross misconduct materially
injurious to the Company or its affiliates or subsidiaries; or
(4) willfully fails to comply with the written instructions of
the Board.
iv. At the election of Brackpool, upon a breach
by the Company of this Agreement by reason of a material change
in Brackpool's job title or a material reduction in Brackpool's
duties and responsibilities hereunder.
c. PAYMENTS FOLLOWING TERMINATION. Following
termination of this Agreement, whether for any of the reasons
specifically set forth above or for any other reason, the Company
shall have no obligation to make payments to, or bestow benefits
upon, Brackpool after the date of termination (otherwise than as
required by law), except as follows:
i. In the event of termination by the Company
pursuant to Section b(ii) as the result of Brackpool's death,
payment of the base compensation otherwise payable to Brackpool
pursuant to Section 4 hereof shall continue to be paid to
Brackpool's estate for a period of 90 days following Brackpool's
death (such payments to be in addition to, and not in lieu of,
any payments made pursuant to any Company provided death benefit
plans).
ii. In the event of termination of this Agreement
by Brackpool pursuant to Section (b)(iv) above, or in the event
of termination of this Agreement by the Company prior to the
expiration of the term of this Agreement for any reason not
specifically set forth above, Brackpool shall be entitled to
receive for the entire remaining term of this Agreement as though
Brackpool were continuing to provide services to the Company
under this Agreement (i) base compensation as set forth in
Section 4 above as in effect on the date of termination and (ii)
all fringe benefits as described in Section 5(b) above (other
than use of an automobile) to the extent that such benefits can
then lawfully be made available by the Company to Brackpool. In
addition, in the event of termination of this Agreement by the
Company prior to the expiration of the term of this Agreement for
any reason not specifically set forth above, Brackpool shall be
entitled to receive for the entire remaining term of this
Agreement as though Brackpool were continuing to provide services
to the Company a monthly payment equal to one-twelfth of his
annual bonus target (i.e. 60% of Brackpool's base compensation as
set forth in Section 4 above as in effect on the date of
termination).
iii. The termination of this Agreement shall not
affect the right of Brackpool to exercise any stock options or
other rights to purchase securities of the Company which may have
vested in full prior to the date of termination or Brackpool's
right to any as yet unpaid bonus payable under Section 5(a) with
respect to a fiscal year ending prior to the date of termination.
d. RETURN OF COMPANY'S PROPERTY. If this Agreement
is terminated for any reason, the Company may, at its option,
require Brackpool to vacate his offices prior to the effective
date of a termination and to cease all activities on the
Company's behalf. Brackpool agrees that on the termination of
his employment in any manner, he will immediately deliver to the
Company all notebooks, brochures, documents, memoranda, reports,
price lists, files, invoices, purchase orders, books,
correspondence, customer lists, or other written or graphical
records, and the like, relating to the business or work of the
Company, which are or have been in his possession or under his
control and which have not been returned to the Company.
Brackpool hereby expressly acknowledges that all such materials
referenced above are the property of the Company.
e. PUBLIC IDENTIFICATION. If this Agreement is
terminated for any reason, Brackpool shall immediately and
forever thereafter cease to hold himself out to any person, firm,
partnership, corporation or other entity as an employee, agent,
independent contractor or representative of the Company or of any
entity owned by, or affiliated with, the Company.
7. EXPENSES. The Company shall reimburse Brackpool for
all out-of-pocket expenses incurred by Brackpool in the
performance of his duties hereunder, including, but not limited
to, telephone, travel, and office expenses, all subject to such
written guidelines and/or requirements for verification as the
Company may, in its sole and absolute discretion, establish.
8. CONFIDENTIALITY AND TRADE SECRETS. For purposes of
this Section 8, the term "Company" shall collectively refer to
the Company and any affiliate thereof.
a. CONFIDENTIAL INFORMATION. Brackpool shall keep in
strictest confidence all information relating to the business,
affairs, customers and suppliers of the Company (collectively
hereinafter referred to as "Trade Secrets"), including, among
other things but without limitation, the Company's cost of
performing services, pricing formulae, methods or procedures, and
customer lists, which Brackpool may acquire during the
performance of his services and duties hereunder and which is not
otherwise generally known to the public. Brackpool acknowledges
that such Trade Secrets are of great value, and have been
developed and/or acquired at great expense to the Company, and
the Company would not enter into this contract of employment and
such information would not be made available to Brackpool in
Brackpool's fiduciary capacity unless the Company were assured
that all such information will be used for the exclusive benefit
of the Company. Accordingly, during the term of this Agreement,
and at all times thereafter, Brackpool shall not publish,
communicate, divulge, disclose or use, whether or not for his own
benefit, any such information without the prior written consent
of the Company. Further, Brackpool agrees that during the period
of his employment, Brackpool will not, directly or indirectly,
engage in the business of, or own or control any interest in
(except as a passive investor owning less than 10% of the equity
securities of a publicly held company), or act as a director,
officer of employee of, or consultant to, any individual,
partnership, joint venture, corporation or other business entity,
directly or indirectly engaged anywhere in the United States, its
possessions and territories, in any business competitive with the
business then being carried on by the Company; nor will Brackpool
engage in any such activity following the termination of his
employment hereunder (however and by whomever caused and
irrespective or whether or not such termination is for cause), if
the loyal and complete fulfillment by Brackpool of such
activities would demand, inherently, that Brackpool reveal Trade
Secrets.
b. CUSTOMER INFORMATION. Brackpool hereby
specifically agrees that he will not utilize any information
concerning the customers of the Company which Brackpool acquires
during the term of this Agreement, whether or not the same
originated through Brackpool's efforts, for any purpose
detrimental to the business of the Company. Without limitation
of the foregoing, Brackpool agrees that he shall not at any time
interfere with any existing contracts of the Company, and further
agrees that he shall not engage in business discussions with any
person or entity with whom he or the Company are in negotiations
at the time he ceases to be an employee of the Company until
after such negotiations have been concluded.
c. SOLICITATION OF EMPLOYEES. Brackpool acknowledges
that important factors in the Company's business and operations
are the loyalty and good will of its employees and its customers.
Accordingly, Brackpool agrees that both during the term of this
Agreement and after the expiration or termination of this
Agreement he will not enter into, and will not participate in,
any plan or arrangement to cause any of the Company's employees
to terminate his employment with the Company or hire any of such
employees in connection with business initiated by Brackpool or
any other person, firm or corporation. Brackpool further agrees
that information as to the capabilities of the Company's
employees, their salaries and benefits, and the other terms of
their employment is confidential and proprietary to the Company
and constitutes its valuable trade secrets.
d. ONGOING OBLIGATION. The provisions in this
Section 8 shall be binding during Brackpool's employment and at
all times thereafter, regardless of the circumstances or reasons
for termination of this Agreement. In the event the provisions
in this Section 8 are more restrictive than permitted by the laws
of the jurisdiction in which enforcement of this provision is
sought, such provisions shall be interpreted to extend only over
the maximum period of time, range of activities or geographic
area as to which it may be enforceable.
9. REMEDY FOR BREACH. Brackpool acknowledges that the
services to be rendered by him hereunder are of a special, unique
and extraordinary character, which gives this Agreement a
peculiar value to the Company, the loss of which cannot be
reasonably or adequately compensated in damages in an action at
law, and a breach by Brackpool of the provisions of this
Agreement will cause the Company irreparable injury. It is,
therefore, expressly acknowledged that this Agreement may be
enforced by injunction and other equitable remedies, without
bond. Such relief shall not be exclusive, but shall be in
addition to any other rights or remedies Company may have for
such breach, and Company shall be entitled to recover all costs
and expenses, including reasonably attorneys' fees, incurred by
reason of any breach of the covenants of this Agreement.
10. LITIGATION AND ATTORNEYS FEES. In the event of any
litigation between the parties hereto in connection with this
Agreement or to enforce any provision or right hereunder, the
unsuccessful party to such litigation shall pay to the successful
party therein all costs and expenses, including but not limited
to reasonable attorneys' fees incurred therein by such successful
party, which costs, expenses and attorneys' fees shall be
included as a part of any judgment rendered in such action in
addition to any other relief to which the successful party may be
entitled.
11. BOARD ACTIONS. Any actions required to be taken or
determinations to be made by the Board under this Agreement may,
at the discretion of the Board, be taken or made by the
Compensation Committee or any other duly authorized committee of
the Board.
12. GENERAL PROVISIONS.
a. The failure of the Company at any time to enforce
performance by Brackpool of any provisions of this Agreement
shall in no way affect the Company's rights thereafter to enforce
the same, nor shall the waiver by the Company of any breach of
any provision hereof be held to be a waiver of any other breach
of the same or any other provision.
b. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and the successors and assigns
of the Company; provided, however, it is understood and agreed
that the services to be rendered and the duties to be performed
by Brackpool hereunder are of a special, unique and personal
nature and that it would be difficult or impossible to replace
such services; by reason thereof, Brackpool may not assign either
the benefits or the obligations of this Agreement.
c. Brackpool shall be considered an employee of the
Company within the meaning of all federal, state and local laws
and regulations governing unemployment insurance, workers'
compensation, industrial accident, labor and taxes.
d. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written agreements and negotiations
between the parties.
e. The headings of the several paragraphs in this
Agreement are inserted solely for the convenience of the parties
and are not a part of and are not intended to govern, limit or
aid in the construction of any term or provision hereof.
f. This Agreement may not be modified except by a
written instrument signed by all parties hereto.
g. All clauses and covenants contained in this
Agreement are severable, and in the event any of them shall be
held to be invalid by any court, such clauses or covenants shall
be limited as permitted under applicable law, or, if the same are
not susceptible to such limitation, this Agreement shall be
interpreted as if such invalid clauses or covenants were not
contained herein.
h. This Agreement is made with reference to the laws
of the State of California and shall be governed by and construed
in accordance therewith. Any litigation concerning or to enforce
the provisions of this Agreement shall be brought in the courts
of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
BRACKPOOL:
/s/ Keith Brackpool
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Keith Brackpool
THE COMPANY
Cadiz Land Company, Inc.
By: /s/ Dwight Makins
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Dwight Makins
Chairman