EMPLOYMENT AGREEMIENT
THIS EMPLOYMENT AGREEMENT is dated as of July 1, 1996, by and between
GARDEN VALLEY NATURALS, INC., a California corporation ("Corporation"), and
FLOYD R. HILL ("Employee") under the following circumstances:
A. Corporation desires to employ Employee as its Chief Executive
Officer because of his knowledge, experience and expertise with respect to
the business of Corporation.
B. Employee desires to be so employed by Corporation.
C. The parties hereto desire to set forth in writing the terms and
conditions of the employment relationship to be established and continued.
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT.
Corporation shall employ Employee as the Chief Executive Officer of
Corporation pursuant to the terms and conditions hereinafter set forth, and
Employee shall perform the duties of such office. Employee shall also serve
as a member of the Board of Directors of Corporation, if elected by the
shareholders of the Corporation to such position. Employee shall perform
such duties at the offices of Corporation located in Morgan Hill, California,
or at such other location(s) as may be agreed to by the parties from time to
time.
2. TERMS OF EMPLOYMENT.
Subject to the provisions of paragraph 7, the term of employment
shall be three (3) years, commencing on July 1, 1996, and continuing through
July 1, 1999.
3. DUTIES AND RESPONSIBILITIES.
Subject only to the directives of the Board of Directors of
Corporation, Employee shall be in complete charge of the operations of
Corporation commensurate with his position as the Chief Executive Officer of
Corporation. Employee agrees to perform his services conscientiously,
effectively and to the best of his ability.
Corporation acknowledges that Employee currently is a shareholder of
Monterey Pasta Company, a member of the Board of Directors of Monterey Pasta
Company, and a product development consultant to Monterey Pasta Company,
which company, INTER ALIA, produces and distributes pasta sauces. Corporation
further acknowledges that Employee intends to retain his ownership interest
in Monterey Pasta Company during the term of this Agreement, and that
Employee intends to serve on that company's board of directors during the
term of this Agreement, in order to protect his investment in Monterey Pasta
Company.
Corporation acknowledges that Monterey Pasta Company may be in
direct or indirect competition with the Corporation with respect to certain
products. However,
Corporation agrees that it shall have no right in or to any activities
performed by Employee for Monterey Pasta Company, or to income or proceeds
that Employee derives therefrom. Corporation further agrees that Employee
shall have no obligation to present any investment opportunity to the
Corporation which is presented to Monterey Pasta Company, even if the
opportunity is of the character that, if presented to the Corporation, could
be taken by the Corporation. Corporation further agrees that it waives any
and all rights and claims which it may otherwise have, both now, or in the
future, against Employee in connection with his ownership interest in
Monterey Pasta Company or his rendering of services to Monterey Pasta Company.
4. BASE SALARY.
In consideration of Employee's services under this Agreement to
Corporation, Employee's base salary shall be fixed at an annual rate of One
Hundred Ten Thousand Dollars ($110,000), payable in accordance with
Corporation's normal payroll practices. Such base salary shall be reviewed
annually for increases by the Board of Directors at the same time the senior
management group of employees of Corporation is reviewed for salary increases.
5. INCENTIVE COMPENSATION.
As additional consideration of Employee's services, Corporation
hereby grants to Employee the option to purchase 200,000 shares of
Corporation's common stock pursuant to the Stock Option Agreement attached
hereto as Exhibit A.
6. INCENTIVE COMPENSATION.
As further consideration for Employee's services under this
Agreement, Corporation shall pay Employee such incentive compensation to
which Employee is entitled pursuant to any applicable Management Incentive
Compensation Plan which may be adopted by the Board of Directors of
Corporation.
7. BENEFITS.
In consideration for Employee's accepting the employment provided
for herein, Corporation agrees to provide the following benefits:
(a) All the standard benefits normally provided to the employees of
Corporation, including, but not limited to, social security benefits,
workers' compensation and any other benefits that may be subsequently made
available to employees of Corporation.
(b) Employee shall be entitled to fifteen (15) paid vacation days
per year and shall be entitled to up to ten (10) paid sick days per year.
Employee shall not be entitled to accrue more than thirty (30) paid vacation
days (no more than an aggregate of thirty (30) days of which may be carried
over to subsequent years) or more than twenty (20) paid sick days (no more
than an aggregate of twenty (20) days of which may be carried over to
subsequent years). Upon termination of Employee's employment for any reason,
Employee shall not be entitled to payment for any accrued but unpaid sick
days.
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(c) Corporation shall reimburse Employee for reasonable and
necessary expenses incurred by him in the performance of his duties hereunder
upon presentation of vouchers in accordance with Corporation's policy.
Employee shall furnish to Corporation adequate records and other documentary
evidence required by federal and state statutes and regulations for the
substantiation of such payments as deductible business expenses of
Corporation and not as deductible compensation to Employee, provided that
reimbursement of such expenses shall not be dependent on proving
deductibility of such expenses for tax purposes.
(d) During the term of this Agreement, Corporation shall pay
Employee an automobile allowance of $350.00 per month.
(e) Such other flexible executive perquisites that may be approved
by the Board of Directors of Corporation for the senior management group of
employees of Corporation.
8. EARLY TERMINATION AND SEVERANCE.
(a) BY CORPORATION. Corporation, acting through its Board of
Directors, may terminate this Agreement ONLY for "cause" upon thirty (30)
days' prior written notice to Employee. For purposes of this Agreement, such
termination shall be deemed for "cause" only if it is by reason of Employee's
commission of willful and material acts of neglect, dishonesty, fraud or
other acts involving moral turpitude which materially and adversely affect
the business or affairs of Corporation. If such termination is for "cause",
then all of the rights, duties and obligations of the parties under this
Agreement shall cease upon the effective date of termination. If such
termination is for any reason other than for "cause," then all of the rights,
duties and obligations of the parties under this Agreement shall cease upon
the effective date of termination, except that Corporation shall pay to
Employee a sum equal to the total base salary for the remaining term of this
Agreement under Section 2.
(b) BY EMPLOYEE. Employee may terminate this Agreement in his sole
discretion for any reason upon ninety (90) days' prior written notice to the
Board of Directors of Corporation. Upon the effective date of such
termination by Employee (except in the event of Employee's death, permanent
disability (as defined below), or resignation as a result of a change in
control of Corporation (as defined below)), all of the rights, duties, and
obligations of the parties under this Agreement shall cease including
Employee's right to his base salary and incentive compensation benefits. In
the event the employment of Employee is terminated at any time during the
term of this Agreement by reason of Employee's death, disability or
resignation as a result of a change in control (as defined below),
Corporation shall, upon the effective date of termination, pay to Employee,
or Employee's estate or personal representatives, a sum equal to three (3)
months' base salary plus the incentive compensation, if any, he would have
received pursuant to paragraph 6 if Employee was employed by Corporation
during such period of time.
(c) For purposes of this Agreement, a "change in control" shall
mean (i) consolidation or merger of Corporation in which Corporation is not
the surviving entity or in which there is a change in the ownership of more
than fifty percent (50%) of the outstanding capital stock of Corporation, or
(ii) the sale of substantially all of the assets of Corporation. For
purposes of this Agreement, Employee shall be considered permanently disabled
if he is unable to perform his duties hereunder on a full-time basis for a
continuous period of three (3) months.
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(d) This Agreement shall inure to the benefit of and be binding
upon Corporation, its successors and assigns, including but not limited to
any corporation which may acquire all or substantially all of Corporation's
assets or business or with which Corporation may be consolidated or merged.
Notwithstanding any other provision of this Agreement, in the event of a
change in control, Employee in his sole and absolute discretion shall have
the right to terminate this agreement upon written notice given to
Corporation, or its successors or assigns, effective no later than ninety
(90) days after the consummation of any such change in control, and in such
event Employee shall be entitled to receive the payments set forth in
paragraph 8(b) hereof.
9. NOTICES.
Notices required or permitted by this Agreement shall be effective
upon mailing, postage prepaid, or upon personal delivery, to the following
address:
To Corporation: Garden Valley Naturals, Inc.
550 Monterey Road
Morgan Hill, CA 95037
To Employee: Floyd R. Hill
P.O. Box 763
Carmel, CA 93921
10. MISCELLANEOUS PROVISIONS.
(a) The law of the State of California shall govern the
interpretation and enforcement of this Agreement.
(b) If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(c) This Agreement contains all of the covenants and agreements
between the parties on the matter stated herein. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other agreement,
statement, or promise on the subject matter stated herein not contained in
this Agreement shall be valid or binding. This Agreement supersedes the
Employment Agreement between Corporation and Employee dated November 20, 1995.
(d) Any modification of this Agreement shall be effective only if
it is in writing and executed by the party or parties to be charged.
(e) This Agreement shall be binding upon and inure to the benefit
of the parties and their spouses, successors, assigns, personal
representatives, heirs and legal representatives.
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11. CONFIDENTIALITY. Employee agrees to hold in confidence and not
disclose to any third party without the prior written consent of Corporation,
any proprietary or confidential information of Corporation. Proprietary or
confidential information refers to any information not generally known among
Corporation's competitors and that has commercial value to Corporation. By
way of illustration, but not limitation, proprietary or confidential
information includes (a) developments, improvements, trade secrets, formulae,
processes, techniques, knowhow and data; (b) plans for research, development,
new products, marketing and selling; information related to business plans,
budgets and unpublished financial statements; prices and costs; information
regarding suppliers and customers; and (c) any information designated by
Corporation as confidential.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first hereinabove written.
GARDEN VALLEY NATURALS, INC.
a California corporation
By /s/ JOHN BATTAGLIA
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Its
---------------------------------
"Corporation"
/s/ FLOYD R. HILL
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FLOYD R. HILL
"Employee"
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