EMPLOYMENT AGREEMENT
dated as of March 31, 2000, between CFP
GROUP, INC., a Delaware corporation (the
"Company"), and ERIC W. EK (the "Executive").
The Company and the Executive are parties to the Employment
Agreement dated as of December 31, 1996 (the "Second Employment Agreement"). The
Company and the Executive desire to terminate the Second Employment Agreement as
of the date hereof and to continue the employment relationship between the
Company and the Executive from and after the date hereof pursuant to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
Section 1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment by the Company upon the terms and conditions
hereinafter set forth.
Section 2. Term. The employment of the Executive hereunder shall be for
the period (the "Employment Period") commencing on the date hereof (the
"Commencement Date") and ending on (a) June 30, 2001 (the "Scheduled Termination
Date"), or (b) such earlier date (the "Termination Date") upon which the
employment of the Executive shall terminate in accordance with the provisions
hereof.
Section 3. Duties. During the Employment Period, the Executive shall be
employed as Executive Vice President - Corporate Development of the Company, CFP
Holdings, Inc., a wholly-owned subsidiary of the Company ("Holdings"), and
Custom Food Products, Inc., a wholly-owned subsidiary of Holdings ("Custom
Food"), and shall perform such duties as are consistent therewith, including,
without limitation, the duties generally described in the Position Description
attached hereto as Annex I. The Executive shall further serve as a member of the
Board of Directors of the Company (the "Board"), Holdings and Custom Food and
shall have such other titles and duties, consistent with the status of a senior
level executive of the Company, as the Board shall in its sole discretion
designate. The Executive shall use his best efforts to perform well and
faithfully the foregoing duties and responsibilities.
Section 4. Time to be Devoted to Employment. During the Employment
Period, the Executive shall devote all of his working time, attention and
energies to the business of the Company and its subsidiaries (except for
vacations to which he is entitled pursuant to Section 6(b) and except for
illness or incapacity). During the Employment Period, the Executive shall not
engage in any business activity which, in the reasonable judgment of the Board,
conflicts with the duties of the Executive hereunder, whether or not such
activity is pursued for gain, profit or other pecuniary advantage. Nothing
contained in this Section 4 shall prohibit the Executive from (a) owning up to
1% of the outstanding capital stock or other class of securities of any
corporation whose shares are traded on a national securities exchange or are
listed on NASDAQ
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or (b) making other passive investments in entities which do not compete in any
manner with the Company after obtaining the prior written consent of the Board.
Section 5. Compensation; Bonus. (a) The Company (or at the Company's
option, any subsidiary or affiliate thereof) shall pay to the Executive an
annual base salary (the "Base Salary") during the Employment Period of $240,000
per annum, payable in such installments (but not less often than monthly) as is
generally the policy of the Company with respect to its officers.
(b) In addition to the Base Salary, the Executive shall be
eligible to participate in the Company's annual cash bonus plan based upon
achieving and exceeding the annual performance targets for the Company as
follows:
(i) In respect of each of the 2001 and 2002 fiscal
years (each, a "Bonus Year"), the Company shall award a cash bonus (the
"Annual Cash Bonus"), if any, of between 35% and 100% of the
Executive's Base Salary, depending upon the percentage of Annual
Budgeted EBITDA (as hereinafter defined) of the Company attained,
according to the following schedule:
Annual Budgeted EBITDA
of the Company Cash Bonus as % of
% Attained Base Salary
---------- -----------
less than 80% 0%
80% 35%
85% 40%
90% 50%
95% 60%
100% 70%
105% 85%
110% and above 100%
(ii) As used herein, the following terms shall have
the following meanings:
(A) "Annual Budgeted EBITDA" for the Company
for the fiscal year ended March 31, 2001 equals $30,513,246
and for each subsequent fiscal year means the figure set by
the Board on a yearly basis.
(B) "EBITDA" means the net income (after
provision for all bonuses) of the Company, determined on a
consolidated basis excluding the effect of any Stipulated
Items (as hereinafter defined) and before payment or provision
for payment of (1) interest expense; (2) any Federal, state,
local or other taxes based on income; (3) depreciation expense
and (4) amortization of goodwill and other tangible assets.
(C) "Stipulated Items" means income or
expense items of a character significantly different from
those incurred in the typical or customary business activities
of the Company (determined on a consolidated basis) or that
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would not be considered recurring factors in any evaluation of
the ordinary operations of the business of the Company
(determined on a consolidated basis), including, but not
limited to, (1) the sale or abandonment of a plant or
significant segment of the business of the Company (determined
on a consolidated basis); (2) the sale of an investment not
acquired for resale; (3) the writeoff of goodwill due to
unusual events or developments within the fiscal year being
considered; (4) the condemnation or expropriation of
properties; (5) certain adjustments to the reserve accounts
recorded by the Company (determined on a consolidated basis);
and (6) any management fees payable to First Atlantic Capital,
Ltd. and its affiliates.
(iii) The Company shall, promptly following the
Company's receipt from its certified public accountants of the audited
consolidated financial statements of the Company for each Bonus Year,
compute and promptly pay the Annual Cash Bonus based upon the EBITDA of
the Company as reflected in such audited consolidated financial
statements. Notwithstanding anything to the contrary contained herein,
the Annual Cash Bonus, if any, in respect of the fiscal year ended
March 31, 2002 shall be computed by multiplying (A) the bonus that
would have been payable to the Executive for the entire year had the
Employment Period extended through March 31, 2002 by (B) a fraction,
the numerator of which is the number of days elapsed from the beginning
of such fiscal year to and including the Scheduled Termination Date and
the denominator of which is 365.
(c) In addition to the Base Salary, in the sole discretion of
the Board, the Executive shall be entitled to participate in the incentive stock
option plan of the Company.
Section 6. Business Expenses; Benefits. (a) The Company (or, at the
Company's option, any subsidiary or affiliate thereof) shall reimburse the
Executive, in accordance with the practice from time to time for officers of the
Company, for all reasonable and necessary expenses and other disbursements
incurred by the Executive for or on behalf of the Company in the performance of
his duties hereunder. The Executive shall provide such appropriate documentation
of expenses and disbursements as may from time to time be reasonably required by
the Company.
(b) During the Employment Period, the Executive shall be
entitled to four weeks paid vacation during each twelve-month period worked
beginning on the Commencement Date.
(c) During the Employment Period, the Company shall provide
the Executive with group health, hospitalization and other employee benefits in
amounts and with terms consistent with the policies of the Company with respect
to its officers.
(d) During the Employment Period, the Company will reimburse
the Executive for professional association fees in an aggregate amount not to
exceed $2,000 per year.
(e) During the Employment Period, the Company will reimburse
the Executive for costs incurred by the Executive for registration or tuition
fees for classes or seminars attended by the Executive in the metropolitan Los
Angeles area (or elsewhere if approved in advance by the Board, such approval
not to be unreasonably withheld) for so long as and to the extent that such
classes or seminars are required by the American Institute of Certified Public
Accountants
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(or its successor organization) in order for the Executive to maintain his
certified public accountant's certificate. The aggregate amount payable under
this Section 6(e) shall not exceed $2,000 per year.
(f) During the Employment Period, the Company will pay the
premiums for a long-term disability plan for the Executive and a life insurance
policy on the Executive having an aggregate benefit of $250,000. The aggregate
cost of the disability plan and life insurance shall not exceed $650 per month.
(g) During the Employment Period, the Executive shall be
entitled to an allowance for a leased automobile not to exceed $750 per month
(inclusive of all maintenance, gasoline, insurance and other costs and expenses
related to such automobile).
Section 7. Involuntary Termination. (a) If the Executive is
incapacitated or disabled by accident, sickness or otherwise so as to render him
mentally or physically incapable of performing the services required to be
performed by him under this Agreement (such condition being hereinafter referred
to as a "Disability") for a period of 180 consecutive days or longer, or for an
aggregate of 210 days during any twelve-month period, the Company may, at any
time following such 180 or 210 day period of Disability, at its option,
terminate the employment of the Executive under this Agreement immediately upon
giving him written notice to that effect (such termination, as well as a
termination under Section 7(b), being hereinafter referred to as an "Involuntary
Termination"). Until the Executive's employment hereunder shall have been
terminated in accordance with the foregoing, the Executive shall be entitled to
receive his compensation notwithstanding any such Disability.
(b) If the Executive dies during the Employment Period, his
employment hereunder shall be deemed to cease as of the date of his death.
Section 8. Termination For Cause. The Company may terminate the
employment of the Executive hereunder at any time for Cause (as hereinafter
defined) (such termination being referred to herein as a "Termination For
Cause") by giving the Executive written notice of such termination, effective
immediately upon the giving of such notice to the Executive. As used in this
Agreement (a) "Cause" means (i) the Executive's material breach of this
Agreement and, if such breach is capable of being cured, the failure to cure
such breach within 30 days of notice thereof from the Company to the Executive,
(ii) the Executive's past, present or future conduct which has a Material
Adverse Effect, (iii) the Executive's disregard of lawful instructions of the
Board that are consistent with the Executive's position, or neglect of duties or
failure to act, which, in either case, may reasonably be anticipated to have a
Material Adverse Effect, and the continuance of such condition for a period of
30 days after notice thereof from the Company to the Executive, (iv) alcohol or
drug abuse by the Executive or (v) the commission by the Executive of a felony
or an act involving fraud, theft or dishonesty and (b) "Material Adverse Effect"
means a material adverse effect on the business, operations, financial
condition, results of operations, assets, liabilities or prospects of the
Company or any of its subsidiaries or affiliates.
Section 9. Termination Without Cause. The Company may terminate the
employment of the Executive hereunder without Cause (such termination being
hereinafter referred to as a "Termination Without Cause") by giving the
Executive written notice of such termination, which
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notice shall be effective on the date specified therein but not earlier than the
date on which such notice is given. For purposes of this Agreement, "Termination
Without Cause" shall also include the following:
(a) any material reduction, in the absence of the Executive's
consent, of the Executive's title, duties or responsibilities;
(b) any material breach by the Company of its obligations
under this Agreement;
(c) the expiration of this Agreement at the Scheduled
Termination Date; and
(d) the Company's relocation of the Executive, in the absence
of the Executive's consent, to a location other than the metropolitan Los
Angeles, California area, provided that the Executive acknowledges that as part
of his duties hereunder, it may be necessary for him to make periodic business
trips of short duration (including, for example, trips to attend meetings of
boards of directors of which he is a member), which trips shall not be
considered the relocation of the Executive for purposes of this Section 9(d);
provided, however, that a Termination Without Cause pursuant to clauses (a) and
(b) of this Section 9 shall not be deemed to have occurred unless, within 30
days of the occurrence (or, in the case of an event described in clause (b) of
this Section 9, the Executive's actual knowledge of such occurrence) of any of
the events described in said clauses (a) and (b), the Executive shall have given
the Company notice, with reasonable specificity, of his intention to claim a
Termination Without Cause pursuant to this Section 9 and the basis therefor, and
the Company shall have failed to cure the act or omission described in the
notice within 30 days of receipt of such notice from the Executive.
Section 10. Voluntary Termination. Any termination of the employment of
the Executive hereunder other than as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination" (it being understood that the resignation by the
Executive prior to the Scheduled Termination Date shall be deemed a "Voluntary
Termination").
Section 11. Effect of Termination. (a) Upon the termination of the
Executive's employment hereunder due to a Termination for Cause or a Voluntary
Termination, neither the Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except to
receive (i) the unpaid portion, if any, of the Base Salary provided for in
Section 5(a), computed on a pro rata basis to the Termination Date (based on the
actual number of days elapsed over a year of 365 or 366 days, as applicable),
(ii) any unpaid accrued benefits due the Executive and (iii) reimbursement for
any expenses for which the Executive shall not have been reimbursed as provided
in Section 6(a).
(b) Upon the termination of the Executive's employment
hereunder due to an Involuntary Termination, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above, (ii) to continue to receive the Base Salary, payable in
such installments as it was paid to the Executive prior to such termination of
employment for a
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period of six (6) months, (iii) the pro rata portion of the bonus to which the
Executive would be entitled for the fiscal year of the Company in which such
termination occurred, computed by multiplying (A) the bonus that would have been
payable to the Executive for the entire year if his employment had not been
terminated by (B) a fraction, the numerator of which is the number of days
elapsed from the beginning of such year to and including the effective date of
such termination and the denominator of which is 365, such portion of the bonus
to be payable at such time and in such manner as is consistent with the
Company's historical practice regarding the payment of bonuses to the Executive
or to its officers generally and (iv) to participate in all group health and
hospitalization plans as contemplated by Section 6(c) hereof until the earlier
to occur of the Scheduled Termination Date and the date which is six (6) months
after the Termination Date.
(c) Upon the termination of the Executive's employment
hereunder due to a Termination Without Cause, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above, (ii) to continue to receive the Base Salary, payable in
such installments as it was paid to the Executive prior to such termination of
employment, for a period of 12 months after the termination of the Executive's
employment with the Company (including a termination of such employment on or
after the Scheduled Termination Date in circumstances contemplated by Section
9(c) hereof), (iii) to receive the pro rata portion of the bonus to which the
Executive would be entitled for the fiscal year of the Company in which such
termination occurred, computed by multiplying (A) the bonus that would have been
payable to the Executive for the entire year if his employment had not been
terminated by (B) a fraction, the numerator of which is the number of days
elapsed from the beginning of such year to and including the effective date of
such termination and the denominator of which is 365, such portion of the bonus
to be payable at such time and in such manner as is consistent with the
Company's historical practice regarding the payment of bonuses to the Executive
or to its officers generally and (iv) to participate in all group health and
hospitalization plans as contemplated by Sections 6(c) and 6(f) hereof for a
period of 12 months after the termination of the Executive's employment with the
Company (including a termination of such employment on or after the Scheduled
Termination Date in circumstances contemplated by Section 9(c) hereof).
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Section 12. Insurance. The Company may, for its own benefit, maintain
"key-man" life and disability insurance policies (collectively, the "Insurance
Policies") covering the Executive. The Executive will cooperate with the Company
and provide such information or other assistance as the Company may reasonably
request in connection with the Company's obtaining and maintaining the Insurance
Policies.
Section 13. Disclosure of Information. The Executive agrees that he
will not, at any time during the Employment Period or thereafter, disclose to
any person, firm, corporation or other business entity, except as required by
law, any non-public information concerning the business, clients or affairs of
the Company or any subsidiary or affiliate thereof for any reason or purpose
whatsoever nor shall the Executive make use of any of such non-public
information for his own purpose or for the benefit of any person, firm,
corporation or other business entity except the Company or any subsidiary or
affiliate thereof. For purposes of this Section 13, "non-public" information
shall not include any information that:
(i) is now, or hereafter becomes, through no act or
failure to act on the part of the Executive that constitutes a breach
of this Section 13, generally known or available to the public;
(ii) is known to the Executive at the time of the
disclosure of such information;
(iii) is hereafter furnished to the Executive by a
third party, who, to the knowledge of such party, is not under any
obligation of confidentiality to the Company or any of its affiliates,
without restriction on disclosure;
(iv) is disclosed with the written approval of the
party to which such information or materials pertain;
(v) is required to be disclosed by law, court order,
or similar compulsion; provided, however, that such disclosure shall be
limited to the extent so required or compelled; and provided further,
however, that if the Executive is required to disclose such
confidential information, he shall give the Company notice of such
disclosure and cooperate in seeking suitable protections; or
(vi) is required to be provided pursuant to or in
connection with any legal proceeding involving the parties hereto.
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Section 14. Right to Inventions. (a) The Executive shall promptly
disclose, grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business actually conducted by the
Company, which he may develop or which may be acquired by the Executive during
the Employment Period (whether or not during normal working hours), together
with all trademarks, patent applications, letters patent, copyrights and
reissues thereof that may at any time be granted for or upon any such mark,
design, logo, invention, improvement or technical information. In connection
therewith:
(i) the Executive shall without charge, but at the
expense of the Company, promptly at all times hereafter execute and
deliver such applications, assignments, descriptions and other
instruments as may be necessary or proper in the opinion of the Company
to vest title to any such marks, designs, logos, inventions,
improvements, technical information, trademarks, patent applications,
patents, copyrights or reissues thereof in the Company and to enable it
to obtain and maintain the entire right and title thereto throughout
the world;
(ii) the Executive shall render to the Company at
its expense (including a reasonable payment for the time involved in
case he is not then in its employ based on his last per diem earnings)
all such assistance as it may require in the prosecution of
applications for said trademarks, patents, copyrights or reissues
thereof, in the prosecution or defense of interferences which may be
declared involving any said trademarks, applications, patents or
copyrights and in any litigation in which the Company may be involved
relating to any such trademarks, patents, inventions, improvements or
technical information; and
(iii) for the avoidance of doubt, it is hereby
agreed that the foregoing provisions shall be deemed to include an
assignment of future copyright in accordance with Section 37 of the
Copyright Act of 1986 and any amendment or re-enactment thereof.
(b) Any provision of this Agreement requiring the Executive to
assign his rights in any invention shall not apply to an invention which
qualifies fully under the provisions of Section 2870 of the California Labor
Code. That Section provides that the requirement to assign "shall not apply to
any invention for which no equipment, supplies, facility or trade secret
information of the employer was used and which was developed entirely on the
employee's own time, and (a) which does not relate (i) to the business of the
employer or (ii) to the employer's actual or demonstrably anticipated research
or development, or (b) which does not result from any work performed by the
employee for the employer." The Executive understands that he bears the full
burden of proving to the Company that an invention qualifies fully under Section
2870. By signing this Agreement, the Executive acknowledges receipt of a copy of
this Agreement and of written notification of the provisions of Section 2870.
Section 15. Enforcement; Severability; Etc. It is the desire and intent
of the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or
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unenforceable, such provision shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such deletion to apply
only with respect to the operation of such provision in the particular
jurisdiction in which such adjudication is made.
Section 16. Remedies. The Company and the Executive acknowledge and
understand that the provisions of this Agreement are of a special and unique
nature, the loss of which cannot be adequately compensated for in damages by an
action at law, and that the breach or threatened breach of the provisions of
this Agreement would cause the Company or the Executive irreparable harm. In the
event of a breach or threatened breach by the Company or the Executive of the
provisions of this Agreement, the Company or the Executive shall be entitled to
an injunction restraining such party from such breach. Nothing contained in this
Agreement shall be construed as prohibiting the Company or the Executive from or
limiting the Company or the Executive in pursuing any other remedies available
for any breach or threatened breach of this Agreement.
Section 17. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to it at:
5501 Tabor Road
Philadelphia, Pennsylvania 19120
Attention: President
Telecopier: (215) 288-5804
Telephone: (800) 275-8902;
with a copy to:
First Atlantic Capital, Ltd.
135 East 57th Street
New York, New York 10022
Attention: Mr. James A. Long
Telecopier: (212) 750-0954
Telephone: (212) 750-0300; and
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Lawrence G. Graev, Esq.
Telecopier: (212) 408-2467
Telephone: (212) 408-2400;
if to the Executive, to him at:
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Mr. Eric W. Ek
C/O CFP Group, Inc.
1117 W. Olympic Blvd.
Montebello, CA 90640
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and in the
case of mailing, on the third business day following that on which the piece of
mail containing such communication is posted.
Section 18. Binding Agreement; Benefit. Subject to Section 23 hereof,
the provisions of this Agreement will be binding upon, and will inure to the
benefit of, the respective heirs, legal representatives, successors and assigns
of the parties.
Section 19. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of California
(without giving effect to principles of conflicts of laws).
Section 20. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other breach.
Section 21. Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements or understandings between the parties with
respect thereto, including, without limitation, the Second Employment Agreement.
This Agreement may be amended only by an agreement in writing signed by the
parties.
Section 22. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 23. Assignment. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
Company may assign this Agreement to any of its subsidiaries and affiliates and
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, each successor of the Company, whether by merger, consolidation, transfer
of all or substantially all of its assets, or otherwise (no such assignment
shall relieve the Company from its obligations hereunder).
Section 24. Counterparts. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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Section 25. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
Section 26. Unlimited Guaranty. As a condition to the execution of this
Agreement and the performance by the Executive of its obligations hereunder,
Custom Food is delivering a guaranty to the Executive in the form of Exhibit A
simultaneously with the execution and delivery hereof.
Section 27. Attorney Fees. In connection with any action, suit or
proceeding arising under or in connection with this Agreement, the prevailing
party in such action, suit or proceeding shall be entitled to the reasonable
attorneys' fees incurred in connection with such action, suit or proceeding.
* * * *
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the date first written above.
CFP GROUP, INC.
By: ____________________________
Name: William G. Del Chiaro
Title: President
________________________________
ERIC W. EK
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EXHIBIT A
Unlimited Guaranty
In consideration of the management advice to be obtained by Custom Food
Products, Inc., a California corporation ("CFP"), pursuant to the Employment
Agreement dated as of March 31, 2000 (the "Employment Agreement"), between Eric
W. Ek and CFP Group, Inc., a Delaware corporation ("Group"), CFP hereby
unconditionally guarantees the payment and performance in full of all of the
obligations of Group arising in connection with the Employment Agreement.
IN WITNESS WHEREOF, CFP has caused this Unlimited Guaranty to be duly
executed as of this 31st day of March 2000.
CUSTOM FOOD PRODUCTS, INC.
By: ____________________________
Name: William G. Del Chiaro
Title: President
