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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT dated as of March 23, 2005, by and between Vintage
Wine Trust Inc., with its principal place
of business at 1101 Fifth Avenue,
Suite 310 San Rafael, California 94901 (the
"Company"), and Joseph W. Ciatti,
residing at the address set forth on the
signature page hereof (the
"Executive").
WHEREAS, the
Company wishes to employ the Executive, and the Executive
wishes to accept such offer, on the terms
set forth below: Accordingly, the
parties hereto agree as follows:
1. Term. The
Company hereby employs the Executive, and the Executive hereby
accepts such employment, for an initial
term commencing as of the date hereof
and continuing for a three-year period
following such date, unless sooner
terminated in accordance with the
provisions of Section 4 or Section 5; with
such employment to continue for successive
one-year periods in accordance with
the terms of this Agreement (subject to
termination as aforesaid) unless either
party notifies the other party of
non-renewal in writing prior to three months
before the expiration of the initial term
and each annual renewal, as applicable
(the period during which the Executive is
employed hereunder being hereinafter
referred to as the "Term").
2. Duties.
During the Term, the Executive shall be employed by the Company
as Chief Executive Officer of the Company,
and, as such, the Executive shall
faithfully perform for the Company the
duties of said offices and shall perform
such other duties of an executive,
managerial or administrative nature as shall
be specified and designated from time to
time by the board of directors of the
Company (the "Board"). The Executive shall
devote a substantial majority of his
business time and effort to the performance
of his duties hereunder. Subject to
the foregoing, the Company hereby
acknowledges that the Executive may continue
to hold an investment in and serve as the
Chairman of Joseph W. Ciatti & Co.,
LLC, and continue to perform his duties in
that position.
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3.
Compensation.
3.1 Salary. The
Company shall pay the Executive during the Term a salary at
a minimum rate of $360,000 per annum (the
"Annual Salary"), in accordance with
the customary payroll practices of the
Company applicable to senior executives.
The Board periodically shall review the
Executive's Annual Salary and may
provide for such increases therein as it
may in its discretion deem appropriate.
(Any such increased salary shall constitute
the "Annual Salary" as of the time
of the increase.)
3.2 Bonus.
During the Term, in addition to the Annual Salary, for each
fiscal year of the Company ending during
the Term, the Executive shall have the
opportunity to receive an annual bonus in
an amount and on such terms to be
determined by the Company, but which Bonus
shall not be less than 40% and shall
not be more than 100% of the Annual Salary.
The forgoing shall not limit the
Executive's eligibility to receive any
other bonus under any other bonus plan,
stock option or equity-based plan, or other
policy or program of the Company.
3.3 Benefits-In
General. The Executive shall be permitted during the Term
to participate in any group life,
hospitalization or disability insurance plans,
health programs, retirement plans, fringe
benefit programs and other benefits
that may be available to other senior
executives of the Company generally, in
each case to the extent that the Executive
is eligible under the terms of such
plans or programs.
3.4 Vacation.
The Executive shall be entitled to vacation of no less than
20 business days per year, to be credited
in accordance with ordinary Company
policies.
3.5 Expenses-In
General. The Company shall pay or reimburse the Executive
for all ordinary and reasonable
out-of-pocket expenses actually incurred (and,
in the case of reimbursement, paid) by the
Executive during the Term in the
performance of the Executive's services
under this Agreement, in accordance with
the Company's policies regarding such
reimbursements.
3.6 Automobile.
The Company shall provide the Executive with an automobile
allowance of $1400 per month.
4. Termination
upon Death or Disability. If the Executive dies during the
Term, the Term shall terminate as of the
date of death, and the obligations of
the Company to or with respect to the
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Executive shall terminate in their entirety
upon such date except as otherwise
provided under this Section 4. If the
Executive is unable to perform
substantially and continuously the duties
assigned to him due to a disability as
defined for purposes of the Company's
long-term disability plan then in effect,
or, if no such plan is in effect, by virtue
of ill health or other disability
for more than 180 consecutive or
non-consecutive days out of any consecutive
12-month period, the Company shall have the
right, to the extent permitted by
law, to terminate the employment of the
Executive upon notice in writing to the
Executive. Upon termination of employment
due to death or disability, (i) the
Executive (or the Executive's estate or
beneficiaries in the case of the death
of the Executive) shall be entitled to
receive any Annual Salary and other
benefits earned and accrued under this
Agreement prior to the date of
termination (and reimbursement under this
Agreement for expenses incurred prior
to the date of termination); (ii) without
duplication of any amounts due under
clause (i), the Executive (or the
Executive's estate or beneficiaries in the
case of the death of the Executive) shall
receive an amount equal to the annual
bonus that, in the absence of such
termination, would have been payable for the
fiscal year in which termination occurs,
payable at such time as would have
applied in the absence of such termination,
with such amount to be multiplied by
a fraction (x) the numerator of which is
the number of days in the fiscal year
preceding the termination and (y) the
denominator of which is 365; (iii) all
outstanding unvested equity-based awards
(including, without limitation, stock
options and restricted stock) held by the
Executive shall fully vest and become
immediately exercisable, as applicable, and
subject to the terms of such awards;
and (iv) the Executive (or the Executive's
estate or beneficiaries in the case
of the death of the Executive) shall have
no further rights to any other
compensation or benefits hereunder, or any
other rights hereunder (but, for the
avoidance of doubt, shall receive such
disability and death benefits as may be
provided under the Company's plans and
arrangements in accordance with their
terms).
5. Certain
Terminations of Employment; Certain Benefits.
5.1 Termination
by the Company for Cause; Termination by the Executive
without Good Reason.
(a) For purposes of this Agreement, "Cause" shall mean the
Executive's:
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(i) commission of, and
indictment for or formal admission to a
felony, a crime of moral turpitude, dishonesty, breach of
trust or unethical business conduct, or any crime involving
the Company;
(ii) continued engagement in the performance of his duties
hereunder in willful misconduct, willful or gross neglect,
fraud, misappropriation or embezzlement, and then only after
appropriate notice of Executive's misconduct or neglect and
an appropriate period, as determined by the Board, to remedy
such misconduct or neglect;
(iii) continued failure to materially adhere to the clear
directions of the Board, to adhere to the Company's policies
and practices or to devote a substantial majority of his
business time and efforts to the Company and its
subsidiaries;
(iv) continued failure to substantially perform his duties
properly assigned to the Executive by the Board of Directors
of the Company in writing (other than any such failure
resulting from his Disability);
(v) material breach of
any of the provisions of Section 6; or
(vi) material and willful breach of the terms and provisions of
this Agreement and failure to cure such breach within 15
days following written notice from the Company specifying
such breach;
provided that the Company shall not be
permitted to terminate the Executive for
Cause except on written notice given to the
Executive at any time not more than
30 days following the occurrence of any of
the events described in clause (ii)
through (vi) above (or, if later, the
Company's knowledge thereof). No
termination for Cause under clause (i)
through (vi) shall be effective unless
the Board makes a determination that Cause
exists after notice to the Executive,
and the Executive has been provided with an
opportunity (with counsel of his
choice) to contest the determination at a
meeting of the Board.
(b) The Company may terminate this Agreement and the
Executive's
employment hereunder for Cause, and the
Executive may terminate his employment
on at least 30 days' written notice given
to the Company. If the Company
terminates the Executive for Cause, or the
Executive terminates his employment
and the termination by the Executive is not
for Good Reason in accordance with
Section 5.2, (i) the Executive shall
receive Annual Salary and other benefits
(including any bonus for a fiscal year
completed before termination and awarded
but not yet paid, or in the event of a
partial fiscal year, a pro rata bonus
earned through the date of such
termination, which is to be calculated based on
the bonus
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earned in the prior fiscal year) earned and
accrued under this Agreement prior
to the termination of employment (and
reimbursement under this Agreement for
expenses incurred prior to the termination
of employment); and (ii) the
Executive shall have no further rights to
any other compensation or benefits
under this Agreement on or after the
termination of employment.
5.2 Termination
by the Company without Cause; Termination by the Executive
for Good Reason.
(a) For purposes of this Agreement, "Good Reason" shall mean,
unless
otherwise consented to by the
Executive,
(i)
the material reduction
of the Executive's title, authority,
duties and responsibilities or the assignment to the
Executive of duties materially inconsistent with the
Executive's position or positions with the Company;
(ii) a reduction in Annual Salary of the Executive;
(iii) the relocation of the Executive's office to more than 50
miles from San Rafael, California; or
(iv) the Company's material and willful breach of this
Agreement.
Notwithstanding the foregoing, (i) Good
Reason shall not be deemed to exist
unless notice of termination on account
thereof (specifying a termination date
no later than 30 days from the date of such
notice) is given no later than 30
days after the time at which the event or
condition purportedly giving rise to
Good Reason first occurs or arises and (ii)
if there exists (without regard to
this clause (ii)) an event or condition
that constitutes Good Reason, the
Company shall have 15 days from the date
notice of such a termination is given
to cure such event or condition and, if the
Company does so, such event or
condition shall not constitute Good Reason
hereunder. In the event of any notice
of non-renewal of this Agreement by the
Company, as described in Section 1, then
(i) the Executive shall receive Annual
Salary and other benefits (including any
bonus for a fiscal year completed before
termination) earned and accrued under
this Agreement prior to the non-renewal of
this Agreement (and reimbursement
under this Agreement for expenses incurred
prior to the termination of
employment), (ii) the Executive shall
receive a single-sum cash payment equal to
the sum of (x) the Executive's Annual
Salary as in effect immediately before
such non-renewal, and (y) the Executive's
bonus payable in accordance with the
last sentence of Section 3.2
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for the fiscal year in which such
non-renewal occurs, payable upon the
expiration of the Term, and (iii) all
outstanding unvested equity-based awards
(including without limitation stock options
and restricted stock) held by the
Executive shall fully vest and shall become
immediately exercisable, as
applicable.
(b) The Company may
terminate the Executive's employment and the
Executive may terminate the Executive's
employment with the Company at any time
for any reason or no reason. If the Company
terminates the Executive's
employment and the termination is not
covered by Section 4 or 5.1, or the
Executive terminates his employment for
Good Reason:
(i) the Executive
shall receive Annual Salary and other benefits
(including any bonus for a fiscal year completed before
termination) earned and accrued under this Agreement prior
to the termination of employment (and reimbursement under
this Agreement for expenses incurred prior to the
termination of employment);
(ii) the Executive shall receive a single-sum cash payment
equal
to 2.99 times the sum of (x) the Executive's Annual Salary
as in effect immediately before such termination as
calculated
for a period of 12 months, and (y) the
Executive's bonus payable in accordance with Section 3.2 for
the fiscal year in which such termination occurs, payable no
later than ten days after such termination;
(iii) for a period of one year after termination of employment,
such continuing coverage under the group health plans the
Executive would have received under this Agreement as would
have applied in the absence of such termination, provided
that t
