GALAXY NUTRITIONAL FOODS,
INC.
EMPLOYMENT
AGREEMENT
This Employment Agreement (this “
Agreement ”) is made and entered into effective as of
this 20th day of May, 2009, by and between Galaxy Nutritional
Foods, Inc., a Delaware corporation (the “ Company
”), and Rick Antonelli (the “ Executive
”).
R E C I T A
L S :
WHEREAS, the Company recognizes that the future
growth, profitability and success of the Company’s business
will be substantially and materially enhanced by the employment of
the Executive by the Company;
WHEREAS, the Company desires to employ the
Executive, and the Executive has indicated his willingness to
provide his services, on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. Employment
. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts employment with the Company, on the
terms and subject to the conditions hereinafter set
forth. Subject to the terms and conditions contained
herein, the Executive shall serve as Chief Executive Officer of the
Company and, in such capacity, shall report directly to the Board
of Directors of the Company (the “ Board
”). The Executive shall have responsibility for
the management and day-to-day operations of the Company and shall
have such duties as are typically performed by a Chief Executive
Officer, together with such additional duties, commensurate with
the Executive’s skills and expertise and his position as
Chief Executive Officer of the Company, as may be assigned to the
Executive from time to time by the Board. The Executive
shall serve on the Board and shall also serve as a member of the
Executive Committee (the “ Executive
Committee ”) of the Company’s parent company MW1
LLC, a Delaware limited liability corporation (“
Parent ”). The Executive shall also serve,
for no additional consideration and at the discretion of the
Executive Committee, as the Chief Executive Officer of
Parent. The principal location of the Executive’s
employment shall be at the Company’s office in Orlando,
Florida, although the Executive understands and agrees that he may
be reasonably required to travel from time to time for business
reasons.
SECTION 2. Term
. Subject to the provisions and conditions of this
Agreement (including, without limitation, Section 7 ) the
Executive’s employment hereunder shall be for an initial term
of two (2) years, commencing on May 18, 2009, which term shall
automatically renew thereafter for successive terms of one year
each unless either party gives notice to the other at least ninety
(90) days prior to the expiration of the initial or any renewal
term that this Agreement shall not renew.
SECTION 3. Exclusivity
. During the term of the Executive’s employment
hereunder, the Executive shall devote his full time during normal
business hours to the business of the Company and Parent, shall
faithfully serve the Company and Parent, shall in all respects
conform to and comply with the lawful and reasonable directions and
instructions given to him by the Board and the Executive Committee
in accordance with the terms of this Agreement, and shall use his
best efforts to promote and serve the interests of the Company and
Parent. The foregoing notwithstanding, subject to
compliance with the other provisions of this Agreement, including
the non-competition provisions set forth in Section 8 , the
Executive may engage in any activities that, either singly or in
the aggregate, do not interfere in any material respect with the
services to be provided by the Executive hereunder.
SECTION 4. Compensation
.
(a) Salary . As
compensation for the performance of the Executive’s services
hereunder, the Company shall pay to the Executive a salary of two
hundred fifty thousand dollars ($250,000) per annum with increases,
if any, as may be approved in writing by the Board (the “
Salary ”); provided , however , that the
Salary shall be increased each year by at least a minimum amount
equal to the greater of 4% or the CPI Adjustment. The
Salary shall be payable in accordance with the payroll practices of
the Company as the same shall exist from time to
time. For the purposes hereof, (i) the “ CPI
Adjustment ” shall be equal to a fraction the numerator
of which is the Consumer Price Index for the calendar month
immediately preceding such anniversary and the denominator of which
is the Consumer Price Index for the same calendar month of the
immediately preceding year, and (ii) the “ Consumer Price
Index ” means the consumer price index as published by
the Bureau of Labor Statistics of the U.S. Department of Labor for
All Items, All Urban Consumers.
(b) Bonus . The
Executive shall be eligible to receive an annual cash bonus (the
“ Bonus ”) of up to 100% of the Salary at the
conclusion of each fiscal year. For the fiscal year
ended March 31, 2010, the Bonus shall be $250,000 and shall be
payable to the Executive so long as he is still employed by the
Company at the end of such fiscal year or as otherwise provided in
Section 7(g) of this Agreement. In subsequent
fiscal years, the amount of the Bonus, if any, shall be determined
based on a formula and performance measures agreed to between the
Executive and the Board at the time of, and in connection with, the
Company’s annual budget process, such formula to provide for
some form of partial payout to be determined based on the
achievement or partial achievement of the relevant performance
metrics. Such Bonus shall be paid no later than sixty
(60) days following the end of the fiscal year for which it is
payable (or if paid pursuant to Section 7(g) of this
Agreement in accordance with the provisions of such
section).
(c) Equity Incentive
. The Executive shall receive an equity incentive in
accordance with Section 11 below.
(d) Other Benefits
. During the term of the Executive’s employment
hereunder, in addition to the Salary and the Bonus, the Executive
shall be entitled to participate in health, insurance, pension, and
other benefits provided to other senior executives of the Company
on terms no less favorable than those available to senior
executives of the Company generally
(collectively “ Benefits
”). The Executive shall also be entitled to four
weeks of vacation per year and the same number of holidays, sick
days and other benefits as are generally allowed to other senior
executives of the Company in accordance with the Company policies
in effect from time to time generally.
(e) Taxation of Payments and
Benefits . The Company may make deductions,
withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that the Company reasonably and
in good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this
Agreement shall be in amounts net of any such deductions or
withholdings. Nothing in this Agreement shall be
construed to require the Company to make any payments to compensate
the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any
payment or benefit.
SECTION 5. Reimbursement for
Expenses . The Executive is authorized to incur
reasonable expenses in the discharge of the services to be
performed hereunder in accordance with Company policy, including
expenses for travel, entertainment, lodging and similar items, in
accordance with the Company’s expense reimbursement policy,
as the same may be modified by the Board from time to
time. The Company shall reimburse the Executive for all
such expenses upon presentation by the Executive of itemized
accounts of such expenditures in accordance with the policy of the
Company, as in effect from time to time.
SECTION 6. Employment at Will
. Subject to the provisions and conditions of this
Agreement (including, without limitation, Section 7 ), the
Executive’s employment hereunder shall be effective as of the
date hereof. Executive’s employment shall be
employment “at will,” under which both Executive and
the Company shall be entitled to terminate this Agreement and the
employment relationship, with or without Cause or Good Reason (each
as hereinafter defined), at any time, subject to the requirements
of Section 7 hereof.
SECTION 7. Termination and
Default .
(a) Death . This
Agreement shall automatically terminate upon the death of the
Executive and upon such event, the Executive’s estate shall
be entitled to receive the amounts specified in Section 7(g)
below.
(b) Disability
. If the Executive is unable to perform the duties
required of him under this Agreement because of illness,
incapacity, or physical or mental disability, this Agreement shall
remain in full force and effect and the Company shall pay all
compensation and benefits required to be paid to the Executive
hereunder, net of any applicable disability coverage, unless the
Executive is unable to perform the duties required of him under
this Agreement for six consecutive months, in which event this
Agreement, including, but not limited to, the Company’s
obligations to pay any Salary or Bonus or to provide any privileges
under this Agreement, shall terminate at the end of such waiting
period and the Executive shall be entitled to receive only those
amounts specified in Section 7(g) below.
(c) Cause
. If the Executive’s employment is terminated for
Cause pursuant to this Section 7(c) , the Executive shall be
entitled to receive the amounts specified in Section 7(f)
below. In the event of termination for Cause, the
Company shall deliver to the Executive written notice pursuant to a
vote of the Board summarizing the basis for such termination
including the nature of the Cause which is the reason for such
termination. For purposes of this Agreement, “
Cause ” shall mean: (i) fraud, embezzlement or other
deliberate dishonesty of the Executive with respect to the Company
or any subsidiary or affiliate thereof; (ii) commission by the
Executive of any felony, the equivalent of a felony, or any charge
of fraud, embezzlement, theft, offense involving moral turpitude,
any crime related to the Executive’s duties hereunder or a
violation of any federal or state securities or tax law; (iii)
material breach by the Executive of this Agreement; or (iv) gross
and willful failure of the Executive to perform his duties
hereunder. With respect to subsections (iii) and (iv)
such actions shall not be deemed Cause unless such breach or
failure continues for more than 10 days following receipt by the
Executive of written notice given pursuant to a vote of the Board,
such vote to set forth in reasonable detail the nature of such
breach or failure.
(d) Good Reason
. The Executive may terminate this Agreement for “
Good Reason ” if he resigns from his employment
hereunder following the occurrence of one of the
following: (i) a substantial adverse alteration in the
nature or status of the Executive’s duties or
responsibilities or the conditions of the Executive’s
employment, which alteration continues for more than 10 days
following receipt by the Company of written notice from the
Executive setting forth in reasonable detail the nature of such
alteration, (ii) a change in the Executive’s principal work
location, without the Executive’s consent, to a location more
than 50 miles from Orlando, Florida (travel for Company business
shall not be deemed a change in principal work location), (iii) a
material default by the Company in the performance of its
obligations hereunder, and such default shall not have been
corrected by the Company within 10 days of receipt by the Company
of written notice from the Executive of the occurrence of such
default, which notice shall specifically set forth the nature of
such default ( provided , however , that if there is
more than one default under this subsection (iii) in any 6-month
period the Executive shall not be required to give notice or allow
cure for the second default), and (iv) a reduction by the Company
in the Executive’s Salary or Benefits; provided , that
if the Board has determined that it is in the best interests of the
Company to reduce compensation and benefits generally, such
reduction shall not entitle the Executive to terminate his
employment for Good Reason if, and only if, the reduction of the
Executive’s Salary and Benefits is proportionate to the
reduction imposed on other executives of the Company. If
the Executive terminates his employment hereunder for Good Reason
pursuant to this Section 7(d) , the Executive shall be
entitled to receive the amounts specified in Section 7(g)
below. The date of termination of the Executive’s
employment under this Section 7(d) shall be the effective
date of any resignation specified in writing by the Executive,
which shall not be less than 10 days after receipt by the Company
of written notice of such resignation.
(e) Resignation
. The Executive shall have the right to immediately
terminate this Agreement by giving notice of the Executive’s
resignation other than for Good Reason. Upon receipt of
such notice, this Agreement shall terminate immediately and the
Executive shall be entitled to receive the amounts specified in
Section 7(f) below, provided, however, that if the Company
has grounds to terminate the Executive for Cause at the time of
such resignation, the
Company shall have the right to notify
Executive, within 10 business days of his resignation, that,
despite his resignation, his employment has been terminated for
Cause.
(f) Payments Upon Termination For
Cause or Resignation without Good Reason . If the
Executive’s employment with the Company is terminated by the
Company for Cause or the Executive resigns without Good Reason, the
Company shall pay to the Executive all amounts accrued but unpaid
hereunder through the date of termination in respect of Salary and
Benefits or un-reimbursed expenses. If the
Executive’s employment hereunder is terminated for Cause, the
Executive shall forfeit all vested and unvested Class B Units
granted pursuant to Section 11 below. If the
Executive’s employment hereunder is terminated as a result of
a resignation by the Executive without Good Reason, the Executive
shall retain all vested Class B Units granted pursuant to
Section 11 below, and shall only forfeit his unvested Class
B Units.
(g) Payments Upon Termination
Other Than For Cause . If the Executive’s
employment with the Company is terminated by the Company without
Cause, or as a result of death or disability of the Executive or if
the Executive terminates his employment for Good Reason: (i) the
Company shall pay to the Executive an amount equal to six
months’ Salary as in effect on the date of such
termination and shall pay the Executive’s health insurance
premiums for a period of six months; provided ,
however , that such health insurance premiums shall only be
paid if and to the extent that following such termination the
Executive is eligible, and elects pursuant to COBRA, to continue to
be covered under the Company’s health insurance plan in
effect at the time of such termination; (ii) if such termination
happens on or before March 31, 2010, the C
