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EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this
"Agreement") is effective as of January 1, 2009, by and
between Landec Corporation (the "Company") and Gary T. Steele (the
"Executive").
WHEREAS , as of January 1, 2006,
Executive and the Company entered into an employment agreement (the
"Second Employment Agreement"); and
WHEREAS , Executive and the Company wish to
replace the Second Employment Agreement (which expires on
December 31, 2008) with this Agreement;
NOW, THEREFORE , in consideration of the
mutual promises and covenants contained herein, it is hereby agreed
by and between the parties hereto as follows:
1. POSITION AND DUTIES
(a) Position
Executive will continue in his present positions of
President, Chief Executive Officer ("CEO") and Chairman of the
Board ("COB") of the Company during the Term (as defined below) of
his employment under this Agreement. The prior sentence
notwithstanding, the Board of Directors (the "Board") may designate
another Director as the COB, at the Board’s sole discretion,
without violating this Agreement. As President, CEO and COB,
Executive reports to the Board and will assist the Board in
developing and implementing the Company’s ongoing business
strategy and objectives. Executive shall have such duties,
authority and responsibilities that are commensurate with his being
the Company’s most senior executive officer, including, but
not limited to, being responsible for the general management and
operation of the Company, and such additional powers and duties as
are prescribed from time to time by the Board.
(b) Obligations
During the term of his employment, Executive will
devote Executive’s full business efforts and time to the
Company. For the duration of his employment, Executive agrees not
to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without
the prior approval of the Board, except Executive may, without
approval of the Board, serve in any capacity with any civil,
educational or charitable organization ("Outside Activity"),
provided such services do not interfere with Executive’s
obligations to the Company. In the event that the Board believes
Executive’s Outside Activity interferes with
Executive’s obligations to the Company, the Board shall
inform Executive of such interference, and Executive shall have
thirty (30) days to cease such Outside Activity.
2. TERM OF EMPLOYMENT
This Agreement covers the Executive’s
employment with the Company from January 1, 2009 through
December 31, 2011 (the "Term"), at which point it will expire
unless renewed or extended by the written consent of both
parties.
3. LOCATION
Executive will be based at the Company’s
executive offices in Menlo Park, California or elsewhere as may be
designated from time to time by the Company. The Executive will be
expected to travel to the Company’s offices at other
locations as needed for the performance of his duties and
responsibilities.
4. COMPENSATION, BENEFITS AND
PERQUISITES
(a) Salary
In consideration of services to be rendered by
Executive to the Company, Executive shall be paid an annual base
salary as follows:
(i) For the period commencing January 1,
2009, through December 31, 2009 (the "2009 Employment Year")
Executive shall be paid $375,000.00; and
(ii) For the period commencing January 1,
2010, through the end of the Term of this Agreement, Executive
shall be paid $450,000.00 per year.
The annual base salary that is then in effect (the
"Base Salary") will be earned and paid in equal semi-monthly
installments, less any deductions required by law, pursuant to
procedures regularly established by the Company. Executive’s
Base Salary will be subject to review by the Compensation Committee
of the Board (the "Committee") not less than annually, and
adjustments can be made at the discretion of the Committee.
(b) Annual Incentive Compensation
Executive will continue to participate in the
Company’s annual cash bonus plan as it may be modified from
time to time (the "Incentive Plan"). Under the terms of the current
Incentive Plan for fiscal year 2009, Executive’s annual bonus
(which may not exceed 100% of Executive’s Base Salary at the
beginning of the fiscal year) is based upon attainment of
pre-determined goals mutually established by the Company and
Executive. Actual bonus(es) payable will be determined and paid
pursuant to the terms of the Incentive Plan. The Company reserves
the right to modify, amend or discontinue the Incentive Plan at any
time, subject to the provisions of Section 5(e)(iv) below.
(c) Long Term Incentive
Compensation
Executive shall be eligible for grants of equity
interests in the Company ("Compensatory Equity") at such times and
in such amounts as determined by the Committee. All future grants
of Compensatory Equity (and the issuance of any underlying shares)
to Executive shall be: (i) issued pursuant to the 2005 Stock
Incentive Plan (or any applicable stockholder-approved successor
plan) (the "Plan") and (ii) issued pursuant to an effective
registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Executive
may elect to establish a trading plan in accordance with
Rule 10b5-1 of the Securities Exchange Act of 1934 for any of
his shares of common stock of the Company, provided, however, that
such trading plan must comply with all of the requirements for the
safe harbor under Rule 10b5-1 and must be approved in
accordance with any Rule 10b5-1 Trading Plan Policy of the
Company then in effect.
(d) Benefits
Executive will participate in the Company’s
standard medical, life, accident, disability and retirement plans
provided to its eligible employees on no less favorable terms than
for other Company executives, subject in each case to the generally
applicable terms and conditions of the plan or arrangement in
question and to the determinations of any person or committee
administering such plan or arrangement. In addition, so long as
Executive is an employee of the Company, the Company will pay the
annual premium on the additional disability plan in which Executive
currently participates.
(e) Vacation
Executive shall accrue Company paid vacation in
accordance with the Company’s policies and procedures, as may
be amended from time to time and which currently provides for five
weeks of vacation per year.
(f) Expenses
The Company will reimburse Executive for travel,
lodging, entertainment and other reasonable business expenses
incurred by him in the performance of his duties in accordance with
the Company’s general policies, as may be amended from time
to time.
5. TERMINATION OF EMPLOYMENT
(a) By Death or Disability
Executive’s employment will terminate
automatically upon the death of Executive or when Executive begins
to receive benefits under the Company’s Long Term Disability
Plan. In such cases, the Company shall pay Executive (in the case
of long term disability) or his estate or a person who acquired the
right to receive such payments by bequest or inheritance (in the
case of death):
(i) any earned, but unpaid, Base Salary to
which Executive is entitled through the date of termination;
(ii) a prorated lump sum payment based upon
the following formula: Y times $68.50, where "Y" equals the number
of days that have passed from January 1, 2009 until the date
of termination, which shall be paid within ten (10) business
days following the date of termination, provided that
Executive’s death or disability occurs during the 2009
Employment Year 1 ; and
(iii) Executive’s annual incentive
award, if any, to which he is entitled under the Incentive Plan
(disregarding any requirement that he be employed through the end
of the determination period or on the date the payment is made),
pro rated through the date of termination.
Upon payment of such amounts, the Company’s
obligations under this Agreement will then cease.
(b) By Company for Cause
The Company may terminate, without liability,
Executive’s employment for Cause (as defined below) at any
time and without notice. The Company will pay Executive any earned,
but unpaid Base Salary to which he is entitled through the date of
termination and thereafter the Company’s obligations under
this Agreement will then cease. Executive will not be entitled to
any annual incentive award under the Incentive Plan for the year in
which termination occurs, unless permitted under the then current
Incentive Plan.
Termination shall be for "Cause" if Executive:
(i) willfully breaches significant and
material duties he is required to perform;
(ii) commits a material act of fraud,
dishonesty, misrepresentation or other act of moral turpitude;
(iii) is convicted of a felony or another
crime which is materially injurious to the reputation of the
Company;
(iv) exhibits gross negligence in the course
of his employment;
(v) is ordered removed by a regulatory or
other governmental agency pursuant to applicable law; or
(vi) fails to obey a lawful direction from the
Board.
(c) By Company Without Cause
The Company may terminate Executive’s
employment and this Agreement, at any time, for any reason, without
Cause.
If Executive’s employment is terminated by
the Company without Cause and not in connection with a "Change of
Control" as described in Section 6(a) below, the Company shall:
(1) pay Executive (in a single lump-sum
payment) any earned, but unpaid, Base Salary to which he is
entitled through the date of termination;
(2) pay Executive an amount equal to 100% of
the Base Salary over the 12-month period immediately following the
date of termination (such amount to be paid in equal installments
on the Company’s regularly scheduled payroll dates);
(3) pay Executive a prorated lump sum payment
based upon the following formula: Y times $68.50, where "Y" equals
the number of days that have passed from January 1, 2009 until
the date of termination, which shall be paid within ten
(10) business days following the date of termination, provided
that Executive’s termination occurs during the 2009
Employment Year;
(4) if Executive elects to continue his health
coverage either pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or through an individual
policy with any insurance carrier (not including health coverage
obtained in connection with any new employment) following the
termination of his employment (it being understood that, if
Executive elects health coverage under COBRA such coverage may only
continue for the maximum period permitted under COBRA or any
applicable state law and thereafter health coverage must be
received through an individual policy with an insurance carrier),
pay Executive’s monthly premium for such coverage directly to
the applicable insurance carrier (including any premium for
coverage of Executive’s spouse) until the earliest of the
date Executive attains age 65, or the date when Executive commences
receiving substantially equivalent health insurance coverage in
connection with new employment;
(5) continue to provide secretarial support to
Executive free of charge for the six-month period beginning on the
date of termination;
(6) cause such number of shares subject to any
unvested stock options and such number of shares of restricted
stock, restricted stock units or other awards made under the Plan
as would have vested over the one-year period beginning on the date
of termination to vest as of the date of Executive’s
termination ; and
(7) pay Executive his annual incentive award,
if any, to which he is entitled under the Incentive Plan
(disregarding any requirement that he be employed through the end
of the determination period or on the date the payment is made),
pro-rated through the date of termination.
After payment of the termination benefits described
in this Section 5(c), the Company’s obligations under
this Agreement will cease.
(d) Voluntary Termination
Executive may terminate his employment at any time
by giving the Company three (3) months’ advanced written
notice of such termination. In this event, the Company will pay any
earned, but unpaid, Base Salary to which Executive is entitled
through the date of termination, and the Company’s
obligations under this Agreement will then cease. The Executive
will not be entitled to any annual incentive award under the
Incentive Plan for the year in which he terminates his
employment.
(e) Termination for "Good Reason"
Executive may also terminate his employment for
"Good Reason" upon the occurrence of any one of the following
events, provided that the Good Reason Payout Trigger (as defined
below) is met:
(i) any assignment to the Executive of duties
other than those contemplated by this Agreement or typically
assumed by a President and CEO, or which represent a material
reduction in the scope and authority of Executive’s position,
except that the designation of another Director as Chairman of the
Board shall not constitute "Good Reason";
(ii) a Company required relocation of
Executive’s principal place of work which is not agreed to by
Executive and which requires an increase in Executive’s
normal commute of more than 35 miles, unless such relocation
results from the relocation of the Company’s executive
offices;
(iii) any reduction in Base Salary which is
not agreed to by Executive; or
(iv) at such time as the Incentive Plan is
approved with respect to any fiscal year, the maximum bonus payable
to Executive under such Incentive Plan shall be determined to be an
amount which is less than 50% of the Base Salary of Executive.
For the Executive to receive the benefits under
this Section 5(e) or Section 6(b) as a result of a termination for
Good Reason, all of the following requirements must be satisfied
(the satisfaction of such conditions, the "Good Reason Payout
Trigger"): (1) Executive must provide notice to the Company of
his intent to assert Good Reason for termination within
30 days of the initial existence of one or more of the
conditions set forth in clauses (i) through (iv) above;
(2) the Company must fail within 30 days (the "Cure
Period") from the date of such notice to remedy such conditions;
and (3) if such conditions are not remedied, Executive must
resign within 20 days after the end of the Cure Period. If the
Company remedies such conditions within the Cure Period, the
Executive may withdraw his proposed termination or may resign with
no benefits under the voluntary separation provision of Section
5(d) above.
If Executive terminates his employment for "Good
Reason" other than in connection with a "Change of Control" as
described in Section 6(b) below and the Good Reason Payout Trigger
has been met, Company shall:
(1) pay Executive (in a single lump-sum
payment) any earned, but unpaid, Base Salary to which he is
entitled through the date of termination;
(2) pay Executive an amount equal to 100% of
the Base Salary over the 12-month period immediately following the
date of termination (or, if higher, at the rate prior to a
reduction referred to in clause (iii) above) (such amount to
be paid in equal installments on the Company’s regularly
scheduled payroll dates);
(3) pay Executive based upon the following
formula: Y times $68.50, where "Y" equals the number of days that
have passed from January 1, 2009 until the date of
termination, which shall be paid within ten (10) business days
following the date of termination, provided that Executive’s
termination occurs during the 2009 Employment Year;
(4) if Executive elects to continue his health
coverage either pursuant to COBRA or through an individual policy
with any insurance carrier (not including health coverage obtained
in connection with any new employment) following the termination of
his employment (it being understood that, if Executive elects
coverage under COBRA such coverage may only continue for the
maximum period permitted under COBRA or any applicable state law
and thereafter health coverage must be received through an
individual policy with an insurance carrier), pay Executive’s
monthly premium for such coverage directly to the applicable
insurance carrier (including any premium for coverage of
Executive’s spouse) until the earliest of the date Executive
attains age 65, or the date when Executive commences receiving
substantially equivalent health insurance coverage in connection
with new employment;
(5) continue to provide secretarial support to
Executive free of charge for the six-month period beginning on the
date of termination;
(6)&n
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