This Executive Employment Agreement involves
Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: California Date: 7/8/2016
Industry: Beverages (Non-Alcoholic) Sector: Consumer/Non-Cyclical
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into as of the 5 th day of July 2016 by and between Jose Castaneda, an individual (the “ Employee ”), and Energy Source Distributors, Inc. , a California S Corporation (collectively referred to as “ ESD, Company, Business or Employer ”).
Employee is currently employed as General Manager of Energy Source Distribution. The Company desires to enter into this Agreement with the Employee, to continue the employ of the Employee as General Manager, and Employee desires to accept such employment with the Company, all in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, and in consideration of the above premises, the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:
1. Employment and Duties.
(a) Subject to the terms and conditions set forth in this Agreement, the Company hereby agrees to continue the employ of the Employee, and the Employee hereby agrees to continue to serve the Company, as General Manager and, thereafter, in such capacities, functions and positions of an executive officer as reasonably designated by the Board of Directors of the Company (the “ Board of Directors ”) from time to time. In performing his duties hereunder, the Employee shall report to and be directly responsible to the Board of Directors.
(b) During the Term (as defined below), the Employee shall, for the benefit of the Company, use his skills, knowledge and specialized training to perform the duties and exercise the powers, functions and discretions incident to the position which, from time to time, may be assigned to or vested in him by the Board of Directors consistent with the terms of the Company’s Bylaws, in an efficient and competent manner and on such terms and subject to such restrictions as the Board of Directors may from time to time impose.
(c) During the Term, the Employee agrees to devote his full business time, energy and skill to the business of the Company and to the fulfillment of the Employee’s obligations under this Agreement. In addition to the foregoing and not in limitation thereof, during the Term, the Employee shall not carry on, engage in, or otherwise be interested in, directly or indirectly, any other business or activity that would compete with or result, directly or indirectly, in a conflict of interest with the Business or that would materially affect the Employee’s ability to perform his duties as set forth in this Agreement. Subject to Section 11 and notwithstanding anything contained in this Section 1(c), the Employee shall be entitled to invest in other business enterprises, provided such ownership docs not detract from the Employee’s duty to devote his full business time, energy and skill to the Business.
2. Effective Date; Term; Post-Termination Restrictions Following Expiration.
The effective date of this Agreement (the “ Effective Date ”) shall be the “ Closing Date ”) under that certain Stock Purchase and Sale Agreement dated as of March 24, 2016, by and among Hispanica International Delights of America, Inc., a Delaware corporation, the Company, Employee, and any other parties thereto (the “ SPA ”). Should the closing under the SPA not occur, this Agreement will be deemed null and void and of no effect whatsoever. The term of Employee’s employment under this Agreement shall commence on the Effective Date and shall, unless earlier terminated as set forth herein or extended by mutual agreement, end on the first twelve month (12) anniversary of the Effective Date (the “ Term ”). If Employee’s employment with the Company terminates as a result of the expiration of the Term, the Employee will be subject to the post-termination restrictions contained in Sections 9 and the Employer will pay Employee the benefits that would be available under Clause 6(c) had the Company terminated the Employee’s employment hereunder Without Cause; provided that the duration of such restrictions and benefit payments shall be six months rather than twelve months. Notwithstanding the immediately preceding sentence, the Employer, by written notice to Employee on or prior to the expiration of the Term, shall be entitled to extend the duration of such restrictions and benefits payments to twelve months.
(a) Subject to the terms of this Agreement, in consideration of the Employee’s performance of the responsibilities and the discharge of those duties set forth in Section l, the Company shall pay the Employee, so long as he shall be employed under this Agreement, a base salary per annum of at least $58,000 plus a monthly car allowance expense (the “ Initial Base Salary ”). The Employee’s Initial Base Salary shall be reviewed by the Compensation Committee (the “ Compensation Committee ”) of the Board of Directors in January of 2016 and in January of each year thereafter during the Term, and the rate thereof may be increased as of such review date by such amount, if any (each, a “ Base Salary Increase ”), as the Board of Directors acting on the recommendation of the Compensation Committee deems appropriate in its sole discretion (the Initial Base Salary together with any Base Salary Increase shall collectively be referred to as the “ Base Salary ”). Notwithstanding the foregoing, if the Term of this Agreement is extended by mutual agreement, the Base Salary shall be at least $60,000 commencing as of the end on the first twelve month (12) anniversary of the Effective Date. The Employee’s Base Salary shall be payable to the Employee on the regularly reoccurring pay period for other salaried employees at the Employee’s work location, but in no event less frequently than monthly installments. The Employee’s Base Salary and any other compensation payable hereunder shall be subject to all withholdings pursuant to applicable law or regulation.
(b) In addition to the foregoing Base Salary, the Employee shall be eligible, at the sole discretion of the Board of Directors acting on the recommendation of the Compensation Committee, to receive an annual incentive bonus.
(c) The Employee hereby acknowledges that the Employee may be required to work beyond standard working hours in order to perform his duties hereunder and may be required to travel from time to time in connection with the performance of such duties. The Employee shall not be entitled to compensation for overtime or extra hours worked in performance of his duties hereunder unless otherwise required by law. Notwithstanding anything contained herein to the contrary, in the event that the Company relocates its principal place of Employee’s employment to a location located outside twenty five miles from its current location, Employee shall have the right to elect to not relocate and such election shall constitute his termination for Good Reason pursuant to the terms herein.
(d) In addition to the compensation described in this Agreement, the Employee shall be entitled to reimbursement by the Company for all actual, reasonable and direct expenses incurred by him in the performance of his duties hereunder consistent with past practices, provided such expenses were incurred and documented in accordance with the expense reimbursement policies and procedures established by the Company from time to time.
4. Employment Benefits; Law and Regulations.
(a) The Employee shall have the right to participate in any and all employee benefit programs established or maintained by the Company for its executive officers at the Employee’s work location from time to time, in accordance with the terms and conditions of such employee benefit programs which including, at a minimum, medical and dental plans and cell phone, as may be established from time to time by the Company. The Company reserves the right, in its sole discretion, to alter, amend or discontinue any of such employee benefit programs at any time; provided, however, that they are replaced and Employee continues to receive substantially the same benefits.
(b) In addition to public holidays as are observed by the Company, the Employee shall be entitled to two weeks of vacation each year during the Term.
(c) The Employee acknowledges that the Company may promulgate employee handbooks, policies and procedures from time to time, and the Employee shall adhere to the terms of any handbook, policy or procedures that the Company may promulgate from time to time. The Company reserves the right, in its sole discretion, to alter, amend or terminate any handbook, policy or procedure. In the event the terms and conditions of this Agreement conflict with the terms and conditions of any employee handbook, policy or procedure adopted by the Company, the terms and conditions of this Agreement shall control to the extent of such conflict.
(d) The Employee shall carry out his duties in full compliance with applicable law, and the laws of any other jurisdiction applicable to the Company’s Business or the Employee’s duties.
5. Illness, Incapacity or Death during Employment.
(a) If by reason of illness, injury or incapacity, the Employee is unable, despite reasonable accommodation, to perform his duties hereunder on a full-time basis for 120 or more consecutive days or 180 days in the aggregate during any 12-month period (or any such longer periods as may be required by law) (“ Disabled ”), then upon ten days prior written notice by the Company to the Employee (or his representative, if applicable), the Company may terminate the employment of the Employee, and, thereupon, the Employee will be entitled to receive an amount equal to one half of the Employee’s then current monthly Base Salary, paid in equal monthly installments, for a period of twelve months following the date of such termination (collectively, the “ Disability Payment ”). Notwithstanding the foregoing, if the Company maintains a long term disability insurance policy for the benefit of the Employee and the Employee qualifies for the payments under such policy, the Company shall be obligated to pay to the Employee only the difference, if any, between the Disability Payment and the aggregate amount of all payments under such policy.
(b) In the event of the Employee’s death, all obligations of the Company under this Agreement shall terminate, other than the Employee’s rights with respect to the payment of that portion of the Base Salary earned by the Employee to the date of death, plus an amount equal to the Employee’s then current Monthly Payment, paid monthly, for a period of three months following the date of such termination, plus a pro rata share (through the date of death) of any annual incentive bonus due Employee (based on the year ending immediately subsequent to the date of death), plus reimbursement of all expenses that were properly incurred in accordance with subsection (d) of Section 3 by the Employee in performing his responsibilities and duties for the Company prior to and including such date.
6. Termination of Employment.
(a) At any time during the Term, (i) the Company may terminate the Employee’s employment With Cause (as hereinafter defined) by written notice to the Employee; (ii) the Company may terminate the Employee’s employment Without Cause (as hereinafter defined) by written notice to the Employee; (iii) the Employee may terminate his employment for Good Reason (as hereinafter defined) upon 30 days’ prior written notice to the Company, which notice shall set forth in detail the matters involved, but only if the Company subsequently fails to cure the basis upon which such termination for Good Reason is based during such 30-day period; and (iv) the Employee may terminate his employment for any reason or for no reason (other than for Good Reason) upon 60 days’ prior written notice to the Company.
(b) Subject to Section 5, if, during the Term, the Employee terminates his employment hereunder for any reason other than for Good Reason, or the Company terminates Employee’s employment hereunder With Cause, all obligations of the Company to provide compensation and benefits under this Agreement shall cease upon the last day of the Employee’s employment (except for the payment of those benefits accrued or those reimbursable expenses properly incurred in accordance with subsection (d) of Section 3 by the Employee prior to the date of such termination), and the Employee shall have no claim against the Company for damages or otherwise by reason of such termination. The Company’s election to terminate the Employee’s employment With Cause shall be without prejudice to any remedy the Company may have against the Employee for the breach or nonperformance of any of the provisions of this Agreement.
(c) If, during the Term, the Company terminates the Employee’s employment hereunder Without Cause or the Employee terminates his employment for Good Reason, then the Employee will be entitled to receive an amount equal to one year’s Base Salary, paid in equal monthly installments for 12 months following the effective date of the termination of the Employee’s employment hereunder. Notwithstanding the foregoing, all post-employment compensation shall cease to accrue, and the Employee shall have no further entitlement to the same from and after the date the Employee breaches any of the post-employment covenants set forth in Sections 8 through 12 of this Agreement (if applicable).
(d) “ With Cause ” means the Company’s termination of the Employee’s employment with the Company upon the occurrence of any of the following (which occurrence in each case results in a material detriment to the Company): (i) a material breach by the Employee of this Employment Agreement, after written notification from the Company of such breach, setting forth in detail the matters involved, and Employee’s failure to cure the problem resulting in such breach (if curable) within 30 days thereafter; or (ii) the conviction of the Employee of a felony or any crime involving moral turpitude, fraud or dishonesty.
(e) “ Without Cause ” means the termination of employment for any reason other than those enumerated in subsection (d) above or Section 5 of this Agreement, or for no reason.
(f) “ Good Reason ” means (i) a material breach by the Company of this Employment Agreement; (ii) a material limitation or diminution of the Employee’s place of Employee’s employment outside current location. responsibilities, authorities or duties; or (iii) the Company’s relocation of the principal place of Employee’s employment outside a twenty five (25) mile radius from its current location.
7. Effect of Termination.
The provisions of subsections (b) and (c) of Sections 6, and Sections 8 through 14 and 22 of this Agreement shall survive the termination of this Agreement and the termination of Employee’s employment with the Company to the extent required to give full effect to the covenants and agreements contained therein.
8. Confidentiality; Intellectual Property; Communications.
(a) Both during the Employee’s employment hereunder and after termination of his employment for any reason or for no reason, the Employee shall not use or disclose, except as set forth in subsection (d) below, as authorized by the Company, or as otherwise necessary in connection with the performance of the Employee’s duties hereunder (during the Term), any Confidential Information (as hereinafter defined) that the Employee may have or acquire (whether or not developed or compiled by the Employee and whether or not the Employee has been authorized to have access to such Confidential Information) during the Term.
(b) The term “ Confidential Information ” as used in this Agreement shall mean and include any information, data and know-how relating to the Group Companies or their Business that is disclosed to the Employee by the Group Companies or known by the Employee as a result of the Employee’s relationship with the Group Companies and not generally within the public domain (whether constituting a trade secret or not), including the following information:
(i) technical information, suc