Executive Employment Agreement - California Culinary Academy Inc. and Jerald W. Chesser
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Contract ("Agreement") is entered into as of July 1, 1999
("Effective Date") by and between the California Culinary Academy, Inc., A
California Corporation ("Employer") and JERALD W. CHESSER ("Employee").
RECITALS
WHEREAS Employer is doing business as a culinary educational institution and
wishes to avail itself of the services of Employee; and
WHEREAS Employee has expertise and experience and is willing to perform and
provide certain services for Employer, all in accordance with the following
terms and conditions;
NOW THEREFORE, in consideration of the fore going premises and mutual
covenants herein contained, the parties hereto agree as follows:
AGREEMENT
1. EMPLOYMENT
The Employer hereby agrees to employ the Employee, and the Employee agrees
to serve the Employer as a Vice President for the period stated in Paragraph 3
hereof, and upon other terms and conditions as herein provided.
2. POSITION AND RESPONSIBILITIES
The Employee shall exert his best efforts and devote all his business time
and attention to the affairs of the Employer. The Employee shall serve as a Vice
President of Employer and President of the Culinary Academy of New Orleans
(CANO), a planned new campus owned by Employer, with overall responsibility and
other such duties as may be assigned or amended by the President and/or the
Board of Directors of the Employer from time to time. The Employee shall be
subject to the restrictions, limitations and guidelines set forth by resolutions
of the Board of Directors adopted by the Board. As a Vice President of Employer
and President of CANO, the Employee will report directly to the President of
Employer or such other executive officer designated by Employer's President.
Employee's principal place of employment shall be Employer's Culinary Academy of
New Orleans in Louisiana.
3. TERM
The term of this Agreement shall be for a five (5) year period, commencing
on July 1, 1999 (the "Effective Date") and ending on June 30, 2004 ("Termination
Date"), subject to the termination provisions set forth in Paragraph 13
hereafter.
4. DUTIES
During the period of his employment hereunder and except for illness,
specified vacation periods and reasonable leaves of absence, the Employee shall
devote his best efforts and all his business time, attention and skill and
efforts to the business and affairs of the Employer and its affiliated
companies, as such business and affairs now exist and as they may hereinafter be
changed or added to under and pursuant to the general direction of the Board of
Directors of the Employer; provided, however, that with the approval of the
Board of Directors of the Employer, the Employee may serve, or continue to
serve, on the Board of Directors of, or hold any other offices or positions in,
companies or
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organizations which, in such Board's judgement, will not present any conflict of
interest with the Company or any of its subsidiaries or affiliates or divisions,
or materially effect the performance of Employee's duties pursuant to this
Agreement. The Employer shall retain full direction and control of the means and
methods by which the Employee performs services for which he is employed
hereunder.
5. COMPENSATION
During the period of employment under this Agreement, Employer shall pay
Employee as compensation for his services during the period July, 1999
throughout June 30, 2000 the sum of $100,000 per year ($8,333.33 per month) and
from July 1, 2000 through the termination date the sum of $125,000 per year
($10,416.67 per month) or such higher salary as may be, from time to time,
approved by the Board of Directors.
6. BONUS
Employee shall have an opportunity to earn a bonus of 10% of his annual base
salary when the annual operating plan and profits are achieved. In the event
that the operating revenue and the profit plan is exceeded by 5% - 9%, a bonus
of 20% of base salary will be awarded. In the event that the operating revenue
and the profit plan is exceeded by 10% or more, 30% of the base salary will be
awarded provided that the Board of Directors and President are satisfied with
executive's people skills and performance of required duties.
7. BENEFITS
During the term of this Agreement, the Employee shall be entitled to the
following Employer-paid benefits:
(A) MEDICAL AND DENTAL COVERAGE. Commencing July 1, 1999 the Employee, his
wife and those children who qualify will be eligible to participate in the
Employer's current Employee Group Medical and Dental Insurance Programs on the
same basis as other executives of the Employer.
(B) DISABILITY INSURANCE. Commencing April 1, 1999 the Employee will be
eligible to participate in the Employer's current Executive Disability Insurance
Program on the same basis as other executives of Employer.
(C) LIFE INSURANCE. If the Employee qualifies for coverage, the Employer
agrees to purchase and maintain a policy of term life insurance on the Employee
in the amount of $15,000, to remain in effect for the duration of the Agreement.
(D) HOLIDAYS. Employee shall be entitled to seven fixed holidays and one
floating holiday per calendar year.
(E) SICK DAYS. Employee shall be entitled to six sick days during each
year of employment under the Agreement. Said sick days shall not accrue beyond
ten days at any given time.
(F) VACATION. The Employee shall be entitled to fifteen paid days of
vacation per year of employment.
(G) 401K PARTICIPATION. Employee shall also be entitled to participate in
Employer's 401K program after six months of continuous employment.
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8. STOCK OPTIONS
On October 1, 1999, The Employer will grant the Employee options to purchase
a total of 25,000 shares of Common Stock of the Employer which shall be
exercisable in accordance with the following schedule and the following purchase
price:
DATE OPTION MAY OPTION
OPTION BE EXERCISED NO. OF SHARES PURCHASE PRICE PER SHARE EXPIRATION DATE
----------- ---------------------- --------------- ---------------------------------- ----------------------
Number 1 March 31, 2000 5,000 Market Price at date of grant September 30, 2004
Number 2 September 30, 2000 5,000 Market Price at date of grant September 30, 2004
Number 3 March 31, 2001 5,000 Market Price at date of grant September 30, 2004
Number 4 September 30, 2001 5,000 Market Price at date of grant September 30, 2004
Number 5 March 31, 2002 5,000 Market Price at date of grant September 30, 2004
Based on satisfactory performance of Employee's duties and responsibilities
as outlined in paragraph 4 above, on July 1, 2000, employer will grant Employee
options to purchase an addition 25,000 shares of common stock which shall be
exercisable in accordance with the following schedule and the following purchase
price:
DATE OPTION MAY OPTION
OPTION BE EXERCISED NO. OF SHARES PURCHASE PRICE PER SHARE EXPIRATION DATE
------------- ---------------------- --------------- ---------------------------------- ---------------
Number 6 December 31, 2000 5,000 Market Price at date of grant June 30, 2005
Number 7 June 30, 2001 5,000 Market Price at date of grant June 30, 2005
Number 8 December 31, 2001 5,000 Market Price at date of grant June 30, 2005
Number 9 June 30, 2002 5,000 Market Price at date of grant June 30, 2005
Number 10 December 31, 2002 5,000 Market Price at date of grant June 30, 2005
Options granted to Employee shall be subject to the terms of Employer's
Stock Option Plans and Standard Stock Option Agreement letter.
9. DISABILITY
If, during the term of this Agreement, the Employee becomes disabled or
incapacitated hereunder by reason of illness or other physical or mental
incapacity and is unable to properly perform Employees responsibilities, the
Employer shall continue to pay the Employee his then-current salary for the
first three (3) months of such disability, less sums equal to the amount
received by the Employee under the Employer's Disability Insurance Policy and/or
Program.
10. OBLIGATIONS OF EMPLOYEE DURING AND AFTER EMPLOYMENT
(a) The Employee agrees that during the term of his employment under this
Agreement, he will engage in no other business activities directly or indirectly
which are or may be competitive with or which might place him in a competing
position to that of the Employer, or any of its affiliated companies.
(b) The Employee realizes that during the course of his employment, the
Employee will have produced and/or have access to confidential business plans,
information, business opportunity records, notebooks, data formula, inventions,
patents, copyrights, concepts, ideas, specifications, trade secrets, customer
lists, student lists and secret inventions and processes of the Employer and its
affiliated
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companies. Therefore, during or subsequent to his employment by the Employer, or
by an affiliated company, the Employee agrees to hold in confidence and not to
directly or indirectly disclose or use or copy or make lists of any such
information, except to the extent authorized by the Employer in writing, All
records, files, business plans, documents, equipment and the like, or copies
thereof, relating to the Employer's business, or the business of an affiliated
company, which the Employee shall prepare, or use, or come into contact with,
shall remain the sole property of the Employer, or of an affiliated company, and
shall not be removed from the Employer's or the affiliated company's premises
without the Employer's written consent and shall be promptly returned to the
Employer upon termination of employment with the Employer and its affiliated
companies.
11. NON COMPETE
In the event that Employee terminates his employment under this Agreement,
Employee shall not, for a period of six (6) months after working for Employer,
work for, in any capacity, direct competitors of Employer. For the purpose of
this Agreement direct competitors shall be defined as any organization offering
culinary certificate or degree educational programs to the general public.
12. EXPENSES
The Employer will reimburse the Employee for all reasonable and necessary
expenses incurred by him in carrying out his duties under this Agreement. The
Employee shall present to the President from time to time an itemized account of
such expenses, along with all appropriate back-up documentation, as will be
required by the Employer.
13. TERMINATION
(A) TERMINATION FOR CAUSE:
During the first two years of the term of this Agreement (July 1, 1999 to
June 30, 2001) there can be no termination of the Employee except for
"Termination for Cause" as outlined below:
Nonwithstanding anything herein to the contrary, the Employer may, without
liability, terminate the Employee's employment hereunder for cause at any time
upon written notice from the Board of Directors specifying such cause, and
thereafter the Employer's obligations hereunder shall cease and terminate;
provided, however, that such written notice shall not be delivered until after
the Board of Directors shall have given the Employee written notice specifying
the conduct alleged to have constituted such cause and the Employee has failed
to cure such conduct, if curable, within ten (10) days following receipt of such
notice. Grounds for "Termination for Cause" include, but are not limited to, one
or more of the following:
(1) A willful breach of duty by Employee during the course of his
employment;
(2) Habitual neglect of duty by the Employee;
(3) The Employee's failure to perform and/or meet the objective measurable
standards set by the Board of Directors;
(4) Action or inaction by the Employee which places the Employer in
circumstances of financial peril;
(5) Dishonest or illegal conduct of the Employee.
(B) TERMINATION WITHOUT CAUSE:
After completion of two years of employment hereunder, the Board of
Directors may terminate the employment of the Employee upon ninety (90) days
written notice without cause by a majority
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vote, if, in the opinion of the Board of Directors, the Employee has failed to
discharge his duties and responsibilities to the satisfaction of the Board.
14. SALE OF COMPANY
In the event that Employer is sold to another company the stock options
granted to Employee under this Agreement shall immediately become fully vested
to Employee. In the event that Employee is not retained by the acquiring company
under the terms of this Agreement or other terms acceptable to Employee,
Employee shall be entitled to severance pay equal to one (1) year of Employee's
most recent Base Compensation.
15. REPRESENTATION AND WARRANTY
Employee represents and warrants that Employee is not bound by any covenant
or agreement, oral or written, which prohibits Employee from entering into this
Agreement and from being Employed by Employer.
16. SEVERABILITY
If any one or more of the provisions hereof shall be held to be invalid,
illegal or unenforceable, the validity and enforceability of its other
provisions shall not be affected thereby.
17. NON-TRANSFER OF RIGHTS AND OBLIGATIONS
The Employee's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, nor shall Employee's rights be subject
to encumbrance or to the claims of the Employer's creditors. Nothing in this
Agreement shall prevent consolidation of the Employer with, or its merger into,
any other corporation, or the sale by the Employer of all or substantially all
of its assets.
18. NOTICE
Any notice required to be given pursuant to the provisions of this Agreement
shall be in writing and hand delivered or mailed prepaid as appropriate to
Employer's President at the address of Employer's corporate offices or the
Employee at the most recent address in Employee's personnel file.
19. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in the city of San
Francisco, California in accordance with the Rules of the American Arbitration
Association, and the judgement upon the award rendered by the arbitration may be
entered in any court having jurisdiction thereof.
20. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of California.
21. MODIFICATION
This Agreement contains the entire understanding of the parities and may not
be amended, supplemented, or discharged except by an instrument in writing
signed by the parties hereto.
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22. BINDING EFFECT
This Agreement shall inure to the benefit of and shall be binding upon
Employer, its successors; and assigns.
IN WITNESS WHEREOF, The parties hereto have executed this Agreement as of
the date first above written.
Dated: CALIFORNIA CULINARY ACADEMY, INC
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By /s/ KEITH H. KEOGH
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Keith H. Keogh, President
Dated: 4/14/99 By /s/ JERALD W. CHESSER
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Jerald W. Chesser
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ADDENDUM TO EMPLOYMENT AGREEMENT
The purpose of this Addendum entered into as of June 1, 1999 ("Effective
Date") is to amend and add provisions to the Employment agreement ("Agreement")
dated July 1, 1999 by and between the California Culinary academy, Inc., a
California Corporation ("Employer") and JERALD W. CHESSER ("Employee") and when
executed will become a part of said Agreement.
RECITALS
WHEREAS, certain shareholders of Employer have announced that they intend to
vote out the existing Board of Directors at the next Shareholders meeting and
attempt to sell Employer, and
WHEREAS, Employee is concerned that his/her position in the company may not
be secure do to the possibility of a change in the composition of the Board of
Directors and/or the sale of Employer, and
WHEREAS, Such concerns may cause employee to seek employment elsewhere, and
WHEREAS, Employees continuing to service to Employer is important to insure
a continuity of management and to maintain shareholder value, and
NOW THEREFORE, to insure employees continuing service, to free Employee from
the concern that a change in the make up of the Employer's Board of Directors
will negatively impact employee's status with the Employer and to allow Employee
to dedicate his/her full time, attention and energy to Employer's business, the
following provision is hereby added to Agreement:
22. CHANGE OF BOARD
In the event of a change in the composition of the Employer's Board of
Directors ("Existing Board") resulting in a majority of the present directors of
Employer not constituting a majority ("Board Change") and Employee elects within
120 days of said majority change to sever his/her employment with Employer or if
Employee is terminated by Employer within 120 days of said Board change,
Employee shall be entitled to severance pay equal to one (1) year of Employee's
most recent base compensation and one year of continuing medical insurance
coverage and all stock options previously granted to Employees shall become
fully vest to Employee. Not withstanding the above, directors of Employer who
were elected by or on recommendation of Existing Board shall be excluded in
determining that a change in the majority of existing Board has taken place.
IN WITNESS THEREOF, the parties hereto have executed this Addendum as of the
date first above written:
Date: June 17, 1999 California Culinary Academy, Inc.
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By: /s/ KEITH KEOGH
-----------------------------------
Keith H. Keogh, President
Date: June 17, 1999 By: /s/ JERALD W. CHESSER
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Jerald W. Chesser