Employment Agreement (46K)
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into and
effective as of the 31st day of August, 2004, by and between AGAX/VLI
ACQUISITION CORPORATION, a Delaware corporation (the "Company"), and KEVIN J.
THOMAS (hereinafter, the "Employee").
R E C I T A L S :
WHEREAS, Argan, Inc. has acquired all of the issued and outstanding
capital stock of Vitarich Laboratories, Inc. ("Vitarich") pursuant to a merger
between the Company, a wholly owned subsidiary of Argan -------- Inc., a
Delaware corporation ("Argan"), and Vitarich; and -----
WHEREAS, prior to the merger, the Employee was the sole stockholder, sole
board member and chief executive officer of Vitarich; and
WHEREAS, the Company is in the business of formulating, packaging and
distributing whole food, dietary, herbal and nutritional supplements and related
products, which are marketed globally to retail, wholesale and private label
customers, including network marketing companies, health food stores, mass
merchandisers, drug stores, food stores and internet and mail order companies
(collectively, the "Business"); and
WHEREAS, the Employee possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel; and
WHEREAS, the Company desires to employ the Employee to operate the
Business and compensate him therefor; and
WHEREAS, the Employee is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the foregoing premises and of the mutual promises and covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Article 1
Employment
Section 1.01 Employment and Term. The Company hereby agrees to employ the
Employee and the Employee hereby agrees to serve the Company on the terms and
conditions set forth herein.
Section 1.02 Duties of Employee. During the Term of Employment under this
Agreement, the Employee shall serve as the Senior Operating Executive of the
Company, shall faithfully and diligently perform all services as may be assigned
to him by the Board of Directors of the Company (the "Board") (provided that,
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such services shall not materially differ from the services provided by the
Employee to Vitarich), and shall exercise such power and authority as may from
time to time be delegated to him by the Board. The Employee shall devote his
full time and attention to the business and affairs of the Company, render such
services to the best of his ability, and use his reasonable best efforts to
promote the interests of the Company. Notwithstanding the foregoing or any other
provision of this Agreement, it shall not be a breach or violation of this
Agreement for the Employee to: (a) serve on civic, charitable or, subject to
Article 6 below, corporate boards or committees; (b) deliver lectures, fulfill
speaking engagements or teach at educational institutions; or (c) manage
personal investments, so long as such activities do not significantly interfere
with or significantly detract from the performance of the Employee's
responsibilities to the Company in accordance with this Agreement.
Article 2
Term
Section 2.01 Initial Term. The initial Term of Employment (as defined
below) under this Agreement, and the employment of the Employee hereunder, shall
commence on August 31, 2004 (the "Commencement Date") and shall expire on August
31, 2007, unless sooner terminated in accordance with Article 5 hereof (the
"Initial Term").
Section 2.02 Renewal Terms. At the end of the Initial Term, the Term of
Employment automatically shall renew for successive one year terms (subject to
earlier termination as provided in Article 5 hereof), unless the Company or the
Employee delivers written notice to the other at least three months prior to the
Expiration Date of its or his election not to renew the Term of Employment.
Section 2.03 Term of Employment and Expiration Date. The period during
which the Employee shall be employed by the Company pursuant to the terms of
this Agreement is sometimes referred to in this Agreement as the "Term of
Employment," and the date on which the Term of Employment shall expire
(including the date on which any renewal term shall expire), is sometimes
referred to in this Agreement as the "Expiration Date."
Article 3
Compensation
Section 3.01 Base Salary. The Employee shall receive a base salary at the
annual rate of $150,000 (the "Base Salary") during the Term of Employment, with
such Base Salary payable in installments consistent with Vitarich's normal
payroll schedule, subject to applicable withholding and other taxes. Following
the Initial Term, the Base Salary shall be reviewed, at least annually, for
merit increases and may, by action and in the discretion of the Board, be
increased at any time or from time to time. Base Salary shall not be decreased
and, if increased, shall not thereafter be decreased for any reason.
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Section 3.02 Bonuses.
(a) In addition to Base Salary, during the Term of Employment, for
each fiscal year of the Company following the fiscal year ended January 31,
2005, the Employee shall be entitled to receive additional bonus compensation,
provided that Pre-Tax Earnings of the Company (as defined in Section 3.02(b)(i))
for such fiscal year exceed 120% of Base Year Pre-Tax Earnings (as defined in
Section 3.02(b)(ii)). In the event Pre-Tax Earnings of the Company for such
fiscal year are between 120% and 130% of Base Year Pre-Tax Earnings, the
Employee shall receive Incentive Compensation (as defined below) of $150,000. In
the event Pre-Tax Earnings of the Company for such fiscal year exceed 130% of
Base Year Pre-Tax Earnings, the Employee shall receive Incentive Compensation of
$250,000.
(b) For the purposes of Section 3.02(a) above,
(i) "Pre-Tax Earnings of the Company" shall mean, for each
fiscal year, earnings of the Company before (A) taxes; (B) non-recurring
expenses or income statement adjustments for any fiscal year, or portion of a
fiscal year, occurring prior to the date of this Agreement, as reasonably
determined by the Board; and (C) any additional bonus compensation due under
Section 3.02(a), if any; provided, however, that for each of the fiscal years
ended on or before January 31, 2005 only, "Pre-Tax Earnings of the Company"
shall be increased by the total compensation paid to the Employee during such
each fiscal year and decreased by the Base Salary payable to the Employee
pursuant to Section 3.01 above; and
(ii) "Base Year Pre-Tax Earnings" shall mean, for each fiscal
year, the greater of:
(A) Pre-Tax Earnings of the Company for the
immediately preceding fiscal year; or
(B) the average Pre-Tax Earnings of the
Company for the immediately preceding three fiscal years;
but in the case of both clause (a) and clause (b), not less
than the Pre-Tax Earnings of the Company for the fiscal year ended January 31,
2005.
(c) The Employee shall receive such additional bonuses, if any, as
the Board may in its sole and absolute discretion determine.
(d) For the Bonus Period (as defined in Section 3.02(e)) in which
the Employee's employment with the Company terminates for any reason, the
Company shall pay the Employee a pro rata portion (based upon the period ending
on the date on which the Employee's employment with the Company terminates) of
the bonus otherwise payable under this Section 3.02 for the Bonus Period in
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