EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of January ___, 2004 by and
between XXXXXX’X FOOD SYSTEMS, INC., a North Carolina corporation (the “Company”), and XXXX X.
XXXXXX (the “Employee”).
R E C I T A L S:
A. Employee is a key employee of the Company.
B. The Company and Employee desire to enter into this Agreement to set forth the terms and
provisions of Employee’s employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the
parties agree as follows:
1. Employment and Duties. Subject to the terms and conditions of this Agreement, the
Company employs the Employee to serve in an executive and managerial capacity as Executive Vice
President of Operations of the Company, and the Employee accepts such employment and agrees to
perform such reasonable responsibilities and duties commensurate with the aforesaid positions as
directed by the Company’s Board of Directors or as set forth in the Articles of Incorporation and
the Bylaws of the Company. Any change in such titles or delegation of duties inconsistent with
such titles without the consent of Employee, shall be deemed a termination without cause under
Section 7(b) below.
2. Term. The term of this Agreement shall commence on the first day of the Company’s
fiscal year commencing in the year 2004 (the “Effective Date”) and shall terminate on the last day
of the Company’s fiscal year ending in the year 2007, subject to prior termination as set forth in
Section 7 below (the “Term”). The Term may be extended at any time upon mutual written agreement
of the parties.
3. Salary. Commencing on the Effective Date, and subject to the other provisions of
this Agreement, the Company shall pay the Employee a minimum base annual salary of $250,000. The
Chief Executive Officer of the Company may, from time to time, increase such salary in his sole
discretion.
4. Other Compensation and Fringe Benefits. In addition to any executive bonus,
pension, deferred compensation and stock option grants which the Company may from time to time make
available to the Employee upon mutual agreement, the Employee shall be entitled to the following:
(a) The standard Company benefits enjoyed by the Company’s other top executives;
(b) Provision by the Company during the Term and any extensions thereof to the Employee and
his dependents of the medical and other insurance coverage provided by the Company to its other top
executives;
(c) Provision by the Company of supplemental disability insurance sufficient to provide
two-thirds of the Employee’s pre-disability minimum base annual salary for a two-year period; and
(d) For the fiscal years ending in January 2005, 2006 and 2007, Employee shall be entitled to
a bonus in the amount determined by the Company’s Chief Executive Officer, in his sole discretion.
The Company shall deduct from all compensation payable under this Agreement to the Employee
any taxes or withholdings the Company is required to deduct pursuant to state and federal laws or
by mutual agreement between the parties.
5. Vacation. For and during each year of the Term and any extensions thereof, the
Employee shall be entitled to reasonable paid vacation periods consistent with his positions with
the Company and in accordance with the Company’s standard policies, or as the Company’s Board of
Directors may approve. In addition, the Employee shall be entitled to such holidays consistent
with the Company’s standard policies or as the Company’s Board of Directors may approve.
6. Expense Reimbursement. In addition to the compensation and benefits provided
herein, the Company shall, upon receipt of appropriate documentation, reimburse the Employee each
month for his reasonable travel, lodging, entertainment, promotion and other ordinary and necessary
business expenses in accordance with the Company’s policies then in effect.
7. Termination.
(a) For Cause. The Company may terminate this Agreement immediately for cause upon
written notice to the Employee, in which event the Company shall be obligated only to pay the
Employee that portion of the minimum base annual salary due him through the date of termination.
Cause shall be limited to (i) the persistent failure to perform duties consistent with a
commercially reasonable standard of care; (ii) the willful neglect of duties; (iii) criminal or
other illegal activities involving dishonesty; or, (iv) a material breach of this Agreement.
(b) Without Cause. Either party may terminate this Agreement immediately without
cause by giving written notice to the other. If the Company terminates under this Section 7(b) ,
then it shall pay to the Employee the sum of (i) all amounts owed through the date of termination,
plus (ii) an amount equal to the product of the Employee’s minimum base annual salary in effect as
of the date of termination times the number of years (including partial years) remaining in the
Term. Such payment to be made in a lump sum on or before the fifth day following the date of
termination, and shall be in lieu of all further salary and bonus obligations under this Agreement.
In addition, if the Company terminates under this Section 7(b), (i) all options granted to the
Employee which had not vested as of the date of such termination shall vest concurrently with such
termination, and, notwithstanding the terms of any option agreements, Employee may exercise any
vested options, including by reason of acceleration, for a period after such termination which is
the greater of what is provided in the respective option agreement or 30 days, and (ii) the Company
shall maintain in full force and effect for the continued benefit of the Employee for the remainder
of the Term, all employee benefit plans (except for the Company’s stock option plans) and programs
in which the Employee was entitled to participate immediately prior to the date of termination,
provided that the Employee’s continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Employee’s participation in any such
plan or program
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is prohibited, the Company shall, at its expense, arrange to provide the Employee with
benefits substantially similar to those which the Employee would otherwise have been entitled to
receive under such plans and programs from which his continued participation is prohibited. If the
Employee terminates under this Section 7(b), then the Company shall only be obligated to pay the
Employee the minimum annual base salary due him through the date of termination.
(c) Disability. If the Employee fails to perform his duties hereunder on account of
illness or other incapacity for a period of six consecutive months, then the Company shall have the
right upon written notice to the Employee to terminate this Agreement without further obligation by
paying the Employee the minimum base annual salary, without offset, for the remainder of the Term
in a lump sum or as otherwise directed by the Employee.
(d) Death. If the Employee dies during the Term, then this Agreement shall terminate
immediately and the Employee’s legal representatives shall be entitled to receive the minimum
annual base salary for the remainder of the Term in a lump sum or as otherwise directed by the
Employee’s legal representative. Executive’s outstanding Company options will immediately vest in
full and be exercisable for a period of 90 days from Employee’s death.
(e) Effect of Termination. Termination for any reason or for no reason shall not
constitute a waiver of the Company’s rights under this Agreement nor a release of the Employee from
any obligation hereunder except his obligation to perform his day-to-day duties as an employee.
(f) Mitigation. Employee shall not be required to mitigate the amount of any payment
provided for in this Section 7 by seeking other employment or otherwise, nor shall any compensation
or other payments received by the Employee after the date of termination reduce any payments due
under this Section 7.
8. Non-Delegation of Employee’s Rights. The obligations, rights and benefits of the
Employee hereunder are personal and may not be delegated, assigned or transferred in any manner
whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer.
9. Confidential Information. The Employee acknowledges that in his capacity as an
employee of the Company he will occupy a position of trust and confidence and he further
acknowledges that he will have access to and learn substantial information about the Company and
its operations that is confidential or not generally known in the industry, including, without
limitation, information that relates to purchasing, sales, customers, marketing, and the Company’s
financial position and financing arrangements. The Employee agrees that all such information is
proprietary or confidential, or constitutes trade secrets and is the sole property of the Company.
The Employee will keep confidential, and will not reproduce, copy or disclose to any other person
or firm, any such information or any documents or information relating to the Company’s methods,
processes, customers, accounts, analyses, systems, charts, programs, procedures, correspondence or
records, or any other documents used or owned by the Company, nor will the Employee advise, discuss
with or in any way assist any other person, firm or entity in obtaining or learning about any of
the items described in this Section 9. Accordingly, the Employee agrees that during the Term and
at all times thereafter he will not disclose, or permit or encourage anyone else to disclose, any
such information, nor will he utilize any such information, either alone or with others, outside
the scope of his duties and responsibilities with the Company.
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10. Non-Competition During Employment Term. The Employee agrees that, during the Term
and any extensions thereof, he will devote substantially all his business time and effort, and give
undivided loyalty, to the Company, and that he will not engage in any way whatsoever, directly or
indirectly, in any business that is competitive with the Company or its affiliates, nor solicit, or
in any other manner work for or assist any business which is competitive with the Company or its
affiliates. In addition, during the Term and any extensions thereof, the Employee will undertake
no planning for or organization of any business activity competitive with the work he performs as
an employee of the Company, and the Employee will not combine or conspire with any other employee
of the Company or any other person for the purpose of organizing any such competitive business
activity.
11. Non-Competition After Employment Term. The parties acknowledge that the Employee
will acquire substantial knowledge and information concerning the business of the Company and its
affiliates as a result of his employment. The parties further acknowledge that the scope of
business in which the Company is engaged as of the Effective Date is national and very competitive
and one in which few companies can successfully compete. Competition by the Employee in that
business after this Agreement is terminated would severely injure the Company. Accordingly, for a
period of two years after this Agreement is terminated or the Employee leaves the employment of the
Company for any reason whatsoever, except as otherwise stated hereinbelow, the Employee agrees (i)
not to become an employee, consultant, advisor, principal, partner or substantial shareholder of
any firm or business that in any way competes with the Company or its affiliates in any of their
presently-existing or then-existing products and markets; and (ii) not to solicit any person or
business that was at the time of such termination and remains an executive employee of the Company
or any of its affiliates. Notwithstanding any of the foregoing provisions to the contrary, the
Employee shall not be subject to the restrictions set forth in this Section 11 under the following
circumstances:
(a) If the Employee’s employment with the Company is terminated by the Company without cause;
or
(b) If the Employee’s employment with the Company is terminated as a result of the Company’s
unwillingness to extend the Term of this Agreement.
12. Return of Company Documents. Upon termination of this Agreement, Employee shall
return immediately to the Company all records and documents of or pertaining to the Company and
shall not make or retain any copy or extract of any such record or document.
13. Improvements and Inventions. Any and all improvements or inventions which the
Employee may conceive, make or participate in during the period of his employment shall be the sole
and exclusive property of the Company. The Employee will, whenever requested by the Company,
execute and deliver any and all documents which the Company shall deem appropriate in order to
apply for and obtain patents for improvements or inventions or in order to assign and convey to the
Company the sole and exclusive right, title and interest in and to such improvements, inventions,
patents or applications.
14. Actions. The parties agree and acknowledge that the rights conveyed by this
Agreement are of a unique and special nature and that the Company will not have an adequate remedy
at law in the event of a failure by the Employee to abide by its terms and conditions nor will
money damages adequately compensate for such injury. It is therefore agreed between the parties
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that, in the event of a breach by the Employee of any of his obligations contained in this
Agreement, the Company shall have the right, among other rights, to damages sustained thereby and
to obtain an injunction or decree of specific performance from any court of competent jurisdiction
to restrain or compel the Employee to perform as agreed herein. The Employee agrees that this
Section 14 shall survive the termination of his employment and he shall be bound by its terms at
all times subsequent to the termination of his employment for so long a period as Company continues
to conduct the same business or businesses as conducted during the Term or any extensions thereof.
Nothing herein contained shall in any way limit or exclude any other right granted by law or equity
to the Company.
15. Amendment; Integration. This Agreement contains, and its terms constitute, the
entire agreement of the parties, and it may be amended only by a written document signed by both
parties to this Agreement.
16. Governing Law. California law shall govern the construction and enforcement of
this Agreement and the parties agree that any litigation pertaining to this Agreement shall be
adjudicated in courts located in California.
17. Attorneys’ Fees. If any party finds it necessary to employ legal counsel or to
bring an action at law or other proceedings against the other party to enforce any of the terms
hereof, the party prevailing in any such action or other proceeding shall be paid by the other
party its reasonable attorneys’ fees as well as court costs, all as determined by the court and not
a jury.
18. Severability. If any section, subsection or provision hereof is found for any
reason whatsoever, to be invalid or inoperative, that section, subsection or provision shall be
deemed severable and shall not affect the force and validity of any other provision of this
Agreement. If any covenant herein is determined by a court to be overly broad thereby making the
covenant unenforceable, the parties agree and it is their desire that such court shall substitute a
reasonable judicially enforceable limitation in place of the offensive part of the covenant and
that as so modified the covenant shall be as fully enforceable as if set forth herein by the
parties themselves in the modified form. The covenants of the Employee in this Agreement shall
each be construed as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Employee against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants in this Agreement.
19. Notices. Any notice, request, or instruction to be given hereunder shall be in
writing and shall be deemed given when personally delivered or three days after being sent by
United States certified mail, postage prepaid, with return receipt requested, to the parties at
their respective addresses set for the below:
To the Company:
Xxxxxx’x Food Systems, Inc.
One XX Xxxx Xxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
Attention: General Counsel
One XX Xxxx Xxxxx
Xxxxx 0000
Xx. Xxxxx, XX 00000
Attention: General Counsel
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To the Employee:
Xxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
20. Waiver of Breach. The waiver by any party of any provisions of this Agreement
shall not operate or be construed as a waiver of any prior or subsequent breach by the other party.
IN WITNESS WHEREOF the parties have executed this Agreement to be effective as of the date
first set forth above.
| XXXXXX’X FOOD SYSTEMS, INC. |
||||
| By: | /s/ E. Xxxxxxx Xxxxxx | |||
| Its: | EVP | |||
| EMPLOYEE |
||||
| /s/ Xxxx X. Xxxxxx | ||||
| Xxxx X. Xxxxxx | ||||
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