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EXHIBIT 10.21
STATE OF NORTH CAROLINA
EMPLOYMENT CONTRACT
COUNTY OF CATAWBA
THIS AGREEMENT, made and entered into this the 4th day of March, 1998,
by and between WSMP, INC., a corporation organized under the laws of the State
of North Carolina, and FRESH FOODS OF NORTH CAROLINA, LLC, a subsidiary of WSMP,
Inc., and a limited liability company organized under the laws of the State of
North Carolina, collectively hereinafter referred to as the "Employer"; and
XXXXXXX X. XXXXXXXX, a citizen and resident of the State of Ohio, hereinafter
referred to as the "Employee";
W I T N E S S E T H:
WHEREAS, the Employee is presently employed as the President of the
Pierre Specialty Foods Division of Tyson Foods, Inc. ("Pierre");
WHEREAS, the Employer is engaged in the food manufacturing
business from its headquarters in Claremont, North Carolina; and
WHEREAS, the Employer desires to purchase Pierre from Tyson Foods,
Inc., and as part of such purchase to employ the Employee to assist in the
operation of Pierre and the Employer's food manufacturing business; and
WHEREAS, the Employee, understanding and accepting the conditions of
employment set forth herein, desires to be employed by the Employer as
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of mutual
covenants herein contained, the parties hereto do covenant and agree together as
follows:
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1. EMPLOYMENT. Employer hereby employs the Employee, as of the Date of
Employment, as defined in Paragraph 2, in the position of President of Fresh
Foods of North Carolina, LLC. The Employee shall have the duties and
responsibilities commensurate with those associated, in the normal course of
business, with the office of President of a wholly owned subsidiary, in
corporations in which a separately organized holding company of all subsidiaries
is structured. The Employee's authority will include operational authority over
the two Pierre plants in Cincinnati, Ohio and Albert Lea, Minnesota, which the
Employer intends to purchase from Tyson, and the Employer's two plants in
Claremont, North Carolina. The Employee will devote the Employee's full time,
utmost knowledge and best skill to such employment. All services performed by
the Employee shall be subject to the review and study of the Employer. The
performance of services by the Employee on behalf of the Employer shall be
performed at such times and at such places as shall be determined by the
Employer and in accordance with such rules as the Employer may establish. Upon
such terms, the Employee hereby accepts such employment.
2. TERM AND TERMINATION. This employment shall be for a period of five
(5) years from the Date of Employment. Thereafter, this term shall automatically
continue from year to year unless the Employer or Employee gives written notice
of termination 120 days prior to the end of the term or any renewal term.
As used in this Agreement, the "Date of Employment" shall mean the date
upon which the Employee begins his employment on a full-time basis, which date
the parties acknowledge is not specifically known at the present, but in any
event shall be on or before March 31, 1998.
Other than at the end of any term or renewal term, the Employee's
employment may be terminated for commission by the
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Employee of any crimes of moral turpitude; or any crime punishable as a felony;
or addiction to drugs, or addiction to alcohol.
3. SALARY. The Employer shall pay to the Employee a salary during the
term of this agreement of $250,000 per annum payable in 26 equal bi-weekly
payments of $9,615.38 each, as may be increased from time to time by the
Employer.
4. ANNUAL BONUS. The Employee shall be entitled to a bonus to be
determined as of the end of the Company's fiscal year ending February 26, 1999.
Upon execution of this Agreement, and then annually prior to the beginning of
each fiscal year, the Employee shall be given targets for the coming year as
part of the Employer's budgeting procedure. These targets shall be placed in
writing, and shall be the Employee's goal for the coming fiscal year. At the end
of such fiscal year, the Employee shall be entitled to a bonus based upon his
achievement of these goal.
a. If the Employee achieves less than 50% of the goal, he shall
receive no bonus.
b. If the Employee achieves 50% or greater of the goal, but less
than 75% of the goal, he shall receive a bonus equal to 50% of
his base salary.
c. If the Employee achieves 75% or greater of the goal but less
than 100% of the goal, he shall receive a bonus equal to 75%
of his base salary.
d. If the Employee achieves 100% of the goal, he shall receive a
bonus equal to 100% of his base salary.
e. If the Employee achieves greater than 100% of the goal, he
shall receive a bonus equal to the percentage of the goal
achieved multiplied by the base salary. (For example, should
the Employee achieve 125% of the goal, the Employee would
receive a bonus equal to 125% of base salary, or $312,500).
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5. INCENTIVE STOCK OPTION PLAN. Subject to all of the terms and
conditions contained in the Employee's 1997 Incentive Stock Option Plan, the
Employer agrees to grant to the Employee the option to purchase the 100,000
shares of the Employer's Common Stock at the NASDAQ closing price of the Common
Stock as of February 20, 1998, which price was $16.00 per share. This option
shall vest as to twenty percent (20%) of such shares per year, beginning one
year from the Date of Employment; provided, however, that upon the Employee's
termination of employment with the Employer for any reason, this option shall
become fully vested.
6. SPECIAL STOCK OPTION PLAN. Subject to all of the terms and
conditions contained in the 1997 Special Stock Option Plan, the Employer agrees
to grant to the Employee the option to purchase 100,000 shares of the Employer's
Common Stock at the NASDAQ closing price of the Common Stock as of February 20,
1998, which price was $16.00 per share. The option to be granted, while fully
vested at the Date of Employment, shall not be exercisable for a period of three
(3) years from the Date of Employment.
7. DIRECTORSHIP. The Employer presently operates with a nine (9) person
Board of Directors, with three (3) directors elected each year to serve
staggered terms of three (3) years each. The parties acknowledge that all Board
seats are currently filled, but agree that the Employee shall be appointed to
fill the first available vacancy on the Board. As used herein, "vacancy" does
not include the ordinary and recurring standing for re-election by an incumbent
Board member, but does include the creation of an additional Board seat by
charter or bylaw amendment.
8. OFFICER AND DIRECTOR STATUS. Service as an Officer and Director of
the Employer shall be without additional compensation to the Employee by the
Employer.
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9. EMPLOYEE BENEFITS. The Employee shall be entitled to all benefits
from time to time granted to employees of the Employer, including but not
limited to, the Employer's Health Care Plan, group life insurance, the right to
participate in the Employer's 401-K Plan, and the right to participate in the
1994 Employee Stock Purchase Plan.
10. VACATIONS AND SICK DAYS. The Employee shall be entitled to four
weeks of paid vacation each calendar year during the term of this Agreement. In
addition, the Employee shall be entitled to any additional vacation, sick days
or other paid leave as the Employer shall from time to time grant to employees
generally through its employee handbook.
11. EXPENSES. The Employee shall be entitled to reimbursement for all
reasonable expenses necessarily incurred by him in the performance of his duties
upon presentation for a voucher indicating the amount and business purposes.
12. USE OF AUTOMOBILE. The Employee shall be provided by the Employer
with an automobile for Employee use, comparable to other vehicles assigned to
Senior Management, and the associated expenses of maintenance, repairs and fuel.
13. INDEMNITY. The Employer shall indemnify the Employee and hold him
harmless for all acts or decisions made by him in good faith while performing
services for the Employer. The Employer shall also use its best efforts to
obtain coverage for him under any insurance policy now in force or hereinafter
obtained during the term of this Agreement covering officers and directors of
the Employer against liability or lawsuit. The Employer shall pay all expenses
including attorneys' fees, actually and necessarily incurred by the Employee in
connection with the defense of such act, suit or proceeding and in connection
with any related appeal including the cost of court settlements.
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14. CONTINGENCY. This Employment Agreement is contingent upon the
Employer successfully acquiring Pierre or a majority of the assets and business
of Pierre, excluding the facilities located in Carryville, Tennessee and the
business related to the production of Chicken Items produced for Sam's, Subway,
and similar companies.
15. CHANGE IN CONTROL AGREEMENT. The Employer and Employee shall enter
into a Change in Control Agreement (the "Change in Control Agreement"). The
Change in Control Agreement shall provide that, if a change in control of the
Employer occurs, then the following benefits will be provided by the Employer:
(a) three times the amount of the annual base salary of the Employee; (b) three
times the amount of the largest annual cash bonus paid or payable to the
Employee; (c) the aggregate spread between the exercise prices of all
outstanding unexercised options of the Employer and the higher of the closing
price of the Employer's Common Stock or the highest price paid in connection
with a change in control of the Employer; and (d) a gross-up payment for all
liabilities resulting from payments under the Change in Control Agreement. A
change in control of the Employer shall have occurred if: (a) the individuals
who constituted the Employer's Board of Directors as of the date of the Change
in Control Agreement cease to constitute a majority of such Board; (b) any
"person" (as defined in the Change in Control Agreement) acquires 15% of the
Employer's Common Stock; (c) any of certain business combinations are
consummated, unless the beneficial owners of the Employer's Common Stock before
such combination own more than 50% of such stock after the business combination;
or (d) the Employer is liquidated or dissolved. Payments under the Change in
Control Agreement are payable upon a change in control of Employer, whether or
not the Employee is terminated. The term of the Change in Control Agreement is
ten (10) years unless it earlier expires upon the termination of the Employee's
employment.
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16. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be deemed to have
been given when mailed at any general or branch United States Post Office
enclosed in a certified post-paid envelope and addressed to the address of the
respective party stated below or to such changed address as the party may have
fixed by notice:
To the Employer: WSMP, Inc.
P. X. Xxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
To the Employee: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxx Xxxx
Xxxx Xxxxxxx, Xxxx 00000
Any notice of change of address shall only be effective, however, when
received.
17. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the Employer, its successors and assigns, including,
without limitation, any corporation which may acquire all or substantially all
of the Employer's assets and business or into which the Employer may be
consolidated or merged, and the Employee, his heirs, executors, administrators
and legal representatives. The Employee may assign his right to payment, but not
his obligation, under this Agreement.
18. APPLICABLE LAW. This Agreement shall be governed by the internal
laws of the State of North Carolina without giving effect to principles of
conflicts of law.
19. OTHER AGREEMENTS. This Agreement supersedes all prior
understandings and agreements between the parties. It may not be amended orally,
but only by a writing signed by the parties hereto.
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20. NON-WAIVER. No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.
21. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE EMPLOYER:
WSMP, INC.
By: /s/ XXXXX X. XXXXXXXXXX, XX.
------------------------------
(Vice Chairman & CEO)
ATTEST:
/s/ XXXXX X. XXXXXX
--------------------------------
Secretary
(Corporate Seal)
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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FRESH FOODS OF NORTH CAROLINA, LLC
By: /s/ XXXXX X. XXXXXXXXXX, XX.
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ATTEST:
/s/ XXXXX X. XXXXXX
--------------------------------
Secretary
(Corporate Seal)
THE EMPLOYEE:
/s/ XXXXXXX X. XXXXXXXX
---------------------------- (SEAL)
XXXXXXX X. XXXXXXXX
STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
I, Xxxx X. Xxxxxxxx, Notary Public for said County and State, certify
that Xxxxx X. Xxxxxx personally appeared before me this day and acknowledged
that he is Secretary of WSMP, Inc., a North Carolina corporation, and that by
authority duly given and as the act of the corporation, the foregoing instrument
was signed in its name by Xxxxx X. Xxxxxxxxxx, its Vice-Chairman & CEO, sealed
with its corporate seal and attested by him as its Secretary.
Witness my hand and seal, this the 3rd day of March, 1998.
/s/ XXXX X. XXXXXXXX
--------------------------------
NOTARY PUBLIC
My Commission Expires: 7-28-02
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STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
I, Xxxx X. Xxxxxxxx, Notary Public for said County and State, certify
that Xxxxx X. Xxxxxx personally appeared before me this day and acknowledged
that he is Secretary of FRESH FOODS OF NORTH CAROLINA, LLC, a North Carolina
limited liability company, and that by authority duly given and as the act of
the company, the foregoing instrument was signed in its name by Xxxxx X.
Xxxxxxxxxx, Xx., its (Vice) President, sealed with its corporate seal and
attested by him as it Secretary.
Witness my hand and seal, this the 3rd day of March, 1998.
/s/ XXXX X. XXXXXXXX
--------------------------------
NOTARY PUBLIC
My Commission Expires: 0-00-00
XXXXX XX XXXXX XXXXXXXX
XXXXXX XX XXXXXXX
I, Xxxx X. Xxxxxxxx, a Notary Public for said County and State, do
hereby certify that XXXXXXX X. XXXXXXXX personally appeared before me this day
and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal, this the 3rd day of March, l998.
/s/ XXXX X. XXXXXXXX
--------------------------------
NOTARY PUBLIC
My Commission Expires: 7-28-02
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NORTH CAROLINA AMENDMENT TO
CATAWBA COUNTY EMPLOYMENT CONTRACT
THIS AGREEMENT, made and entered into as of the 1st day of July, 1998, by
and between FRESH FOODS, INC., a corporation organized under the laws of the
State of North Carolina, hereinafter referred to as the "Employer"; and XXXXXXX
X. XXXXXXXX, a citizen and resident of the State of Ohio, hereinafter referred
to as the "Employee";
W I T N E S S E T H:
WHEREAS, the Employer and the Employee entered into an Employment Contract
dated as of March 4, 1998, whereby the Employee became President of Pierre
Foods, LLC, a subsidiary of the Employer (the "Employment Contract"); and
WHEREAS, the Employment Contract was subject to a contingency before going
into effect, which contingency has now passed, and the parties wish to
acknowledge this and acknowledge a clarification concerning the Employee's
incentive compensation; and
WHEREAS, the parties wish to memorialize these changes as an amendment to
the Employment Contract;
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
contained herein, the parties hereto are agreed as follows:
1. CONTINGENCY. The parties acknowledge that the contingency set forth
in Paragraph 14 of the Employment Agreement has been fulfilled, and Paragraph
14 is hereby deleted. As used in the Employment Contract, the "Date of
Employment" shall be June 9, 1998.
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2. ANNUAL BONUS. Paragraph 4, entitled "Annual Bonus", is hereby deleted
except for its title, and replaced with the following:
1. The Employee shall be entitled to a bonus to be determined as of the
end of the Company's fiscal year end (February 26, 1999), and at the end of each
fiscal year thereafter. Employee's Annual Bonus shall be earned and computed
in the following way:
a. Upon the Employee's assuming employment, and thereafter prior to
the beginning of each fiscal year, the Employer shall announce to the
public its projected pre-tax profit for the coming fiscal year. This
announced projection shall include a projected pre-tax profit for the
coming fiscal year. This announced projection shall include a projected
pre-tax profit for the Employee's Pierre Foods, LLC ("Pierre") division.
The pre-tax profit announced for the Pierre division shall be referred to a
the "Baseline Pre-tax Profit." "Pre-tax profit" as used herein shall mean
that term as customarily and ordinarily used in corporate accounting, to be
determined when the Employer's fiscal year-end financial statements have
been audited by the Employer's auditors and their opinion letter thereupon
issued.
b. The Employee's bonus structure shall be based upon Pierre's
success in achieving its Baseline Pre-tax Profit for that fiscal year, and
Pierre's success in achieving a higher pre-tax profit amount for the
Pierre division for the fiscal year. This higher pre-tax profit amount
for Pierre shall be referred to as the "Target Pre-tax Profit." The
Target Pre-tax Profit for any fiscal year is not announced to the public,
but shall be presented by the Employer to and ratified by the Board of
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Directors at the beginning of each fiscal year.
c. If the Pierre division fails to achieve the Baseline Pre-tax Profit
for a fiscal year, then the Employee shall receive no Annual Bonus.
d. If the Pierre division achieves the Baseline Pre-tax Profit for the
fiscal year, then the Employee shall receive an Annual Bonus equal to 50% of his
salary for that fiscal year.
e. If the Pierre division achieves a pre-tax profit for the fiscal year
greater than or equal to the amount determined by the following formula:
((Target + Baseline) a 2) + $1.00
but less than the Target Pre-tax Profit, then the Employee shall receive an
Annual Bonus equal to 75% of his salary for that fiscal year.
f. If the Pierre division achieves a pre-tax profit for the fiscal year
of 100% of the Target Pre-tax Profit, then the Employee shall receive a bonus
equal to 100% of his salary for that fiscal year.
g. If the Pierre division achieves a pre-tax profit for the fiscal year
of greater than 100% of the Target Pre-tax Profit, then the Employee shall
receive a bonus incrementally larger in the same percentage than his salary for
that fiscal year.
h. By way of example, in a fiscal year for which the Employee's Salary is
$250,000 per year, the Pierre division Baseline Pre-tax Profit is $1,000,000,
and the Pierre division Target Pre-tax Profit is $1,500,000, the Employee's
Annual Bonus would be as follows:
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Pre-tax Profit
Level Achieved Employee's Bonus
-------------- ----------------
$ 800,000 -0-
$1,000,000 $125,000
$1,200,000 $125,000
$1,400,000 $187,500
$1,500,000 $250,000
$1,600,000 $266,500
$1,800,000 $300,000
3. EFFECTIVE AS AMENDED. As amended hereby, the Employment Contract shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE EMPLOYER:
FRESH FOODS, INC.
By:
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President
ATTEST:
------------------------------
Secretary
(corporate seal)
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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THE EMPLOYEE:
(SEAL)
---------------------------
XXXXXXX X. XXXXXXXX
STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
I, ____________________, Notary Public for said County and State, certify
that __________________________ personally appeared before me this day and
acknowledged that he is _______ Secretary of WSMP, Inc., a North Carolina
corporation, and that by authority duly given and as the act of the
corporation, the foregoing instrument was signed in its name by ________, its
President, sealed with its corporate seal and attested by him as its _______
Secretary.
Witness my hand and seal, this the _____ day of _______, 1998.
NOTARY PUBLIC
My Commission Expires:
STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
I, ______________________________, a Notary Public for said County and
State, do hereby certify that XXXXXXX X. XXXXXXXX personally appeared before me
this day and acknowledged the due execution of the foregoing instrument.
Witness my hand and seal, this the _______ day of ______, 1998.
NOTARY PUBLIC
My commission expires:
____________.
