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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 29th day
of January, 1998 between WSMP, Inc., a North Carolina corporation ("Employer"),
and X. Xxxx Xxxxxx, a North Carolina resident ("Employee");
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee and Employee desires to be
so employed upon the terms and conditions provided herein; and
WHEREAS, as a condition precedent to Employer's obligation to
consummate the transactions (the "Closing") contemplated by that certain
Agreement and Plan of Merger dated as of November 14, 1997 (the "Merger
Agreement") among Employer, Sagebrush, Inc. ("Sagebrush"), WSMP Acquisition,
Inc., Xxxxxxx X. Xxxxxx, Xx. and Employee, Employee is required to execute and
deliver this Agreement; and
WHEREAS, Employer anticipates restructuring its restaurant operations
into a single wholly-owned subsidiary ("Restaurant Sub");
NOW, THEREFORE, in consideration of the covenants contained herein,
together with other valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Employment. Employer agrees to employ Employee and Employee hereby
accepts such employment upon the terms and conditions set forth in this
Agreement. Employee shall report to the Chief Operating Officer of Employer (or,
if none exists, then the Chief Executive Officer of Employer) and shall perform
such duties as the Chief Operating Officer or the Chief Executive Officer, as
the case may be (the "Superior Officer") may reasonably require. Employee shall
become the President of Restaurant Sub upon the organization thereof and shall
remain in such office unless and until his employment is terminated hereunder.
Employee shall not be required to locate outside of the Claremont - Statesville
area.
2. Term. This Agreement shall terminate two years from the date of the
Closing, unless it is terminated earlier in accordance with other provisions
hereof.
3. Compensation. While employed by Employer under this Agreement:
(a) Employee shall be entitled to receive an annual base salary of
$200,000, payable in equal bi-monthly installments. Any
increases in Employee's base salary shall be in the discretion
of the Superior Officer, subject to ratification by the
Compensation Committee of the Board of Directors of Employer
or, if no such Compensation Committee exists, then by the
entire Board of Directors of Employer (in either case, the
"Directors").
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(b) Employee shall be entitled to receive such bonuses and stock
option grants as the Superior Officer shall determine from
time to time in his discretion, subject to ratification by the
Directors.
4. Fringe Benefits. While employed by Employer under this Agreement:
(a) Employee shall be reimbursed for all reasonable and necessary
business expenses incurred by him on behalf of Employer,
provided that he shall submit substantiation of such expenses
in form acceptable to the Internal Revenue Service.
(b) Employee shall be entitled to four weeks of vacation per year.
(c) Employee shall be entitled to participate in all such health
or accident insurance plans, life insurance plans, major
medical plans and other similar plans and arrangements of
Employer as may from time to time be in effect for the benefit
of Employer's officers and employees generally. The parties
acknowledge that Employee presently has group life coverage at
the level of $450,000 face amount, and that Employer's present
plan does not provide for such level of coverage. The Employer
will use its reasonable efforts to obtain additional term
coverage on Employee, without replacing the Employer's
standard insurance plan, and subject to the Employee's
insurability. Employee shall be entitled to receive such other
and additional fringe benefits as may be agreed upon in
writing with Employer.
(d) Employee shall be entitled to the use of a vehicle of similar
make, model and year as is presently provided to Employee by
Sagebrush, Inc.
5. Termination.
(a) Employer may, by written notice to Employee, terminate this
Agreement at any time for Cause (as defined below), it being
understood that no termination of this Agreement shall affect
(1) Employee's obligations under Sections 7 and 8 of this
Agreement, which shall remain in full force and effect, or (2)
Employer's obligation under Section 3(a) to pay Employee his
annual base salary for the remainder of the two-year term of
this Agreement, except as provided in subsection (iii) hereof.
The term "Cause" shall mean:
(i) commission of a wrongful act by Employee that has had
or will have a material adverse effect on the
business, operations or financial condition of
Employer;
(ii) willful and material failure by Employee to perform
any one or more of the duties assigned to him in or
pursuant to this Agreement;
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(iii) engaging in any outside activity prohibited by
Section 6 hereof, or failing to comply with any
provision of Section 7 or 8 hereof, it being
understood and agreed by the parties that such
activities by the Employee terminate the Employer's
obligation to continue paying the Employee under
Section 3(a);
(iv) conviction of a criminal offense; or
(v) the taking of any act, or the omission to take any
act, the reasonably foreseeable result of which act
or omission is to adversely affect the operations,
goodwill, reputation or image of Employer.
(b) This Agreement shall terminate upon the death of Employee if
prior to the end of the term. Neither Employee nor his estate
shall be entitled to receive any severance pay in either such
event.
(c) If Employee shall become subject to any Disability (as defined
below), then Employer may terminate this Agreement by giving
Employee written notice of termination. After such
termination, Employee shall continue to receive his annual
base salary for the remainder of the two-year term of this
Agreement. During any period in which Employee is subject to
any Disability, any compensation and bonus payments due to
Employee under this Agreement shall be reduced by any payments
made to Employee during such period under the terms of any
disability insurance policy provided or paid for by Employer.
The term "Disability" shall have the same meaning herein as in
any disability insurance policy maintained by Employer on
Employee's behalf; in the event that no such policy is
maintained, it shall mean mental or physical impairment or
incapacity rendering Employee unable to perform his essential
duties under and pursuant to this Agreement with or without
reasonable accommodations for a period of 120 days or more out
of any 360-day period during the term of this Agreement, as
determined by a licensed physician experienced in the
particular area wherein the disability may be claimed and
selected by the Superior Officer of Employer in his discretion
and upon his initiative or upon the request of Employee or a
person acting on his behalf.
6. Outside Activities. During the term of this Agreement, Employee
shall serve Employer faithfully and to the best of his ability and shall devote
all of his working time and energies to the furtherance of Employer's business;
provided, however, that Employee may continue to operate and manage any
restaurant in which Employee, but not Sagebrush, owns an equity interest
disclosed on the form attached hereto as Exhibit 6; and provided further that
Employee, while employed hereunder, shall not engage in any activity detrimental
to Employer or which interferes with the performance of his duties hereunder.
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7. Covenant Not to Disclose Confidential Information. During the term
of this Agreement, Employee will be placed in a position by Employer to become
acquainted with confidential and privileged information of Employer and its
affiliates and successors, including, but not limited to, customer files,
customer lists, special customer matters, sales methods and techniques,
merchandising concepts and plans, business plans, sources of supply and vendors,
special business relationships with vendors, agents and brokers, promotional
materials and information, financial matters, mergers, acquisitions, selective
personnel matters and confidential processes, designs, formulas, ideas, plans,
devices or materials, and other similar matters which are confidential (any and
all such information being referred to herein as "Confidential Information").
The use of Confidential Information against Employer would seriously damage
Employer's business. Accordingly, Employee agrees that during the term of this
Agreement and at all times thereafter with respect to financial matters and
information, and during the Restrictive Period (as defined below) with respect
to all other Confidential Information:
(a) He shall not, directly or indirectly, use, divulge, publish or
otherwise reveal or allow to be revealed any aspect of the
Confidential Information to any Person (as defined below)
except by Employer's prior, express and written consent or as
required by law;
(b) He shall refrain from any action or conduct which might
reasonably or foreseeably be expected to compromise the
confidentiality or proprietary nature of the Confidential
Information; and
(c) He has no right to apply for or to obtain any patent,
copyright, or other form of intellectual property protection
with regard to the Confidential Information.
The term "Person" shall mean any person, firm, partnership, trust, corporation
or other association (whether governmental or private). The disclosure by
Employee of Confidential Information in the bona fide conduct of his duties
under Section 1 of this Agreement shall not constitute a breach of this
Agreement. In further consideration of the salary paid to him by Employer,
Employee agrees that he will promptly communicate, disclose and deliver to
Employer any and all inventions, discoveries, marketing concepts and ideas,
promotional ideas, trade names, trademarks and other improvements relating to
devices, methods, formulas, sales and distribution concepts or processes of any
nature whatsoever that are used in the business of Employer and created or
developed by Employee while in the employ of Employer. Employer shall have the
right, at its expense, to apply for U.S. and foreign patents and trademarks on
any inventions, discoveries, trade names, trademarks and other improvements in
the name of Employee. Employee, upon request, shall at once execute any and all
documents relating to the application for and assignment to Employer of all such
applications without further compensation for such assignment.
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8. Covenant Not to Compete.
(a) Covenant. Employee hereby stipulates, covenants and agrees
that, during the Restrictive Period (as defined below), he
shall not, directly or indirectly, other than on behalf of
Employer, without Employer's prior, express and written
consent:
(i) Engage in Competition (as defined below) with
Employer or any of its successors or assigns; or
(ii) Employ or solicit the employment of any individual
who is, or has been, at any time during the
Restrictive Period or during the twelve complete
calendar months immediately preceding the date of
this Agreement, an employee of Employer.
(b) Definitions. As used in this Section, the following terms
shall have the following meanings:
(i) "Business" shall mean the business conducted by
Employer at the date of this Agreement, including the
business of restaurant franchising, restaurant
operations and food processing; excluding, however,
the operation and management of any restaurant in
which Employee, but not Sagebrush, owns an equity
interest disclosed on the form attached hereto as
Exhibit 6.
(ii) "Competition" shall mean:
(1) Engaging in a business substantially similar
to the Business within the Territory;
(2) Assisting any Person (whether in a
financial, managerial, employment, advisory
or other material capacity) to engage in a
business substantially similar to the
Business within the Territory; provided,
however, that nothing herein shall preclude
Employee as a bona fide lessor from leasing
restaurant property to a tenant; or
(3) Owning any interest in or organizing a
corporation, partnership, or other business
or organization which engages in a business
substantially similar to the Business within
the Territory; provided, however, that
nothing herein shall preclude Employee from
holding not more than one percent of the
outstanding shares of common stock of any
company whose shares of common stock are
listed on a national securities exchange or
authorized for quotation by NASDAQ.
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(iii) "Restrictive Period" shall mean the period from the
date of this Agreement through the date that is
exactly two years after the date of termination of
this Agreement.
(iv) "Territory" shall mean: the 25-mile radius from (A)
any restaurant owned or franchised directly or
indirectly by the Company, (B) any food processing
facility of the Company or (c) any other situs used
directly or indirectly by the Company, in any such
case at which Employee assisted in the operation of
the Business; and the 25-mile radius from (X) any
restaurant owned or franchised directly or indirectly
by Sagebrush or (Y) any other situs at which
Sagebrush conducted business directly or indirectly
from the date of organization of Sagebrush through
the date of termination of this Agreement.
(c) Reasonable Exception. Should Employee desire to invest or
operate a restaurant which would constitute engaging in
competition, Employee may request the Employer's consent to
such investment or operation. If the proposed restaurant is of
a type similar to a Sagebrush, Prime Sirloin, Western Steer,
or Bennetts' restaurant concept, or any concept that the
Employer at the time is engaged in or has announced plans at
the time to engage in, the Employer may withhold its consent
for any reason. If the proposed restaurant is not of one of
the aforenamed concepts, then such consent shall not be
unreasonably withheld.
The parties agree that proximity to an existing
Employer restaurant constitutes a reasonable basis for
withholding consent.
9. Enforcement. In the event of any breach of the provisions of this
Agreement, Employer, its successors and assigns, in addition to any other
remedies that they may have in law or in equity, shall be entitled to any and
all of the following remedies:
(a) It is stipulated that a breach or anticipatory breach by
Employee of Section 6, 7 or 8 of this Agreement will cause
irreparable damage to Employer and that, accordingly, Employer
shall be entitled to an injunction restraining Employee from
attempting to violate, violating or continuing a violation of
Sections 6, 7 and 8 of this Agreement. The existence of any
claim or cause of action on the part of Employee against
Employer, its successors or assigns, whether arising from this
Agreement or otherwise, shall in no way constitute a defense
to the enforcement of these provisions.
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(b) The Restrictive Period shall be extended by any time period
during which Employee is in violation of any of the provisions
of this Agreement.
10. Acknowledgement of Adequate Consideration. The parties stipulate
and agree that the employment of Employee by Employer under this Agreement and
the performance of Employer's obligations hereunder constitute sufficient
consideration to support enforcement of the covenants of this Agreement.
11. Acknowledgement of Reasonableness. Employee has carefully read and
considered the provisions of this Agreement in consultation with attorneys of
his choice and agrees that the restrictions set forth herein are fair and
reasonably required for Employer's protection. In the event that any provision
relating to the Restrictive Period and/or the Territory shall be declared by a
court of competent jurisdiction to exceed the maximum time period or
geographical area such court deems reasonable and enforceable under applicable
law, the time period and/or area of restriction considered reasonable and
enforceable by the court shall thereafter be the applicable Restrictive Period
and/or Territory under this Agreement.
12. Surrender of Books and Records. Employee agrees that all files,
documents, records, customer lists, vendor and supplier records, books,
products, calculations, drawings, descriptions, designs and other materials
which come into Employee's use or possession during the term of this Agreement
and that are in any way related to Employer's business shall at all times remain
the property of Employer and that, upon the termination of this Agreement for
any reason, Employee shall immediately surrender to Employer all such materials.
13. Attorneys' Fees. Should it become necessary for Employer to
institute legal proceedings as a result of the breach of any terms or covenants
contained in this Agreement, Employer shall, if it is the prevailing party in
such litigation, be entitled to have and recover from the non-prevailing party
reasonable attorneys' fees plus court costs in addition to any and all relief
otherwise available to the prevailing party, either at law or in equity. Should
it become necessary for Employee to institute legal proceedings as a result of
the breach of any terms or covenants contained in this Agreement, Employee
shall, if he is the prevailing party in such litigation, be entitled to have and
recover from the non-prevailing party reasonable attorneys' fees plus court
costs in addition to any and all relief otherwise available to the prevailing
party, either at law or in equity.
14. Severability. The illegality, unenforceability or invalidity of any
one or more covenants, phrases, clauses, sentences or paragraphs of this
Agreement, as determined by a court of competent jurisdiction, shall not effect
the remaining portions of this Agreement, or any part thereof; and, in case of
any such illegality, unenforceability or invalidity, this Agreement shall be
construed as if such covenants, phrases, clauses, sentences or paragraphs, to
the extent and only to the extent determined to be illegal, unenforceable or
invalid, had not been inserted.
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15. Waiver of Breach. The waiver by either party of any breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of any provision of this Agreement.
16. Entire Agreement. This Agreement sets forth the entire
understanding between the parties relating to the subject matter hereof and
supersedes all previous and contemporaneous understandings or agreements,
written and oral. This Agreement may be modified only by an agreement in
writing, signed by all parties, purporting to modify it.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without regard to the
principles of conflict of laws thereof.
18. Notices. Any notice that may be given hereunder shall be in writing
and shall be deemed to have given on the earlier to occur of (a) actual receipt
or (b) the second business day after the same shall have been mailed by
certified mail, postage prepaid, return receipt requested, to the parties at the
addresses listed below:
If to Employer: WSMP, Inc.
0 XXXX Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
If to Employee: X. Xxxx Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
19. Successors, Heirs and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors, heirs and
assigns.
20. Survival. The provisions of Sections 6, 7, 8, 9, 10 and 11 hereof
shall survive the termination of this Agreement for any reason and shall remain
in full force and effect.
21. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which, taken together, shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMPLOYER:
WSMP, Inc.
By: /s/ XXXXX X. XXXXXXXXXX, XX.
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Name: Xxxxx X. Xxxxxxxxxx, Xx.
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Title: Chief Executive Officer
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EMPLOYEE:
X. Xxxx Xxxxxx
/s/ X. XXXX XXXXXX
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(SEAL)
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EXHIBIT 6
Untouchables Pizza
J & W Cafeteria
Flapjack's
Mel's Diner
Bethlehem Fish & Steak
Mom's
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