EMPLOYMENT AGREEMENT EXHIBIT 10.3
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 3rd day of September, 2001, by and between Pierre Foods, Inc., a North
Carolina corporation (the "Company"), and Xxxxx X. Xxxxx, a resident of the
State of North Carolina ("Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that it
is the best interests of the Company to retain the services of Executive as Vice
Chairman of the Company; and
WHEREAS, the By-laws of the Company permit the Company to enter into
contracts for the employment of officers of the Company; and
WHEREAS, the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement, and the Executive wishes to
serve in the employ of the Company in the capacity and on the terms and
conditions hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I
EMPLOYMENT AND DUTIES
Section 1.1 Employment. The Company hereby employs Executive, and
Executive accepts employment with the Company as an employee of the Company,
upon the terms and subject to the conditions hereinafter set forth.
Section 1.2 Duties. Executive shall serve as Vice Chairman of the
Company and shall (a) help develop strategic plans for the growth of the
business of the Company, (b) serve on the Board of Directors and give input on
the total scope of the Company's operations, and (c) provide primary oversight
for acquisitions, financial matters, and banking relationships. Executive will
report directly to the Board of Directors of the Company (the "Board").
Executive agrees to devote his best efforts to the performance of his duties for
the Company, and shall perform such duties in a diligent, trustworthy, and
business-like manner, all for the purpose of advancing the business of the
Company. Executive acknowledges that the executive offices of the Company are
located in Hickory, North Carolina. The Executive's primary office shall be
located at the executive offices. Notwithstanding the foregoing, Executive
acknowledges that the nature of his duties shall require him to be away from his
primary office on occasion; provided, the Executive shall not be expected to be
away from his primary office more than two (2) days per week on the average.
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It is acknowledged by the Executive that the above duties and primary
responsibilities of the Executive and the performance thereof are integral to
the success of the Company. The Executive expressly agrees that he shall not
delegate the responsibility or performance of such duties or responsibilities
without the prior consent of the Board.
ARTICLE II
TERMS OF EMPLOYMENT
Section 2.1 Term. Except as otherwise provided in Section 2.2, the term
of this Agreement shall be for three (3) years (the "Initial Term"), beginning
on the date hereof, and shall be automatically renewed thereafter for successive
one (1) year terms (each a "Renewal Term") unless either party gives to the
other written notice of termination no fewer than ninety (90) days prior to the
expiration of the Initial Term, or any Renewal Term, that it does not wish to
extend this Agreement for a successive one-year term. The Initial Term and any
Renewal Term, if any, shall be referred to herein as "the term".
Section 2.2 Termination. This Agreement, and the employment of
Executive hereunder, shall terminate prior to the expiration of the term hereof
in the following manner:
a. Death or Disability. Immediately upon the death of Executive during
the term of his employment hereunder or, at the option of the Company, in the
event of Executive's disability, upon thirty (30) days' notice to Executive. The
Executive will be considered "disabled" if, as a result of incapacity due to
physical or mental illness injury, Executive shall be unable to perform the
material duties of his position on a full time basis for a period of two (2)
consecutive months or if the Executive shall become eligible to currently
receive disability payments under the disability policy referenced in Section
3.2 e hereunder.
b. For Cause. For "Cause" upon ten (10) days written notice by the
Company to the Executive after compliance in full by the Company with paragraph
3 of this subsection b below. For purposes of this Agreement:
1. A termination will be for "Cause" if: (i) Executive
willfully and continuously fails to perform his duties with the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), after a demand for substantial performance has been delivered to
Executive by the Board of Directors which specifically identifies the manner in
which the Board believes that Executive has not substantially performed his
duties, (ii) Executive willfully engages in gross misconduct materially and
demonstrably injurious to the Company or (iii) Executive is convicted of a
felony.
2. For purposes of this subsection b, no act, or failure to
act, on the
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Executive's part shall be considered "willful" unless unilaterally done by him
not in good faith and without reasonable belief that his action or omission was
not in the best interest of the Company.
3. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire authorized membership of the Board of
Directors (other than the Executive if and when he is also a director) at a
meeting of the Board called and held for the purpose (after reasonable notice
and an opportunity for the Executive, together with counsel, to be heard before
the Board), finding that in the good faith opinion of the Board the Executive
was guilty of conduct set forth above in clauses (i) or (ii) or (iii) of
paragraph 1 above and specifying the particulars thereof in detail.
c. Resignation for Good Reason. Immediately by the Executive upon
thirty (30) days written notice to the Company of the resignation of the
Executive for Good Reason (as defined below). For purposes of this Agreement,
the term "Good Reason" shall mean:
1. Without his express written consent, the assignment to the
Executive of any duties inconsistent with his positions, duties,
responsibilities and status with the Company as described in Section 1.2 hereof,
or a change in his reporting responsibilities, titles or offices, or any removal
of the Executive from or any failure to re-elect the Executive to any of such
positions, except in connection with the termination of his employment for Cause
or as a result of his death or disability or by the Executive other than for
Good Reason;
2. Any failure of the Company to obtain the assumption of, or
the agreement to perform, this Agreement by any successor as contemplated in
Section 5.1 hereof;
3. Any purported termination of the Executive's employment by
the Company which is not effected pursuant to the provisions of this Section
2.2; or
4. The relocation of the executive offices of the Company from
Hickory, North Carolina without the express written consent of the Executive.
Section 2.3 Occurrences Upon Termination. Upon termination of this
Agreement, Executive shall be entitled to the following:
a. Cessation of Salary and Benefits. The Company's obligation to
provide Executive all compensation and benefits as provided herein shall
discontinue at the termination date of this Agreement except as otherwise
required herein or by law.
b. Payment of Bonus. Executive, or his estate if deceased, shall be
entitled to any bonus payable for any bonus earned or declared to which
Executive was entitled but not yet paid.
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c. Surrender of Company Property. Promptly upon termination of
Executive's employment by the Company for any reason or no reason, Executive or
Executive's personal representative shall return to the Company (a) all
Confidential Information (hereinafter defined); (b) all other records, designs,
patents, business plans, financial statements, manuals, memoranda, lists,
correspondence, reports, records, charts, advertising materials, and other data
or property delivered to or compiled by Executive by or on behalf of the Company
that pertain to the business of the Company, whether in paper, electronic, or
other form; and (c) all keys, credit cards, vehicles, and other property of the
Company. Executive shall not retain or cause to be retained any copies of the
foregoing. Executive hereby agrees that all of the foregoing shall be and remain
the property of the Company and be subject at all times to its discretion and
control.
d. Benefits. With respect to incentive plans, pension, profit sharing,
and 401k retirement plans, deferred compensation arrangements or other plans or
programs in which the Executive is participating at the time of termination of
his employment, the Executive's rights and benefits under each such plan shall
be determined in accordance with the terms, conditions, and limitations of the
plan and any separate agreement executed by the Executive which may then be in
effect.
e. Termination Without Cause; Death/Disability; Resignation for Good
Reason. During the Initial Term, or any Renewal Term, of this Agreement, if the
Executive's employment is terminated by the Company without Cause or the
Executive voluntarily terminates his employment with the Company for Good
Reason, or Executive's employment is terminated by reason of death or
disability, then the Company shall immediately pay to the Executive or his
estate a lump sum severance payment equal to the total sum of the Executive's
then current base salary as provided in Section 3 as would be due in the
aggregate (absent the termination) for the remainder of the entire Initial Term,
or Renewal Term, as the case may be, of this Agreement, not to be less than
three (3) months of the Executive's then current base salary.
Provided, however, in the event the Executive's employment is
terminated during the Initial Term or any Renewal Term by reason of death or
disability, the Company shall be entitled to an offset against any lump sum
payment obligation due under this subsection e as a result of said death or
disability an amount equal to (i) any death proceeds payable to the Executive's
estate or his designated beneficiary arising from any Company group plan
insurance policy insuring the life of the Executive carried by the Company, or
(ii) in the event of termination by reason of disability during the Initial
Term, by the aggregate disability benefits which the Executive would be eligible
to receive during the remainder of the Initial Term under a disability insurance
policy on the Executive carried by the Company, or if during any Renewal Term,
by an amount equal to the first three months of disability payments to which the
Executive is eligible to receive under a disability policy on the Executive
carried by the Company.
In addition, the Company shall maintain in full force and effect for
the continued
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benefit of the Executive, for the remaining term of this Agreement, all employee
benefit plans and programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of termination, provided that his
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that the Executive's participation in any
such plan or program is barred, the Company shall arrange to provide the
Executive with benefits substantially similar to those to which he is entitled
to receive under such plans and programs. The Company represents that it will
cause to be set aside all necessary funds to satisfy its obligations hereunder.
Section 2.4 Resignation Without Good Reason. It is acknowledged that in
consideration of the benefits of this Agreement, the Company expects the
Executive to remain in the employment of the Company for a minimum of the
Initial Term of this Agreement in order to guide the Company through a
critically important period. In the event the Executive shall voluntarily resign
without Good Reason, other than by reason of disability, before the end of the
Initial Term, or if the Executive shall be terminated for "Cause" within the
Initial Term; then within ninety (90) days thereafter, the Executive shall remit
to the Company the sum of $175,000 plus 10% of all compensation paid under this
Agreement during the Initial Term.
Section 2.5 Change of Control. It is expressly acknowledged and agreed
that Executive and the Company are parties to separate agreement entitled
"Amended and Restated Change In Control Agreement" dated July 6, 1999 ("Change
of Control Agreement"), which said Agreement is independent and separate from
this Agreement and is not otherwise impaired, affected, or modified by this
Agreement. Said agreement shall remain in full force and effect in accordance
with its terms without regard to this Agreement.
ARTICLE III
COMPENSATION AND BENEFITS
Section 3.1 Compensation. As compensation for services rendered to the
Company hereunder during the term of this Agreement, the Company will compensate
Executive as follows:
a. Base Salary. Commencing on the date hereof, the Company shall pay
the Executive an annual base salary of One Million Eight Hundred and No/Dollars
($1,000,800.00), pro rated for periods of less than 12 months, or as increased
from time to time by the Board of Directors of the Company. Such base salary
shall be paid in bi-weekly installments in accordance with the payroll schedule
followed by the Company (less applicable withholding and other deductions). Base
salary shall be reviewed and adjusted by the Company at least annually.
Notwithstanding the foregoing sentence, Executive's base salary shall be
increased annually to at least equal the CPI increase for the prior twelve
months. The Company may not reduce the Executive's base salary at any time
during the term of this Agreement.
b. Bonus. In addition to any other compensation or consideration
payable to the
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Executive hereunder, the Executive shall be entitled to receive such bonuses as
may be approved by the Executive Compensation Committee and ratified by the
Board based on such meritorious performance or such other criteria measuring the
performance of the Executive as may be determined from time to time.
Section 3.2 Benefits. In addition to, and not in lieu of, base salary,
bonus or other compensation payable to the Executive, the Executive shall be
entitled to the following benefits:
a. Employee Benefits. The Executive shall be entitled to participate in
the employee benefit programs generally available to employees of the Company.
b. Vacations. Executive shall be entitled to compensated vacation each
year in accordance and consistent with Company policy. Upon termination of
employment, any unused vacation time shall expire without compensation.
c. Holidays. The Executive shall be entitled to such holidays as the
Company may approve for all employees of the Company.
d. Sick Leave. The Executive shall be entitled to paid sick leave each
year because of sickness or accident in accordance and consistent with Company
policy. Upon termination of employment, any unused sick leave shall expire
without compensation.
e. Supplemental Disability Insurance. In addition to any disability
insurance programs under which the Executive may be eligible to participate
under paragraph a above, the Company shall during the term carry and maintain
such supplemental disability insurance coverage for the benefit of the Executive
upon such terms and conditions as may be approved from time to time by the
Executive Compensation Committee and the Board of Directors.
f. Supplemental Life Insurance. In addition to any life insurance
programs under which the Executive may be eligible to participate under
paragraph a above, the Company shall during the term carry and maintain such
supplemental life insurance coverage for the benefit of the Executive upon such
terms and conditions as may be approved from time to time by the Executive
Compensation Committee and the Board of Directors. If requested, the Company
shall cooperate with Executive's personal insurance planning by establishing a
split dollar arrangement with the Executive or an assignee of the Executive
(including a trust) as owner under the collateral assignment method.
g. Reimbursement of Expenses. The Company shall reimburse the Executive
for all reasonable out-of-pocket expenses incurred by the Executive in the
course of his duties, in accordance with normal Company policies.
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h. Automobile Allowance. The Executive shall be provided by the Company
with an automobile for his use, and the associated expenses of maintenance,
repairs and fuel.
ARTICLE IV
CONFIDENTIAL INFORMATION/INVENTIONS
Section 4.1 Covenant Not To Disclose Confidential Information. During
Executive's position with the Company and during the term of this Agreement,
Executive has and will become acquainted with confidential and proprietary
information of the Company, in whatever form, whether oral, written, or
electronic including, but not limited to, manner of operation, manufacturing
processes and know-how, plant design, customer names and representatives,
customer files, customer lists, customer specifications and requirements,
product recipes, product pricing, special customer matters, sales methods and
techniques, merchandising concepts and plans, business plans, sources of supply
and vendors, terms and conditions of business relationships with vendors, agents
and brokers, promotional materials and information, financial matters, mergers,
acquisitions, personnel matters and confidential processes, designs, formulas,
ideas, plans, devices and materials and other similar matters that are kept
confidential (any and all such information being referred to herein as
"Confidential Information"). The parties agree that the use of Confidential
Information against the Company would seriously damage the business of the
Company. Accordingly, Executive agrees that he (individually or in concert with
others) during or after the term of this Agreement:
a. Shall not, directly or indirectly, use any Confidential Information
for any purpose other than to benefit the Company except with the prior, express
and written consent of the Company or as required by law;
b. Shall not, directly or indirectly, divulge, publish or otherwise
reveal or allow to be revealed any Confidential Information as to any individual
or entity except with the prior, express and written consent of the Company or
as required by law;
c. Shall refrain from any action or conduct that might reasonably or
foreseeably be expected to compromise the confidentiality or proprietary nature
of any Confidential Information; and
d. Shall have no rights to apply for, or to obtain any patent,
copyright or other form of intellectual property protection regarding, any
Confidential Information.
This restriction shall not apply to any Confidential Information that
(i) becomes known generally to the public through no fault of the Executive;
(ii) is required by applicable law, legal process, or any order or mandate of a
court or other governmental authority to be disclosed; or (iii) is reasonably
believed by Executive, based upon the advice of legal counsel, to be required to
be disclosed in defense of a lawsuit or other legal or administrative action
brought against Executive; provided, that in the case of clauses (ii) or (iii),
Executive shall give the Company reasonable advance written notice
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of the Confidential Information intended to be disclosed and the reasons and
circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information.
Section 4.2 Inventions. Executive shall disclose promptly to the
Company any and all significant conceptions and ideas for inventions,
improvements, and valuable discoveries, whether patentable or not, that are
conceived or made by Executive, solely or jointly with another, during the
period of employment or within one year thereafter, and that are directly
related to the business or activities of the Company and that Executive
conceives as a result of his employment by the Company, regardless of whether or
not such ideas, inventions, or improvements qualify as "works for hire".
Executive hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Executive
shall execute any and all applications, assignments, or other instruments that
the Company shall deem necessary to apply for and obtain patent registrations in
the United States or any foreign country or to otherwise protect the Company's
interest therein.
Section 4.3 Enforcement and Remedies.
a. Executive further covenants, agrees, and recognizes that because the
breach or threatened breach of the covenants, or any of them, contained in
Section 4.1 or 4.2 will result in immediate and irreparable injury to the
Company, the Company shall be entitled to a preliminary and permanent injunction
restraining Executive from any violation of Section 4.1 or 4.2 to the fullest
extent allowed by law, in addition to any other rights available at law, in
equity or otherwise.
b. Executive further covenants, agrees and recognizes that in the event
of a violation of any of the covenants and agreements contained in Sections 4.1
and 4.2 hereof, the Company, shall be entitled to an accounting of all profits,
compensation, commissions, renumerations or benefits which Executive directly or
indirectly has realized as a result of, growing out of or in connection with any
such violation and shall be entitled to receive all such other amounts to which
Executive would be entitled as damages under law or at equity.
Section 4.4 Acknowledgement of Adequate Consideration. The parties
stipulate and agree that the payment and other benefits owed to Executive by the
Company under this Agreement and the performance of the Company's obligations
hereunder constitute sufficient consideration to support enforcement of the
covenants of this Agreement.
Section 4.5 Acknowledgement of Reasonableness. Executive 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 the protection of the Company.
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ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be an event of "Good
Reason" as set forth hereinabove and Executive shall be deemed automatically
without any further action on his part to have given his notice to the Company
of his termination for Good Reason, except that for purposes of implementing the
provisions hereof, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
Provided, to the extent that the Change of Control Agreement, or any
agreement in substitution thereof, would be applicable to the aforesaid
transaction, then the Company may offset against any payment obligation due the
Executive under this Agreement as a result of his termination of employment any
payment made to the Executive pursuant to such Change of Control Agreement, or
any substitution thereof.
As used in this Agreement, "Company" shall mean the Company as herein
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 5.1 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
Section 5.2 Waiver of Breach or Violation. The waiver by either party
of a breach or violation of any provision of this Agreement shall not operate as
or be construed to be a waiver of any subsequent breach of any provision of this
Agreement.
Section 5.3 Notices. All notices required or permitted to be given
under this Agreement will be sufficient if furnished in writing, sent by
registered mail to the last known residence of the Executive.
Section 5.4 Indemnification. In the event Executive is made a party to
any threatened or pending action, suit, or proceeding, whether civil, criminal,
administrative or legislative (other than an action by the Company against
Executive, and excluding any action by Executive against the Company), by reason
of the fact that he is or was performing services under this Agreement or as an
officer or director of the Company, then, to the fullest extent permitted by
applicable law, the Company shall indemnify the Executive against all expenses
(including reasonable attorney's fees), judgments, fines, and amounts paid in
settlement, as actually and reasonably incurred by Executive in connection
therewith. Such indemnification shall continue as to Executive even if he has
ceased to be an employee, officer, or director of the Company and shall inure to
the
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benefit of his heirs and estate. The Company shall advance to Executive all
reasonable costs and expenses directly related to the defense of such actions,
suit, or proceeding within 20 days after written request therefore by Executive
to the Company. In the event that both Executive and the Company are made party
to the same third-party action, complaint, suit, or proceeding, the Company will
engage competent legal representation, and Executive agrees to use the same
representation; provided, that if counsel selected by the Company shall have a
conflict of interest that prevents counsel from representing Executive,
Executive may engage separate counsel and the Company shall pay all reasonable
attorney's fees of such separate counsel. The provisions of this Section are in
addition to, and not in derogation of, the indemnification provisions of the
Company's By-laws. The foregoing indemnification also shall be applicable to
Executive in his capacity as an officer, director, or representative of any
subsidiary of the Company or any entity controlled by or affiliated with the
Company.
Section 5.5 Confidentiality; Covenant Not To Disparage. Each party
covenants and agrees with the other not to disclose the existence or terms of
this Agreement to any person at any time for any purpose, except that (a) either
party may make such disclosures confidentially to the party's lawyers and
accountants in connection with the rendition of their professional services or
as otherwise required by law and (b) the Company may make such disclosures as it
deems to be required by applicable securities laws. Each party covenants and
agrees with the other not to disparage the reputation of the other.
Section 5.6 Governing Law and Arbitration. This Agreement shall be
interpreted, construed, and governed according to the laws of the State of North
Carolina. Any disputes or claims, excepting matters warranting injunctive relief
under Article IV, arising under this Agreement shall be settled between the
parties by an arbitration proceeding to be conducted by an arbitration panel
mutually acceptable to Company and Executive in accordance with Article 45A of
the North Carolina General Statutes. Such proceeding will be conducted pursuant
to the rules of procedure of the American Arbitration Association then in effect
and the results of the arbitration shall be binding on the parties in complete
settlement of the disputes or claims at issue. The direct expense of any
arbitration proceeding shall be borne by the Company. Each party shall bear its
own counsel fees; provided, the panel as part of the award may in its discretion
award attorney fees to the prevailing party. The arbitration shall be held in
Hickory, North Carolina.
Section 5.7 Headings. The paragraph and section headings contained in
this agreement are for convenience only and shall in no manner be construed as a
part of this Agreement.
Section 5.8 Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision, and this Agreement
shall be construed as if such invalid, illegal, or unenforceable provision had
never been included in the Agreement.
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Section 5.9 Prior Agreements Superseded. This Agreement constitutes the
sole Agreement of the parties with respect to employment of the Executive and
supersedes any prior understandings or written or oral arrangements between the
parties respecting the subject hereunder, including that certain Employment
Contract between WSMP, Inc. and Xxxxx X. Xxxxx dated June 30, 1996 as amended
February 23, 1998.
Section 5.10 Assignment. The Executive may not assign his rights or
delegate his duties or obligations hereunder without the written consent of the
Company.
Section 5.11 Enforcement. In the event either party resorts to legal
action to enforce the terms and provisions of the Arbitration award, the
prevailing party shall be entitled to recover the costs of such action so
incurred, including, without limitation, reasonable attorney's fees.
Section 5.12 Gender and Number. Whenever the context hereof requires,
the gender of all words shall include the masculine, feminine, and neuter and
the number of all words shall include the singular and plural.
Section 5.13 Amendments and Agreement Execution. This Agreement may be
modified or amended only in writing, signed by the Executive and the Company.
Section 5.14 Counterparts. This Agreement (and any written amendment
thereto) may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
Section 5.15 Executive's Heirs. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Notwithstanding any other provision herein to the
contrary, if the Executive should die while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to his designee or, if there be no
such designee, to his estate.
[Signature Page Attached]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE: COMPANY:
Pierre Foods, Inc.
/ / Xxxxx X. Xxxxx / / / / Xxxxxx X. Xxxxxxx / /
------------------------- ----------------------------
Xxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
Senior Vice-President and CFO
Approved:
/ / Xxxxx X. Xxxxxx / /
---------------------------------
Xxxxx X. Xxxxxx, Chairman
Executive Compensation Committee
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