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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the _____ day of _____, 1997, by and between Xxxxx Foods Inc., a Delaware
corporation (the "Employer"), and XXXXXX X. XXXXXXX (the "Executive").
RECITALS
A. The Employer desires that the Executive continue to provide services
for the benefit of the Employer and its affiliates and the Executive desires to
so continue such employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive has and
will continue to be a key member of the senior management team of the Employer.
C. In the course of employment with the Employer, the Executive will have
access to certain confidential information that relates to or will relate to the
business of the Employer and its affiliates.
D. The Employer desires that any such information not be disclosed to
other parties or otherwise used for unauthorized purposes.
NOW, THEREFORE, in consideration of the above premises and the following
mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall continue to employ the Executive as
Senior Vice President, Chief Financial Officer and Treasurer of Xxxxx Foods Inc.
and will cause its subsidiary, Xxxxx Meat Inc., to appoint Executive as Chief
Financial Officer of such subsidiary, and the Executive hereby accepts such
employment on the following terms and conditions.
2. Duties. The Executive shall work for the Employer in a full-time
capacity. The Executive shall, during the term of this Agreement, have the
duties, responsibilities, powers and authority customarily associated with the
positions identified in Paragraph 1. The Executive shall report to, and follow
the direction of the Chief Executive Officer. In addition to, or in lieu of, the
foregoing, the Executive shall also perform such other and unrelated services
and duties as may be assigned to him from time to time by the Chief Executive
Officer. The Executive shall diligently, competently, and faithfully perform all
duties, and shall devote his entire business time, energy, attention, and skill
to the performance of duties for the Employer and will use his best efforts to
promote the interests of the Employer.
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3. Executive Loyalty. The Executive shall devote all of his time,
attention, knowledge, and skill solely and exclusively to the business and
interests of the Employer, and the Employer shall be entitled to all benefits
and profits arising from or incident to any and all work, services, and advice
of the Executive. The Executive expressly agrees that during the term of this
Agreement, he shall not engage, directly or indirectly, as a partner, officer,
director, stockholder, advisor, agent, employee, or in any other form or
capacity, in any other business similar to that of the Employer or its
affiliates. The foregoing notwithstanding, nothing herein contained shall be
deemed to prevent the Executive from investing his money in the capital stock
or other securities of any corporation whose stock or securities are
publicly-owned or are regularly traded on any public exchange, nor shall
anything herein contained be deemed to prevent the Executive from investing his
money in real estate.
4. Term of Employment. This Agreement shall be entered into for a
period of three (3) years, commencing ______________, 1997 and continuing
through _______________ ,2000 (the "Initial Term"). Beginning in _____ 1998, the
term of employment shall be renewed daily for a period of two (2) years (a
"Renewal Term") so that the renewal term will always be two years, unless the
Executive provides the Chief Executive Officer with written notice to the
contrary at least ninety (90) days prior to the termination of this Agreement.
5. Compensation.
A. Salary. The Employer shall pay the Executive an annual salary
of $140,000 (the "Initial Salary"), payable in substantially equal installments
in accordance with the Employer's payroll policy from time to time in effect.
The Executive's salary shall be subject to any payroll or other deductions as
may be required to be made pursuant to law, government order, or by agreement
with, or consent of, the Executive. Increases to the Initial Salary, as
adjusted, shall be made following an annual salary review, the first of which
shall take place in or around __________, 1998, and all subsequent reviews
shall occur in or around ___________ of each year thereafter. The Initial
Salary shall be increased, effective __________, 1998, and the Initial Salary,
as previously adjusted, shall be increased, effective on each anniversary of
such date occurring during any Renewal Term, by a percentage equal to the
percentage increase, if any, in the Consumer Price Index for all Urban
Consumers - new Series (1982-1984 = 100) for the Chicago Metropolitan Area, as
published by the U.S. Bureau of Labor Statistics, over the 12-month period
ended on the immediately preceding December 31st. The Executive's annual salary
may also be further increased, at the discretion of the Board of Directors,
following annual salary reviews which shall occur on or about ____________,
1998 and each anniversary of such date occurring during any Renewal Term.
B. Bonuses. The Employer shall pay the Executive a quarterly
performance bonus equal to 2% of Employer's quarterly profit before taxes,
payable _________ days after the end of each quarter. The Executive's bonus
shall be subject to any payroll or other deductions as may be required to be
made pursuant to law, government order, or
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by agreement with, or the consent of, the Executive. The Executive may receive
additional bonuses as awarded in the discretion of the Board of Directors of
the Employer.
C. Right to Receive Equity. Upon the completion of the
contemplated restructuring, the Employer shall grant 172,000 fully-vested
shares of stock to the Executive. The Employer shall provide a loan as
described in Paragraph 7 to the Executive to assist with the tax consequences
of the grant of such stock. The Executive shall be eligible to receive stock
option grants consistent with those grants made to other executives in 1998 and
subsequent years. Any options granted will fully vest upon a change in control
of the Employer.
D. Other Benefits. During the term of this Agreement, the
Employer shall provide the Executive with all perquisites and fringe benefits
on terms no less favorable than those provided to the Executive prior to the
date hereof. If the perquisites and fringe benefits are more favorable than
those heretofore provided, then the perquisites and fringe benefits must be no
less favorable than those provided to other employees of Employer. These
perquisites and fringe benefits ("Benefits") include, but are not limited to:
(1) any life insurance, disability insurance,
medical, dental or health care insurance, pension and retirement plans and other
benefit plans or programs (including, if applicable, any excess benefit or
supplemental executive retirement plans) maintained by the Employer for the
benefit of its executives;
(2) no less than four (4) weeks paid vacation per
annum;
(3) an automobile allowance of $500 per month.
6. Expenses. The Employer shall reimburse the Executive for all
reasonable and approved expenses, provided the Executive submits paid receipts
or other documentation acceptable to the Employer and as required by the
Internal Revenue Service to qualify as ordinary and necessary business expenses
under the Internal Revenue Code of 1986, as amended (the "Code").
7. Loans. At the time of the grant of 172,000 shares of stock
described in Paragraph 5, the Employer shall loan to the Executive $_______ for
three years with interest at the Applicable Federal Rate as provided by the
Internal Revenue Service under Paragraph 1274(d) of the Code in the most recent
announcement preceding such loan and the Executive shall deliver to the
Employer a note for such loan in the form of Exhibit A. Fifty percent (50%) of
the principal of and all accrued interest on such note shall be forgiven on the
first anniversary of such loan and twenty-five percent (25%) of the principal
of and all accrued interest on such note shall be forgiven on the second and
third anniversaries of such loan, provided that the Executive shall not be
entitled to loan forgiveness on any anniversary date if he has terminated his
employment under Paragraph 8D on or prior to such anniversary date.
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8. TERMINATION. The Executive's services shall terminate upon the first to
occur of the following events:
A. Upon the Executive's date of death or the date of the Executive is given
written notice that he has been determined to be "disabled" by the Employer. For
purposes of this Agreement, the Executive shall be deemed to be "disabled" if
the Executive, as a result of illness or incapacity, shall be unable to perform
substantially his required duties for a period of six (6) consecutive months or
for any aggregate period of six (6) months in any twelve (12) month period.
B. On the date the Employer provides the Executive with written notice that
he is being terminated for "cause". For purposes of this Agreement, the
Executive shall be deemed terminated for "cause" if the Employer terminates the
Executive after the Executive:
(1) shall be convicted of any felony including, but not limited to, a
felony involving fraud, theft, misappropriation, dishonesty, or embezzlement of
the Employer's property; or
(2) shall have committed intentional acts that materially impair the
goodwill or business of the Employer; or
(3) shall have refused to, or willfully failed to, perform his material
duties hereunder.
C. On the date the Executive terminates his employment for "Good Reason".
For purposes of this Agreement, the Executive shall be deemed to terminate his
employment relationship for "Good Reason" if the Executive terminates his
employment after the Employer:
(1) fails to pay or provide the Executive's required compensation;
or
(2) fails to maintain the Executive's title, positions and/or duties.
D. On the date the Executive terminates his employment for any reason other
than for "Good Reason", provided that the Executive shall give the Employer
ninety (90) days written notice prior to such date of his intention to terminate
this Agreement.
E. On the date the Employer terminates the Executive's employment during
the term hereof for any reason other than for "cause".
9. BENEFITS UPON TERMINATION. If the Executive's services are terminated
pursuant to Xxxxxxxxxx 0X, 0X or 8E or if the Executive resigns within the
one-year period
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beginning upon a change of control of the Employer, the Executive shall be
entitled to receive (a) a lump sum payment of two times the sum of the
Executive's annual salary and most recent 12 months' bonus payments; (b) all
quarterly performance bonuses due through the end of the fiscal year of
termination; (c) any Benefits accrued to the date of termination but previously
unpaid; (d) the continuation of Benefits for the Executive and his dependents
for two years after the date of termination, except that medical insurance
coverage will be secondary upon the earlier of (i) the date on which the
Executive begins to be covered by comparable medical insurance provided by a
new employer or (ii) the earliest date on which the Executive becomes eligible
for Medicare or a comparable governmental insurance program; (e) full vesting
of options with all options remaining exercisable through the end of their
original terms; and (f) forgiveness of any remaining balance on the loan
described in Paragraph 7. In any event, the Executive shall also be entitled to
any benefits mandated under the Consolidated Omnibus Budget Reconciliation Act
of 1985 or required under the terms of any death, insurance, or retirement
plan, program, or agreement provided by the Employer and to which the Executive
is a party, or in which the Executive is a participant, including, but not
limited to, any short-term or long-term disability plan or program, if
applicable.
10. No Duty to Mitigate. After a termination of employment, the
Executive will not be obligated to mitigate damages by seeking other comparable
employment.
11. Gross-Up Payment for Golden Parachute Taxes. If it is determined
that any payment by the Employer to or for the benefit of Executive, under this
Employment Agreement or otherwise, would be subject to the federal excise taxes
imposed under Section 280G and 4999 of the Code (the "Initial Excise Tax"), the
Employer will make an additional payment to the Executive (the "Gross-Up
Payment") in an amount such that after payment by Executive of all taxes,
including, without limitation, any income taxes and the excise tax, imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Initial Excise Tax. For purposes of this Paragraph 12, all
references to "taxes" shall include any interest or penalties imposed with
respect to such taxes.
12. Protective Covenants. The Executive acknowledges and agrees that
the services to be rendered by him to the Employer are of extraordinary merit
and constitute a necessary and valuable contribution to the general growth and
development of the Employer that results from the Executive's unique personal
talent and expertise. In return for the consideration described in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as a condition precedent to
the Employer entering into this Agreement, and as an inducement to the Employer
to do so, the Executive hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement as his
free and voluntary act, after having determined that the provisions contained
herein are of a material benefit to him, and that the duties and obligations
imposed on him hereunder are
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fair and reasonable and will not prevent him from earning a livelihood
following the termination of his employment with the Employer;
B. The Executive has read and fully understands the terms and
conditions set forth herein, has had time to reflect on and consider the
benefits and consequences of entering into this Agreement, acknowledges that
any reference in this Paragraph 12 to the Employer applies also to any
affiliates of the Employer, and has had the opportunity to review the terms
hereof with an attorney or other representative, if he so chooses.
C. The execution and delivery of this Agreement by the Executive does
not conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Executive is a
party or by which the Executive may be bound;
D. The Executive agrees that, during the time of his employment and
for a period of one (1) year after the termination of the Executive's
employment hereunder for any reason whatsoever or for no reason, whether
voluntary or involuntary, the Executive will not, except on behalf of Employer:
(1) directly or indirectly contact, solicit or direct any
person, firm, or corporation to contact or solicit any of the Employer's
customers, prospective customers, or business brokers (as hereinafter
defined) for the purpose of selling or attempting to sell any products
and/or services that are the same as or similar to the products and
services provided by the Employer to its customers during the term
hereof. In addition, the Executive will not disclose the identity of any
such business brokers, customers, or prospective customers, or any part
thereof, to any person, firm, corporation, association, or other entity,
for any reason or purpose whatsoever; and
(2) directly or indirectly, whether as an investor, lender,
owner, stockholder, officer, director, consultant, employee, agent,
salesperson or in any other capacity, whether part-time or full-time,
engage in any business involved in meat processing, or in the marketing
or servicing of products thereof. The Executive agrees that the scope
described above is necessary and reasonable in order to protect the
Employer in the conduct of its business; and
(3) solicit or accept if offered to him, with or without
solicitation on his own behalf or on behalf of any other person, the
services of any person who is an employee of the Employer, nor solicit
any of the Employer's employees to terminate employment with the
Employer.
E. The Executive agrees that both during his employment and
thereafter, the Executive will not, for any reason whatsoever, whether
voluntary or involuntary, use for
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himself or disclose to any person not employed by the Employer any
"Confidential Information" of the Employer acquired by the Executive during his
relationship with the Employer, both prior to and during the term of this
Agreement. The Executive further agrees to use Confidential Information solely
for the purpose of performing duties with the Employer and further agrees not to
use Confidential Information for his own private use or commercial purposes or
in any way detrimental to the Employer. "Confidential Information" includes
but is not limited to: (a) any financial, business, planning, operations,
services, potential services, products, potential products, technical
information and/or know-how, formulas, production, purchasing, marketing,
sales, personnel, customer, broker, supplier, or other information of the
Employer; (b) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices, customer
lists, or documents of the Employer in confidence or subject to other use or
disclosure restrictions or Limitations; and (c) any other information, written,
oral, or electronic, whether existing now or at some time in the future,
whether pertaining to current or future developments, and whether previously
accessed during the Executive's tenure with the Employer or to be accessed
during his future employment with the Employer, which pertains to the
Employer's affairs or interests or with whom or how the Employer does business.
The Employer acknowledges and agrees that Confidential Information does not
include information properly in the public domain, or information in the
Executive's possession prior to the date of his original employment with the
Employer.
F. During and after the term of employment hereunder, the Executive
will not remove from the Employer's premises any documents, records, files,
notebooks, correspondence, computer printouts, computer programs, computer
software, price lists, microfilm, or other similar documents containing
Confidential Information including copies thereof, whether prepared by him or
others, except as his duty shall require, and in such cases, will promptly
return such items to the Employer. Upon termination of his employment with the
Employer, such items including summaries or copies thereof, then in the
Executive's possession, shall be returned to the Employer immediately;
G. For purposes of this Paragraph 12, "customer" shall be defined as
any person, firm, or any entity that purchased any type of product and/or
service from the Employer or is or was doing business with the Employer or the
Executive within the thirty-six (36) month period immediately preceding
termination of the Executive's employment. For purposes of this Paragraph 12,
"prospective customer" shall be defined as any person, firm, or entity
contacted or solicited by the Employer or the Executive (whether directly or
indirectly) or who contacted the Employer or the Executive (whether directly or
indirectly) within the twelve (12) month period immediately preceding
termination of the Executive's employment for the purpose of having such
persons, firms, or entities become a customer of the Employer. For purposes of
this Paragraph 12, "business broker" shall be defined as any person, firm or
entity who is or was doing business with the Employer or the Executive or who
was contacted or solicited by the Employer or the Executive (whether directly
or indirectly) or who contacted or solicited the Employer or the
Executive (whether directly
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or indirectly) within the thirty-six (36) month period immediately preceding
termination of the Executive's employment; and
H. It is agreed that any breach or anticipated or
threatened breach of any of the Executive's covenants contained in this
Paragraph 12 will result in irreparable harm and continuing damages to the
Employer and its business and that the Employer's remedy at law for any such
breach or anticipated or threatened breach will be inadequate and, accordingly,
in addition to any and all other remedies that may be available to the Employer
at law or in equity in such event, any court of competent jurisdiction may
issue a decree of specified performance or issue a temporary and permanent
injunction, without posting bond or furnishing other security and without
proving special damages or irreparable injury, enjoining and restricting the
breach, or threatened breach, of any such covenant, including, but not limited
to, any injunction restraining the breaching party from disclosing, in whole or
part, any Confidential Information. The Executive will pay all of the
Employer's costs and expenses, including reasonable attorneys' and accountants'
fees, incurred in enforcing such covenants.
13. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a)
personally delivered, or sent by first class, registered, or certified mail,
postage prepaid, return receipt requested or by recognized overnight courier,
(b) send by telefacsimile, provided a hard copy is mailed on that date to the
party for whom such notices are intended; or (c) sent by other means at least
as fast and reliable as first class mail. A written notice shall be deemed to
have been given to the recipient party on the earliest of (a) the date it shall
be delivered to the address required by this Agreement; (b) the date delivery
shall have been refused at the address required by this Agreement; (c) with
respect to notices sent by mail or overnight courier, the date as of which the
postal service or overnight courier, as the case may be, shall have indicated
such notice to be undeliverable at the address required by this Agreement; or
(d) with respect to a telefacsimile, the date on which the telefacsimile is
sent and receipt of which is confirmed. Any and all notices referred to in
this Agreement, or which either party desires to give to the other, shall be
addressed to his residence in the case of the Executive, or to its principal
office in the case of the Employer.
14. Waiver of Breach. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
15. Assignment. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement. The rights and obligations of the Employer under this
Agreement inure to the benefit of and shall be binding upon the successors and
assigns of the Employer. Any successor to all or
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substantially all of the business and/or assets of the Employer must expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform if no such succession had
taken place.
16. Entire Agreement. This Agreement sets forth the entire and final
agreement and understanding of the parties and contains all of the agreements
made between the parties with respect to the subject matter hereof. This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto, with respect to the subject matter hereof. No
change or modification of this Agreement shall be valid unless in writing and
signed by the Employer and the Executive. If any provision of this Agreement
shall be found invalid or unenforceable for any reason, in whole or in part,
then such provision shall be deemed modified, restricted or reformulated to the
extent and in the manner necessary to render the same valid and enforceable, or
shall be deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law, as if such provision had been originally incorporated herein as so
modified, restricted, or reformulated or as if such provision had not been
originally incorporated herein, as the case may be. The parties further agree
to seek a lawful substitute for any provision found to be unlawful.
17. Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered a construction of the provisions hereof.
18. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
19. Recitals. The recital to this Agreement are an integral part hereof
and shall be considered as substantive and not precatory language.
20. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or breach thereof, other than any controversy or claim arising
under Paragraph 9, shall be settled by arbitration in accordance with the
Voluntary Labor Arbitration Rules of the American Arbitration Association, and
judgement upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof in the State of Illinois. In reaching his or her
decision, the arbitrator shall have no authority (a) to interpret or enforce
Paragraph 9 of the Agreement (for his Paragraph 18 shall provide the exclusive
venue), (b) to change or modify any provision of this Agreement, or (c) to base
any part of his or her decision on the common law principle of constructive
termination. The prevailing party shall be entitled to an award of reasonable
attorneys' fees, and the parties may petition the arbitrator for pre- and
post-judgement interest to be included in the award.
21. Governing Law. This Agreement shall be governed by the laws of the
State of Illinois, without reference to its conflict of law provisions, and any
court action commenced herein shall be as its venue the County of Xxxx,
Illinois.
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IN WITNESS WHEREOF, the parties have set their signatures on the date first
written above.
XXXXX FOODS INC.
By: By:
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Xxxxxx X. Xxxxxxx Authorized Officer
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