EXHIBIT 10.15
AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT (the "Amendment") is made and entered into as of the 11th
day of May, 2004 ("Execution Date"), by and between Pierre Foods, Inc., a North
Carolina corporation (the "Company"), and Xxxxxx X. Xxxxxx, a resident of the
State of Ohio ("Executive").
WITNESSETH:
WHEREAS, Executive serves the Company in the capacity of Senior Vice
President of Sales and Marketing of the Company pursuant to a certain Employment
Agreement dated December 31, 2001 (the "Original Agreement"); and
WHEREAS, the Company considers it essential to the best interest of its
sole shareholder, PF Management, Inc. ("PFMI") to xxxxxx the continued
employment of key management personnel in a period of uncertainty recognizing
that the possibility of a change in control exists and that such possibility,
and the uncertainty and questions which it necessarily raises among management,
may result in the departure or distraction of key management personnel to the
detriment of the Company and PFMI in this period when their undivided attention
and commitment to the best interests of the Company and PFMI are particularly
important; and
WHEREAS, the Company wishes to assure itself of the services of the
Executive without distraction from any circumstances arising from the
possibility of a change in control of the Company and to incentivize the
Executive to remain with the Company during any such process to assist in
obtaining an execution of any such corporate transaction (the "Transaction"),
and the Executive wishes to continue to serve in the employ of the Company in
the current capacity and upon the terms and conditions set forth in the Original
Agreement, as modified and amended hereby for the compensatory arrangement in
the event of a Transaction; and
WHEREAS, the parties desire to make and memorialize certain amendments to
the Original Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
1. Definitions. Except as otherwise defined in the Original Agreement,
all capitalized terms herein not otherwise defined shall have the same meaning
as in the Original Agreement. For purposes hereof:
(a) "Code" shall mean the United States Internal Revenue Code of 1986,
as amended.
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(b) "Change of Control Date" shall mean the date on which a Change of
Control shall be deemed to have occurred.
(c) "Shareholders Agent" shall mean Xxxxx X. Xxxxx, or such other person
appointed as the agent and representative of the shareholders of
PFMI with respect to the Transaction under a Shareholders Agent
Agreement.
(d) "Parachute Payment" shall mean any payment in the nature of
compensation payable to the Executive if such payment is contingent
on a change in the ownership or effective control of the Company or
PFMI.
(e) "Acquirer" means the person or entity acquiring the shares of PFMI
by reason of a Change of Control.
(f) "Shareholders Agent Agreement" shall mean an agreement binding on
the shareholders of PFMI and executives of the Company participating
in bonuses as a result of a Transaction, said agreement specifying
the rights and obligations of the parties.
2. Change of Control Amendment. Subject to the Effective Conditions (as
herein defined) and provided the Executive is in the employment of the Company
as of the Change of Control Date, the parties hereby agree to amend subsection
f. of Section 2.3 of the Original Agreement to read as follows:
f. Change of Control. If a Change of Control shall occur before the
termination of this Agreement, then the Company shall pay to Executive, in lump
sum by bank check or other good funds, simultaneously with the Change of Control
on the Change of Control Date, a bonus ("Bonus") equal to 3% of the net proceeds
realized by PFMI's shareholders and Executive and the other officers of the
Company receiving payments similar to the Bonus hereunder from the Transaction,
after all purchase price adjustments and reductions for the retirement of debt
and other obligations of the Company (excluding the Bonus hereunder and other
bonuses payable to other officers of the Company), and escrow and indemnity
deposits and other adjustments (including costs and fees) as may be necessary or
required as a condition of the closing of the Transaction, and as reduced by
$2,129,630 to be payable pursuant to a deferred compensation plan to be adopted
by the Company on or prior to the Change of Control Date.
It is expressly agreed and understood and the Executive hereby
acknowledges that the intent of the Bonus is to place the Executive in the same
economic position with respect to the Transaction, with the same risk of
indemnity and obligation for sharing transaction costs, as a hypothetical
shareholder owning 3% of the outstanding capital shares of PFMI; provided, it is
expressly understood that Executive will have no right to participate in or
receive any warrants issued to the shareholders in the Transaction. In
furtherance of this understanding, Executive as a condition of receiving said
Bonus shall agree, and upon instructions from the Shareholders Agent, shall
deliver his proportionate share of said Bonus for deposit in any escrow or other
indemnity account as may be
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required pursuant to any purchase agreement and other ancillary agreements
(including a Shareholders Agent Agreement) related to the Transaction. As a
further condition of the payment of the Bonus, Executive agrees to enter into,
execute and deliver such ancillary agreements along with shareholders of PFMI
and other key executives participating in any similar bonus on the same Change
of Control as may be required pursuant to the closing of the Transaction, or
otherwise agreed upon by such parties, as necessary to carry out the obligations
of the Executive for his several responsibilities (as among the PFMI
shareholders and participating key executives receiving distributions of the
aforesaid net purchase price proceeds), to indemnify and hold harmless the
Acquirer in the Transaction from working capital or other purchase price
adjustments, claims under indemnity obligations, tax sharing agreements or
otherwise, and all costs, fees, interest, and expenses associated therewith and
under the purchase agreement or any ancillary agreement or in the administration
thereof.
Executive as a further condition of payment of said Bonus does hereby
agree that duly appointed Shareholders Agent (representing the PFMI shareholders
and Executive and other key executives participating in the aforesaid net
proceeds) shall be duly authorized to direct the Company, Acquirer, any escrow
agent or any other party distributing or paying such Bonus or any other proceeds
from the Transaction, including from an escrow or indemnity account, for the
benefit of Executive to distribute all or part thereof to the Shareholders Agent
for deposit and distribution under the terms of a Shareholders Agent Agreement,
or require the Executive to likewise contribute all or part thereof to the
Shareholders Agent, subject to the Shareholders Agent's obligation to make
payments thereof to the Executive, and further subject to Shareholders Agent's
reasonable discretion to establish a reserve for future indemnity, costs,
expenses or claims arising from or related to the Transaction as the Agent deems
necessary.
The Bonus herein shall be subject to normal and appropriate employment
tax, withholding, and other similar deductions.
3. Effective Conditions. The effectiveness of the amendment in Section
2 herein and the payment of the Bonus contemplated thereunder is subject to the
satisfaction of all of the following conditions (the "Effective Conditions"):
(a) On or before the Effective Date, the delivery by the Executive of a
waiver (in the form attached as Exhibit A) of all Parachute Payments
due to or receivable by the Executive under any other plan,
arrangement or agreement between the Executive and the Company,
other than as provided under the Original Agreement, as hereby
amended.
(b) Approval (in accordance with Section 280G(b)(5)(B) of the Code ) by
the shareholders of the Company and PFMI of the amendment in Section
2 hereof and the payment of the Bonus thereunder (said approval date
being the "Effective Date") before the closing of the Transaction.
(c) The Change of Control occurs within six months of the Effective
Date.
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4. Effectiveness. The amendment in Section 2 shall not become operative
until the satisfaction of conditions (a) and (b) of Section 3 hereinabove.
Further provided that notwithstanding the operative effect of the amendment in
Section 2, if a Change of Control does not occur within six months of the
Effective Date, the amendment in Section 2 shall thereafter become null and
void, and the Original Agreement, only as amended hereunder in Section 5, shall
be binding on the parties as originally written.
5. Other Amendment.
(a) Section 3.1(a) of the Original Agreement is amended by deleting
therefrom the following sentence:
"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 Executive hereby waives any and all rights to any CPI increases
referenced above not otherwise awarded or implemented prior to the
date hereof.
(b) The second sentence of Section 5.3 is amended to read as
follows:
"Such indemnification shall continue as to Executive for a period of
two (2) years after he has ceased to be an employee, officer, or
director of the Company and shall inure to the benefit of his heirs
and estate".
6. No Change. Except as amended by this Amendment, the Original
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE: COMPANY:
Pierre Foods, Inc.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
----------------------------- -----------------------------
Xxxxxx X. Xxxxxx Xxxxx X. Xxxxx, Vice Chairman
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EXHIBIT A
WAIVER
OF
PAYMENT
MAY 11, 2004
A. Pierre Foods, Inc. (the "Company") and Xxxxxx X. Xxxxxx, an
executive of the Company (the "Executive") entered into an employment agreement,
dated December 31, 2001 (the "Original Agreement").
B. Pursuant to the Original Agreement, the Company committed to pay
Executive certain payments under Section 2.3 f. upon a Change of Control (as
defined in the Original Agreement).
C. The shareholders of PF Management, Inc. ("PFMI") are in negotiations
with an undisclosed buyer ("Buyer") pursuant to which the shareholders of PFMI
may sell all of the capital shares of PFMI to said Buyer.
D. The Company and Executive desire to amend Section 2.3 f. of the
Original Agreement (the "Amendment") to provide for the payment of a different
amount in the event of a Change of Control (the "New Bonus").
The undersigned Executive, recognizing that PFMI, the Company and Buyer
will rely on this Waiver, agrees as follows:
The Executive understands that it is the intent of the Board of Directors
of the Company to submit the proposed Amendment to the Original Agreement
providing for the New Bonus to a vote of PFMI and its shareholders for approval
of said Amendment and the payment of said New Bonus in accordance with the
shareholder approval procedures in Section 280G(b)(5)(B) of the Internal Revenue
Code of 1986, as amended, ("Code") and the regulations thereunder. In
consideration thereof, the Executive does hereby waive all rights to any other
payments in the nature of compensation payable to the Executive under any other
plan, arrangement or agreement if such payment is contingent on a Change of
Control. The Executive understands that there are no guarantees or commitments
that the shareholders will actually approve such Amendment and New Bonus.
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All other provisions of the Original Agreement shall remain in full force
and effect, except as modified or amended by the Amendment or affected by this
Waiver.
This Waiver shall be construed in accordance with the laws of the State of
North Carolina, excluding conflicts of laws and principles, with the
understanding that it is intended to exempt the payment of the New Bonus from
the application of excise taxes under Section 4999 of the Code.
The undersigned Executive has executed this Waiver as of May 11, 2004.
Acknowledged, Accepted and Received
this 11th day of May, 2004 ________________________________
Xxxxxx X. Xxxxxx
Pierre Foods, Inc.
By: _____________________________
Xxxxx X. Xxxxx, Vice Chairman
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