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EXHIBIT 10.41
INCENTIVE AGREEMENT
This INCENTIVE AGREEMENT is among Fresh Foods, Inc., a North Carolina
corporation (the "Company"), Pierre Foods, LLC, a North Carolina limited
liability company and wholly-owned subsidiary of the Company ("Pierre"), and
Xxxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company is evaluating the potential sale or other
disposition (whether by merger or consolidation or transfer of assets or equity
interests issued by the Company or by one or more subsidiaries of the Company)
of all or substantially all of the food processing operations presently
conducted by Pierre;
WHEREAS, the aforementioned disposition (the "Disposition") is a
complex and demanding undertaking, which will challenge fully the energy,
resourcefulness and commitment of the Company's executives in a critical period
of the Company's corporate life; and
WHEREAS, the Company wants to incentivize the Executive by promising to
compensate the Executive for the extraordinary efforts that will be required to
assist others in the execution of this extraordinary corporate transaction for
the benefit of the Company's shareholders;
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. SALARY. The Company hereby confirms the annual salary of the
Executive in the amount specified as such on SCHEDULE A to this Agreement. The
amount of such salary shall not be increased throughout the term of this
Agreement otherwise than pursuant to an amendment of this Agreement executed on
behalf of the Company by each of its Chief Executive Officer and its President.
2. PAY-TO-STAY BONUS; NO GUARANTEED EMPLOYMENT. The Executive covenants
and agrees with the Company to use the best efforts of the Executive, during the
term of this Agreement, to consummate any Disposition recommended or approved by
the Company. The Executive further covenants and agrees with the Company not to
resign his position with the Company, during the term of this Agreement, without
the consent of the Company until the consummation of a Disposition. In
consideration of these covenants and agreements of the Executive, the Company
promises to pay to the Executive the amount specified as the "Pay-to-Stay Bonus"
on SCHEDULE A to this Agreement in the event that, during the term of this
Agreement, (i) a definitive agreement contemplating a Disposition (a "Definitive
Agreement") is executed and delivered or (ii) for any reason the Executive's
employment by the Company is terminated. Notwithstanding any provision of this
Agreement (or any other agreement), the Executive is and shall remain an
employee at will of the Company whose employment by the Company may be
terminated by the Company at any time, with or without cause.
3. DISPOSITION BONUS. The Company will pay the Executive, by bank check
or other good funds, as a transaction success bonus, an amount specified as the
"Disposition Bonus" on
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SCHEDULE A to this Agreement in the event that, during the term of this
Agreement, (i) a Disposition is consummated or (ii) for any reason the
Executive's employment by the Company is terminated.
4. OPERATING BONUSES. Regardless of the occurrence or nonoccurrence of
a Disposition, for each complete or partial fiscal quarter during the term of
this Agreement the Executive shall be eligible for operating bonuses as and to
the extent provided for in this Section. The Company will pay the Executive an
amount equal to 6.25% of the Executive's annual salary for each fiscal quarter
in which Pierre achieves operating income in an amount not less than the amount
budgeted by the Board of Directors of the Company for Pierre. The parties
acknowledge that the amounts of operating income so budgeted for Pierre through
the end of the current fiscal year are as follows: first fiscal quarter,
$4,803,259; second fiscal quarter, $4,976,411; third fiscal quarter, $6,915,232;
and fourth fiscal quarter, $5,908,162. If and to the extent that the operating
income for Pierre exceeds the budgeted amount, then, and in each such case, the
Company shall establish a bonus pool in an aggregate amount equal to 25% of the
excess. The Company will pay the Executive an amount equal to the percentage of
such bonus pool specified as the "Incremental Operating Bonus" on SCHEDULE A to
this Agreement. Each payment to be made to the Executive pursuant to this
Section shall be made not later than fourteen days after the date on which the
Company first publicly announces its results of operations for the relevant
fiscal quarter.
5. SEVERANCE. The Company will pay the Executive, by bank check or
other good funds, the amount specified as "Severance" on SCHEDULE A to this
Agreement in the event that, during the term of this Agreement, (i) a
Disposition is consummated or (ii) for any reason the Executive's employment by
the Company is terminated.
6. STOCK OPTIONS. The Executive presently holds stock options granted
by the Company with the characteristics described on SCHEDULE A to this
Agreement. This Agreement shall not be construed as having any effect on the
rights of the Executive under the stock option agreements and related stock
option plans that govern such stock options. The Board of Directors of the
Company and the Executive Compensation Committee of such Board have taken all
action necessary to accelerate the vesting of all such stock options upon the
consummation of a Pierre Disposition.
7. TERM. This Agreement shall terminate on June 8, 2003. Thereafter,
the term shall automatically continue from year to year unless the Executive or
the Company gives written notice of termination 120 days prior to the end of the
term or any renewal term.
8. COMPANY DETERMINATIONS FINAL. The "gross-up amounts" to be withheld
by the Company pursuant to Sections 2, 3 and 5 of this Agreement, and all
amounts to be paid and withheld pursuant to Section 4, shall be determined by
the Company. Every such determination by the Company shall be binding and
conclusive for all purposes in the absence of fraud.
9. 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 affect
the remaining portions of this Agreement, or any part thereof; and, in case of
any such illegality, unenforceability or invalidity, this Agreement shall be
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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.
10. 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.
11. EMPLOYMENT AGREEMENT AND CHANGE IN CONTROL AGREEMENT TERMINATED.
The parties agree that the Employment Contract between Pierre and the Executive
dated as of March 4, 1998, as amended by that certain Amendment to Employment
Contract dated as of March 24, 1999, is hereby terminated in its entirety
without liability on the part of any party as a consequence thereof. The parties
further agree that the Change in Control Agreement between the Company and the
Executive dated as of June 9, 1998 (together with any and all amendments to and
restatements of such agreement, the "Change in Control Agreement") is hereby
terminated in its entirety without liability on the part of any party as a
consequence thereof. Without limiting the generality of the foregoing, the
Company shall have no liability to the Executive, upon a Disposition or
otherwise, pursuant to the Change in Control Agreement.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding between such parties relating to the Executive's employment by the
Company, including all compensation payable to the Executive for such
employment, and supersedes all previous understandings or agreements (written
and oral). This Agreement may be amended only by an agreement in writing, signed
by each of the Chief Executive Officer and the President of the Company (for the
Company) and by the Executive.
13. 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.
14. NOTICES. Any notice that may be given hereunder shall be in writing
and shall be deemed to have been 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: if to the Company,
then to Fresh Foods, Inc., X.X. Xxx 0000, Xxxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxx; if to the Executive, then to the address specified on SCHEDULE A to this
Agreement; or, in any case, to such other address as the party to whom or to
which such notice is to be given shall have specified by notice given to the
other parties.
15. SUCCESSORS, HEIRS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their successors, heirs and
assigns.
16. 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 August 18, 1999.
FRESH FOODS, INC.
By: /s/ XXXXX X. XXXXXXXXXX, XX.
------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx., Chief Executive Officer
By: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx, President
PIERRE FOODS, LLC
By: FRESH FOODS, INC.,
Its Sole Member and Manager
By: /s/ XXXXX X. XXXXX
------------------------------
Xxxxx X. Xxxxx, President
THE EXECUTIVE:
/s/ XXXXXXX X. XXXXXXXX
--------------------------------(SEAL)
Xxxxxxx X. Xxxxxxxx
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SCHEDULE A
ANNUAL SALARY: $250,000
PAY-TO-STAY BONUS:
Amount before income tax gross-up: $432,256
Gross-up amount (to be withheld
by the Company): $367,744
Total payment after gross-up: $800,000
DISPOSITION BONUS:
Amount before income tax gross-up: $405,240
Gross-up amount (to be withheld
by the Company): $344,760
Total payment after gross-up: $750,000
INCREMENTAL OPERATING BONUS: 24.53%
SEVERANCE:
Amount before income tax gross-up: $287,504
Gross-up amount (to be withheld
by the Company): $244,595
Total payment after gross-up: $532,099
STOCK OPTIONS:
NO. EXERCISE PRICE ORIGINAL GRANT DATE EXPIRATION DATE
------ -------------- ------------------- ---------------
200,000 $10.50 6-6-1998 6-6-2008
EXECUTIVE'S ADDRESS FOR NOTICES:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxx Xxxx
Xxxx Xxxxxxx, XX 00000
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FIRST AMENDMENT TO INCENTIVE AGREEMENT
This FIRST AMENDMENT TO INCENTIVE AGREEMENT (the "First Amendment")
between Fresh Foods, Inc., a North Carolina corporation (the "Company"), Pierre
Foods, LLC, a North Carolina limited liability company and wholly-owned
subsidiary of the Company ("Pierre"), and Xxxxxxx X. Xxxxxxxx (the "Executive")
is dated as of January 1, 2000.
WHEREAS, the Company, Pierre and the Executive entered into a certain
Incentive Agreement dated as of August 18, 1999 (the "Incentive Agreement"); and
WHEREAS, the Company, Pierre and the Executive desire to amend the
Incentive Agreement to modify the Executive's salary payable thereunder; and
WHEREAS, the Company, Pierre and the Executive desire to amend the
Incentive Agreement to modify the operating bonuses payable thereunder;
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. The Incentive Agreement is hereby amended by deleting "$250,000"
specified as Annual Salary on Schedule A to the Incentive Agreement and
substituting "$300,000" in lieu thereof.
2. The Incentive Agreement is hereby amended by deleting Paragraph 4,
entitled "Operating Bonuses," and replacing it with the following:
4. Operating Bonuses. The Executive shall be entitled
to a periodic bonus to be determined in accordance with the
Company's executive bonus plan as adopted and amended from
time to time by the Executive Compensation Committee and the
Board of Directors of the Company.
3. This First Amendment 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.
4. This First Amendment may be executed in counterparts, each of which
shall constitute an original and all of which, taken together, shall constitute
one and the same instrument.
5. Except as amended hereby, the Incentive Agreement shall remain in
full force and effect.
6. This First Amendment shall inure to the benefit of and be binding
upon the parties hereto, their successors, heirs and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
FRESH FOODS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.,
Chief Executive Officer
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, President
PIERRE FOODS, LLC
By: FRESH FOODS, INC.,
Its Sole Member and Manager
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx, President
THE EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx (SEAL)
----------------------------------
Xxxxxxx X. Xxxxxxxx
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