Employment Agreement - Poore Brothers Inc. and John M. Silvestri
EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered into effective
as of the 31st day of August 2000 ("Effective Dates"), by and between POORE
BROTHERS, INC. ("Company"), a Delaware corporation, and JOHN M. SILVESTRI
("Employee"), a married man.
In consideration of the mutual promises and covenants contained herein, and
other good and valuable consideration, the receipt of which is acknowledged,
Company and Employee agree as provided in this Agreement.
1. EMPLOYMENT. Company hereby employs Employee, and Employee accepts
employment by Company, upon the terms and conditions contained in this
Agreement.
2. TERM. Employee's employment by Company shall commence on August 31,
2000, and shall continue until either Company or Employee gives to the other
party written notice of termination. Employee shall be an employee at will and
if Employee's employment is terminated, Employee's status as officer of Company
shall also be terminated. Either Company or Employee may terminate Employee's
employment by Company with or without cause upon written notice of termination
to the other party.
3. TITLE. During the period of Employee's employment by Company, Employee
shall be the Senior Vice President of Sales & Marketing of Company and shall
have all rights, powers and authority inherent in such position, including,
without limitation, the authority to direct the day-to-day sales operations of
Company, as may be designated by the Company's Board of Directors from time to
time.
4. COMPENSATION. During the period of Employee's employment by Company,
Employee shall receive from Company an annual salary of $157,200, which shall be
payable proportionately on Company's regular payroll payment dates for its
employees. Employee's annual salary shall be subject to change at the discretion
of Company's Compensation Committee of the Board of Directors.
5. BONUSES. During and for the period of Employee's employment by Company,
Employee shall receive such bonuses, whether incentive, merit or otherwise and
whether cash, stock or otherwise, as Company's Compensation Committee shall
determine from time to time.
6. FRINGE BENEFITS. During the period of Employee's employment by Company,
Employee shall be entitled to participate in all of Company's qualified
retirement plans and welfare benefit plans (e.g., group health insurance) on the
same basis as Company's other employees. In addition, during the period of
Employee's employment by Company, Employee shall be entitled to participate in
all non-qualified deferred compensation and similar compensation, bonus and
stock plans offered, sponsored or established by Company on substantially the
same basis as any other employee of Company.
Employee shall be entitled to four (4) weeks vacation (prorated for partial
calendar years) during each year of his employment with Company.
7. TELEPHONE, CREDIT CARD AND ALLOWANCES. During the period of Employee's
employment by Company, Company shall furnish to Employee the following:
(a) Company shall furnish to Employee a mobile or cellular telephone
for Employee's use and shall pay all charges in connection therewith (except
Employee shall reimburse Company for the charges each month that are in excess
of $200 of charges in such month which are not accounted for by Employee as
charges for the purposes of Company). The telephone to be furnished to Employee
shall be agreed upon by Company and Employee from time to time.
(b) Company shall furnish to Employee a Company credit card for
Employee to use solely for purposes of Company.
(c) Company shall pay Employee an automobile allowance of $650 per
month. In no event shall Company be responsible for any automobile related
expenses, including but not limited to gasoline, insurance (however Employee
shall maintain insurance coverage reasonably satisfactory to Company), oil,
tires, warranty and routine service and other maintenance and repairs for the
1
<PAGE>
automobile. Employee acknowledges that he may recognize taxable income in
connection with Company's providing an auto allowance.
(d) Company shall also pay to Employee a $105,900.00 non-accountable
expense allowance, before taxes, to defray Employee's reasonable costs of moving
and relocation. This allowance shall be paid within three (3) business days of
the Effective Date if Employee commences employment with Company in Goodyear,
Arizona on or before said date; provided, that if this Agreement is terminated
by Employee prior to Employee's completion of twelve (12) months of employment
or Employee's immediate family fails to move permanently to Arizona within 90
days of the Effective Date, Employee shall repay to Company within three (3)
months the $105,900.00 allowance paid by Company. Employee acknowledges that he
may recognize taxable income in connection with Company's providing a
non-accountable expense allowance.
8. OPTIONS.
Company hereby grants to Employee the right and option to purchase 100,000
shares of Company's $0.01 par value voting common stock ("Common Stock"), in
accordance with Company's 1995 Stock Option Plan ("ISO Plan"), at a price per
share equal to the average closing price ("last sale") per share of Company's
Common Stock for the five (5) consecutive day trading period ending on the
Effective Date. These options will vest in equal 33,333 (33,334 shares in the
final year) share increments on the first, second and third anniversaries of the
Effective Date. Employee acknowledges receipt of a copy of the ISO Plan and
agrees to the terms set forth therein. Employee further recognizes that the ISO
Plan is subject to change from time to time by the Board of Directors of
Company. All of the terms and conditions of the options described herein shall
otherwise be governed by the terms of the ISO Plan including, without
limitation, exercise dates and times, payment of option prices, revisions of the
options, expiration and the like, all of the terms and conditions of which ISO
Plan are incorporated by reference into this portion of this Agreement as if
fully rewritten herein.
Company hereby grants to Employee the right and option to purchase 100,000
shares of Company's Common Stock, in accordance with Company's Non-statutory
Stock Options ("NSO Plan"), at a price per share equal to the average closing
price ("last sale") per share of Company's Common Stock for the five (5)
consecutive day trading period ending on the Effective Date. These options will
vest in equal 33,333 (33,334 shares in the final year) share increments on the
first, second and third anniversaries of the Effective Date. Employee
acknowledges receipt of a copy of the NSO Plan and agrees to the terms set forth
therein. Employee further recognizes that the NSO Plan is subject to change from
time to time by the Board of Directors of Company. All of the terms and
conditions of the options described herein shall otherwise be governed by the
terms of the NSO Plan including, without limitation, exercise dates and times,
payment of option prices, revisions of the options, expiration and the like, all
of the terms and conditions of which NSO Plan are incorporated by reference into
this portion of this Agreement as if fully rewritten herein.
Nothwithstanding the foregoing, any unvested portion of the options granted
to Employee hereunder shall become exercisable upon a "change in control" (as
defined below) of Company. As used in this paragraph, the term "change of
control" shall mean the change of hands, within any consecutive one (1) month
period, of more than thirty (30) percent of the voting stock of Company, with
the concomitant result that the new owner or owners of such stock exercise their
voting rights to "control" the identities of the members of the Company's Board
of Directors, as the term "control" is defined, or to which reference is made,
in the regulations promulgated under the Securities Exchange Act of 1934, as
amended.
9. CONFIDENTIALITY.
(a) During the period of Employee's employment by Company and for a
one year period thereafter, Employee shall hold in confidence and shall not
disclose or publish, except in the performance of his duties under this
Agreement, any Confidential Information (as defined below) that is presented or
disclosed to him in connection with his employment by Company.
(b) Subject to the provisions of Section 9(c) below, for purposes of
this Agreement the term "Confidential Information" shall mean information or
material that is proprietary to and owned by Company. Such Confidential
Information shall include, without limitation, Company's recipes for specialty
potato chips, manufacturing processes, customer lists, supplier lists and
pricing information.
(c) Notwithstanding the foregoing, the term Confidential Information
shall not include any information or material that:
(i) is in, or has passed into, the public domain;
2
<PAGE>
(ii) is lawfully received by Employee from a third party;
(iii) is required to be disclosed by Employee by law or pursuant
to an order determination issued by a court or any federal, state or
municipal regulatory or administrative agency; or
(iv) was in the possession of, or known by, Employee prior to his
Employment by Company.
(d) Employee acknowledges that the Confidential Information of Company
is unique in character and that Company would not have an adequate remedy at law
for a material breach or threatened material breach by Employee of his covenants
under this Section 9. Employee therefore agrees that, in the event of any such
material breach or threat thereof, Company may obtain a temporary and/or
permanent injunction or restraining order to enjoin Employee from such material
breach or threat thereof, in addition to any other rights or remedies available
to Company at law or in equity.
(e) Notwithstanding the foregoing, Employee may disclose Confidential
Information to his attorneys and other advisors on a need to know basis provided
the recipient is directed and required to maintain the disclosed Confidential
Information in confidence.
10. NONCOMPETE. During the period of Employee's employment by Company,
Employee shall not, directly or indirectly, whether as principal, consultant,
employee, agent, officer, director, trustee or otherwise, engage in the business
of manufacturing specialty potato chips, salted snack foods or popcorn or engage
in the business of selling or distributing specialty potato chips, salted snack
foods or popcorn. In addition, Employee shall not, for a period of one year
beginning on the date of termination of his employment, directly or indirectly,
whether as principal, consultant, employee, agent, officer, director, trustee or
otherwise, engage in the United States in the business of manufacturing
specialty potato chips, salted snack foods or popcorn or engage in the United
States in the business of selling or distributing specialty potato chips, salted
snack foods or popcorn. Employee acknowledges that the foregoing limitations are
minimum limitations which are necessary to protect the legitimate interests of
Company because of Employee's sensitive executive position with Company.
Therefore, if a breach of the foregoing shall occur, in addition to any action
for damages which Company may have, Company shall have the right to obtain an
injunction as a matter of right prohibiting Employee's competition in violation
of the foregoing. In the event that the time period of non-competition is deemed
to be unreasonable, Employee acknowledges that 11 months shall be deemed
reasonable. In the event 11 months is deemed unreasonable, then 10 months is
deemed reasonable, and so on, until the foregoing covenant is enforceable to the
fullest extent permitted by law. Similarly, in the event the entire United
States is deemed unreasonable, states shall be eliminated one by one beginning
with Maine, continuing down the east coast of the United States and in roughly
in north to south linear fashion across the United States until the geographical
limit set forth above is deemed reasonable to the fullest extent permitted by
law.
11. SEVERANCE. Although Employee is an employee at will, and Employee's
status as employee and officer of Company may be terminated at any time for any
reason or for no reason at all, Company agrees that, if Employee is terminated
by Company (as opposed to Employee resigning) without "cause" (to which
reference is made below), Employee shall be entitled to receive four months'
salary ("Severance Compensation"), which Severance Compensation shall be paid as
regular compensation would be paid over said four-month period after Employee's
employment is terminated. Employee shall further be entitled to retain all
vested options and Employer shall pay reasonable (in Employer's reasonable
determination) out-placement fees not to exceed $5,000.00 regarding Employee's
future employment during the four-month period following the termination.
Employee's right to receive such Severance Compensation shall be conditioned
upon Employee executing such documents (including reasonable mutual releases
which also must be executed by Employee's spouse, if any) in such forms as may
be prescribed by Company from time to time.
Employee acknowledges if Employee's employment is terminated by Company for
"cause," Employee shall be due no Severance Compensation or out-placement
assistance and may further be liable to Company for damages caused by the
existence of such cause, to the extent permitted by law and this Agreement. When
used herein, the term "cause" shall mean and refer to any of the following:
(i) Employee's continued insubordination or failure to follow Company
directives after notice from Company or its Board;
(ii) Employee conducting himself in a manner which is not reasonably
calculated to be in the best interests of Company or which brings
disrepute or disdain upon Company and/or its reputation and/or
products, after Employee has received notice from Company or the
Board of such conduct and has continued to persist in such
conduct;
3
<PAGE>
(iii) Any acts of gross negligence, willful malfeasance, theft, fraud
or dishonesty of Employee or the bankruptcy or insolvency of
Employee;
(iv) The death or disability of Employee, Employee acknowledging that
such events are covered by Company's general benefit package; or
(v) Employee's breach of any other term of this Agreement, which
breach persists after ten (10) days written notice to Employee of
such breach.
12. INDEMNIFICATION.
(a) Company shall indemnify and hold Employee harmless and defend
Employee for, from and against all claims, liabilities, obligations, fines,
penalties and other matters and all costs and expenses relating thereto that
Company and/or such subsidiary or affiliated entity is permitted by applicable
law, except as any of the foregoing arises out of or relates to Employee's
negligence, willful malfeasance and/or breach of this Agreement.
(b) Company represents and warrant to Employee that neither its
articles of incorporation nor its bylaws nor any resolutions of its shareholders
or board of directors restricts or limits Companies rights or obligations to
indemnify Employee as provided in subsection (a) of this Section 12, except to
the extent such restrictions or limitations are required by applicable law.
13. ADDITIONAL PROVISIONS.
(a) This Agreement shall not be assigned by either Company or Employee
without the other party's prior written consent; otherwise, this Agreement shall
be binding upon, and shall inure to the benefit of, the heirs, personal
representatives, successors and assigns of Company and Employee respectively.
(b) This Agreement and the rights and obligations of Company and
Employee shall be governed by, and shall be construed in accordance with, the
laws of the State of Arizona without the application of any laws of conflicts of
laws that would require or permit the application of the laws of any other
jurisdiction.
(c) Time is of the essence of this Agreement and each provision
hereof.
(d) This Agreement sets forth the entire understanding of Company and
Employee with respect to the matters set forth herein and cannot be amended or
modified except by an instrument in writing signed by the party against whom
enforcement is sought.
(e) This Agreement is the result of negotiations between Company and
Employee, and Company and Employee hereby waive the application of any rule of
law that otherwise would be applicable in connection with the interpretation and
construction of this Agreement that ambiguous or conflicting terms or provisions
are to be interpreted or construed against the party who (or whose attorney)
prepared the executed Agreement or any earlier draft of the same.
(f) If any provision or any portion of any provision of this Agreement
shall be deemed to be invalid, illegal or unenforceable, the same shall not
alter the remaining portion of such provision or any other provision of this
Agreement, as each provision of this Agreement and portion thereof shall be
deemed severable.
(g) Except as may be otherwise required by law, any notice required or
permitted to be given under this Agreement shall be given in writing and shall
be given either by (i) personal delivery, or (ii) overnight courier service, or
(iii) facsimile transmission, or (iv) United States certified or registered
mail, in each case with postage prepaid to the following address or to such
other address as Company or Employee may designate by notice given to the other
party pursuant to this section. Notice shall be effective on (v) the day notice
is personally delivered, if notice is given by personal delivery, or (vi) the
first business day after the date of delivery to the overnight delivery service,
if notice is given by such a delivery service, (vii) the day notice is received,
if notice is given by facsimile, or (viii) the fourth business day after notice
is deposited in the United States mail, if notice is given by United States
certified or registered mail.
Company: Poore Brothers, Inc.
3500 South La Cometa Drive
Goodyear, Arizona 85338
Fax No. (623) 925-2363
4
<PAGE>
Employee: John M. Silvestri
-------------------------------
-------------------------------
Fax No. --
--------------------
(h) If any action, suit or proceeding is brought in connection with
this Agreement, or on account of any breach of this Agreement, or to enforce or
interpret any of the terms, covenants and conditions of this Agreement, the
prevailing party shall be entitled to recover from the other party or parties,
the prevailing party's reasonable attorneys' fees and costs, and the amount
thereof shall be determined by the court (not by a jury) or the arbitrator and
shall be made a part of any judgment or award rendered.
POORE BROTHERS, INC. ("Company")
By
------------------------------------
Its
------------------------------------
JOHN M. SILVESTRI ("Employee")
----------------------------------------
5