Exhibit 10.4
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into as of February 2, 1998,
between ESKIMO PIE CORPORATION, a Virginia Corporation ("Eskimo Pie"), and Xx.
Xxxxx X. Xxxxxxxx ("Executive").
WHEREAS, the maintenance of a strong and experienced management is
essential in protecting and enhancing the best interests of Eskimo Pie and its
stockholders, and in this connection Eskimo Pie recognizes that the possibility
of a change in control of Eskimo Pie or any of its business divisions may result
in the departure or distraction of management personnel to the detriment of
Eskimo Pie and its stockholders; and
WHEREAS, the Compensation Committee and the Board of Directors of
Eskimo Pie have each determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of key members of
management to their regular duties without distraction arising from a possible
change in control of Eskimo Pie or any of its business divisions; and
WHEREAS, the Compensation Committee and the Board have each carefully
reviewed the information presented to them and have determined that the
anticipated benefits to Eskimo Pie from entering into this Agreement with
Executive, thereby encouraging his continued attention and dedication to his
duties, exceed the anticipated costs to Eskimo Pie of entering into such
Agreement; and
WHEREAS, the Compensation Committee and the Board have each concluded
this Agreement is in the best interests of Eskimo Pie and its stockholders; and
WHEREAS, Executive is a key executive of Eskimo Pie and has been
selected by the Compensation Committee to enter into such an agreement with
Eskimo Pie;
NOW, THEREFORE, to assure Eskimo Pie that it will have the continued
dedication of Executive and the availability of his advice and counsel
notwithstanding the possibility or occurrence of a change in control of Eskimo
Pie or any of its business divisions, and to induce Executive to remain in the
employ of Eskimo Pie, and for other good and valuable consideration, Eskimo Pie
and Executive agree as follows:
1. Definitions of Certain Terms. For purposes of this Agreement,
(a) "Termination" shall occur if Executive's employment by
Eskimo Pie is terminated by Eskimo Pie at any time within three years
following a (x) Change in Control or (y) Sale of the Foodservices
Division for reasons other than:
(i) for Cause (as defined in Section 3 (a));
(ii) as a result of Executive's death, permanent
disability, or retirement at or after the first day
of the month following the month in which Executive
attains age 65 ("Normal Retirement Date");
(b) a "Termination" shall also occur if Executive's employment
by Eskimo Pie is terminated by Executive for Good Reason (as defined in
Section 4) within three years following a Change in Control or Sale of
the Foodservices Division; and
(c) a "Change in Control" shall mean:
(i) the acquisition by any individual, entity or
group (within the meaning of Section 13 (d) (3) or 14
(d) (2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of
common stock of Eskimo Pie (the "Outstanding Common
Stock") or (B) the combined voting power of the then
outstanding voting securities of Eskimo Pie entitled
to vote generally in the election of directors (the
"Outstanding Voting Securities"). Notwithstanding the
foregoing, the following acquisitions shall not
constitute a Change in Control: (A) any acquisition
directly from Eskimo Pie, (B) any acquisition by
Eskimo Pie, (C) any acquisition by, or benefit
distribution from, any employee benefit plan (or
related trust) sponsored or maintained by Eskimo Pie,
(D) any acquisition pursuant to any compensatory
stock option or stock purchase plan for employees, or
(E) any acquisition pursuant to a reorganization,
merger or consolidation, if, following such
reorganization, merger or consolidation, the
conditions described in clauses (A), (B), and (C) of
Subsection (iii) of this Section 1 (c) are satisfied;
or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election or nomination for election was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall
be considered as though such individual were a member
of the Incumbent Board (with his predecessor
thereafter ceasing to be a member); or
(iii) Approval by the shareholders of Eskimo Pie of
the reorganization, merger, or consolidation of
Eskimo Pie unless, following such reorganization,
merger, or consolidation, (A) more than 60% of the
then outstanding shares of common stock and the then
outstanding voting securities of the resulting
corporation is then beneficially owned by all or
substantially all of the beneficial owners,
respectively, of the Outstanding Common Stock and
Outstanding Securities immediately prior to such
reorganization, merger, or consolidation, (B) no
Person (excluding (I) Eskimo Pie, (II) any employee
benefit plan (or related trust) of Eskimo Pie or such
corporation resulting from such reorganization,
merger, or consolidation, and (III) any Person
beneficially owning, immediately prior to such
reorganization, merger, or consolidation, 20% or more
of the Outstanding Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns 20%
or more of the then outstanding shares of common
stock or the combined voting power of the then
outstanding voting securities of the resulting
corporation, and (C) at least a majority of the
members of board of directors of the resulting
corporation were members of the Incumbent Board at
the time of the execution of the initial agreement
providing for such reorganization, merger, or
consolidation; or
(iv) Approval by the shareholders of Eskimo Pie of
(A) a complete liquidation or dissolution of Eskimo
Pie, or (B) the sale or other disposition of all or
substantially all of the assets of Eskimo Pie other
than to a corporation with respect to which,
following such sale or other disposition, (I) more
than 60% of the outstanding shares of common stock
and the then outstanding voting securities of such
corporation is beneficially owned by all or
substantially all of the beneficial owners,
respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to
such sale or disposition; (II) no Person (excluding
(x) Eskimo Pie, (y) any employee benefit plan (or
related trust) of Eskimo Pie or such corporation, and
(z) any person beneficially owning, immediately prior
to such sale or other disposition, 20% or more of the
Outstanding Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns 20%
or more of the then outstanding shares of common
stock or the combined voting power of the then
outstanding voting securities of such corporation,
and (III) at least a majority of the members of the
board of directors of such corporation were members
of the Incumbent Board at the time of the execution
of the initial agreement providing for such sale or
other disposition of the assets of the corporation.
(d)"Sale of the Foodservices Division" shall mean the sale
or disposition by Eskimo Pie of substantially all the
assets or business of its foodservices division.
2. Benefit upon Termination. Except as provided in Section 3, upon
Termination, Eskimo Pie agrees to provide or cause to be provided
to Executive the benefits described in Section 2 (a) below,
subject to the limitations set forth in Sections 2 (b) and (c)
below:
(a)Benefit Payment.Executive shall receive within five
business days of Termination a lump sum payment in cash in
an amount equal to one (1) times Executive's Earnings (as
defined in this Section 2 (a)); provided, however, that if
there are fewer than 12 months remaining from the date of
Termination to Executive's Normal Retirement Date, the
amount calculated pursuant to this Section 2(a) shall be
reduced by multiplying such amount by a fraction, the
numerator of which is the number of months (including any
fraction of a month) remaining to Executive's Normal
Retirement Date and the denominator of which is 12.
For purposes of the section 2 (a), "Earnings" shall mean the
average annual compensation payable by Eskimo Pie and includible
in the gross income of Executive for the taxable years during the
period consisting of the most recent three taxable years ending
before the date on which the Change in Control or Sale of the
Foodservices Division occurs (or such portion of such period
during which Executive performed personal services for Eskimo
Pie).
(b)Other Benefit Plans and Perquisites. The benefit payable
upon Termination in accordance with this Section 2 is not
intended to exclude Executive's participation in any
benefit plans or enjoyment of other perquisites which are
available to executive personnel generally in the class or
category of Executive or to preclude such other
compensation or benefits as may be authorized from time to
time by the Board of Directors of Eskimo Pie or by its
Compensation Committee; provided, however, that any amount
otherwise payable in accordance with Section 2 (a) above
shall be reduced by any amounts payable to Executive upon
termination of employment pursuant to any termination
allowance policy or other severance pay plan covering
Eskimo Pie employees.
(c)Excise Taxes. If Executive becomes entitled to a payment
under this Section 2 ("Severance Payment"), and if any
part or all of the Severance Payment will be subject to
the tax ("Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
then the amount otherwise payable to Executive in
accordance with Section 2 (a) above shall be reduced as
necessary so that no part of such payment shall be subject
to the Excise Tax.
(d)No Duty to Mitigate. Executive's entitlement to benefits
hereunder shall not be governed by any duty to mitigate
his damages by seeking further employment nor offset by
any compensation which he may receive from future
employment.
3. Conditions to the Obligations of Eskimo Pie. Eskimo Pie shall have
no obligation to provide or cause to be provided to Executive the
benefit described in Section 2 hereof if either of the following
events shall occur:
(a)Termination for Cause. Eskimo Pie shall terminate
Executive's employment for Cause. For purposes of this
Agreement, termination of employment for "Cause" shall
mean termination solely for dishonesty, conviction of a
felony, or willful unauthorized disclosure of confidential
information of Eskimo Pie..
(b)Resignation as Director and/or Officer. Executive shall
not, promptly after Termination and upon receiving a
written request to do so, resign as a director and/or
officer of Eskimo Pie and of each subsidiary and affiliate
of Eskimo Pie for which he is then serving as a director
and/or officer.
4. Termination for Good Reason. Executive may terminate his
employment with Eskimo Pie following a change in Control or a Sale
of the Foodservices Division for Good Reason and shall be entitled
to receive the benefit described in Section 2 hereof. For purposes
of this Agreement, "Good Reason" shall mean:
(a)the assignment to Executive of any duties inconsistent
with the position (including status, offices, titles, and
reporting requirements) or authority in Eskimo Pie that
Executive held immediately prior to the Change in Control
or Sale of the Foodservices Division, or a significant
adverse alteration in the nature or status of Executive's
responsibilities or the conditions of Executive's
employment from those in effect immediately prior to such
Change in Control or Sale of the Foodservices Division;
(b)a reduction by Eskimo Pie in Executive's annual base
salary as in effect on the date hereof or as the same may
be increased from time to time;
(c)the relocation of Eskimo Pie's principal executive
offices to a location outside the Richmond Metropolitan
area or Eskimo Pie's requiring Executive to be based
anywhere other than Eskimo Pie's principal executive
offices except for required travel on Eskimo Pie's
business to an extent substantially consistent with
Executive's present business travel obligations;
(d)except in the event of reasonable administrative delay,
the failure by Eskimo Pie to pay to Executive any portion
of Executive's current compensation or to pay to Executive
any portion of an installment of deferred compensation
under any deferred compensation program of Eskimo Pie
within seven (7) days of the date such compensation is
due;
(e)the failure by Eskimo Pie to continue in effect any
compensation plan in which Executive participates
immediately prior to the Change in Control or Sale of the
Foodservices Division that is material to Executive's
total compensation or any substitute plans adopted prior
to the Change in Control or Sale of the Foodservices
Division, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by Eskimo Pie to
continue Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits
provided and the level of Executive's participation
relative to other participants, as it existed at the time
of the Change in Control or Sale of the Food Services
Division;
(f)the failure by Eskimo Pie to continue to provide
Executive with benefits substantially similar to those
enjoyed by Executive under any of Eskimo Pie's life
insurance, medical, health and accident, disability plans,
or other welfare and defined benefit plans (qualified and
non-qualified) in which Executive was participating at the
time of the Change in Control or Sale of the Foodservices
Division, the taking of any action by Eskimo Pie which
would directly or indirectly materially reduce any of such
benefits or deprive Executive of any material fringe
benefit enjoyed by Executive at the time of the Change in
Control or Sale of the Foodservices Division, or the
failure by Eskimo Pie to provide Executive with the number
of paid vacation days to which Executive is entitled on
the basis of years of service with Eskimo Pie in
accordance with Eskimo Pie's normal vacation policy in
effect at the time of the Change in Control or Sale of the
Foodservices Division; or
(g)the failure of Eskimo Pie to obtain a satisfactory
agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 9
hereof.
5. Other Covenants. Upon Termination, if Executive is entitled to
receive the benefit described in Section 2, then:
(a)If a leased automobile is assigned to Executive at the
time of his Termination, Executive shall have the right to
purchase such automobile, free and clear of any liens and
encumbrances, at its fair market value (as determined by
the leasing company). If executive wishes to exercise this
right, he shall (i) give Eskimo Pie notice to such effect
within 10 days following the date of Termination, (ii)
tender the purchase price within 10 days after he is given
notice of the fair market value, and (iii) be solely
responsible for maintaining and insuring the automobile
effective from the date of Termination.
(b)At Executive's request, Eskimo Pie shall arrange
outplacement services for Executive, at Eskimo Pie's
expense, for a period of one year following Termination.
(c)Executive and/or his qualified dependents shall be
provided coverage, at his/their expense, under any medical
benefit plans covering him and/or them at the time of
Termination in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended from time to time.
6. Confidentiality: Non-Solicitation: Cooperation.
(a)Confidentiality. At all times following Termination,
Executive will not, without the prior written consent of
Eskimo Pie, disclose to any person, firm or corporation
any confidential information of Eskimo Pie or its
subsidiaries or affiliates which is now known to him or
which hereafter may become known to him as a result of his
employment or association with Eskimo Pie and which could
be helpful to a competitor; provided, however, that the
foregoing shall not apply to confidential information
which becomes publicly disseminated by means other than a
breach of this Agreement.
(b)Non-Solicitation. For a period of three years following
the date of Termination (or until Executive's Normal
Retirement Date, whichever is sooner), Executive will not
induce or attempt to induce, either directly or
indirectly, any management or executive employee of Eskimo
Pie or of any of its subsidiaries or affiliates to
terminate his or her employment.
(c)Cooperation. At all times following Termination,
Executive will furnish such information and render such
assistance and cooperation as may reasonably be requested
in connection with any litigation or legal proceedings
concerning Eskimo Pie or any of its subsidiaries or
affiliates (other than any legal proceedings concerning
Executive's employment). In connection with such
cooperation, Eskimo Pie will pay or reimburse Executive
for reasonable expenses actually incurred.
(d)Remedies for Breach. It is recognized that damages in the
event of breach of Sections 6(a) and (b) above by
Executive would be difficult, if not impossible, to
ascertain, and it is therefore specifically agreed that
Eskimo Pie, in action to and without limiting any other
remedy or right it may have, shall have the right to an
injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach. The
existence of this right shall not preclude Eskimo Pie from
pursuing any other rights and remedies at law or in equity
which Eskimo Pie may have.
7. Term of Agreement. This Agreement shall commence on the date
hereof and shall remain in force until December 31, 1998;
provided, however, that on each anniversary of such date, the term
of this Agreement shall be automatically renewed for successive
one year terms, unless at least 60 days prior to the expiration of
the then current term, Eskimo Pie shall give notice to Executive
that the Agreement shall not be renewed; and further provided,
however, that if a Change in Control or a Sale of the Foodservices
Division occurs during the term of this Agreement, this Agreement
shall continue in effect for a period of 36 months beyond the
month in which the Change in Control or a Sale of the Foodservices
Division occurred.
Notwithstanding the foregoing, this Agreement shall terminate if
either Eskimo Pie or Executive terminates the employment of
Executive before a Change in Control or a Sale of the Foodservices
Division occurs. Except as otherwise provided in Section 9(b),
this Agreement shall also terminate upon the Executive's death or
permanent disability or his Normal Retirement Date.
8. Adjudication and Expenses.
(a)If a dispute or controversy arises under or in connection
with this Agreement, Executive shall be entitled to an
adjudication in an appropriate court of the State of
Virginia, or in any other court of competent jurisdiction.
Alternatively, Executive, at Executive's option, may seek
an award in arbitration to be conducted by a single
arbitrator under the Commercial Arbitration Rules of the
American Arbitration Association.
(b)Eskimo Pie shall pay or reimburse Executive for all costs
and expenses, including without limitation court costs and
attorney's fees, incurred by Executive as a result of any
claim, action or proceeding (including without limitation
a claim, action or proceeding by Executive against Eskimo
Pie) arising out of, or challenging the validity or
enforceability of, this Agreement or any provision hereof,
if Executive is successful on the merits or otherwise in
such claim, action or proceeding.
9. Successors; Binding Agreement.
(a)This Agreement shall inure to the benefit of and be
binding upon Eskimo Pie and its successors and assigns.
Eskimo Pie will require any (i) successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of Eskimo Pie and (ii) successor to the
business or assets of the foodservices division upon a
Sale of the Foodservices Division to assume expressly and
agree to perform this Agreement in the same manner and to
the same extent that Eskimo Pie would be required to
perform it if no such succession had taken place. As used
in this Agreement, "Eskimo Pie" shall mean Eskimo Pie as
hereinbefore defined and any successor to its business
and/or assets or to the business and/or assets of the
foodservices division upon a Sale of the Foodservices
Division as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(b)This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive
should die while any amount would still be payable
hereunder if Executive had continued to live, any such
amount, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's
devisee, legatee or other designee or, if there is no such
designee, Executive's estate.
10. Miscellaneous.
(a)Assignment. No right, benefit or interest hereunder shall
be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge,
except by will or the laws of descent and distribution,
and any attempt thereafter shall be void; and no right,
benefit or interest hereunder shall, prior to receipt of
payment, be in any manner liable for or subject to the
recipient's debts, contracts, liabilities, engagements or
torts.
(b)Construction of Agreement. Nothing in this Agreement
shall be construed to amend any provision of any plan or
policy of Eskimo Pie. This Agreement is not, and nothing
herein shall be deemed to create, a commitment of
continued employment of Executive by Eskimo Pie or by any
of its subsidiaries and affiliates.
(c)Statutory References. Any reference in this Agreement to
a specific statutory provision shall include that
provision and any comparable provision or provisions of
future legislation amending, modifying, supplementing or
superseding the referenced provision.
(d)Amendment. This Agreement may not be amended, modified or
terminated except by written agreement of both parties.
(e)Waiver. No provision of this Agreement may be waived
except by a writing signed by the party to be bound
thereby.
Executive may at any time or from time to time waive any or all of
the benefits provided for herein which have not been received by
Executive at the time of such waiver. In addition, prior to the
last day of the calendar year in which Executive's Termination
occurs, Executive may waive any or all rights and benefits provided
for herein which have been received by Executive; provided that
Executive repays to Eskimo Pie the amount of the benefits received
(together with interest at the rate provided in Section 1274 (b)
(2) (B) of the Code). Any waiver of benefits pursuant to this
section shall be irrevocable.
(f)Severability. If any provision or portion of this
Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of
this Agreement shall remain in full force and effect to
the fullest extent permitted by law.
(g)Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered
an original and all of which together shall constitute one
agreement.
(h)Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to
withholding of taxes, filing, making of reports and the
like, and Eskimo Pie shall use its best efforts to satisfy
promptly all such requirements.
(i)Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
Virginia.
(j)Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with
respect to the matters covered hereby.
Each of the parties has therefore caused this Agreement to be executed
on its or his behalf as of the date first written above.
ESKIMO PIE CORPORATION EXECUTIVE
By /s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxxx
