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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN
HANOVER FOODS CORPORATION AND XXXX X. XXXXXXXX
This document, dated as of February 11,1997, shall constitute Amendment No. 1 to
an Employment Agreement dated as of June 12, 1995 (the "Employment Agreement")
between Hanover Foods Corporation (the "Employer") and Xxxx X. Xxxxxxxx (the
"Employee").
Background
As of June 12, 1995, Employer and Employee entered into the Employment
Agreement. The parties desire to amend the Employment Agreement as set forth
herein.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Definitions
The definitions contained in the Employment Agreement shall apply
to this Amendment No. 1.
2. Amendments
The following provisions of the Employment Agreement shall be
amended as follows:
Section 4.1.1 Change this Section to read in full as follows,
effective retroactively as if such change were originally contained in the
Employment Agreement:
"4.1.1 During the initial Contract Year of the Term from April
1, 1994 to April 1, 1995, at the rate of Four Hundred and Ninety-eight Thousand,
Eight Hundred and Sixty-six ($498,866) Dollars per annum."
Section 7.: Change this Section to read in full as follows,
effective retroactively as if such change were originally contained in the
Employment Agreement:
"7. BONUSES The Employer shall pay an annual bonus in cash or
Class A common stock of the Employer of equal value, at the sole option of the
Employee.
"7.1 The bonus shall be equal to the sum of the following:
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"7.1.1. if Pre-tax Earnings of the Employer are $5 million or
more in any Contract Year of the Term, the bonus shall equal $100,000 plus ten
(10%) percent of Pre-tax Earnings over $5 million, but in no event shall the
total bonus payable under this Section 7.1.1, plus the total amount payable
under Section 4 hereof, exceed $1 million in any Contract Year; if Pre-tax
Earnings of the Employer are below $5 million in any Contract Year of the Term,
no bonus is payable under this Section 7.1.1.
PLUS
"7.1.2. a bonus equal to the gross dollar value (if any) of
1,500 performance units which shall be valued at the end of each Contract Year
of the Term as set forth in Addendum No. 2 hereto. The bonus computed pursuant
to Addendum No. 2 is based upon the relative prior five-year performance of the
Employer (using the five-year average sales growth and operating profits) as
compared to an industry peer group. The industry peer group shall consist of the
following companies: Xxxxxxx Xxxxx Foods (Rochester, NY), Seneca Foods Corp.
(Pittsford, NY), Xxxxxxx USA, Inc. (Green Bay, WI), United Foods, Inc. (Bells,
TN) and Xxxx Foods (Franklin Park, IL). It is the intention of the parties that
the industry peer group data will be appropriately and fairly adjusted to
provide, to the extent feasible, a consistent method of comparing the
performance of the Employee against the performance of top management in the
industry peer group. In the case of any dispute concerning the interpretation of
Addendum No. 2, the firm of Towers Xxxxxx shall resolve such dispute and their
determination shall be final, binding and conclusive upon the Employer and the
Employee.
"7.2 For purposes of determining the Employee's bonuses under
this Section 7, the Pre-Tax Earnings of the Employer shall be adjusted to
account for the impact of any changes in accounting methods and to eliminate the
effect of any unusual or non-recurring items."
The Employee hereby agrees to waive any accrued rights he may have under the
unamended Employment Agreement to a bonus for the Contract Year beginning April
1, 1996, which bonus the Employee and Employer acknowledge could amount, based
upon the projected Pre-tax Earnings of the Employer, to over $2 million, and,
instead, Employee hereby agrees to accept the bonus formula set forth in this
Amendment No.1 for the Contract Year beginning April 1, 1996.
The Employee shall repay to the Employer the amount of the net excess
compensation overpayment for Contract Years beginning prior to April 1, 1996 as
a result of the changes made in this Amendment No. 1 to Section 4 and Section 7
of the Employment Agreement, which changes are retroactive to the date of the
Employment Agreement; such repayment to the Employer shall be made without
interest. It is agreed that the amount of the repayment due from the Employee to
the Employer for such net excess compensation overpayment with respect to
Contract Years beginning prior to April 1,
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1996 is $83,024. The $83,024 shall be repaid by the Employee to the Employer
solely out of the amount of the Salary increases hereafter due to the Employee
for Contract Years beginning on and after April 1,1997 by reason of the
provisions of Section 4.1.2, and the Employee shall have no other liability for
such repayment.
Section 9.1: Add the following sentence to the end of Section
9.1:
"Notwithstanding the foregoing, if the Employer,
acting through its Board of Directors (provided that a majority of its members
were also directors on January 1, 1997), at any time after January 1, 1998,
requests that the Employee cease to be Chairman of the Board and Chairman of the
Employer, but continue as Chief Executive Officer and President of the Employer,
the Employee shall relinquish his title as Chairman of the Board and Chairman of
the Employer, but shall continue as Chief Executive Officer and President of the
Employer with all of the powers, duties and authorities normally associated with
those positions; in such event, the By-Laws of the Employer shall be amended to
reflect that the Chief Executive Officer need not be Chairman of the Board or
Chairman of the Employer."
Section 12: Add the following sentence to the end of Section
12:
"Notwithstanding the foregoing, in no event may the total
vacation time exceed six weeks during any Contract Year."
Section 22.5: Change the words "termination pay" to
"supplemental pension payments" in Section 22.5 and change the words
"termination benefits" to "supplemental pension benefits."
Section 22.5.1.1 Change the words in Section 22.5.1.1 from
"Without cause; or " to "Without cause by the Employer; or"
Section 23: Change the first sentence to read in full as
follows: "At any time after January 1, 1998, the Employee may retire from the
employ of the Employer if the Employee, at least thirty (30) days before the
intended date of retirement, gives the Employer written notice specifying the
intended date of retirement." Add the following sentence at the end of Section
23: "If the Employee elects to retire prior to the age of 65, the supplemental
pension payments provided for in Section 24 shall be reduced by using the
following formula: for each of the first sixty (60) calendar months by which the
retirement date precedes the age of 65, the supplemental pension payments shall
be reduced by five-ninths (5/9) of one percent and for each such calendar month
in excess of sixty (60) calendar months the supplemental pension payments shall
be reduced by five-eighteenths (5/18) of one percent.
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Section 24: Change the first sentence of this Section to read
in full as follows: "Commencing not later than thirty (30) days after the
applicable Triggering Date or, if earlier, the date the Employee elects to
retire, and in consideration of Employee's past services, Employer shall pay
compensation to Employee or to his surviving spouse at a per annum rate equal to
60% of the amount of the Employee's Average Annual Compensation during the
Measurement Period, subject to reduction pursuant to Section 23 in the event the
Employee elects to retire prior to age 65."
Section 25: Change the words "termination benefits" to
"supplemental pension benefits" in Section 25.
Section 25.1.2: Delete this provision.
Section 25.2: Delete this provision.
Section 25.3: Delete this provision.
Section 25.4: Delete this provision.
Section 26: Change the title of Section 26 from "Security" to
"Security and Acceleration." Change Section 26 to read in full as follows:
"26.1 In order to secure Employer's obligations to Employee
and his surviving spouse under this Agreement, Employer shall, if and when
requested by the Employee or his surviving spouse at any time after January 1,
1998, and provided that the cost does not exceed $25,000 per annum, cause a
reputable bank reasonably acceptable to Employee to issue a Letter of Credit, in
the face amount designated by Employee and in form attached as Exhibit "A"
("Letter of Credit"), to be issued to the Employee or his surviving spouse as
beneficiary,or, in lieu thereof, establish a mutually acceptable escrow
arrangement. The Letter of Credit shall not expire sooner than one year and
thirty (30) days after the date of its issuance. Employer shall maintain the
Letter of Credit in effect at all times during the Term and any other period of
time during which the Employee is entitled to any payments or benefits under
Sections 22.5, 24 or 25 of this Agreement.
"26.2 Employee will not present a draft under the Letter of
Credit for payment unless (i) he shall have first made written demand on
Employer for direct payment of the amount sought and Employer has not made full
payment in cash to the Employee as required by this Agreement within thirty (30)
days after the date of delivery of the written demand or (ii) a renewed Letter
of Credit is not provided to the Employer at least thirty (30) days prior to the
expiration date of the existing Letter of Credit. Employee shall not draw funds
under the Letter of Credit with respect to costs or expenses already reimbursed
to him by Employer.
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"26.3 If the Employer fails to pay the Employee any of the
compensation or benefits (including, but not limited to, the supplemental
pension payments and benefits) due to him under this Agreement, within thirty
(30) days after having received written notice from the Employee of such failure
to pay, the Employee shall have the right to accelerate future payments of all
sums due to Employee under this Agreement."
3. Amended Employment Agreement Continues in Full Force and Effect.
There are no amendments to the Employment Agreement except as
specified herein. The Employment Agreement, as amended hereby, shall continue,
in full force and effect and constitutes the entire understanding of the parties
with respect to its subject matter. Employee agrees that the compensation set
forth in this Amendment No. 1 for the Contract Year of the Term beginning April
1, 1996 shall constitute his sole compensation due from the Employer with
respect to such Contract Year, and hereby waives any rights to additional
compensation for any period prior to the date of this Amendment No. 1.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
ATTEST/WITNESS: HANOVER FOODS CORPORATION
By: /s/ XXXXXXXX X. XXXXXXXX By: /s/ XXXX X. XXXXXXX
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WITNESS/ATTEST: EMPLOYEE:
By: /s/ XXXXX X. XXXXXX By: /s/ XXXX X. XXXXXXXX
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