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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
BY AND BETWEEN
INTERNATIONAL HOME FOODS, INC.
AND
XXXXXXXX XXXXXXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective
as of the 3rd day of January, 2000 (the "Effective Date") by and between
INTERNATIONAL HOME FOODS, INC., a Delaware corporation (the "Company"), and
Xxxxxxxx X. Xxxxxxxx (the "Executive").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company and its stockholders
to assure that the Company will have the continued dedication of Executive; and
WHEREAS, the Company and Executive desire to enter into a compensation
arrangement to assure retention of Executive in the future.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants herein, the parties hereto agree as follows:
1. Employment Period. Subject to Section 3, the Company hereby agrees
to continue Executive in its employ, and Executive hereby agrees to remain in
the employ of the Company, in accordance with the terms and provisions of this
Agreement, during the period commencing on the date of this Agreement (the
"Effective Date") and ending on the third anniversary of the Effective Date (the
"Employment Period").
2. Terms of Employment.
(a) Positions and Duties. During the term of Executive's
employment with the Company, Executive shall serve as President and Chief
Operating Officer and a member of the Board (or such other position or positions
as Executive and the Board shall mutually agree) and, in so doing, shall report
to the Company's Chief Executive Officer. Executive shall have supervision and
control over, and responsibility for, the day to day management and operational
functions of the Company. During the term of Executive's employment with the
Company (excluding any periods of vacation and sick leave), Executive shall
devote his best efforts and full business time to the business and affairs of
the Company in order to discharge the responsibilities assigned to Executive
hereunder in a manner consistent with past practice.
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(b) Compensation, Benefits and Expenses.
(i) Base Compensation. During the term of
Executive's employment with the Company, Executive shall receive an annual base
salary of not less than $500,000 ("Annual Base Salary"). In addition, Executive
shall be entitled to receive an annual bonus ("Annual Bonus") of up to 100% of
the Annual Base Salary upon the achievement of performance criteria as shall be
established by the Chief Executive Officer and the Board.
(ii) Investment Benefit Plans. During the term of
Executive's employment with the Company, Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other executives of the Company
("Investment Plans").
(iii) Welfare Benefit Plans. During the term of
Executive's employment with the Company, Executive and his family shall be
eligible for participation in, and shall receive all benefits under, welfare
benefit plans, practices, policies and programs applicable generally to other
executives of the Company ("Welfare Plans").
(iv) Expenses. During the term of Executive's
employment with the Company, Executive shall be entitled to receive prompt
reimbursement for all reasonable employment related expenses incurred by
Executive.
3. Termination of Employment.
(a) Reasons for Termination. Executive's employment with the
Company may be terminated during the Employment Period (i) by the Company with
or without Cause, (ii) by Executive with or without Good Reason, or (iii) by
either the Company or Executive upon Executive's Disability. Executive's
employment with the Company shall automatically terminate upon Executive's
death.
(b) Definitions. The following terms shall have the following
meanings for purposes of this Agreement.
(i) "Annual Base Compensation" shall mean, at
any given time, the aggregate amount of (i) the Annual Base Salary and (ii) the
then budgeted Annual Bonus for Executive; provided that in no event shall Annual
Base Compensation be less than $1,000,000. Calculations required herein based
upon Annual Base Compensation shall be determined as if the Annual Base
Compensation is earned evenly throughout the year based upon a 365-day year.
(ii) "Cause" shall mean (A) fraud on the part of
Executive that has caused demonstrable and serious injury to the Company or (B)
conviction of, or plea of nolo contendre to, a felony or (C) a material breach
by Executive of this Agreement.
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(iii) "Change in Control" shall mean (A) any
"person" (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) other than Hicks, Muse, Xxxx & Xxxxx
Incorporated and/or its affiliates ("Xxxxx Muse") becoming the direct or
indirect "beneficial owner" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities, (B)
individuals who at the Effective Date constitute the members of the Board and
any new director, whose election to the Board or nomination for election to the
Board by the Company's stockholders was approved by a vote of at least a
majority of the directors then in office who either were directors at the
Effective Date or whose election or nomination for election was previously so
approved (each an "Incumbent Director"), ceasing for any reason to constitute a
majority of the Board, (C) the Company merging with or consolidating into any
other entity, or the stockholders of the Company and the holders of voting
securities of any other entity participating in a securities exchange (other
than a merger, consolidation or exchange which would result in the holders
(and/or their affiliates) of the voting securities of the Company outstanding
immediately prior thereto holding immediately thereafter securities representing
more than 50% of the combined voting power of the voting securities of the
surviving entity outstanding immediately after such merger, consolidation or
exchange), or (D) the stockholders of the Company approving a plan of complete
liquidation of the Company or an agreement or agreements for the sale or
disposition by the Company (in one or a series of related transactions) of all
or substantially all of the Company's assets, or such a plan commencing other
than in connection with a merger, consolidation or exchange which does not
constitute a Change in Control under the preceding clause (C).
(iv) "Disability" means (A) Executive's
incapacity due to a permanent mental or physical illness that prevents Executive
from performing his duties or (B) a physical condition that renders the
performance by Executive of his duties hereunder a serious threat to the health
and well being of Executive. Disability shall be determined by a physician
acceptable to Executive (or his legal representative).
(v) "Good Reason" means (A) the assignment to
Executive of any duties inconsistent with Executive's position as President and
Chief Operating Officer and a member of the Board of the Company (including
status and reporting requirements), or his authority, duties or responsibilities
or any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof, (B) a
material breach by the Company of this Agreement, (C) the occurrence of a Change
in Control, (D) any demotion of Executive resulting in Executive no longer
holding the offices of President and Chief Operating Officer of the Company (E)
any change requiring Executive to report to any person other than an Incumbent
Director, or (F) any change in workplace location without the consent of
Executive requiring Executive to daily commute a distance greater than 55 miles
from his present home in Riverside, Connecticut.
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(c) Obligations of the Company upon Termination.
(i) With Cause; Without Good Reason; Death or
Disability. If, during the Employment Period, the Company shall terminate
Executive's employment with the Company for Cause, Executive shall terminate his
employment with the Company without Good Reason, or Executive's employment with
the Company shall terminate due to Executive's death or Disability, then:
(A) the Company shall pay to Executive
in cash within 10 days after the date of such termination the sum of (x) any
Annual Base Salary earned through the date of termination to the extent not
theretofore paid by the Company, (y) any compensation previously deferred by
Executive and (z) any vacation pay earned through the date of termination not
theretofore paid by the Company (in the aggregate, the "Accrued Obligation");
and
(B) the Company shall pay to Executive
any amounts arising from Executive's participation in, or benefits under, any
Investment Plans (the "Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of the Investment Plans.
(ii) Without Cause; With Good Reason. If, during
the Employment Period, the Company shall terminate Executive's employment with
the Company without Cause, or Executive shall terminate his employment with the
Company with Good Reason, then:
(A) the Company shall pay to Executive
in cash within 10 days after the date of such termination the amount of the
Accrued Obligation;
(B) the Company shall pay to Executive
the Accrued Investments in accordance with the terms and conditions of the
Investment Plans;
(C) the Company shall pay to Executive
in cash within 10 days after the date of such termination an amount (the
"Severance Amount") that is equal to one and one half (1 1/2) times the
aggregate amount of Annual Base Compensation at the time of termination;
(D) for a period of one year following
such termination (or such longer period as the Welfare Plans may provide), the
Company shall continue benefits provided under the Welfare Plans to Executive
and his family at least equal to those that would have been provided had
Executive's employment with the Company not been terminated (the "Welfare
Benefit Continuation"); provided, however, that if Executive becomes employed
with another employer and is eligible to receive similar benefits under that
employer's plans, the benefits described in this paragraph (D) shall be
secondary to and not duplicative of those similar benefits.
(d) Effect on Benefit Plans. The foregoing payments and
benefits shall be in addition to and not in lieu of any payments or benefits to
which Executive and his dependents
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may otherwise be entitled to under the Company's compensation and employee
benefit plans, programs, policies or practices. Nothing herein shall restrict
the Company's right to amend any plan, practice, policy or program in a manner
generally applicable to similarly situated active executives, in which event
Executive shall be entitled to participate on the same basis (including payment
of applicable contributions) as similarly situated active executives of the
Company.
(e) No Mitigation. Executive shall not be obligated to seek
new employment or take any other action to mitigate the benefits to which
Executive is entitled hereunder. Except as contemplated by Section 3(c)(ii)(D)
with respect to the Welfare Benefit Continuation, such benefits shall not be
reduced whether or not Executive obtains new employment.
(f) Stock Options. In the event of a Change in Control all
options to purchase shares of the Company's common stock, par value $.0l per
share, granted by the Company to the Executive (including options granted under
the Company's 1997 Stock Option Plan) shall automatically become fully vested
and immediately exercisable in full at the at the time of the Change in Control.
4. Mutual Release. Payment of the Severance Amount shall be conditioned
upon the execution by Executive and the Company of a valid mutual release, to be
prepared by the Company, in which Executive and the Company mutually release the
other, to the maximum extent permitted by law, from any and all claims either
may have against the other that relate to or arise out of Executive's employment
or termination of employment, except such claims arising under this Agreement,
any employee benefit plan or any other written plan or agreement.
5. Excise Taxes.
(a) Determination and Payment. If it is determined that any
payment, distribution or other benefit to Executive, whether pursuant to this
Agreement or otherwise (a "Payment"), would be subject to any tax (e.g. excise
tax under Section 4999 of the Internal Revenue Code of 1986) other than income
tax (such tax, together with any interest and penalties related thereto are
hereinafter collectively referred to as an "Excise Tax"), then the Company shall
promptly pay to Executive an additional payment ("Gross-Up Payment") in an
amount such that Executive retains, after payment of all taxes, and all interest
and penalties with respect thereto (including, without limitation, income tax
and Excise Tax imposed upon the Gross-Up Payment), an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment. The determination of
the amount of any Gross-Up Payment shall be made by a certified public
accounting firm selected jointly by the Company and Executive (the "Accounting
Firm"), the fees and expenses of which shall be paid by the Company.
(b) Contesting. Executive shall promptly notify the Company of
any claim that, if successful, would require the payment of the Gross-Up
Payment. Without the consent of the Company, Executive shall not pay such claim
prior to the date that the payment of taxes with respect to such claim is due.
If the Company notifies Executive in writing prior to such due date that it
desires to contest the claim, Executive shall take all actions in connection
with contesting
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the claim reasonably requested by the Company (including accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company); provided, however, that the Company shall pay all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, from any tax (including interest and penalties with respect
thereto) imposed as a result thereof.
6. Claims.
(a) Arbitration of Claims. Executive shall settle by
arbitration any dispute or controversy arising in connection with this
Agreement, whether or not such dispute involves a plan subject to the Employee
Retirement Income Security of 1974, as amended. Such arbitration shall be
conducted in accordance with the rules of the American Arbitration Association
before a panel of three arbitrators sitting in Parsippany, New Jersey. The award
of the arbitrators shall be final and nonappealable, and judgment may be entered
on the award of the arbitrators in any court having proper jurisdiction. All
expenses of such arbitration shall be borne by the Company.
(b) Payment of Legal Fees and Costs. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of any action taken
pursuant to the terms of this Agreement, or of the validity or enforceability
of, or liability under, any provision of this Agreement, or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the rate of 8% per annum.
(c) Agent for Service of Legal Process. Service of legal
process upon the Company with respect to a claim under this Agreement shall be
made upon the General Counsel of the Company.
7. Tax Withholding. All payments to the Executive under this Agreement
will be subject to the withholding of all applicable employment and income
taxes.
8. Severability. In the event that 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 be unaffected thereby and shall
remain in full force and effect.
9. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no succession had taken place.
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10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. This
Agreement may not be modified in any manner except by a written instrument
signed by both the Company and Executive.
11. Notices. Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:
To Executive:
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To the Company:
INTERNATIONAL HOME FOODS, INC.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
12. Validity. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, such provision shall be fully severable, this
Agreement shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect.
Furthermore, in lieu of such illegal, invalid or unenforceable provision there
shall be added automatically as part of this Agreement a provision as similar in
terms as may be possible and be legal, valid and enforceable.
13. Non-Competition. In the event that Executive's employment with the
Company is terminated (other than a termination in connection with the
occurrence of a Change-in-Control) and Executive receives payment of the
Severance Amount, for the remainder of the Employment Period or for one and one
half (1 1/2) years, whichever is longer, Executive shall not engage in or
promote any business within the United States that is principally engaged in the
business of manufacturing and marketing canned name brand food products in the
same categories as the core products of the Company at the time of termination;
provided that the foregoing shall not prohibit Executive from owning less than
10% of the voting securities of any publicly traded company so long as Executive
does not otherwise engage in or promote the activities of that company.
14. Governing Law. The provisions of this Agreement shall be construed
in accordance of the laws of the state of New Jersey, without giving effect to
that states choice of law provisions.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date and year first above written.
INTERNATIONAL HOME FOODS, INC.
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C. Xxxx Xxxxxxxxxxx
Chief Executive Officer
EXECUTIVE
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Xxxxxxxx X. Xxxxxxxx
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