Exhibit 10.31
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 2nd day of September 2005, by and among
Birds Eye Holdings, LLC, a Delaware limited liability company ("BE Holdings"),
and Xxxx Xxxxxxxx (the "Executive").
WHEREAS, the BE Holdings desires that Executive serve as an employee
of Birds Eye Foods, Inc., a Delaware corporation having its principal executive
offices in Rochester, New York (the "Company") and an indirectly wholly-owned
subsidiary of BE Holdings, and the Executive is willing to accept employment
with the Company, all on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Employment Period. Subject to the terms and conditions of this
Agreement, including Section 3, BE Holdings agrees to cause the Company to
employ the Executive, and the Executive hereby accepts employment with the
Company, for the period commencing on the September 8, 2005 (the "Effective
Date") and ending as provided in the next sentence (such period, the "Employment
Period"). The Employment Period shall end on the fourth anniversary of the date
hereof; provided, that the Employment Period shall automatically be renewed for
successive one-year periods, unless the Company or Executive gives the other
party written notice of the election not to renew the Employment Period at least
90 days prior to the expiration of the Employment Period; provided, however, the
Employment Period shall be subject to early termination as provided in Section 3
hereof.
2. Terms of Employment.
(a) Position and Duties. During the Employment Period, the
Executive shall serve as President and Chief Executive Officer of the Company
with the appropriate authority, duties and responsibilities as are customarily
attendant to such position at other similarly situated companies with
significant private equity ownership, subject, in all instances, to the general
supervisory power of the Company's board of directors (the "Board") under
applicable corporate law. During the Employment Period, the Executive shall
serve as a member of the management committee of BE Holdings, the board of
directors of Birds Eye Holdings, Inc. ("BE Inc.") and the Board as its Chairman.
Upon the termination or expiration of the Employment Period, Executive shall
resign as a member of the management committee, board of directors or any
equivalent body of BE Holdings and its subsidiaries (including the Company and
BE Inc.), as the case may be and such obligation to resign shall survive the
termination of this Agreement.
(i) During the Employment Period, Executive shall report
solely and directly to the Board and excluding any periods of vacation and sick
leave to which the Executive is entitled, Executive agrees to devote
substantially all of his business time and attention to the business and affairs
of the Company and to use the Executive's reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to Executive
hereunder; provided, however, that Executive may serve as a member of the board
of directors of one other corporation or other entity (and on any committee
thereof) if approved by the Board.
(b) Compensation.
(i) Annual Base Salary. Effective immediately, and during
the Employment Period, the Executive shall receive an annual base salary (as in
effect from time to time, the "Annual Base Salary") of at least $600,000, which
Annual Base Salary shall be payable in regular installments in accordance with
the Company's general payroll practices. The Annual Base Salary will be subject
to periodical review and may be increased in accordance with Company policy.
Once increased, the Annual Base Salary cannot be decreased.
(ii) Annual Bonus. During the Employment Period, the
Executive shall participate in such bonus arrangements as may be approved by the
Compensation Committee of the Board (the "Compensation Committee") (the
aggregate of all payments made under such bonus arrangements during any fiscal
year being herein referred to as the "Annual Bonus"). Executive's "Target Bonus"
for any fiscal year will be no less than $350,000 and shall be payable upon the
achievement of the Bonus Criteria (as defined below) for such fiscal year and
such other factors as may be determined by the Board. In addition, with respect
to each fiscal year during the Employment Period, Executive shall have the
opportunity to earn an additional bonus of at least $400,000 upon the
achievement of the Superior Bonus Criteria (as defined below) for such fiscal
year and such other factors as may be determined by the Board that are
communicated to Executive in accordance with the next sentence. Within the first
three months of any fiscal year during the Employment Period (other than with
respect to the fiscal year ending June 30, 2006 ("Fiscal 2006")), the Board
shall in good faith, and in consultation with Executive, establish and
communicate to Executive (x) EBITDA and net debt reduction targets for the
Company and its subsidiaries for such fiscal year (collectively, the "Bonus
Criteria") and (y) additional extraordinary performance targets for the Company
and its subsidiaries that are reflective of extraordinary performance
(collectively, the "Superior Bonus Criteria"), and any additional factors or
objectives related to the achievement of such additional bonus. The
communication to Executive referred to in the preceding sentence may be in the
form of materials distributed to him as a member of the Board. The Bonus
Criteria for any fiscal year shall be adjusted in good faith by the Board if the
Company or any subsidiary engages in any significant acquisition or disposition
outside the ordinary course of business during such fiscal year. Notwithstanding
the foregoing, subject to Executive's, continued employment, Executive shall be
entitled to a guaranteed bonus for Fiscal 2006 of $350,000 pro-rated for the
actual number of days the Executive was employed by the Company during Fiscal
2006. The Annual Bonus shall be paid within 30 days of receipt by the Company of
the audited financial statements for the fiscal year of the Company to which it
relates. As used herein, "EBITDA" shall mean the Company's and its subsidiaries'
earnings before interest, taxes, depreciation and amortization calculated on a
consolidated basis consistent with the Company's past practice of calculating
"operating EBITDA" for internal reporting purposes.
(iii) Employee Benefit Plans. During the Employment Period,
except as otherwise expressly provided herein, the Executive shall be entitled
to participate in all compensation, incentive, employee benefit, welfare and
other plans and programs and fringe benefits (collectively, "Employee Benefit
Plans") on a basis no less favorable than that are
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generally provided to any other senior executive officer of the Company. In
addition, within 60 days of the Effective Date, the Company shall, at its
expense, procure a term life insurance policy covering Executive's life during
the Employment Period in the face amount of up to $1,500,000 subject to the
total cost of such insurance to the Company being no more than $12,000 per
annum, payable to one or more beneficiaries designated by Executive and
Executive shall co-operate and make himself available for any medical
examination reasonably required by the Company in connection therewith.
(iv) Residence in Rochester. Executive shall establish a
permanent residence in the Rochester, NY area by purchasing a residence as soon
as reasonably practicable after the Effective Date but in any event within six
months of the date of this Agreement and in connection therewith shall be
entitled to an one-time expense reimbursement of reasonable costs and expenses
incurred by Executive for purchasing a new residence in the Rochester, NY area.
Such reimbursement shall, in any event, include (x) reasonable costs and fees
incurred in connection with the search for and purchase of a new residence in
the Rochester, New York metropolitan area, including a reasonable number of
house hunting trips for Executive and his spouse (which shall include air fare,
lodging, meals and other incidental expenses) (other than mortgage discount
points) and, the physical move of Executive's belongings and family (if and to
the extent applicable) and (y) for a period of six (6) months following the
Effective Date (or, if earlier, until Executive purchases a residence in
Rochester, NY) (A) temporary living expenses of up to $5,000 per month and (B)
two (2) airline tickets per month for travel between Rochester and Executive's
place of residence. During the Employment Period, Executive shall perform his
duties hereunder during the business week of the Company (which shall include
every business day commencing on Monday and ending on Friday of each week) at
the corporate headquarters of the Company at Rochester, New York (except when
Executive is engaged in business travel in connection with his responsibilities
hereunder).
(v) Vacation. During the Employment Period, Executive shall
be entitled to four (4) weeks of paid vacation during each calendar year,
pro-rated, in the case of the 2005 calendar year, for the actual number of days
the Executive was employed by the Company during the 2005 calendar year.
Executive may carry over accrued, unused vacation to subsequent calendar years
but in no event shall Executive be entitled to utilize more than six (6) weeks
of vacation time in any calendar year.
(c) Indemnification and Insurance. Executive shall be entitled to
indemnification, to the fullest extent permitted by law, as a director or
officer of the Company (including advancement of litigation expenses upon
executing a customary undertaking in favor of the Company to return such
advances to the extent it is finally determined that Executive is not entitled
to indemnification) in accordance with the certificate of incorporation of the
Company. The Company shall insure Executive, or shall cause Executive to be
insured, under directors' and officers' liability insurance at the same level as
other directors and officers of the Company are covered from time to time during
the Employment Period and a period of six years thereafter.
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3. Termination of Employment.
(a) Death, Disability or Non-renewal. The Executive's employment
shall terminate automatically upon the Executive's death during the Employment
Period or upon non-renewal of the Employment Period by the Company or Executive
as provided in Section 1 above. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 8(c) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the receipt
of such notice by the Executive (the "Disability Effective Date"). For purposes
of this Agreement, "Disability" shall mean a determination by the Board in its
good faith judgment with input from appropriate medical personnel that Executive
is unable to substantially perform his job responsibilities as a result of
chronic illness, physical, mental or any other disability for a period of 180
days or more in any 365 consecutive day period. The Executive shall co-operate
and make himself available for any medical examination reasonably required by
the Company with respect to any determination of the Disability of the
Executive.
(b) With or Without Cause. The Company may terminate the
Executive's employment during the Employment Period with or without Cause. Any
termination of the Executive's employment during the Employment Period for Cause
shall be made by providing a Notice of Termination within sixty (60) days of the
Board being informed of the occurrence of the relevant event or events
constituting Cause. For purposes of this Agreement, "Cause" shall mean:
(i) Executive is indicted or charged with, or pleads guilty
or nolo contendere to, (A) a felony or (B) a crime involving moral turpitude
that is either materially detrimental to the Company or that which brings the
Company into public disgrace or disrepute;
(ii) in carrying out his duties hereunder, Executive engages
in conduct that constitutes gross neglect or willful misconduct that, in either
case, results in material economic harm or is materially detrimental to the
Company;
(iii) Executive breaches any material provision of the
Employment Agreement (including Section 5 hereof), and such breach has not been
cured prior to 30 days following notice from the Company;
(iv) Executive engages in willful gross misconduct in the
operation of the Company or in connection with Company activities that brings
the Company into public disgrace or disrepute;
(v) Executive's repeated refusal to perform duties or
responsibilities as reasonably directed by the Board; or
(vi) Executive engages in willful misconduct resulting in or
intended to result in direct personal gain to Executive at the Company's
expense.
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(c) Good Reason. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean a termination by Executive of his employment on thirty (30) days'
written notice given by him to the Company following the occurrence of any of
the following events, which notice shall be given within sixty (60) days
following Executive becoming aware of such occurrence, without his express prior
written consent, unless all grounds for termination shall have been fully cured
prior to thirty (30) days after he gives notice to the Company requesting cure:
(i) any failure of the Company to continue Executive as
President and Chief Executive Officer of the Company and as Chairman of the
Board provided, that after a Change of Control (as defined below), failure of
the Executive to be appointed or nominated to the board of directors of a
successor shall not constitute "Good Reason";
(ii) any material diminution in Executive's responsibilities
or authorities under the Employment Agreement; the appointment of another person
whose duties are inconsistent with Executive's role as Chief Executive Officer
and Chairman of the Board; or the assignment to Executive of duties that are
materially inconsistent with, or materially impair his ability to perform, the
duties then assigned to him; or any change in the reporting structure so that
Executive is required to report to any person other than the Board; provided
that within six months of a Change in Control, the Company shall have the
flexibility to appoint Executive to a reporting relationship different from that
which existed prior to the Change in Control, to make immaterial changes in
Executive's duties (which changes in the aggregate shall not be material), or to
change Executive's title provided that Executive shall not have the stature less
than that of a Divisional President, and it is understood that equivalent
positions may have different titles; provided further that in no event shall any
diminution of position, authority, duties or responsibilities of the Executive
resulting solely from the consummation of one or more dispositions of assets or
business lines constitute "Good Reason" hereunder so long as subsequent to any
such disposition the Company's primary business continues to be the marketing
and sale of branded frozen vegetable products;
(iii) if as a condition to his continued employment,
Executive's principal place of work is relocated more than 75 miles from the
location of the current corporate headquarters of the Company in Rochester, New
York and Pittsburgh, PA other than any relocation effected pursuant to a
recommendation by Executive;
(iv) subject to the terms and conditions of that certain
letter agreement dated as of the date hereof between BE Holdings and Executive,
failure by BE Holdings to issue to Executive the limited liability company units
of BE Holdings specified therein within the time periods specified therein;
(v) any material breach by the Company of any of its
obligations under the Employment Agreement which has not been cured prior to 30
days following notice from Executive of such breach; or
(vi) any failure of the Company to obtain the assumption in
writing of its obligations under the Employment Agreement by any successor to
all or substantially all of its business or assets within thirty (30) days after
any reconstruction,
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amalgamation, combination, merger, consolidation, sale, liquidation, dissolution
or similar transaction; provided that no such assumption shall be required to be
obtained in connection with any dispositions of assets or business lines by the
Company or any of its subsidiaries so long as subsequent to any such disposition
the Company's primary business continues to be the marketing and sale of branded
frozen vegetable products.
As used herein, "Change in Control" means the consummation of a transaction,
whether in a single transaction or in a series of related transactions that are
consummated contemporaneously (or consummated pursuant to contemporaneous
agreements), with any other party or parties on an arm's-length basis, pursuant
to which such party or parties (a) acquire (whether by merger, stock purchase,
recapitalization, reorganization, redemption, issuance of capital stock or
otherwise) more than 50% of the voting stock of the Company or (b) acquire
assets constituting all or substantially all of the assets of the Company and
its subsidiaries on a consolidated basis; provided that nothing in clause (a) or
(b) shall include any dispositions of assets or business lines by the Company or
any of its subsidiaries so long as subsequent to any such disposition the
Company's primary business continues to be the marketing and sale of branded
frozen vegetable products.
(d) Notice of Termination. Any termination by the Company or by
the Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 8(c) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company other than for Disability,
the date of receipt of the Notice of Termination or any later date specified
therein within 30 days of such notice, (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be, (iii) if the Executive's employment is terminated by the Executive, the
Date of Termination shall be thirty days after the giving of such notice by the
Executive provided that the Company may elect to place the Executive on paid
leave for all or any part of such 30-day period and (iv) if the Executive's
employment is terminated as a result of non-renewal of the Employment Period by
the Company or the Executive pursuant to Section 1, the last day of the then
current Employment Period.
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4. Obligations of the Company upon Termination.
(a) Death or Disability. If, during the Employment Period the
Executive's employment shall terminate on account of death or Disability the
Company shall pay to the Executive or his estate:
(i) the Executive's Annual Base Salary through the Date of
Termination within 30 days after the Date of Termination to the extent not
theretofore paid; and
(ii) an amount equal to the product of (x) the Annual Bonus
that would have been paid to the Executive for such fiscal year and (y) a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination and the
denominator of which is 365, to the extent not theretofore paid (such amount,
the "Accrued Bonus"), at such time as the Annual Bonus would have been paid in
the ordinary course;
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive or his estate or
beneficiaries (A) a cash lump sum amount equal to the product of (x) the
Executive's Annual Base Salary and (y) a fraction, the numerator of which is the
number of Executive's accrued but unused vacation days and the denominator of
which is 365 (the "Accrued Vacation Amount") and (B) any other amounts
(including any unreimbursed business expenses) or benefits required to be paid
or provided or which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies through the Date of Termination (the Accrued Vacation
Amount and such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits"); and
(b) By the Company for Cause; By the Executive Other than for
Good Reason; Non-Renewal by Executive. If the Executive's employment is
terminated for Cause, the Executive terminates his employment without Good
Reason during the Employment Period or the Executive elects to not renew the
Employment Period pursuant to Section 1, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (i) his Annual Base Salary through the Date of Termination to the
extent theretofore unpaid and (ii) the Other Benefits.
(c) By the Company Other than for Cause, Death or Disability; By
the Executive for Good Reason; Non-Renewal by the Company. If, during the
Employment Period the Executive's employment is terminated by the Executive for
Good Reason or by the Company other than for Cause, other than on account of
death or Disability or as a result of non-renewal of the Employment Period by
the Company pursuant to Section 1:
(i) subject to continued compliance by the executive of the
covenants set forth in Section 5 hereof, the Company shall pay to the Executive:
(A) the Executive's Annual Base Salary through the Date of
Termination within 30 days after the Date of Termination to the extent not
theretofore paid; and
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(B) the amount equal to the product of (x) two (2) and (y) the
sum of the Executive's current Annual Base Salary and Annual Bonus for the
preceding fiscal year (which Annual Bonus shall be deemed to be $350,000 for the
purposes of this Section 4(c)(i)(B) if Date of Termination occurs prior to June
30, 2006), payable during the period commencing on the Date of Termination and
until the termination of the Restricted Period (as defined below) in regular
installments in accordance with the Company's general payroll practices;
(ii) the Company shall provide the Executive with the Other
Benefits; and
(iii) the Company shall provide the Executive continued
coverage under the Company's group health plans until the earlier of (x) the
expiration of the Restricted Period and (y) the date Executive becomes eligible
for comparable coverage under health plans of any successor employer.
(d) Release. The severance payments and such benefits to be
provided by the Company pursuant to this Section 4 shall (i) be in lieu of any
other payments by the Company to Executive (other than pursuant to BE Holdings'
limited liability company agreement) and (ii) be subject to Executive's
execution (other than in the case of Executive's death) of a release agreement
in substantially the form attached hereto as Exhibit A,
5. Noncompetition; Nonsolicitation; Etc. Executive acknowledges that
in the course of his employment with the Company he will become familiar with
the Company's and its subsidiaries' trade secrets and other confidential
information concerning the Company and such subsidiaries (collectively, the
"Confidential Information") and that his services will be of special, unique and
extraordinary value to the Company and its subsidiaries. Therefore, Executive
agrees that:
(a) Noncompetition. During the Employment Period and until the
second anniversary of the date Executive's employment with the Company
terminates (the "Restricted Period"), Executive shall not, for himself or on
behalf of any other person, firm, partnership, corporation, or other entity
(each a "Person"), engage, directly or indirectly, as an executive, agent,
representative, consultant, partner, shareholder or holder of any other
financial interest in any Person that owns or operates any business that
competes with (i) the frozen vegetable, frozen fruit, frozen skillet meal or the
fruit or pie filling lines of business of the Company or any subsidiary of the
Company (including both branded and non-branded segments within each line of
business) or (ii) any line of business (other than those currently engaged in by
the Company or any of its subsidiaries) that accounts for 10% or more of the
revenues or net operating cash flows of the Company and its subsidiaries any
time during the Employment Period (collectively, the "Business"). Nothing herein
shall prohibit Executive (i) from being a passive owner of not more than 2% of
the outstanding, publicly traded stock of any class of a corporation engaged in
any of the activities described in the foregoing sentence, so long as Executive
has no active participation in the business of such corporation, (ii) subsequent
to the Employment Period, from being employed by, or otherwise having material
association with, any business that competes materially with the Company in the
Business if his employment or association is with a separately managed and
operated division or Affiliate of such business that does not compete with the
Company in any part of the Business and (iii) subsequent to the Employment
Period,
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from serving on the board of directors of any business that is involved in the
Business as an immaterial part of its overall business (i.e., less than 5% of
its overall revenues), so long as Executive recuses himself fully and completely
from all matters relating to any part of the Business. Executive acknowledges
that this Agreement, and specifically, this Section 5, does not preclude
Executive from earning a livelihood, nor does it unreasonably impose limitations
on Executive's ability to earn a living. In addition, Executive agrees and
acknowledges that the potential harm to the Company of its non-enforcement
outweighs any harm to Executive of its enforcement by injunction or otherwise.
(b) Nonsolicitation. During the Restricted Period, Executive
shall not directly or indirectly through another entity (i) induce or attempt to
induce any employee of the Company or its subsidiaries to leave the employ of
the Company or its subsidiaries, or in any way interfere with the relationship
between the Company or any of its subsidiaries and any employee thereof, (ii)
hire any person who was an employee of the Company or any of its subsidiaries
within 180 days prior to the time such employee was hired by Executive, (iii)
induce or attempt to induce any customer, supplier, licensee or other business
relation of the Company or any of its subsidiaries to cease doing business with
the Company or its subsidiaries or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any subsidiary or (iv) directly or indirectly acquire or attempt to
acquire an interest in any business relating to the business of the Company or
any of its subsidiaries and with which the Company or any of its subsidiaries
has entertained discussions or has requested and received information relating
to the acquisition of such business by the Company or its subsidiaries in the
one-year period immediately preceding Executive's termination of employment with
the Company.
(c) Confidentiality. The Confidential Information is property of
the Company or its subsidiaries. Executive further agrees that Executive shall
not disclose to any unauthorized Person or use for Executive's own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the Confidential Information becomes generally known to
and available for use by the public other than as a result of Executive's acts
or omissions. Executive shall deliver to the Company on the Date of Termination,
or at any other time as the Company may request, all memoranda, notes, plans,
records, reports, computer tapes, printouts and software and other documents and
data (and copies thereof) embodying or relating to the Confidential Information,
Work Product (as defined below), or the business of the Company or any
subsidiaries which Executive may then possess or control.
(d) Inventions and Patents. Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive while employed
by the Company and its subsidiaries (collectively, the "Work Product") belong to
the Company or such subsidiary. Executive shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
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(e) Enforcement. The parties to this Agreement hereby agree and
stipulate that (i) the restrictions contained in this Agreement are reasonable
and necessary in order to protect the Company's and its subsidiaries' legitimate
business interests and (ii) in the event of any breach or violation of this
Agreement or of any provision hereof by Executive, the Company and its
subsidiaries will have no adequate remedy at law and will suffer irreparable
loss and damage thereby. The parties hereby further agree and stipulate that in
the event of any such breach or violation, either threatened or actual, the
Company's and its subsidiaries' rights shall include, in addition to any and all
other rights available to the Company and its subsidiaries at law or in equity,
the right to seek and obtain any and all injunctive relief or restraining orders
available to it in courts of proper jurisdiction, so as to prohibit, bar, and
restrain any and all such breaches or violations by Executive. The prevailing
party to any legal action, arbitration or other proceeding commenced in
connection with enforcing any provision of this Section 5, including without
limitation, obtaining the injunctive relief provided by this Section 5 shall be
entitled to recover all court costs, reasonable attorneys' fees, and related
expenses incurred by such party. Executive further agrees that no bond need be
filed in connection with any request by the Company and its subsidiaries for a
temporary restraining order or for temporary or preliminary injunctive relief.
(f) Additional Acknowledgments. Executive acknowledges that the
provisions of this Section 5 are in consideration of: (i) employment with the
Company, (ii) the issuance of certain limited liability company interests of BE
Holdings to the Executive and (iii) additional good and valuable consideration
as set forth in this Agreement. In addition, Executive acknowledges (i) that the
business of the Company and its subsidiaries is national in scope and without
geographical limitation and (ii) notwithstanding the state of incorporation or
principal office of the Company or any of its subsidiaries, or any of their
respective executives or employees (including the Executive), it is expected
that the Company will have business activities and have valuable business
relationships within its industry throughout the United States. Executive
acknowledges that he has carefully read this Agreement and has given careful
consideration to the restraints imposed upon Executive by this Agreement, and is
in full accord as to their necessity for the reasonable and proper protection of
confidential and proprietary information of the Company and its subsidiaries now
existing or to be developed in the future. Executive expressly acknowledges and
agrees that each and every restraint imposed by this Agreement is reasonable
with respect to subject matter, time period and geographical area.
6. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
7. 280G Benefits and Excise Tax.
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(a) Shareholder Approval. The Company agrees to notify Executive
if there is a high probability that a 280G Event (as defined below) will likely
occur with respect to Executive, and further agrees that, upon written request
of the Executive which written request (if made) shall include an election by
the Executive to condition his receipt of any 280G Benefits (as defined below)
on obtaining the Shareholder Approval (as defined below), prior to its
consummating any transaction that could cause the Company to be considered to
have experienced a change within the meaning of Section 280G(b)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code") (a
"280G Event"), the Company shall use commercially reasonable efforts in seeking
Company shareholder approval, pursuant to the requirements set forth at Q&A 7 of
Reg. section 1.280G-1, of payment of such portions of the payments to be made to
or for the benefit of the Executive contingent on such transaction that would
constitute "parachute payments" within the meaning of Section 280G(b)(2) of the
Code (such payments or benefits, the "280G Benefits" and such shareholder
approval, the "Shareholder Approval"), as requested in writing by Executive.
Executive may (but shall not be required to) elect to condition his receipt of
any such payment on obtaining such Shareholder Approval.
(b) Cutback. Notwithstanding any provision of this Agreement to
the contrary and if the Shareholder Approval is not obtained (including as a
result of the Executive failing to elect to condition his receipt of any such
payment or benefit on obtaining Shareholder Approval), and if all or any portion
of the payment or benefits received or realized by Executive pursuant to this
Agreement either alone or together with other payments or benefits which
Executive receives or realizes or is then entitled to receive or realize from
the Company or any of its affiliates would constitute a "parachute payment"
within the meaning of Section 280G of the Code and/or any corresponding and
applicable state law provision, such payments or benefits provided to Executive
shall be reduced by reducing the amount of payments or benefits payable to
Executive (using any cash payments first in the manner designated by the
Executive) to the extent necessary so that no portion of such payments or
benefits shall be subject to the excise tax imposed by Section 4999 of the Code
and any corresponding and/or applicable state law provision; provided that such
reduction shall only be made if, by reason of such reduction, Executive's net
after tax benefit shall exceed the net after tax benefit is such reduction were
not made. For purposes of this paragraph, "net after tax benefit" shall mean the
sum of (i) the total amount received or realized by Executive pursuant to this
Agreement that would constitute a "parachute payment" within the meaning of
Section 280G of the Code and/or any corresponding and applicable state law
provision (as applicable), plus (ii) all other payments or benefits which
Executive receives or realizes or is then entitled to receive or realize from
the Company and any of its affiliates that would constitute a "parachute
payment" within the meaning of Section 280G of the Code and/or any corresponding
and applicable state law provision (as applicable), less (iii) the amount of
federal or state income taxes payable (as applicable) with respect to the
payments or benefits described in (i) and (ii) above calculated at the maximum
marginal individual income tax rate for each year in which payments or benefits
shall be realized by Executive (based upon the rate in effect for such year as
set forth in the Code or applicable State law (as applicable) at the time of the
first receipt or realization of the foregoing), less (iv) the amount of excise
taxes imposed with respect to the payments or benefits described in (i) and (ii)
above by Section 4999 of the Code and/or any corresponding and applicable state
law provision (as applicable). The calculations of the various amounts required
to be made pursuant to this Section 7(b) shall be made by the Company's regular
independent accounting firm unless Executive reasonably
11
objects to the use of such firm, in which event such calculations will be made
by a nationally recognized United States public accounting firm chosen by the
parties.
8. Miscellaneous.
(a) This Agreement and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of New
York applicable to contracts entered into and to be performed solely within such
State without regard to choice of law considerations. The parties hereto hereby
waive, to the fullest extent by applicable law, any right to trial by jury with
respect to any action or proceeding arising out of or relating to this
Agreement.
(b) Any disputes with regard to this Agreement that is not
resolved by mutual agreement, other than as provided in Section 5(e) hereof,
shall be resolved by binding arbitration before the American Arbitration
Association ("AAA") in New York City pursuant to the rules of AAA. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
'SS''SS' 1-16 and shall be conducted in accordance with the rules and procedures
of AAA. Any judgment upon the reward rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitrator's decision shall set
forth a reasoned basis for any award of damages or findings of liability. The
arbitrator shall not have the power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive
damages, and each party hereby irrevocable waives any claim to such damages. The
costs of AAA and the arbitrator shall be borne by the Company. Each party shall
bear its own costs (including, without limitation, legal fees and fees of any
experts) and out-of-pocket expenses; provided, that the Company shall promptly
advance to Executive all reasonable expenses (including attorney's fees) up to
$25,000 incurred in connection with such dispute, subject to Executive executing
a customary undertaking to repay such advances to the Company to the extent the
Executive does not substantially prevail in such arbitration.
(c) all notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient with telephonic confirmation by the sending party. Such notices,
demands and other communications will be sent to the address indicated below:
If to the Executive:
Xxxx Xxxxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: (000)000-0000
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If to the Company:
Birds Eye Foods, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopy Number: (000)000-0000
Attention: Secretary
with a copy to (which shall not constitute notice to the
Company):
Vestar Capital Partners IV, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000)000-0000
Attention: General Counsel
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.
(d) The Company shall promptly reimburse Executive for reasonable
attorneys' fees of up to $40,000 he incurs in connection with the negotiation,
implementation, and documentation of this Agreement and other arrangements
relating to his employment with the Company.
(e) The Executive shall not be required to seek other employment
during the Restricted Period subsequent to the termination or expiration of the
Employment Period or to reduce any amounts or benefits payable or to be provided
to him under Section 4 hereof, and no such payment or benefit shall be reduced
on account of any compensation received by the Executive from other employment.
The Company's obligation to pay or provide the amounts or benefits under Section
4 hereof shall not be reduced by any amount owed by the Executive to the
Company.
(f) Subject to the provisions of Section 4(c), there shall be no
limitation on the ability of the Company to terminate the Executive at any time
with or without Cause.
(g) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(h) The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise
13
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(i) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(j) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(k) From and after the Effective Date this Agreement shall
supersede any other employment agreement between the parties or between the
Company and the Executive with respect to the subject matter hereof.
(l) Notwithstanding anything to the contrary herein, (i) BE
Holdings shall prior to the Effective Date assign this Agreement to the Company
and upon such assignment, the Company shall be deemed substituted for BE
Holdings as a party to this Agreement and BE Holdings shall have no obligations
to the Executive hereunder, (ii) such assignment shall not require the consent
of the Executive and (iii) until such assignment has been effected, the Company
shall be a third party beneficiary of this Agreement and shall be entitled to
enforce this Agreement as if it were an original party thereto.
* * * * * * * * *
14
IN WITNESS WHEREOF, the Executive and the Company have each executed
this Agreement as of the day and year first above written.
/s/ Xxxx Xxxxxxxx
--------------------------------
Xxxx Xxxxxxxx
BIRDS EYE HOLDINGS, LLC
By: /s/ Xxxxx Xxxxxx
-----------------------------
Title: Authorized Person
--------------------------
IN WITNESS WHEREOF, the Executive and the Company have each executed
this Agreement as of the day and year first above written.
/s/ Xxxx Xxxxxxxx
--------------------------------
Xxxx Xxxxxxxx
BIRDS EYE HOLDINGS, LLC
By: Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxxx
Title: Authorized Person
-------------------------
Exhibit A
FORM OF RELEASE AGREEMENT
In consideration of receipt of severance payments and benefits as set
forth in Section 4 of the Employment Agreement, dated as of September 2, 2005,
by and between Birds Eye Holdings, LLC ("BE Holdings") and Xxxx Xxxxxxxx (the
"Employment Agreement") and subsequently assigned by BE Holdings to Birds Eye
Foods, Inc. (the "Company"), I, Xxxx Xxxxxxxx, hereby release and discharge the
Company, and each of its employees, officers, directors, stockholders, agents,
subsidiaries and other affiliates from, and waive any and all claims, demands,
damages, causes of action or suits (collectively, "Claims") of any kind or
nature whatsoever that I may have had or may now have against any of them
(including, without limitation, any Claims arising out of or related to my
employment with the Company or the termination thereof), whether arising under
contract, tort, statute or otherwise, and whether I know of the claim or not,
including, without limitation, Claims arising under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Equal Pay for Equal Work Act, and any other applicable
federal, state or local statutes, rules, codes, or ordinances. Notwithstanding
anything herein to the contrary this release does not cover (i) my rights to the
severance payments and benefits provided in Section 4 of the Employment
Agreement or any payments that are due under Birds Eye Holdings, LLC's limited
liability company agreement; (ii) my rights to any vested or accrued benefits or
rights under the applicable terms of Company plans, programs, or arrangements;
(iii) any Claim by me to enforce the rights arising under or preserved by the
Employment Agreement that survive expressly survive termination of my
employment; and (iv) any Claim by me to enforce indemnification rights as
provided in the Company's articles of incorporation.
I have not, and shall not hereafter, institute any lawsuit of any kind
whatsoever, or file any complaint or charge, against the Company or any of its
former or present employees, officers, directors, stockholders, agents,
subsidiaries, or affiliates, and any of their successors or assigns, under any
federal, state or local statute, rule, regulation or principle of common law
growing out of events released hereunder. I shall not seek employment or
reemployment with the Company. I acknowledge that I have had at least 21 days to
review and consider this release agreement before accepting it. I have been
advised to consult with an attorney before signing this release agreement.
This release agreement and any dispute, disagreement, or issue of
construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of New
York applicable to contracts entered into and to be performed solely within such
State without regard to choice of law considerations. The parties hereto hereby
waive, to the fullest extent by applicable law, any right to trial by jury with
respect to any action or proceeding arising out of or relating to this release
agreement.
16
/s/ Xxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
Dated: September 2, 2005
Acknowledged and Agreed as of
September 2, 2005:
BIRDS EYE FOODS, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Person
17
