Exhibit 10.31
EMPLOYMENT AGREEMENT
AGREEMENT by and among Xxxxxx'x Grand Ice Cream, Inc., a Delaware
corporation (the "Company") and Xxxx X. XxXxxxx (the "Executive"), dated as
August 30, 2002 (the "Agreement").
WHEREAS, the Company, New December, Inc., a Delaware corporation ("New
Dreyer's") and wholly owned subsidiary of the Company, December Merger Sub,
Inc., a Delaware corporation and wholly owned subsidiary of New Dreyer's, Nestle
Holdings, Inc., a Delaware corporation ("Nestle") and NICC Holdings, Inc., a
Delaware corporation and wholly owned indirect subsidiary of Nestle ("NICC")
have entered into an Agreement and Plan of Merger Contribution, dated as of June
16, 2002 (as such agreement may hereafter be amended, the "Merger Agreement"),
whereby, among other things, the Company and NICC will become wholly owned
subsidiaries of New Dreyer's; and
WHEREAS, the Executive currently serves as an employee of the Company;
and
WHEREAS, in light of the foregoing, the Company wishes to provide for
the employment of the Executive by the Company, and the Executive wishes to
serve the Company, in the capacities and on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period.
(a) Agreement Effective Date. The Company hereby agrees
to employ the Executive, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, during the
period (the "Employment Period") beginning on the earlier of the Effective Time
of the Merger (as defined in the Merger Agreement) or the occurrence of a Change
in Control (as defined below) (the date of the earlier of such events, the
"Agreement Effective Date") and ending on the later of the third anniversary of
the Agreement Effective Date or January 1, 2006; provided, that if the Merger
Agreement is terminated as a result of a Change in Control occurring before the
Effective Time of the Merger, the Employment Period shall not begin unless and
until the Executive expressly reaffirms by written notice to the Company the
waiver of vesting of the Deferred Options set forth in Section 1(b) below; and
provided further that if the Merger Agreement is terminated as a result of a
Change in Control occurring before the Effective Time of the Merger, this
Agreement shall immediately be null and void ab initio and of no further effect
unless the Executive expressly reaffirms the waiver of vesting of the Deferred
Options within ten business days after (i) in the case of a Change of Control as
described in Section 1(c)(iii) below, the date the Company publicly announces
that it has entered into a definitive agreement pursuant to which the Change of
Control will occur, and (ii) in the case of any other Change of Control, the
date of such Change of Control.
(b) Deferred Options. In consideration for the
protections afforded to the Executive under this Agreement, the Executive hereby
waives the vesting of the Deferred Options (as defined below) that has occurred
or may hereafter occur solely as a result of the
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applicability of the change-of-control provisions of Section 11 of the Company's
Stock Option Plan (1993) (the "Option Plan") upon the approval of the Merger
Agreement by the Board of Directors of the Company (the "Board") and/or the
transactions contemplated by the Merger Agreement, and agrees that the Deferred
Options shall vest in three equal annual installments on each of the first three
anniversaries of the Agreement Effective Date, subject to the terms of the
Deferred Options, the Option Plan and the provisions of Sections 4(a)(iv),
4(b)(iii) and 4(c)(v) of this Agreement. Each such annual installment shall
include a pro-rata portion of each separate grant of Deferred Options.
Notwithstanding the foregoing, if the Merger Agreement is terminated as a result
of a Change in Control occurring before the Effective Time of the Merger, such
waiver and the preceding sentence shall be void unless expressly reaffirmed as
contemplated by Section 1(a) above. The "Deferred Options" means those stock
options that have been granted to the Executive under the Option Plan that are
outstanding on the date of this Agreement that would not be vested on the date
of this Agreement, absent the fact that approval of the Merger Agreement by the
Board caused them to vest pursuant to Section 11 of the Option Plan. In
addition, the Executive consents to the treatment of his options to purchase
Company common stock provided for in Section 2.11(e) of the Merger Agreement.
Except as provided otherwise in this Agreement or the Merger Agreement, the
Deferred Options shall continue to be subject to the Option Plan and the terms
of the underlying award agreement, including without limitation the provision
that vested Deferred Options will remain exercisable for at least three months
following any termination of the Executive's employment for any reason, whether
during or after the end of the Employment Period (but not after the expiration
of the original option term).
(c) Definition of Change in Control: A Change in Control
shall mean the first to occur of any of the following events, but disregarding
any such event that occurs pursuant to the transactions contemplated by the
Merger Agreement:
(i) 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") shall be the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (x) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (y) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that if any Person's beneficial ownership of the Outstanding
Company Common Stock or Outstanding Company Voting Securities reaches or exceeds
30% as a result of a redemption of Outstanding Company Common Stock or
Outstanding Company Voting Securities by the Company, such event shall not be
considered an event described in this clause (i) of Section 1(c), but if such
Person subsequently acquires beneficial ownership of additional Outstanding
Company Common Stock or Outstanding Company Voting Securities, such subsequent
acquisition shall be treated as an event described in this clause (i) of Section
1(c); and provided further, that, for purposes of this Section 1(c), the
following shall not constitute a Change of Control: (A) any acquisition directly
from the Company, (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or (D) any acquisition by any corporation pursuant to a transaction that
complies with Sections (A), (B), and (C) of clause (iii) of this Section 1(c);
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(ii) Individuals who, as of the date of this
Agreement, 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 of this Agreement whose
election, or nomination for election by the Company's stockholders, 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, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;
(iii) Consummation of a reorganization, merger,
statutory share exchange or consolidation or similar corporate transaction
involving the Company or any of its subsidiaries, a sale or other disposition of
all or substantially all of the assets of the Company, or the acquisition of
assets or stock of another entity by the Company or any of its subsidiaries
(each, a "Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(iv) Approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with those held or exercised by the
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Executive immediately preceding the Agreement Effective Date and (B) the
Executive's services shall be performed at the office where the Executive was
employed immediately preceding the Agreement Effective Date or at any other
location less than 30 miles from such office.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full-time attention and time during
normal business hours to the business and affairs of the Company. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Agreement
Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Agreement
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period,
the Executive shall receive a base salary (the "Base Salary") at an annual rate
at least equal to the annual rate of base salary in effect for the Executive as
of the date of this Agreement, as the same may be increased thereafter pursuant
to the Company's normal practices for its executives. The Base Salary shall be
paid at such intervals as the Company pays executive salaries generally. During
the Employment Period, the Base Salary shall be reviewed at least annually for
possible increase. Any increase in Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. The Base
Salary shall not be reduced after any such increase and the term Base Salary as
utilized in this Agreement shall refer to Base Salary as so increased.
(ii) Annual Bonus. In addition to the Base
Salary, the Executive shall be eligible to earn, for each fiscal year ending
during the Employment Period, an annual cash bonus (an "Annual Bonus") on terms
and conditions no less favorable (taking into account both the amount of the
Annual Bonus that may be earned, the difficulty of achieving the associated
performance goals, and all other relevant terms and conditions) than the terms
and conditions applicable to the Executive under the Company's annual bonus
program as in effect as of the date of this Agreement. In no event shall the
percentage of the Base Salary represented by the Annual Bonus that the Executive
is eligible to earn upon achievement of all performance targets at 100% (the
"Target Bonus Percentage") be less than such percentage applicable to the
Executive as of the date of this Agreement.
(iii) Long-Term Incentive Plan. The Executive
shall also receive long-term incentive compensation opportunities during the
Employment Period as set forth in this Section 2(b)(iii) (the "Long-Term
Incentive Compensation"). If the Agreement Effective Date occurs at the
Effective Time of the Merger, the Long-Term Incentive Compensation shall be
provided pursuant to the long-term incentive plan provided for in Section 6.5 of
the Merger Agreement and described in Exhibit A hereto (the "Agreed LTIP");
provided, however, that the
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Company's failure to adopt the Agreed LTIP shall not constitute Good Reason
within the meaning of Section 3(c). If the Agreement Effective Date occurs upon
a Change of Control, the Long-Term Incentive Compensation shall be provided
either pursuant to a long-term incentive plan on terms and conditions
substantially similar to the Agreed LTIP or through grants of stock options on a
basis not less favorable than the stock options currently provided to the
Executive by the Company.
(iv) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to participate in
all other incentive plans, practices, policies and programs, and all savings and
retirement plans, practices, policies and programs, in each case that are
applicable generally to other peer executives of the Company, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities, savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than those
provided to the Executive under such plans, practices, policies and programs as
in effect immediately before the date of this Agreement or, if more favorable to
the Executive, those provided generally at any time thereafter to other peer
executives of the Company.
(v) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliates (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable, in
the aggregate, than those provided to the Executive immediately before the date
of this Agreement or, if more favorable to the Executive, those provided
generally at any time thereafter to other peer executives of the Company.
(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company in effect for the Executive
immediately before the date of this Agreement or, if more favorable to the
Executive, those provided generally at any time thereafter to other peer
executives of the Company.
(vii) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits in accordance with
the most favorable policies, practices and procedures of the Company in effect
for the Executive immediately before the date of this Agreement (including,
without limitation, automobiles) or, if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company.
(viii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance at least equal to those provided to the
Executive immediately before the date of this Agreement or, if more favorable to
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the Executive, those provided generally at any time thereafter to other peer
executives of the Company.
(ix) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company as in effect
for the Executive immediately before the date of this Agreement or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
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 10(b) 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 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 90 consecutive days or on a total of
180 days in any 12-month period, in either case as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a
physician selected by the Company or their insurers and acceptable to the
Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. For purposes
of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the Company (as
described in Section 2(a)) (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties and the
Executive is given a reasonable opportunity to cure any such failure to
substantially perform;
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct, in each case which is materially and
demonstrably injurious to the Company; or
(iii) (A) any intentional act of fraud, or
material embezzlement or material theft by the Executive, in each case, in
connection with the Executive's duties hereunder or in the course of the
Executive's employment hereunder or (B) the Executive's admission in any court,
or conviction of, a felony involving moral turpitude, fraud, or material
embezzlement, material theft or material misrepresentation, in each case,
against the Company.
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For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, upon the instructions of the Chief Executive Officer of
the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in Section 3(b)(i), 3(b)(ii) or 3(b)(iii), and
specifying the particulars thereof in detail; provided, that if the Executive is
a member of the Board, the Executive shall not vote on such resolution nor shall
the Executive be counted in determining the "entire membership" of the Board;
and provided, further, that the members of the Board voting in favor of such
resolution shall include at least two directors who were not selected, nominated
or appointed by Nestle.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason or by the Executive without Good
Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, 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 given by the
Executive; provided, however, that the mere completion of the Merger, in and of
itself, shall not constitute Good Reason;
(ii) any failure by the Company to comply with
any of the provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than as provided in clause (B) of Section
2(a)(i) hereof or the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required immediately prior to
the Agreement Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by this
Agreement; or
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(v) any failure by the Company to comply with
and satisfy Section 9(c) of this Agreement.
For purposes of this Section 3(c), the Company may not challenge the Executive's
determination of Good Reason except upon the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel for
the Executive, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive does not have Good Reason and specifying the
particulars thereof in detail; provided, that if the Executive is a member of
the Board, the Executive shall not vote on such resolution nor shall the
Executive be counted in determining the "entire membership" of the Board; and
provided, further, that the members of the Board voting in favor of such
resolution shall include at least two directors who were not selected, nominated
or appointed by Nestle. The Executive's mental or physical incapacity following
the occurrence of an event described above in clauses (i) through (v) shall not
affect the Executive's ability to terminate employment for Good Reason.
(d) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other parties hereto given in accordance with Section
10(b) 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, the Company or New Dreyer's, 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 for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein (which date shall not be more than 30 days
after the giving of such notice), as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) 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.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment without Cause or the Executive shall terminate employment
for Good Reason:
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(i) The Executive shall be paid, in a single
lump sum payment within 60 days after the Date of Termination, the aggregate
amount of (A) the Executive's earned but unpaid Base Salary and accrued but
unpaid vacation pay through the Date of Termination, and any Annual Bonus
required to be paid to the Executive pursuant to Section 2(b)(ii) above for any
fiscal year that ends on or before the Date of Termination to the extent not
previously paid (the "Accrued Obligations"), (B) the Base Salary that would have
been required to be paid to the Executive through the remainder of the
Employment Period if the Executive had remained in the employ of the Company
throughout the Employment Period, (C) an amount equal to the Target Bonus
Percentage times the total amount described in clause (B) of this sentence, and
(D) the product of (x) the number of years and fractions thereof from the Date
of Termination through the end of the Employment Period, times (y) the amount of
matching contributions made by the Company for the Executive's account under its
401(k) plan with respect to the most recent plan year ending prior to the Date
of Termination;
(ii) The Executive shall be entitled to the
Long-Term Incentive Compensation on the same basis and at such times as if the
Executive's employment had not terminated;
(iii) Through the remainder of the Employment
Period, or such longer period as may be provided by the terms of a written plan,
program or policy, the Executive and/or the Executive's family shall continue to
be provided with welfare benefits and fringe benefits at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Sections 2(b)(v) and 2(b)(vii) of this
Agreement if the Executive's employment had not been terminated; and for
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed for the remainder of the Employment Period and to have retired
on the last day of such period;
(iv) The Deferred Options shall vest and become
exercisable as of the Date of Termination to the extent not previously vested
and exercisable, and all Deferred Options that have not previously been
exercised shall remain exercisable for the period provided under the Option Plan
and the applicable agreement or, if longer, until the day after any puts under
the Company's charter have ceased to be exercisable (but in no event after the
expiration of their original term);
(v) The Company shall, at its sole expense and
on an as-incurred basis, provide the Executive with outplacement services the
scope and provider of which shall be reasonable and consistent with industry
practice for similarly situated executives; and
(vi) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any vested
benefits and other amounts 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 affiliates (such other amounts
and benefits shall be hereinafter referred to as the "Other Benefits").
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Notwithstanding the foregoing, if the Company executes and delivers to the
Executive a mutual release in the form attached hereto as Exhibit B within 15
days after the Date of Termination, it shall be a condition to the Executive's
right to receive the amounts provided for in clauses (B), (C) and (D) of Section
4(a)(i) above that the Executive execute, deliver to the Company and not revoke
such mutual release.
(b) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated by the Company for Cause during the Employment
Period, any Deferred Options that have not vested prior to the Date of
Termination shall be forfeited and the Company shall have no further obligations
to the Executive under this Agreement other than pursuant to Sections 6 and 7
hereof, and the obligation to pay to the Executive the Accrued Obligations in
cash within 30 days after the Date of Termination and to provide the Other
Benefits. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason:
(i) The Other Benefits shall be paid or provided
to the Executive on a timely basis;
(ii) The Accrued Obligations shall be paid to the
Executive's estate or beneficiaries or to the Executive, as applicable, in cash
within 30 days of the Date of Termination; and
(iii) Any Deferred Options that have vested by
their terms on or before the Date of Termination and have not previously been
exercised shall remain exercisable for the period provided under the Option Plan
and the applicable agreement; provided, however, that during the pendency, and
for three months after the resolution, of any dispute between the Company and
the Executive as to whether the Executive's termination is for Good Reason, such
Deferred Options shall remain exercisable.
(c) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period:
(i) The Accrued Obligations shall be paid to the
Executive's estate or beneficiaries or to the Executive, as applicable, in cash
within 30 days of the Date of Termination;
(ii) At the time when annual bonuses are paid to
other peer executives of the Company for the fiscal year in which the Date of
Termination occurs, the Executive shall be paid an Annual Bonus in an amount
equal to the product of (x) the amount of the Annual Bonus to which the
Executive would have been entitled, if the Executive's employment had not been
terminated, and (y) a fraction, the numerator of which is the number of days in
such fiscal year through the Date of Termination and the denominator of which is
365 (a "Pro-Rata Annual Bonus");
(iii) The Other Benefits shall be paid or provided
to the Executive on a timely basis;
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(iv) Through the remainder of the Employment
Period, or such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Executive and/or the Executive's family
shall continue to be provided with medical, dental and other health benefits at
least equal to those which would have been provided to them in accordance with
the plans, programs, practices and policies described in Section 2(b)(v) of this
Agreement if the Executive's employment had not been terminated; and
(v) The Deferred Options shall vest and become
exercisable as of the Date of Termination to the extent not previously vested
and exercisable, and all Deferred Options that have not previously been
exercised shall remain exercisable for the period provided under the Option Plan
and the applicable agreement or, if longer, until the day after any puts under
the Company's charter have ceased to be exercisable (but in no event after the
expiration of their original term).
The term "Other Benefits" as utilized in this Section 4(c) shall include,
without limitation, and the Executive or the Executive's estate and/or
beneficiaries, as applicable, shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company to peer executives
of the Company or the estates and beneficiaries of peer executives of the
Company, as applicable, under such written plans, programs and policies relating
to death or disability benefits, as applicable, if any, as in effect with
respect to other peer executives and their beneficiaries immediately before the
date of this Agreement or, if more favorable to the Executive or the Executive's
estate and/or the Executive's beneficiaries, as in effect on the date of the
Executive's death or Disability with respect to other peer executives of the
Company and their beneficiaries.
5. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred (within 10 days following the Company's
receipt of an invoice from the Executive), to the full extent permitted by law,
all legal fees and expenses which the Executive or his beneficiaries may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others 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
11
the Executive or his beneficiaries about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"). The preceding sentence shall not
apply with respect to any such contest if the court having jurisdiction over
such contest determines that the Executive's claim in such contest is frivolous
or maintained in bad faith.
7. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any Payment would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (the "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(and any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 7(a), if it shall be determined that the Executive is entitled to the
Gross-Up Payment, but that the Parachute Value of all Payments does not exceed
110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the
Executive and the amounts payable under this Agreement shall be reduced so that
the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor
Amount. The reduction of the amounts payable hereunder, if applicable, shall be
made by first reducing the payments under Section 4(a)(i), unless an alternative
method of reduction is elected by the Executive, and in any event shall be made
in such a manner as to maximize the Value of all Payments actually made to the
Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amount payable under this Agreement would not result in
a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no
amounts payable under the Agreement shall be reduced pursuant to this Section
7(a). The Company's obligation to make Gross-Up Payments under this Section 7
shall not be conditioned upon the Executive's termination of employment.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers or such other nationally recognized accounting firm as
may be agreed by the Company and the Executive (the "Accounting Firm");
provided, that the Accounting Firm's determination shall be made based upon
"substantial authority" within the meaning of Section 6662 of the Code. The
Accounting Firm shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice from
the Executive that there has been a Payment or such earlier time as is requested
by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 7, shall be paid by the Company to the Executive within 5 days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive, unless the
Company obtains an opinion of outside legal counsel, based upon at least
"substantial authority" within the meaning of Section 6662 of the Code, reaching
12
a different determination, in which event such legal opinion shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
will not have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to Section 7(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable, but no later than 10 business days after the Executive
is informed in writing of such claim. The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 7(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company
13
directs the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties) imposed with
respect to such advance or with respect to any imputed income in connection with
such advance; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of a Gross-Up
Payment or an amount advanced by the Company pursuant to Section 7(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
Section 7(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section
7, the Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the
benefit of the Executive, all or any portion of any Gross-Up Payment, and the
Executive hereby consents to such withholding.
(f) Any other liability for unpaid or unwithheld Excise
Taxes shall be borne exclusively by the Company, in accordance with Section 3403
of the Code. The foregoing sentence shall not in any manner relieve the Company
of any of its obligations under this Employment Agreement.
(g) Definitions. The following terms shall have the
following meanings for purposes of this Section 7.
(i) "Excise Tax" shall mean the excise tax
imposed by Section 4999 of the Code, together with any interest or penalties
imposed with respect to such excise tax.
(ii) "Parachute Value" of a Payment shall mean
the present value as of the date of the change of control for purposes of
Section 280G of the Code of the portion of such Payment that constitutes a
"parachute payment" under Section 280G(b)(2), as determined by the Accounting
Firm for purposes of determining whether and to what extent the Excise Tax will
apply to such Payment.
14
(iii) A "Payment" shall mean any payment or
distribution in the nature of compensation (within the meaning of Section
280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or
payable pursuant to this Agreement or otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times
the Executive's "base amount," within the meaning of Section 280G(b)(3) of the
Code.
(v) "Value" of a Payment shall mean the economic
present value of a Payment as of the date of the change of control for purposes
of Section 280G of the Code, as determined by the Accounting Firm using the
discount rate required by Section 280G(d)(4) of the Code.
8. Confidential Information and Non-Solicitation.
(a) The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or
data relating to the Company, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it; provided, that if the Executive receives actual notice that
the Executive is or may be required by law or legal process to communicate or
divulge any such information, knowledge or data, the Executive shall promptly so
notify the Company.
(b) While employed by the Company and after the
termination of the Executive's employment with the Company until the end of the
Employment Period, the Executive shall not directly or indirectly solicit,
induce, or encourage any employee, consultant, agent, customer, vendor, or other
parties doing business with the Company to terminate their employment, agency,
or other relationship with the Company or to render services for or transfer
their business from the Company and the Executive shall not initiate discussion
with any such person for any such purpose or authorize or knowingly cooperate
with the taking of any such actions by any other individual or entity.
(c) In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement. However, in
recognition of the facts that irreparable injury will result to the Company in
the event of a breach by the Executive of his obligations under Sections 8(a)
and (b) of this Agreement, that monetary damages for such breach would not be
readily calculable, and that the Company would not have an adequate remedy at
law therefor, the Executive acknowledges, consents and agrees that in the event
of such breach, or the threat thereof, the Company shall be entitled, in
addition to any other legal remedies and damages available, to specific
performance thereof and to temporary and permanent injunctive relief (without
the necessity of posting a bond) to restrain the violation or threatened
violation of such obligations by the Executive.
15
9. 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.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise. Without limiting the generality of the foregoing, as of the
Effective Time of the Merger, the Company shall cause New Dreyer's to become an
additional party to this Agreement and a co-obligor with respect to the
obligations of the Company under this Agreement, and from and after the
Effective Time of the Merger, the references in Section 3(b) and 3(c) of this
Agreement to the "Board" shall be deemed to refer to the Board of Directors of
New Dreyer's, and all references in this Agreement to the Company shall be
deemed to refer to both the Company and New Dreyer's.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. 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 than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the Executive's most recent address on the
records of the Company,
If to the Company:
Xxxxxx'x Grand Ice Cream, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
16
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
and (solely if the Employment Period begins upon the Effective Time of
the Merger) with a copy to:
Nestle Holdings, Inc.
000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) 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. In
addition, notwithstanding any other provision of this Agreement, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.
(e) 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, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 3(c)(i)-(v) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(f) Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto.
(g) Counterparts. This Agreement may be executed
simultaneously in two counterparts, each of which shall be deemed an original
but which together shall constitute one and the same instrument.
17
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
/s/ Xxxx X. XxXxxxx
Xxxx X. XxXxxxx
XXXXXX'X GRAND ICE CREAM, INC.
By: /s/ T. Xxxx Xxxxxx
Name: T. Xxxx Xxxxxx
Title: Chairman of the Board and Chief
Executive Officer
18
Exhibit A
Long Term Incentive Plan
The Company currently provides long-term incentive compensation through grants
of stock options. Certain key terms and conditions of the Company's current
stock option program (the "Current Program") are described at the end of this
Exhibit A.
The new incentive plan provided for in Section 6.5 of the Merger Agreement (the
"New Incentive Plan") shall be designed to provide employees of New Dreyer's and
its Subsidiaries with earnings opportunities that are not less favorable than
their earnings opportunities under the Current Program, and that are competitive
with market practices. In the case of employees who are parties to employment
agreements with the Company, such earnings opportunities shall be designed to
meet the requirements of the preceding sentence over the length of the term of
those agreements and such employees will have the opportunity to earn the full
amounts which are made available to them under the New Incentive Plan during the
term of those agreements. The other terms and conditions of the New Incentive
Plan shall be comparable to those of the Current Program.
The Company shall engage a consulting firm chosen by mutual agreement between
the Company and Nestle to design the New Incentive Plan, subject to the approval
of the Board of Directors of New Dreyer's, which approval shall be sought and
obtained as soon as practicable after the Effective Time.
The New Incentive Pan shall provide for cash incentive compensation based on
performance measures linked to the creation and enhancement of shareholder
value, such as, but not limited to, profitability, cash flow, revenue growth,
asset utilization, investment returns, and/or merger-related cost savings. For
the purpose of determining the target level of earnings opportunities under the
New Incentive Plan, the earnings opportunities provided by the Current Program
will be valued based on their expected fair value, such as under the
Black-Scholes option valuation method, and not taking into account any impact of
the Merger or its announcement on the value of the Company's stock. Failure by
the Board of Directors of New Dreyer's to implement the New Incentive Plan shall
not constitute "Good Reason" under any employment agreement entered into by New
Dreyer's or its Subsidiaries, before or after the Effective Time.
19
Description of Current Stock Option Program
- Grants to executives and the `middle-management' group are made annually.
The grants are approved by the Board at its February meeting and priced as
of the date of grant.
- All options have a ten-year life, and are vested on the following schedule:
-------------------------------------------------------
Anniversary of Grant Date Cumulative Amount Vested
-------------------------------------------------------
< 2 years None
-------------------------------------------------------
2 years 40%
-------------------------------------------------------
3 years 60%
-------------------------------------------------------
4 years 80%
-------------------------------------------------------
5 years 100%
-------------------------------------------------------
20
- The grants are based on a dollar value of stock, determined on the basis of
the fair market value of the Company's stock on the date of grant and by
ratios that apply to each class of managers. The Board reviews these ratios
for competitiveness from time to time, with advice from external
consultants. The ratios were last adjusted in February of 2001.
- The award factors for each class of managers are as follows:
-----------------------------------------------------------------
Group Award Factor
-----------------------------------------------------------------
CEO and President (2) 3.5 x Salary
-----------------------------------------------------------------
Vice-Presidents (4) 2.5 x the average salary of this group
-----------------------------------------------------------------
Executive Staff (24) 1.25 x the individual's salary
-----------------------------------------------------------------
Management Staff (78) 0.75 x the individual's salary
-----------------------------------------------------------------
- In addition to these programs for executives and managers, the Company has
an option incentive program called "I Can Make a Difference" for front-line
employees. Under this program, grants of 1000 shares each are made to
between 115 and 135 front-line employees each year, through a selection
made by the Vice-Presidents.
February 2002 Option Grants
Number
of # of Options $ Value of
Class Grantees Basis of Award Granted Shares
----- -------- -------------- ------------ ----------
CEO 1 3.5 x Salary 69,740 $ 2,747,000
Vice-Presidents 4 2.5 x Salary 95,680 $ 3,769,000
Executive Staff 24 1.25 x Salary 154,850 $ 6,100,000
Management Staff 78 0.75 x Salary 166,250 $ 6,549,000
Front-Line Incentive 120 1000 shares each 120,000 $ 4,727,000
-------- ------- -----------
Totals 227 606,520 $23,892,000
Notes: The xxxxx xxxxx for 2002 was $39.395
This table excludes the grant to the President (which was equal to
the CEO grant) and also excludes grants to the Board of Directors,
which amounted to 18,000 shares.
"Basis of Awards" yields a number of shares of stock, based on fair
market value on date of option grant, equal to salary times multiple.
21
Exhibit B
GENERAL RELEASE
This General Release (the "Agreement"), dated as of ______, is entered
into by and among Xxxxxx'x Grand Ice Cream, Inc., a Delaware corporation (the
"Company") and Xxxx X. XxXxxxx (the "Executive").
RECITALS
A. The Executive and the Company have previously entered into
that certain Employment Agreement, dated as of _________ (the "Employment
Agreement").
B. The Executive and the Company wish to enter into an agreement
to specify the terms of the termination of the Executive's positions as an
officer, employee and director of the Company and its subsidiaries, and to
clarify and resolve any disputes that may exist between them arising out of the
employment relationship and its termination, and to state the continuing
obligations of the parties to one another following the end of the employment
relationship.
C. In connection with the Executive's termination, the parties
have agreed to release each other from any and all claims which each may have
against the other, including claims arising from or related to the Executive's
employment relationship with the Company.
D. The Company has advised the Executive to consult an attorney
prior to signing this Agreement and has provided him with up to twenty-one (21)
days to consider this Agreement and to seek legal assistance. The Executive has
either consulted an attorney of his choice or voluntarily elected not to consult
legal counsel.
E. This Agreement is not and should not be construed as an
admission or statement by any party that it or any other party has acted
wrongfully or unlawfully. Each party expressly denies any wrongful or unlawful
action.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises contained below, it is agreed as follows:
1. Termination of Employment. Effective as of ____________ (the
"Termination Date"), the Executive's employment with the Company shall
terminate, and the Executive shall cease to hold any and all of his positions as
an officer, employee or director of the Company.
2. Severance and Benefits. As of the expiration of the revocation
period with respect to this Agreement provided for in Section 12 and the
consequent effectiveness of the waiver and release set forth in Section 6 hereof
(the "Release"), the Company shall provide the Executive with the payments and
benefits specified in clauses (B), (C) and (D) of Section 4(a)(i) of the
Employment Agreement (the "Severance Benefits"). The Executive acknowledges and
agrees that his right to receive the Severance Benefits thereunder is contingent
upon his execution of this Agreement and the consequent effectiveness due to
non-revocation of this
22
Agreement and the Release. If the Executive fails to execute this Agreement
within twenty-one days after it is executed by the Company and delivered to the
Executive and/or the Executive revokes this Agreement or the Release within
seven days after such execution, then the Executive shall not be entitled to the
Severance Benefits.
3. Valid Consideration. The Executive and Company agree that
Company's payment of the Severance Benefits is not required by Company's
policies or procedures and is given as consideration for the Release under this
Agreement.
4. General Release of Claims. In consideration of the Severance
Benefits and promises provided for herein, and except for rights created by this
Agreement and any indemnification rights the Executive may have as an officer,
director and/or employee of the Company, the Executive, on behalf of himself and
his heirs, representatives and assigns, hereby expressly waives, releases and
forever discharges the Company, and its direct or indirect parents,
subsidiaries, affiliates, related entities, predecessors, successors, divisions,
owners, stockholders, directors, officers, employees, partners, heirs, assigns,
agents, attorneys, insurers, managers, representatives and all persons acting
by, through, under or in concert with them (collectively referred to herein as
the "Company Releasees"), and the Company hereby expressly waives, releases and
forever discharges the Executive and his heirs, assigns, agents, attorneys,
representatives and persons acting by, through, under or in concert with them,
each in their capacity as such, from any and all claims, demands, actions,
causes of action (in law or in equity), suits, debts, liens, contracts,
agreements, promises, liability, damages, loss, cost or expense, of every kind
and nature, whether known or unknown, suspected or unsuspected, fixed or
contingent (collectively, "Claims") (including, without limitation, any claims
for wages, severance pay, bonuses or other incentive compensation, stock options
or employment benefits) that each now has or at any time may have had against
the other(s) or any of them, arising out of or in any way related to:
(a) the Executive's employment with the Company and/or
the termination thereof;
(b) any employment agreement (including, without
limitation, the Employment Agreement) or any other contracts, express or
implied, any covenant of good faith and fair dealings, express or implied, any
theory of wrongful discharge, breach of contract, defamation, whistle-blowing or
any legal restriction on the Company's right to terminate employees;
(c) any federal, state, or other governmental statute or
ordinance or wage order, including, without limitation, Title VII of the Civil
Rights Act of 1964 as amended by the Civil Rights Act of 1991, the Federal Age
Discrimination in Employment Act, as amended, the Equal Pay Act, as amended, the
Older Workers Benefit Protection Act of 1990, the Family and Medical Leave Act,
the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the
Fair Labor Standards Act, as amended, the Employee Retirement Income Security
Act, the California Fair Employment and Housing Act, the California Labor Code,
any California Wage Order, and/or any other Federal, state, municipal or local
law (statutory or decisional), regulation, or ordinance, or any other legal
limitation on the employment relationship;
23
provided, however, that notwithstanding the foregoing, the release set forth in
this Agreement shall not waive or release: (i) any claims arising out of
fraudulent or criminal conduct or embezzlement; (ii) any claims arising under or
relating to Section 4 (other than clauses (B), (C) and (D) of Section 4(a)(i))
or Sections 5, 6, 7, 8, 9 or 10 of the Employment Agreement (such Sections, the
"Surviving Employment Agreement Provisions"); or (iii) claims where the events
in dispute first arise after execution of this Agreement, nor shall it preclude
the Executive or the Company from filing a lawsuit for the exclusive purpose of
enforcing his or its rights under this Agreement or the Surviving Employment
Agreement Provisions.
5. Release of Unknown Claims. It is the intention of the
Executive and the Company that this Agreement is a General Release which shall
be effective as a bar to each and every Claim released hereby. Each of the
parties recognizes that it may have a Claim against a released party of which it
is totally unaware and unsuspecting which it is giving up by execution of the
General Release. It is the intention of the Executive and the Company in
executing this Agreement to forego each such Claim. In furtherance of this
intention, each of the Executive and the Company expressly waives any rights or
benefits conferred by the provision of Section 1542 of the Civil Code of the
State of California which provides as follows, or under any similar applicable
law:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT NOW KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
In connection with such waiver and relinquishment, the parties
acknowledge that they are aware that they may hereafter discover facts in
addition to, or different from, those which they now know or believe to be true
with respect to the subject matter of this Agreement, but that it is their
intention hereby to fully, finally and forever settle and release all released
matters. In furtherance of such intention, the Release given herein shall be and
remain in effect as a full and complete release, notwithstanding the discovery
or existence on any such additional facts. Each of the Executive and the Company
expressly acknowledges that this Agreement is intended to include in its effect,
without limitation, all Claims which such party does not know or suspect to
exist in their favor at the time of execution of this Agreement, and that this
Agreement contemplates the extinguishment of any such Claims.
6. Knowing and Voluntary Agreement. The Executive represents and
agrees that he has read this Agreement, understands its terms and the fact that
he releases all Claims which he might have against the Company Releasees,
understands that he has the right to consult counsel of choice and has either
done so or knowingly waived the right to do so, and is entering into this
Agreement voluntarily and without duress or coercion from any source.
7. Review and Revocation Period; Effective Date. The Executive
acknowledges that he has been advised by the Company to consult an attorney
before signing this Agreement and that he has executed this Agreement (including
the Release set forth above which releases the Executive's rights under the Age
Discrimination in Employment Act of 1967, as amended) after having been given up
to twenty-one (21) days to review this Agreement and consult legal
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counsel. The Executive may revoke this Agreement up to seven (7) days after
signing it. This Agreement shall automatically become effective, enforceable and
irrevocable upon the expiration of that seven-day revocation period, if not
timely revoked by the Executive.
8. Binding Nature; Assignability. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors,
heirs (in the case of the Executive), and assigns. No rights or obligations of
the Executive under this Agreement may be assigned or transferred by the
Executive other than by will or by the laws of descent and distribution, and all
transferees shall be bound by the terms of this Agreement.
9. Entire Agreement. This Agreement and the Surviving Employment
Agreement Provisions set forth the entire understanding between the Executive
and the Company with respect to the Claims released hereby, and supersedes any
prior agreements (including, without limitation, the provisions of the
Employment Agreement other than the Surviving Employment Agreement Provisions
and the Company's Employee Handbook) or understandings, express or implied,
pertaining to such Claims. The Executive acknowledges that in executing this
Agreement, the Executive is not relying upon any representation or statement by
any representative of the Company concerning the subject matter of this
Agreement, except as expressly set forth in the text of the Agreement.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.
XXXXXX'X GRAND ICE CREAM, INC.
Dated: By:
--------------------
By: T. Xxxx Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
Dated:
--------------------
Xxxx X. XxXxxxx
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