Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 30, 2007 (but is effective
and binding upon the Parties as provided in subsection 19(b) below) by and
among INTERSTATE BRANDS CORPORATION, a Delaware corporation, (unless the
context otherwise requires, together with its successors and permitted assigns,
the "Company"), INTERSTATE BAKERIES CORPORATION, a Delaware corporation, and
XXXXX X. XXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and to enter into
an agreement embodying the terms of such employment;
WHEREAS, the Executive desires to accept employment with the Company,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Parties agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall
have the meanings set forth in Exhibit A.
2. Term. The term of the Executive's employment hereunder (the "Term")
shall be for a period commencing on the Effective Date and ending on the third
(3rd) anniversary of the Effective Date; provided, however, that the Term shall
thereafter be automatically extended for additional one-year periods unless
either the Company or the Executive gives the other written notice at least 120
days prior to the then-scheduled date of expiration of the Term that such Party
is electing not to so extend the Term (it being understood that the Executive
will continue to serve through the then -scheduled date of expiration of the
Term in the event that such a notice is given). Notwithstanding the foregoing,
the Term may be earlier terminated in accordance with the provisions of Section
10 below.
3. Positions, Duties and Location. (a) During the Term, the Executive
shall serve as the Chief Executive Officer of the Company, and of IBC and each
of its subsidiaries, and shall be a member of the Board and of the boards of
directors of IBC's subsidiaries. The Executive shall report solely and directly
to the Board. The Executive shall be responsible for the general management of
the affairs of IBC and its subsidiaries (including the Company) and shall have
all authorities, duties and responsibilities customarily exercised by an
individual serving as the Chief Executive Officer in a corporation of the size
and nature of IBC.
(b) During the Term, the Executive shall devote substantially
all of his business time and efforts to the affairs of IBC and its
subsidiaries; provided that nothing herein shall preclude the Executive from:
(i) serving on the boards of a reasonable number of other business entities,
trade associations and charitable organizations, consistent with IBC's
Corporate Governance Guidelines applicable to all directors as adopted and
approved by the Board from time to time, (ii) engaging in other charitable
activities and community affairs and (iii) managing his personal investments
and affairs, provided that such activities do not materially interfere with the
proper performance of his duties and responsibilities hereunder.
(c) During the Term, the Executive's principal office, and
principal place of employment, shall be in Kansas City, Missouri or such other
place that the Executive consents to in writing.
4. Base Salary. Executive shall receive an annual base salary of
$900,000 (the "Base Salary"), which shall be paid in accordance with the
customary payroll practices of the Company, but in no event less frequently
than monthly. During the Term, the Executive's Base Salary shall be reviewed at
least annually by the Compensation Committee of the Board (the "Compensation
Committee") on or before May 1 of each year (beginning with May 1, 2008, for
the Fiscal Year ending in 2009) and may be increased (but not decreased) from
time to time as shall be determined by the Compensation Committee. After any
such increase, the term "Base Salary" as utilized in this Agreement shall
thereafter refer to the increased amount.
5. Bonuses. (a) During the Term, beginning with the Company's Fiscal
Year ending in 2009, the Executive shall be eligible to receive an annual
performance-based cash bonus award (a "Bonus") with a target of no less than
one hundred percent (100%) of Executive's then current Base Salary (the "Target
Bonus") pursuant to the terms and conditions of Company's annual performance
bonus plan and in accordance with an annual performance plan to be adopted by
the Compensation Committee on or before the 90th day after the start of each
Fiscal Year after due consultation with the Executive (beginning with the
Fiscal Year ending in 2009); provided that the actual cash bonus paid to the
Executive for any Fiscal Year shall not exceed two hundred percent (200%) of
the Executive's Base Salary. The Bonus shall be based on IBC's consolidated
actual performance compared to such annual performance plan with linear
interpolation applied for incremental performance achieved. During the Term,
beginning with the Company's Fiscal Year ending in 2010, the Executive's Target
Bonus shall be reviewed at least annually by the Compensation Committee on or
before May 1 of each year and may be increased (but not decreased) from time to
time as shall be determined by the Compensation Committee. After any such
increase, the term "Target Bonus" as utilized in this Agreement shall
thereafter refer to the increased amount. The Executive shall be paid his Bonus
at the same time as the other senior executives of IBC and/or the Company are
paid their annual performance bonuses, but in no event later than the date on
which IBC is required under applicable law to file its Annual Report on Form
10-K (without extension) with the Securities and Exchange Commission (or would
have been so required, if at the applicable time IBC had been subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended)
unless, pursuant to a deferred compensation arrangement approved by the Board
or a committee thereof, the Executive elects to defer such payment.
(b) The Executive shall also be entitled to receive the
following special cash awards in accordance with this subsection 5(b):
(i) The Executive shall be entitled to receive a special
cash award (the "Enhanced Enterprise Value Award")
as follows:
o 0.25% of Total Enterprise Value in excess of
$500 million but less than $600 million, plus
o An additional 0.50% of Total Enterprise Value
in excess of $600 million but less than $700
million, plus
o An additional 0.75% of Total Enterprise Value
in excess of $700 million but less than $800
million, plus
o An additional 1.0% of Total Enterprise Value in
excess of $800 million.
Notwithstanding the calculations above, the Enhanced Enterprise Value Award
described in this subsection 5(b)(i) shall in no event exceed $3,000,000.
(ii) In addition to Enhanced Enterprise Value Award,
Executive shall be entitled to another special cash
award (the "Total Enterprise Value Over Claims
Award"; and together with the Enhanced Enterprise
Value Award, the "Special Awards") equal to one and
three quarters percent (1.75%) of Total Enterprise
Value in excess of an amount equal to the sum of:
(1) $700 million, plus
(2) 95% of the Triggered Contingent Claims Amount.
(iii) Total Enterprise Value (for purposes of subsections
5(b)(i) and 5(b)(ii) above) and the Triggered
Contingent Claims Amount (and each of their
respective component parts) shall be (a) based upon
the consolidated books and records of IBC and its
subsidiaries as reviewed by IBC's independent
auditor, (b) determined in good faith by the Board
and IBC's advisors and appraisers as contemplated in
the definition of Total Enterprise Value which
appears at Exhibit A hereto as of the applicable
Determination Date and (c) set forth in writing to
the Executive from IBC and such advisors and
appraisers, together with supporting schedules,
calculations and other information in reasonable
detail (the "IBC Determination"), and shall be
delivered to the Executive within thirty (30) days
of the applicable Determination Date. In the event
the Executive disputes any aspect of the IBC
Determination (whether for purposes of the Enhanced
Enterprise Value Award, the Total Enterprise Value
Over Claims Award or both), the Executive shall send
a dispute notice to IBC specifying the items in
dispute and the reasons therefore in reasonable
detail (a "Dispute Notice") within a thirty (30) day
period following receipt by the Executive of the IBC
Determination. During such thirty (30) day period,
IBC shall provide the Executive and his
representatives with full access to all of the books
and records of IBC and its subsidiaries, and to
their financial personnel having information
relevant to such review, their advisors, appraisers
and independent auditors and their work papers for
the purpose of reviewing and verifying the IBC
Determination. If the Executive and IBC are unable
to resolve such dispute within ten (10) days after
receipt by IBC of a Dispute Notice, the Executive
and IBC shall each promptly designate one accounting
firm and those two firms shall promptly and jointly
designate a separate accounting firm, investment
banking firm or actuarial firm as appropriate (as
determined by such accounting firms) to determine
the disputed items in respect of the calculations of
the Total Enterprise Value, the Triggered Contingent
Claims Amount or both depending upon which is
subject to dispute (the accounting, investment
banking or actuarial firm so designated, the
"Evaluation Firm"). The Evaluation Firm shall not
have served IBC or any of its subsidiaries during
the two (2) years preceding its designation. The
determination of the Evaluation Firm shall be set
forth in writing in reasonable detail and delivered
to the Executive and IBC and shall be final and
binding on the Parties absent manifest error (the
"Final Determination"). All fees and expenses of the
Evaluation Firm shall be borne solely by IBC;
provided, however, that if the calculation of (a)
the Total Enterprise Value as determined by the
Evaluation Firm is less than 110% of IBC's
calculation of the Total Enterprise Value or (b) the
amount of Triggered Contingent Claims Amount as
determined by the Evaluation Firm is not less than
90% of IBC's calculation of Triggered Contingent
Claims Amount, then 50% of the fees and expenses of
the Evaluation Firm shall be borne by the Executive.
(iv) The amounts of the Special Awards described in
subsections 5(b)(i) and 5(b)(ii) above shall be
determined as of the applicable Determination Date.
The payment of the Special Awards shall, unless
disputed, be made in cash in a lump sum on the date
which is sixty (60) days after the applicable
Determination Date (or, if sooner, five (5) business
days after the Executive notifies IBC that he will
not dispute the IBC Determination). If the Executive
has timely delivered a Dispute Notice, payment to
the Executive of that portion, if any, of the
Special Awards which is not in dispute shall be made
in cash in a lump sum on the date which is sixty
(60) days after the applicable Determination Date
(or, if sooner, five (5) business days after the
Executive notifies IBC that he will not dispute such
portion) and payment to the Executive of that
portion (including the whole, if so disputed) of the
Special Awards which is in dispute shall be made in
cash in a lump sum within five (5) business days
after the delivery of the Final Determination to the
Parties.
6. Sign-on Arrangements. On the Company's first payroll date after the
Effective Date, the Company shall pay the Executive $1,200,000 in a lump sum in
cash (the "Signing Bonus"). In the event that the Executive ceases to be
employed by IBC and its subsidiaries (including the Company) before the first
anniversary of the Effective Date (other than as a result of termination of
employment without Cause by the Company or a Constructive Termination Without
Cause by the Executive), the Executive shall, within thirty (30) days of the
Termination Date, repay to the Company a portion of the Signing Bonus equal to
the Signing Bonus multiplied by a fraction, the numerator of which is the
number of days remaining from the Termination Date to the last day of Company's
Fiscal Year ending in 2008, and the denominator of which is the number of days
from the Effective Date to the last day of the Company's Fiscal Year ending in
2008, subject to an appropriate reduction in the amount of the Signing Bonus
otherwise required to be repaid by the Executive to take into account the
Federal, state and local income tax, earnings and employment tax consequences
to the Executive (determined at the highest marginal rates applicable to the
Executive) of receiving and then repaying such portion of the Signing Bonus (it
being the intent of this provision that the Executive shall not have to incur
any net tax liability as a result of his receipt and subsequent repayment of a
portion of the Signing Bonus ). Notwithstanding the foregoing or any provision
in Section 10 to the contrary, the Parties agree that any amount owed by the
Executive in accordance with the preceding sentence shall first be paid by
reducing the cash amounts otherwise payable to the Executive (or his estate or
beneficiaries) under subsections 10(a), (b) or (c) below, and only the portion,
if any, of the amount owed by the Executive that is in excess of the amount
reduced shall be repaid by the Executive (or his estate or beneficiaries)
pursuant to the preceding sentence.
7. Equity. (a) The Executive shall be granted an equity interest in
IBC at the same time as all other Persons who, or which, are to be equity
holders of IBC in accordance with the Plan receive their equity in IBC, subject
to the Executive's rights in such equity interest being subject to vesting (and
acceleration in vesting) as set forth herein; provided that if no new or
additional equity in IBC is to be issued on the Emergence Date to any Person
(other than the Executive) in accordance with the Plan, then the Executive's
equity interest in IBC shall be granted on the Emergence Date. At such time,
the Executive shall receive from IBC a grant of Capital Stock and options to
purchase Capital Stock (the "Options") as provided in this Section 7 (the "Post
Emergence Equity Award"). The aggregate number of shares of Capital Stock
comprising the Post Emergence Equity Award (as shares of Capital Stock and as
shares of Capital Stock underlying the Options) shall be equal to two percent
(2%) of the number of shares of Capital Stock issued and outstanding on the
Emergence Date, after giving effect to the issuances of Capital Stock to the
Executive and the issuances of Capital Stock (if any) to all other
post-emergence Capital Stock holders, and calculated on a fully diluted basis
(taking into account all classes of capital stock and all securities
convertible, exchangeable or exercisable into Capital Stock (collectively,
"Rights"), whether or not at the time convertible, exchangeable or
exercisable). Fifty percent (50%) of the Post Emergence Equity Award shall be
in the form of a grant of shares of Capital Stock and fifty percent (50%) of
the Post Emergence Equity Award shall be in the form of Options. Twenty five
percent (25%) of the number of shares of Capital Stock and twenty five percent
(25%) of the Options comprising the Post Emergence Equity Award shall vest
(and, in the case of Options, become exercisable) immediately upon the grant to
the Executive of the Post Emergence Equity Award. The remaining unvested shares
of Capital Stock and Options comprising the Post Emergence Equity Award shall,
so long as the Executive's employment by the Company or an Affiliate thereof
continues, vest (and, in the case of Options, become exercisable) pro rata on a
monthly basis over a thirty-six (36) month period beginning with the last day
of the month in which the Emergence Date occurs. Once vested, all such shares
of Capital Stock and Options shall be nonforfeitable in all circumstances. The
exercise price per share of Capital Stock underlying the Options shall be equal
to the fair market value per share of Capital Stock (determined, in the case of
Capital Stock which is publicly traded on an established securities market or
exchange, as the average of the closing prices per share for such Capital Stock
for the five (5) trading days first occurring within thirty (30) days following
the Emergence Date as reported on the securities exchange on which such Capital
Stock is listed for trading, or if not so listed, in the over the counter
market, and, if the Capital Stock is not so publicly traded within a thirty
(30) day period following the Emergence Date, determined in good faith by the
Board in accordance with the requirements for determining such value as set
forth in the regulations, and in the rulings, notices and other guidance issued
by the Internal Revenue Service, under section 409A of the Code). Subject to
the next sentence, all Options comprising part of the Post Emergence Equity
Award shall, upon vesting, be exercisable for a period of ten (10) years after
the date of grant. After termination of the Executive's employment for any
reason, all Options (to the extent vested) shall be exercisable for a period
equal to the lesser of (i) two (2) years beginning on the applicable
Termination Date and (ii) the period of time remaining until the tenth (10th)
anniversary of the Emergence Date. The Post Emergence Equity Award shall be
entitled to the following anti-dilution protection until the first (1st)
anniversary date of the Emergence Date: in the event that IBC shall issue
additional shares of Capital Stock and/or Rights to any Person, it shall also
simultaneously issue additional shares of Capital Stock (and/or Options in the
case of the issuance of Rights) to the Executive (for nominal consideration in
the case of shares of Capital Stock) in order to fully maintain the Executive's
fully diluted two percent (2%) interest in the Capital Stock, calculated as
aforesaid.
(b) Upon issuance to the Executive, the Capital Stock and the
Capital Stock underlying the Options comprising the Post Emergence Equity Award
shall be effectively registered on Form S-8 (or the successor to such Form)
under the Securities Act of 1933, as amended (the "Securities Act"), which
registration statement shall contain all of the provisions necessary to permit
the resale to the public by the Executive of such Capital Stock and Capital
Stock acquired by him pursuant to the exercise of such Options; provided that
if for any reason such Form is not available for such purpose and the Executive
is unable to sell publicly all of the shares of Capital Stock comprising the
Post Emergence Equity Award within ninety (90) days after the issuance of the
Post Emergence Equity Award to the Executive pursuant to Rule 144 under the
Securities Act, IBC shall promptly use its commercially reasonable efforts to
register the resale of the Capital Stock comprising and underlying the Post
Emergence Equity Award on the appropriate registration statement under the
Securities Act. The Executive shall also be granted "piggy-back" registration
rights at IBC's expense and otherwise commensurate with any such rights granted
to other holders of the Company's equity as and when so granted in connection
with IBC's emergence from bankruptcy.
(c) The Executive shall be prohibited from selling in the
public markets shares of Capital Stock comprising and underlying the Post
Emergence Equity Award until twelve (12) months after the grant date of the
Post Emergence Equity Award, except that the Executive may sell shares in such
markets (and otherwise) attributable to the Post Emergence Equity Award with an
aggregate market value at the time of such sale equal to the amount of any tax
liability he incurs in connection with the grant and/or vesting of such award
that is not satisfied through the withholding of shares of Capital Stock by IBC
upon the grant of such award in accordance with subsection 19(j) below,
including any tax liability incurred in connection with the sale(s) permitted
by this subsection (c).
(d) Notwithstanding anything in this Agreement to the
contrary, the Executive does not have any right or interest in and to the Post
Emergence Equity Award or any value with respect thereto in the event that the
Emergence Date does not occur during the Term; provided that notwithstanding
the foregoing and notwithstanding anything in this Agreement to the contrary,
the Executive shall be granted the Post Emergence Equity Award at the time
otherwise required pursuant to subsection 7(a) above in the event that the
Executive's employment is terminated hereunder at any time within sixty (60)
days prior to the Emergence Date by the Company without Cause or by the
Executive as a result of a Constructive Termination Without Cause. In such
circumstances, the Post Emergence Equity Award shall be fully vested upon grant
and shall otherwise have the terms and conditions applicable to the Post
Emergence Equity Award provided in this Section 7.
8. Employee Benefits and Perquisites. (a) During the Term, the
Executive and, to the extent permissible under the applicable plans and
programs, his eligible dependents shall be eligible to participate in all
employee benefit and welfare plans and programs applicable to senior executives
of IBC and its subsidiaries generally, including medical/dental and
hospitalization plans, life insurance, short- and long-term disability
programs, accidental death and dismemberment protection, travel accident
insurance, and pension (including any 401(k) plan), savings, profit-sharing and
deferred compensation plans, in each case at a level and on terms and
conditions consistent with his positions and no less favorable than those
provided to other senior executives.
(b) During the Term, the Executive shall be entitled to not
less than four (4) weeks' paid vacation and to such other perquisites on the
same basis as are made available to other senior executives of IBC and its
subsidiaries.
9. Reimbursement of Business Expenses and Relocation.
(a) The Executive shall be promptly reimbursed for all
reasonable business expenses incurred by him in the conduct of his services
hereunder, subject to the submission of appropriate documentation in accordance
with the Company's policy, and shall be promptly reimbursed for all reasonable
legal fees and expenses incurred by the Executive in connection with the
preparation and negotiation of this Agreement (and the term sheet related
thereto).
(b) The Executive shall be entitled to prompt reimbursement
of all costs and expenses reasonably incurred by him and his family in
relocating him, his family and their household goods from Weston, Florida to
his new principal place of employment in the Kansas City, Missouri area. Such
reimbursement shall include:
(i) the brokerage commission of up to six percent (6%)
of the sales price of his current residence and all
reasonable legal and other closing costs associated
with such sale;
(ii) all reasonable costs for (x) temporary living
expenses during the two (2) months after the
Effective Date, including taxis, rental car, meals
and lodging, (y) one (1) round trip for the
Executive and his wife to Kansas City, Missouri to
arrange for living accommodations (including
business-class airfare, taxis, rental car, meals and
lodging), and (z) during the first two (2) months
after the Effective Date, one round trip per week
between Weston, Florida and Kansas City, Missouri
for Executive and his wife (including business-class
airfare, taxis, rental car, meals and lodging);
(iii) all reasonable expenses incurred in connection with
moving his and his family's household goods and
automobiles;
(iv) all reasonable storage costs for his and his
family's household goods for up to twelve (12)
months; and
(v) all reasonable legal and other closing costs
associated with the purchase of a new residence in
the Kansas City, Missouri area.
(c) All taxable payments or reimbursements required pursuant
to subsection 9(b) above shall be grossed up for Federal, state and local
income, earnings and employment tax purposes, such that the Company shall,
together with each such payment or reimbursement, pay the Executive an amount
in respect of any such taxable payment or reimbursement that, after all
Federal, state and local income, earnings and employment taxes thereon and on
such amount (determined at the highest marginal rates for Federal, state and
local income and earnings taxes applicable to the Executive), shall be equal to
such payment or reimbursement. In the event of a subsequent relocation of the
Company's principal offices to a new location outside the Kansas City, Missouri
area, to which he consents, the Executive shall be promptly reimbursed for the
costs and expenses of that relocation on the same basis as provided in
subsection 9(b) above and in this subsection 9(c).
(d) All reimbursements and tax gross up amounts to be paid to
the Executive pursuant to this Section 9 shall be paid to him promptly and in
any event no later than by March 15 following the close of the calendar year in
which the costs entitling the Executive to reimbursement hereunder are
incurred.
10. Termination of Employment.
(a) Termination Due to Death. In the event that the
Executive's employment hereunder is terminated due to his death, his estate or
his beneficiaries (as the case may be) shall be entitled to, without
duplication (subject to Section 6 above):
(i) Base Salary through the Termination Date, payable on
the first payroll date after the Termination Date;
(ii) a pro-rata cash Bonus for the year of death, based
on the Target Bonus for the year of death, payable
within thirty (30) days after the Termination Date;
(iii) full and immediate vesting of (A) all outstanding
and unvested Capital Stock and Options comprising
the Post Emergence Equity Award and (B) all other
unvested equity awards (if any) at the Termination
Date;
(iv) continued participation for his eligible dependents,
at the Company's cost, for twelve (12) months after
the Termination Date in all medical, dental, and
hospitalization plans and programs and in all other
employee welfare plans and programs in which his
eligible dependents were participating on the
Termination Date, provided, however, that in the
event that any of the benefit plans or programs do
not permit his eligible dependents' continued
participation, the Company shall provide them with
the economic equivalent on an after-tax basis; and
(v) all Accrued Obligations, payable within thirty (30)
days after the Termination Date or otherwise in the
manner specified in the applicable benefit or
compensation plan, program or arrangement.
(b) Termination Due to Disability. In the event that the
Executive's employment hereunder is terminated due to Disability, he shall be
entitled to, without duplication (subject to Section 6 above):
(i) Base Salary through the Termination Date, payable on
the first payroll date after the Termination Date;
(ii) disability benefits in accordance with the long-term
disability program and other disability benefits
described in Section 8(a) above;
(iii) a pro-rata cash Bonus for the year of termination,
based on the Target Bonus for the year of
termination, payable within thirty (30) days after
the Termination Date;
(iv) full and immediate vesting of (A) all outstanding
and unvested Capital Stock and Options and (B) all
other unvested equity awards (if any) at the
Termination Date;
(v) continued participation for himself and his eligible
dependents, at the Company's cost, for twelve (12)
months after the Termination Date in all medical,
dental, hospitalization and life insurance plans and
programs and in all other employee welfare plans and
programs in which he and his eligible dependents
were participating on the Termination Date,
provided, however, that in the event that any of the
benefit plans or programs do not permit his and his
eligible dependents' continued participation, the
Company shall provide him with the economic
equivalent on an after-tax basis; and
(vi) all Accrued Obligations, payable within thirty (30)
days after the Termination Date or otherwise in the
manner specified in the applicable benefit or
compensation plan, program or arrangement.
No termination of the Executive's employment hereunder for Disability shall be
effective unless the Party terminating his employment first gives thirty (30)
days' written notice of such termination to the other Party.
(c) Termination by the Company for Cause and Voluntary
Termination by the Executive.
(i) In the event the Executive is terminated by the
Company for Cause or the Executive voluntarily
terminates his employment (other than upon
Disability or a Constructive Termination Without
Cause), the Executive shall be entitled to, without
duplication (subject to Section 6 above):
(a) Base Salary through the Termination Date, payable on the
first payroll date after the Termination Date;
(b) all Accrued Obligations, payable within thirty (30) days
after the Termination Date or otherwise in the manner specified in the
applicable benefit or compensation plan, program or arrangement; but
(c) the Executive and his eligible dependants shall no longer
be permitted to participate at the Company's expense in medical, dental,
hospitalization and life insurance plans and programs or in any other employee
welfare plans and programs for which he and his eligible dependents were
otherwise entitled to receive or participate in but for the Executive's
termination (for clarity, other than for Accrued Obligations and provided that
the Executive shall be entitled to exercise his rights under COBRA).
In the circumstances contemplated by this subsection 10(c)(i), the Executive
shall forfeit all unvested Capital Stock and Options comprising the Post
Emergence Equity Award at the Termination Date. A voluntary termination of his
employment by the Executive shall not be a breach of this Agreement.
(ii) No termination of the Executive's employment hereunder
by the Company for Cause shall be effective as a termination for Cause unless
the provisions of this subsection 10(c)(ii) shall first have been complied
with. The Executive shall be given written notice by the Board, with such
notice stating in reasonable detail the particular circumstances that
constitute the grounds on which the proposed termination for Cause is based.
The Executive shall have ten (10) business days after receipt of such notice to
fully cure such alleged violation. If he fails to cure such alleged violation
within such ten (10)-business day period, the Executive shall then be entitled
to a hearing in person before the full Board. If after such hearing, the Board
gives written notice to the Executive confirming that a majority of the members
of the full Board voted after the hearing to terminate him for Cause, the
Executive's employment shall thereupon be terminated for Cause.
(d) Termination Without Cause, Constructive Termination
without Cause or Termination upon Non-Renewal of the Term. In the event that
(x) the Executive's employment hereunder is terminated by the Company (other
than upon Disability in accordance with subsection 10(b) above or for Cause in
accordance with subsection 10(c)(ii) above), (y) a Constructive Termination
Without Cause occurs, or (z) the Company provides the Executive with a notice
of non-renewal of the Term in accordance with Section 2 above, the Executive
shall be entitled to, without duplication:
(i) Base Salary through the Termination Date, payable on
the first payroll date after the Termination Date;
(ii) a pro-rata cash Bonus for the year of termination,
based on the Target Bonus for the year of
termination, payable within thirty (30) days after
the Termination Date;
(iii) an amount equal to two (2) times the Executive's
Base Salary, at the annualized rate in effect on the
Termination Date, payable in twenty-four (24) equal
monthly installments commencing promptly (but not
more than fifteen (15) days) after the Termination
Date;
(iv) an amount equal to two (2) times the cash Bonus,
based on the Target Bonus for the year of
termination (it being assumed for any termination
occurring in Fiscal Years 2007 or 2008 that the
Executive would have a Target Bonus equal to 100% of
Base Salary), payable in twenty-four (24) equal
monthly installments commencing promptly (but not
more than fifteen (15) days) after the Termination
Date;
(v) full and immediate vesting of (A) all outstanding
and unvested Capital Stock and Options comprising
the Post Emergence Equity Award and (B) all other
unvested equity awards (if any) at the Termination
Date (for clarity, the Executive shall be entitled
to the grant of the Post Emergence Equity Award in
the circumstances and on the terms set forth in
subsection 7(d) above);
(vi) continued participation for himself and his eligible
dependents, at the Company's cost, in all medical,
dental, hospitalization and life insurance plans and
programs and in all other employee welfare plans and
programs in which he and his eligible dependents
were participating on the Termination Date until the
end of the 24-month period following the Termination
Date, provided, however, that in the event that any
of the benefit plans or programs do not permit his
and his eligible dependents' continued
participation, the Company shall provide him with
the economic equivalent on an after-tax basis;
(vii) prompt reimbursement of the reasonable costs of
relocation for the Executive, his family and their
household goods to a location of the Executive's
choice within the United States in an amount up to
$50,000 (grossed up in the same manner and payable
at the same time as provided in subsections 9(c) and
9(d) above);
(viii) a lump sum payment of the Special Awards, determined
and payable in accordance with Section 5(b) above
(if the Termination Date is the Determination Date;
and
(ix) all Accrued Obligations, payable within thirty (30)
days after the Termination Date or otherwise in the
manner specified in the applicable benefit or
compensation plan, program or arrangement.
(e) No Mitigation/No Offset. In the event of any termination
of the Executive's employment hereunder for any reason, the Executive shall be
under no obligation to seek other employment or otherwise mitigate the
obligations of the Company under this Agreement. There shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration or other benefit earned or received by the Executive after such
termination or on account of any claim that the Company or any of its
Affiliates may have against him.
11. Change in Control. (a) Upon a Change in Control, all outstanding
and unvested Capital Stock and Options comprising the Post Emergence Equity
Award and all other unvested equity awards (if any) shall immediately and fully
vest (and in the case of Options and other Rights, become exercisable and
remain exercisable for their remaining terms). If, upon a Change in Control or
during the two (2) year period following a Change in Control, the Executive's
employment is terminated by the Company without Cause, a Constructive
Termination Without Cause occurs, or the Company provides the Executive with a
notice of nonrenewal of the Term in accordance with Section 2 above, then the
severance multiple used to determine the Executive's severance benefit under
subsections 10(d)(iii) and 10(d)(iv) above shall be three times (3x) the
Executive's Base Salary and three times (3x) the Executive's cash Bonus (based
on the Target Bonus) for the year in which termination occurs (it being assumed
for a termination occurring during either of the Fiscal Years ending in 2007 or
2008 that the Executive would be entitled to receive a cash Target Bonus equal
to 100% of Base Salary); provided, however, that the salary and bonus
multipliers contained in this subsection 11(a) shall be two times (2x) (as
opposed to three times (3x)) in the instance that a severance payment is
otherwise due to the Executive pursuant to this subsection 11(a) as a result of
a Change in Control of the type described in subparts (iii), (iv) or (v) of the
definition of Change in Control in the event that the occurrences described in
such subparts are specifically approved by the Board at a meeting thereof duly
called and held for such purpose within twelve (12) months of the Effective
Date.
(b) If any of the payments or benefits received or to be
received by the Executive (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control, or any Person affiliated with the
Company or such Person) (such payments or benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the "Total Payments") shall be
subject to any excise tax (the "Excise Tax") imposed by section 4999 of the
Code (or any successor to such section), the Company shall promptly (and in any
event prior to the due date of such Excise Tax) pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income, earnings and employment taxes and Excise Tax
on the Gross-Up Payment, shall be equal to the Total Payments.
(c) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) all of the Total Payments shall be treated as "parachute payments" (within
the meaning of section 280G(b)(2) of the Code) unless, in the opinion of an
independent accounting firm selected by the Company and reasonably acceptable
to the Executive (the "Adviser"), such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of section
280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of the Adviser, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in
excess of the base amount (within the meaning of section 280G(b)(3) of the
Code) allocable to such reasonable compensation, or are otherwise not subject
to the Excise Tax, and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Adviser in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income tax at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income and earnings taxes at the highest marginal rate of
taxation in such calendar year in the state and locality of the Executive's
residence or principal place of business, as applicable, on the Date of
Termination, net of the maximum reduction in federal income taxes which would
be obtained from deduction of such state and local taxes.
(d) In the event that the Excise Tax is finally determined to
be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, the Executive shall repay to the Company, within five (5)
business days following the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income, earnings
and employment taxes imposed on the Gross-Up Payment being repaid by the
Executive, to the extent that such repayment results in a reduction in the
Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income
and wages for purposes of federal, state and local income, earnings and
employment taxes); provided that such repayment shall be subject to an
appropriate reduction in the amount of the repayment otherwise required to be
repaid by the Executive to take into account the Federal, state and local
income tax and employment tax consequences to the Executive (determined at the
highest marginal rate applicable to the Executive) of receiving and then
repaying such repayment amount (it being the intent of this provision that the
Executive shall not have to incur any net tax liability as a result of his
receipt and subsequent repayment of such repayment amount). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
in calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall promptly make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by
the Executive with respect to such excess) within five (5) business days
following the time that the amount of such excess is determined. The Executive
and the Company shall each reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments, and the
Company shall promptly reimburse the Executive for all reasonable out-of-pocket
costs and expenses, including legal fees, incurred in connection therewith.
(e) An initial determination as to whether any of the Total
Payments received by the Executive during any calendar year ending after the
occurrence of a Change in Control shall be subject to the Excise Tax shall be
made by no later than March 15 following the close of such year, and a Gross-Up
Payment shall be made to the Executive in a single cash lump sum by no later
than such date with respect to any Excise Tax determined to be payable with
respect to such Total Payments. The Executive shall be furnished with written
notice of all determinations made as to the Excise Tax payable with respect to
his Total Payments, together with all related calculations and copies of all
opinions rendered by the Advisor under subsection 11(b) above, within two (2)
business days after such determinations and opinions have been delivered to the
Company.
12. Indemnification.
(a) If the Executive is made a party, or is threatened to be
made a party, to any Proceeding by reason of the fact that he is or was a
director, officer, employee, agent, manager, consultant or representative of
IBC, the Company or any of IBC's Affiliates or is or was serving at the request
of IBC, the Company or any of IBC's Affiliates, or in connection with his
service hereunder, as a director, officer, member, employee, agent, manager,
consultant or representative of any other Person, or if any Claim is made, or
is threatened to be made, that arises out of or relates to the Executive's
service in any of the foregoing capacities, then the Executive shall promptly
be indemnified and held harmless, and shall be entitled to prompt advancement
of expenses, including without limitation attorneys' fees and other charges of
counsel, in each case to the fullest extent provided under applicable law,
IBC's or the Company's By-Laws and Certificate of Incorporation, and officers'
and directors' liability insurance policies and programs.
(b) During the Term and for a period of six (6) years
thereafter, a directors' and officers' liability insurance policy (or policies)
shall be kept in place providing coverage of at least $50 million to all
covered officers and directors including the Executive and that is no less
favorable to him in any respect (including without limitation, with respect to
scope, exclusions, sub-amounts, and deductibles) than (x) the coverage then
being provided to any other present or former senior executive or director of
IBC or of the Company and (y) the coverage provided to him as of the Effective
Date.
13. Confidentiality. The Executive hereby agrees that, other than in
the ordinary course of performing his duties for the Company or any Affiliate,
he shall not divulge to any Person other than the Company or any Affiliate,
without the Company's express written authorization, any information
constituting trade secrets or proprietary information belonging to IBC and its
subsidiaries, or other confidential information, including operating budgets,
strategic plans, or research methods, projects or plans of IBC and its
subsidiaries, received by him in the course of his employment by the Company or
in connection with his duties with the Company ("Confidential Information").
Anything herein to the contrary notwithstanding, the provisions of this Section
13 shall not apply (i) when disclosure is required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order the Executive to
disclose or make accessible any information, provided that, unless otherwise
prohibited by law and provided such information is not related to any illegal
activities of IBC and its subsidiaries, the Executive shall provide Company
with prompt notice of any such requested or required disclosure and shall
reasonably cooperate with the Company in any effort by the Company to prevent
or otherwise contest such disclosure, (ii) with respect to any other
litigation, arbitration or mediation involving this Agreement, including, but
not limited to, the enforcement of this Agreement or (iii) as to Confidential
Information that becomes generally known to the public or within the relevant
trade or industry other than due to the Executive's violation of this Section
13. The provisions of this Section 13 shall survive termination of this
Agreement.
14. Non-Competition and Non-Solicitation. (a) Upon the termination of
the Executive's employment for any reason, for a period of one (1) year
following the Termination Date, the Executive shall not, without the prior
written consent of the Board, provide services, as an employee, officer,
consultant or director of, to any Person primarily engaged in business which is
directly competitive with the business conducted on the Termination Date by IBC
and its subsidiaries in the same geographic areas as IBC and its subsidiaries
(a "Competitor"). Notwithstanding the foregoing, the Executive may serve as an
employee, officer, consultant or director of any Person that provides
investment, financial or consulting services to a Competitor, provided that the
Executive does not have direct responsibility for or direct involvement in the
provision of any such advice or services to such Competitor.
(b) Upon the termination of the Executive's employment for
any reason, for a period of one (1) year following the Termination Date, the
Executive shall not, without the prior written consent of the Board, solicit
for employment, either for himself or on behalf of any other Person in which he
is an officer, director, employee or consultant, any employee of IBC or any of
its subsidiaries, provided that nothing in this subsection 14(b) shall prohibit
the Executive from providing employment or personal references for any such
employee.
(c) Executive acknowledges and confirms that (i) the
restrictive covenants contained in this Section 14 are reasonably necessary to
protect the legitimate business interests of the Company and (ii) the
restrictions contained in this Section 14 (including without limitation the
length of the term of the provisions of this Section 14) are not overbroad and
are not the result of overreaching, duress or coercion of any kind. The
Executive further acknowledges that the restrictions contained in this Section
14 are intended to be, and shall be, for the benefit of and shall be
enforceable by, the Company's successors and permitted assigns.
(d) In the event that a court of competent jurisdiction shall
determine that any provision of this Section 14 is invalid or more restrictive
than permitted under the governing law of such jurisdiction, then, only as to
enforcement of this Section 14 within the jurisdiction of such court, such
provision shall be interpreted and enforced as if it provided for the maximum
restriction permitted under such governing law.
15. Assignability; Binding Nature. (a) This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs and beneficiaries (in the case of the Executive), and permitted assigns,
including for clarity, any successor entities of the Company, and of IBC and
any of its Affiliates, on the Emergence Date.
(b) No rights or obligations of the Company or IBC under this
Agreement may be assigned or transferred by the Company or IBC, except that
such rights or obligations may be assigned or transferred pursuant to a merger,
consolidation or other combination in which the Company or IBC is not the
continuing entity, or in connection with the sale or liquidation of all or
substantially all of the business and assets of IBC and its subsidiaries;
provided that the assignee or transferee is the successor to all or
substantially all of the business and assets of IBC and its subsidiaries and
such assignee or transferee expressly assumes the liabilities, obligations and
duties of the Company and IBC as set forth in this Agreement. In the event of
any merger, consolidation or other combination, or the sale or liquidation of
business and assets, as described in the preceding sentence, the Company shall
use its reasonable best efforts to cause such assignee or transferee to
promptly and expressly assume the liabilities, obligations and duties of the
Company and IBC hereunder.
(c) No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or
operation of law, except as provided in subsection 20(d) below.
16. Representations. (a) The Company represents and warrants that (i)
it and IBC are fully authorized by action of the Board, the Company's board of
directors and of any other Person whose action is required (other than the
Bankruptcy Court) to enter into this Agreement and to perform their respective
obligations; (ii) the execution, delivery and performance of this Agreement by
it and IBC does not and will not violate any applicable law, regulation, order,
judgment or decree or any agreement, plan or corporate governance document to
which it or IBC is a party or by which it or IBC is bound; and (iii) upon the
execution and delivery of this Agreement by the Parties and subject to the
satisfaction of the conditions to the occurrence of the Effective Date as set
forth in subsection 19(b) below, this Agreement shall be a valid and binding
obligation of the Company and IBC, enforceable against each of them in
accordance with its terms.
(b) The Executive represents and warrants that (i) the
execution, delivery and performance of this Agreement by him does not violate
any applicable law, regulation, order, judgment or decree or any agreement to
which the Executive is a party or by which he is bound (no representation or
warranty is made herein by the Executive regarding any required approval of
this Agreement by the Bankruptcy Court) and (ii) upon the execution and
delivery of this Agreement by the Parties and subject to the satisfaction of
the conditions to the occurrence of the Effective Date as set forth in
subsection 19(b) below, this Agreement shall be a valid and binding obligation
of the Executive, enforceable against him in accordance with its terms.
17. Resolution of Disputes. Any Claim arising out of or relating to
this Agreement, any other agreement between the Executive and the Company or
any of its Affiliates, or the Executive's employment with the Company or the
termination thereof (collectively, "Covered Claims") shall be resolved by
binding arbitration, to be held in the city in which IBC's principal offices
are then located, in accordance with the Commercial Arbitration Rules (and not
the National Rules for the Resolution of Employment Disputes) of the American
Arbitration Association and this Section 17. Judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.
Both during and after the Executive's employment hereunder, the Company will
pay all of the legal and accounting fees incurred in connection with
enforcement by the Executive (or his estate or beneficiaries) of any rights
under any IBC or Company benefit or compensation plan or program, pursuant to
this Agreement or in defending against any challenge by any Person to such
rights, including by any court or governmental agency. In the event that the
arbitrator shall rule against the Executive (such that the Executive receives
in such arbitration less than 90% of that which he claims), the Executive shall
promptly reimburse the Company for 50% of all legal and accounting fees
previously paid by the Company. The Company and its Affiliates shall be
responsible for their own costs and expenses, including without limitation,
attorneys' fees. Pending the resolution of any Covered Claim, the Executive
(and his estate or beneficiaries) shall continue to receive all payments and
benefits due under this Agreement or otherwise. The foregoing notwithstanding,
in the event of any actual, threatened or suspected breach hereof by any Party,
the non-breaching Party shall be entitled to obtain injunctive and such other
equitable relief with respect to such breach.
18. Notices. Any notice, consent, demand, request, or other
communication given to a Person in connection with this Agreement shall be in
writing and shall be deemed to have been given to such Person (a) when
delivered personally to such Person or (b) three (3) days after being sent by
prepaid certified or registered mail provided that a written acknowledgment of
receipt is obtained, or two (2) days after being sent by a nationally
recognized overnight courier, in either instance to the address (if any)
specified below for such Person (or to such other address as such Person shall
have specified by ten (10) days' advance notice given in accordance with this
Section 18) or (c) in the case of the Company only, on the first business day
after it is sent by facsimile to the facsimile number set forth below (or to
such other facsimile number as the Company shall have specified by ten (10)
days' advance notice given in accordance with this Section 18), with a
confirmatory copy sent by certified or registered mail or by overnight courier
in accordance with this Section 18.
If to the Company: 00 Xxxx Xxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: General Counsel
If to the Executive: The address of his
principal residence as it appears in the
Company's records, with a copy to him
(during the Term) at his office in Kansas
City, Missouri or such other place where it
may have been relocated.
If to the estate or
a beneficiary of the
Executive: The address most recently specified by the
Executive, estate or beneficiary.
19. Miscellaneous. (a) Entire Agreement. This Agreement (including
Exhibit A) contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, term sheets, discussions, negotiations and undertakings,
whether written or oral, between them relating to the subject matter of this
Agreement. In the event of any inconsistency between any provision of this
Agreement and any provision of any plan, employee handbook, personnel manual,
program, policy, arrangement or agreement of IBC, the Company or any of their
Affiliates, the provisions of this Agreement shall control.
(b) Effective Date. This Agreement shall become effective and
binding upon the parties on the date (the "Effective Date") which is the later
to occur of (i) the execution hereof by the Executive, the Company and IBC and
(ii) the entry by the Bankruptcy Court of an order (the "Order") in a form and
substance reasonably acceptable to each of the Parties authorizing and
approving the terms hereof (including, without limitation, granting to the
Executive administrative priority claim status with respect to the Special
Awards and all other amounts payable hereunder prior to the Emergence Date);
provided that this Agreement shall automatically terminate (1) at the close of
business on February 28, 2007, if the Bankruptcy Court has not so entered the
Order or (2) if any of the Parties notifies the others within two (2) business
days of receipt of the Order that the terms of the Order are not reasonably
acceptable to such Party.
(c) Amendment or Waiver. No provision in this Agreement may
be amended unless such amendment is set forth in a writing and is signed by the
Executive and by an authorized officer of the Company other than the Executive.
No waiver by any Party of any breach of any condition or provision contained in
this Agreement shall be deemed a waiver of any similar or dissimilar condition
or provision at the same or any prior or subsequent time.
(d) Headings. The headings of the Sections and subsections
contained in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of this
Agreement.
(e) Beneficiaries/References. The Executive shall be
entitled, to the extent permitted under applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit hereunder
following the Executive's death by giving the Company written notice thereof.
In the event of the Executive's death or a judicial determination of his
incompetence, references in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
(f) Non-Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in,
or entitlements under, any benefit, bonus, incentive or other plan or program
of IBC, the Company or any of their Affiliates for which Executive may qualify,
nor shall anything herein limit or reduce such rights as the Executive may have
under any other agreement with IBC, the Company or any of their Affiliates.
(g) Guaranty. IBC hereby unconditionally and irrevocably
guarantees to the Executive, as a primary obligor, the prompt payment and
performance of all of the liabilities, obligations and duties of the Company
under this Agreement when due and owing. The Parties intend this guaranty to be
a guaranty of payment and not of collectability.
(h) Severability. In the event that any provision or portion
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
(i) Survivorship. Except as otherwise expressly set forth in
this Agreement, to the extent necessary to carry out the intentions of the
Parties hereunder, the respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's employment.
(j) Withholding Taxes. The Company may withhold from any
amounts or benefits payable under this Agreement (including without limitation,
the Post Emergence Equity Award) income taxes that are required to be withheld
pursuant to any applicable law or regulation.
(k) Section 409A, Etc. All benefits and payments to the
Executive hereunder are intended to be in accordance with Section 409A of the
Code, and the Company shall have the right, acting reasonably, in good faith
and upon prior notice to the Executive and/or when requested by the Executive,
to amend or modify this Agreement, but only to the extent necessary to avoid
the imposition of additional taxes, penalties and interest under such Section
409A; provided that such amendment or modification substantially preserves the
value to the Executive of the affected benefit or payment. Without limiting the
generality of the foregoing and notwithstanding any provision in this Agreement
to the contrary, any payment otherwise required to be made hereunder to the
Executive at any date shall be delayed for such period of time as may be
necessary to meet the requirements of Section 409(a)(2)(B)(i) of the Code. On
the earliest date on which any payments so delayed can be made without
violating the requirements of Section 409(a)(2)(B)(i) of the Code (the "Delayed
Payment Date"), there shall be paid to the Executive (or if the Executive has
died, to his estate or beneficiaries), in a single cash lump sum, an amount
equal to the aggregate amount of all payments delayed pursuant to the preceding
sentence, plus interest thereon at the Delayed Payment Interest Rate (as
defined below) computed from the date on which each such delayed payment
otherwise would have been made to Executive until the Delayed Payment Date. For
purposes of the foregoing, the "Delayed Payment Interest Rate" shall mean the
national average annual rate of interest payable on jumbo six-month bank
certificates of deposit, as quoted in the business section of the most recently
published Sunday edition of the New York Times preceding the date as of which
Executive is treated as having incurred a "separation from service" for
purposes of Section 409(a)(2)(B)(i). The Parties also agree that all amounts
required to be paid hereunder to the Executive or to his estate or
beneficiaries shall, notwithstanding any other provision in this Agreement
requiring such amounts to be paid at a different time, be paid by no later than
the latest date by which such amounts would have to be paid in order not to be
treated under Section 409A as includible in gross income for any tax year
earlier than the tax year in which such payment otherwise was scheduled to be
made under the terms of this Agreement.
(l) Governing Law. This Agreement shall be governed,
construed, performed and enforced in accordance with its express terms, and
otherwise in accordance with the laws of the State of Missouri, without
reference to principles of conflict of laws.
(m) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. Signatures
delivered by facsimile or pdf shall be valid and binding for all purposes.
* * *
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
INTERSTATE BRANDS CORPORATION
By: /s/ Xxxx Xxxxxx
----------------------------
Name: Xxxx Xxxxxx
Title: Executive Vice President,
General Counsel and Corporate
Secretary
INTERSTATE BAKERIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
The Executive:
By: /s/ Xxxxx X. Xxxx
-----------------------------
Xxxxx X. Xxxx
EXHIBIT A
DEFINITIONS
a. "Accrued Obligations" shall mean, at any point in time, any amounts
vested, earned or accrued but not yet paid to the Executive including, but not
limited to, each of the following (but only to the extent such amounts are
vested, earned or accrued at the time of payment), salary, bonus amounts
described in subsection 5(a) of the Agreement, Special Award amounts as
provided in subsection 5(b) of the Agreement, and any other payments,
entitlements or benefits vested, earned or accrued but unpaid under applicable
benefit and compensation plans, programs and other arrangements with IBC and/or
any of its subsidiaries, including the Company.
b. "Affiliate" of a Person shall mean any other Person that directly
or indirectly controls, is controlled by, or is under common control with, such
Person.
c. "Aggregate Consideration" shall mean the total amount of cash and
the fair market value (on the date of closing of an Asset Sale) of all
Securities and Other Property paid or payable, directly or indirectly:
(i) by the acquiring party (the "Acquiror") to the acquired
party or the seller of the acquired business or assets (in either case, the
"Acquired"), and
(ii) to the Acquired's contract parties, claim holders and
security holders, in connection with a sale or a transaction related thereto.
Aggregate Consideration shall also include the value of any claims and
liabilities (including without limitation, obligations relating to any
capitalized leases and the principal amount of any indebtedness for borrowed
money) assumed directly or indirectly by the Acquiror in connection with an
Asset Sale or which are otherwise cancelled or terminated in connection with an
Asset Sale.
d. "Agreement" shall mean the Employment Agreement of which this
Exhibit A is a part.
e. "Asset Sales" shall have the meaning set forth in the definition of
Triggered Contingent Claims Amount.
f. "Bankruptcy Court" shall mean the United States Bankruptcy Court
for the Western District of Missouri.
g. "Board" shall mean the board of directors of IBC.
h. "Capital Stock" shall mean the class of capital stock of IBC which
is publicly traded upon (or which is to be so traded within a reasonable period
of time after) the occurrence of the Emergence Date, or if no class of capital
stock of IBC is (or is to be) so traded at such time, then the class of capital
stock of IBC at such time which is entitled to vote in the election of
directors under all circumstances.
i. "Cause" shall mean a termination based upon any of the following:
(i) the Executive has been convicted of (or pleads guilty or no contest to) a
felony involving theft or moral turpitude; (ii) the Executive has engaged in
conduct that constitutes willful gross misconduct in the performance of his
duties; (iii) a material breach of the Agreement by the Executive that is not
fully cured within ten (10) business days of written notice provided by the
Company; (iv) a material breach by the Executive of a written policy of the
Company determined by the Board in good faith to be material to the Company
that is not fully cured within ten (10) business days of written notice
provided by the Company; or (v) any failure by the Executive to reasonably
cooperate in any investigation involving IBC and its subsidiaries that is not
fully cured within ten (10) business days of written notice provided by the
Company.
j. "Change in Control" shall mean the occurrence of any of the
following events:
(i) any "person" (other than any stockholder of IBC holding
15% or more of the Voting Stock of IBC on the Emergence Date), as such term is
used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934,
becomes a "beneficial owner," as such term is used in Rule 13d-3 promulgated
under such Act, of 50% or more of the Voting Stock of IBC;
(ii) the majority of the Board consists of individuals other
than Incumbent Directors, which term means the members of the Board on the
Effective Date or, in the event of confirmation of a Plan, the members of the
Board who are designated to serve upon the occurrence of the Emergence Date;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was voted for by a majority of the
directors who then comprised the Incumbent Directors shall be considered to be
an Incumbent Director;
(iii) IBC adopts or its subsidiaries adopt any plan of
liquidation providing for the liquidation of all or substantially all of IBC's
and its subsidiaries' assets (for avoidance of doubt, a plan of liquidation as
covered by this clause (iii) is to be contrasted with, and shall not include, a
sale or sales, whether in one or a series of transactions, whether or not
related, of assets, business lines, divisions, segments, subsidiaries or other
business units at a time when the Board has not determined to liquidate IBC and
its subsidiaries substantially in whole or has determined to sell all or
substantially all of the businesses and assets of IBC and its subsidiaries as a
going concern(s)); provided that, during the period that IBC is in the Chapter
11 Cases, a Change in Control will not be deemed to occur if IBC adopts (or
effects) or its subsidiaries adopt (or effect) a plan of liquidation within the
meaning set forth in this clause (iii);
(iv) all or substantially all of the consolidated assets or
business of IBC and its subsidiaries are disposed of pursuant to a merger or
consolidation in which IBC and/or its subsidiaries is/are not the surviving
company or are sold or otherwise transferred in another transaction (other than
pursuant to a plan of liquidation as provided in clause (iii) above), whether
in one or a series of related transactions or whether occurring pursuant to 11
U.S.C. section 363, the Plan or otherwise (unless the stockholders of IBC
immediately prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, 50% or more of the Voting Stock of
the combined company or other ownership interests of the entity or entities, if
any, that succeed to the business of IBC and its subsidiaries); or
(v) IBC combines with another company and is the surviving
corporation but, immediately after the combination, the stockholders of IBC
immediately prior to the combination hold, directly or indirectly, 50% or less
of the Voting Stock of the combined company (there being excluded from the
number of shares held by such stockholders, but not from the Voting Stock of
the combined company, any shares received by Affiliates of such other company
in exchange for stock of such other company).
For the avoidance of doubt, there shall not occur a "Change in Control" as
contemplated in subsection j(iv) or j(v) above in the event that IBC and its
subsidiaries emerge from the Chapter 11 Cases pursuant to a "stand alone" Plan,
the result of which is that stockholders holding IBC's common stock immediately
prior to the Emergence Date do not hold more than fifty percent (50%) of the
Voting Stock immediately after the Emergence Date, but rather the result of
which is that creditors in the Chapter 11 Cases (and not a third party
acquirer(s)) of IBC and its subsidiaries or of all or substantially all of
their assets and businesses) collectively hold more than fifty percent (50%) of
the Voting Stock immediately after the Emergence Date.
For purposes of this Change in Control definition, "Voting Stock" shall mean
securities of any class or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect the directors of a
corporation.
k. "Chapter 11 Cases" shall mean the chapter 11 cases commenced by IBC
and its subsidiaries on September 22, 2004 (and, in one instance, on January
14, 2006) in the Bankruptcy Court and which presently are pending before such
court.
l. "Claim" shall mean any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information.
m. "Code" shall mean the Internal Revenue Code of 1986, as amended.
n. "Constructive Termination Without Cause" shall be defined as
follows: The Executive shall have the right to resign his employment and
terminate the remaining Term for "Constructive Termination Without Cause" if,
without the Executive's consent there shall occur:
(i) a reduction of the Executive's Base Salary or Target
Bonus opportunity, other than in connection with any
across-the-board and proportionate reduction of base
salaries or target bonus opportunities of senior
executives of IBC and its subsidiaries;
(ii) the failure of the Company or IBC to pay any
compensation or material benefit when (including,
without limitation, the Special Awards) due that is
not cured after notice from the Executive within ten
(10) days of such notice;
(iii) the failure of IBC to issue the Post Emergence
Equity Award;
(iv) prior to the Emergence Date, the failure of the
Executive to be a member of the Board, or upon and
after the Emergence Date, any failure by IBC to
nominate the Executive for election by IBC's
stockholders as a member of the Board or the failure
to re-elect the Executive as a member of the Board;
(v) any requirement that the Executive report to any
Person other than the Board;
(vi) a material diminution in or interference with the
Executive's duties or responsibilities or assignment
to the Executive of duties or responsibilities
inconsistent with his such duties or
responsibilities;
(vii) the failure of the acquirer of all or substantially
all of the assets of IBC or its subsidiaries to
assume the Agreement if IBC or such subsidiaries, as
applicable, is/are to be liquidated within a
reasonable period of time following such
acquisition; or
(viii) any requirement that the Executive relocate his
principal executive office or residence to a
location that is more than 50 miles from IBC's
executive office on the Effective Date.
A Constructive Termination Without Cause under any of clauses (i) through (vi)
shall not take effect unless the following provisions are satisfied. The
Executive's notice of termination shall be given to the Company within ninety
(90) days after Executive has notice or otherwise learns of such act or acts or
failure or failures to act that form the grounds for "Constructive Termination
Without Cause." The Company shall have thirty (30) days after the date that
such notice of termination has been given within which to cure such conduct. If
the Company fails to cure such conduct, the Executive shall be deemed to have
terminated his employment for Constructive Termination Without Cause on the
31st day after such notice of termination is given to the Company.
o. "Determination Date" shall be the earlier of:
(i) the Emergence Date;
(ii) the date the Chapter 11 Cases are converted from
chapter 11 to chapter 7 of the Bankruptcy Code;
(iii) the date of the consummation of the sale or other
transfer of all or substantially all of the assets
of IBC and its subsidiaries whether in one or a
series of transactions, whether or not related; or
(iv) the date upon which the Executive is terminated
without Cause or resigns as a result of a
Constructive Termination Without Cause, or the date
upon which the Term expires due to delivery of a
notice by the Company pursuant to Section 2 of the
Agreement not to renew the Term.
p. "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, substantially to perform his duties and responsibilities
under the Agreement for a period of 180 consecutive days as determined by a
medical doctor selected by the Company and the Executive. If the Company and
the Executive cannot agree on a medical doctor, each shall select a medical
doctor and the two doctors shall select a third who shall be the approved
medical doctor for this purpose.
q. "Distributable Cash" shall equal the total cash and cash equivalent
balances of IBC and its subsidiaries as of the Determination Date (from
whatever source) plus, without duplication, the Aggregate Consideration
received or receivable by IBC and/or any of its subsidiaries from Asset Sales
occurring after the Effective Date (provided that the cash portion of such
Aggregate Consideration shall not be included as "Aggregate Consideration" (but
shall be included in Distributable Cash as "cash"; the intent of the Parties
being that dollars be counted only once) if such cash was not distributed, used
or applied for any purpose by IBC or its subsidiaries prior to the
Determination Date), minus, to the extent applicable, Operating Cash as of the
Determination Date. For the avoidance of doubt, if the cash proceeds from any
financing obtained by IBC and its subsidiaries in anticipation of their
emergence from bankruptcy and earmarked for distribution in satisfaction of
claims against IBC and/or its subsidiaries payable upon their emergence from
bankruptcy remain on the balance sheet of IBC and its subsidiaries as of the
Determination Date, such cash shall be excluded from Distributable Cash to the
extent such financing is reflected in Total Enterprise Value; the intent of the
Parties being that such financing (and cash) be reflected only once in such
value.
r. "Emergence Date" shall mean the date upon which the Plan is
substantially consummated, as such term is defined in 11 U.S.C. section
1101(2).
s. "Fiscal Year" shall mean the fiscal year of IBC and its
subsidiaries ending on the Saturday closest to the last day of May in each
year.
t. "IBC" shall mean Interstate Bakeries Corporation, a Delaware
corporation, or such other entity which shall be the parent entity of such
corporation and its subsidiaries or which shall otherwise succeed to all or
substantially all of the assets and business of such corporation, in any case,
immediately following the Emergence Date, unless the context otherwise
requires, together in any case with its successors and permitted assigns.
u. "Operating Cash" shall be defined as the average (by reference to
the two (2) year period prior to the applicable time of determination) and
seasonally adjusted level of cash (from whatever source, including amounts
borrowed under any working capital facility or amounts constituting Aggregate
Consideration) historically maintained in the ordinary course of business by
IBC and its subsidiaries as working capital as determined in good faith by the
Board and set forth in a written notice from the Board to the Executive,
together with supporting schedules and calculations in reasonable detail.
v. "Parties" shall mean the Company, IBC and the Executive.
w. "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, board, committee,
agency, body, employee benefit plan, or other person or entity.
x. "Plan" shall mean the plan of reorganization or liquidation
confirmed in IBC's Chapter 11 Cases and that is substantially consummated, as
that term is defined in 11 U.S.C. section 1101(2).
y. "Proceeding" shall mean any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate
or other.
z. "Securities and Other Property" shall include, without limitation,
the face amount of any indebtedness or securities, and the fair market value of
any other property, "credit bid" by any Person in any Asset Sale.
aa. "Termination Date" shall mean:
(i) in the case of death, the date of death;
(ii) in the case of Disability, thirty (30) days after the
written notice of termination is given as specified in subsection 10(b) of the
Agreement;
(iii) in the case of a termination by the Company for Cause,
the date on which the Executive receives the notice as specified in subsection
10(c)(ii) of the Agreement that a majority of the members of the Board voted,
after the hearing referred to therein, to terminate him for Cause;
(iv) in the case of a voluntary termination, the last day of
the Executive's employment;
(v) in the case where the Executive's employment is
terminated by the Company after providing a notice of non-renewal in accordance
with Section 2 of the Agreement, the end of the Term;
(vi) in the case where the Executive's employment is
terminated by the Company without Cause (other than for Disability) thirty (30)
days after written notice is given to the Executive thereof; and
(vii) in the case of a Constructive Termination Without
Cause, thirty (30) days after the Executive gives the notice provided in this
Exhibit A, subclause (n) above, unless the Company has fully cured all alleged
grounds for such termination within thirty (30) days after the Executive gives
such notice.
bb. "Total Enterprise Value" shall equal the sum of Distributable
Cash, plus:
(i) in the case of a Determination Date under clause (i) of
the definition of Determination Date, the midpoint total enterprise value set
forth in the final approved disclosure statement issued with respect to the
Plan;
(ii) in the case of a Determination Date under clause (ii) of
the definition of Determination Date, the estimated fair market value of IBC's
and its subsidiaries' assets as determined in good faith by IBC's financial
advisors and appraisers and set forth in a written notice from such advisors
and appraisers to the Executive, together with supporting schedules and
calculations in reasonable detail;
(iii) in the case of a Determination Date under clause (iii)
of the definition of Determination Date, the Aggregate Consideration received
and receivable from all applicable sales and transfers; or
(iv) in the case of a Determination Date under clause (iv) of
the definition of Determination Date, the total enterprise value of the IBC and
its subsidiaries, as determined in good faith by IBC's financial advisors and
appraisers (using the same methodology as would have been used to arrive at the
midpoint total enterprise value referred to in clause (i) above) and set forth
in a written notice from such advisors and appraisers to the Executive,
together with supporting schedules and calculations in reasonable detail.
cc. "Triggered Contingent Claims Amount" shall mean the amount of
contingent claims against IBC and its subsidiaries under the Multiemployer
Pension Plan Amendments Act of 1980 (ERISA sections 4201-4303) and the amount
of other employee-related contingent claims against IBC and its subsidiaries
that become no longer contingent after the Effective Date (and remain IBC's or
any of its subsidiaries' primary obligation) as a result of (x) sales of IBC's
(or any of its subsidiaries') business units, segments, subsidiaries, divisions
or other major assets ("Asset Sale(s)") after such date, (y) operational
changes or modifications approved by the Executive and implemented by IBC or
any of its subsidiaries after such date or (z) the substantial consummation of
a Plan.
