EXHIBIT 10.50
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
March 15, 1999, among SPECIALTY FOODS ACQUISITION
CORPORATION, a Delaware corporation ("SFAC"), SPECIALTY
FOODS CORPORATION, a Delaware corporation ("SFC"), XXXX
BAKING COMPANY, a Delaware Corporation ("Xxxx"), MOTHER'S
CAKE AND COOKIE CO., a California corporation ("Mother's"),
ARCHWAY COOKIES, L.L.C., a Delaware limited liability
company ("Archway") and ANDRE-BOUDIN BAKERIES, INC., a
California corporation ("Boudin") and XXXXXX X. XXXXXXXX
(the "Executive"). This Agreement replaces that Amended and
Restated Executive Employment Agreement dated as of May 13,
1996 (as amended as of June 30, 1997) among SFAC, SFC and
the Executive. SFAC and SFC are sometimes referred to
herein as the "Parent Companies" and SFAC, SFC, Xxxx,
Mother's, Archway and Boudin are each sometimes herein
referred to individually as an "Employer" and are sometimes
referred to collectively as the "Employers."
The Employers wish to employ the Executive, and the
Executive wishes to accept such employment, on the terms and
conditions set forth in this Agreement.
Accordingly, the Employers and the Executive hereby
agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment Duties. The Employers hereby
employ the Executive for the Term (as defined in Section 2),
to render exclusive and full-time services to the Employers,
as Vice President and Chief Financial Officer of the Parent
Companies, and to perform such other duties (consistent with
the customary duties of a corporate officer) as may be
assigned to the Executive by the Board of Directors
(collectively, the "Boards") or Chief Executive Officer of
the Parent Companies.
1.2 Acceptance. The Executive hereby accepts
such employment and agrees to render the services described
above. During the Term, the Executive agrees to devote the
Executive's entire business time, energy and skill to such
employment, and to use the Executive's best efforts, skill
and ability to promote the Employers' interests. The
Executive further agrees to accept election, and to serve
during all or any part of the Term, as an officer or
director of any Employer or any subsidiary of any Employer,
without any compensation therefor other than that specified
in this Agreement, if elected to any such position by the
shareholders of any Employer, the Boards or the shareholders
or Board of Directors of any such subsidiary, as the case
may be.
2. Terms of Employment.
2.1 The Term. The term of the Executive's
employment under this Agreement (the "Term") shall commence
on January 1, 1999 (the "Effective Date") and shall, unless
sooner terminated pursuant to Section 2.3 hereof, end on
December 31, 2000 or on such later December 31 to which the
Term is extended pursuant to Section 2.2.
2.2 Extension. On June 30 of each calendar year
starting with June 30, 2000, the then scheduled expiration
date of the Term shall automatically be extended, without
any action required of either the Executive or the
Employers, for twelve additional months, unless the
Executive, on the one hand, or the Employers, on the other
hand, shall have given written notice of non-extension to
the other no later than such June 30. If such written
notice of non-extension is given, the Term shall end on the
then-scheduled termination date (taking into account any
previous extensions pursuant to this Section 2.2). By way
of example, unless written notice of non-extension is given
by June 30, 2000, the otherwise scheduled expiration date of
December 31, 2000 shall be extended to December 31, 2001.
2.3 Early Termination. The Term shall end
earlier than the December 31 termination date scheduled in
accordance with the foregoing provisions of this Articles 2,
if sooner terminated pursuant to Article 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to
be rendered pursuant to this Agreement, the Employers agree
to pay the Executive during the 12 months of the Term ending
on December 31, 1999, a base salary at an annual rate of
$400,000 (the "Base Salary"). The annual Base Salary rate
may be increased from time to time, in the sole discretion
of the Boards.
3.2 Bonus. In addition to the amounts to be paid
to the Executive pursuant to Section 3.1, the Executive will
be eligible to receive with respect to each fiscal year of
the Employers commencing with their fiscal year ending
December 31, 1999, an incentive bonus (the "Incentive
Bonus") equal to a percentage of Base Salary for such fiscal
year based on the achievement of the Employers of
performance targets ("Performance Targets") to be set in the
beginning of such fiscal year by the compensation committee
of the Boards, such that if the minimum Performance Target
is not achieved, the Incentive Bonus shall be zero; if the
intermediate Performance Target is achieved, the Incentive
Bonus shall be equal to 75% of Base Salary; and if the
maximum Performance Target is achieved, the Incentive Bonus
shall be equal to 150% of Base Salary (provisions for pro
rata Incentive Bonus amounts for achievements between the
minimum Performance Target and the intermediate Performance
Target or between the intermediate Performance Target and
the maximum Performance Target, as the case may be, shall
also be established). The Incentive Bonus for each fiscal
year shall be paid to the Executive within 30 days of the
receipt by the Employers of their audited financial
statements for such fiscal year.
3.3 Business Expenses. The Employers shall pay
or reimburse the Executive for all reasonable expenses
actually incurred or paid by the Executive during the Term
in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or
vouchers or such other supporting information as the
Employers customarily require of their other senior
executives.
3.4 Vacation. During the Term, the Executive
shall be entitled to a paid vacation period or periods taken
in accordance with the vacation policy of the Employers
during each year of the Term; provided, that the Executive
shall be entitled to not less than four (4) weeks paid
vacation for each year of the Term.
3.5 Fringe Benefits; Securities Investment; Stock
Options.
3.5.1 Benefits. During the Term, the
Executive shall be entitled to all benefits for which the
Executive shall be eligible under any long term incentive
plan, qualified pension plan, 401(k) plan, annuity plan,
group insurance plan or other so-called "fringe" benefit
plan which the Parent Companies provide to their executive
officers generally, including, without limitation, the SFC
Executive Retirement Annuity Plan. In addition, the
Employers shall pay the reasonable fees in connection with
personal financial counseling on behalf of the Executive,
including fees relating to tax return preparation.
3.5.3 Management Option and Bonus. The
Executive shall continue to participate in the management
stock option plan (the "Option Plan") of the Employers.
3.6 Automobile. In addition, the Executive will
receive an automobile allowance of $1,100.00 per month
during the term of this Agreement.
3.7 Withholding. All compensation of the
Executive by the Employers provided for in this Agreement,
whether in the form of cash, securities or "fringe"
benefits, shall be subject to such deductions or amounts to
be withheld as required by applicable law and regulations.
Whenever compensation provided for under this Agreement is
to be delivered to the Executive in a form other than cash,
the Employers may require as a condition of delivery that
the Executive remit to the Employers an amount sufficient to
satisfy all federal, state and other governmental
withholding tax requirements related thereto. If the
compensation referred to in the preceding sentence is in the
form of securities (whether by the vesting of securities or
otherwise), the Employers shall, if the Executive so
requests and the Employers consent (such consent not to be
withheld unreasonably), satisfy the requirements of the
preceding sentence, to the extent permitted by applicable
law, by deducting from the number of securities otherwise
deliverable to the Executive, a number of securities having
a fair market value equal to the amount required to satisfy
all federal, state and other governmental withholding tax
requirements related thereto.
3.8 Sources of Payment; Joint and several
obligations; Nature of Certain Payments. Any amounts
payable to or on behalf of the Executive under this
Agreement shall be paid by the Employers on an allocated
basis in accordance with the services rendered by the
Executive to each Employer; provided that the Employers
shall be jointly and severally liable for all amounts
payable to or on behalf of the Executive hereunder. No
payment made to the Executive pursuant to Section 3.9 shall
be deemed, for any purpose, a payment of purchase price for
Common Stock or Subordinate Debentures.
3.9 Certain Additional Payments by the Employers.
(a) Anything in this Agreement to the
contrary notwithstanding, in the event that (i) a Section
280G Change (as defined below) occurs and (ii) any payment,
distribution, other compensation or benefit by any Employer
to (or for the benefit of) the Executive pursuant to the
terms of this Agreement or any other plan or agreement in
which the Executive participates, as now in effect or as
amended from time to time (hereinafter, a "Payment"), is
determined (as hereinafter provided) to be subject to the
tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the
Employers shall 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 (as defined below) and any federal, state and
local income tax and Excise Tax upon the additional amount
provided for by this paragraph (a), shall be equal to the
Total Payments; provided, however, that the aggregate
payments required to be paid to or for the benefit of the
Executive pursuant to this Section 3.9 shall not exceed 400%
of the Base Salary in effect pursuant to Section 3.1 in the
year in which the Section 280G Change occurs, plus an amount
equal to the interest and penalties, if any, attributable to
the portion of the Excise Tax for which the Gross-Up
Payment, as limited by this provision, reimburses the
Executive.
(b) Subject to the provisions of Section
3.9(c), all determinations required to be made under this
Section 3.9 including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and,
subject to the provisions below, the assumptions to be
utilized in arriving at such determination, shall be made by
KPMG Peat Marwick (or other independent auditor of the
Employers at the time) (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Employers and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment with respect to which a Gross-Up Payment is owing,
or such earlier time as is requested by the Employers. All
fees and expenses of the Accounting Firm shall be paid
solely by the Employers. Any Gross-Up Payment, as
determined pursuant to this Section 3.9, shall be paid by
the Employers to the Executive within five business days of
the receipt of the Accounting Firm's determination. The
parties acknowledge that unless the Accounting Firm is able
to provide the Executive with the opinion described in the
third following sentence with respect to such Payment, the
Accounting Firm shall determine the amount of the Gross-Up
Payment that is due at the time of any Payment. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
result in the imposition of the negligence or similar
penalty. Any determination by the Accounting Firm shall be
binding upon the Employers and the Executive. The parties
hereto acknowledge that, as a result of uncertainty in the
application of Section 4999 of the Code, it is possible that
Gross-Up Payments will not have been made by the Employers
that should have been made (hereinafter, an "Underpayment"),
consistent with the provisions of this Section 3.9. In the
event that the Executive 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 Employers to or
for the benefit of the Executive, unless the Executive has
failed to comply with Section 3.9(c) and such failure has
materially deprived the Employers of the right to contest
any claim by the Internal Revenue Service with respect to
such payments.
For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation for the calendar year in which the Gross-up
Payment is to be made and the applicable state and local
taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payments is to be made,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes.
(c) The Executive shall notify the Employers
in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the
Employers of a Gross-Up Payment. Such notification shall be
given as soon as practicable but, in any event, no later
than ten business days after the Executive is informed in
writing of such claim and shall apprise the Employers 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 he gives such notice to the Employers (or
such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Employers
notify the Executive in writing prior to the expiration of
such period that they desire to contest such claim, and if
the Employers acknowledge in writing their liability,
subject to the limitations set forth in Section 3.9(a), to
the Executive pursuant to this Section 3.9 with respect to
any amounts payable in connection with such claim, the
Executive shall:
(i) give the Employers any
information reasonably requested by the Employers
and reasonably available to the Executive relating
to such claim;
(ii) take all such actions in
connection with contesting such claim as the
Employers shall reasonably request in writing from
time to time, including, without limitation,
accepting legal representation with respect to
such claim by an attorney selected by the
Employers and agreeing to extend the statute of
limitations as requested by the Employers;
(iii) cooperate with the Employers
in good faith in order to effectively contest such
claim; and
(iv) permit the Employers to
participate in any proceeding related to such
claim;
provided, however, that the Employers 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 with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation of the foregoing
provisions of this Section 3.9(c), the Employers shall
control all proceedings taken in connection with such
contest and, at their sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at their sole option, 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 Employers shall determine; provided, however, that if
the Employers direct the Executive to pay such claim and xxx
for a refund, the Employers shall advance the amount of such
payment to the executive, on an interest-free, after-tax
basis. Furthermore, the Employers' control of the contest
shall be limited to issues with respect to which a 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 an amount advanced by the Employers pursuant to Section
3.9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Employers' complying with the requirements of Section
3.9(c)), promptly pay to the Employers the amount of such
refund (together with any interest received or credited
thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the
Employers pursuant to Section 3.9(c), a determination is
made that the Executive shall not be entitled to any refund
with respect to such claim and the Employers do not notify
the Executive in writing of their intent to contest such
denial of refund prior to the expiration of 30 days after
such determination, then to the extent of the Gross-Up
Payment such advance shall be forgiven and shall not be
required to be repaid and shall, to such extent, offset the
amount of Gross-Up Payment required to be paid, and the
remaining portion of such advance shall forthwith become due
and payable.
(e) For purposes of this Agreement:
A "Section 280G Change" shall mean a
"change . . . in the ownership or effective control" of
either Employer or a "change . . . in the ownership of a
substantial portion of the assets" of either Employer, in
each case within the meaning of Section 280G(b)(2)(A)(i) of
the Code.
A "Public Offering" shall mean an
initial public offering of stock of either Employer if at
any time thereafter stock of either Employer is "readily
tradable on an established securities market or otherwise"
(within the meaning of Section 280G(b)(5)(A)(ii) of the
Code).
"Total Payments" shall mean any payments
or benefits received or to be received by the Executive
under this Agreement or any other plan or agreement in which
the Executive participates, as now in effect or as amended
from time to time, including the plans discussed in Section
3.5.3.
3.10 Performance Based Compensation. It is the
intention of the parties that, if Section 162(m) of the Code
is or will be applicable with respect to one or more
payments hereunder, the Executive will consider in good
faith any requests by the Employers to take actions to cause
such payments to meet the requirements of Section
162(m)(4)(B) or (C) of the Code, and thus to be excluded
from the definition of "applicable employee remuneration"
within the meaning of Section 162(m)(4) of the Code.
4. Termination.
4.1 Death. If the Executive shall die during the
Term, upon the date of the Executive's death the Term shall
terminate and no further amounts or benefits shall be
payable hereunder, except that the Employers shall be
obligated to pay to the Beneficiary (as defined below) in
exchange for a release in form and substance acceptable to
the Employers acting reasonably, within 60 days of the date
of the Executive's death, (i) all unpaid Base Salary accrued
through and including the date of the Executive's death,
(ii) a lump sum amount equal to Base Salary for one year, at
the rate in effect on the date of the Executive's death (the
"Annual Base Salary Upon Death"), and (iii) an additional
lump sum bonus amount equal to the sum of (x) 75% of Annual
Base Salary Upon Death and (y) 75% of Annual Base Salary
Upon Death pro rated for the period commencing on the first
day of the fiscal year during which the Executive's death
occurred and ending on the date of Executive's death; it
being understood that such 75% bonus level has been agreed
to because it is impossible to determine the performance of
the Employers for future periods, provided that the amounts
to be paid by the Employers under (ii) and (iii) above shall
be reduced by any payments received by the Beneficiary under
life insurance policies the premiums for which have been
paid by the Employers. The "Beneficiary" shall be (i) the
beneficiary designated by the Executive on a form prescribed
for such purpose by the Employers, or (ii) in the absence of
such designation, the Executive's executor or legal
representative, in such capacity;
4.2 Disability.
4.2.1 If during the Term the Executive shall
become physically or mentally disabled, whether totally or
partially, such that the Executive is unable to perform the
Executive's services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating
six months during any twelve month period, the Employers may
on any day (the "Disability Termination Date") after the
last day of the six consecutive months of disability or the
day on which the shorter periods of disability shall have
equaled an aggregate of six months (but, in each case,
before the Executive has recovered from such disability), by
written notice to the Executive, terminate the Term (a
"Disability Termination") and no further amounts or benefits
shall be payable hereunder, except that the Employers shall
be obligated to pay to the Executive in exchange for a
release in form and substance acceptable to the Employers
acting reasonably, within 60 days of the Disability
Termination Date, (i) all unpaid Base Salary accrued through
and including the Disability Termination Date, (ii) a lump
sum amount equal to Base Salary for one year, at the rate in
effect on the Disability Termination Date (the "Annual Base
Salary Upon Disability"), and (iii) an additional lump sum
bonus amount equal to the sum of (x) 75% of Annual Base
Salary Upon Disability and (y) 75% of Annual Base Salary
Upon Disability prorated for the period commencing on the
first day of the fiscal year during which the Disability
Termination occurred and ending on the Disability
Termination Date; it being understood that such 75% bonus
level has been agreed to because it is impossible to
determine the performance of the Employers for future
periods. If the Executive shall die before receiving all
amounts required to be paid by the Employers in accordance
with the foregoing, such amounts shall be paid to the
Beneficiary.
4.3 Cause; Voluntary Termination.
4.3.1 In the event of the conviction of the
Executive of any felony involving intentional conduct on the
part of the Executive, the conviction of the Executive of
any lesser crime or offense involving the illegal use or
conversion of property of the Employers or any of their
subsidiaries or affiliates, the willful misconduct by the
Executive in connection with the performance of the
Executive's duties hereunder (which shall not be deemed to
include an action by the Executive taken in good faith in
the best interest of the Employers) or the continued breach
by the Executive of any material provision of this Agreement
after notice of such breach has been actually received by
the Executive from the Employers (the "deemed receipt"
provisions of Article 8 hereof being inapplicable to this
Section 4.3.1), the Employers may at any time, by written
notice to the Executive, terminate the Term (a "Termination
For Cause"), and upon such Termination For Cause, the Term
shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive in exchange for a release in form and substance
acceptable to the Employers acting reasonably, within 60
days of the date of termination, all unpaid Base Salary
accrued, and provide the Executive with all benefits and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination.
4.3.2. Upon a voluntary termination of the
term by the Executive (a "Voluntary Termination") without
Good Reason (as defined in Section 4.4.2), the Term shall
terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder; provided, that the
Employers shall be obligated to pay to the Executive in
exchange for a release in form and substance acceptable to
the Employers acting reasonably, within 60 days of the date
of termination, all unpaid Base Salary accrued, and provide
the Executive with all benefits and expense reimbursement to
which the Executive would otherwise be entitled, through and
including the date of termination.
4.4 Termination by Employers Without Cause;
Termination by the Executive for Good Reason.
4.4.1 Upon a Termination Without Cause (as
defined below) or a Voluntary Termination with Good Reason
(as defined below):
(a) the Employers shall pay to the
Executive, within 60 days of the date of termination, all
unpaid Base Salary accrued, and provide the Executive with
all benefits and expense reimbursement to which the
Executive would otherwise be entitled, through and including
the date of termination,
(b) subject to Sections 4.4.4, the
Employers shall, in exchange for a release in form and
substance acceptable to the Employers acting reasonably, pay
the following to the Executive:
(i) the Employers shall
continue payments of Base Salary to the Executive
(the "Continued Salary"), at the rate and at such
times as are in effect on the date of termination
(the "Base Salary Upon Termination"), for the 12
month period following the date of termination
(the "Payment Period"), except as provided in
Section 4.4.4,
(ii) the Employers shall
continue health and life insurance benefits during
the Payment Period (the "Continued Benefits"), and
(iii) the Employers shall
pay to the Executive, at the end of the Payment
Period, a bonus (the "Continued Bonus," and
together with the Continued Salary and the
Continued Benefits, the "Continued Payments") in
an amount equal to 75% of the aggregate base
salary paid to the Executive during the period
commencing on the day after the last day of the
last fiscal year completed prior to the date of
termination and ending on the last day of the
Payment Period; it being understood that such 75%
bonus level has been agreed to because it is
impossible to determine the performance of the
Employers for future periods,
4.4.2 Definitions:
(a) "Termination Without Cause" means
the termination of the Term by the Employer for reasons
other than those described in Sections 4.1, 4.2 or 4.3.
(b) "Good Reason" means:
(i) the continuation of any of the
following (without the Executive's express prior
consent) after written notice provided by the
Executive and failure by the Employers to remedy
such event within thirty (30) days after receipt
of such notice:
(A) a reduction
in the Executive's Base Salary, as in
effect at the date hereof pursuant to
Section 2.2 or as in effect pursuant
to increases from time to time made
during the Term;
(B) failure by the
Employers to pay to the Executive an Incentive
Bonus, as provided for in this Agreement;
(C) a failure by the
Employers to provide any benefit or compensation
plan (including any pension, profit sharing,
annuity, life insurance, health, accidental death
or dismemberment or disability plan), or any
substantially similar benefit or compensation
plan, which has been made available to other
comparable executives of the Employers on terms no
less favorable to the Executive than the terms
offered to such other executives; provided,
however, that nothing in this clause (iii) shall
be construed to mean that the Employers shall be
constrained from amending or eliminating any
benefit or compensation plan as such is applied to
the Executive and to other comparable executives
of the Employers; provided, further, that a
failure by the Employers to include the Executive
in any stock option plan or bonus plan shall not
constitute Good Reason hereunder;
(D) the assignment to
the Executive of any duties materially
inconsistent with the Executive's position as Vice
President and Chief Financial Officer of the
Parent Companies;
(E) a materially adverse
change in the Executive's title or the line of
authority through which the Executive is required
to report, it being understood that the Executive
shall at all times report to either the Chief
Executive Officer of the Parent Companies;
(F) failure by the
Employers to obtain the written agreement of any
successor in interest to the business of the
Employers to assume and perform the obligations of
the Employers under this Agreement;
(G) a relocation of
the corporate headquarters of the Employers
requiring the Executive to relocate to a place
other than the greater Chicago, Illinois
metropolitan area; or
(H) any material breach
of this Agreement by the Employers; or
(ii) termination at the Election of
the Executive within 180 days following a Change of Control
(as defined in Section 4.4.6).
4.4.3 In the event of a Termination Without
Cause or a Voluntary Termination for Good Reason, the
Executive shall not be required to mitigate his damages
hereunder; provided, however, that, notwithstanding the
foregoing, if there are any damages hereunder by reason of
the events of termination described above which are
"contingent on" a Section 280G Change in the meaning of
Section 280G(b)(2)(A) of the Code after a Public Offering
(i) the Executive shall be required to mitigate such damages
hereunder, including any such damages theretofore paid, but
not in excess of the extent, if any, necessary to prevent
the Employers from losing any tax deductions to which they
would otherwise be entitled in connection with such damages
if they were not so "contingent on" a Section 280G Change
(provided, that, the parties agree that this clause (i)
shall not require the Executive to violate Section 5.2
hereof) and (ii) in addition to any obligation under the
preceding clause (i), and without duplication of any amounts
required to be paid to the Employers thereunder, if any such
termination occurs and the Executive, whether or not
required to mitigate his damages under clause (i) above,
thereafter obtains other employment, the total compensation
received in connection with such other employment, whether
paid to the Executive or deferred for his benefit, for
services prior to the end of the Modified Payment Period (as
defined below) (up to the aggregate amount of damages
described in Section 4.4.1(b)) shall be paid over to the
Employers as received with respect to such period.
Notwithstanding the provisions of this Section 4.4.3, the
Employers shall not have the right to enforce their rights
under this Section 4.4.3 by set off against or by otherwise
withholding any amounts receivable by the Executive (or
payable on the Executive's behalf) under this Agreement upon
or following the time at which they are required to be paid
under this Agreement.
4.4.4 In the event that any amounts or other
benefit payable pursuant to Section 4.4 or 4.5 (including,
but not limited to, the Continued Payments, the receipt of
any security upon the exercise of any Option, or the lapse
of any direct or indirect restriction on the ability to
transfer any such security for the fair market value
thereof) would be deemed "contingent on" a Section 280G
Change (within the meaning of Section 280G(b)(2)(A) of the
Code) that occurs subsequent to a Public Offering:
(a) the Continued Salary shall be paid,
the Continued Bonus shall be calculated by reference to and
the Continued Benefits shall be provided for the shorter of
(i) 12 months following the date of termination, and (ii)
the remainder of the Term (even if such remaining period is
less than twelve months) (the "Modified Payment Period"),
and
(b) the Continued Salary and the
Continued Bonus (as modified in clause (a) of this Section
4.4.4) shall be paid to the Executive by the Employers,
within 60 days of the date of termination, in a lump sum,
which lump sum shall be discounted to the present value, on
the date of payment, of the Continued Salary (as if paid at
the times the Base Salary would have been paid to the
Executive under Section 2.2 if the Executive had been
employed by the Employers during the Modified Payment
Period) and the Continued Bonus (as if paid on the last day
of the Modified Payment Period) at the Discount Rate.
"Discount Rate" shall mean the discount rate described in
Section 280G(d)(4) of the Code. The parties hereby elect,
to the extent permitted for purposes of such Section
280G(d)(4), to base the Discount Rate on the applicable
federal rate in effect on the date hereof.
4.4.5 It is the intention of the parties that, if
there has been a Public Offering and a Section 280G Change
occurs, payments to be made to the Executive in the event of
a Termination Without Cause or a Voluntary Termination for
Good Reason qualify as "reasonable compensation for personal
services to be rendered on or after the date of the change"
within the meaning of Section 280G(b)(4)(A) of the Code and
Q&A 42(b) of Proposed Regulation Section 1.280G-1 thereunder
(as amended from time to time), and the provisions of this
Agreement shall, in the event of any ambiguity, be
interpreted in a manner consistent with the foregoing.
4.4.6 A "Change of Control" shall, for the
purposes of this Agreement, be deemed to have occurred upon
the date, if any, at which (i) with respect to SFAC, a
person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) other than
Acadia Partners, L.P., Keystone, Inc., HWP Partners, L.P.
and their respective Affiliates (as defined in Section
2.1(a) of the Principal Stockholders Agreement) (such person
or group being a Non- Affiliate) has the collective ability
to directly or indirectly designate a majority of the
members of the SFAC Board (whether by contract or otherwise)
or (ii), with respect to SFC, a transaction (including a
sale, merger or other similar transaction, but excluding any
transaction among only SFAC, SFC and/or their subsidiaries)
(x) pursuant to which all or substantially all of the assets
of SFC (as exist on the date hereof) are sold to Non-
Affiliates (y) pursuant to which Non-Affiliates acquire the
collective ability to designate directly or indirectly a
majority of the Board of Directors of SFC (by contact or
otherwise) or (z) which the compensation committee of the
Board of Directors of SFC determines, in its discretion, to
constitute a change in control.
4.5 Termination by Non-Extension of Term. Upon a
termination of the Term by reason of the non-extension of
the Term pursuant to Section 2.2:
(a) without regard to whether notice of such
termination is given by the Employers or the Executive, the
Term shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive all unpaid Base Salary accrued, and provide the
Executive with all Base Salary, benefits, bonuses and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination
of the Term;
(b) in addition to the provisions of clauses
(a) above, if the Employers give notice of non-extension
pursuant to Section 2.2:
(i) unless the notice of non-extension
would be deemed "contingent on" a Section 280G Change
(within the meaning of Section 280G(b)(2)(A) of the
Code) that occurs subsequent to a Public Offering, the
Employers shall, in exchange for a release in form and
substance acceptable to the Employers acting
reasonably, continue payments of Base Salary to the
Executive (the "Non-Renewal Continued Salary"), at the
rate and at such times as are in effect on the date of
the termination of the Term (the "Non-Renewal Base
Salary"), for the 12 month period following the date of
termination of the Term (the "Non-Renewal Payment
Period"); and
(ii) the Employers shall provide the
Continued Benefits during the Payment Period.
4.5.1 Certain Provisions Regarding Termination
by Non-Extension. Following a notice of termination of the
term by reason of the non-extension of the Term pursuant to
Section 2.2, the Executive shall remain entitled to the
protection of Sections 4.1, 4.2 and 4.3 of this Agreement
and shall receive the benefits payable under such Sections
in the event the Executive's death or disability or a
Termination Without Cause or a Voluntary Termination with
Good Reason occurs between the time the notice of non-
extension occurs pursuant to Section 2.2 and the end of the
Term.
5. Protection of Confidential Information: Non-
Competition; No Solicitation.
5.1 In view of the fact that the Executive's work
for the Employers will bring the Executive into close
contact with many confidential affairs of the Employers not
readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest
confidence all confidential matters of the Employers,
including, without limitation, to the extent the following
are confidential, trade secrets, "know how," customer lists,
pricing policies, operational methods, technical processes,
formulae, inventions and research projects, and other
business affairs of the Employers, learned by the Executive
heretofore or hereafter, and not to disclose them to anyone
outside of the Employers, either during or after the
Executive's employment with the Employers, except in the
course of performing the Executive's duties hereunder or
with the Employers' express written consent; and
5.1.2 To deliver promptly to the Employers
on termination of the Executive's employment by the
Employers, or at any time the Employers may so request, all
memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof)
relating to the Employers' business and all property
associated therewith, which the Executive may then possess
or have under the Executive's control unless such
information is necessary to enable the Executive to file any
federal or state tax return or make any other report or
filing or take any other action required by any law,
regulation or order of any court or regulatory commission,
department or agency.
Notwithstanding the foregoing, nothing
contained in this Section 5.1 shall restrict the Executive
from using, disclosing or retaining any information (i)
which is in the public domain or could readily be known or
determined without being employed by the Employers or which
enters the public domain through no breach of the
Executive's obligations to the Employers, (ii) which the
Executive acquired prior to his employment by the Employers,
(iii) which the Executive properly acquired or acquires from
parties independent of the Employers, (iv) which the
Executive is required to disclose by law, regulation, order
or legal process, (v) which is desirable to establish the
Executive's claim or defense in any litigation between the
parties, provided that the Executive uses his best efforts
to ensure that confidential treatment will be afforded such
information.
5.2 During the term of the Executive's employment
by the Employers and, in the event of the termination of the
Executive's employment for any reason, for the 180-day
period immediately following the date of termination, the
Executive shall not, directly or indirectly, enter the
employ of, or render any services to, any person, firm or
corporation engaged in any business competitive with the
business of the Employers or of any of their subsidiaries;
in any state in which any such business is conducted or in
which the Employers have specific plans to conduct business
at the time of such termination, the Executive shall not
engage in such business on the Executive's own account; and
the Executive shall not become interested in any such
business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee,
trustee, consultant, or in any other relationship or
capacity; provided, however, that nothing contained in this
Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to one percent (1%)
of the outstanding shares of capital stock of any public
corporation. The Executive shall not be deemed to be in
breach of this Section 5.2 because (i) a public corporation
of which he owns more than 1% of the outstanding capital
stock begins to engage in any such prohibited activities or
(ii) his ownership interest in a public corporation engaged
in such activities increases to more than 1% of such
corporation's issued and outstanding capital stock in either
case without any volitional act on the part of the
Executive, if, in the case of either clause (i) or (ii)
above, within sixty (60) days of learning of such event, the
Executive disposes of the amount of capital stock necessary
to cause his ownership to be less than 1% of the amount of
such capital stock issued and outstanding.
5.3 When the Executive's employment by the
Employers terminates for any reason whatsoever, then during
the period commencing on the date of such termination and
ending on the second anniversary thereof, the Executive
shall not without the express written consent of SFAC,
directly or indirectly, (i) solicit any employee of the
Employers or of any of their subsidiaries to terminate his
employment with the Employers or with such subsidiary or
(ii) hire any such employee.
5.4 If the Executive commits a breach, or
threatens to commit a breach, of any of the provisions of
Sections 5.1, 5.2 or 5.3 hereof, the Employers shall have,
in addition to any other remedies they may have, the
following rights and remedies:
5.4.1 The right and remedy to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause
irreparable injury to the Employers and that money damages
will not provide an adequate remedy to the Employers; and
5.4.2 The right and remedy to require the
Executive to account for and pay over to the Employers all
compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by
the Executive as the result of any transactions constituting
a breach of any of the provisions of the preceding
paragraph, and the Executive hereby agrees to account for
and pay over such Benefits to the Employers.
5.4.3 Each of the rights and remedies
enumerated above shall be independent of the other, and
shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Employers under
law or in equity.
5.5 If any of the covenants contained in Section
5.1, 5.2 or 5.3, or any part thereof, hereafter is construed
to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.6 If any of the covenants contained in Section
5.1, 5.2 or 5.3 or any part thereof, is held to be
unenforceable because of the duration of such provision or
the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the
duration and/or area of such provision and, in its reduced
form, said provision shall then be enforceable.
5.7 The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in
Sections 5.1, 5.2 and 5.3 upon the courts of any state
within the geographical scope of such covenants where the
Executive is engaged in activities in violation of such
covenants or the Employers are damaged or harmed in any way
by the Executive's violation of such covenants. In the
event that the courts of any one or more of such states
shall hold such covenants wholly unenforceable by reason of
the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not
bar or in any way affect the Employers' right to the relief
provided above in the courts of any other states within the
geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above
covenants as they relate to each state being for this
purpose severable into diverse and independent covenants.
6. Inventions and Patents. The Executive agrees
that all processes, technologies and inventions
(collectively "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or
not, conceived, developed, invented or made by him while
employed by the Employers shall belong to the Employers,
provided that such Inventions grew out of the Executive's
work with the Employers or any of their subsidiaries or
affiliates, are related in any manner to the business
(commercial or experimental) of the Employers or any of
their subsidiaries or affiliates or are conceived or made on
the Employers' time or with the use of the Employers'
facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Employers; (b)
assign to the Employers, without additional compensation,
all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers
necessary to carry out the foregoing; and (d) give testimony
in support of the Executive's inventorship.
7. Intellectual Property. The Employers shall be
the exclusive owners of all the products and proceeds of the
Executive's services with the Employers, including, but not
limited to, all materials, ideas, concepts, formats,
suggestions, developments, arrangements, packages, programs
and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and
during the Executive's employment by the Employers, free and
clear of any claims by the Executive (or anyone claiming
under the Executive) of any kind or character whatsoever
(other than the Executive's right to receive payments
hereunder). The Executive shall, at the request of the
Employers, execute such assignments, certificates or other
instruments as the Employers may from time to time deem
necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend their right, title or
interest in or to any such properties.
8. Notices. All notices, requests, consents and
other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight
courier or mailed first-class, postage prepaid, by
registered or certified mail (notices mailed shall be deemed
to have been given on the date mailed) or sent by
telecopier, as follows (or such other address as either
party shall designate by notice in writing to the other in
accordance herewith):
If to the Employers, to:
Specialty Foods Acquisition Corporation
Specialty Foods Corporation
Xxxx Baking Company
Mother's Cake and Cookie Co.
Archway Cookies
Andre-Boudin Bakeries
c/o Specialty Food Corporation
000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier: 847/405-3310
Attention: Chief Executive Officer
If to the Executive, to:
Xx. Xxxxxx Xxxxxxxx
0000 Xxx Xxxx Xxxxx
Xx. Xxxxxxx, Xxxxxxxx 00000
9. General.
9.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Illinois applicable to agreements made and to be
performed entirely in Illinois.
9.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating
to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound
by or liable for any alleged representation, promise of
inducement not so set forth.
9.4 This Agreement, and the Executive's rights
and obligations hereunder, may not be assigned by the
Executive. The Employers may assign their rights, together
with their obligations, hereunder (i) to any subsidiary of
or successor-in-interest to any of them, or (ii) to third
parties in connection with any sale, transfer or other
disposition of all or substantially all of the business or
assets of any of them; in any event the obligations of the
Employers hereunder shall be binding on their successors or
permitted assigns, whether by merger, consolidation or
acquisition of all or substantially all of either of their
businesses or assets.
9.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time
to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this
Agreement.
9.6 This Agreement or any amendment hereto may be
signed in any number of counterparts, each of which shall be
an original, but all of which taken together shall
constitute one agreement (or amendment as the case may be).
9.7 This Agreement shall be of no force or effect
until it has been approved by the Boards.
10. Certain Definitions.
10.1 As used herein the term "subsidiary" shall
mean any corporation or other business entity controlled
directly or indirectly by the corporation or other business
entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or
indirectly controlling, controlled by or under common
control with the corporation or other business entity in
question.
10.2 Survival. The provisions of Sections 5, 6
and 7 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of March 15, 1999.
SPECIALTY FOODS ACQUISITION COPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
Name: Xxxxxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
SPECIALTY FOODS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President and
General Counsel
XXXX BAKING COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
MOTHER'S CAKE &COOKIE CO.
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
ARCHWAY, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
ANDRE-BOUDIN BAKERIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxxxx
XXXXXX X. XXXXXXXX
