EXHIBIT 10.8a
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is made by
and between Foodbrands America, Inc., a Delaware corporation, and
R. Xxxxxxxx Xxxxxxxx and dated as of the 31st day of December,
1996.
W I T N E S S E T H:
WHEREAS, Foodbrands America, Inc., a Delaware
corporation (the "Corporation"), is the successor to Xxxxxxxx
Companies Incorporated within the meaning of paragraph 7(c) of
the Employment Agreement dated as of August 2, 1994 between
Xxxxxxxx Companies Incorporated and R. Xxxxxxxx Xxxxxxxx (the
"1994 Agreement"); and
WHEREAS, the Corporation and the Executive desire to
make certain changes in the 1994 Agreement and have agreed to
state those changes in this document amending the 1994 Agreement
(the "Amendment");
NOW, THEREFORE, in consideration of the mutual
covenants and representations contained herein, the parties
hereto agree as follows:
1. Definitions. Unless otherwise defined herein,
defined terms shall have the meaning ascribed to them in the 1994
Agreement.
2. Accounting Treatment. In the event that the
Corporation becomes a party to a transaction which is otherwise
intended to qualify for "pooling of interests" accounting
treatment then (A) this Amendment shall, to the extent
practicable, be interpreted so as to permit such accounting
treatment, and (B) to the extent that the application of clause
(A) of this sentence does not preserve the availability of such
accounting treatment, then, to the extent that any provision of
this Amendment disqualifies the transaction as a "pooling"
transaction (including, if applicable, this entire Amendment),
such provision shall be null and void as of the date hereof. All
determinations under this paragraph shall be made by the
accounting firm whose opinion with respect to "pooling of
interests" is required as a condition to the consummation of
such transaction.
3. Paragraph 1.2 Compensation and General Benefits.
The first sentence of paragraph 1.2(a) of the 1994 Agreement
shall be deleted and the following sentence substituted therefor:
"(a) The Corporation shall pay to the
Executive a base salary of not less than
$700,000 per annum effective retroactively to
January 1, 1996, such annual compensation
being herein sometimes referred to as the
'base salary.'"
Paragraph 1.2(b) of the 1994 Agreement shall be amended
to read, in its entirety, as follows:
"(b) The Corporation shall also pay to
the Executive a performance bonus for each
fiscal year beginning after December 31, 1995,
of 100% of his base salary for such year (the
'Target Bonus') if the Corporation meets its
EBIT target for such year (as set by the
Compensation Committee of the Board in the
annual budget after consulting with senior
management of the Corporation), plus a minimum
of 25% of his annual base salary for such year
if the Corporation exceeds such EBIT target by
10% or more, plus a minimum of an additional
25% of his base salary for such year if the
Corporation exceeds such EBIT target by 20% or
more; provided, however, that the Executive
remains an employee of the Corporation on the
last day of each such fiscal year for which a
performance bonus is being paid, except that,
in the event of the Executive's death or his
qualification for a benefit under the Corpora-
tion's long term disability plan (the 'LTD
Plan'), the Executive shall be entitled to the
entire bonus to which he would otherwise be
entitled had he remained an employee of the
Corporation as of the last day of the year in
which such event of death or qualification
occurred. The performance bonus for any year
shall be payable as soon as administratively
feasible after it is determined and shall be
paid in the form of cash or Common Stock
(based on market price on the date of payment)
or a combination thereof as selected by the
Executive, but subject to such limitation on
the number of shares as the Compensation
Committee of the Board may have set for such
year. For the purposes of this Agreement and
subject to extraordinary events, 'EBIT' shall
mean the Corporation's consolidated earnings
before interest and taxes, all determined in
accordance with generally accepted accounting
principles ('GAAP') consistently applied."
Paragraph 1.2(c)(iv) of the 1994 Agreement shall be
amended to read, in its entirety, as follows:
"(iv) In the event of a 'Change of
Control' (as defined below), all outstanding
option shares not previously vested shall vest
on the date of such event provided the
Executive is an employee of the Corporation on
such date. For the purpose of the 1994
Agreement and this Amendment, 'Change of
Control' means each of the following:
(A) A change in shareholder
ownership of the Corporation, whereby a
person or company, or a group of affili-
ated persons or companies, acquires a
sufficiently large block of Common Stock,
which, when voted together with the
shares of Common Stock of all other
shareholders of the Corporation whose
proxies or written consents are solicited
by such person, company or group without
the benefit of a management supported
proxy statement at any meeting of the
shareholders of the Corporation, would
enable such person or company or group of
affiliated persons or companies to elect
a majority of the members of the Board;
(B) A merger or consolidation of
the Corporation with and into another
company, other than with or into a
wholly-owned subsidiary of the Corpora-
tion, where the Corporation is not the
surviving company; or the Corporation is
the surviving company and the members of
the Board immediately prior to the merger
or consolidation do not constitute a
majority of the Board of the surviving
company after the merger or consolida-
tion;
(C) Whether such transaction
results in a Change of Control pursuant
to subparagraphs (A) or (B) above or not,
the following events shall be deemed a
Change of Control: (i) a transaction or
series of transactions pursuant to which
Xxxxxx Xxxxxxxxxx & Xxxx Fund, L.P.,
transfer substantially all of its benefi-
cial ownership (within the meaning of
Rule 13d-3 promulgated under the Secu-
rities Exchange Act of 1934, as amended
(the 'Exchange Act')) in the capital
stock of the Corporation of any other
person or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Ex-
change Act), or (ii) substantially all of
the outstanding capital stock of the
Corporation is acquired by any person or
group in one or more related transac
tions; or
(D) Any other kind of a corporate
reorganization or takeover where: (i)
the Corporation is not the surviving
company; or the Corporation is the sur-
viving company and the members of the
Board immediately prior to the reorgani-
zation do not constitute a majority of
the Board.
With respect to the events described in sub-
paragraphs (B), (C) and (D) above, the Change
of Control shall be deemed to occur on the
later of the transaction described in such
subparagraph or a shareholder vote approving
such a transaction."
4. Employment Period. Paragraph 4.1 Duration of the
1994 Agreement is hereby amended to provide that the Employment
Period which commenced on August 1, 1994 shall be extended to
December 31, 1999, and unless previously terminated as provided
herein and therein, the Employment Period shall be extended
automatically for one (1) year after December 31, 1999, unless
prior to January 1, 1999, either party provides to the other
party written notice of the intent of such party not to extend.
The following sentences shall be added at the end of
paragraph 4.1:
"Further, notwithstanding any of the preceding
provisions of this paragraph 4.1, if a Change
of Control shall occur within the Employment
Period, the Employment Period (unless previ-
ously terminated as herein provided) shall be
extended to the second anniversary of the
Change of Control. Further, notwithstanding
any other provision hereof, any obligations of
the Corporation or the Executive under this
Agreement which by their nature may require
either partial or total performance after the
expiration of the Employment Period shall
survive such expiration."
5. Termination Without Cause. Paragraph 4.3 of the
1994 Agreement is hereby amended to read, in its entirety, as
follows:
"4.3. Termination Without Cause. The
Executive's employment may be terminated with-
out 'cause,' as defined in paragraph 4.2 of
the 1994 Agreement, at any time by the Board
during the Employment Period or by the
Executive for 'Good Reason', as defined in
paragraph 4.5 of the 1994 Agreement and in
each instance before a Change of Control
occurs. In such event, the Corporation shall
pay to the Executive a severance payment equal
to three (3) times the sum of (i) his base
salary under paragraph 1.2(a) hereof for the
last twelve-month period ending prior to such
termination, plus (ii) an amount equal to the
Executive's Target Bonus of 100% of his base
salary regardless of whether such bonus was
earned and paid under paragraph 1.2(b) hereof
for the last fiscal year of the Corporation
ending prior to such termination. The sever-
ance payment described in the immediately
preceding sentence shall be made in thirty-six
(36) equal monthly installments, commencing
within thirty (30) days after date of termina-
tion, except, if such termination occurs and
this paragraph is invoked and a Change of
Control subsequently occurs, payment of the
balance of the severance payment, if any,
shall be made in a single lump sum payment
upon the Change of Control. Payment under
this paragraph 4.3 shall be in lieu of any
other benefits that may otherwise be payable
to the Executive under any severance pay plan
or arrangement. In the event Executive should
die prior to the end of said thirty-six (36)
month period, the unpaid portion of the sever-
ance payment shall be paid in a lump sum to
the Executive's surviving spouse, and if none,
then to his estate."
6. Change of Control. Paragraph 4.4 of the 1994
Agreement is hereby amended to read, in its entirety, as follows:
"4.4. Change of Control.
(a) The Executive's Agreement. In
the event of a Change of Control, upon receipt
by the Executive of the Change of Control
Payment, subject only to death, disability,
termination of employment by the Executive for
Good Reason (as defined in paragraph 4.5 of
the 1994 Agreement) or termination of employ-
ment by the Corporation, the Executive agrees
to continue his employment pursuant to para-
graph 1.1 hereof under the same terms and
conditions and in the capacity set forth in
the 1994 Agreement and herein during the one-
year period immediately following a Change of
Control (the 'Stay Period'). During the Stay
Period, the Executive shall be entitled to all
compensation and benefits as otherwise would
be provided to the Executive during the
Employment Period. The parties recognize that
it would be difficult to determine the amount
of damages that will result to a prospective
purchaser of the Corporation in the event the
Executive should fail to perform his agreement
to provide services to the Corporation during
the Stay Period as provided in this paragraph
4.4(a). Accordingly, the Corporation and the
Executive agree that as liquidated damages for
the Executive's failure to perform such ser-
vices and to remain in the employ of the
Corporation as provided herein, the Executive
agrees to reimburse the Corporation an amount
equal to one-third of the Change of Control
Payment (as defined in paragraph 4.4(b) below)
less the amount of income and employment taxes
attributable to such amount which have been or
will be required to be paid by the Executive,
but excluding from the amount to be repaid the
Gross-up Payment (as defined in paragraph 8
below), herein attributable to such amount,
and to forfeit all but $100.00 of the Covenant
Payment (as defined in paragraph 4.4(c) be-
low), herein the 'Liquidation Amount'; provid-
ed, in the event that (i) the Executive de-
ducts any of the Liquidation Amount which has
been paid to the Company pursuant to this
paragraph 4.4(a) as a deductible expense under
Section 165(c) of the Code and (ii) the Inter-
nal Revenue Service allows a final refund of
any income or employment taxes (including
interest) no longer subject to audit (the
'Refund') attributable to the Liquidation
Amount, the Executive shall immediately pay
the Refund to the Company. The Corporation
and the Executive agree that the payment of
the Liquidation Amount by the Executive to the
Corporation shall be the sole and exclusive
remedy of the Corporation for the breach by
Executive of the provisions of this paragraph
4.4(a), and that paragraph 3 of the 1994
Agreement shall not be applicable.
(b) Payments Upon Change of
Control. Upon a Change of Control, the Corpo-
ration shall pay to the Executive in a single
lump sum an amount equal to the sum of (i) the
amount which would otherwise be paid to the
Executive under paragraph 4.3 hereof if the
Executive was terminated by the Corporation
without cause prior to a Change of Control
(the 'Change of Control Payment') and (ii) the
a Gross-Up Payment as provided in paragraph 8
hereof. The parties agree that the Change of
Control Payment would be a parachute payment
as described in Section 280G of the Internal
Revenue Code of 1986, as amended (the 'Code')
and subject to the excise tax imposed under
Section 4999 of the Code. The Change of
Control Payment and the Gross-Up Payment shall
be paid within fifteen (15) days after the
Executive becomes entitled to payment pursuant
to the immediately preceding sentence.
(c) Covenant Not to Compete and
Payment. Upon the occurrence of a Change of
Control, (i) paragraph 2.1 of the 0000 Xxxxx-
ment shall no longer be applicable and (ii) if
the Executive's employment with the Corpora-
tion is terminated upon such Change of Control
or at any time thereafter for any reason
whatsoever, the Executive agrees to not enter
into a Competitive Business (as defined below)
(the 'Covenant Not to Compete') anywhere in
the United States for a period of twenty-four
(24) months after his termination of employ-
ment (the 'Covenant Period'). In consider
ation of such covenant, the Corporation shall
pay to the Executive the sum of $1,000,000
(the 'Covenant Payment') which shall be paid
on a monthly basis of $41,666.66 commencing as
of the first day of the month following his
termination of employment and will continue as
of the first day of each month thereafter
during the Covenant Period. Except with prior
written consent of the Corporation, the Execu-
tive shall not enter into the employ of,
render services to, or invest in any person or
entity that is in competition (or is actively
planning to engage in competition) with the
Corporation in any 'Competitive Business.'
Ownership of up to 1% of stock of a public
company which is a Competitive Business shall
not be deemed to violate the immediately
preceding sentence. Competitive Businesses
shall include any business actively conducted
by the Corporation at the Executive's
termination of employment and any business
which the Corporation plans to enter at the
time of the Executive's termination of employ-
ment pursuant to a business strategy in the
development of which the Executive actively
participated and which was adopted by the
Board prior to the Executive's termination of
employment. By way of illustration, at the
present time, the foodservice industry (de-
fined as all aspects of away-from-home food
preparation) would not be considered a Com-
petitive Business in its entirety. However,
the production, marketing or distribution of
frozen and refrigerated products to the seg-
ments of the foodservice industry which the
Corporation has currently targeted (for exam-
ple, pizza toppings, pizza crusts, ethnic
foods, kettle-cooked sauces, soups, and side
dishes and branded and processed meat prod-
ucts) would be Competitive Businesses. Fur-
ther, during the Covenant Period, except with
prior written consent of the Corporation, the
Executive shall not attempt to induce any
other Corporation employee to be employed or
perform services elsewhere. Upon any xxxxx-
tion by the Executive of the non-compete or
non-solicitation provisions of this Agreement,
the Corporation shall be entitled to cease
making the Covenant Payment after it provides
written notice to the Executive that a xxxxx-
tion of this paragraph 4.4(c) has occurred,
and the Executive has not ceased such xxxxx-
tion after a period of thirty (30) days. The
Corporation shall also have the right to seek
damages and/or a temporary or permanent
injunction against the Executive for violating
this paragraph 4.4(c). If any provision of
this paragraph 4.4(c) is unenforceable because
of its duration or the area covered, the court
having jurisdiction can reduce the duration
and/or area to the extent required to make it
enforceable.
(i) Funding of Covenant Payment. The
Corporation agrees that in order to provide a
source of funding for the Covenant Payment,
immediately upon a Change of Control, the
Corporation shall transfer the sum of
$1,000,000 to the trustee of a 'rabbi trust'
as described in Internal Revenue Procedure 92-
64 (the 'Rabbi Trust'). The Covenant Payment
will be held by and paid from the Rabbi Trust
during the Covenant Period. In accordance
with the terms of the Rabbi Trust, (i) the
assets of the Rabbi Trust will at all times be
subject to the general creditors of the Corpo-
ration and (ii) any earnings on the assets
held in the Rabbi Trust during its existence
shall be returned to the Corporation upon the
termination of the Rabbi Trust.
(ii) Payment of Covenant Payment in
Event of Death. In the event of the
death of the Executive during the Cove-
nant Period, the balance of the Covenant
Payment, if any, will be paid to the
Executive's surviving spouse, and if
none, then to his estate."
7. Additional Payments to Executive Upon Termination.
Paragraph 4.7 of the 1994 Agreement is hereby amended to read, in
its entirety, as follows:
"4.7. Additional Payments to Executive
Upon Termination. In the event of the termi-
nation of the employment of the Executive for
any of the reasons provided in paragraphs 4.3,
4.4 or 4.5 hereof, and in addition to all
amounts required to be paid to the Executive
by the Corporation, then during the thirty-six
(36) month period following a termination
pursuant to such paragraphs, and during the
Covenant Period, the Executive shall be enti-
tled to continue to participate in all of the
Corporation's health plans and welfare plans
(including life insurance policies), and after
the expiration of such thirty-six (36) month
period or such Covenant Period, the Executive
shall then be eligible to elect COBRA continu-
ation coverage under the Corporation's health
plan. During such thirty-six (36) month
period and during the Covenant Period the
Executive shall also be entitled to continue
to receive all of the other welfare benefits
and perquisites described in paragraph 1.2(c)
at the higher of the level of such coverage
and perquisites immediately prior to the
Change of Control or immediately prior to such
termination, provided, however, if the
Executive is prohibited by law from partici-
pating in such plans, the Corporation shall
provide equivalent benefits."
8. Additional Payments by the Corporation. Paragraph
8 of the 1994 Agreement is hereby amended to read, in its
entirety,
as follows:
"8. Additional Payment by the Corpora-
tion. Anything in this Agreement to the
contrary notwithstanding, in the event it
shall be determined that any right, payment or
distribution by the Corporation to or for the
benefit of the Executive, whether paid or
payable or distributed or distributable pursu-
ant to the terms of this Agreement or other-
wise including by example and not by limita-
tion, acceleration of the date of vesting or
payment or rate of payment under any plan,
program or arrangement of the Corporation or
any payment under this paragraph 8 (the 'Pay-
ment'), would be subject to the excise tax
imposed by Section 4999 of the Code, or any
interest or penalties with respect to such
excise tax (such excise tax, together with any
such interest and penalties, are hereinafter
collectively referred to as the 'Excise Tax'),
then, the Executive shall be entitled to
receive an additional payment (the 'Gross-Up
Payment') in an amount such that after payment
by the Executive of all taxes on the Gross-Up
Payment (including any interest or penalties
imposed with respect to such taxes), the
Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon
the Payment. Provided, the parties agree that
the Covenant Payment shall not be considered
for any purposes as a parachute payment under
Section 280G of the Code for which the Corpo-
ration would be obligated to pay a Gross-Up
Payment. If the Executive receives a refund
on any Excise Tax for which he received pay-
ment hereunder, the Executive shall pay such
refund (net of any applicable taxes) to the
Corporation. The amount of the Gross-Up
Payment required to be paid to the Executive
shall be determined by Coopers & Xxxxxxx (the
'Accounting Firm') which shall provide de-
tailed supporting calculations both to the
Corporation and to the Executive within fif-
teen (15) business days of a Change of Control
or at such earlier time as requested by the
Corporation or the Executive. The Gross-Up
Payment determined under this paragraph 8
shall be paid to the Executive within five (5)
days of receipt of the Accounting Firm's
determination. The cost of performing all
calculations with respect to termination of
the applicable Gross-Up Payment shall be paid
solely by the Corporation."
9. Boards. The Corporation agrees that, for purposes
of paragraph 1.1(b) of the 1994 Agreement, its advance consent
shall be deemed to have been given as to the Executive's serving
as a member of the board of directors of each of the following
companies: Arkwright Mutual Insurance Company, Xxxxxxx Fabrics,
Inc., Autocraft Industries, Inc., ENTEX Information Services,
Inc. and Del Monte Corporation.
10. Amendments. Subject to applicable law, this
Amendment may be amended only in writing signed by each of the
parties hereto.
11. Headings. The descriptive headings of the several
paragraphs of this Amendment are inserted for convenience only
and do not constitute a part of this Amendment.
12. Governing Law. The 1994 Agreement and this
Amendment and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the
State of Oklahoma.
13. 1994 Agreement. The 1994 Agreement, as amended by
this Amendment, shall constitute the entire agreement between the
parties as to the subject matter hereof and shall be in full
force and effect as herein provided.
IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment to Employment Agreement as of the day and
year first above written.
CORPORATION: FOODBRANDS AMERICA, INC.
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
EXECUTIVE: /s/ R. Xxxxxxxx Xxxxxxxx
R. Xxxxxxxx Xxxxxxxx
