SALARY CONTINUATION AGREEMENT
This Agreement, dated the 22nd day of August, 2001, between Agrilink
Foods, Inc., a New York corporation (the "Employer"), with offices at 00 Xxxxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, and Xxxxxx X. Xxxxxx (the "Employee"),
residing at 00 Xxxxx Xxxxx Xxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
WHEREAS, the Employer employs the Employee, and the Employee shall
serve as the Employer's president and chief executive officer, and
WHEREAS, the Employer and Employee wish to provide for the continuation
of the Employee's salary in certain events of termination of employment,
NOW, THEREFORE, the parties agree as follows:
1. CONSIDERATION. The parties hereby acknowledge that
this Agreement is entered into for good and sufficient consideration, the
receipt of which is hereby acknowledged by each of the parties.
2. COMPENSATION AND BENEFITS.
(a) Salary. As compensation for services of the
Employee, the Employer shall pay to the Employee an annual salary determined
from time to time by the Board of Directors of the Employer, in accordance with
its compensation policies.
(b) Incentive Compensation. In addition, the
Employee shall participate in, and shall be entitled to, additional
compensation under the Employer's Management Incentive Plan at an entitlement
rate to be determined from time to time by the Board of Directors of the
Employer, in accordance with its compensation policies.
(c) Benefits. The Employee shall be entitled
to receive health insurance, disability insurance, and all other employee
benefits consistent with the Employer's employee benefit policies for executives
as determined from time to time by the Board of Directors of the Employer.
Notwithstanding the foregoing, the Employee expressly acknowledges that the
salary continuation benefits under this Agreement are provided in lieu of any
other severance arrangements normally provided by the Employer to its executive
employees.
(d) For purposes of this Agreement, the
Employee's "Salary" shall mean the sum of (i) the Employee's annual salary, as
then in place at the time of such determination, and (ii) the average Management
Incentive Program award received by the Employee for the two (2) most recently
completed fiscal years of the Employer.
3. TERMINATION.
(a) Death. If the Employee dies during
employment with the Employer, the Employer shall continue the Employee's salary,
defined in Section 2(d), for a period of twenty-four (24) months. Such salary
continuation payments are in addition to all life insurance benefits the
Employee is entitled to receive under any life insurance policies provided to
the Employee pursuant to Section 2(c). The Employer may, in its sole discretion,
acquire a life insurance policy or policies to fund any obligation it may have
under this Section 3(a). Such salary continuation payments shall be paid to the
Employee's spouse.
(b) Disability. If the Employee becomes
disabled due to a physical or mental disability, the Employer shall continue
the Employee's salary, as defined in Section 2(d), for a period of twenty-four
(24) months from the date of the Employee's disability; provided, however, that
such salary continuation payments shall be offset by the amount, if any, which
the Employee shall receive under any short-term or long-term program of the
Employer. The Employer may, in its sole discretion, acquire a disability policy
or policies to fund any obligation it may have under this Section 3(b). For
purposes of this Section 3(b), the Employee shall be deemed disabled if the
Board of Directors of the Employer shall in good faith find, on the basis of
medical evidence submitted to it, that the Employee suffers from a mental or
physical condition or impairment which precludes the resumption of his usual and
customary duties, and if such impairment or condition is likely to last for
period of more than six (6) months. In the event of a disability, the Employee's
Salary shall be determined as of the date of the onset of the Employee's
disability and the twenty-four (24) month salary continuation period shall be
measured from the date of the onset of the Employee's disability.
(c) Termination Without Cause. The Employer
may terminate the Employee without cause. For purposes of this Agreement, the
term "cause" shall have the meaning set forth in Section 3(d) hereof. In the
event the Employer terminates the Employee without cause, the Employer shall
continue the Employee's salary, as defined in Section 2(d), for a period of
twenty-four (24) months.
(d) Termination for Cause. The Employer may
terminate the Employee for cause. For purposes of this Agreement, the Employer
shall have cause to terminate the Employee in the event of (a) the willful and
continued failure or refusal by the Employee to substantially perform his duties
with Agrilink Foods (other than any such failure resulting from termination for
Good Reason), after a demand for substantial performance is delivered to the
executive that specifically identifies the manner in which Agrilink Foods, Inc.
believes that the executive has not substantially performed his duties, if the
executive fails to resume substantial performance of his duties on a continuous
basis for fourteen (14) days on receiving such demand, (b) willful and gross
misconduct on the part of the executive that is materially and demonstrably
detrimental to Agrilink Foods, Inc.; or (c) the commission by the executive of
one or more acts which constitute an indictable felony under United States
federal, state, or local law. "Cause" under (a), (b) or (c) shall be determined
in good faith by a written resolution duly adopted by the affirmative vote of
not less than two-thirds (2/3) of all the Directors of Agrilink Foods, Inc. at a
meeting duly called and held for that purpose after reasonable notice to the
Employee and opportunity for the Employee and his legal counsel to be heard. In
the event the Employee is terminated for cause, the Employer shall have no
further obligation under this Agreement.
(e) Voluntary Termination By the Employee. The
Employee may terminate employment voluntarily upon reasonable notice to the
Employer. If the Employee terminates employment voluntarily, the Employer shall
have no further obligation under this Agreement.
4. NON-COMPETITION
With the exception of benefits being paid or payable to the Employee
due to a Termination following a Change of Control under Section 5 hereunder, if
when the Employee is receiving, or may be entitled to receive, a benefit
hereunder, the Employee engages in Competition with the Company (without prior
authorization given by the Committee in writing), payments thereafter payable
hereunder to the Employee will, at the discretion of the Committee, be forfeited
and the Company will have no further obligation hereunder to the Employee. For
purposes of this Section 4, "Competition with the Company" shall occur if,
before or after termination of employment, the Employee directly or indirectly
comes to own, manage, operate, control, be employed by or participate in the
ownership, management, operation or control of, or be connected in any other
manner with, any business which, in the judgment of the Board of Directors of
the Company, is in substantial competition with the Company (unless the Employee
has first obtained the Board's prior written consent).
5. CHANGE OF CONTROL.
(a) Notwithstanding the provisions of Section 3,
in the event of a Termination, as defined below, of the Employee within two (2)
years after a Change of Control, as defined below, the Employer shall continue
the Employee's Salary as defined in Section 2(d), for a period of twenty-four
(24) months.
(b) Termination. For purposes of this Section
5, "Termination" shall mean (i) termination by the Employer of the employment
of the Employee for any reason other than on account of the Employee's death,
disability, or for cause, as defined in Section 3(d), or (ii) resignation of the
Employee for Good Reason, as defined below.
(c) Change of Control. For purposes of this
Section 5, a Change of Control shall be deemed to have occurred if (i) anyone
other than Pro-Fac Cooperative, Inc. or any of its affiliates, including a
"group" (as defined in Section 13(d)(3) of the Securities and Exchange Act of
1934 (the "1934 Act") becomes the "beneficial owner" (within the meaning of
Section 13(d)(3) under the 0000 Xxx) of a majority of the common stock of the
Employer; or (ii) the Employer is a party to a merger, consolidation, or other
business combination in which it is not the surviving corporation, or sells or
transfers all of a major portion of its assets to any other person (any of the
foregoing constituting a "Business Combination"); or (iii) as a result of, or in
connection with, any cash tender or exchange offer, purchase of stock, Business
Combination, or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were directors of the Employer
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Employer or any Successor Corporation. "Successor Corporation"
means the surviving, resulting or transferee corporation in a Business
Combination, or if such corporation is a direct or indirect subsidiary of
another corporation, the parent corporation of such surviving, resulting or
transferee corporation.
(d) Good Reason. For purposes of this Section
5, "Good Reason" shall mean the occurrence of one of the following events:
(i) the assignment of the Employee to any duties materially inconsistent
with the Employee's positions, duties, responsibilities and status with the
Employer immediately prior to the occurrence of a Change of Control; or (ii)
a reduction in the Employee's annual salary or annual incentive opportunity;
or (iii) the Employer requires the Employee to be based anywhere other than
his office location immediately preceding the occurrence of the Change of
Control or one of the principal executive offices of the Employer; or (iv) the
liquidation, dissolution, consolidation or merger of the Employer or transfer
of all or a significant portion of its assets, unless a successor or successors
(by merger, consolidation, or otherwise) to which all or a significant portion
of the Employer's assets have been transferred assumes all duties and
obligations of the Employer under this Agreement. The Employee's right to
terminate employment for Good Reason shall not be affected by the Employee's
incapacity due to physical or mental illness. The Employee's continued
employment shall not constitute a consent to or waiver of rights with respect to
any circumstances constituting Good Reason herein.
6. BENEFITS In the event the Employee is entitled to salary
continuation payments under the provisions of subsection (a), (b), or (c) of
Section 3 or under the provisions of Section 5, the Employer shall continue to
provide to the Employee during the period of such salary continuation payments
all welfare benefits on the same terms and conditions as the Employer is
providing such benefits to its executive employees under its employee benefit
policies for executives. For purposes of this Section 6, welfare benefits shall
include, by way of example and not limitation, health insurance benefits, life
insurance benefits, disability insurance benefits, and the like, and shall
exclude, by way of example, and not limitation, participation in any defined
benefit plan, defined contribution plan, ss.401(k) plan, or non-qualified
deferred compensation plan.
7. MISCELLANEOUS.
(a) Unfunded Plan. This Agreement shall not
require the Employer to segregate any assets with respect to the benefits which
may be paid under it. Neither the Employer nor the Board of Directors shall be
deemed to be a trustee of any amounts to be paid under this Agreement. Any
liability of the Employer shall be based solely upon the contractual obligations
created by this Agreement and no such obligations shall be deemed to be secured
by any pledge or an encumbrance on any property of the Employer.
(b) Termination and Amendment. This Agreement
shall remain in effect until such time as the Board of Directors elects to
terminate or amend the Agreement; provided, however, that in the event of a
Termination as defined in Sections 3 or 5 above, of the Employee within two (2)
years after the termination or amendment of the Agreement, the Employer shall
continue the Employee's Salary as defined in Section 2(d), for a period of
twenty-four (24) months.
(c) Governing Law. This Agreement shall be
governed by the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
AGRILINK FOODS, INC.
By: /s/ Xxxxx Xxx
Title: President
