Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the
1st day of November, 1996, by and between International Multifoods
Corporation, a Delaware corporation (the "Company"), and Xxxx X.
Xxxxxxx, a resident of Winston-Salem, North Carolina (the "Executive").
WHEREAS, the Executive is experienced in managing significant
business enterprises; and
WHEREAS, the Company wishes to secure the Executive's services
as Chairman of the Board, President and Chief Executive Officer under
the terms and conditions hereof; and
WHEREAS, the Executive wishes to provide such services to the
Company;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and undertakings stated herein, the Executive and the
Company hereby agree as follows:
1. Period of Employment
Subject to all terms and conditions hereof, the Company shall
employ the Executive as, and the Executive shall serve the Company as,
Chairman of the Board, President and Chief Executive Officer during the
period commencing on January 1, 1997 and ending on December 31, 1999
(the "Employment Period"), unless the Executive's employment hereunder
terminates earlier in accordance with Section 5 hereof. Commencing on
January 1, 1998, and on each January 1 thereafter, the Employment Period
shall be extended automatically for one additional year, unless not
later than the September 30th preceding any such automatic extension,
the Company shall give the Executive written notice that it elects not
to so extend the Employment Period.
2. Duties and Responsibilities of the Executive
Subject to all terms and conditions hereof, the Company
shall employ the Executive as, and the Executive shall serve the Company
as, Chairman of the Board, President and Chief Executive Officer. The
Board of Directors of the Company (the "Board") has, effective as of
January 1, 1997, appointed the Executive as, and the Executive shall
serve the Company as, Chairman of the Board, President and Chief
Executive Officer. As Chairman of the Board, President and Chief
Executive Officer, the Executive shall have all duties and
responsibilities customarily associated with the offices of chairman,
president and chief executive officer of a significant business
enterprise, shall have primary management responsibility for the
Company, shall chair the Board, and shall perform such other duties
consistent with the offices of Chairman of the Board, President and
Chief Executive Officer of the Company as may be specified from time to
time by the Board, to whom the Executive shall report. During the
Employment Period, the Executive shall devote full time to the
Executive's duties and responsibilities hereunder, and he shall not
engage in other employment or in other material business activities;
provided, however, that the Executive may make appropriate and
reasonable personal investments, may continue as an inactive employee of
Xxxxxxx Company on leave-of-absence through October 31, 1998, and, with
the approval of the Board or the Chair of the Nominating and Corporate
Governance Committee of the Board, may continue to serve on the boards
of directors of the business corporations on which he currently serves
and may serve on the boards of directors of other business corporations
and engage in community activities in the locations in which the Company
has offices.
3. Compensation
(a) Base Salary. While the Executive is employed
by the Company hereunder, the Company shall pay to the Executive a base
salary ("Base Salary"), which shall be established by the Compensation
Committee of the Board (the "Compensation Committee"). Every 15 to 18
months during the Employment Period, the Compensation Committee in its
discretion may grant increases in the Executive's Base Salary on the
basis of merit. The Compensation Committee has established the
Executive's Base Salary as of January 1, 1997 at $600,000.00 per year.
The Company shall pay the Executive's Base Salary to him in accordance
with the Company's standard payroll practices as in effect from time to
time.
(b) Annual Bonus Awards. While the Executive is
employed by the Company hereunder, the Executive shall be eligible to
participate in the Company's Management Incentive Plan (the "Incentive
Plan"). Beginning with the fiscal year that commences on March 1, 1997
and for each fiscal year thereafter during which the Executive is
eligible to participate in the Incentive Plan, the Company shall pay to
the Executive as an annual bonus (the "Bonus Award"), if approved by the
Compensation Committee in its discretion, a minimum of 15 percent of the
Executive's Base Salary and a maximum of 100 percent of his Base Salary
(or such higher maximum established by the Compensation Committee), with
65 percent of the Executive's Base Salary being his target annual Bonus
Award. The amount of the Executive's annual Bonus Award as determined
by the Compensation Committee in its discretion shall be based on the
financial performance achieved by the Company during the applicable
fiscal year as measured by either the Company's attainment of its
business plan goals or other standards as established by the
Compensation Committee in its discretion from time to time. The
Compensation Committee shall make its determination of the amount of the
Executive's annual Bonus Award, if any, within 60 days following the end
of each fiscal year, which Bonus Award shall be paid to the Executive
within 90 days following the end of such fiscal year. Except as
modified by the provisions of this Section 3(b) and of Section 6(b),
Section 6(c), and Section 6(d) hereof, payments of annual Bonus Awards
to the Executive by the Company shall be governed by the terms of the
Company's Incentive Plan as it is in effect from time to time.
(c) Stock Options. Pursuant to the provisions of
the Company's Amended and Restated 1989 Stock-Based Incentive Plan (the
"Stock Plan"), the Compensation Committee shall, effective as of the
first day of his actual employment with the Company, grant to the
Executive an option to purchase 100,000 shares of common stock of the
Company at a price per share equal to the mean of the high and low sales
prices of a share of common stock of the Company on the New York Stock
Exchange on the trading day immediately preceding the first day of the
Executive's actual employment with the Company. Such option shall be
fully exercisable on the first day of the Executive's actual employment
with the Company. The term of the grant of such option shall be ten
years. In addition, pursuant to the provisions of the Stock Plan or a
similar stock option plan to be adopted, the Compensation Committee
shall grant to the Executive an option to purchase an additional 100,000
shares of common stock of the Company at a price per share equal to the
mean of the high and low sales prices of a share of common stock of the
Company on the New York Stock Exchange on the trading day immediately
preceding the first day of the Executive's actual employment with the
Company, which grant shall be null and void if the stock option plan
pursuant to which such grant is made is not approved by the Company's
stockholders at the next annual meeting of stockholders. Such
additional option shall become exercisable either (i) cumulatively at
the rate of 25,000 shares annually at the end of each of the four
consecutive fiscal years of the Company following such stockholder
approval, beginning with the fiscal year that ends on February 28, 1998,
if the Company's net pre-tax earnings for each such fiscal year exceed
the Company's net pre-tax earnings for the immediately preceding fiscal
year by at least 15 percent (or, alternatively, at the end of any such
fiscal year if the Company's net pre-tax earnings for the period of
consecutive fiscal years following such stockholder approval, beginning
with the fiscal year that ends on February 28, 1998, exceed the
Company's net pre-tax earnings for the fiscal year immediately preceding
such period of consecutive fiscal years by an average of at least 15%
annually), or (ii) based on other standards as established by the
Compensation Committee in its discretion from time to time; provided,
however, that such option shall become fully exercisable to the extent
not previously exercisable after the Executive has been continuously
employed by the Company for a period of years to be determined by the
Compensation Committee in its discretion, which period shall not be less
than seven years nor greater than nine years. For purposes of the
preceding sentence, the phrase "the Company's net pre-tax earnings"
shall mean the operating profit of the Company and its subsidiaries on a
consolidated basis, before income taxes and extraordinary items, as
determined according to generally accepted accounting principles. The
term of the grant of such option shall be ten years. Further, pursuant
to the provisions of the Stock Plan, the Compensation Committee in its
discretion may grant to the Executive additional stock options beginning
with the Company's fiscal year that commences on March 1, 1998. Except
as modified by the provisions of this Section 3(c) and Section 6(b),
Section 6(c), and Section 6(d) hereof, the stock options granted to the
Executive by the Company shall be governed by the terms of the Company's
Stock Plan or a similar stock option plan to be adopted in accordance
with the provisions of this Section 3(c) as they are in effect from time
to time.
4. Employee Benefits
(a) While the Executive is employed by the Company
hereunder, the Executive shall be entitled to participate in the
Company's Voluntary Investment and Savings Plan ("VISA") and the
Company's Pension Equity Plan ("PEP") in accordance with the provisions
of such plans. The Compensation Committee shall approve, effective as
of the first day of the Executive's actual employment with the Company,
the Executive's participation in the Company's Management Benefit Plan
("MBP"), and shall authorize that the Executive's participation in the
MBP shall commence immediately upon the first day of his actual
employment with the Company notwithstanding the provisions of the MBP.
(b) While the Executive is employed by the Company
hereunder, the Executive shall be entitled to participate in such group
insurance plans, including health insurance, dental insurance, vision
insurance, life and accidental death and dismemberment insurance, and
disability insurance, and such other employee benefits as are provided
from time to time by the Company to its senior executives, in accordance
with the provisions of the Company's general employee benefits plans and
programs then in effect, to the extent that such provisions are not
expressly modified in this Agreement. All eligibility standards or
waiting periods that the Executive would otherwise be required to
satisfy or complete in order to participate in such employee benefit
plans and programs, including any pre-existing condition restrictions or
limitations that may be waived by the Company, shall be expressly waived
by the Company as of the first day of the Executive's actual employment
with the Company, with the exception of the length-of-service
requirements specified in the VISA and the PEP.
(c) While the Executive is employed by the Company
hereunder, the Company promptly shall reimburse the Executive for his
reasonable and necessary business, entertainment, and travel expenses in
accordance with the Company's general expense reimbursement policies and
practices in effect from time to time for its senior executives.
(d) While the Executive is employed by the Company
hereunder, the Company promptly shall reimburse the Executive for:
(i) the membership fees and monthly dues
charged by the Minneapolis Club and a
country club located in the Twin Cities
metropolitan area that has been approved
in advance by the Chair of the Compensation
Committee;
(ii) the cost of an annual executive physical
examination to be performed at the Mayo
Clinic in Rochester, Minnesota; and
(iii) the costs that the Executive incurs
each year for financial planning advice
and tax preparation services.
(e) After the Executive and the Company execute this Agreement
and this Agreement is thereafter approved by the Compensation Committee and
the Board, the Company promptly shall reimburse the Executive for his
expenses associated with his search for a principal residence in and his
move to the Twin Cities metropolitan area in accordance with the
provisions of the Company's relocation policies and practices for senior
executives and also promptly shall:
(i) reimburse the Executive for the actual
cost of temporary housing for him and his
wife in the Twin Cities metropolitan area
for a period of up to six months;
(ii) pay him or cause to be paid to him as
the purchase price of the current
principal residence of the Executive and
his wife in Winston-Salem, North Carolina,
an amount equal to the appraised fair
market value of such residence, which
appraised fair market value shall be
determined by calculating the average of
two appraised fair market values of such
residence established by two qualified
appraisers selected by the Executive (or,
if the initial two appraisals result in
fair market values that differ from each
other by more than five percent, then a
third appraisal shall be obtained and the
average shall be calculated by using the
two highest fair market values), and which
appraisal process may commence promptly
after the execution of this Agreement by
the parties, notwithstanding any other
provision of this Section 4(e);
(iii) pay him an amount equal to 140 percent
multiplied by the excess, if any, of (A)
an amount to be agreed upon by the Company
and the Executive (based on documentation
to be furnished by the Executive) that is
equal to the Executive's and his wife's
cost basis for such residence, including
the cost of the improvements they have
made to such residence (which amount is
currently estimated to be approximately
$965,000.00), over (B) the amount
determined as the appraised fair market of
such residence under Section 4(e)(ii)
hereof;
(iv) pay directly to the provider or
providers of such services an amount, not
to exceed $10,000.00, for career
counseling and related services to be
provided to his wife in connection with
her relocation to the Twin Cities
metropolitan area; and
(v) pay directly to the Executive's legal
counsel an amount, not to exceed
$10,000.00, for the attorneys' fees and
costs that the Executive has incurred in
connection with the negotiation and
preparation of this Agreement.
(f) In the event that the Executive does not
commence active employment with the Company by reason of his death or
Disability (as defined below) after he executes this Agreement, the
Company promptly shall reimburse the Executive or his wife,
as the case may be, for the expenses associated with a search for a principal
residence in and a move to North Carolina in accordance with the provisions
of the Company's relocation policies and practices for senior executives,
as if the Executive were a senior executive of the Company actively employed
at that time.
5. Termination
The Executive's employment with the Company hereunder
shall terminate immediately upon:
(a) receipt by the Company of the Executive's
written resignation from the Company,
(b) the Executive's receipt of written notice from
the Company of the termination of the Executive's employment,
(c) the Executive's death or Disability (as
defined below), or
(d) expiration of the Employment Period,
and the date on which the Executive's employment termination occurs
shall be the "Termination Date" hereunder.
6. Payments Upon Termination
(a) If the Executive's employment hereunder
terminates by reason of:
(i) resignation by the Executive without
Good Reason (as defined below) or
abandonment by the Executive of his
employment,
(ii) Termination by the Company For Cause
(as defined below), or
(iii) the Executive's death or Disability
(as defined below),
then the Company shall pay to the Executive or his beneficiary or his
estate, as the case may be, his Base Salary through the Termination
Date.
(b) If the Executive's employment hereunder
terminates on or before the expiration of the Initial Employment Period
(the "Initial Employment Period" hereunder being the period from January
1, 1997 through December 31, 1999) by reason of:
(i) termination by the Company other than
Termination by the Company For Cause, or
(ii) resignation by the Executive for Good
Reason,
then the Company shall pay to the Executive in 24 equal monthly
installments after the Termination Date an amount equal to the sum of
(1) two multiplied by the Executive's Base Salary as of the Termination
Date, plus (2) two multiplied by the average of the annual Bonus Awards
paid to the Executive for the two fiscal years immediately preceding the
Termination Date (or, if an annual Bonus Award has been paid to the
Executive for only the fiscal year ending on February 28, 1998, then the
amount of such award shall be used in lieu of calculating an average),
plus (3) an amount equal to (A) the greater of (I) 65 percent of the
Executive's Base Salary as of the Termination Date, or (II) the amount
of the Executive's actual annual Bonus Award for the fiscal year
immediately preceding the Termination Date, (B) multiplied by a
fraction, (I) the numerator of which shall be the actual number of full
weeks between the start of such fiscal year and the Termination Date,
and (II) the denominator of which shall be 52. For purposes of
calculating the average of such annual Bonus Awards under this Section
6(b) only, the amount included for the fiscal year ending on February
28, 1998 shall be the greater of 65 percent of the Executive's Base
Salary at the end of such fiscal year or the actual annual Bonus Award
paid to him for such fiscal year.
(c) If the Executive's employment hereunder
terminates after the expiration of the Initial Employment Period by
reason of:
(i) termination by the Company other than
Termination by the Company For Cause,
(ii) resignation by the Executive for Good
Reason, or
(iii) expiration of the Employment Period,
then the Company shall pay to the Executive in 18 equal monthly
installments after the Termination Date an amount equal to the sum of
(1) one and one-half multiplied by the Executive's Base Salary as of the
Termination Date, plus (2) one and one-half multiplied by the average of
the annual Bonus Awards paid to the Executive for the three fiscal years
immediately preceding the Termination Date (or, if annual Bonus Awards
have been paid to the Executive for only two fiscal years, then such
average shall be calculated using the annual Bonus Awards for such two
fiscal years), plus (3) an amount equal to (A) the greater of (I) 65
percent of the Executive's Base Salary as of the Termination Date, or
(II) the amount of the Executive's actual annual Bonus Award for the
fiscal year immediately preceding the Termination Date, (B) multiplied
by a fraction, (I) the numerator of which shall be the actual number of
full weeks between the start of such fiscal year and the Termination
Date, and (II) the denominator of which shall be 52.
(d) Notwithstanding the foregoing provisions of
this Section 6, if the Executive's employment hereunder is terminated by
the Company following a Change of Control (as defined below), or if the
Executive elects to resign his employment with the Company for any
reason within 180 days after the effective date of a Change of Control,
then the Company shall pay to the Executive in 36 equal monthly
installments after the Termination Date an amount equal to the sum of
(1) three multiplied by the Executive's Base Salary as of the
Termination Date, plus (2) three multiplied by the average of the annual
Bonus Awards paid to the Executive for the three fiscal years
immediately preceding the effective date of the Change of Control (or,
if annual Bonus Awards have been paid to the Executive for only two
fiscal years, then such average shall be calculated using the annual
Bonus Awards for such two fiscal years, or if an annual Bonus Award has
been paid to the Executive for only the fiscal year ending on February
28, 1998, then the amount of such award shall be used in lieu of
calculating an average), plus (3) an amount equal to the greater of (A)
65 percent of the Executive's Base Salary as of the Termination Date, or
(B) the amount of the Executive's actual annual Bonus Award for the
fiscal year immediately preceding the Termination Date. For purposes of
calculating the average of such annual Bonus Awards under this Section
6(d) only, the amount included for the fiscal year ending on February
28, 1998 shall be the greater of 65 percent of the Executive's Base
Salary at the end of such fiscal year or the actual annual Bonus Award
paid to him for such fiscal year.
(e) "Termination by the Company For Cause" shall
mean the Executive's employment termination for:
(i) a persistent failure by the Executive to
perform the duties and responsibilities of
his employment hereunder, which failure is
willful and deliberate on the Executive's
part and is not remedied by him in a
reasonable period of time after the
Executive's receipt of written notice from
the Company of such failure;
(ii) an act or acts of dishonesty undertaken
by the Executive and intended to result in
substantial gain or personal enrichment of
the Executive at the expense of the
Company;
(iii) unlawful conduct or gross misconduct
that is willful and deliberate on the
Executive's part and that, in either
event, is materially injurious to the
Company; or
(iv) the conviction of the Executive of a
felony.
(f) "Good Reason" for resignation by the Executive
shall mean his resignation because of:
(i) the removal of the Executive as Chairman
of the Board, President, or Chief
Executive Officer of the Company by action
of the Company's Board;
(ii) the assignment to the Executive of any
duties and responsibilities that are
substantially inconsistent with or
materially diminish the Executive's
position as Chairman of the Board,
President and Chief Executive Officer of
the Company;
(iii) a material reduction of the
Executive's Base Salary, or material
modifications to the Incentive Plan, the
Stock Plan (or any similar stock option
plan), or the MBP that amount to a
material reduction in the Executive's
total compensation hereunder;
(iv) a requirement that the Executive be
based at any office or location more than
50 miles from downtown Minneapolis,
Minnesota; or
(v) any purported termination of the
Executive's employment by the Company
except as expressly permitted by the
provisions of this Agreement.
(g) "Change of Control" shall mean:
(i) The acquisition by any individual,
entity, or group (within the meaning of
Section 13 (d) (3) or 14 (d) (2) of the
Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person")
of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20 percent or more of
either (A) the then outstanding shares of
common stock of the Company (the
"Outstanding Company Common Stock") or (B)
the combined voting power of the then
outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided,
however, that for purposes of this Section
6 (g)(i), the following acquisitions shall
not constitute a Change of Control:
(A) any acquisition directly from the
Company, (B) any acquisition by the
Company, (C) any acquisition by any
employee benefit plan (or related trust)
sponsored or maintained by the Company or
any corporation controlled by the Company,
or (D) any acquisition by any corporation
pursuant to a transaction which complies
with clauses (A), (B), and (C) of Section
6 (g)(iii) hereof; or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent
Board") cease for any reason to constitute
at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's stockholders,
was approved by a vote of at least a
majority of the directors then comprising
the Incumbent Board shall be considered as
though such individual were a member of
the Incumbent Board, but excluding, for
this purpose, any such individual whose
initial assumption of office occurs as a
result of an actual or threatened election
contest with respect to the election or
removal of directors or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Consummation of a reorganization,
merger or consolidation, or sale or other
disposition of all or substantially all of
the assets of the Company (a "Business
Combination"), in each case, unless,
following such Business Combination, (A)
all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than 60 percent of,
respectively, the then outstanding shares
of common stock and the combined voting
power of the then outstanding voting
securities entitled to vote generally in
the election of directors, as the case may
be, of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a
result of such transaction owns the
Company or all or substantially all of the
Company's assets either directly or
through one or more subsidiaries) in
substantially the same proportions as
their ownership, immediately prior to such
Business Combination of the Outstanding
Company Common Stock and Outstanding
Company Voting Securities, as the case may
be, (B) no Person (excluding any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such Business Combination) beneficially
owns, directly or indirectly, 20 percent
or more of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such Business
Combination or the combined voting power
of the then outstanding voting securities
of such corporation except to the extent
that such ownership existed prior to the
Business Combination, and (C) at least a
majority of the members of the board of
directors of the corporation resulting
from such Business Combination were
members of the Incumbent Board at the time
of the execution of the initial agreement,
or of the action of the Board, providing
for such Business Combination; or
(iv) Approval by the stockholders of the
Company of a complete liquidation or
dissolution of the Company.
(h) "Disability" shall mean the inability of the
Executive to perform the duties and responsibilities of his employment
hereunder by reason of his illness or other physical or mental
impairment or condition, if such inability continues for an
uninterrupted period of 90 days or more. A period of inability shall be
"uninterrupted" unless and until the Executive returns to full-time work
for a continuous period of at least 30 days.
(i) In the event of termination of the Executive's
employment hereunder, the sole obligation of the Company shall be its
obligation to make the payments called for by Section 6(a), Section
6(b), Section 6(c), or Section 6(d) hereof, as the case may be, and the
Company shall have no other obligation to the Executive or to his wife,
his beneficiary, or his estate, except as otherwise provided by law,
under any applicable stock option agreement between the Executive and
the Company, or, in the event of the Executive's employment termination
by reason of the Executive's death or Disability, under any insurance
policies then in effect covering the Executive. Without limiting the
generality of the foregoing, the Company shall not be required to pay
any annual Bonus Awards to the Executive under the Incentive Plan except
to the extent provided in the Incentive Plan (as modified by Section
3(b) hereof) with respect to any fiscal years that have not been
completed as of the Termination Date.
(j) Notwithstanding the foregoing provisions of
this Section 6, the Company shall not be obligated to make any payments
to the Executive under Section 6(b), Section 6(c), or Section 6(d)
hereof unless the Executive shall have signed a release of claims in
favor of the Company in a form to be prescribed by the Company, all
applicable consideration and rescission periods provided by law shall
have expired, and the Executive is in strict compliance with the terms
of Section 8(b), Section 8(c), and Section 8(d) hereof.
7. Certain Additional Payments and Acts by the Company
(a) Notwithstanding the provisions of either this
Agreement or any other agreement or plan of the Company, in the event
that it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments
required under this Section 7) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code or any
interest or penalties are incurred by the Executive 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 (a "Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. If any other agreement between the Executive and the Company
provides for payments by the Company similar in nature to the Gross-Up
Payment provided for in this Section 7(a), and the Executive receives
such similar payments under such other agreement, then the Gross-Up
Payment otherwise required hereunder shall be reduced to the extent
necessary to avoid duplication of the benefit intended to be conferred
upon the Executive by the making of a Gross-Up Payment pursuant to this
Agreement.
(b) Subject to the provisions of Section 7(c)
hereof, all determinations required to be made under this Section 7,
including whether and when a Gross-Up Payment is required and the amount
of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by KPMG Peat Marwick or such other
certified public accounting firm as may be designed by the Executive
(the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for
the individual, entity, or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payments, as determined pursuant to this Section 7, shall
be paid by the Company to the Executive with five days of the receipt of
the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As
a result of the uncertainty in the application of Section 4999 of the
Internal Revenue Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant
to Section 7(c) hereof and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no
later than 20 business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company
relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation with
respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good
faith in order effectively to contest such
claim; and
(iv) permit the Company to participate in
any proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this
Section 7(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings, and
conferences with the taxing authority in respect of such claim and may,
at its 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 Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and
xxx for a refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which 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 Company pursuant to Section 7(c) hereof, the
Executive becomes entitled to receive any refund with respect to such
claim the Executive shall (subject to the Company's complying with the
requirements of Section 7(c) hereof) promptly pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7(c)
hereof, a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify
the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Certain Covenants of the Executive
(a) As used in this Section 8, "Company" shall
include the Company and each corporation, partnership, and other entity
that controls the Company, is controlled by the Company, or is under
common control with the Company (in each case "control" meaning the
direct or indirect ownership of 50 percent or more of all outstanding
equity interests).
(b) The Executive shall not, directly or
indirectly, while the Executive is employed by the Company, for a period
of two years after his Termination Date if the Executive's employment
hereunder terminates as a result of one of the reasons set forth in
Section 6(a), Section 6(b), or Section 6(d) hereof, or for a period of
18 months after his Termination Date if the Executive's employment
hereunder terminates as a result of one of the reasons set forth in
Section 6(c) hereof, own, operate, invest in, lend money to, be employed
by, consult with, render services to, act as agent, officer, or director
for, or acquire or hold any interest in any business enterprise that
competes with any business owned or operated by the Company as described
in the Company's Form 10-K filed with the Securities and Exchange
Commission immediately preceding the Executive's Termination Date, other
than a business that contributes less than three percent of the gross
revenues of the Company; provided, however, that nothing herein shall
prohibit the Executive from owning not more than one percent of the
outstanding shares of any class of stock of a corporation if such class
of stock is regularly traded on a recognized national securities
exchange, including the NASDAQ national market system.
(c) The Executive shall not, directly or
indirectly, while the Executive is employed by the Company, or for a
period of three years after the Executive's Termination Date:
(i) employ or attempt to employ any
director, officer, or employee of the
Company, or otherwise interfere with or
disrupt any employment relationship
(contractual or otherwise) between the
Company and any director, officer, or
employee of the Company;
(ii) solicit, request, advise, or induce any
individual or business enterprise that,
prior to the Termination Date, was a
customer, was actively solicited to become
a customer, or actively sought to become a
customer, or was a supplier or other
material business contact of the Company
to cancel, curtail, or otherwise change
its relationship with the Company; or
(iii) publicly criticize or disparage in any
manner or by any means the Company, its
personnel, or any aspect of its
management, policies, operations,
products, services, or practices.
(d) The Executive hereby acknowledges that all
non-public and/or proprietary information and data of the Company,
including without limitation such information and data that is related
to product and service formulation, customers, pricing, sales, and
financial results (collectively "Trade Secrets"), are of substantial
value to the Company, provide it with a substantial competitive
advantage in its business, and are and have been maintained in the
strictest confidence as trade secrets. Except as otherwise approved in
writing in advance by the Board, the Executive shall not at any time
divulge, furnish, or make accessible any Trade Secrets to anyone (other
than the Company and its directors and officers).
(e) The Executive hereby specifically acknowledges
that this Section 8 and each provision hereof are reasonable and
necessary to ensure that the Company receives the expected benefits of
this Agreement and that any violation of this Section 8 by the Executive
shall harm the Company to such an extent that monetary damages alone
would be an inadequate remedy. Therefore, in the event of any violation
by the Executive of any provision of this Section 8, the Company shall
be entitled to an injunction (in addition to all other remedies it may
have) restraining the Executive from committing or continuing to commit
such violation. If any provision or application of this Section 8 is
held unlawful or unenforceable in any respect, then this Section 8 shall
be revised or applied in a manner that renders it lawful and enforceable
to the fullest extent possible.
9. No Violation of Other Agreements
The Executive hereby represents that neither (a) the
Executive's entering into this Agreement nor (b) the Executive's
carrying out the provisions of this Agreement shall violate any other
agreement (oral or written) to which the Executive is a party or by
which the Executive is bound.
10. Successors and Assigns
This Agreement is binding on the Executive and on the
Company and its successors and assigns. The rights and obligations of
the Company under this Agreement may be assigned to a successor. No
rights or obligations of the Executive hereunder may be assigned by the
Executive to any other person or entity.
11. Separate Representation
The Executive hereby acknowledges that the Executive has
sought and received independent advice from counsel of the Executive's
own selection in connection with this Agreement and has not relied to
any extent on any officer, director, or stockholder of, or counsel to,
the Company in deciding to enter into this Agreement.
12. Governing Law
This Agreement shall be construed under and governed by
the laws of the State of Minnesota.
13. Severability
Each section and provision of this Agreement shall be
considered severable and any invalidity of any section or provision
shall not render invalid or impair to any extent any other section or
provision hereof.
14. Withholding of Taxes
All payments made by the Company to the Executive
hereunder are subject to withholding of income and employment taxes and
all other amounts required by law.
15. Fees and Expenses after Change of Control
If the Executive's employment hereunder terminates
following a Change of Control, then the Company shall pay or reimburse
the Executive for all costs, including reasonable attorneys' fees and
expenses of litigation, incurred by the Executive in contesting or
disputing any such termination of his employment, or in seeking to
obtain or enforce any right or benefit provided by this Agreement.
16. Notices
Any notice hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or sent by
registered or certified mail, return receipt requested, postage prepaid,
to the party to receive such notice at the address set forth with the
signature of such party below or at such other address as may have been
furnished to the sender by notice hereunder. All notices shall be
deemed given on the date on which delivered or, if mailed, on the date
postmarked.
17. Miscellaneous
This Agreement contains the entire understandings of the
parties with respect to the employment of the Executive by the Company,
and no provision hereof may be altered, amended, modified, waived, or
discharged in any way whatsoever except by written agreement executed by
both parties. No delay or failure of either party to insist, in any one
or more instances, upon performance of any of the terms and conditions
of this Agreement or to exercise any rights or remedies hereunder shall
constitute a waiver or a relinquishment of such rights or remedies or
any other rights or remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date and year first above written.
XXXX X. XXXXXXX INTERNATIONAL MULTIFOODS
CORPORATION
0000 Xxxxxxxx Xxxxx 00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000 P. O. Xxx 0000
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
-------------------------- By: -----------------------
Xxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Chairman of the Board and
Chief Executive Officer
