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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
BY AND BETWEEN
INTERNATIONAL HOME FOODS, INC.
AND
N. XXXXXXX XXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of this
23rd day of October, 1998 (the "Effective Date"), by and between INTERNATIONAL
HOME FOODS, INC., a Delaware corporation (the "Company"), and N.
Xxxxxxx Xxxx (the "Executive").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company and its stockholders
to assure that the Company will have the continued dedication of Executive; and
WHEREAS, the Company and Executive desire to enter into a compensation
arrangement to assure retention of Executive in the future.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants herein, the parties hereto agree as follows:
1. Employment Period. Subject to Section 3, the Company hereby
agrees to continue Executive in its employ, and Executive hereby agrees to
remain in the employ of the Company, in accordance with the terms and provisions
of this Agreement, during the period commencing on the date of this Agreement
(the "Effective Date") and ending on the fifth anniversary of the Effective Date
(the "Employment Period").
2. Terms of Employment.
(a) Positions and Duties. During the term of Executive's
employment with the Company, Executive shall serve as Chief Financial Officer
and, in so doing, shall report to the President and/or Chief Executive Officer
of the Company. During the term of Executive's employment with the Company
(excluding any periods of vacation and sick leave), Executive shall devote full
business time to the business and affairs of the Company. Notwithstanding the
foregoing, it shall not be a violation of this Agreement for the Executive to
(i) serve on civic or charitable boards or committees, (ii) deliver lectures or
fulfill speaking engagements or (iii) manage personal investments.
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(b) Compensation, Benefits and Expenses.
(i) Annual Base Compensation. During the term
of Executive's employment with the Company, Executive shall receive an annual
base salary of not less than $240,000 ("Annual Base Salary"). In addition,
Executive shall be entitled to receive an annual bonus ("Annual Bonus") in an
amount to be determined by the Company consistent with its practices for
executive officers.
(ii) Investment Benefit Plans. During the term
of Executive's employment with the Company, Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other executives of the Company
("Investment Plans").
(iii) Welfare Benefit Plans. During the term of
Executive's employment with the Company, Executive and his family shall be
eligible for participation in, and shall receive all benefits under, welfare
benefit plans, practices, policies and programs applicable generally to other
executives of the Company ("Welfare Plans").
(iv) Expenses. During the term of Executive's
employment with the Company, Executive shall be entitled to receive prompt
reimbursement for all reasonable employment related expenses incurred by
Executive.
3. Termination of Employment.
(a) Reasons for Termination. Executive's employment with
the Company may be terminated during the Employment Period (i) by the Company
with or without Cause, (ii) by Executive with or without Good Reason, or (iii)
by either the Company or Executive upon Executive's Disability. Executive's
employment with the Company shall automatically terminate upon Executive's
death.
(b) Definitions. The following terms shall have the
following meanings for purposes of this Agreement.
(i) "Annual Base Compensation" shall mean, at
any given time, the aggregate amount of (i) the Annual Base Salary and (ii) the
average of the Annual Bonus paid to Executive by the Company in connection with
the prior two fiscal years or, if Executive was not an employee of the Company
during all of the prior two fiscal years, then the amount of the prior fiscal
year's bonus. Calculations required herein based upon Annual Base Compensation
shall be determined as if the Annual Base Compensation is earned evenly
throughout the year based upon a 365-day year.
(ii) "Cause" shall mean (A) the willful and
intentional misconduct in the performance of, or willful neglect of, the
Executive's duties, which has caused demonstrable and serious injury (monetary
or otherwise) to the Company, (B) conviction of, or plea of nolo
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contendre to, a felony, or (C) misappropriation of corporate funds; provided,
however, that no act or omission shall constitute "Cause" for purposes of this
Agreement unless the Board provides Executive (a) written notice clearly and
fully describing the particular acts or omissions which the Board reasonably
believes in good faith constitutes "Cause" and (b) an opportunity, within 30
days following his receipt of such notice, to meet in person with the Board to
explain or defend the alleged acts or omissions relied upon by the Board and, to
the extent practicable, to cure such acts or omissions. Further, no act or
omission shall constitute fraud if Executive reasonably believed such act or
omission was in the best interests of the Company. Executive shall have the
right to contest a determination of Cause by the Company by requesting
arbitration in accordance with the terms of Section 6 hereof.
(iii) "Change in Control" shall mean (A) any
"person" (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) becoming the direct or indirect
"beneficial owner" (as determined pursuant to Rule 13d-3 under the Exchange Act)
of securities of the Company representing 30% or more of the combined voting
power of the Company's then outstanding securities, (B) individuals who at the
Effective Date constitute the members of the Board and any new director, whose
election to the Board or nomination for election to the Board by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
in office who either were directors at the Effective Date or whose election or
nomination for election was previously so approved, ceasing for any reason to
constitute a majority of the Board, (C) the Company merging with or
consolidating into any other entity, or the stockholders of the Company and the
holders of voting securities of any other entity participating in a securities
exchange (other than a merger, consolidation or exchange which would result in
the holders (and/or their affiliates) of the voting securities of the Company
outstanding immediately prior thereto holding immediately thereafter securities
representing more than 70% of the combined voting power of the voting securities
of the surviving entity outstanding immediately after such merger, consolidation
or exchange), or (D) the stockholders of the Company approving a plan of
complete liquidation of the Company or an agreement or agreements for the sale
or disposition by the Company (in one or a series of related transactions) of
all or substantially all of the Company's assets, or such a plan commencing.
(iv) "Disability" means (A) Executive's
incapacity due to a permanent mental or physical illness that prevents Executive
from performing his duties or (B) a physical condition that renders the
performance by Executive of his duties hereunder a serious threat to the health
and well being of Executive. Disability shall be determined by a physician
acceptable to Executive (or his legal representative).
(v) "Good Reason" means (A) the assignment to
Executive of any duties inconsistent with Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof, (B) a material breach by the
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Company of this Agreement or any stock option agreement between the Company and
Executive, or (C) the occurrence of a Change in Control.
(c) Obligations of the Company upon Termination.
(i) With Cause; Without Good Reason. If, during
the Employment Period, the Company shall terminate Executive's employment with
the Company for Cause, or Executive shall terminate his employment with the
Company without Good Reason, then:
(A) the Company shall pay to Executive
in cash within 10 days after the date of such termination the sum of (x) any
Annual Base Compensation earned through the date of termination to the extent
not theretofore paid by the Company, (y) any compensation previously deferred by
Executive and (z) any vacation pay earned through the date of termination not
theretofore paid by the Company (in the aggregate, the "Accrued Obligation");
and
(B) the Company shall pay to Executive
any amounts arising from Executive's participation in, or benefits under, any
Investment Plans (the "Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of the Investment Plans.
(ii) Without Cause; With Good Reason. If, during
the Employment Period, the Company shall terminate Executive's employment with
the Company without Cause, or Executive shall terminate his employment with the
Company with Good Reason, then:
(A) the Company shall pay to Executive
in cash within 10 days after the date of such termination the amount of the
Accrued Obligation;
(B) the Company shall pay to Executive
the Accrued Investments in accordance with the terms and conditions of the
Investment Plans;
(C) the Company shall pay to Executive
in cash within 10 days after the date of such termination an amount (the
"Severance Amount") equal to one and one half times Executive's Annual Base
Compensation.
(D) for the remainder of the Employment
Period (or such longer period as the Welfare Plans may provide), the Company
shall continue benefits provided under the Welfare Plans to Executive and his
family at least equal to those that would have been provided had Executive's
employment with the Company not been terminated (the "Welfare Benefit
Continuation"); provided, however, that if Executive becomes employed with
another employer and is eligible to receive similar benefits under that
employer's plans, the benefits described in this paragraph (D) (hereinafter
referred to as the "Welfare Benefit Continuation") shall be secondary to and not
duplicative of those similar benefits.
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(iii) Death or Disability. If, during the
Employment Period, the Company or Executive shall terminate Executive's
employment with the Company because of Executive's Disability, or Executive's
employment with the Company shall terminate upon Executive's death, then:
(A) the Company shall pay to Executive
(or his representative or estate) in cash within 10 days after the date of such
termination the amount of the Accrued Obligation;
(B) the Company shall pay to Executive
(or his representative or estate) the Accrued Investments in accordance with the
terms and conditions of the Investment Plans; and
(C) the Company shall provide to
Executive the Welfare Benefit Continuation.
(d) Effect on Benefit Plans. The foregoing payments and
benefits shall be in addition to and not in lieu of any payments or benefits to
which Executive and his dependents may otherwise be entitled to under the
Company's compensation and employee benefit plans, programs, policies or
practices. Nothing herein shall restrict the Company's right to amend any plan,
practice, policy or program in a manner generally applicable to similarly
situated active executives, in which event Executive shall be entitled to
participate on the same basis (including payment of applicable contributions) as
similarly situated active executives of the Company.
(e) No Mitigation. Executive shall not be obligated to seek new
employment or take any other action to mitigate the benefits to which Executive
is entitled hereunder. Except as contemplated by Section 3(c)(ii)(E) with
respect to the Welfare Benefit Continuation, such benefits shall not be reduced
whether or not Executive obtains new employment.
4. Mutual Release. Payment of the Severance Amount shall be
conditioned upon the execution by Executive and the Company of a valid mutual
release, to be prepared by the Company, in which Executive and the Company
mutually release the other, to the maximum extent permitted by law, from any and
all claims either may have against the other that relate to or arise out of
Executive's employment or termination of employment, except such claims arising
under this Agreement, any employee benefit plan or any other written plan or
agreement.
5. Excise Taxes.
(a) Determination and Payment. If it is determined that any
payment, distribution or other benefit to Executive, whether pursuant to this
Agreement or otherwise (a "Payment"), would be subject to any tax (e.g. excise
tax under Section 4999 of the Internal Revenue Code of 1986) other than income
tax (such tax, together with any interest and penalties related thereto are
hereinafter collectively referred to as an "Excise Tax"), then the Company shall
promptly pay to Executive an additional payment ("Gross-Up Payment") in an
amount such
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that Executive retains, after payment of all taxes, and all interest and
penalties with respect thereto (including, without limitation, income tax and
Excise Tax imposed upon the Gross-Up Payment), an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payment. The determination of the
amount of any Gross-Up Payment shall be made by a certified public accounting
firm selected jointly by the Company and Executive (the "Accounting Firm"), the
fees and expenses of which shall be paid by the Company.
(b) Contesting. Executive shall promptly notify the Company of
any claim that, if successful, would require the payment of the Gross-Up
Payment. Without the consent of the Company, Executive shall not pay such claim
prior to the date that the payment of taxes with respect to such claim is due.
If the Company notifies Executive in writing prior to such due date that it
desires to contest the claim, Executive shall take all actions in connection
with contesting the claim reasonably requested by the Company (including
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company); provided, however, that the Company shall
pay all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, from any tax (including interest and penalties
with respect thereto) imposed as a result thereof.
6. Claims.
(a) Arbitration of Claims. Executive shall settle by arbitration
any dispute or controversy arising in connection with this Agreement, whether or
not such dispute involves a plan subject to the Employee Retirement Income
Security of 1974, as amended. Such arbitration shall be conducted in accordance
with the rules of the American Arbitration Association before a panel of three
arbitrators sitting in Dallas, Texas. The award of the arbitrators shall be
final and nonappealable, and judgment may be entered on the award of the
arbitrators in any court having proper jurisdiction. All expenses of such
arbitration shall be borne by the Company.
(b) Payment of Legal Fees and Costs. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of any action taken
pursuant to the terms of this Agreement, or of the validity or enforceability
of, or liability under, any provision of this Agreement, or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the rate of 8% per annum.
(c) Agent for Service of Legal Process. Service of legal process
upon the Company with respect to a claim under this Agreement shall be made upon
the General Counsel of the Company.
7. Tax Withholding. All payments to the Executive under this
Agreement will be subject to the withholding of all applicable employment and
income taxes.
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8. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
9. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no succession had taken place.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. This
Agreement may not be modified in any manner except by a written instrument
signed by both the Company and Executive.
11. Notices. Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:
To Executive:
N. Xxxxxxx Xxxx
0 Xxxxxxxxxx Xx.
Xxxxxxxx, XX 00000
To the Company:
INTERNATIONAL HOME FOODS, INC.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
12. Validity. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable, this
Agreement shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect.
Furthermore, in lieu of such illegal, invalid or unenforceable provision there
shall be added automatically as part of this Agreement a provision as similar in
terms as may be possible and be legal, valid and enforceable.
13. Governing Law. The provisions of this Agreement shall be
construed in accordance of the laws of the state of New Jersey, without giving
effect to that states choice of law provisions.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date and year first above written.
INTERNATIONAL HOME FOODS, INC.
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Member of the Board of Directors
EXECUTIVE
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N. Xxxxxxx Xxxx
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