EXHIBIT 10.1
CONFORMED COPY
EAGLE FAMILY FOODS, INC.
Employment Agreement, dated as of the 16th day of December, 1997, between
Eagle Family Foods, Inc.(the "Company"), Eagle Family Foods Holdings, Inc.
("Holdings") and Xxxxxxxx X. Xxxx (the "Employee").
Witnesseth:
Whereas, the Company recognizes that the growth, profitability and success
of the Company will be materially and substantially enhanced by the employment
of the Employee by the Company; and
Whereas, the Company desires to employ the Employee, and the Employee has
indicated his willingness to provide his services, on the terms and conditions
set forth herein;
Now, therefore, in consideration of the mutual covenants and agreements
contained herein, the Company and the Employee agree as follows:
Section 1. Employment. The Company hereby agrees to employ the Employee and
the Employee hereby accepts employment with the Company on the terms and subject
to the conditions contained in this agreement. Subject to the terms and
conditions contained herein, the Employee shall serve as the Company's Vice
President, General Counsel and Secretary and, in such capacity, shall report to
the Company's President and Chief Executive Officer (the "President") and shall
have such duties as are typically performed by the Vice President, General
Counsel and Secretary of a food company, together with such additional duties,
commensurate with the Employees position, as may be assigned to him from time to
time by the President. The principal location of the Employee's employment will
be at the offices of the Company in Tarrytown, New York, although the Employee
understands and agrees that he may be required to travel from time to time for
business reasons.
Section 2. Term. Unless terminated pursuant to Section 6 hereof, the
Employee's employment hereunder shall commence on the date hereof and shall
continue during the period ending on the first anniversary of the date
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hereof (the "Initial Term"). Beginning with such anniversary date, the
Employment term shall be extended automatically for consecutive periods of one
year on each anniversary date of this agreement. The Initial Term, together with
any extension pursuant to this Section 2, is referred to herein as the
"Employment Term". The Employment Term shall terminate upon any termination of
the Employee's employment pursuant to Section 6.
Section 3. Compensation. During the Employment Term, the Employee shall be
entitled to the following compensation and benefits:
(a) Salary: As compensation for the performance of the Employee's services
hereunder, the Company shall pay to the Employee a salary (the "Salary") of
$120,000 per annum, subject to required tax withholding and deductions for
benefits, with increases, if any, as may be approved by the President. The
salary shall be payable in accordance with the payroll practices of the Company
as the same shall exist from time to time. In no event shall the Salary be
decreased during the Employment Term.
(b) Annual Bonus Plan: The Employee shall be eligible to receive an annual
cash bonus (the "Bonus") which shall be determined by the Board of Directors of
the Company ("the Board"). For the Company's 1998 fiscal year, the Employee's
Bonus eligibility shall be as follows: (1) 25% of Salary if the Company achieves
85% of 1998 Target EBITDA; or (2) 50% of Salary if the Company achieves 100% of
1998 Target EBITDA; and (3) 2% of Salary for each percentage point by which the
Company exceeds 100% of 1998 Target EBITDA, up to 125% of 1998 Target EBITDA or
up to an additional 50% of Salary. "1998 Target EBITDA" is the Company's
earnings for the year before interest, taxes, depreciation and amortization as
set forth in the Company's 1998 business plan approved by the Board. For fiscal
years during the Employment Term subsequent to 1998, the relevant performance
targets shall be set by the Board in its sole discretion, provided that the
Employee's aggregate Bonus potential as a percentage of Salary shall not
decrease. That is performance criteria may change and may no longer consist of
achievement of Target EBITDA but, even so, the Bonus as a percent of Salary
realizable in any year for achievement of that year's criteria will not be less
than that provided above for achievement of 1998 Target EBITDA.
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(c) Benefits: In addition to Salary and Bonus-eligibility, the Employee
shall be entitled to participate in health, insurance and other benefits
provided to other Company employees at an executive level similar to that of the
Employee and on terms no less favorable than the terms available to those
employees. The Employee shall be entitled to five weeks vacation, as well as
time off and other consideration in accordance with the Company's policies
applicable to employees of the Company at an executive level similar to that of
the Employee in effect from time to time.
(d) Awards; Purchases of shares of the Company's stock:
(1) The Employee shall be eligible to receive awards of restricted stock
and options under the Eagle family Foods Holdings, Inc. 1998 Stock Incentive
Plan (the "Stock Plan"), as determined by the Board of Directors of Holdings
(the "Holdings Board") or a designated committee thereof) in its sole
discretion. The terms of such awards including, without limitation, those which
apply upon the termination of the Employee's employment, shall be governed by
the Stock Plan and any award agreements entered into between the Employee and
Holdings.
(2) The Employee's initial award of restricted stock pursuant to the Stock
Plan is described in Schedule A attached hereto. The terms of this award
including, without limitation, those which apply upon the termination of the
Employee's employment, shall be governed by the Stock Plan and the award
agreement entered into between the Employee and Holdings.
(3) The Employee has elected to purchase additional shares of Holdings'
stock and the terms and conditions of such purchase are those which will be
specified in the subscription agreement between the Employee and Holdings.
(4) Any shares of Holdings' stock, of any class, purchased by or awarded
to the Employee shall be subject to the terms and conditions of the proposed
Eagle Family Foods Holdings, Inc. Stockholders Agreement in the form attached
hereto as Exhibit 1 (the "Stockholders Agreement").
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Section 4. Exclusivity: During the Employment Term the Employee shall
devote his full time to the business of the Company, shall faithfully serve the
Company, shall in all respects conform to and comply with the lawful and
reasonable directions and instructions given to him by the President in
accordance with the terms of this agreement, shall use his best efforts to
promote and serve the interests of the Company and shall not engage in any other
business activity, whether or not such activity shall be pursued for financial
gain, except that the Employee may (a) participate in the activities of
professional trade organizations related to the business of the Company and (b)
engage in personal investing activities, provided that these permitted
activities do not interfere in any material way with the Employee's effective
service to the Company pursuant to this agreement.
Section 5. Reimbursement for Expenses. The Employee is authorized to incur
reasonable expenses in the discharge of the services to be performed hereunder,
including expenses for travel, entertainment, lodging and similar items, in
accordance with the Company's travel and entertainment policies and requirements
for prior approval in certain cases, as the same may be modified from time to
time. The Company shall reimburse the Employee for all such proper expenses upon
presentation by the Employee of itemized accounts of such expenditures,
supported by appropriate documentation.
Section 6. Termination and Default.
(a) Death. The Employee's employment shall terminate upon his death and,
in such event, the Employee's estate shall be entitled to receive the amounts
specified in Section 6(e), below.
(b) Disability. If the Employee is unable to perform his duties under this
agreement because of illness, injury or other change in the Employee's condition
that results in a lack of adequate physical or mental capacity, the Employment
Term shall continue and the Company shall pay all compensation required to be
paid to the Employee hereunder, unless the Employee is unable to perform the
duties required of him under this agreement for an aggregate of 180 days,
consecutive or not, during any 12 month period during the term of this
agreement, in which event the Company may terminate the Employee's employment
for "Disability".
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(c) Cause: The Company may terminate the Employee's employment at any
time, with or without Cause. In the event of termination pursuant to this
Section 6(c) for Cause, the Company shall deliver written notice to the Employee
setting forth the basis for such termination, which notice shall specify the
nature of the Cause for termination. Termination shall be effective upon the
delivery of such notice. "Cause" shall mean (i) the Employee's failure (except
when caused by disability as contemplated by Section 6(b), above), neglect or
refusal to perform his duties hereunder for a period in excess of thirty days
following receipt of a written notice specifying such failure, neglect or
refusal, (ii) any willful or intentional act of the Employee that has the effect
of injuring the reputation or business of the Company, (iii) any willful or
intentional misrepresentation made by or at the instigation of the Employee to
the President or any other member of the Board, (iv) any continued or repeated
absence from his duties unless such absence is approved or excused by the
President or is the result of disability as contemplated by Section 6(b), above,
(v) use of illegal drugs or repeated drunkenness while engaged in his
responsibilities hereunder or in public, (vi) conviction for the commission of a
felony, (vii) the commission of any fraud upon the Company or the theft, by
embezzlement or otherwise, of any of the Company's assets or (viii) any breach
of the obligations of the Employee under Section 7 hereof.
(d) Resignation: The Employee shall have the right to terminate his
employment at any time by the giving of 30 days prior written notice to the
Company.
(e) Payments; Repurchase of Stock:
(1) In the event that the Employee's employment terminates for any reason,
the Company shall pay to the Employee all amounts accrued but unpaid hereunder
through the date of termination in respect of Salary and reimbursable expenses.
In the event the Employee's employment is terminated by the Company without
cause, in addition to the amounts specified in the previous sentence, the
Employee shall (A) continue to receive Salary (less any applicable withholding
or similar taxes) at the rate in effect on the date of termination for a period
of 12 months following the termination (the Severance Term") and (B) remain
eligible to participate in benefits offered in accordance with section 3(c)
hereof during the Severance Term. Upon termination the
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Employee shall be entitled to a full program of outplacement assistance and upon
completion of the Severance Term the Employee shall be entitled to COBRA
coverage.
(2) Upon termination of the Employee's employment for Cause, or if the
Employee resigns, Holdings shall have the right, but not the obligation, to
purchase any preferred stock of Holdings owned by the Employee at a price equal
to the Employee's initial cost and any common stock of Holdings owned by the
Employee and not subject to the Stock Plan's provisions at the lower of the
Employee's initial cost or the Fair Value of the shares.
(3) In the event of a termination of the Employee's employment by the
Company without Cause, or by reason of his death or Disability, the Holdings
shall have the right and obligation to purchase from the Employee any preferred
stock of Holdings owned by the Employee or his estate at a price equal to the
Employee's initial cost plus all accrued and unpaid dividends and any common
stock of Holdings owned by the Employee or his estate and not subject to the
Stock Plan's provisions at the Fair Value of the shares.
(4) For the purposes of this agreement, "Fair Value" means the fair market
value of the shares being purchased, as determined in good faith by a majority
of the directors of the Holdings Board.
(5) In addition to the right and obligations described herein, all shares
of the stock of the Company, of any class, owned by the Employee shall be
subject, without implying any limitation of the application of the Stock Plan,
to the terms and conditions of the Stockholder's Agreement.
(f) Survival of Operative Sections: Upon any termination of the Employee's
employment, the provisions of Section 6(e) and the Sections of this agreement
following Section 6(e) shall survive to the extent necessary to give effect to
the provisions thereof.
Section 7. Secrecy and Non-Competition.
(a) No Competing Employment: The Employee acknowledges that the agreements
and covenants contained in this Section 7 are essential to
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protect the value of the Company's business and assets and that by his
employment with the Company the Employee will obtain knowledge and experience
which could be used to the substantial advantage of a competitor of the Company
and to the Company's substantial detriment. Therefore the Employee agrees that,
for the period commencing on the date of this agreement and ending on the first
anniversary of the termination of the Employee's employment hereunder (the
"Restricted Period"), the Employee shall not participate or engage, directly or
indirectly, in any business activity if such activity competes with any activity
undertaken or expressly contemplated to be undertaken by the Company.
(b) Nondisclosure of Confidential Information: The Employee shall not
disclose to any person or entity or use, either during the Employment Term or
after, any information not in the public domain nor generally known in the
industry acquired during the Employment Term relating to the Company including,
but not limited to, business plans, customers, suppliers, know-how, trade
secrets, formulas, manufacturing and other processes, computer programs,
research of every kind and new product initiatives, in all cases whether or not
written and however embodied, which is, or has been or may be used in the
business of the Company. Upon termination of his employment the Employee shall
return to the Company all files, correspondence and other records and
communications received or originated or maintained by the Employee during the
course and term of his employment.
(c) No Interference: During the Restricted Period the Employee shall
not, for his own account or the account of any other person or entity, directly
or indirectly solicit, endeavor to entice away from the Company or otherwise
interfere with the relationship of the Company with any of its officers,
directors, employees, any individual performing services for the Company as an
independent contractor, any supplier to the Company or any customer of the
Company.
(d) Inventions, etc.: The Employee hereby sells, transfers and
assigns to the Company all of the entire right, title and interest of the
Employee in and to all inventions, ideas, disclosures and improvements made or
conceived by the Employee, whether or not they be copyrighted, patented or
patentable, during his employment by the Company which in any way relate to the
business, functions or operations of the Company, present or prospective, or to
the industries in which the Company now or hereafter competes. The
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Employee shall cooperate fully to give full effect to the provisions hereof and
shall provide the Company with all information and execute all document which
the Company deems necessary or convenient to secure, protect and exploit its
right acquired hereunder.
Section 8. Injunctive Relief. Without limiting the remedies available
to the Company, the Employee acknowledges that any breach of any of his
covenants and undertakings expressed in Section 7, above, may result in material
and irreparable harm to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such harm with
precision and that, in the event of such a breach or threat or same, the Company
shall be entitled obtain a temporary restraining order and/or preliminary or
permanent injunction, without the necessity of proving irreparable harm or
injury as a result of such breach or threatened breach, restraining the Employee
from engaging in any activity prohibited by Section 7, above, or such other
relief as may be required specifically to enforce any of the covenants or
undertakings expressed in Section 7, above.
Section 9. Extension of Restricted Period. In addition to the
remedies the Company may seek and obtain pursuant to Section 8, above, the
Restricted Period shall be extended by any and all periods during which the
Employee shall have been found by a court to have been in violation of any of
the covenants and undertakings expressed in section 7, above.
Section 10. Representations and Warranties. The Employee represents
and warrants to the Company that (a) this agreement constitutes a valid and
binding obligation of the Employee, enforceable against him in accordance with
its terms and (b) the Employee is not a party to any agreement, including
without limitation, any employment or non-competition agreement, nor is he
subject to any order, judgment or under any legal disability which would
restrict or in any way purport to affect or prevent his employment and the
performance of his duties hereunder.
Section 11. Successors and Assigns; No Third-Party Beneficiaries. This
agreement shall inure to the benefit of, and be binding
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upon, the successors and assigns of each of the parties, including, but not
limited to, The Employee's heirs and the personal representatives of the
Employee's estate; provided, however, that neither party shall assign or
delegate any of the obligations created by this agreement without the prior
written consent of the other party. Notwithstanding the foregoing, the Company
shall have the unrestricted right to assign its rights and obligations hereunder
to any subsidiary or affiliate of the Company. Nothing in this agreement shall
confer upon any person or entity not a party any rights or remedies of any kind
or nature whatsoever.
Section 12. Waiver and Amendments. Any waiver, alteration or
amendment of this agreement shall be valid only if in writing and signed by both
parties. No waiver by either party of a right hereunder shall be deemed to
constitute a waiver with respect to any subsequent event.
Section 13. Governing Law. This agreement shall be governed by and
construed in accordance the laws of the State of New York applicable to
contracts made and to be performed entirely within said State.
Section 14. Notices. All notices and other communications under this
agreement shall be in writing and delivered by hand, facsimile transmission or
first class mail, postage prepaid and shall be effective on the date of actual
receipt by the addressee.
Section 15. Entire Agreement. This agreement constitutes the entire
understanding and agreement of the parties regarding the employment of the
Employee. It supersedes and replaces all prior communications by and
understandings of the parties relating to such employment.
Section 16. Severability. In the event that any part or parts of this
agreement shall be held illegal or unenforceable, such determination shall not
effect the remaining provisions of this agreement, all of which shall remain in
full force and effect.
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In witness whereof the parties hereto have executed this agreement as
of the date first written above.
EAGLE FAMILY FOODS, INC.
by /s/ Xxxx O'X. Xxxxxx
--------------------
President
EAGLE FAMILY FOODS HOLDINGS, INC.
by /s/ Xxxx O'X. Xxxxxx
--------------------
President
/s/ Xxxxxxxx X. Xxxx
--------------------
Xxxxxxxx X. Xxxx
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SCHEDULE A
to Employment Agreement between
Eagle Family Foods Holdings, Inc. and Xxxxxxxx X. Xxxx
Initial Award of Restricted Stock:
0.33% (thirty three hundredths of one percent) of the Common Stock of
Holdings issued and outstanding on the date of the closing of the purchase of
certain assets of Xxxxxx Foods Corporation by the Company, subject to the terms
and limitations, including vesting requirements, restrictions on transfer and
mandatory sale or forfeiture applicable thereto. On the assumption that there
will be 200,000 shares of the Common Stock of Holdings outstanding on that date,
the initial award will be 660 shares.
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