Exhibit 10.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
REVISED
THIS AMENDMENT (the "AMENDMENT") is made as of the 21st day of
May, 2001 and shall hereby constitute the second amendment to the employment
agreement, dated October 27, 1997, and effective as of June 18, 1997, as amended
on March 13, 2000 (the "AGREEMENT"), and is made by and among Xxxxx Xxxxx Inc.,
a Delaware corporation (the "COMPANY"), Credit Suisse First Boston Ltd. (as
successor of DLJ Merchant Banking Partners, II, L.P. and with respect to Section
6 only) ("CSFB") and Xxxxxxx Xxxx (the "EXECUTIVE"). Capitalized terms that are
not otherwise defined in this Amendment shall have the meanings assigned to them
in the Agreement. The parties agree that the second amendment to the Agreement
dated May 1, 2001 shall be of no force or effect and is hereby superceded in its
entirety by this Amendment.
W I T N E S S E T H:
WHEREAS, the Executive and the Company entered into the
Agreement, effective June 18, 1997, and Executive is currently employed by the
Company under the Agreement; and
WHEREAS, pursuant to Section 35 of the Agreement, the Company
and the Executive may amend the Agreement by an instrument in writing, signed by
the Executive and the Chairman of the Board of Directors of the Company; and
WHEREAS, the parties desire to enter into this Amendment,
which Amendment shall be effective as of the date first set forth above;
NOW THEREFORE, and in consideration of the foregoing and the
mutual agreements set forth herein, the parties, intending to be legally bound,
agree as follows:
1. ADDITIONAL RESTRICTIVE COVENANT. In addition to the
restrictive covenants set forth in Section 21 of the Agreement, the Executive
hereby agrees that, during the Term of Employment, he will not solicit an
invitation for employment in the food and drug industry from any employer other
than the Company unless he first receives a written waiver of the restriction
set forth in this Section 1 signed by either Xxxxx Xxxxx, the Chairman of the
Compensation Committee of the Company's Board of Directors (the "BOARD"), or his
successor, or a majority of the members of the Board. The Executive further
agrees that if he receives an unsolicited formal offer of employment in the food
and drug industry from any employer other than the Company, he shall inform
either Xxxxx Xxxxx, the Chairman of the Compensation Committee of the Board, or
his successor, or the Board of his receipt of such offer.
2. DEFINITION OF "SALE OF THE COMPANY." The definition of Sale
of the Company as set forth in Section 1 of the Agreement is hereby deleted in
its entirety and replaced by the following:
"SALE OF THE COMPANY" shall mean the consummation of one of
the following events:
(i) any Independent Third Party is or becomes the Beneficial
Owner (as defined below), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities. For purposes of this Agreement,
the term "BENEFICIAL OWNER" shall have the meaning given to such term
in Rule 13d-3 under the Exchange Act;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (or other
entity), other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; PROVIDED, HOWEVER, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 25% of the combined
voting power of the Company's then outstanding securities shall not
constitute a Sale of the Company;
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iv) DLJ ceases to own at least 1,200,000 shares of Common
Stock. A Sale of the Company as defined in this subsection (iv) shall
hereinafter be referred to as a "DLJ SALE".
3. DEFINITION OF GOOD REASON. The definition of Good Reason,
as set forth in Section 1 of the Employment Agreement, is hereby deleted in its
entirety and replaced by the following:
"GOOD REASON" shall mean the occurrence of the following:
(i) a reduction, without the Executive's written consent, in
the Executive's then current Base Salary, unless such reduction is
generally applicable to all executives of the Company;
(ii) removal, without his consent, of the Executive from the
position of President, Chief Executive Officer or Chairman of the
Company or assignment, without his consent, to the Executive of any
duties materially and adversely inconsistent with the Executive's
position as President, Chief Executive Officer or Chairman of the
Company or any other action which results in a material and adverse
change in such status, offices, titles or responsibilities;
(iii) the creation of any position within the Company equal to
or superior to that of the Executive or which does not report to the
Executive;
(iv) the failure of the Executive to be reelected as Chairman
of the Board;
(v) the relocation of the offices at which the Executive is
principally employed to a location which requires a commute which is
more than five miles longer than the commute from the Executive's
current home in Saddle River, New Jersey to 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, which relocation is not approved by the Executive;
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(vi) any material breach by the Company or DLJ of the
Employment Related Agreements;
(vii) any voluntary resignation by the Executive for any
reason or for no stated reason (unless the Company shall then have a
basis to terminate the Executive for Cause) during the 30-day period
beginning six months following a Sale of the Company, other than a DLJ
Sale; or
(viii) any voluntary resignation by the Executive for any
reason or for no stated reason (unless the Company shall then have a
basis to terminate the Executive for Cause) at any time beginning
either (A) eighteen months following a DLJ Sale that occurs on or
before December 31, 2001, or (B) twelve months following a DLJ Sale
that occurs after December 31, 2001, PROVIDED, HOWEVER, that at the
written request of the Board, which request shall be provided to the
Executive at least six months prior to the end of the applicable
eighteen or twelve month period, (A) the Executive shall work with his
successor to expedite a successful transition and (B) continue to serve
as Chairman of the Board until the earlier of the end of the
Continuation Period and the date upon which the Board elects to remove
him from such position.
4. SETTLEMENT AND FORGIVENESS OF ALL NOTES OUTSTANDING. (a)
PRIOR TO DECEMBER 31, 2001. In the event that on or before December 31, 2001,
either (i) Executive's employment is terminated by the Company without Cause,
due to the Executive's death or Disability or by the Executive with Good Reason
or (ii) a Sale of the Company occurs (either (i) or (ii), a "FORGIVENESS
EVENT"), the Company hereby agrees to the following:
(A) with respect to the DLJ Note and any other outstanding
notes between the Executive and DLJ or its successors (collectively, the
"AGGREGATE DLJ NOTES"), the Company shall either pay on behalf of the Executive,
or assume from the Executive, 50% of any interest and principal balance owed by
the Executive as of either the Termination Date or the date of the Sale of the
Company, as applicable; and
(B) with respect to the Company Note and any other outstanding
notes between the Executive and the Company or its successors, including,
without limitation, the note for two million dollars dated November 9, 1998
between the Executive and the Company (collectively, the "AGGREGATE COMPANY
NOTES"), the Company shall forgive 50% of any interest and principal balance
owed by the Executive as of either the Termination Date or the date of the Sale
of the Company, as applicable.
(b) AFTER DECEMBER 31, 2001. In the event that either (i) a
Forgiveness Event occurs at any time after December 31, 2001 or (ii) the
Executive's employment is terminated by the Company by reason of notice from the
Company of non-renewal of the Employment Term, the Company hereby agrees to the
following:
(A) with respect to the Aggregate DLJ Notes, the Company shall
either pay on behalf of the Executive, or assume from the Executive, 100% of any
interest and principal balance owed by the Executive as of either the
Termination Date or the date of the Sale of the Company, as applicable; and
(B) with respect to the Aggregate Company Notes, the Company
shall forgive 100% of any interest and principal balance owed by the Executive
as of either the Termination Date or the date of the Sale of the Company, as
applicable.
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5. Section 15(c) of the Agreement is hereby deleted in its
entirety and replaced by the following:
(c) The Company will be under no obligation to set aside any
funds with respect to the benefit obligations accruing under the SERP; PROVIDED,
HOWEVER, that the Company agrees that prior to or simultaneous with the first
occurrence, if any, of any of the following:
(i) any Sale of the Company;
(ii) the termination of the Executive's employment by the
Company without Cause, by the Executive for Good Reason, or by reason
of the Executive's death or Disability;
(iii) the nonrenewal of this Agreement pursuant to notice of
nonrenewal by the Company; or
(iv) the Executive's 65th birthday;
at the Executive's election, one of the following shall occur:
(A) The Company will establish an irrevocable grantor trust
(the "TRUST") pursuant to a trust agreement and fully fund the SERP in an amount
equal to the Actuarial Present Value as of the date of such funding (the "FUNDED
AMOUNT"), based on a Term of Employment which will be deemed to equal 20 years.
The amount of interest earned by the Funded Amount will be evaluated annually on
or before March 15. In the event that the Funded Amount has not earned interest
during the past year in an amount equal to or greater than the prevailing rate
for ten-year treasury bonds on the Start Date (the "TREASURY RATE"), the Company
will deposit an additional amount into the grantor trust equal to (i) the amount
of interest the Funded Amount would have earned during the last calendar year at
the Treasury Rate, (ii) less the interest actually earned by the Funded Amount
during such period. The trust agreement will provide for a return to the Company
of all assets that remain in the trust after satisfaction of all obligations of
the SERP; or
(B) The Company shall implement such other alternative
arrangement that does not result in a total after-tax economic impact to the
Company that is materially greater than the alternative described in (A) above.
6. COLLATERAL FOR THE DLJ NOTE. (a) Except as provided in
Section 6(b) below, with respect to any collateral the Executive has assigned
under the Agreement or any other promissory note or other document as a
security interest with respect to the DLJ Note (including, without
limitation, the Current Option, Performance Option and Super Performance
Option, together with all shares, dividends, cash, instruments and other
property from time to time received or otherwise distributed in respect of or
in exchange for any or all of such Current Option; Performance Option; Super
Performance Option; the Non-Qualified Current Option Agreement, the
Non-Qualified Performance Option Agreement and the Non-Qualified Super
Performance Option Agreement; and all rights of the Executive under or
pursuant to the such agreements) CSFB agrees that, as of the date of this
Amendment, it hereby waives and relinquishes any and all rights it has with
respect to such collateral and that the Executive shall have unencumbered
rights to all assets that, prior to the date of this Amendment, were assigned
as a security interest with respect to the DLJ Note.
(b) Notwithstanding the terms of Section 6(a) above, the
Executive hereby agrees that CSFB shall retain as a security interest with
respect to the unpaid portion of the DLJ Note, a portion of the Performance
Option exercisable for 50,000 shares of Company common stock (together with all
shares, dividends, cash, instruments and other
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property from time to time received or otherwise distributed in respect of or in
exchange for any or all such portion of the Performance Option, the
Non-Qualified Performance Option Agreement as it applies to such portion of the
Performance Option, and all rights of the Executive pursuant to such agreement).
7. CONTINUING EFFECT OF THE AGREEMENT.The Agreement shall
continue in full force and effect as amended herein.
8. ATTORNEYS FEES. The Company shall pay or reimburse
Executive for all reasonable legal fees and costs incurred in the drafting,
negotiation and execution of this Amendment.
9. COUNTERPARTS. This Amendment may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both such
counterparts shall together constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date and year first above written.
THE EXECUTIVE
/s/ Xxxxxxx Xxxx
--------------------------------------
Xxxxxxx Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXX XXXXX INC.
By: /s/ Xxxxxxx Xxxx
-----------------------------------
Name: Xxxxxxx Xxxx
Title: Chairman of the Board
(In compliance with the employment
agreement, dated October 27, 1997,
and effective as of June 18, 1997)
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Chairman of the
Compensation Committee of
the Board of Directors
CREDIT SUISSE FIRST BOSTON LTD.
(with respect to Section 6
only)
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
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