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EXHIBIT (c)(4)
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of the 10th day of March, 1998, by and between INTERNATIONAL
HOME FOODS, INC., a Delaware corporation (the "Company"), and XXXX XXXXXXXX (the
"Employee").
WHEREAS, concurrently with the execution of this Agreement, IHF/GM
Holding Corporation, IHF/GM Acquisition Corporation ("IHF/GM Acquisition"), the
Company and Grist Mill Co. (the "Seller") have entered into that certain
Agreement and Plan of Merger (the "Purchase Agreement") pursuant to which the
Company will beneficially acquire all of the outstanding equity securities of
the Seller; and
WHEREAS, the Employee has been the CEO of Seller for a substantial
period of time prior to the Acquisition and has therefore acquired a great deal
of knowledge about Seller's business, including Confidential Information; and
WHEREAS, the Employee is desirous of receiving a commitment from the
Company in the form of an Employment Agreement and the Company is desirous of
employing the Employee.
NOW, THEREFORE, in consideration of the promises, covenants and
agreements contained herein, it is hereby agreed as follows:
1. EMPLOYMENT PERIOD. Subject to Section 3, the Company hereby
agrees to employ the Employee, and the Employee hereby agrees to be employed by
the Company, in accordance with the terms and provisions of this Agreement, on
the date (the "Closing Date") that IHF/GM Acquisition accepts for payment any
shares of common stock of Seller tendered pursuant to the Offer (as defined in
the Purchase Agreement), it being intended that Employee's first date of
employment by the Company be the date the Company has beneficially acquired all
of the equity securities of Seller.
2. TERMS OF EMPLOYMENT.
(a) Position and Duties.
(i) During the term of the Employee's
employment, the Employee shall serve as a senior executive of the Company and
shall perform such duties as the Company shall assign. He shall report to the
CEO of the Company or his designee.
(ii) During the term of Employee's employment,
and excluding any periods of vacation and sick leave to which the Employee is
entitled, the Employee agrees to
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devote substantially all of his full business time to the business and affairs
of the Business and, to the extent necessary to discharge the responsibilities
assigned to the Employee hereunder, to use the Employee's reasonable best
efforts to perform faithfully, effectively and efficiently such
responsibilities.
(b) Compensation.
(i) Base Salary. During the term of the
Employee's employment, the Employee shall receive an annual base salary of
$225,000 ("Annual Base Salary"), which shall be paid in accordance with the
customary payroll practices of the Company. The Employee shall be eligible for
merit increases after the first year of this Agreement, consistent with the
policy applicable to other senior executives of the Company.
(ii) Bonus. It is contemplated that Employee
shall be eligible for an annual bonus, such bonus to be determined based on
targets established by the Company at the beginning of each calendar year. A
bonus shall be payable only in accordance with the terms of the Company's plan.
Such bonus shall, at maximum, be equal to $175,000. Notwithstanding anything to
the contrary, Employee shall be eligible for a bonus, for the fiscal year ending
May 31, 1998, in accordance with the Seller's bonus plan applicable. Such bonus
shall be paid to Employee in accordance with the Seller's prior history in
paying bonuses to Employee. In calculating such bonus, all expenses relating to
the acquisition by the Company of Seller shall be disregarded. The maximum bonus
payable to Employee for the year ending May 31, 1998 shall be $200,000. Said
bonus shall be payable if the Seller attains an EBITDA of $13.5 Million for the
period ending May 31, 1998. The bonus for which Employee shall be eligible for
the calendar year December 31, 1998, pursuant to the Company's to be established
bonus targets shall then be prorated to seven months.
(iii) Other Benefits. During the term of the
Employee's employment, the Employee shall be entitled to the other benefits
available to the Company's employees in accordance with the plans, policies,
programs and practices, if any, of the Company.
(iv) Reimbursements. Employee shall be entitled
to reimbursement for all reasonable, ordinary and necessary business expenses
incurred by him in the performance of his duties under this Agreement in
accordance with Company policies.
3. TERMINATION OF EMPLOYMENT. Either party may terminate the
Employee's employment at any time.
4. STOCK OPTIONS. Employee shall receive, on the first business
day after the Closing Date, 50,000 non-qualified stock options in the Company,
said options to have a strike price equal to the "Fair Market Value" of a share
of the Company's Common Stock determined as of the Closing Date in accordance
with the Company's Stock Option Plan. Said options shall be subject to the terms
and conditions of the Company's Stock Option Plan and shall vest in equal
amounts over three years with the first one-third vesting on the first
anniversary of the Closing Date; the second one-third on the second anniversary
date and the last one-third on the
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third anniversary date.
5. CONFIDENTIAL INFORMATION.
(a) The Employee acknowledges that the Company and its
affiliates have, or may in the future obtain, trade, business and financial
secrets and other confidential and proprietary information (collectively, the
"Confidential Information"). As defined herein, Confidential Information shall
not include (i) information that is generally known to other persons or entities
who can obtain economic value from its disclosure or use and (ii) information
required to be disclosed by the Employee pursuant to a subpoena or court order,
or pursuant to a requirement of a governmental agency or law of the United
States of America or a state thereof or any governmental or political
subdivision thereof; provided, however, that the Employee shall take all
reasonable steps to prohibit such disclosure.
(b) From and after the Closing Date, the Employee agrees
to hold such Confidential Information in confidence and not to release such
information to any person (other than Company employees and other persons to
whom the Company has authorized the Employee to disclose such information and
then only to the extent that such Company employees and other persons authorized
by the Company have a need for such knowledge).
(c) From and after the Closing Date, the Employee further
agrees not to use any Confidential Information for the benefit of any person or
entity other than the Company.
6. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination
of the Employee's employment, the Employee shall immediately return to the
company all copies, in whatever form, of any and all Confidential Information
and other properties of the Company and its affiliates which are in the
Employee's possession, custody or control.
7. SUCCESSORS. This Agreement is personal to the Employee and
without the prior written consent of the Company shall not be assignable by the
Employee.
8. NONCOMPETITION.
(a) In consideration of the sums received by the Employee
pursuant to the Purchase Agreement, the consideration recited herein and the
Stock Options granted herein, the Employee hereby agrees to the following
Noncompetition Agreement. The term of Noncompetition (herein so called) shall be
for a term beginning as of the Closing Date and continuing until the later of
one year after the Date of Termination of the Employee's employment or three
years from the date of commencement of employment with the Company.
(b) During the term of Noncompetition, the Employee shall
not (other than for the benefit of the Company pursuant to this Agreement)
directly or indirectly, individually or as an officer, director, employee,
shareholder, consultant, contractor, partner, joint venturer, agent, equity
owner or in any capacity whatsoever (i) engage in the manufacturing,
distribution or
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marketing of food products anywhere in the United States that are either (x) of
the type of food category then being manufactured, distributed, sourced or
marketed by either the Company or any direct or indirect subsidiary of the
Company (collectively, the "IHF Group") or (y) food products manufactured,
sourced, distributed or marketed by Seller, at any time within the most recent
two year period prior to the date of this Agreement, (ii) hire or solicit with
respect to hiring any employee of any member of the IHF Group, or (iii) divert
or take away any customers or suppliers of any member of the IHF Group within
the United States or elsewhere where the IHF Group is then selling product.
(c) It is understood and agreed to that this Section 8
shall be in addition to and not be construed as a limitation upon the covenants
in Section 5 hereof.
(d) The Employee acknowledges that (i) the geographic
boundaries, scope of prohibited activities, and time duration of the preceding
provisions are reasonable in nature and are no broader than are necessary to
maintain the confidentiality and the goodwill of the Company's proprietary
information, plans and services and to protect the other legitimate business
interests of the Company and (ii) the payments provided Employee hereunder are
collectively consideration for the agreements contained herein.
9. TERMINATION OF EMPLOYMENT AGREEMENT. Effective as of the
Closing Date, that certain Employment Agreement (the "Existing Agreement") dated
January 10, 1990 (as amended) by and between Seller and Employee shall be
terminated in full without any further action on the part of Seller or Employee.
From and after the date of termination of the Existing Agreement, Employee shall
not be entitled to receive (i) any further wages or other compensation provided
for or anticipated by Article 4 of the Existing Agreement, (ii) except for the
payment of $850,000 on the Closing Date to Employee (which payment the Company
shall make to Employee on the Closing Date), any other payment following a
change in control or other compensation contemplated by Article 7 of the
Existing Agreement, or (iii) any other benefits or compensation arising under or
pursuant to the Existing Agreement or, except as may be otherwise provided
herein, Employee's employment relationship with Seller or any of its
subsidiaries.
10. RELEASE OF CLAIMS.
(a) Effective as of the Closing Date, Employee hereby
releases and discharges the Released Parties from all Claims and Damages (each
as defined below), including those related to, arising from, or attributed to
(i) Employee's employment with and membership on the Boards of Directors for
Seller and its subsidiaries, (ii) the Existing Agreement and (iii) all other
acts or omissions at any time prior to and including the date of termination of
the Existing Agreement; except that this release shall not include Employee's
(A) ENTITLEMENT TO CONTINUED GROUP MEDICAL COVERAGE IN ACCORDANCE WITH THE
CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 ("COBRA"), (B) VESTED
ACCOUNT BALANCES IN SELLER'S EMPLOYEE BENEFIT PLANS AND RIGHTS UNDER OPTION
AGREEMENTS OUTSTANDING AS OF THE DATE HEREOF (IN EACH CASE AS DESCRIBED IN ANNEX
I ATTACHED HERETO), (C) RIGHTS WITH RESPECT TO SHARES OF CAPITAL
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STOCK OF SELLER (AS LISTED ON ANNEX II ATTACHED HERETO), (D) RIGHTS OF EMPLOYEE
ARISING UNDER THIS AGREEMENT, (E) RIGHTS OF EMPLOYEE ARISING UNDER ANY OF THE
TRANSACTION DOCUMENTS (AS DEFINED IN THE MERGER AGREEMENT), (F) RIGHTS OF
EMPLOYEE ARISING UNDER SELLER'S ORGANIZATION DOCUMENTS, (G) ACCRUED AND UNPAID
SALARY AND EXPENSES INCURRED BY EMPLOYEE IN RESPECT OF THE PERIOD PRIOR TO THE
CLOSING DATE, AND (H) ANY BONUS PAYMENT OWED TO EMPLOYEE PURSUANT TO THE
SELLER'S BONUS PLAN. Employee understands and expressly agrees that, unless
specifically excluded from this release, this release extends to all Claims and
Damages of every nature and kind, known or unknown, suspected or unsuspected,
past or present, whether or not these Claims and Damages were set forth in any
writing, and that all such Claims and Damages are hereby expressly settled or
waived. Notwithstanding the foregoing, Employee does not release or discharge
Seller and its subsidiaries from any Claims or Damages related to or arising
from Employee's capacity as an officer or director of Seller or its subsidiaries
to which Employee is entitled to be indemnified against or reimbursed by Seller
or its subsidiaries, whether by statute, contract or otherwise.
(b) As used in this Section 10, the following terms shall
have meanings set forth below:
(i) "CLAIMS" means all theories of recovery of
whatever nature, whether known or unknown, at law or equity of any jurisdiction,
based on acts, omissions or other matters occurring on or before the date the
parties sign this Agreement. This term includes, without limitation, lawsuits,
petitions, complaints, causes of action, charges, indebtedness, losses, claims,
liabilities, and demands, whether arising in equity or under the common law or
under any contract (including, without limitation, the Existing Agreement),
statute, regulation or ordinance. This term also includes, without limitation,
any Claim of discrimination (based on age or any other factor) under any statute
or law (including, without limitation, the Age Discrimination in Employment Act,
29 U.S.C. ' 621, et seq.; Title VII of the Civil Rights Act of 1964, 42 U.S.C. '
2000e, et seq.; and the Americans with Disabilities Act, 42 U.S.C. ' 12101, et
seq.), and all Claims asserted by Employee, in writing or otherwise, or which
could be asserted, by Employee.
(ii) "DAMAGES" means all elements of relief or
recovery of whatever nature, whether known or unknown, which are recognized by
the law or equity of any jurisdiction. This terms includes, without limitation,
actual, incidental, indirect, consequential, compensatory, liquidated,
exemplary, and punitive damages; rescission, attorneys' fees; interest; costs;
equitable relief; and expenses.
(iii) "RELEASED PARTIES" means and includes Seller
and its subsidiaries, and all of the foregoing entities' past, present and
future shareholders, directors, officers, employees, agents, insurance carriers,
employee benefit plans (and such plans' fiduciaries, trustees, administrators
and representatives), predecessors, successors, assigns, executors,
administrators, attorneys and representatives, in both their corporate and
individual capacities.
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11. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. Whenever the terms
"hereof", "hereby", "herein", or words of similar import are used in this
Agreement they shall be construed as referring to this Agreement in its entirety
rather than to a particular section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular "Section"
or "paragraph" shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary. The
use of the term "including" herein shall be construed as meaning "including
without limitation." This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee: Xxxx Xxxxxxxx
00000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
With a Copy to: Xxxxxxx X. Xxxxxxxxx
Xxxxxxxxx, Xxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to the Company: CEO
International Home Foods, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a Copy to: Xxxxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such 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 and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this
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Agreement. 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 to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) The Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Employee acknowledges that money damages would be
both incalculable and an insufficient remedy for a breach of Section 5 or 8 by
the Employee and that any such breach would cause the Company irreparable harm.
Accordingly, the Company, in addition to any other remedies at law or in equity
it may have, shall be entitled, without the requirement of posting of bond or
other security, to equitable relief, including injunctive relief and specific
performance, in connection with the breach of Section 5 or 8 by the Employee.
(g) This Agreement constitute the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(h) This Agreement may be executed in two or more
counterparts.
(i) Sections 5 and 8 of this Agreement shall survive the
termination of Employee's employment under this Agreement.
(j) Employee agrees that this Agreement and the
obligations hereunder shall be binding upon his heirs, guardians, administrators
or successors.
(k) Seller and its affiliates are intended third party
beneficiaries of Sections 9 and 10 of this Agreement.
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IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and the company has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.
EMPLOYEE
/s/ XXXX X. XXXXXXXX
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Xxxx Xxxxxxxx
INTERNATIONAL HOME FOODS, INC.
/s/ XXXXXXX X. XXXXXX
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By: Xxxxxxx X. Xxxxxx
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Its: Vice President
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