Exhibit 10.4
EMPLOYMENT AGREEMENT
dated as of December 31, 1996,
between CFP HOLDINGS, INC., a
Delaware corporation (the
"Company"), and XXXXXX X. XXXXX
(the "Executive").
Reference is made to the Securities Purchase Agreement dated as of
December 31, 1996 (the "Securities Purchase Agreement") among the Company,
Quality Foods, L.P. ("Quality Foods"), the partners of Quality Foods, certain
additional beneficial owners of Quality Foods, the stockholders of QF
Acquisition Corp., a Delaware corporation, and the stockholders of QF Management
Corp., a Delaware corporation. Pursuant to the Securities Purchase Agreement,
the Company is acquiring the business of Quality Foods.
The Executive is the Chief Executive Officer of Quality Foods and
possesses unique knowledge of the business, products and operations thereof. The
Company desires to enter into this Agreement in order to assure itself of the
continued service of the Executive and the Executive desires to accept
employment with the Company upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
SECTION 1. Employment. The Company hereby employs the Executive and
the Executive hereby accepts employment by the Company upon the terms and
conditions hereinafter set forth.
SECTION 2. Term. The employment of the Executive hereunder shall be
for the period (the "Employment Period") commencing on the date hereof (the
"Commencement Date") and ending on (a) the fifth anniversary of the date hereof
(the "Scheduled Termination Date"), or (b) such earlier date (the "Termination
Date") upon which the employment of the Executive shall terminate in accordance
with the provisions hereof.
SECTION 3. Duties; Etc. (a) During the Employment Period, the
Executive shall be employed as the President and Chief Executive Officer of the
Company. Subject to the authority of the Board of Directors of the Company (the
"Board"), the Executive shall have the authority and responsibility to manage
the business and affairs of the Company and shall have such other titles and
duties consistent with the status of a senior level executive of the Company as
the Board shall in its discretion designate which, initially, shall include
serving as the Chief
Executive Officer of the Company's Quality Foods subsidiary. The Executive shall
use his best efforts to perform well and faithfully the foregoing duties and
responsibilities.
(b) Nothing contained in this Agreement shall obligate the Executive
to relocate to a location other than the metropolitan Buffalo, New York area.
The parties acknowledge that the discharge of the Executive's duties hereunder
will require the Executive to travel as necessary to the facilities of the
Company and its affiliates and that a substantial portion of his duties will
require the Executive to be present at the facilities of the Company and its
affiliates. The Executive may from time to time also be required to travel to
other locations to carry out the business of the Company and perform his duties
hereunder. The Executive shall be provided, at the expense of the Company or one
of its affiliates, with an office at the facilities of the Company located at
0000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx. Subject to the foregoing and to the
extent consistent with the proper discharge of his duties hereunder, the
Executive may perform his duties from Buffalo, New York and the Company (or any
of its affiliates) shall provide the Executive with an office in Buffalo, New
York (not to exceed a cost per month of $750).
(c) During the Employment Period, the Executive shall receive an
annual performance review, with the first such review to take place on the first
anniversary of the Commencement Date.
SECTION 4. Time to be Devoted to Employment. (a) During the
Employment Period, the Executive shall devote such time, attention and energies
to the business of the Company and its subsidiaries (except for vacations to
which he is entitled pursuant to Section 6(b) and except for illness or
incapacity) as shall be necessary for the Executive to perform the duties
required to be performed hereunder as outlined in Section 3 hereof. During the
Employment Period, the Executive shall not engage in any business activity
which, in the reasonable judgment of the Board, conflicts with the duties of the
Executive hereunder, whether or not such activity is pursued for gain, profit or
other pecuniary advantage.
(b) The parties recognize that the Executive currently holds public
and private sector positions, both volunteer and non-volunteer, as Chairman of
the Niagara Frontier Transportation Authority. He has also in the past served as
a member of the Boards of Directors of various institutions, and the parties
intend that nothing in this Agreement shall preclude his continued involvement
in these capacities, provided that such involvement does not interfere with, or
prevent the Executive from, complying with the terms of this Agreement,
including, without limitation, those set forth in Section 4(a).
SECTION 5. Compensation; Bonus. (a) The Company (or, at the
Company's option, any affiliate thereof) shall pay to the Executive an annual
base salary (the "Base Salary") during
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the Employment Period of $325,000 per annum, payable in such installments (but
not less often than monthly) as is generally the policy of the Company with
respect to its officers.
(b) Subject to the last sentence of this Section 5(b), on
January 1 of each year (each such year, an "Adjustment Year") commencing January
1, 1998, the Executive's Base Salary shall be subject to increase by a
percentage of the Executive's Base Salary equal to the percentage increase, if
any, in the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners, "all items" for the city or
metropolitan area to which Buffalo, New York bears the closest geographic
proximity, 1982-84=100 base, or any successor or substitute index between
December of the year that is two years immediately prior to the adjustment year
and December of the year immediately preceding the adjustment year (the "Index
Year"). The Company shall calculate any increase as soon as practicable after
the Consumer Price Index information for December of the Index Year is made
available and any such increase shall be effective on January 1st of the
Adjustment Year. Any increase in Base Salary pursuant to this Section 5(b) shall
be added to the Base Salary then being paid to the Executive, and the sum
thereof shall then become the Base Salary for each successive year, until
further adjusted in accordance with the provisions of this Section 5(b).
Notwithstanding anything to the contrary contained herein, any increase in Base
Salary pursuant to this Section 5(b) shall be offset against any other increase
in Base Salary to which the Executive might, in the discretion of the Board of
Directors of the Company, become entitled.
(c) In addition to the Base Salary, the Executive shall also
be eligible to participate in the Company's annual cash bonus plan based upon
achieving and exceeding the annual performance targets for the Company and its
affiliates as follows:
(i) In respect of each of the 1997 through 2001 fiscal
years (each, a "Bonus Year"), the Company shall award a cash bonus (the "Annual
Cash Bonus") of up to 100% of the Executive's Base Salary, depending upon the
percentage of Annual Budgeted EBITDA (as hereinafter defined) attained,
according to the following schedule:
Annual Budgeted Cash Bonus
EBITDA % Attained as % of Base Salary
----------------- -------------------
less than 80% 0%
80% 30%
90% 40%
100% 50%
110% 75%
125% and above 100%
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; provided, however, that in each Bonus Year (as long as the Employee has been
continuously employed throughout such Bonus Year), the Executive shall be
entitled to an Annual Cash Bonus in the amount of at least $50,000 (the "Minimum
Annual Bonus"), except that in the event this Agreement expires upon the
Scheduled Termination Date without being renewed, the Executive shall be
entitled to a pro rata share of the Annual Minimum Bonus in respect of the 2001
Bonus Year for the period the Executive was actually employed during such year.
(d) As used herein, the following terms shall have the
following meanings:
(i) "Annual Budgeted EBITDA" for the Company for the
fiscal year ended December 31, 1997 equals $28,818,000 and for each subsequent
fiscal year means the figure set by the Board of Directors on a yearly basis in
advance of the relevant year.
(ii) "EBITDA" means the net income of the Company and
its subsidiaries, determined on a consolidated basis excluding the effect of any
Stipulated Items (as hereinafter defined) and before payment or provision for
payment of (A) interest expense; (B) any Federal, state, local or other taxes
based on income; (C) depreciation expense; and (D) amortization of goodwill and
other intangible assets.
(iii) "Stipulated Items" means income or expense items
of a character significantly different from those incurred in the typical or
customary business activities of the Company and any of its subsidiaries or that
would not be considered recurring factors in any evaluation of the ordinary
operations of the business of the Company and its subsidiaries, including, but
not limited to, (A) the sale or abandonment of a plant or significant segment of
the business of the Company or any of its subsidiaries; (B) the sale of an
investment not acquired for resale; (C) the writeoff of goodwill due to unusual
events or developments within the fiscal year being considered; (D) the
condemnation or expropriation of properties; (E) certain adjustments to the
reserve accounts recorded by the Company or any of its subsidiaries; (F) any
management fees payable to First Atlantic Capital, Ltd. or the Parent (as
hereinafter defined) or any of their affiliates; and (G) fees and expenses
relating to the consummation of the transactions contemplated by the Securities
Purchase Agreement and the Rule 144A debt offering of senior notes of the
Company.
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(e) The Company shall, promptly following the Company's
receipt from its certified public accountants of the audited consolidated
financial statements of the Company for each Bonus Year, compute and promptly
pay the Annual Cash Bonus based upon EBITDA as reflected in such audited
consolidated financial statements.
(f) Notwithstanding anything to the contrary contained herein,
any and all Annual Cash Bonuses otherwise payable hereunder shall be subject to
the Company's obligations to comply with the covenants set forth in its
agreements with its lenders and payment of any and all Annual Cash Bonuses
otherwise payable may be deferred in order to maintain the Company's compliance
with such covenants. If any Annual Cash Bonus hereunder is not paid when due as
a result of the Company's obligations to its lenders, such bonus shall accrue
interest at the Applicable Federal Rate, as such term is defined in Section
1274(d) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder) until paid but shall, in any event, be paid
as soon as permissible.
(g) In addition to the Base Salary, the Executive shall be
entitled to participate in the Company's (or its parent company's) incentive
stock option plan to be formulated by the Board of Directors of the Company.
(h) Upon the Commencement Date, the Company's parent, CFP
Group, Inc., a Delaware corporation (the "Parent"), shall grant the Executive
options to purchase Class B Nonvoting Common Stock, $.01 par value (the "Class B
Nonvoting Stock"), of the Parent representing up to 1.25% (determined on the
Commencement Date on a fully diluted basis) of the issued and outstanding Common
Stock, $.01 par value, of the Parent. Such options shall be issued on such terms
as the Board of Directors of the Parent shall, in its discretion, determine,
provided such options shall be exercisable for the five year period commencing
on the first anniversary of the Commencement Date in the event the employee
remains continuously employed through such anniversary date and the exercise
price thereof shall be $693.75 per share.
SECTION 6. Business Expenses; Benefits. (a) The Company (or, at the
Company's option, any subsidiary or affiliate thereof) shall reimburse the
Executive, in accordance with the practice from time to time for officers of the
Company, for all reasonable and necessary expenses and other disbursements
incurred by the Executive for or on behalf of the Company in the performance of
his duties hereunder. The Executive shall provide such appropriate documentation
of expenses and disbursements as may from time to time be reasonably required by
the Company.
(b) During the Employment Period, the Executive shall be
entitled to five weeks paid vacation during each twelve-month period worked
beginning on the Commencement Date.
(c) During the Employment Period, the Company shall provide
the Executive with group health, hospitalization and disability insurance and
other employee benefits consistent with such benefits as are generally made
available from time to time to executive employees of the Company.
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(d) During the Employment Period, the Company shall reimburse
the Executive for premiums (not to exceed $2500 in any year) on a current
supplemental life insurance policy through Cigna Insurance Company for a maximum
amount of Five Hundred Thousand Dollars ($500,000).
SECTION 7. Involuntary Termination. (a) If the Executive is
incapacitated or disabled by accident, sickness or otherwise so as to render him
mentally or physically incapable of performing the services required to be
performed by him under this Agreement (such condition being hereinafter referred
to as a "Disability") for a period of 180 consecutive days or longer, or for an
aggregate of 210 days during any twelve-month period, the Company may, at any
time following such 180 or 210 day period of Disability, at its option,
terminate the employment of the Executive under this Agreement immediately upon
giving him written notice to that effect (such termination, as well as a
termination under Section 7(b), being hereinafter referred to as an "Involuntary
Termination"). Until the Executive's employment hereunder shall have been
terminated in accordance with the foregoing, the Executive shall be entitled to
receive his compensation notwithstanding any such Disability.
(b) If the Executive dies during the Employment Period, his
employment hereunder shall be deemed to cease as of the date of his death.
SECTION 8. Termination For Cause. The Company may terminate the
employment of the Executive hereunder at any time for Cause (as hereinafter
defined) (such termination being referred to herein as a "Termination For
Cause") by giving the Executive written notice of such termination, effective
immediately upon the giving of such notice to the Executive. As used in this
Agreement (a) "Cause" means any of the following: (i) any deliberate or
intentional act or omission undertaken or omitted by the Executive causing
damage to the Company or any of its affiliates or any of their respective
properties, assets or business; (ii) any fraud, misappropriation or embezzlement
by the Executive involving properties, assets or funds of the Company or any of
its affiliates or a conviction of the Executive, or pleading nolo contendere by
the Executive, to any crime or offense involving monies or other property of the
Company or any of its affiliates or any other felony offense for any crime of
gross moral turpitude; (iii) the violation by the Executive of Sections 13, 14
or 15 of this Agreement or the provisions of any other employment,
non-competition or confidentiality agreement with the Company or any of its
affiliates; (iv) the Executive's material breach of any agreement to which he is
a party with the Company or any of its affiliates; (v) any usurpation by the
Executive of a corporate opportunity of the Company or any of its affiliates;
(vi) the Executive's failure or refusal to perform any of his material duties,
responsibilities or obligations as an employee of the Company; provided,
however, that any action or omission by the Executive taken in good faith and in
the
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reasonable belief that such action or omission was in the best interests of
the Company shall not constitute "Cause"; and provided further, however, that
the Executive shall be entitled to cure any investment that unintentionally
violates clause (iii) hereof or any violation of clause (iv) hereof, in each
case within thirty (30) days of his receipt of written notice thereof from the
Company.
SECTION 9. Termination Without Cause. The Company may terminate the
employment of the Executive hereunder without Cause (such termination being
hereinafter referred to as a "Termination Without Cause") by giving the
Executive written notice of such termination, which notice shall be effective on
the date specified therein but not earlier than the date on which such notice is
given. For purposes of this Agreement, "Termination Without Cause" shall also
include the following:
(a) any material reduction, in the absence of the Executive's
consent, of the Executive's title, duties or responsibilities;
(b) any reduction, in the absence of the Executive's consent,
in the Executive's Base Salary, Annual Cash Bonus or the perquisites listed in
Sections 6(c) or (d) hereof, in each case as in effect on the Commencement Date;
and
(c) the Company's permanent relocation of the Executive, in
the absence of the Executive's consent, to a location other than the
metropolitan Buffalo, New York area. Notwithstanding the foregoing provision of
this clause (c), the parties acknowledge that the discharge of the Executive's
duties hereunder will require the Executive to travel as necessary to the
facilities of the Company and its affiliates and that a substantial portion of
his duties will require the Executive to be present at the facilities of the
Company and its affiliates. The Executive may from time to time also be required
to travel to other locations to carry out the business of the Company and
perform his duties hereunder. Accordingly, such travel shall be expressly
included in the Executive's duties and shall not be the basis of a Termination
Without Cause;
provided, however, that a Termination Without Cause pursuant to clauses (a)
through (c) of this Section 9 shall not be deemed to have occurred unless,
within 30 days of the occurrence of any of the events described in said clauses
(a) through (c), the Executive shall have given the Company reasonable notice of
his intention to claim a Termination Without Cause pursuant to this Section 9
and the basis therefor, and the Company shall have failed to cure the act or
omission described in the notice within 30 days of receipt of such notice from
the Executive.
SECTION 10. Voluntary Termination. Any termination of the employment
of the Executive hereunder other than as a result of an Involuntary Termination,
a Termination For Cause, a
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Termination Without Cause or a Termination For Nonrenewal shall be deemed to be
a "Voluntary Termination."
SECTION 10A. Renewal of Agreement. On the fourth anniversary of the
Commencement Date, the Company and the Executive shall enter into good faith
negotiations for the renewal of this Agreement following the Scheduled
Termination Date. If the parties are unable, within 90 days after commencement
of such negotiations, to agree to a renewal of this Agreement on mutually
acceptable terms, the Executive shall continue to perform the services required
hereunder until the Scheduled Termination Date, whereupon a Termination For
Nonrenewal shall be deemed to have occurred; provided, however, that a
"Termination For Nonrenewal" shall not be deemed to have occurred in the event
the Executive and the Company do in fact renew this Agreement prior to the
Scheduled Termination Date.
SECTION 11. Effect of Termination. (a) Upon the termination of the
Executive's employment hereunder due to a Termination for Cause or a Voluntary
Termination, neither the Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except to
receive (i) the unpaid portion, if any, of the Base Salary provided for in
Section 5(a), computed on a pro rata basis to the Termination Date (based on the
actual number of days elapsed over a year of 365 or 366 days, as applicable),
(ii) any unpaid accrued benefits of the Executive (including any Annual Cash
Bonus deferred pursuant to Section 5(f) hereof), and (iii) reimbursement for any
expenses for which the Executive shall not have been reimbursed as provided in
Section 6(a).
(b) Upon the termination of the Executive's employment
hereunder due to an Involuntary Termination, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under the Agreement except (i) to receive the amounts set forth in
Section 11(a) above; (ii) to continue to receive the Base Salary and the Minimum
Annual Bonus, payable in such installments and on such terms as they were paid
to the Executive prior to such termination of employment through the later to
occur of the Scheduled Termination Date and the date which is 18 months after
the Termination Date; (iii) in the case of an Involuntary Termination due to
Disability, to participate in all group health, hospitalization and disability
insurance plans as contemplated by Sections 6(c) hereof and to receive the
payments contemplated in Section 6(d) hereof until the later to occur of the
Scheduled Termination Date and the date which is 18 months after the Termination
Date; provided, however, that any such rights under clauses (ii) and (iii) of
this Section 11(b) shall be reduced, to the extent the Executive shall obtain
other employment during the period such payments are required to be made, by the
amount of the salary and benefits received by the Executive in connection with
such new employment.
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(c) Upon the termination of the Executive's employment
hereunder due to a Termination Without Cause, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above, (ii) to continue to receive the Base Salary and the Minimum
Annual Bonus, payable in such installments and on such terms as they were paid
to the Executive prior to such termination of employment, through the later to
occur of the Scheduled Termination Date and the date which is 18 months after
the Termination Date and (iii) to participate in all group health,
hospitalization and disability insurance plans as contemplated by Section 6(c)
hereof and to receive the payments contemplated in Section 6(d) hereof until the
later to occur of the Scheduled Termination Date and the date which is 18 months
after the Termination Date; provided, however, that any such rights under
clauses (ii) and (iii) of this Section 11(c) shall be reduced, to the extent the
Executive shall obtain other employment during the period such payments are
required to be made, by the amount of the salary and benefits received by the
Executive in connection with such new employment.
(d) Upon the termination of the Executive's employment
hereunder due to a Termination For Nonrenewal, neither the Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except (i) to receive the amounts set forth in
Section 11(a) above; (ii) to continue to receive the Base Salary, payable in
such installments as it was paid to the Executive prior to such termination of
employment for a period of 18 months; and (iii) to participate in all group
health, hospitalization and disability insurance plans as contemplated by
Section 6(c) hereof and to receive the payments contemplated in Section 6(d)
hereof for a period of 18 months after the Termination Date; provided, however,
that any such rights under clauses (ii) and (iii) of this Section 11(d) shall be
reduced, to the extent the Executive shall obtain other employment during the
period such payments are required to be made, by the amount of the salary and
benefits received by the Executive in connection with such new employment.
SECTION 12. Insurance. The Company may, for its own benefit,
maintain "key-man" life and disability insurance policies (collectively, the
"Insurance Policies") covering the Executive. The Executive will cooperate with
the Company and provide such information or other assistance as the Company may
reasonably request in connection with the Company's obtaining and maintaining
the Insurance Policies.
SECTION 13. Disclosure of Information. The Executive agrees that he
will not, at any time during the Employment Period or thereafter, disclose to
any person, firm, corporation or other business entity, except as required by
law, any non-public information concerning the business, clients or affairs of
the Company or any subsidiary or affiliate thereof for any reason or
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purpose whatsoever nor shall the Executive make use of any of such non-public
information for his own purpose or for the benefit of any person, firm,
corporation or other business entity except the Company or any subsidiary or
affiliate thereof.
SECTION 14. Right to Inventions. The Executive shall promptly
disclose, grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business actually conducted by the
Company, which he may develop or which may be acquired by the Executive during
the Employment Period (whether or not during usual working hours), together with
all trademarks, patent applications, letters patent, copyrights and reissues
thereof that may at any time be granted for or upon any such xxxx, design, logo,
invention, improvement or technical information. In connection therewith:
(a) the Executive shall without charge, but at the expense of
the Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Company to vest title to any
such marks, designs, logos, inventions, improvements, technical
information, trademarks, patent applications, patents, copyrights or
reissues thereof in the Company and to enable it to obtain and maintain
the entire right and title thereto throughout the world;
(b) the Executive shall render to the Company at its expense
(including a reasonable payment for the time involved in case he is not
then in its employ based on his last per diem earnings) all such
assistance as it may require in the prosecution of applications for said
trademarks, patents, copyrights or reissues thereof, in the prosecution or
defense of interferences which may be declared involving any said
trademarks, applications, patents or copyrights and in any litigation in
which the Company may be involved relating to any such trademarks,
patents, inventions, improvements or technical information; and
(c) for the avoidance of doubt, it is hereby agreed that the
foregoing provisions shall be deemed to include an assignment of future
copyright in accordance with Section 37 of the Copyright Act of 1986 and
any amendment or re-enactment thereof.
SECTION 15. Restrictive Covenant. (a) The Executive acknowledges and
recognizes that during the Employment Period he will be privy to non-public
information critical to the Company's and its affiliates' business and further
acknowledges and recognizes that the Company would find it extremely difficult
to
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replace him. Accordingly, in consideration of the premises contained herein, and
the consideration to be received by the Executive hereunder and the granting of
certain stock options to the Executive, during the Employment Period and the
Non-Competition Period (as defined below), the Executive shall not (i) directly
or indirectly engage in, represent in any way, or be connected with, any
Competing Business (as defined below), whether such engagement shall be as an
officer, director, owner, employee, partner, affiliate or other participant in
any Competing Business; (ii) assist others in engaging in any Competing
Business; (iii) induce any employee of the Company or any affiliate thereof to
terminate such employee's employment with the Company or any such affiliate or
to engage in any Competing Business; or (iv) induce any entity or person with
which the Company or any affiliate thereof has a business relationship to
terminate or alter such business relationship; provided, however, that the
foregoing shall not prevent the Executive from owning the securities of or an
interest in any business, provided such ownership of securities or interest
represents less than five percent (5%) of any class or type of securities of, or
interest in, such business.
(b) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company or any affiliate thereof, but he nevertheless believes that he has
received and will receive sufficient consideration and other benefits as an
employee of the Company and as otherwise provided hereunder and pursuant to
other agreements between the Company and the Executive to justify clearly such
restrictions which, in any event (given his education, skills and ability), the
Executive does not believe would prevent him from earning a living.
(c) As used herein, "Competing Business" shall mean any business in
North America if such business or the products sold by it are competitive,
directly or indirectly, with (i) the business of the Company or any of its
affiliates for which the Executive has direct managerial responsibility, (ii)
any of the products manufactured, sold or distributed by the Company or any of
its affiliates for which the Executive has direct managerial responsibility or
(iii) any products or business being developed by the Company or any of its
affiliates for which the Executive has direct managerial responsibility and
"Non-Competition Period" shall mean the period commencing on the day immediately
following the Termination Date and ending upon the expiration of 18 months
following the Termination Date. For purposes of this paragraph (c), the
Executive shall be deemed to have direct managerial responsibility for the
business of the Company, Quality Foods and Custom Food Products, Inc.
SECTION 16. Right to Sell Securities. In the event (the "Trigger
Event") of a (i) Termination Without Cause; (ii) Termination For Nonrenewal; or
(iii) Involuntary Termination, the Executive shall have the right and option
(the "Put Option")
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during the 90-day period (the "Put Period") following the Trigger Event to sell
to the Company the shares of Class B Nonvoting Stock and/or options (the
"Options") to acquire such shares of Class B Nonvoting Stock that are then
vested and exercisable, in each case owned by the Executive (or any member of
the Group (as defined in the Stockholders' Agreement) of the Executive) on the
date of the Trigger Event (collectively, the "Put Securities"). The Put Option
shall be exercisable by the Executive by written notice to the Company during
the Put Period, and upon receipt thereof, the Company shall be obligated to
purchase the Put Securities that are the subject of such notice on the following
basis:
(A) The price (the "Put Price") of the Put Securities shall be
determined as follows:
(1) if the Trigger Event is a Termination Without Cause
or an Involuntary Termination, the Put Price for the Put Securities shall
be the greater of (x) the price paid by the Executive for the Put
Securities and (y) the Fair Value Per Share (as defined in the
Stockholders' Agreement (the "Stockholders' Agreement") dated as of the
date hereof among the Company, the Executive and the other signatories
thereto), net of the exercise price in the case of Options; and
(2) if the Trigger Event is a Termination For
Nonrenewal, the Put Price for the Put Securities shall be Fair Value Per
Share, net of the exercise price, in the case of Options.
(B) The Put Price shall be payable as follows:
(1) if the Trigger Event is a Termination For
Nonrenewal, the Put Price shall be payable in cash or, at the option of
the Company, by delivery of a subordinated promissory note that (a)
matures ratably on a quarterly basis over a three year period; (b) is
subordinated to all other current or future indebtedness of the Company;
(c) bears interest, payable on a quarterly basis, at a fluctuating annual
rate equal to that rate announced by NationsBank, N.A. from time to time
as its prime rate; (d) shall be secured with the Put Securities
repurchased by delivery of such note; and (e) shall otherwise contain such
terms and provisions as may be required by the Company's lenders; and
(2) if the Trigger Event is a Termination Without Cause
or an Involuntary Termination, the Put Price shall be payable in cash.
(C) The Put Price shall be paid within 90 days of the exercise by
the Executive of the Put Option.
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(D) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 16 shall be subject to the following:
(1) The put rights set forth in this Section 16 shall be
subject to the terms and conditions of the Tripartite Agreement dated as
of the date hereof among the Executive, Xxxxx Xxxxx and Xxxxxxx X.
Xxxxxxxx.
(2) The parties acknowledge that any obligation on the
part of the Company to pay the Put Price shall be subject to the Company's
obligations to comply with the covenants set forth in its agreements with
its lenders and payment of any Put Price payable may be deferred in order
to maintain the Company's compliance with such covenants but shall, in any
event, be paid as soon as permissible.
(3) Anything contained herein to the contrary
notwithstanding, the Put Option (if not theretofore exercised) of the
Executive shall terminate and be of no further force or effect
simultaneously with the consummation by the Parent of the initial public
offering of shares of its capital stock.
SECTION 17. Enforcement; Severability; Etc. It is the desire and
intent of the parties that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
SECTION 18. Remedies. The Executive acknowledges and understands
that the provisions of this Agreement are of a special and unique nature, the
loss of which cannot be adequately compensated for in damages by an action at
law, and that the breach or threatened breach of the provisions of this
Agreement would cause the Company irreparable harm. In the event of a breach or
threatened breach by the Executive of the provisions of this Agreement, the
Company shall be entitled to an injunction restraining him from such breach.
Nothing contained in this Agreement shall be construed as prohibiting the
Company from or limiting the Company in pursuing any other remedies available
for any breach or threatened breach of this Agreement.
SECTION 19. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by
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nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to it at:
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
with a copy to:
First Atlantic Capital, Ltd.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000; and
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
if to the Executive, to him at:
00 Xxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
with a copy to:
Saperston & Day, P.C.
Attorneys At Law
1100 M&T Center
Three Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000;
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (i) in the
case of personal delivery, on the date of such delivery, (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (iii) in the case of telecopy transmission, when received, and (iv)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.
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SECTION 20. Binding Agreement; Benefit. Subject to Section 25
hereof, the provisions of this Agreement will be binding upon, and will inure to
the benefit of, the respective heirs, legal representatives, successors and
assigns of the parties.
SECTION 21. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of New York
(without giving effect to principles of conflicts of laws).
SECTION 22. Waiver of Breach. The waiver by either party of a breach
of any provision of this Agreement must be in writing and shall not operate or
be construed as a waiver of any other breach.
SECTION 23. Entire Agreement; Amendments. This Agreement contains
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings between the parties
with respect thereto, including, without limitation, the Agreement dated as of
July 22, 1992 by and between Quality Foods and the Executive. This Agreement may
be amended only by an agreement in writing signed by the parties.
SECTION 24. Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 25. Assignment. This Agreement is personal in its nature and
the parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that if the
Executive fails to consent to the assignment of this Agreement, such failure
will be deemed a Voluntary Termination of this Agreement. Notwithstanding the
foregoing, (a) the parties acknowledge that the Company may, at any time, assign
this Agreement to any of its affiliates (determined on the date hereof); and (b)
in the event of a Change of Control (as hereinafter defined) of the Company,
provided the Executive consents to the assignment of this Agreement to the
Company's successor, the Executive shall be entitled, in his sole discretion, to
terminate the Employment Period at any time after nine months shall have elapsed
from the date of the change of control (provided the Executive shall have been
continuously employed by the Company during such nine-month period), in which
case such termination shall be deemed a Termination Without Cause. As used
herein, "Change of Control" shall mean the failure of Atlantic Equity Partners,
L.P. (together with its affiliates determined on the date hereof) to own,
directly or indirectly, beneficially or of record, in excess of 50% of the
issued and outstanding voting securities of the Company having the ordinary
power to elect directors.
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SECTION 26. Counterparts. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 27. Gender. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
SECTION 28. Attorney Fees. (a) In connection with any action, suit
or proceeding arising under or in connection with this Agreement, the prevailing
party in such action, suit or proceeding shall be entitled to the reasonable
attorneys' fees incurred in connection with such action, suit or proceeding.
(b) The Company agrees to pay the reasonable fees and expenses of
Saperston & Day, P.C. (not to exceed $7,500) in connection with negotiation of
this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the date first written above.
CFP HOLDINGS, INC.
By:_____________________________
Name:
Title:
________________________________
Xxxxxx X. Xxxxx
