EXHIBIT B
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and among NORTHLAND CRANBERRIES, INC., a
Wisconsin corporation ("Northland"), FARGO ACQUISITION CO., a New Jersey
corporation and a wholly-owned subsidiary of Northland ("Company") and
XXXXXXX X. XXXXXXX ("Executive"), dated as of July 1, 1998.
R E C I T A L S
A. Minot Food Packers, Inc., a New Jersey corporation
("Minot") has been engaged in the business of producing, packaging,
marketing, distributing and selling under Minot's brand and customers'
private labels (i) cranberry-based products, cranberry sauces, cranberry
juice cocktails and blended cranberry drinks, (ii) apple juice and cider
products and (iii) other shelf-stable juices and drinks and is engaged in
the co-packing of such products for other branded producers (the
"Business").
B. Northland, Minot and Executive are parties to an Asset
Purchase Agreement ("Purchase Agreement"), dated May 20, 1998, pursuant to
which Northland agreed to purchase substantially all of the assets and
Business of Minot.
C. Pursuant to the Purchase Agreement and an Assignment and
Assumption of Agreement dated June 29, 1998, Company assumed the rights
and obligations of Northland to purchase the assets and Business of Minot.
D. Following the Closing (as such term is defined in the
Purchase Agreement) on the date hereof, the Business will be conducted by
Company.
E. Prior to the Closing Executive has been an executive
officer of Minot and, as a result, possesses an intimate knowledge of the
Business.
F. Northland recognizes that Executive's contribution to the
Business has been substantial and desires to assure Executive's continued
employment with Company in an executive capacity.
G. Executive desires to be employed by Company on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto covenant and agree as follows:
1. Employment Period. Company shall employ Executive, and
Executive shall serve Company, on the terms and conditions set forth in
this Agreement, for a period commencing at the Closing (as that term is
defined in the Purchase Agreement) and ending on the date immediately
preceding the third anniversary of the Closing (the "Employment Period").
2. Position and Duties. (a) The Executive shall serve as
President of Company, with such duties and responsibilities as are
customarily assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may from time to time be
assigned to him by the Chief Executive Officer of Company and the Board of
Directors of Company (the "Board").
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which Executive is entitled, Executive shall
devote full business time and effort during normal business hours to the
business and affairs of Company and, to the extent necessary to discharge
the responsibilities assigned to Executive under this Agreement, use
Executive's best efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for
Executive to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with
the performance of Executive's responsibilities as an employee of Company
in accordance with this Agreement.
(c) During the Employment Period, Executive shall have the
right to perform his duties under this Agreement in Bridgeton, New Jersey
and shall not be required to relocate to any other geographic area without
his consent.
3. Compensation. (a) Salary. Company shall pay to Executive
an annual salary ("Annual Salary") of $190,000. The amount of the Annual
Salary shall be reviewed not less frequently than once a year during the
Employment Period by the Board and, at the sole discretion of the Board,
shall be subject to upward adjustment consistent with the salary reviews
and salary adjustments of senior executive officers of Northland and the
performance of Executive under this Agreement. The Annual Salary shall be
payable in accordance with Company's regular payroll practice for its
senior executives, as in effect from time to time, but not less frequently
than monthly.
(b) Additional Benefits. During the Employment Period: (A)
Northland shall enable Executive to participate in all applicable
incentive, savings and retirement plans, practices, policies and programs
made available to executives of Northland (including, without limitation,
the Amended 1995 Stock Option Plan, the 401(k) Plan and participation in
Northland's Incentive Bonus Plan ("Bonus Plan") at the 50% level ("50%
Level"), to the same extent and subject to the same terms and conditions
as comparable senior executives of Northland (such additional benefits
hereinafter referred to as "Additional Compensation"), and (B) Northland
shall cause Executive and/or Executive's family, as the case may be, to be
eligible for immediate participation in, and to receive all benefits
under, all applicable welfare benefit plans, practices, policies and
programs made available to executives of Northland, other than severance
plans, practices, policies and programs but including, without limitation,
medical, dental, group life insurance and accidental death and travel
accident insurance plans and programs (the "Benefit Programs"), to the
same extent as eligible executives of Northland. Without limiting the
generality of the foregoing, Executive shall be eligible for an option
grant under the Amended 1995 Stock Option Plan at the time the committee
administering such Plan next grants options generally to senior management
of Northland. The number of shares subject to such an option grant that
will be recommended for award to Executive by such committee shall be
within the range of amounts of shares granted to other employees of
Northland qualifying as participants at the 50% Level under the Bonus Plan
and any such grant shall be at such time and shall be on grant terms
comparable to the terms applicable to such other grantees.
(c) Expense Reimbursement. Company shall reimburse Executive
for all reasonable and documented expenses incurred by Executive in the
performance of Executive's duties under this Agreement in accordance with
the policies and procedures established by the Board for its senior
executive officers.
(d) Automobile Lease. During the Employment Period, Northland
shall provide Executive with the unrestricted use of a new automobile of
the make and model of his choice; provided such automobile is generally
comparable with the make and model currently provided by Northland to
other similarly situated executive officers of Northland as of the date of
this Agreement. All of the direct and indirect operating and maintenance
expenses associated with Executive's use of such automobile shall be paid
by Northland upon the Executive's request.
(e) Holidays and Vacation. Executive shall be entitled to not
fewer than the number of paid holidays as may be made available annually
to other executives of Northland of a comparable status and shall be
entitled to paid vacation of not less than the greater of (i) the amount
of paid vacation made available annually to other executives of Northland
of comparable status or (ii) five weeks.
4. Termination of Employment. (a) Death or Disability.
Executive's employment shall terminate automatically upon Executive's
death during the Employment Period. Company shall be entitled to
terminate Executive's employment because of Executive's Disability during
the Employment Period. "Disability" means that (i) Executive has been
unable, for a period of 60 consecutive business days, to perform
Executive's duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by Company or its
insurers, and acceptable to Executive or Executive's legal representative,
has determined that Executive's incapacity is total and permanent. A
termination of Executive's employment by Company for Disability shall be
communicated to Executive by written notice, and shall be effective on the
10th day after receipt of such notice by Executive (the "Disability
Effective Date"), unless Executive returns to full-time performance of
Executive's duties before the Disability Effective Date.
(b) By Company. (i) Company may terminate Executive's
employment during the Employment Period with or without Cause. "Cause"
means:
A. the willful and continued failure of Executive
substantially to perform Executive's duties under this Agreement
(other than as a result of physical or mental illness or
injury).
B. illegal conduct or gross misconduct by Executive, in
either case that is willful and results in material and
demonstrable damage to the business or reputation of Company or
Northland.
(c) By Executive. Executive may terminate his employment
hereunder at any time for any reason upon giving the Company written
notice ("Executive Notice of Termination"). The Executive Notice of
Termination shall become effective as specified by the Executive in such
Notice, but not earlier than 30 days after delivery of such Notice to
Company, except in the case of notice for reasons set forth in Section
5(d) below in which case termination of employment may be effective upon
the giving of Notice pursuant to this Section 4(c).
(d) Notice to Executive. Any termination by Company under
Section 4(b) hereof shall be communicated by a written notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under
the provision so indicated or shall state that the termination is without
Cause ("Company Notice of Termination"). The Company Notice of
Termination shall become effective on the date such Notice is given unless
otherwise specified by Company in such Notice; provided, however, that no
such Notice shall be given for Cause under clause (A) of Section 4(b)
until Company has notified Executive in writing of the facts and
circumstances upon which such Notice is to be given and Executive has not
satisfactorily addressed the concerns set forth in such Notice within a
period of 30 days after its receipt.
(e) Date of Termination. The "Date of Termination" means the
date of Executive's death, the Disability Effective Date, or the date on
which an Executive Notice of Termination or Company Notice of Termination
becomes effective as provided in Section 4(c) and Section 4(d),
respectively, is given.
5. Obligations of Company upon Termination. (a) Death and
Disability. If Executive's employment is terminated by reason of
Executive's death or Disability during the Employment Period, Company
shall pay to Executive or, in the case of Executive's death, to
Executive's designated beneficiaries (or, if there is no such beneficiary,
to Executive's estate or legal representative), in a lump sum in cash
within 30 days after the Date of Termination, the sum of the following
amounts (the "Accrued Obligations"): (1) any portion of Executive's
Annual Salary through the Date of Termination that has not yet been paid;
(2) an amount representing the Additional Compensation for the period that
includes the Date of Termination, computed by assuming that the amount of
all such Additional Compensation would be equal to the maximum amount of
such Additional Compensation that Executive would have been eligible to
earn for such period, and multiplying that amount by a fraction, the
numerator of which is the number of days in such period through the Date
of Termination, and the denominator of which is the total number of days
in the relevant period; and (3) any accrued but unpaid Additional
Compensation and vacation pay. In addition, Company at its expense will
continue to provide for a period of not less than 180 days all Benefit
Programs in which Executive and his dependents are then participating for
the continued benefit of Executive and his dependents, in the case of the
Disability of Executive, or the dependents of Executive, in the case of
the death of Executive.
(b) By Company With Cause; By Executive Without Justification.
If Executive's employment is terminated by Company with Cause during the
Employment Period, Company shall pay Executive the Annual Salary through
the Date of Termination to the extent not yet paid, and Company shall have
no further obligations under this Agreement. If Executive voluntarily
terminates employment during the Employment Period for reasons other than
as provided in Section 5(d), the Company shall pay the Accrued Obligations
to Executive in a lump sum in cash within 30 days of the Date of
Termination, and Company shall have no further obligations under this
Agreement.
(c) By Company Without Cause. If Company shall terminate
Executive's employment without Cause, Company shall pay to Executive the
Accrued Obligations to the extent not yet paid plus, in lieu of any
further salary payments to Executive for periods subsequent to the Date of
Termination, Company shall pay as liquidated damages, or severance pay, or
both to Executive on or prior to the fifth day following the Date of
Termination, a lump-sum amount equal to the Annual Salary in effect as of
the Date of Termination multiplied by the number of years remaining in the
Employment Period, with each remaining month or portion thereof being
1/12th of one year (the "Termination Payment"). For purposes of
calculating the lump-sum payment due Executive pursuant to this paragraph,
any partial month remaining in the term of employment shall be deemed a
full month. In addition, Company at its expense will continue to provide
to Executive and his dependents all Benefit Programs in which Executive
and his dependents are then participating for a period equal to the
greater of (i) the number of days remaining in the Employment Period or
(ii) 180 days.
(d) By Executive with Justification. If Executive voluntarily
terminates employment during the Employment Period as a result of a
decision by Company to terminate the Business or as a result of a material
breach by Company or Northland of its obligations under this Agreement,
then Executive shall be entitled to the payments and benefits provided in
Section 5(c) above.
6. Limitation on Payments. (a) Notwithstanding any other
provision of this Agreement, if any portion of the Termination Payment, or
any other payment under this Agreement, or under any other agreement with
or plan of Company or its affiliates (in the aggregate "Total Payments"),
would constitute an "excess parachute payment," then the Total Payments to
be made to Executive shall be reduced such that the value of the aggregate
Total Payments that Executive is entitled to receive shall be one dollar
less than the maximum amount which Executive may receive without becoming
subject to the tax imposed by Section 4999 (or any successor provision) of
the Internal Revenue Code of 1986, as amended (the "Code") or which
Company may pay without loss of deduction under Section 280G(a) of the
Code (or any successor provision). For purposes of this Agreement, the
terms "excess parachute payment" and "parachute payments" shall have the
meanings assigned to them in Section 280G of the Code (or any successor
provision), and such "parachute payments" shall be valued as provided
therein. Present value for purposes of this Agreement shall be calculated
in accordance with Section 1274(b)(2) of the Code (or any successor
provision). Within fifteen days following the Date of Termination or
notice by Company to Executive of its belief that there is a payment or
benefit due Executive which will result in an excess parachute payment as
defined in Section 280G of the Code (or any successor provision),
Executive and Company, at Company's expense, shall obtain the opinion
(which need not be unqualified) of nationally recognized tax counsel
selected by Company's independent auditors and acceptable to Executive in
his sole discretion (which may be regular outside counsel to Company),
which opinion sets forth (i) the amount of the Base Period Income, (ii)
the amount and present value of Total Payments and (iii) the amount and
present value of any excess parachute payments determined without regard
to the limitations of this paragraph (a) of Section 6. As used in this
Agreement, the term "Base Period Income" means an amount equal to
Executive's "annualized includible compensation for the base period" as
defined in Section 280G(d)(1) of the Code (or any successor provision).
For purposes of such opinion, the value of any noncash benefits or any
deferred payment or benefit shall be determined by Company's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code (or any successor provisions), which determination shall be
evidenced in a certificate of such auditors addressed to Company and
Executive. Such opinion shall be dated as of the Date of Termination and
addressed to Company and Executive and shall be binding upon Company and
Executive. If such opinion determines that there would be an excess
parachute payment, any payment or benefit determined by such counsel to be
includible in Total Payments shall be reduced or eliminated as specified
by Executive in writing delivered to Company within thirty days of his
receipt of such opinion or, if Executive fails to so notify the Company,
then as Company shall reasonably determine, so that under the bases of
calculations set forth in such opinion there will be no excess parachute
payment. If such legal counsel so requests in connection with the opinion
required by this paragraph (a) of Section 6, Executive and Company shall
obtain, at Company's expense, and the legal counsel may rely on in
providing the opinion, the advice of a firm of recognized executive
compensation consultants as to the reasonableness of any item of
compensation to be received by Executive. If the provisions of Sections
280G and 4999 of the Code (or any successor provisions) are repealed
without succession, then this paragraph (a) of Section 6 shall be of no
further force or effect.
(b) If, notwithstanding the provisions of paragraph (a) of
Section 6, it is ultimately determined by a court or pursuant to a final
determination by the Internal Revenue Service that any portion of Total
Payments is subject to the tax (the "Excise Tax") imposed by Section 4999
of the Code (or any successor provision), Company shall pay to Executive
an additional amount (the "Gross-Up Payment") such that the net amount
retained by Executive after deduction of any Excise Tax and any interest
charges or penalties in respect of the imposition of such Excise Tax (but
not any federal, state or local income tax) on the Total Payments, and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this paragraph (b) of Section 6, shall be equal to the
Total Payments. For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rates of taxation in the state and locality of
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
7. Successors. (a) This Agreement is personal to Executive
and, without the prior written consent of Company, shall not be assignable
by Executive. This Agreement shall inure to the benefit of and be
enforceable by Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company expressly to
assume and agree to perform this Agreement in the same manner and to the
same extent that Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean both Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
8. Miscellaneous. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New Jersey,
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. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) All notices and other communications under this Agreement
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 Executive:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxx X. Xxxxx, III, Esq.
Xxxxxx, Xxxxx and Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
If to Northland or Company:
Northland Cranberries, Inc.
000 Xxxxx Xxxxxx Xxxxx
P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
Attention: Xxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxx
c/o Foley & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 8. Notices and
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be
held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall
remain valid and enforceable and continue in full force and effect to the
fullest extent consistent with law.
(d) Notwithstanding any other provisions of this Agreement,
Company may withhold from amounts payable under this Agreement all
federal, state, local and foreign taxes that are required to be withheld
by applicable laws or regulations.
(e) Executive's or Company's failure to insist upon strict
compliance with any provisions of, or to assert any right under, this
Agreement shall not be deemed to be a waiver of such provision or right or
of any other provision of or right under this Agreement.
(f) The rights and benefits of Executive under this Agreement
may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by Executive to anticipate, alienate,
assign, sell, transfer, pledge, encumber or charge the same shall be void.
Payments hereunder shall not be considered assets of Executive in the
event of insolvency or bankruptcy.
(g) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
(h) This Agreement has been jointly drafted by the respective
representatives of Company and Executive and no party shall be considered
as being responsible for such drafting for the purpose of applying any
rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement.
(i) If Company fails to pay any amount due to Executive under
the terms of this Agreement within the time periods provided herein for
such payment, Company will pay to Executive, in addition to any other sums
required to be paid under this Agreement, (i) interest on any amount
remaining unpaid from the date payment is required under this Agreement
until payment is received by Executive at the prime rate published daily
in The Wall Street Journal and (ii) the amount necessary to reimburse
Executive for all reasonable expenses incurred by Executive in enforcing
any of the obligations of Company under this Agreement, it being the
intent of the parties that Executive not incur any expenses associated
with enforcing his rights under this Agreement because the cost and
expense thereof would substantially detract from the benefits intended to
be extended to Executive hereunder.
9. Effectiveness of Agreement. The effectiveness of this
Agreement is subject to Closing (as defined in the Purchase Agreement).
If for any reason the Closing does not take place, this Agreement shall be
null and void, ab initio.
10. Northland Guaranty. This Agreement shall inure to the
benefit of, and be binding upon, Northland; and Northland hereby
guarantees the full and prompt payment and performance by Company of its
obligations to Executive under this Agreement.
11. Enforcement. Venue for enforcement of the terms and
conditions of this Agreement shall be the federal or state courts of the
State of New Jersey with service of process by notice as provided herein.
IN WITNESS WHEREOF, Executive, Company and Northland have duly
executed this Agreement under seal as of the date first above written.
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
FARGO ACQUISITION CO.
("COMPANY")
By /s/ Xxxx Xxxxxxxxxxx
Xxxx Xxxxxxxxxxx
Chairman of the Board and
Chief Executive Officer
NORTHLAND CRANBERRIES, INC.
("NORTHLAND")
By /s/ Xxxx Xxxxxxxxxxx
Xxxx Xxxxxxxxxxx
Chairman of the Board and
Chief Executive Officer
