CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
198
EXHIBIT 10.6
EBITDA OVERVIEW COMMITTEE AGREEMENT
This EBITDA Overview Committee Agreement (the "Agreement") is made and
entered into as of this 26th day of January, 2001, by and between Xxxxxx
Canning Company, a Colorado corporation ("Xxxxxx"), and Hoopeston Foods Denver
Corp., a Delaware corporation ("HFDC").
Recitals
X. Xxxxxx owns and operates food production, canning and warehousing facilities
located at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxx (the "Plant").
B. Concurrent with the execution of this Agreement, Xxxxxx and HFDC are also
entering into various other agreements listed on Schedule 1 hereto (the "Other
Agreements"), concerning HFDC leasing the Plant from Xxxxxx and thereafter
running and operating the Plant and the business conducted at the Plant.
C. One of the Other Agreements is a Lease Override Agreement (the "Override
Agreement"), whereby HFDC has agreed to pay to Xxxxxx, as additional
consideration for the Other Agreements, [TEXT OMITTED PURSUANT TO THE
REGISTRANT'S APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406] (as defined
in the Override Agreement).
D. The parties are entering into this Agreement to set forth various additional
agreements with respect to the Override Agreement and the EBITDA payment to be
made to Xxxxxx.
Agreement
NOW, THEREFORE, in consideration of the Other Agreements and the mutual
agreements set forth herein, and other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
agree as follows:
1. HFDC will operate the Plant and its business in a competent manner in
accordance with ordinary prudence and good industry standards and practices, and
pursuant to an approved annual budget (the "EBITDA Plan"). Attached hereto as
Schedule 2 is the EBITDA Plan for the remainder of fiscal year 2001 and fiscal
year 2002. Any changes to the current EBITDA Plan and all EBITDA Plans for
subsequent years shall be approved by the EBITDA Overview Committee pursuant to
2 below.
2. The EBITDA Overview Committee will initially consist of Xxxx Xxxxxx, Xxx
Xxxxxxxxxx and Xxx Xxxxx. Xxxx Xxxxxx will act as Secretary at the Committee
meetings (with Xxxx Xxxxx acting as assistant secretary for purposes of
attending meetings held in Denver). All decisions by the EBITDA Overview
Committee shall be by unanimous agreement of all three members. If a decision
of the Committee cannot be reached because of lack of unanimous agreement, any
member of the Committee may submit such matter to resolution by binding
arbitration in accordance with paragraph 5 below. The Committee shall meet at
least 30 days prior to the start of each fiscal year for the purpose of
reviewing and approving the EBITDA Plan for the upcoming year. The Committee
shall also meet monthly (in person or via teleconference) as
soon as the financial reports are sent to HFDC's senior lender to discuss the
monthly and year-to-date EBITDA performance.
3. The Committee may adopt such rules and operating procedures as may be
desirable or necessary for the Committee to carry out its functions hereunder.
4. The Committee will consider any recommendations from HFDC's management
regarding the reinvestment of EBITDA in the business for equipment or other
expenditures.
5. If the Committee cannot reach agreement on any matter, then that matter
shall be submitted to final and binding arbitration in accordance with the
Rules of the American Arbitration Association (the "Rules"). The site of the
arbitration shall be Denver, Colorado if HFDC initiates the arbitration, and
Chicago, Illinois if Xxxxxx initiates the arbitration. One arbitrator appointed
in accordance with the Rules shall hear the matter.
6. HFDC will cause Xxxx Xxxxxx to devote sufficient time to properly manage
the business that is being conducted at Plant.
7. In addition to other legitimate deductions, the rent expense under the real
estate lease for the Plant along with the payments under the employment
contracts for the four Pages are specifically recognized as legitimate
deductions in the calculation of EBITDA. HFDC shall assume the four Page
employment contracts, with the incentive sections deleted (all of such
employment contracts expire on August 31, 2001, pursuant to their terms).
8. Effective as of the day immediately preceding the closing of the
transactions contemplated by this Agreement and the Other Agreements (the
"Closing"), Xxxxxx shall terminate all of its employees who work at the Denver
processing plant (the "Plant") or are in any way related to the business
conducted at the Plant. HFDC shall have the right, but not the obligation, to
offer employment to, and hire, certain of these former Xxxxxx employees
selected by HFDC. Prior to the Closing, HFDC shall furnish Xxxxxx with a list
of all such employees of Xxxxxx it desires to hire (attached hereto as Schedule
3). HFDC shall hire those employees listed on Schedule 3 with substantially the
same pay and benefits they enjoyed at Xxxxxx and HFDC will assume any vacation
liability associated with those employees listed on Schedule 3. HFDC shall have
no obligations whatsoever, whether financial or otherwise, to those former
employees of Xxxxxx who are not hired by HFDC and Xxxxxx shall be solely
responsible for the administration of all benefits, including, without
limitation, the continuation of insurance coverages required pursuant to
applicable law and/or Xxxxxx' policies with respect to all Xxxxxx employees who
are not hired by HFDC.
9. Former employees of Xxxxxx who are hired by HFDC as of the Closing shall be
given credit for service with Xxxxxx for the purposes of determining vacation
time as an employee of HFDC. At the Closing, Xxxxxx shall give a cash credit
(the "Cash Credit") to HFDC for the vacation time accrued by such employees of
Xxxxxx who are hired by HFDC. The Cash Credit shall be a dollar-for-dollar
credit against the payments to be made by HFDC to Xxxxxx pursuant to the Lease
Override Agreement. At the Closing, Xxxxxx shall provide an accounting of the
vacation accruals for each of those former Xxxxxx employees listed on Schedule
3.
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10. This Agreement shall be governed by and construed in accordance with
Colorado law.
11. This Agreement may not be amended except in a writing signed by both
parties.
The parties have entered into and executed this Agreement as of
the date first set forth above.
Xxxxxx Canning Company
By: /s/ Xxxxx X. Xxxxx
---------------------------
Title: CEO
------------------------
Hoopeston Foods Denver Corp.
By: /s/ Xxxx X. Xxxxxx
---------------------------
Title: Pres/CEO
------------------------
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