Exhibit 10.35
EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of the
2nd day of September 2005, by and among Birds Eye Holdings, LLC, a
Delaware limited liability company (“BE Holdings”), and Xxxx Xxxxxxxx (the “Executive”).
WHEREAS, the BE Holdings
desires that Executive serve as an employee of Birds Eye Foods, Inc., a
Delaware corporation having its principal executive offices in Rochester, New
York (the “Company”) and an indirectly wholly-owned subsidiary of BE Holdings,
and the Executive is willing to accept employment with the Company, all on the
terms and conditions set forth below;
NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Employment Period. Subject
to the terms and conditions of this Agreement, including Section 3, BE
Holdings agrees to cause the Company to employ the Executive, and the Executive
hereby accepts employment with the Company, for the period commencing on the September 8,
2005 (the “Effective Date”) and ending as provided in the next sentence (such
period, the “Employment Period”). The Employment Period shall end on the fourth
anniversary of the date hereof; provided, that the Employment Period shall
automatically be renewed for successive one-year periods, unless the Company or
Executive gives the other party written notice of the election not to renew the
Employment Period at least 90 days prior to the expiration of the Employment
Period; provided, however, the Employment Period shall be subject to early
termination as provided in Section 3 hereof.
2. Terms of Employment.
(a) Position and Duties.
During the Employment Period, the Executive shall serve as President and Chief
Executive Officer of the Company with the appropriate authority, duties and
responsibilities as are customarily attendant to such position at other
similarly situated companies with significant private equity ownership,
subject, in all instances, to the general supervisory power of the Company’s
board of directors (the “Board”) under applicable corporate law. During the
Employment Period, the Executive shall serve as a member of the management
committee of BE Holdings, the board of directors of Birds Eye Holdings, Inc.
(“BE Inc.”) and the Board as its Chairman. Upon the termination or expiration
of the Employment Period, Executive shall resign as a member of the management
committee, board of directors or any equivalent body of BE Holdings and its subsidiaries
(including the Company and BE Inc.), as the case may be and such obligation to
resign shall survive the termination of this Agreement.
(i) During the
Employment Period, Executive shall report solely and directly to the Board and
excluding any periods of vacation and sick leave to which the Executive is
entitled, Executive agrees to devote substantially all of his business time and
attention to the business and affairs of the Company and to use the Executive’s
reasonable best efforts to perform faithfully and efficiently the duties and
responsibilities assigned to Executive
hereunder; provided, however,
that Executive may serve as a member of the board of directors of one other
corporation or other entity (and on any committee thereof) if approved by the
Board.
(b) Compensation.
(i) Annual Base Salary.
Effective immediately, and during the Employment Period, the Executive shall
receive an annual base salary (as in effect from time to time, the “Annual Base
Salary”) of at least $600,000, which Annual Base Salary shall be payable in
regular installments in accordance with the Company’s general payroll
practices. The Annual Base Salary will be subject to periodical review and may
be increased in accordance with Company policy. Once increased, the Annual Base
Salary cannot be decreased.
(ii) Annual Bonus.
During the Employment Period, the Executive shall participate in such bonus
arrangements as may be approved by the Compensation Committee of the Board (the
“Compensation Committee”) (the aggregate of all payments made under such bonus
arrangements during any fiscal year being herein referred to as the “Annual
Bonus”). Executive’s “Target Bonus” for any fiscal year will be no less than
$350,000 and shall be payable upon the achievement of the Bonus Criteria (as
defined below) for such fiscal year and such other factors as may be determined
by the Board. In addition, with respect to each fiscal year during the
Employment Period, Executive shall have the opportunity to earn an additional
bonus of at least $400,000 upon the achievement of the Superior Bonus Criteria
(as defined below) for such fiscal year and such other factors as may be
determined by the Board that are communicated to Executive in accordance with
the next sentence. Within the first three months of any fiscal year during the
Employment Period (other than with respect to the fiscal year ending June 30,
2006 (“Fiscal 2006”)), the Board shall in good faith, and in consultation with
Executive, establish and communicate to Executive (x) EBITDA and net debt
reduction targets for the Company and its subsidiaries for such fiscal year
(collectively, the “Bonus Criteria”) and (y) additional extraordinary
performance targets for the Company and its subsidiaries that are reflective of
extraordinary performance (collectively, the “Superior Bonus Criteria”), and
any additional factors or objectives related to the achievement of such
additional bonus. The communication to Executive referred to in the preceding
sentence may be in the form of materials distributed to him as a member of the
Board. The Bonus Criteria for any fiscal year shall be adjusted in good faith
by the Board if the Company or any subsidiary engages in any significant
acquisition or disposition outside the ordinary course of business during such
fiscal year. Notwithstanding the foregoing, subject to Executive’s, continued
employment, Executive shall be entitled to a guaranteed bonus for Fiscal 2006
of $350,000 pro-rated for the actual number of days the Executive was employed
by the Company during Fiscal 2006. The Annual Bonus shall be paid within 30
days of receipt by the Company of the audited financial statements for the
fiscal year of the Company to which it relates. As used herein, “EBITDA” shall
mean the Company’s and its subsidiaries’ earnings before interest, taxes,
depreciation and amortization calculated on a consolidated basis consistent
with the Company’s past practice of calculating “operating EBITDA” for internal
reporting purposes.
(iii) Employee Benefit
Plans. During the Employment Period, except as otherwise expressly provided
herein, the Executive shall be entitled to participate in all compensation,
incentive, employee benefit, welfare and other plans and programs and fringe
benefits (collectively, “Employee Benefit Plans”) on a basis no less favorable
than that are
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generally provided to any
other senior executive officer of the Company. In addition, within 60 days of
the Effective Date, the Company shall, at its expense, procure a term life
insurance policy covering Executive’s life during the Employment Period in the
face amount of up to $1,500,000 subject to the total cost of such insurance to
the Company being no more than $12,000 per annum, payable to one or more beneficiaries
designated by Executive and Executive shall co-operate and make himself
available for any medical examination reasonably required by the Company in
connection therewith.
(iv) Residence in
Rochester. Executive shall establish a permanent residence in the Rochester, NY
area by purchasing a residence as soon as reasonably practicable after the
Effective Date but in any event within six months of the date of this Agreement
and in connection therewith shall be entitled to an one-time expense reimbursement
of reasonable costs and expenses incurred by Executive for purchasing a new
residence in the Rochester, NY area. Such reimbursement shall, in any event,
include (x) reasonable costs and fees incurred in connection with the
search for and purchase of a new residence in the Rochester, New York
metropolitan area, including a reasonable number of house hunting trips for
Executive and his spouse (which shall include air fare, lodging, meals and
other incidental expenses) (other than mortgage discount points) and, the
physical move of Executive’s belongings and family (if and to the extent
applicable) and (y) for a period of six (6) months following the
Effective Date (or, if earlier, until Executive purchases a residence in
Rochester, NY) (A) temporary living expenses of up to $5,000 per month and
(B) two (2) airline tickets per month for travel between Rochester
and Executive’s place of residence. During the Employment Period, Executive
shall perform his duties hereunder during the business week of the Company
(which shall include every business day commencing on Monday and ending on
Friday of each week) at the corporate headquarters of the Company at Rochester,
New York (except when Executive is engaged in business travel in connection
with his responsibilities hereunder).
(v) Vacation. During the
Employment Period, Executive shall be entitled to four (4) weeks of paid
vacation during each calendar year, pro-rated, in the case of the 2005 calendar
year, for the actual number of days the Executive was employed by the Company
during the 2005 calendar year. Executive may carry over accrued, unused
vacation to subsequent calendar years but in no event shall Executive be
entitled to utilize more than six (6) weeks of vacation time in any
calendar year.
(c) Indemnification and
Insurance. Executive shall be entitled to indemnification, to the fullest
extent permitted by law, as a director or officer of the Company (including
advancement of litigation expenses upon executing a customary undertaking in
favor of the Company to return such advances to the extent it is finally
determined that Executive is not entitled to indemnification) in accordance
with the certificate of incorporation of the Company. The Company shall insure
Executive, or shall cause Executive to be insured, under directors’ and
officers’ liability insurance at the same level as other directors and officers
of the Company are covered from time to time during the Employment Period and a
period of six years thereafter.
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3. Termination of Employment.
(a) Death, Disability or
Non-renewal. The Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period or upon non-renewal of the
Employment Period by the Company or Executive as provided in Section 1
above. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice in
accordance with Section 8(c) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment
with the Company shall terminate effective on the receipt of such notice by the
Executive (the “Disability Effective Date”). For purposes of this Agreement, “Disability”
shall mean a determination by the Board in its good faith judgment with input
from appropriate medical personnel that Executive is unable to substantially
perform his job responsibilities as a result of chronic illness, physical,
mental or any other disability for a period of 180 days or more in any 365
consecutive day period. The Executive shall co-operate and make himself
available for any medical examination reasonably required by the Company with
respect to any determination of the Disability of the Executive.
(b) With or Without
Cause. The Company may terminate the Executive’s employment during the
Employment Period with or without Cause. Any termination of the Executive’s
employment during the Employment Period for Cause shall be made by providing a
Notice of Termination within sixty (60) days of the Board being informed of the
occurrence of the relevant event or events constituting Cause. For purposes of
this Agreement, “Cause” shall mean:
(i) Executive is
indicted or charged with, or pleads guilty or nolo contendere to, (A) a
felony or (B) a crime involving moral turpitude that is either materially
detrimental to the Company or that which brings the Company into public
disgrace or disrepute;
(ii) in carrying out his
duties hereunder, Executive engages in conduct that constitutes gross neglect
or willful misconduct that, in either case, results in material economic harm
or is materially detrimental to the Company;
(iii) Executive breaches
any material provision of the Employment Agreement (including Section 5
hereof), and such breach has not been cured prior to 30 days following notice
from the Company;
(iv) Executive engages
in willful gross misconduct in the operation of the Company or in connection
with Company activities that brings the Company into public disgrace or
disrepute;
(v) Executive’s repeated
refusal to perform duties or responsibilities as reasonably directed by the
Board; or
(vi) Executive engages
in willful misconduct resulting in or intended to result in direct personal
gain to Executive at the Company’s expense.
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(c) Good Reason. The
Executive’s employment may be terminated by the Executive for Good Reason. For
purposes of this Agreement, “Good Reason” shall mean a termination by Executive
of his employment on thirty (30) days’ written notice given by him to the
Company following the occurrence of any of the following events, which notice
shall be given within sixty (60) days following Executive becoming aware of
such occurrence, without his express prior written consent, unless all grounds
for termination shall have been fully cured prior to thirty (30) days after he
gives notice to the Company requesting cure:
(i) any failure of the
Company to continue Executive as President and Chief Executive Officer of the
Company and as Chairman of the Board provided, that after a Change of Control
(as defined below), failure of the Executive to be appointed or nominated to
the board of directors of a successor shall not constitute “Good Reason”;
(ii) any material
diminution in Executive’s responsibilities or authorities under the Employment
Agreement; the appointment of another person whose duties are inconsistent with
Executive’s role as Chief Executive Officer and Chairman of the Board; or the
assignment to Executive of duties that are materially inconsistent with, or
materially impair his ability to perform, the duties then assigned to him; or
any change in the reporting structure so that Executive is required to report
to any person other than the Board; provided that within six months of a Change
in Control, the Company shall have the flexibility to appoint Executive to a
reporting relationship different from that which existed prior to the Change in
Control, to make immaterial changes in Executive’s duties (which changes in the
aggregate shall not be material), or to change Executive’s title provided that
Executive shall not have the stature less than that of a Divisional President,
and it is understood that equivalent positions may have different titles;
provided further that in no event shall any diminution of position, authority,
duties or responsibilities of the Executive resulting solely from the consummation
of one or more dispositions of assets or business lines constitute “Good Reason”
hereunder so long as subsequent to any such disposition the Company’s primary
business continues to be the marketing and sale of branded frozen vegetable
products;
(iii) if as a condition
to his continued employment, Executive’s principal place of work is relocated
more than 75 miles from the location of the current corporate headquarters of
the Company in Rochester, New York and Pittsburgh, PA other than any relocation
effected pursuant to a recommendation by Executive;
(iv) subject to the
terms and conditions of that certain letter agreement dated as of the date
hereof between BE Holdings and Executive, failure by BE Holdings to issue to
Executive the limited liability company units of BE Holdings specified therein
within the time periods specified therein;
(v) any material breach
by the Company of any of its obligations under the Employment Agreement which
has not been cured prior to 30 days following notice from Executive of such
breach; or
(vi) any failure of the
Company to obtain the assumption in writing of its obligations under the
Employment Agreement by any successor to all or substantially all of its
business or assets within thirty (30) days after any reconstruction,
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amalgamation, combination,
merger, consolidation, sale, liquidation, dissolution or similar transaction;
provided that no such assumption shall be required to be obtained in connection
with any dispositions of assets or business lines by the Company or any of its
subsidiaries so long as subsequent to any such disposition the Company’s
primary business continues to be the marketing and sale of branded frozen
vegetable products.
As used herein, “Change in
Control” means the consummation of a transaction, whether in a single
transaction or in a series of related transactions that are consummated
contemporaneously (or consummated pursuant to contemporaneous agreements), with
any other party or parties on an arm’s-length basis, pursuant to which such
party or parties (a) acquire (whether by merger, stock purchase,
recapitalization, reorganization, redemption, issuance of capital stock or
otherwise) more than 50% of the voting stock of the Company or (b) acquire
assets constituting all or substantially all of the assets of the Company and
its subsidiaries on a consolidated basis; provided that nothing in clause (a) or
(b) shall include any dispositions of assets or business lines by the
Company or any of its subsidiaries so long as subsequent to any such
disposition the Company’s primary business continues to be the marketing and
sale of branded frozen vegetable products.
(d) Notice of
Termination. Any termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 8(c) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(e) Date of Termination.
“Date of Termination” means (i) if the Executive’s employment is
terminated by the Company other than for Disability, the date of receipt of the
Notice of Termination or any later date specified therein within 30 days of
such notice, (ii) if the Executive’s employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be, (iii) if
the Executive’s employment is terminated by the Executive, the Date of
Termination shall be thirty days after the giving of such notice by the
Executive provided that the Company may elect to place the Executive on paid
leave for all or any part of such 30-day period and (iv) if the Executive’s
employment is terminated as a result of non-renewal of the Employment Period by
the Company or the Executive pursuant to Section 1, the last day of the
then current Employment Period.
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4. Obligations of the Company
upon Termination.
(a) Death or Disability.
If, during the Employment Period the Executive’s employment shall terminate on
account of death or Disability the Company shall pay to the Executive or his
estate:
(i) the Executive’s
Annual Base Salary through the Date of Termination within 30 days after the
Date of Termination to the extent not theretofore paid; and
(ii) an amount equal to
the product of (x) the Annual Bonus that would have been paid to the
Executive for such fiscal year and (y) a fraction, the numerator of which
is the number of days in the fiscal year in which the Date of Termination
occurs through the Date of Termination and the denominator of which is 365, to
the extent not theretofore paid (such amount, the “Accrued Bonus”), at such
time as the Annual Bonus would have been paid in the ordinary course;
(iii) to the extent not
theretofore paid or provided, the Company shall timely pay or provide to the
Executive or his estate or beneficiaries (A) a cash lump sum amount equal
to the product of (x) the Executive’s Annual Base Salary and (y) a
fraction, the numerator of which is the number of Executive’s accrued but
unused vacation days and the denominator of which is 365 (the “Accrued Vacation
Amount”) and (B) any other amounts (including any unreimbursed business
expenses) or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies through the Date of
Termination (the Accrued Vacation Amount and such other amounts and benefits
shall be hereinafter referred to as the “Other Benefits”); and
(b) By the Company for
Cause; By the Executive Other than for Good Reason; Non-Renewal by Executive.
If the Executive’s employment is terminated for Cause, the Executive terminates
his employment without Good Reason during the Employment Period or the
Executive elects to not renew the Employment Period pursuant to Section 1,
this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive (i) his Annual Base
Salary through the Date of Termination to the extent theretofore unpaid and (ii) the
Other Benefits.
(c) By the Company Other
than for Cause, Death or Disability; By the Executive for Good Reason;
Non-Renewal by the Company. If, during the Employment Period the Executive’s
employment is terminated by the Executive for Good Reason or by the Company
other than for Cause, other than on account of death or Disability or as a
result of non-renewal of the Employment Period by the Company pursuant to Section 1:
(i) subject to continued
compliance by the executive of the covenants set forth in Section 5
hereof, the Company shall pay to the Executive:
(A) the Executive’s
Annual Base Salary through the Date of Termination within 30 days after the
Date of Termination to the extent not theretofore paid; and
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(B) the amount equal to
the product of (x) two (2) and (y) the sum of the Executive’s
current Annual Base Salary and Annual Bonus for the preceding fiscal year
(which Annual Bonus shall be deemed to be $350,000 for the purposes of this Section 4(c)(i)(B) if
Date of Termination occurs prior to June 30, 2006), payable during the
period commencing on the Date of Termination and until the termination of the
Restricted Period (as defined below) in regular installments in accordance with
the Company’s general payroll practices;
(ii) the Company shall
provide the Executive with the Other Benefits; and
(iii) the Company shall
provide the Executive continued coverage under the Company’s group health plans
until the earlier of (x) the expiration of the Restricted Period and (y) the
date Executive becomes eligible for comparable coverage under health plans of
any successor employer.
(d) Release. The
severance payments and such benefits to be provided by the Company pursuant to
this Section 4 shall (i) be in lieu of any other payments by the
Company to Executive (other than pursuant to BE Holdings’ limited liability
company agreement) and (ii) be subject to Executive’s execution (other
than in the case of Executive’s death) of a release agreement in substantially
the form attached hereto as Exhibit A,
5. Noncompetition;
Nonsolicitation; Etc. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company’s and its
subsidiaries’ trade secrets and other confidential information concerning the
Company and such subsidiaries (collectively, the “Confidential Information”)
and that his services will be of special, unique and extraordinary value to the
Company and its subsidiaries. Therefore, Executive agrees that:
(a) Noncompetition.
During the Employment Period and until the second anniversary of the date
Executive’s employment with the Company terminates (the “Restricted Period”),
Executive shall not, for himself or on behalf of any other person, firm,
partnership, corporation, or other entity (each a “Person”), engage, directly
or indirectly, as an executive, agent, representative, consultant, partner,
shareholder or holder of any other financial interest in any Person that owns or
operates any business that competes with (i) the frozen vegetable, frozen
fruit, frozen skillet meal or the fruit or pie filling lines of business of the
Company or any subsidiary of the Company (including both branded and
non-branded segments within each line of business) or (ii) any line of
business (other than those currently engaged in by the Company or any of its
subsidiaries) that accounts for 10% or more of the revenues or net operating
cash flows of the Company and its subsidiaries any time during the Employment
Period (collectively, the “Business”). Nothing herein shall prohibit Executive (i) from
being a passive owner of not more than 2% of the outstanding, publicly traded
stock of any class of a corporation engaged in any of the activities described
in the foregoing sentence, so long as Executive has no active participation in
the business of such corporation, (ii) subsequent to the Employment
Period, from being employed by, or otherwise having material association with,
any business that competes materially with the Company in the Business if his
employment or association is with a separately managed and operated division or
Affiliate of such business that does not compete with the Company in any part
of the Business and (iii) subsequent to the Employment Period,
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from serving on the board of
directors of any business that is involved in the Business as an immaterial
part of its overall business (i.e., less than 5% of its overall revenues), so
long as Executive recuses himself fully and completely from all matters
relating to any part of the Business. Executive acknowledges that this
Agreement, and specifically, this Section 5, does not preclude Executive
from earning a livelihood, nor does it unreasonably impose limitations on
Executive’s ability to earn a living. In addition, Executive agrees and
acknowledges that the potential harm to the Company of its non-enforcement
outweighs any harm to Executive of its enforcement by injunction or otherwise.
(b) Nonsolicitation.
During the Restricted Period, Executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any employee of the
Company or its subsidiaries to leave the employ of the Company or its
subsidiaries, or in any way interfere with the relationship between the Company
or any of its subsidiaries and any employee thereof, (ii) hire any person
who was an employee of the Company or any of its subsidiaries within 180 days
prior to the time such employee was hired by Executive, (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation
of the Company or any of its subsidiaries to cease doing business with the
Company or its subsidiaries or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any subsidiary or (iv) directly or indirectly acquire or
attempt to acquire an interest in any business relating to the business of the
Company or any of its subsidiaries and with which the Company or any of its
subsidiaries has entertained discussions or has requested and received
information relating to the acquisition of such business by the Company or its
subsidiaries in the one-year period immediately preceding Executive’s
termination of employment with the Company.
(c) Confidentiality. The
Confidential Information is property of the Company or its subsidiaries.
Executive further agrees that Executive shall not disclose to any unauthorized
Person or use for Executive’s own purposes any Confidential Information without
the prior written consent of the Board, unless and to the extent that the
Confidential Information becomes generally known to and available for use by
the public other than as a result of Executive’s acts or omissions. Executive
shall deliver to the Company on the Date of Termination, or at any other time
as the Company may request, all memoranda, notes, plans, records, reports,
computer tapes, printouts and software and other documents and data (and copies
thereof) embodying or relating to the Confidential Information, Work Product
(as defined below), or the business of the Company or any subsidiaries which
Executive may then possess or control.
(d) Inventions and
Patents. Executive acknowledges that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports and all similar or
related information (whether or not patentable) which relate to the Company’s
or any of its subsidiaries’ actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by Executive while employed by the Company and its
subsidiaries (collectively, the “Work Product”) belong to the Company or such
subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
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(e) Enforcement. The
parties to this Agreement hereby agree and stipulate that (i) the
restrictions contained in this Agreement are reasonable and necessary in order
to protect the Company’s and its subsidiaries’ legitimate business interests
and (ii) in the event of any breach or violation of this Agreement or of
any provision hereof by Executive, the Company and its subsidiaries will have
no adequate remedy at law and will suffer irreparable loss and damage thereby.
The parties hereby further agree and stipulate that in the event of any such
breach or violation, either threatened or actual, the Company’s and its
subsidiaries’ rights shall include, in addition to any and all other rights
available to the Company and its subsidiaries at law or in equity, the right to
seek and obtain any and all injunctive relief or restraining orders available
to it in courts of proper jurisdiction, so as to prohibit, bar, and restrain
any and all such breaches or violations by Executive. The prevailing party to
any legal action, arbitration or other proceeding commenced in connection with
enforcing any provision of this Section 5, including without limitation,
obtaining the injunctive relief provided by this Section 5 shall be
entitled to recover all court costs, reasonable attorneys’ fees, and related
expenses incurred by such party. Executive further agrees that no bond need be
filed in connection with any request by the Company and its subsidiaries for a
temporary restraining order or for temporary or preliminary injunctive relief.
(f) Additional
Acknowledgments. Executive acknowledges that the provisions of this Section 5
are in consideration of: (i) employment with the Company, (ii) the
issuance of certain limited liability company interests of BE Holdings to the
Executive and (iii) additional good and valuable consideration as set
forth in this Agreement. In addition, Executive acknowledges (i) that the
business of the Company and its subsidiaries is national in scope and without
geographical limitation and (ii) notwithstanding the state of
incorporation or principal office of the Company or any of its subsidiaries, or
any of their respective executives or employees (including the Executive), it
is expected that the Company will have business activities and have valuable
business relationships within its industry throughout the United States.
Executive acknowledges that he has carefully read this Agreement and has given careful
consideration to the restraints imposed upon Executive by this Agreement, and
is in full accord as to their necessity for the reasonable and proper
protection of confidential and proprietary information of the Company and its
subsidiaries now existing or to be developed in the future. Executive expressly
acknowledges and agrees that each and every restraint imposed by this Agreement
is reasonable with respect to subject matter, time period and geographical
area.
6. Successors.
(a) This Agreement is
personal to the Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.
(b) This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.
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7. 280G Benefits and Excise
Tax.
(a) Shareholder
Approval. The Company agrees to notify Executive if there is a high probability
that a 280G Event (as defined below) will likely occur with respect to
Executive, and further agrees that, upon written request of the Executive which
written request (if made) shall include an election by the Executive to
condition his receipt of any 280G Benefits (as defined below) on obtaining the
Shareholder Approval (as defined below), prior to its consummating any transaction
that could cause the Company to be considered to have experienced a change
within the meaning of Section 280G(b)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”) (a “280G Event”),
the Company shall use commercially reasonable efforts in seeking Company
shareholder approval, pursuant to the requirements set forth at Q&A 7 of
Reg. section 1.280G-1, of payment of such portions of the payments to be made
to or for the benefit of the Executive contingent on such transaction that
would constitute “parachute payments” within the meaning of Section 280G(b)(2) of
the Code (such payments or benefits, the “280G Benefits” and such shareholder
approval, the “Shareholder Approval”), as requested in writing by Executive.
Executive may (but shall not be required to) elect to condition his receipt of
any such payment on obtaining such Shareholder Approval.
(b) Cutback.
Notwithstanding any provision of this Agreement to the contrary and if the
Shareholder Approval is not obtained (including as a result of the Executive
failing to elect to condition his receipt of any such payment or benefit on
obtaining Shareholder Approval), and if all or any portion of the payment or
benefits received or realized by Executive pursuant to this Agreement either
alone or together with other payments or benefits which Executive receives or
realizes or is then entitled to receive or realize from the Company or any of
its affiliates would constitute a “parachute payment” within the meaning of Section 280G
of the Code and/or any corresponding and applicable state law provision, such
payments or benefits provided to Executive shall be reduced by reducing the
amount of payments or benefits payable to Executive (using any cash payments
first in the manner designated by the Executive) to the extent necessary so
that no portion of such payments or benefits shall be subject to the excise tax
imposed by Section 4999 of the Code and any corresponding and/or
applicable state law provision; provided that such reduction shall only be made
if, by reason of such reduction, Executive’s net after tax benefit shall exceed
the net after tax benefit is such reduction were not made. For purposes of this
paragraph, “net after tax benefit” shall mean the sum of (i) the total
amount received or realized by Executive pursuant to this Agreement that would
constitute a “parachute payment” within the meaning of Section 280G of the
Code and/or any corresponding and applicable state law provision (as
applicable), plus (ii) all other payments or benefits which Executive
receives or realizes or is then entitled to receive or realize from the Company
and any of its affiliates that would constitute a “parachute payment” within
the meaning of Section 280G of the Code and/or any corresponding and
applicable state law provision (as applicable), less (iii) the amount of
federal or state income taxes payable (as applicable) with respect to the
payments or benefits described in (i) and (ii) above calculated at
the maximum marginal individual income tax rate for each year in which payments
or benefits shall be realized by Executive (based upon the rate in effect for
such year as set forth in the Code or applicable State law (as applicable) at
the time of the first receipt or realization of the foregoing), less (iv) the
amount of excise taxes imposed with respect to the payments or benefits
described in (i) and (ii) above by Section 4999 of the Code
and/or any corresponding and applicable state law provision (as applicable).
The calculations of the various amounts required to be made pursuant to this Section 7(b) shall
be made by the Company’s regular independent accounting firm unless Executive
reasonably
11
objects to the use of such
firm, in which event such calculations will be made by a nationally recognized
United States public accounting firm chosen by the parties.
8.
Miscellaneous.
(a) This
Agreement and any dispute, disagreement, or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided therein or performance shall be governed or
interpreted according to the internal laws of the State of New York applicable
to contracts entered into and to be performed solely within such State without
regard to choice of law considerations. The parties hereto hereby waive, to the
fullest extent by applicable law, any right to trial by jury with respect to
any action or proceeding arising out of or relating to this Agreement.
(b) Any
disputes with regard to this Agreement that is not resolved by mutual
agreement, other than as provided in Section 5(e) hereof, shall be
resolved by binding arbitration before the American Arbitration Association (“AAA”)
in New York City pursuant to the rules of AAA. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. ‘SS’’SS’ 1-16 and shall
be conducted in accordance with the rules and procedures of AAA. Any
judgment upon the reward rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator’s decision shall set forth a
reasoned basis for any award of damages or findings of liability. The
arbitrator shall not have the power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive
damages, and each party hereby irrevocable waives any claim to such damages.
The costs of AAA and the arbitrator shall be borne by the Company. Each party
shall bear its own costs (including, without limitation, legal fees and fees of
any experts) and out-of-pocket expenses; provided, that the Company shall
promptly advance to Executive all reasonable expenses (including attorney’s
fees) up to $25,000 incurred in connection with such dispute, subject to
Executive executing a customary undertaking to repay such advances to the
Company to the extent the Executive does not substantially prevail in such
arbitration.
(c) all
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally, mailed by certified or
registered mail, return receipt requested and postage prepaid, or sent via a
nationally recognized overnight courier, or sent via facsimile to the recipient
with telephonic confirmation by the sending party. Such notices, demands and
other communications will be sent to the address indicated below:
If
to the Executive:
Xxxx
Xxxxxxxx
000
Xxxxxxxx Xxxx
Xxxxxxxxxx,
XX 00000
Fax:
(000)000-0000
12
If
to the Company:
Birds
Eye Foods, Inc.
00
Xxxxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Telecopy
Number: (000)000-0000
Attention:
Secretary
with
a copy to (which shall not constitute notice to the Company):
Vestar
Capital Partners IV, L.P.
000
Xxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telecopy
Number: (000)000-0000
Attention:
General Counsel
or such other address or to
the attention of such other person as the recipient party shall have specified
by prior written notice to the sending party. Any notice under this Agreement
shall be deemed to have been given when so delivered, sent or mailed.
(d) The
Company shall promptly reimburse Executive for reasonable attorneys’ fees of up
to $40,000 he incurs in connection with the negotiation, implementation, and
documentation of this Agreement and other arrangements relating to his
employment with the Company.
(e) The
Executive shall not be required to seek other employment during the Restricted
Period subsequent to the termination or expiration of the Employment Period or
to reduce any amounts or benefits payable or to be provided to him under Section 4
hereof, and no such payment or benefit shall be reduced on account of any
compensation received by the Executive from other employment. The Company’s
obligation to pay or provide the amounts or benefits under Section 4
hereof shall not be reduced by any amount owed by the Executive to the Company.
(f) Subject
to the provisions of Section 4(c), there shall be no limitation on the
ability of the Company to terminate the Executive at any time with or without
Cause.
(g) Whenever
possible, each provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
(h) 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 otherwise
13
than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.
(i) The
Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(j) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
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.
(k) From
and after the Effective Date this Agreement shall supersede any other
employment agreement between the parties or between the Company and the
Executive with respect to the subject matter hereof.
(l) Notwithstanding
anything to the contrary herein, (i) BE Holdings shall prior to the
Effective Date assign this Agreement to the Company and upon such assignment,
the Company shall be deemed substituted for BE Holdings as a party to this
Agreement and BE Holdings shall have no obligations to the Executive hereunder,
(ii) such assignment shall not require the consent of the Executive and (iii) until
such assignment has been effected, the Company shall be a third party
beneficiary of this Agreement and shall be entitled to enforce this Agreement
as if it were an original party thereto.
* * * * * * * * *
14
Exhibit A
FORM OF RELEASE AGREEMENT
In
consideration of receipt of severance payments and benefits as set forth in Section 4
of the Employment Agreement, dated as of September 2, 2005, by and between
Birds Eye Holdings, LLC (“BE Holdings”) and Xxxx Xxxxxxxx (the “Employment
Agreement”) and subsequently assigned by BE Holdings to Birds Eye Foods, Inc.
(the “Company”), I, Xxxx Xxxxxxxx, hereby release and discharge the Company,
and each of its employees, officers, directors, stockholders, agents,
subsidiaries and other affiliates from, and waive any and all claims, demands,
damages, causes of action or suits (collectively, “Claims”) of any kind or
nature whatsoever that I may have had or may now have against any of them
(including, without limitation, any Claims arising out of or related to my
employment with the Company or the termination thereof), whether arising under
contract, tort, statute or otherwise, and whether I know of the claim or not,
including, without limitation, Claims arising under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Americans
with Disabilities Act, the Equal Pay for Equal Work Act, and any other
applicable federal, state or local statutes, rules, codes, or ordinances.
Notwithstanding anything herein to the contrary this release does not cover (i) my
rights to the severance payments and benefits provided in Section 4 of the
Employment Agreement or any payments that are due under Birds Eye Holdings, LLC’s
limited liability company agreement; (ii) my rights to any vested or
accrued benefits or rights under the applicable terms of Company plans,
programs, or arrangements; (iii) any Claim by me to enforce the rights
arising under or preserved by the Employment Agreement that survive expressly
survive termination of my employment; and (iv) any Claim by me to enforce
indemnification rights as provided in the Company’s articles of incorporation.
I
have not, and shall not hereafter, institute any lawsuit of any kind
whatsoever, or file any complaint or charge, against the Company or any of its
former or present employees, officers, directors, stockholders, agents,
subsidiaries, or affiliates, and any of their successors or assigns, under any
federal, state or local statute, rule, regulation or principle of common law
growing out of events released hereunder. I shall not seek employment or
reemployment with the Company. I acknowledge that I have had at least 21 days
to review and consider this release agreement before accepting it. I have been
advised to consult with an attorney before signing this release agreement.
This
release agreement and any dispute, disagreement, or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided therein or performance shall be governed or
interpreted according to the internal laws of the State of New York applicable
to contracts entered into and to be performed solely within such State without
regard to choice of law considerations. The parties hereto hereby waive, to the
fullest extent by applicable law, any right to trial by jury with respect to
any action or proceeding arising out of or relating to this release agreement.
16
