EXHIBIT 10.8
EAGLE FAMILY FOODS, INC.
Employment Agreement, dated as of the 16th day of February, 1998, between
Eagle Family Foods, Inc. (the "Company"), Eagle Family Foods Holdings, Inc.
("Holdings") and Xxxxx X. Xxxxxxx (the "Employee").
Witnesseth:
Whereas, the Company recognizes that the growth, profitability
and success of the Company will be materially and substantially enhanced by the
employment of the Employee by the Company; and
Whereas, the Company desires to employ the Employee, and the
Employee has indicated his willingness to provide his services, on the terms and
conditions set forth herein;
Now, therefore, in consideration of the mutual covenants and
agreements contained herein, the Company and the Employee agree as follows:
Section 1. EMPLOYMENT. The Company hereby agrees to employ the
Employee and the Employee hereby accepts employment with the Company on the
terms and subject to the conditions contained in this agreement. Subject to the
terms and conditions contained herein, the Employee shall serve as the Company's
Vice President, Chief Financial Officer and Treasurer and, in such capacity,
shall report to the Company's Chairman and Chief Operating Officer (the
"Chairman") and shall have such duties as are typically performed by the Vice
President, Chief Financial Officer and Treasurer of a food company, together
with such additional duties, commensurate with the Employees position, as may be
assigned to him from time to time by the Chairman. The principal location of the
Employee's employment will be at the offices of the Company in Tarrytown, New
York, although the Employee understands and agrees that he may be required to
travel from time to time for business reasons.
Section 2. TERM. Unless terminated pursuant to Section 6
hereof, the Employee's employment hereunder shall commence on the date hereof
and shall continue during the period ending on the first anniversary of the date
hereof (the "Initial Term"). Beginning with such anniversary date, the
Employment term shall be extended automatically for consecutive periods of one
year on each anniversary date of this agreement. The Initial Term, together with
any extension pursuant to this Section 2, is referred to herein as the
"Employment Term". The Employment Term shall terminate upon any termination of
the Employee's employment pursuant to Section 6.
Section 3. COMPENSATION. During the Employment Term, the Employee shall be
entitled to the following compensation and benefits:
(a) Salary: As compensation for the performance of the
Employee's services hereunder, the Company shall pay to the Employee a salary
(the "Salary") of $210,000 per annum, subject to required tax withholding and
deductions for benefits, with increases, if any,
as may be approved by the Chairman. The salary shall be payable in accordance
with the payroll practices of the Company as the same shall exist from time to
time. In no event shall the Salary be decreased during the Employment Term.
(b) Annual Bonus Plan: The Employee shall be eligible to
receive an annual cash bonus (the "Bonus") which shall be determined by the
Board of Directors of the Company ("the Board"). For the Company's 1998 fiscal
year, the Employee's Bonus eligibility shall be as follows: (1) 25% of Salary if
the Company achieves 85% of 1998 Target EBITDA; or (2) 50% of Salary if the
Company achieves 100% of 1998 Target EBITDA; and (3) 2% of Salary for each
percentage point by which the Company exceeds 100% of 1998 Target EBITDA, up to
125% of 1998 Target EBITDA or up to an additional 50% of Salary. "1998 Target
EBITDA" is the Company's earnings for the year before interest, taxes,
depreciation and amortization as set forth in the Company's 1998 business plan
approved by the Board. For fiscal years during the Employment Term subsequent to
1998, the relevant performance targets shall be set by the Board in its sole
discretion, provided that the Employee's aggregate Bonus potential as a
percentage of Salary shall not decrease. That is performance criteria may change
and may no longer consist of achievement of Target EBITDA but, even so, the
Bonus, as a percent of Salary, realizable in any year for achievement of that
year's criteria will not be less than that provided above for achievement of
1998 Target EBITDA.
(c) Benefits: In addition to Salary and Bonus-eligibility, the
Employee shall be entitled to participate in health, insurance and other
benefits provided to other Company employees at an executive level similar to
that of the Employee and on terms no less favorable than the terms available to
those employees. The Employee shall be entitled to four weeks vacation, as well
as time off and other consideration in accordance with the Company's policies
applicable to employees of the Company at an executive level similar to that of
the Employee in effect from time to time.
(d) Awards; Purchases of shares of Holdings' stock:
(1) The Employee shall be eligible to receive awards of
restricted stock and options under the Eagle family Foods Holdings Inc. 1998
Stock Incentive Plan (the "Stock Plan"), as determined by the Board of Directors
of Holdings (the "Holdings Board") or a designated committee thereof ) in its
sole discretion. The terms of such awards including, without limitation, those
which apply upon the termination of the Employee's employment, shall be governed
by the Stock Plan and any award agreements entered into between the Employee and
Holdings.
(2) The Employee's initial award of restricted stock pursuant
to the Stock Plan is described in Schedule A attached hereto. The terms of this
award including, without limitation, those which apply upon the termination of
the Employee's employment, shall be governed by the Stock Plan and the award
agreement entered into between the Employee and Holdings.
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(3) The Employee has elected to purchase additional shares of
Holdings' stock and the terms and conditions of such purchase are those which
will be specified in the subscription agreement between the Employee and
Holdings.
(4) Any shares of Holdings' stock, of any class, purchased by
or awarded to the Employee shall be subject to the terms and conditions of the
proposed Eagle Family Foods Holdings, Inc. Stockholders Agreement in the form
attached hereto as Exhibit 1 (the "Stockholders Agreement").
Section 4. EXCLUSIVITY: During the Employment Term the
Employee shall devote his full time to the business of the Company, shall
faithfully serve the Company, shall in all respects conform to and comply with
the lawful and reasonable directions and instructions given to him by the
Chairman in accordance with the terms of this agreement, shall use his best
efforts to promote and serve the interests of the Company and shall not engage
in any other business activity, whether or not such activity shall be pursued
for financial gain, except that the Employee may (a) participate in the
activities of professional trade organizations related to the business of the
Company and (b) engage in personal investing activities, provided that these
permitted activities do not interfere in any material way with the Employee's
effective service to the Company pursuant to this agreement.
Section 5. REIMBURSEMENT FOR EXPENSES. The Employee is
authorized to incur reasonable expenses in the discharge of the services to be
performed hereunder, including expenses for travel, entertainment, lodging and
similar items, in accordance with the Company's travel and entertainment
policies and requirements for prior approval in certain cases, as the same may
be modified from time to time. The Company shall reimburse the Employee for all
such proper expenses upon presentation by the Employee of itemized accounts of
such expenditures, supported by appropriate documentation.
Section 6. TERMINATION AND DEFAULT.
(a) Death. The Employee's employment shall terminate upon his
death and, in such event, the Employee's estate shall be entitled to receive the
amounts specified in Section 6(e), below.
(b) Disability. If the Employee is unable to perform his
duties under this agreement because of illness, injury or other change in the
Employee's condition that results in a lack of adequate physical or mental
capacity, the Employment Term shall continue and the Company shall pay all
compensation required to be paid to the Employee hereunder, unless the Employee
is unable to perform the duties required of him under this agreement for an
aggregate of 180 days, consecutive or not, during any 12 month period during the
term of this agreement, in which event the Company may terminate the Employee's
employment for "Disability".
(c) Cause: The Company may terminate the Employee's employment
at any time, with or without Cause. In the event of termination pursuant to this
Section 6(c) for Cause, the Company shall deliver written notice to the Employee
setting forth the basis for
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such termination, which notice shall specify the nature of the Cause for
termination. Termination shall be effective upon the delivery of such notice.
"Cause" shall mean (i) the Employee's failure (except when caused by disability
as contemplated by Section 6(b), above), neglect or refusal to perform his
duties hereunder for a period in excess of thirty days following receipt of a
written notice specifying such failure, neglect or refusal, (ii) any willful or
intentional act of the Employee that has the effect of injuring the reputation
or business of the Company, (iii) any willful or intentional misrepresentation
made by or at the instigation of the Employee to the Chairman or any other
member of the Board, iv) any continued or repeated absence from his duties
unless such absence is approved or excused by the Chairman or is the result of
disability as contemplated by Section 6(b), above, (v) use of illegal drugs or
repeated drunkenness while engaged in his responsibilities hereunder or in
public, (vi) conviction for the commission of a felony, (vii) the commission of
any fraud upon the Company or the theft, by embezzlement or otherwise, of any of
the Company's assets or (viii) any breach of the obligations of the Employee
under Section 7 hereof.
(d) Resignation: The Employee shall have the right to
terminate his employment at any time by the giving of 30 days prior written
notice to the Company.
(e) Payments; Repurchase of Stock:
(1) In the event that the Employee's employment terminates for
any reason, the Company shall pay to the Employee all amounts accrued but unpaid
hereunder through the date of termination in respect of Salary and reimbursable
expenses. In the event the Employee's employment is terminated by the Company
without cause, in addition to the amounts specified in the previous sentence,
the Employee shall (A) continue to receive Salary (less any applicable
withholding or similar taxes) at the rate in effect on the date of termination
for a period of 12 months following the termination (the Severance Term") and
(B) remain eligible to participate in benefits offered in accordance with
section 3(c) hereof during the Severance Term. Upon termination the Employee
shall be entitled to a full program of outplacement assistance and upon
completion of the Severance Term the Employee shall be entitled to COBRA
coverage.
(2) Upon termination of the Employee's employment for Cause,
or if the Employee resigns, Holdings shall have the right, but not the
obligation, to purchase any preferred stock of Holdings owned by the Employee at
a price equal to the Employee's initial cost and any common stock of Holdings
owned by the Employee and not subject to the Stock Plan's provisions at the
lower of the Employee's initial cost or the Fair Value of the shares.
(3) In the event of a termination of the Employee's employment
by the Company without Cause, or by reason of his death or Disability, Holdings
shall have the right and obligation to purchase from the Employee any preferred
stock of Holdings owned by the Employee or his estate at a price equal to the
Employee's initial cost plus all accrued and unpaid dividends and any common
stock of Holdings owned by the Employee or his estate and not subject to the
Stock Plan's provisions at the Fair Value of the shares.
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(4) For the purposes of this agreement, "Fair Value" means the
fair market value of the shares being purchased, as determined in good faith by
a majority of the directors of the Holdings Board.
(5) In addition to the right and obligations described herein,
all shares of the stock of the Company, of any class, owned by the Employee
shall be subject, without implying any limitation of the application of the
Stock Plan, to the terms and conditions of the Stockholder's Agreement.
(f) Survival of Operative Sections: Upon any termination of the Employee's
employment, the provisions of Section 6(e) and the Sections of this agreement
following Section 6(e) shall survive to the extent necessary to give effect to
the provisions thereof.
Section 7. SECRECY AND NON-COMPETITION.
(a) No Competing Employment: The Employee acknowledges that
the agreements and covenants contained in this Section 7 are essential to
protect the value of the Company's business and assets and that by his
employment with the Company the Employee will obtain knowledge and experience
which could be used to the substantial advantage of a competitor of the Company
and to the Company's substantial detriment. Therefore the Employee agrees that,
for the period commencing on the date of this agreement and ending on the first
anniversary of the termination of the Employee's employment hereunder (the
"Restricted Period"), the Employee shall not participate or engage, directly or
indirectly, in any business activity if such activity competes with any activity
undertaken or expressly contemplated to be undertaken by the Company.
(b) Nondisclosure of Confidential Information: The Employee
shall not disclose to any person or entity or use, either during the Employment
Term or after, any information not in the public domain nor generally known in
the industry acquired during the Employment Term relating to the Company
including, but not limited to, business plans, customers, suppliers, know-how,
trade secrets, formulas, manufacturing and other processes, computer programs,
research of every kind and new product initiatives, in all cases whether or not
written and however embodied, which is, or has been or may be used in the
business of the Company. Upon termination of his employment the Employee shall
return to the Company all files, correspondence and other records and
communications received or originated or maintained by the Employee during the
course and term of his employment.
(c) No Interference: During the Restricted Period the Employee
shall not, for his own account or the account of any other person or entity,
directly or indirectly solicit, endeavor to entice away from the Company or
otherwise interfere with the relationship of the Company with any of its
officers, directors, employees, any individual performing services for the
Company as an independent contractor, any supplier to the Company or any
customer of the Company.
(d) Inventions, etc.: The Employee hereby sells, transfers and
assigns to the Company all of the entire right, title and interest of the
Employee in and to all inventions,
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ideas, disclosures and improvements made or conceived by the Employee, whether
or not they be copyrighted, patented or patentable, during his employment by the
Company which in any way relate to the business, functions or operations of the
Company, present or prospective, or to the industries in which the Company now
or hereafter competes. The Employee shall cooperate fully to give full effect to
the provisions hereof and shall provide the Company with all information and
execute all document which the Company deems necessary or convenient to secure,
protect and exploit its right acquired hereunder.
Section 8. INJUNCTIVE RELIEF. Without limiting the remedies
available to the Company, the Employee acknowledges that any breach of any of
his covenants and undertakings expressed in Section 7, above, may result in
material and irreparable harm to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for such harm
with precision and that, in the event of such a breach or threat or same, the
Company shall be entitled obtain a temporary restraining order and/or
preliminary or permanent injunction, without the necessity of proving
irreparable harm or injury as a result of such breach or threatened breach,
restraining the Employee from engaging in any activity prohibited by Section 7,
above, or such other relief as may be required specifically to enforce any of
the covenants or undertakings expressed in Section 7, above.
Section 9. EXTENSION OF RESTRICTED PERIOD. In addition to the
remedies the Company may seek and obtain pursuant to Section 8, above, the
Restricted Period shall be extended by any and all periods during which the
Employee shall have been found by a court to have been in violation of any of
the covenants and undertakings expressed in section 7, above.
Section 10. REPRESENTATIONS AND WARRANTIES. The Employee
represents and warrants to the Company that (a) this agreement constitutes a
valid and binding obligation of the Employee, enforceable against him in
accordance with its terms and (b) the Employee is not a party to any agreement,
including without limitation, any employment or non-competition agreement, nor
is he subject to any order, judgment or under any legal disability which would
restrict or in any way purport to affect or prevent his employment and the
performance of his duties hereunder.
Section 11. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY
BENEFICIARIES. This agreement shall inure to the benefit of, and be binding
upon, the successors and assigns of each of the parties, including, but not
limited to, The Employee's heirs and the personal representatives of the
Employee's estate; provided, however, that neither party shall assign or
delegate any of the obligations created by this agreement without the prior
written consent of the other party. Notwithstanding the foregoing, the Company
shall have the unrestricted right to assign its rights and obligations hereunder
to any subsidiary or affiliate of the Company. Nothing in this agreement shall
confer upon any person or entity not a party any rights or remedies of any kind
or nature whatsoever.
Section 12. WAIVER AND AMENDMENTS. Any waiver, alteration or
amendment of this agreement shall be valid only if in writing and signed by both
parties. No waiver by
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either party of a right hereunder shall be deemed to constitute a waiver with
respect to any subsequent event.
Section 13. GOVERNING LAW. This agreement shall be governed by
and construed in accordance the laws of the State of New York applicable to
contracts made and to be performed entirely within said State.
Section 14. NOTICES. All notices and other communications
under this agreement shall be in writing and delivered by hand, facsimile
transmission or first class mail, postage prepaid and shall be effective on the
date of actual receipt by the addressee.
Section 15. ENTIRE AGREEMENT. This agreement constitutes the entire
understanding and agreement of the parties regarding the employment of the
Employee. It supersedes and replaces all prior communications by and
understandings of the parties relating to such employment.
Section 16. SEVERABILITY. In the event that any part or parts
of this agreement shall be held illegal or unenforceable, such determination
shall not effect the remaining provisions of this agreement, all of which shall
remain in full force and effect.
In witness whereof the parties hereto have executed this agreement as of
the date first written above.
EAGLE FAMILY FOODS, INC.
by /s/ Xxxxxxx X. Xxxxx
---------------------
Chairman
EAGLE FAMILY FOODS HOLDINGS, INC.
by /s/ Xxxxxxx X. Xxxxx
--------------------
Chairman
by /s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
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SCHEDULE A
to Employment Agreement between
Eagle Family Foods, Inc. and Xxxxx X. Xxxxxxx
Initial Award of Restricted Stock:
0.494% (four hundred ninety four thousandths of one percent)
of the Common Stock of Holdings issued and outstanding on the date of the
closing of the purchase of certain assets of Xxxxxx Foods Corporation by the
Company, subject to the terms and limitations, including vesting requirements,
restrictions on transfer and mandatory sale or forfeiture applicable thereto. On
the assumption that there will be 1,000,000 shares of the Common Stock of
Holdings outstanding on that date, the initial award will be 4,940 shares.
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