1
EXHIBIT 10.4
ASSUMPTION AGREEMENT
AGREEMENT ("Agreement") effective on the date the initial public
offering of the stock of Tropicana Products, Inc. ("Tropicana") closes (the
"Effective Date"), among Tropicana, The Seagram Company Ltd. ("SCL or Seagram"),
Xxxxxx X. Xxxxxxx & Sons, Inc. ("JES") and Xxxxx X. Xxxxxx ("Executive").
Pursuant to this Agreement, Tropicana hereby assumes the obligations
of SCL and JES with respect to the employment of Executive under the letter
agreement between Executive, on the one hand, and JES and SCL, on the other,
dated January 26, 1998 ("the Letter Agreement"), and all liabilities and
benefits thereunder, and agrees to employ Executive in accordance with the terms
of the Letter Agreement, except as modified as follows:
1. Title; Responsibilities.
Executive shall no longer have any titles, offices, duties or
responsibilities with respect to SCL, JES or any entity affiliated therewith,
but shall serve as Chairman of the Board, President and Chief Executive Officer
of Tropicana, with ongoing duties and responsibilities with respect thereto, and
shall report directly to the Board of Directors of Tropicana.
2. Compensation and Benefits.
(a) In lieu of participation in the JES Management Incentive Plan,
Executive shall have a target management incentive award of 90% of salary, and
Executive's actual bonus shall be determined in accordance with practices
applicable to senior executives of Tropicana, which are substantially identical
to those in effect for SCL, except that they are based on Tropicana, rather than
SCL, performance.
(b) In lieu of a target annual option grant of 75,000 Seagram
shares, Executive's target annual option grant shall be not less than an option
to buy that number of Tropicana shares determined by multiplying 75,000 by a
fraction, the numerator of which is the average of the "Daily Average Trading
Prices" of Seagram common stock for the first five consecutive trading days
immediately preceding the Tropicana IPO Date, and the denominator of which is
the offering price of Tropicana shares under the Tropicana IPO. ("Daily Average
Trading Price" shall mean the average of the high and low trading prices for
stock on a given day.)
2
2
(c) (i) In lieu of participation in Seagram's Senior Executive
Compensation and Benefits Program, and all other pension, retirement
and similar plans applicable to senior executives of SCL (the "SCL
Plans"), Tropicana shall provide Executive with benefits that are
substantially identical to the benefits provided under the SCL
Plans; in addition, Tropicana shall assume SCL's and JES'
liabilities with respect to Executive's participation in any SCL
Plan or any JES plan. Tropicana also shall provide Executive with a
"Performance-Based Retirement Benefit" ("PBRB") at the same level as
referred to in the Letter Agreement and shall assume SCL's and JES'
liabilities with respect to that benefit including giving credit to
Executive for partially completed cycles of PBRB awards and making
appropriate adjustments in performance targets going forward.
(ii) Executive shall be provided with an automobile pursuant
to the Tropicana automobile program, and a car and driver in New
York City, as needed.
(iii) Executive acknowledges and agrees that Tropicana shall
have no continuing obligation with respect to the use of company
owned aircraft. Executive shall be entitled to fly first class on
business trips.
3. Indemnification.
On and after the Effective Date, Executive will be entitled to
indemnification in accordance with (i) the provisions of Article X of
Tropicana's Certificate of Incorporation ("Certificate") as it exists on the
Effective Date and (ii) the Delaware General Corporation Law. In addition, in
the event Executive is required to repay the amount of any advance made pursuant
to Section 2 of Article X of such Certificate, any such repayment obligation
shall be net of any taxes incurred by the Executive on the reimbursement (after
taking into account the tax deduction, if any, obtained by the Executive on the
repayment).
4. D&O Liability Insurance.
On and after the Effective Date, Tropicana agrees to obtain and
maintain a directors and officers' liability insurance policy covering the
Executive to the extent Tropicana provides such coverage for its other executive
officers; provided, however, that to the extent that the obligations of
Tropicana with respect to the provision of such directors and officers'
liability insurance are reduced by the Board of Directors with Executive's
consent, Tropicana's obligations to provide such insurance to Executive shall be
in accordance with such action.
3
3
5. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall, at Executive's election, be resolved by binding arbitration in the state
of New York in accordance with New York law under the Rules of the American
Arbitration Association then in effect. Arbitration shall be before a Board of
three disinterested persons, consisting of one arbitrator appointed by
Tropicana, one appointed by Executive, and one by the arbitrators so chosen.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Costs of arbitration or litigation,
including, without limitation, reasonable attorneys' fees of both Parties, shall
be borne by Tropicana. Pending the resolution of any arbitration or court
proceeding, Tropicana shall continue payment of all amounts due Executive under
this Agreement and all benefits to which Executive is entitled at the time the
dispute arises.
6. Miscellaneous.
On and after the Effective Date,
(a) the term "Change in Control," as defined in Appendix A hereto,
shall be substituted for the phrase "sale of all or substantially all of the
stock or assets" in the first full paragraph on page three of the Letter
Agreement;
(b) the term "Cause," as defined in the bottom paragraph on page
two of the Letter Agreement, shall be modified by substituting the phrase
"willful gross neglect" for "gross negligence;" and
(c) the word "exclusive" shall be deleted from the last sentence
of the second full paragraph on page two of the Letter Agreement.
In all other respects, the terms of the Letter Agreement are
confirmed, agreed to, and assumed by Tropicana. In no event shall SCL or JES
have any further liability under the Letter Agreement. In the event that
Executive shall assert any such liability against SCL, JES, or any affiliate
thereof, Tropicana shall indemnify SCL, JES and any such affiliate in
4
4
full against such liability. At Tropicana's request, Tropicana shall control the
defense of any such indemnified claim.
This Agreement shall become null and void on July 15, 1999, if the
Effective Date has not occurred prior thereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
15th day of July, 1998.
TROPICANA PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
THE SEAGRAM COMPANY LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
XXXXXX X. XXXXXXX & SONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Accepted and agreed to:
/s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
5
5
SCHEDULE A
"Change of Control" means the occurrence of any of the following events:
(1) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company)
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20 percent or more of
the combined voting power of the Company's then-outstanding
securities;
(2) during any period of 24 months (not including any period prior
to the Effective Date), individuals who, at the beginning of
such period, constitute the Board, and any new director, other
than
(a) a director nominated by a Person who has entered into an
agreement with the Company to effect a transaction
described in subparagraphs (1), (3), or (4) of this
section,
(b) a director nominated by any Person (including the
Company) who publicly announces an intention to take or
to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which, if
consummated, would constitute a Change of Control, or
(c) a director nominated by any Person who is the Beneficial
Owner, directly or indirectly, of securities of the
Company representing 10 percent or more of the combined
voting power of the Company's securities,
whose election by the Board or nomination for election by the
Company's stockholders was approved in advance by a vote of at
least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority thereof;
6
6
(3) the stockholders of the Company approve any transaction or
series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation
(a) which would result in the voting securities of the
Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) more than 66-2/3 percent of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation, and
(b) after which no Person holds 20 percent or more of the
combined voting power of the then-outstanding securities
of the Company or such surviving entity; or
(4) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
