Exhibit 10.27
-------------
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of April 1, 2002 (the "Effective
Date") between Aurora Foods Inc., a Delaware corporation (the "Company") and
Xxxxxxx X. XxXxxxxxx (the "Executive").
WHEREAS, the Executive is possessed of certain experience and expertise in
management; and
WHEREAS, the Company wishes to employ the Executive as its Executive Vice
President and Chief Financial Officer and the Executive wishes to accept such
employment.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT.
1.1. Agreement. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, in each case subject to the terms
and conditions set forth herein.
1.2. Term. The employment of the Executive by the Company shall be for the
period commencing on the Effective Date and expiring on the date on which
termination of employment is effective pursuant to the provisions of Section 8
(the "Termination Date"). For all purposes of this Agreement, references to the
"term" of the Executive's employment hereunder shall mean the period commencing
on the Effective Date and ending on the Termination Date.
2. POSITION AND DUTIES. The Executive shall serve as Executive Vice President
and Chief Financial Officer ("EVP-CFO") of the Company, and shall be accountable
to, and shall have such powers, duties and responsibilities consistent with and
customary to the position of Chief Financial Officer of a corporation the size
of the Company and as may from time to time be prescribed by the Board of
Directors of the Company (the "Board"). The Executive shall perform and
discharge, faithfully, diligently, competently and in good faith such duties and
responsibilities. The Executive (a) shall devote all of his business time and
attention and his best efforts and ability to the business and affairs of the
Company and its Subsidiaries and (b) shall not engage in other business
activities whether or not compensated during the term of this Agreement without
the prior written consent of the Chief Executive Officer of the Company. The
services of the Executive shall be performed at the offices of the Company in
the Metropolitan Area.
3. COMPENSATION. Subject to all of the terms and conditions hereof and to the
performance by the Executive of his duties and obligations to the Company:
3.1. Salary. As compensation for services performed from the Effective Date
through December 31, 2002, the Company shall pay the Executive a salary at a
rate of $400,000 per annum, and thereafter such other greater amount as may be
established by the Board annually (such annual rate of salary in effect from
time to time being referred to as the "Salary"). The
-1-
Salary shall be payable in accordance with the regular payroll practices of the
Company. Except as otherwise provided in this Agreement, the Salary shall be
prorated for any period less than a full year.
3.2. Annual Bonus. As additional compensation for services hereunder, the
Executive shall receive an annual bonus in an amount based on Board-specified
performance targets set in accordance with an executive bonus plan as may be
established by the Company from time to time (such annual bonus in effect from
time to time being referred to as the "Annual Bonus"). Such bonus plan shall
provide for the Annual Bonus to be equal to 100% of Salary in the event the
Company achieves 100% of the Board-specified performance targets. For the
Company's fiscal year ending December 31, 2002, the Annual Bonus shall not be
less than 100% of Salary paid in 2002 (the Salary for such fiscal year shall be
prorated since Executive shall have been employed by the Company for less than a
full year), and for the Company's fiscal year ending December 31, 2003, the
Annual Bonus shall not be less than 50% of Salary paid in 2003. Except as
otherwise provided in this Agreement, the Annual Bonus shall be prorated for any
period less than a full year.
3.3. Long Term Incentive Bonus Plan. Executive shall have the right to
participate in any Long Term Incentive Bonus Plan the Company may adopt from
time to time to the extent senior executives may generally be entitled to
participate. The bonus as may be allowed in connection with such Plan shall be
referred to herein as the "Long Term Incentive Bonus."
3.4. Stock Options. The Company shall grant to the Executive under the
Company's 2000 Long Term Incentive Plan stock options to purchase 500,000 shares
of Common Stock of the Company (the "Stock Options"). The Stock Options will
have an exercise price based on the trading price of Common Stock on the close
of business on the date of grant and will vest in accordance with the Company's
2000 Equity Incentive Plan and as follows: 125,000 on December 31, 2002, 125,000
on December 31, 2003, 125,000 on December 31, 2004 and 125,000 on December 31,
2005.
3.5. Business Expenses. During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement by the Company for
all reasonable business expenses incurred by him on behalf of the Company or any
of its Subsidiaries or Affiliates (in accordance with the policies and
procedures established by the Board from time to time for the Company's
executive officers) in performing services hereunder; provided, however, that
the Executive shall properly account therefor in accordance with requirements
for federal income tax deductibility and the Company's policies and procedures.
3.6. Benefits. From the period commencing on the Effective Date and subject
to any contribution generally required of executives of the Company, Executive
shall be entitled to participate in any and all employee benefit plans from time
to time in effect for senior executives of the Company generally, except to the
extent such plans are in a category of benefit otherwise provided to Executive.
Such participation shall be subject to (i) the terms of the applicable plan
documents, (ii) generally applicable Company policies, and (iii) the discretion
of the Board or any administrative or other committee provided for in or
contemplated by such plan, provided such discretion must be exercised reasonably
for the proper administration of the subject plan and not for the purpose of
denying benefits to the Executive. The Company may alter, modify or terminate
its employee benefit plans at anytime as it, in its sole discretion, determines
to be
-2-
appropriate, provided such alterations and modifications adverse to the
Executive are applicable generally to other senior executives of the Company.
3.7. Vacations. During the term of his employment hereunder, the Executive
shall be entitled to twenty (20) paid working days as vacation in each year and
shall also be entitled to all paid holidays given by the Company to its
employees. The paid vacation days shall be prorated for any period of service
hereunder less than a full year. The Executive shall not be entitled to cash
compensation for any vacation time not taken during the term hereof and shall
not be entitled to accrue unused vacation.
3.8. Transition Expenses. During the term of his employment hereunder, the
Company shall reimburse Executive for reasonable documented travel expenses,
including reasonable expenses for air and ground transportation and incidental
travel related expenses such as meals, parking, and long distance telephone
charges of Executive incurred in connection with travel between his primary
residence in LaGrange, Illinois and the Metropolitan Area. In addition, Company
shall reimburse Executive for the documented cost of leasing a furnished
apartment in the Metropolitan Area up to an amount to be mutually agreed between
the Company and the Executive. Payments under this Section 3.8 for travel and
housing expenses shall in no event exceed $60,000 per year. In addition, for
each applicable tax year, the Company shall make a lump-sum cash "gross-up"
payment to Executive with respect to taxes paid by Executive in connection with
reimbursement of transition costs pursuant to this Section 3.8. The gross-up
payment will be sufficient, after giving effect to all federal, state and other
taxes and charges (including interest and penalties, if any, imposed as a result
of any action or inaction by the Company) with respect to the gross-up payment,
to make Executive whole for all taxes (including withholding taxes) and any
associated interest and penalties, imposed in connection with the reimbursement
of transition costs.
3.9. Transportation Stipend. During the term of his employment hereunder,
the Executive shall be entitled to a monthly stipend of $750, to be paid
consistent with Company practice for senior executives, each month to cover
expenses associated with transportation, including leasing or owning an
automobile; provided, however, that the Executive shall properly account
therefor in accordance with the requirements for federal income tax
deductibility and the Company's policies and procedures.
3.10. Legal Fees. The Company shall pay directly to legal counsel as the
Executive shall direct, up to $15,000 of legal fees and related expenses
incurred in connection with the negotiation of this agreement.
4. OFFICES; SUBSIDIARIES AND AFFILIATES.
4.1. Generally. In addition to being EVP-CFO of the Company, the Executive
agrees to serve during the term of his employment hereunder, if elected or
appointed thereto, in one or more positions as an officer or director of the
Company or any of its Subsidiaries, or as an officer, trustee, director or other
fiduciary of any pension or other employee benefit plan of the Company or any of
its Subsidiaries. Service in such additional positions will be without
additional compensation except for reimbursement of reasonably related business
expenses on the same terms as provided elsewhere in this Agreement.
-3-
4.2. Indemnification. The Company agrees that in connection with the
Executive's service hereunder and in additional positions as provided under
Section 4.1, the Executive shall be entitled to the benefit of any
indemnification provisions in the indemnification agreement between Executive
and the Company dated as of the date hereof and any director and officer
liability insurance coverage carried by the Company and any of its Subsidiaries
for which the Executive serves as an officer or director; provided, however,
that this Section 4.2 shall not impose on the Company or any of its Subsidiaries
any obligation to include any such indemnification provisions in its charter or
by-laws or to maintain any such insurance coverage.
5. UNAUTHORIZED DISCLOSURE; INVENTIONS.
5.1. Confidential Information. The Executive acknowledges that the Company
and its Subsidiaries and Affiliates continually develop Confidential
Information, that the Executive may develop Confidential Information for the
Company or its Subsidiaries or Affiliates and that the Executive may learn of
Confidential Information during the course of employment. The Executive will
comply with the policies and procedures of the Company and its Subsidiaries and
Affiliates for protecting Confidential Information and agrees not to disclose to
any Person (except as required by applicable law or for the proper performance
of his duties and responsibilities to the Company and its Subsidiaries and
Affiliates), or use for his own benefit or gain, any Confidential Information
obtained by the Executive incident to his employment or other association with
the Company or any of its Subsidiaries or Affiliates. The Executive understands
that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.
5.2. Protection of Documents. All documents, records, tapes and other media
of every kind and description relating to the business, present or otherwise, of
the Company or its Subsidiaries or Affiliates and any copies, in whole or in
part, thereof (the "Documents"), whether or not prepared by the Executive, shall
be the sole and exclusive property of the Company or its Subsidiaries or
Affiliates. The Executive shall safeguard all Documents and shall surrender to
the Company at the time his employment terminates, or at such earlier time or
times as the Board or its designee may specify, all Documents then in the
Executive's possession or control.
5.3. Proprietary Rights. Any and all inventions, discoveries, developments,
methods, processes, compositions, works, supplier and customer lists (including
information relating to the generation and updating thereof), concepts and ideas
(whether or not patentable or copyrightable) (collectively, "Inventions")
conceived, made, developed, created or reduced to practice (collectively,
"Conceived") by the Executive (whether at the request or suggestion of the
Company or otherwise, whether alone or in conjunction with others, and whether
during regular hours of work or otherwise) during the term of his employment by
the Company, which may be directly or indirectly useful in, or related to, the
business, ventures or other activities of or products manufactured or sold by
the Company or any of its Subsidiaries or Affiliates or any business or products
contemplated by the Company or any of its Subsidiaries or Affiliates while the
Executive was or is an employee, officer or director of the Company
(collectively, "Proprietary Rights"), together with Inventions so Conceived by
the Executive within the six-month period following the Termination Date and
which directly relate to Company work initiated, conducted, observed, or
contemplated prior to the Termination Date, shall be promptly and fully
disclosed by the Executive to the Board and shall be the exclusive property of
the Company as against the Executive and his successors, heirs, devisees,
legatees and assigns, and
-4-
the Executive hereby assigns to the Company his entire right, title and interest
therein and shall promptly deliver to the Company all papers, drawings, models,
data and other material relating to any of the foregoing Proprietary Rights
conceived, made, developed, created or reduced to practice by him as aforesaid.
All copyrightable Proprietary Rights shall be considered "works made for hire."
The Executive shall, upon the Company's request and without any payment therefor
or expense with respect thereto, execute any documents necessary or advisable in
the reasonable opinion of the Company's counsel to assign, and confirm the
Company's title in, his entire right, title and interest in the foregoing
Proprietary Rights and to direct issuance of patents or copyrights to the
Company with respect to such Proprietary Rights as are the Company's exclusive
property as against the Executive and his successors, heirs, devisees, legatees
and assigns under this Section 5.3 or to vest in the Company title to such
Proprietary Rights as against the Executive and his successors, heirs, devisees,
legatees and assigns, the expense of securing any such patent or copyright,
however, to be borne by the Company.
6. RESTRICTED ACTIVITIES. The Executive agrees that some restrictions on his
activities during and after his employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Subsidiaries and Affiliates:
6.1. Non-Competition. While the Executive is employed by the Company, the
Executive shall not, directly or indirectly, whether as owner, partner,
investor, consultant, agent, employee, co-venturer or otherwise, compete with
the Company or any of its Subsidiaries or Affiliates within the United States in
any Competitive Business or undertake any planning for any Competitive Business.
For one year immediately following termination of his employment, the Executive
shall not, directly or indirectly, whether as owner, partner, investor,
consultant, agent, employee, co-venturer or otherwise, compete with the Company
or any of its Subsidiaries or Affiliate with the United States in any Restricted
Business or undertake planning for a Restricted Business. Without limiting the
generality of the foregoing, during the Non-Competition Period, the Executive
will not solicit or encourage any Person who is or was a customer of the Company
or any of its Subsidiaries or Affiliates to terminate its relationship with any
of them, or to conduct with any other Person any business or activity which such
customer conducted with the Company or any of its Subsidiaries or Affiliates,
and which is or would be detrimental to the Company.
6.2. Outside Activities. The Executive agrees that during his employment
with the Company, he will not undertake any outside activity, whether or not
competitive with the business of the Company or any of its Subsidiaries or
Affiliates, that could reasonably give rise to a conflict of interest or
otherwise interfere with the performance of his duties and obligations to the
Company or any of its Subsidiaries or Affiliates; provided, however, that
Executive shall be permitted to continue to serve as a director of Amcore
Financial Inc.
6.3. Non-Solicitation of Employees. Acknowledging the strong interest of
the Company in an undisrupted workplace, the Executive further agrees that while
he is employed by the Company and for a period of two years immediately
following termination of his employment, the Executive will not (a) directly, or
indirectly through agents or other representatives, seek to persuade, solicit or
encourage any employee of the Company or any of its Subsidiaries or Affiliates
to discontinue employment with the Company or any of its Subsidiaries or
Affiliates or (b) solicit or encourage any independent contractor providing
-5-
services to the Company or any of its Subsidiaries or Affiliates to terminate or
diminish its relationship with the Company or any of its Subsidiaries or
Affiliates.
6.4. Ownership of Securities. Notwithstanding the provisions of this
Section 6, the Executive shall have the right to acquire as a passive investor
(with no involvement in the operations or management of the business) up to 1%
of any class of securities which is (a) issued by any Person engaged in a
Competitive Business and (b) publicly traded on a national securities exchange
or over-the-counter market.
7. ENFORCEMENT OF COVENANTS. The Executive acknowledges that he has carefully
read and considered all the terms and conditions of this Agreement, including
the restraints imposed upon him pursuant to Sections 5 and 6. The Executive
agrees that such restraints are necessary for the reasonable and proper
protection of the Company and its Subsidiaries and Affiliates and that each and
every one of the restraints is reasonable in respect to subject matter, length
of time and geographic area. The Executive further acknowledges that, were he to
breach any of the covenants contained in Section 5 or 6, the damage to the
Company would be irreparable. The Executive therefore agrees that the Company,
in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive (or other equitable) relief against any
breach or threatened breach by the Executive of any of such covenants, without
having to post bond. The Company will be entitled to recover from the Executive
any attorneys fees and costs it incurs in connection with the successful
enforcement of its rights under Sections 5 and 6, and the Executive will be
entitled to recover from the Company reasonable attorneys fees and costs he
incurs in connection with the successful defense of any such enforcement action
brought by the Company. The parties further agree that, in the event that any
provision of Sections 5 or 6 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.
8. TERMINATION.
8.1. Death. The Executive's employment hereunder shall terminate upon his
death.
8.2. Incapacity. If the Executive shall have been unable to perform his
duties hereunder by reason of any physical or mental illness, injury or other
incapacity (collectively "Incapacity") (a) for any period of 90 consecutive days
or (b) for a total of 150 days in any period of 12 consecutive calendar months,
either (i) as determined by Board in good faith upon receipt and reliance of
sufficient competent medical advice or (ii) as satisfying the definition of
"disability" under the Company's disability insurance policy, the Company may
terminate the Executive's employment hereunder by written notice to the
Executive. During any period of Incapacity prior to termination of the
Executive's employment under this Section 8.2, the Company shall continue to pay
and provide to the Executive, as the case may be, all amounts and benefits due
the Executive under Section 3.
8.3. Cause. The Company may terminate the Executive's employment hereunder
for Cause at any time upon written notice to the Executive. For the purposes of
this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon: (a) the Executive's material breach of any of his
obligations set forth in this Agreement; (b) the
-6-
Executive's breach of his fiduciary duties as an officer or director of the
Company or any of its Subsidiaries or Affiliates, or as an officer, trustee,
director thereof; (c) the Executive's commission of a felony involving fraud,
personal dishonesty or moral turpitude (whether or not in connection with his
employment); or (d) the Executive's failure to follow the reasonable
instructions of the Board; provided, that the Executive shall receive written
notice of the occurrence of any event contemplated under sections (a) or (d)
hereunder and Executive shall have failed to cure the conduct, activity or event
thereunder within 30 days.
8.4. Other than for Cause. The Company may terminate the Executive's
employment hereunder other than for Cause at any time upon written notice to the
Executive.
8.5. Good Reason. The Executive may terminate the Executive's employment
hereunder for Good Reason at any time upon 30 days' prior written notice to the
Company. In the event of termination of the Executive pursuant to this Section
8.5, the Board may elect to waive the period of notice or any portion thereof.
For the purposes of this Agreement, the Executive shall have "Good Reason" to
terminate the Executive's employment hereunder upon: (a) material diminution in
the nature or scope of Executive's responsibilities, duties or powers, in each
case except in the event of termination of the Executive's employment pursuant
to Sections 8.1, 8.2, 8.3 or 8.6, (b) a reduction in the amount of Executive's
Salary, (c) the failure by the Company to pay the Executive his Salary, Long
Term Incentive Bonus or Annual Bonus as provided in Sections 3.1 and 3.2,
respectively (provided, that in the case of the Annual Bonus or Long Term
Incentive Bonus, the Company is not required to pay any part of such bonus that
is conditioned upon certain events, including, without limitation, the
achievement of Board-specified performance targets, unless such events have
occurred), (d) the failure by the Company to grant the Executive the Stock
Options, (e) the material failure, individually or in the aggregate, by the
Company to provide the Executive with the benefits provided for in Sections 3.5
through 3.11, (f) a Change of Control in which the successor company, if any, to
the Company fails to assume this Agreement in its entirety or (g) subsequent to
a Change of Control, the Executive is not the most senior finance officer of the
Company or the successor company, as the case may be.
8.6. Other than for Good Reason. The Executive may terminate his employment
hereunder at any time upon 30 days' prior written notice to the Company. In the
event of termination of the Executive pursuant to this Section 8.6, the Board
may elect to waive the period of notice, or any portion thereof.
8.7. Resignation. If Executive is a director of Company or any of its
Subsidiaries or Affiliates, without the need for any further action, he shall be
deemed to have resigned from these positions effective as of the Termination
Date.
9. COMPENSATION UPON TERMINATION.
9.1. Death. In the event of the Executive's death during the term hereof,
the Company shall pay or transfer, as the case may be, to the Executive's
designated beneficiary or, if no beneficiary has been designated by the
Executive, to his estate, (a) his Salary that is earned and unpaid at the date
of death, (b) all amounts due the Executive as of the date of Executive's death
pursuant to Sections 3.5 through 3.10, (c) all amounts due under the Company's
Long Term Incentive Bonus Plan as provided under the terms thereof, and (d) to
the extent not already
-7-
granted, the grant of Stock Options contemplated by Section 3.4; provided, that
50% of all Stock Options that are not vested on the date of death shall be
automatically vested and otherwise Executive's rights in the event of death with
respect to the Stock Options shall be governed by a stock option certificate,
and (e) at the end of such fiscal year, an amount equal to the product of (A)
the Annual Bonus that the Executive would otherwise have earned for such fiscal
year if death had not occurred multiplied by (B) a fraction, the numerator of
which is the number of days from the beginning of such fiscal year until the
date of death and the denominator of which is 365.
9.2. Incapacity. If the Executive's employment shall be terminated by
reason of his incapacity pursuant to Section 8.2, the Company shall (a) continue
through the Termination Date to pay or provide to Executive, as the case may be,
all amounts and benefits due to the Executive through the Termination Date under
Section 3, (b) pay the Executive at the end of the fiscal year in which the
Termination Date occurred, an amount equal to the product of (A) the Annual
Bonus that the Executive would otherwise have earned for such fiscal year if
termination pursuant to Section 8.2 had not occurred multiplied by (B) a
fraction, the numerator of which is the number of days from the beginning of
such fiscal year until the date of termination pursuant to Section 8.2 and the
denominator of which is 365 and (c) 50% of all Stock Options that are not vested
on the date of such termination shall be automatically vested. In addition, the
Executive shall receive disability insurance payments to the extent the
Executive is eligible under the Company's disability insurance policy and
applicable law.
9.3. Cause. If the Company shall terminate the Executive's employment for
Cause, the Company shall have no further, obligations to the Executive under
this Agreement other than the payment or provision to the Executive, as the case
may be, of all amounts and benefits due the Executive through the Termination
Date under Section 3.
9.4. Other than for Cause; Good Reason. If the Company shall terminate the
Executive's employment pursuant to Section 8.4 or the Executive shall terminate
the Executive's employment pursuant to Section 8.5, and, if no benefits are
payable to the Executive under a separate severance agreement or an executive
severance plan (acknowledged in writing by the Executive to supersede the
provisions of this Section 9.4) as a result of such termination, then the
Company shall pay or provide to the Executive:
(a) as soon as reasonably practicable after the Termination Date, all
amounts and benefits provided for in Section 3 and due to the
Executive through the Termination Date; and
(b) Executive's Salary in effect at the time notice of termination is
given until the second anniversary of the Termination Date, payable on
a monthly basis or such other time increment as the Executive and the
Company mutually agree; and
(c) to the extent not previously paid, an Annual Bonus for the fiscal year
ending December 31, 2002 (such Annual Bonus to be prorated for the
period that Executive is employed by the Company in 2002) in an amount
equal to 100% of Salary in effect at the time notice of termination is
given, and an Annual Bonus for the fiscal year ending December 31,
2003 (such Annual Bonus to be prorated
-8-
for the period that Executive is employed by the Company in 2003) in
an amount equal to 50% of Salary in effect at the time notice of
termination is given; and
(d) 50% of all Stock Options that are not vested on the date of such
termination shall be automatically vested.
With respect to any termination of employment to which this Section 9.4 applies,
until the earlier to occur of (1) the second anniversary of the Termination Date
or (2) the date on which the Executive receives from another employer (including
self-employment or engaging in an enterprise as a sole proprietor or partner)
medical and dental benefits substantially comparable to those made available by
the Company to the Executive as of the time notice of termination is given (the
"Benefits Termination Date"), the Company shall, if the Executive was
participating in any Company medical and dental insurance plans pursuant to
Section 3.6 immediately prior to the effectiveness of his termination of
employment and subject to any employee contribution applicable to the Executive
immediately prior to such effectiveness, continue to provide and contribute to
the cost of the Executive's participation in such medical and dental insurance
plans so long as the Executive is entitled to continue such participation under
applicable law and plan terms. The obligations of the Company to the Executive
under this Section 9.4 (other than clause (a) of the first sentence of this
Section 9.4) are conditioned upon the Executive's signing a release of claims in
the form of Exhibit A (the "Release") within 28 days of the date on which notice
of termination is given and upon such Release remaining in full force and effect
thereafter. Except as otherwise provided, all severance payments under this
Section 9.4 will be in the form of salary continuation, payable in accordance
with the normal payroll practices of the Company and will begin at the Company's
next regular payroll period following the effective date of the Release, but
shall be retroactive to the Termination Date; provided, that payments to the
Executive under this Section 9.4 shall not be reduced by reason of any
compensation payments Executive receives from employment subsequent to the
Termination Date.
9.5. Other than for Good Reason. If the Executive shall terminate his
employment pursuant to Section 8.6, the Company shall have no further
obligations to the Executive under this Agreement other than the Rights Not
Subject to Release and payment or provision of all amounts and benefits provided
for in Section 3 and due to the Executive through the Termination Date
(provided, that, if, in accordance with Section 8.6, the Board elects to waive
the period of notice, or any portion thereof, the payment of Salary under this
Section 9.5 shall continue through the notice period or any portion thereof so
waived).
9.6. Post-Termination Obligations Generally. Except as expressly set forth
in this Section 9, the stock option certificate, the Executive Long Term
Incentive Plan and Rights Not Subject to Release and as provided by law, the
Company shall have no further obligations to the Executive following expiration
of the term of the Executive's employment hereunder, and performance by the
Company of any obligation specifically provided in this Section 9 shall
constitute full settlement of any claim that the Executive may have on account
of such termination against the Company and its Subsidiaries and Affiliates and
all of their respective past and present officers, directors, stockholders,
controlling Persons, employees, agents, representatives, successors and assigns
and all other others connected with any of them, both individually and in their
official capacities.
9.7. Change of Control.
-9-
(a) If within two years of a Change of Control, the Executive terminates
his employment for Good Reason or the Company terminates Executive's
employment other than for Cause, death or incapacity, the Company
shall have no further obligations to the Executive under this
Agreement other than (i) a lump sum payment equal to two times the sum
of the Salary and the Annual Bonus paid to Executive during the
preceding twelve months; (ii) continued contributions (if the
Executive was participating in any Company medical and dental
insurance plans pursuant to Section 3.6 immediately prior to the
effectiveness of his termination of employment and subject to any
employee contribution applicable to the Executive immediately prior to
such effectiveness), until the Benefits Termination Date, to the cost
of Executive's participation in such medical and dental insurance
plans so long as the Executive is entitled to continue such
participation under applicable law and plan terms; and (iii) Rights
Not Subject to Release.
(b) The parties hereto acknowledge that in connection with a change in
ownership or control of the Company or a sale of a substantial portion
of the Company's assets, certain payments and benefits to or for the
benefit of the Executive, whether pursuant to this Agreement or
otherwise, could be subject to the tax described at Section 4999 of
the Internal Revenue Code (the "Code"). In the event that the
severance and other benefits provided for in this Agreement or
otherwise payable to the Executive (i) constitute "parachute payments"
within the meaning of Section 280G of the Code and (ii) but for this
Section 9.7(b) would be subject to the excise tax imposed by Section
4999 of the Code, then the Executive's payments and benefits, if any,
under this Agreement shall be reduced, as hereinafter described, (but
not below zero) to the extent, and only to the extent, necessary to
ensure that no portion of any payment or benefit to or for the benefit
of the Executive would constitute an "excess parachute payment" as
defined in Section 280G of the Code; provided, that if, after taking
into account all applicable federal, state and local income and
employment taxes and the excise tax imposed by Section 4999, the
payments and benefits to or for the benefit of the Executive would be
greater on an after-tax basis without any such reduction, then no
reduction in the Executive's payments or benefits shall be made by
reason of this Section 9.7(b). If the payments and benefits that would
otherwise be paid or provided to the Executive under this Agreement
are required to be reduced but not eliminated to comply with the
provisions of this Section 9.7(b), the payments and benefits shall be
reduced in the following order, unless otherwise elected by the
Executive: (i) the payments under Section 9.7(a)(i) shall be reduced,
(ii) if necessary, benefits under the Long Term Incentive Bonus shall
be reduced, (iii) if necessary, benefits under Section 9.7(a)(ii)
shall be reduced and (iv) if necessary, acceleration under the Stock
Options shall be reduced, in each case such reduction to be made in
accordance with and only to the extent required under this Section
9.7(b). If, as a result of any reduction required by this Section
9.7(b), amounts previously paid to the Executive exceed the amount to
which the Executive is entitled, the Executive will promptly return
the excess amount to the Company. Unless the Company and the Executive
otherwise agree in writing, any determination required under this
Section 9.7(b) shall be made in writing by the Company's independent
public accountants (the "Accountants"). For purposes of
-10-
making the calculations required by this Section 9.7(b), the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999
of the Code. The Company and the Executive shall furnish to the
accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by
this Section 9.7(b).
10. LITIGATION. Executive agrees that during his employment or thereafter, he
shall do all things, including the giving of evidence in suits and other
proceedings, which Company shall deem necessary or proper to obtain, maintain or
assert rights accruing to Company during his employment involving matters about
which Executive has knowledge, information or expertise. All reasonable expenses
incurred by Executive in fulfilling the duties set forth in this Section shall
be reimbursed by Company.
11. CONFLICTING AGREEMENTS. Executive hereby represents and warrants that the
execution of this Agreement and the performance of Executive's obligations
hereunder will not breach or be in conflict with any other agreement to which
Executive is a party or is bound and that Executive is not now subject to any
covenants against competition, nonsolicitation or similar covenants that would
affect the performance of Executive's obligations hereunder or would restrict
the Company in its operations, including hiring any additional executives.
Executive has provided the Company with a true and correct copy of all
agreements having executory obligations on the part of the Executive or the
Company between Executive and Executive's former employer or employers and any
similar agreements governing Executive's rights and obligations relating to any
former employer. Executive will not disclose to or use on behalf of the Company
any confidential or proprietary information of a third party without such
party's consent.
12. WITHHOLDING. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.
13. NOTICES. All notices, requests and demands to or upon the parties hereto to
be effective shall be in writing, by facsimile, by overnight courier or by
registered or certified mail, postage prepaid and return receipt requested, and
shall be deemed to have been duly given or made upon: (a) delivery by hand, (b)
one business day after being sent by nationally recognized overnight courier; or
(c) in the case of transmission by facsimile, when confirmation of receipt is
-11-
obtained. Such communications shall be addressed and directed to the parties as
follows (or to such other address as either party shall designate by giving like
notice of such change to the other party):
If to the Executive:
Xxxxxxx X. XxXxxxxxx
000 X. Xxxxxx Xxxxxx
XxXxxxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxx
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
8000 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: 312-876-7934
If to the Company:
Aurora Foods Inc.
00000 Xxxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: 000-000-0000
14. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION. Certain capitalized terms are
used in this Agreement with the specific meanings defined below in this Section
14. Except as otherwise explicitly specified to the contrary or unless the
context clearly requires otherwise, (a) the capitalized term "Section" refers to
sections of this Agreement, (b) the capitalized term "Exhibit" refers to
exhibits to this Agreement, (c) references to a particular Section include all
subsections thereof, (d) the word "including" shall be construed as "including
without limitation" and (e) references to "$" mean United States dollars.
14.1. "AAA" is defined in Section 20.
14.2. "Accountants" is defined in Section 9.7(b).
-12-
14.3. "Affiliate" shall mean (a) any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
Company (or other specified Person), (b) any other Person which, together with
its Affiliates (as defined in clause (a) above) shall, directly or indirectly,
own beneficially or control the voting of at least 10% of the ownership interest
in the Company (or other specified Person) and (c) any other Person of which the
Company (or other specified Person) and its Affiliates (as defined in clauses
(a) and (b) above) shall, directly or indirectly, own beneficially or control
the voting of at least 10% of any class of outstanding capital stock or other
evidence of beneficial interest or of any interest as a general partner or joint
venturer.
14.4. "Annual Bonus" is defined in Section 3.2.
14.5. "Beneficial Owner" shall have the meaning in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have a
"beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
14.6. "Benefits Termination Date" is defined in Section 9.4.
14.7. "Board" is defined in Section 2.
14.8. "Cause" is defined in Section 8.3.
14.9. "Change of Control" means:
(a) any person (used as such term is defined in Sections 1.3(d) and 14(d)
of the Exchange Act) other than one or more Permitted Holders, is or
becomes the Beneficial Owner, directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the Company; provided
that the Permitted Holders are Beneficial Owners of, directly or
indirectly, in the aggregate, a lesser percentage of the total voting
power of the Voting Stock of the Company than such other person (used
as such term is defined in Sections 13(d) and 14(d) of the Exchange
Act) and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board;
provided, further, that a person (used as such term is defined in
Sections 13(d) and 14(d) of the Exchange Act) shall be deemed to be
the Beneficial Owner of any Voting Stock of a Person held by any other
Person (the "Parent Corporation") if such other person (used as such
term is defined in Sections 13(d) and 14(d) of the Exchange Act) is
the Beneficial Owner of, directly or indirectly, more than 35% of the
voting power of the Voting Stock of the Parent Corporation and the
Permitted Holders are Beneficial Owners of, directly or indirectly, in
the aggregate, a lesser percentage of the voting power of the Voting
Stock of the Parent Corporation and do not have the right or ability
by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the Parent
Corporation; or
(b) the consummation, through one transaction or a series of related
transactions, of a reorganization, merger or consolidation, in each
case, unless, following such reorganization, merger or consolidation
the shareholders of the Company
-13-
immediately prior to such reorganization, merger or consolidation are
the Beneficial Owners, directly or indirectly, of more than 50% of,
respectively, the then outstanding shares of Common Stock resulting
from such reorganization, merger or consolidation and the combined
voting power of the Voting Stock of the Company; or
(c) the consummation, through one transaction or a series of related
transactions, of (i) a complete liquidation or dissolution of the
Company or (ii) the sale, disposition or other transfer or removal of
assets of the Company to which 40% of the Company's annualized
revenues as of December 31, 2001 are directly attributable; provided,
that a Change of Control shall not be deemed to have occurred if the
entity or entities acquiring control in such sale or disposition are
the Permitted Holders or their Affiliates.
(d) Within any twenty-four (24) consecutive month period, persons who were
members of the Board immediately prior to such twenty-four (24) month
period, together with any persons who were first elected as directors
(other than as a result of any settlement or proxy or consent
solicitation contest or any action taken to avoid such a contest)
during such twenty-four (24) month period by or upon the
recommendation of persons who were members of the Board immediately
prior to such twenty-four (24) month period and who constituted a
majority of the Board at the time of such election, cease to
constitute a majority of the Board.
14.10. "Code" is defined in Section 9.7(b).
14.11. "Common Stock" means the common stock, $.01 par value, of the
Company.
14.12. "Company" is defined in the preamble to this Agreement.
14.13. "Competitive Business" means any existing business conducted by the
Company or any of its Subsidiaries during the term of the Executive's employment
with the Company; provided that the phrase "existing business" shall for
purposes of this Section 14.13 be deemed to include any business actively
proposed to be conducted by the Company and for which the Company has developed
a formal business or marketing plan during the term, whether or not it existed
on the effective date.
14.14. "Confidential Information" means any and all information regarding
the Company and its Subsidiaries and Affiliates that is not generally known by
others with whom they compete or do business, or with whom they actively plan to
compete or do business, including such information relating to (a) the
development; research, testing, manufacturing, marketing and financial
activities of the Company and its Subsidiaries, (b) the Products, (c) the costs,
sources of supply, financial performance and strategic plans of the Company and
its Subsidiaries and Affiliates, (d) the identity and special needs of the
customers of the Company and its Subsidiaries and Affiliates and (e) the people
and organizations with whom the Company and its Subsidiaries and Affiliates have
business relationships and those relationships, but excluding information which
(i) is generally available to and known by the public or (ii) is or becomes
known on a non-confidential basis from a source other than the Executive.
-14-
14.15. "Documents" is defined in Section 5.2.
14.16. "Effective Date" is defined in the preamble.
14.17. "Executive" is defined in the preamble.
14.18. "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
14.19. "Fenway" means Fenway Capital Partners Fund, L.P., a Delaware
limited partnership, and Fenway Capital Partners Fund II, L.P., a Delaware
limited partnership.
14.20. "Good Reason" is defined in Section 8.5.
14.21. "Long Term Incentive Bonus" is defined in Section 3.3.
14.22. "XxXxxx" means XxXxxx De Leeuw & Co. III, L.P., XxXxxx De Leeuw &
Co. III (Europe), L.P., XxXxxx De Leeuw & Co. III (Asia), L.P., Gamma Fund LLC,
XxXxxx De Leeuw & Co. IV, L.P., XxXxxx Xx Leeuw & Co. IV Associates, L.P.
14.23. "Metropolitan Area" means the St. Louis, Missouri metropolitan area.
14.24. "Non-Competition Period" is defined in Section 6.1.
14.25. "Permitted Holders" means Fenway, XxXxxx, Delta Fund LLC, California
Public Employees Retirement System, Tiger Oats Limited and UBS Capital LLC.
14.26. "Person" means any individual, partnership, corporation,
association, trust, joint venture, limited liability company, unincorporated
organization or entity, and any government, governmental department or agency or
political subdivision thereof.
14.27. "Products" means all products planned, researched, developed,
tested, manufactured, sold, licensed, leased or otherwise distributed or put
into use by the Company or any of its Subsidiaries or Affiliates, together with
all services provided or planned by the Company or any of its Subsidiaries or
Affiliates, during the Executive's employment; provided that Products shall not
include products not in distribution and for which there is not active planning,
research, development or testing or for which there is not a current formal
business or marketing plan.
14.28. "Proprietary Rights" is defined in Section 5.3.
14.29. "Release" is defined in Section 9.4.
14.30. "Restricted Business" shall mean International Multi-Foods, General
Xxxxx, Xxxxxx'x or Xxxxxx Ltd. or any of their successors.
14.31. "Rights Not Subject To Release" shall mean (1) any future claim to
enforce rights of Executive under this Agreement, (2) any rights to
indemnification under any bylaws, certificate of incorporation or an agreement
between the Company or its Subsidiaries and Executive, respecting
indemnification of directors and officers, (3) any rights under any directors
and officers liability insurance policies maintained by the Company or its
Subsidiaries, and (4)
-15-
any vested rights under any employee benefit or pension benefit plan of the
Company or its Subsidiaries in accordance with the terms and conditions of such
plan.
14.32. "Salary" is defined in Section 3.1.
14.33. "Stock Options" is defined in Section 3.4.
14.34. "Subsidiary" means any Person of which the Company (or other
specified Person) shall, directly or indirectly, own beneficially or control the
voting of at least a majority of the outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally or at least a majority of the
partnership, joint venture or similar interests, or in which the Company (or
other specified Person) or a Subsidiary thereof shall be a general partner or
joint venturer without limited liability.
14.35. "Termination Date" is defined in Section 1.2.
14.36. "Voting Stock" of a Person means all classes of capital stock of
such Person then outstanding and normally entitled to vote in the election of
directors or managers.
15. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Board and agreed to in writing by the Executive and such officer as may be
specifically authorized by the Board in connection with such approval. No waiver
by either party hereto at any time of compliance with or of any breach by the
other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which is not
set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement and the legal relations created
thereby shall be governed by the domestic substantive laws of the State of
Missouri without giving effect to any choice or conflict of laws provision or
rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
16. SEVERABILITY. If any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
17. COUNTERPARTS. This Agreement may he executed in any one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
-16-
18. ENTIRE AGREEMENT. This Agreement (together with the stock option
certificate) constitutes the entire agreement between the parties hereto, and
supersedes any and all prior communications, agreements and understandings,
written or oral, with respect to the terms and conditions of the Executive's
employment with the Company.
19. ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon
(a) the Executive, his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees and (b)
the Company and its successors (including by means of reorganization, merger,
consolidation or liquidation) and permitted assigns. The Company may assign this
Agreement to any of its Subsidiaries or to any successor of the Company by
reorganization, merger, consolidation or liquidation and any transferee of all
or substantially all of the business or assets of the Company or of any division
or line of business of the Company with which the Executive is at any time
associated; provided that, no such assignment shall operate to release the
Company from its payment and benefit obligations hereunder. The Company requires
the personal services of the Executive hereunder and the Executive may not
assign this Agreement.
20. ARBITRATION. With the exception of claims arising under or connected to
Sections 5 and 6, any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted by a single arbitrator in St. Louis, Missouri in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association ("AAA") then in effect; provided, however, that the
parties may agree to use an arbitrator other than those provided by the AAA. The
arbitrator shall not have the authority to add to, detract from, or modify, any
provision hereof nor to award punitive damages to any injured party. The
arbitrator shall have the authority to order back-pay and severance
compensation, and, to the extent deemed reasonable and appropriate by such
arbitrator given the issues involved and the outcome of the arbitration, shall
award to the prevailing, party reimbursement of out of pocket costs and expenses
(including legal fees) incurred by such party in connection with such dispute or
controversy, together with interest thereon. A decision by the arbitrator shall
be final and binding. Judgment may be entered on the arbitrator's award in any
court having competent jurisdiction. Responsibility for bearing the cost of the
arbitration shall be determined by the arbitrator and shall be proportional to
the arbitrator's decision on the merits.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, as of
the date first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION CLAUSE THAT MAY BE ENFORCED
BY THE PARTIES.
THE COMPANY: THE EXECUTIVE:
AURORA FOODS INC.
By: /s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxx X. XxXxxxxxx
------------------------------- ------------------------
Title: Chief Executive Officer Xxxxxxx X. XxXxxxxxx
Date Signed: October 28, 2002 Date Signed: October 28, 2002
-17-
Exhibit A
---------
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the special payments and benefits to be
provided in connection with the termination of my employment in accordance with
the terms of the Employment Agreement dated as of April 1, 2002 (as amended and
in effect from time to time, the "Employment Agreement") between Aurora Foods
Inc., a Delaware corporation (the "Company"), and me; I, on my own behalf and on
behalf of my personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees and all others connected
with me, hereby release and forever discharge the Company and its respective
Affiliates (as defined in the Employment Agreement) and all of their respective
past and present officers, directors, stockholders, controlling persons,
employees, agents, representatives, successors and assigns and all others
connected with any of them (all collectively, the "Released"), both individually
and in their official capacities, from any and all rights, liabilities, claims,
demands and causes of action of any type (collectively, "Claims") which I have
had in the past, now have, or might now have, through the date of my signing of
this Release of Claims, in any way resulting from, arising out of or connected
with my employment or its termination or pursuant to any federal, state, foreign
or local employment law, regulation or other requirement (including, without
limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, and the fair employment
practices laws of the state or states in which I have been employed by the
Company, each as amended from time to time); provided, however, that the
foregoing release shall not apply to any Rights Not Subject to Release (as
defined in the Employment Agreement).
In signing this Release of Claims, I acknowledge that I have had at least
21 days from the date of notice of termination of my employment to consider the
terms of this Release of Claims and that such time has been sufficient; that I
am encouraged by the Company to seek the advice of an attorney prior to signing
this Release of Claims; and that I am signing this Release of Claims voluntarily
and with a full understanding of its terms.
I understand that I may revoke this Release of Claims at any time within
seven days of the date of my signing by written notice to the Company and that
this Release of Claims will take effect only upon the expiration of such
seven-day revocation period and only if I have not timely revoked it.
Intending to be legally bound, I have signed this Release of Claims as of
the date first written above.
Signature: _____________________
Xxxxxxx X. XxXxxxxxx
Date Signed: _____________________
-18-
