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EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
AGREEMENT made on December 2 , 1996 between Xxxx Foods Company, a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxxx ("Executive").
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 hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the chief
operating officer of the Company, and shall have the normal duties,
responsibilities and authority of an executive serving in such position, subject
to supervision and control by the Board of Directors of the Company (the
"Board") and the chief executive officer of the Company (the "CEO"). Executive
shall have the title President and Chief Operating Officer of the Company.
During the Employment Period, Executive shall also serve as a director of the
Company for so long as the Board nominates him to that position and he is
elected to it and as a director of any affiliate of the Company designated by
the Board for so long as the Board causes him to be elected to such position.
(b) Executive shall report to the CEO.
(c) During the Employment Period, Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation
periods, reasonable periods of illness or other incapacity and, provided such
activities do not interfere with the performance by Executive of his duties and
responsibilities hereunder, participation in charitable and civic endeavors and
management of Executive's personal investments and business interests) to the
business and affairs of the Company, its subsidiaries and affiliates. Executive
shall perform his duties and responsibilities hereunder to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
(d) Executive shall perform his duties and responsibilities
hereunder principally in the Chicago, Illinois metropolitan area.
(e) Executive is entering into this Agreement with the desire of
becoming the chief executive officer of the Company not later than December 31,
2001, but without any commitment from the Company that such will be the case.
If at any
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time during the Employment Period the Board provides Executive with a written
formal offer (the "CEO Position Offer") to make Executive the chief executive
officer of the Company as of a date (which may be either a specified date or an
outside date) not later than December 31, 2001 and which sets forth the terms of
such offer (including the effect of such offer on the terms of this Agreement,
and possibly including a provision that service as chief executive officer will
be at the pleasure of the Board rather than pursuant to contract), Executive
will discuss such offer, and any changes to its terms that he may wish to
propose, with the Board.
3. Salary and Benefits.
(a) Pursuant to authorization by the Compensation Committee of the
Board, and under the Xxxx Foods Company 1989 Stock Awards Plan, on the date
hereof Executive will be granted incentive stock options and non-qualified stock
options to purchase shares of the Company's common stock (the numbers of shares
to be determined by such Committee, on a basis consistent with that used by such
Committee in making similar determinations, so that such options have an
aggregate value on the date hereof of $400,000) at an exercise price per share
equal to the fair market value of such a share on the date hereof. Such options
will be in the respective forms of the incentive stock options and non-qualified
stock options granted under such Plan most recently prior to the date hereof,
except that such non-qualified options will provide for accelerated full vesting
at the end of the Employment Period unless the Employment Period ends early
pursuant to paragraph 4 hereof on account of a Termination for Cause or a
Termination by Executive for CEO Position Offer Deadlock.
(b) The Company agrees to pay Executive a salary during the
Employment Period, in monthly installments. Executive's initial salary shall
be $625,000 per annum. Executive's salary may be changed by the Board at any
time or from time to time after May 31, 1998, but may not be reduced below
$625,000.
(c) Executive shall be entitled during the Employment Period to
participate, on the same basis as the CEO, in both the corporate performance and
personal performance components of the Company's incentive pay program in effect
from time to time; provided (i) that the percentage of Executive's salary to
which the formula under such program shall be applied for any of the following
fiscal years shall be the following percentage for such fiscal year: fiscal
year ending in 1997-60%; fiscal year ending in 1998-65%; fiscal year ending in
1999-70%; fiscal year ending in 2000-75%; and (ii) the amount of incentive pay
to which Executive shall be entitled for the Company's fiscal year ending in
1997 and for the Company's fiscal year ending in 2000 pursuant to such program
shall be a pro rata portion (based on the days Executive is employed by the
Company during such fiscal year) of the amount to which Executive would have
been entitled had he been employed by the Company for all of such fiscal year.
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(d) Executive shall be entitled during the Employment Period to
participate in the Xxxx Foods Company Supplemental Benefits Plan.
(e) Executive shall be entitled during the Employment Period to be
covered, on the same basis and in the same amount as the CEO, by any excess
personal liability insurance provided by the Company from time to time. Such
coverage is currently provided in the amount of $10,000,000.
(f) The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(g) In addition to the salary, incentive pay and other benefits
payable to Executive pursuant to the preceding provisions of this paragraph,
Executive shall be entitled during the Employment Period to participate, on the
same general basis as other executive officers of the Company, in those other
Company benefit programs for which the CEO is from time to time eligible as
determined from time to time by the Board. Such other benefit programs
currently include the Xxxx Foods Company 1989 Stock Awards Plan, pension plan,
401 (k) plan, insurance (life, short-term disability, long-term disability,
health and dental), annual physical, vacation, personal use of airline mileage
awards, company car, country club dues, financial consulting and change of
control agreement. However, it is expressly understood by Executive that, in
view of the options being granted to Executive pursuant to (a) above, until May
26, 1997 Executive will not be eligible to participate in the Xxxx Foods Company
1989 Stock Awards Plan except to the extent the incentive pay provisions of (c)
above operate under such Plan and except for participation in the program
thereunder permitting an executive to elect to receive Company common stock in
lieu of all or a portion of incentive cash bonuses otherwise payable to him. It
is further expressly understood by Executive that his change of control
agreement will provide for the elimination of any duplication of the payments
and benefits provided under this Agreement.
4. Employment Period.
(a) Except as hereinafter provided, the Employment Period shall
continue until, and shall end upon, November 30, 1999.
(b) Notwithstanding (a) above, the Employment Period shall end early
upon the first to occur of any of the following events:
(i) Executive's death;
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(ii) the Company's termination of Executive's employment on account of
Executive's having become unable (as determined by the Board in
good faith) to regularly perform his duties hereunder by reason of
illness or incapacity for a period of more than six (6) consecutive
months ("Termination for Disability");
(iii) the Company's termination of Executive's employment for Cause
("Termination for Cause");
(iv) the Company's termination of Executive's employment other than a
Termination for Disability or a Termination for Cause ("Termination
without Cause");
(v) Executive's termination of Executive's employment for Good Reason,
by means of advance written notice to the Company at least thirty
(30) days prior to the effective date of such termination
identifying such termination as a Termination by Executive for Good
Reason ("Termination by Executive for Good Reason"); or
(vi) Executive's termination of Executive's employment for CEO Position
Offer Deadlock, by means of advance written notice to the Company
at least ninety (90) days prior to the effective date of such
termination identifying such termination as a Termination by
Executive for CEO Position Offer Deadlock ("Termination by
Executive for CEO Position Offer Deadlock").
(c) For purposes of this Agreement, "Cause" shall mean:
(i) the commission by Executive of a felony or a crime involving moral
turpitude;
(ii) the commission by Executive of a fraud;
(iii) the commission by Executive of any act involving dishonesty or
disloyalty with respect to the Company or any of its subsidiaries
or affiliates;
(iv) conduct by Executive tending to bring the Company or any of its
subsidiaries or affiliates into substantial public disgrace or
disrepute;
(v) gross negligence or willful misconduct by Executive with respect to
the Company or any of its subsidiaries or affiliates;
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(vi) repudiation of this Agreement by Executive or Executive's
abandonment of his employment with the Company (it being expressly
understood that neither a Termination by Executive for Good Reason
nor a Termination by Executive for CEO Position Offer Deadlock
shall constitute such a repudiation or abandonment);
(vii) breach by Executive of any of the agreements in paragraph 9 hereof;
or
(viii) any other breach by Executive of this Agreement which is material
and which is not cured within thirty (30) days after written notice
thereof to Executive from the Company.
(d) For purposes of this Agreement, "Good Reason" shall mean:
(i) any breach by the Company of this Agreement which is material
(including without limitation any substantial reduction by the
Company in Executive's duties, responsibilities or authority) and
which is not cured within thirty (30) days after written notice
thereof to the Company from Executive; or
(ii) the election or appointment of a chief executive officer of the
Company other than Xxxxxx X. Xxxx.
(e) For purposes of this Agreement, "CEO Position Offer Deadlock" shall
mean Executive's unwillingness to accept the CEO Position Offer after discussion
with the Board of any changes thereto proposed by Executive and the inclusion
therein of any such changes to which the Board is agreeable.
5. Post-Employment Period Payments.
(a) If the Employment Period ends pursuant to paragraph 4 hereof on
November 30, 1999, or if the Employment Period ends early pursuant to paragraph
4 hereof for any reason, Executive shall cease to have any rights to salary,
bonus (if any) or benefits other than: (i) any salary which has accrued but is
unpaid, and any reimbursable expenses which have been incurred but are unpaid,
as of the end of the Employment Period, (ii) (but only to the extent provided in
any benefit plan in which Executive has participated as an employee of the
Company) any plan benefits which by their terms extend beyond termination of
Executive's employment and (iii) any other amounts(s) payable pursuant to the
succeeding provisions of this paragraph 5.
(b) If the Employment Period ends pursuant to paragraph 4 hereof on
November 30, 1999: (i) the Company shall pay to Executive amounts equal to the
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amounts Executive would have received as salary (based on a salary of $625,000
per annum) had the Employment Period remained in effect until November 30, 2001,
at the times such amounts would have been paid (in the event Executive is
entitled during the payment period to any payments under any disability benefit
plan or the like in which Executive has participated as an employee of the
Company, less such payments); and (ii) until November 30, 2001 or such earlier
time as Executive commences other employment, Executive and his dependents shall
continue to be eligible to participate, on the same basis as other employees of
the Company, in the Company's health care program in effect from time to time.
Executive agrees that the period subsequent to November 30, 1999 during which he
and his dependents continue to be eligible to participate in such health care
program shall count toward the period of continuation coverage required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any
comparable state laws. It is expressly understood that the Company's payment
obligations under this (b) shall cease in the event Executive breaches any of
his agreements in paragraph 6, 8 or 9 hereof.
(c) If the Employment Period ends early pursuant to paragraph 4 hereof
on account of Executive's death, the Company shall pay to Executive's estate
amounts equal to the amounts Executive would have received as salary (based on a
salary of $625,000 per annum or, if greater, Executive's salary then in effect)
had the Employment Period remained in effect until November 30, 1999, at the
times such amounts would have been paid.
(d) If the Employment Period ends early pursuant to paragraph 4 hereof
on account of a Termination for Disability, the Company shall pay to Executive
amounts equal to the amounts Executive would have received as salary (based on a
salary of $625,000 per annum) had the Employment Period remained in effect
until November 30, 1999, at the times such amounts would have been paid (in the
event Executive is entitled during the payment period to any payments under any
disability benefit plan or the like in which Executive has participated as an
employee of the Company, less such payments). It is expressly understood that
the Company's payment obligations under this (d) shall cease in the event
Executive breaches any of his agreements in paragraph 6, 8 or 9 hereof.
(e) If the Employment Period ends early pursuant to paragraph 4 hereof
on account of a Termination for Cause, the Company shall make no further
payments to Executive except as contemplated in (a)(i) and (ii) above.
(f) If the Employment Period ends early pursuant to paragraph 4 hereof
on account of a Termination without Cause or a Termination by Executive for Good
Reason: (i) the Company shall pay to Executive amounts equal to the amounts
Executive would have received as salary (based on a salary of $625,000 per
annum) had the Employment Period remained in effect until the second anniversary
of the end of the Employment Period, at the times such amounts would have been
paid (in the
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event Executive is entitled during the payment period to any payments under any
disability benefit plan or the like in which Executive has participated as an
employee of the Company, less such payments); and (ii) until the second
anniversary of the end of the Employment Period, or such earlier time as
Executive commences other employment, Executive and his dependents shall
continue to be eligible to participate, on the same basis as other employees of
the Company, in the Company's health care program in effect from time to time.
Executive agrees that the period subsequent to the end of the Employment Period
during which he and his dependents continue to be eligible to participate in
such health care program shall count toward the period of continuation coverage
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and any comparable state laws. It is expressly understood that the
Company's payment obligations under this (f) shall cease in the event Executive
breaches any of his agreements in paragraph 6, 8 or 9 hereof.
(g) If the Employment Period ends early pursuant to paragraph 4 hereof
on account of a Termination by Executive for CEO Position Offer Deadlock, the
Company shall make no further payments to Executive except as contemplated in
(a)(i) and (ii) above.
6. Inventions and Other Intellectual Property. Executive agrees that
all inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports, trademarks, slogans, product or other designs,
advertising or marketing programs, and all similar or related information which
relate to the Company's or any of its subsidiaries' or affiliates' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive, whether alone
or jointly with others, while employed by the Company or any such subsidiary or
affiliate ("Work Product") belong to the Company or such subsidiary or
affiliate. Executive will promptly disclose such Work Product to the CEO and
perform all actions reasonably requested by the CEO (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
7. Limitation/Illinois Disclosure. Paragraph 6 of this Agreement
regarding the ownership of inventions and other intellectual property does not
apply to the extent application thereof is prohibited by any law the benefits of
which cannot be waived by Executive. Executive hereby waives the benefits of
any such law to the maximum extent permitted by law. In accordance with Section
2872 of the Illinois Employee Patent Act, Ill. Rev. Stat. Chap. 140, Section 301
et. seq. (1983), Executive is hereby advised that in the event and to the extent
such Act is applicable to Executive, paragraph 6 of this Agreement regarding
the ownership of inventions and other intellectual property does not apply to
any invention for which no equipment, supplies, facilities or trade secret
information of the Company or any of its subsidiaries or affiliates was used and
which was developed entirely on Executive's own time, unless (i) the invention
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relates to the business of the Company or any of its subsidiaries or affiliates
or to the Company's or any of its subsidiaries' or affiliates' actual or
demonstrably anticipated research or development or (ii) the invention results
from any work performed by Executive for the Company or any of its subsidiaries
or affiliates.
8. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
pursuant to this Agreement concerning the business or affairs of the Company or
any of its subsidiaries or affiliates (unless and except to the extent the
foregoing become generally known to and available for use by the public other
than as a result of Executive's acts or omissions to act, "Confidential
Information") are the property of the Company or such subsidiary or affiliate.
Therefore, Executive agrees that he shall not disclose any Confidential
Information without the prior written consent of the CEO unless and except to
the extent that such disclosure is (i) made in the ordinary course of
Executive's performance of his duties under this Agreement or (ii) required by
any subpoena or other legal process (in which event Executive will give the
Company prompt notice of such subpoena or other legal process in order to permit
the Company to seek appropriate protective orders), and that he shall not use
any Confidential Information for his own account without the prior written
consent of the CEO. Executive shall deliver to the Company at the termination
of the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, the Work Product or the business of the Company or any of its
subsidiaries or affiliates which he may then possess or have under his control.
9. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his employment with
the Company pursuant to this Agreement he will become familiar with trade
secrets and customer lists of and other confidential information concerning the
Company and its subsidiaries and affiliates and that his services have been and
will be of special, unique and extraordinary value to the Company.
(b) Executive agrees that during the Employment Period he shall not in
any manner, directly or indirectly, through any person, firm or corporation,
alone or as a member of a partnership or as an officer, director, stockholder,
investor or employee of or in any other corporation or enterprise or otherwise,
engage or be engaged in, or assist any other person, firm, corporation or
enterprise in engaging or being engaged in, the development, processing,
marketing, distribution or sale of any product of a kind then actively being
developed, processed, marketed, distributed or sold by the Company or any of its
subsidiaries or affiliates. Executive further agrees that for two years after
the Employment Period he shall not in any manner, directly or indirectly,
through any person, firm or corporation, alone or as a member of a partnership
or as an
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officer, director, stockholder, investor or employee of or in any other
corporation or enterprise or otherwise, engage or be engaged in, or assist any
other person, firm, corporation or enterprise in engaging or being engaged in,
the development, processing, marketing, distribution or sale of any product of a
kind actively being developed, processed, marketed, distributed or sold by the
Company or any of its subsidiaries or affiliates at the end of the Employment
Period, in any geographic area in which the Company or any of its subsidiaries
or affiliates is engaged in such development, processing, marketing,
distribution or selling (whether through production, calling on customers or
prospective customers, or otherwise) at the end of the Employment Period.
(c) Executive further agrees that during the Employment Period and for
two years thereafter he shall not in any manner, directly or indirectly, (i)
induce or attempt to induce any employee of the Company or of any of its
subsidiaries or affiliates to quit or abandon his employ, or any customer of the
Company or of any of its subsidiaries or affiliates to quit or abandon its
relationship, for any purpose whatsoever, or (ii) in connection with any
business to which the first sentence of (b) above applies, call on, service,
solicit or otherwise do business with any then current or prospective customer
of the Company or of any of its subsidiaries or affiliates.
(d) Nothing in this paragraph 9 shall prohibit Executive from being:
(i) a stockholder in a mutual fund or a diversified investment company or (ii) a
passive owner of not more than 2% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.
(e) If, at the time of enforcement of this paragraph, a court holds
that the restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.
10. Enforcement. Because Executive's services are unique and because
Executive has access to Confidential Information and Work Product, the parties
hereto agree that the Company would be damaged irreparably in the event any of
the provisions of paragraph 6, 8 or 9 hereof were not performed in accordance
with their specific terms or were otherwise breached and that money damages
would be an inadequate remedy for any such non-performance or breach. Therefore,
the Company or its successors or assigns shall be entitled, in addition to other
rights and remedies existing in their favor, to an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to enforce
such provisions specifically (without posting a bond or other security).
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11. Executive Representations. Executive represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
12. Survival. Paragraphs 6, 8 and 9 hereof shall survive and continue
in full force in accordance with their terms notwithstanding any termination of
the Employment Period.
13. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
Xx. Xxxxxx X. Xxxxxxxx
Notices to the Company:
Xx. Xxxxxx X. Xxxx
Chairman of the Board and Chief Executive Officer
Xxxx Foods Company
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
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 will be deemed to have been given when so delivered
or mailed.
14. Severability. Whenever possible, each provision of this Agreement
shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
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15. Complete Agreement. This Agreement embodies the complete agreement
and understanding between the parties with respect to the subject matter hereof
and effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and both of which
taken together shall constitute one and the same agreement.
17. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, executors, personal representatives, successors and assigns, except that
neither party may assign any of his or its rights or delegate any of his or its
obligations hereunder without the prior written consent of the other party.
Executive hereby consents to the assignment by the Company of all of its rights
and obligations hereunder to any successor to the Company by merger or
consolidation or purchase of all or substantially all of the Company's assets;
in each case provided such transferee or successor assumes the liabilities of
the Company hereunder.
18. Choice of Law. This Agreement shall be governed by the internal
law, and not the laws of conflicts, of the State of Illinois.
19. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
XXXX FOODS COMPANY
By:
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Its: Chairman of the Board and
Chief Executive Officer
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Xxxxxx X. Xxxxxxxx
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