Exhibit 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 31, 1996, by and between MBW
FOODS INC. (the "Company"), a Delaware corporation, and XXXXXX X. XXXXXXX (the
"Employee").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company desires to employ the Employee and the Employee desires to accept
employment by the Company;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Employment. Upon the terms and subject to the conditions of this
Agreement, the Company hereby employs the Employee and the Employee hereby
accepts employment with the Company in the capacities hereinafter set forth.
2. Term of Employment. The term of this Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998, unless
earlier terminated pursuant to Section 6 below (the "Term"); provided that on
each anniversary of the date hereof, the Term of this Agreement shall be
automatically extended for an additional 12-month period.
3. Duties; Extent of Services.
(a) Duties. During the Term, the Employee shall serve as President of the
Company and as a Director of the Company and shall perform the duties, undertake
the responsibilities and exercise the authority reasonably required of such an
employee of the Company, and shall have such other powers and perform such
additional executive duties as may be assigned to him from time to time by the
Board of Directors of the Company (the "Board"). The Employee shall report to
and carry out the lawful directions of the Board.
(b) Extent of Services. Except for illness and permitted vacation periods,
during the Term the Employee shall (i) devote his full time and attention during
normal business hours to the businesses of the Company and its subsidiaries and
Affiliates (as defined herein); (ii) use his best efforts to promote the
interests of the Company and its subsidiaries and Affiliates; (iii) discharge
such executive and administrative duties not inconsistent with his position as
may be assigned to him by the Board; and (iv) serve,
without additional compensation, as a director or officer of any subsidiary of
the Company if elected as such.
4. Compensation.
(a) Base Salary. In consideration of the services rendered by the Employee
hereunder and provided that the Employee has substantially performed all of his
obligations provided for herein, the Company will pay to the Employee a base
salary (the "Base Salary") at the rate of $175,000 per year during the Term. The
Base Salary may be increased from time to time in an amount mutually agreed to
by the Employee and the Company to reflect the performance of the Employee and
additional responsibilities undertaken by the Employee. The Base Salary shall be
paid in accordance with the Company's normal payroll practice.
(b) Base Bonus. The Company shall pay the Employee a bonus with respect to
each fiscal year or portion thereof during the Term in accordance with the
following provisions:
(i) If the Financial Results of the Company for a fiscal year during
the Term are at least 90% but less than 95% of the EBITDA Target for such
year, Employee shall be paid an amount equal to 25% of so much of his Base
Salary as was paid with respect to such year.
(ii) If the Financial Results of the Company for a fiscal year
during the Term are at least 95% but less than 100% of the EBITDA Target
for such year, Employee shall be paid an amount equal to 37.5% of so much
of his Base Salary as was paid with respect to such year.
(iii) If the Financial Results of the Company for a fiscal year
equal or exceed 100% of the EBITDA Target for such year, Employee shall be
paid an amount equal to 50% of so much of his Base Salary as was paid with
respect to such year.
(c) Supplemental Bonus. In addition to the Base Bonus, if any, to which
the Employee may be entitled under clauses (i), (ii) or (iii) of Section 4(b),
the Company shall pay the Employee a bonus with respect to such fiscal year or
portion thereof during the Term in accordance with the following provisions:
(i) If the Financial Results of the Company for a fiscal year during
the Term are at least 105%, but less than 110% of the EBITDA Target for
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such year, Employee shall be paid an amount equal to 5% of so much
of his Base Salary as was paid with respect to such year.
(ii) If the Financial Results of the Company for a fiscal year
during the Term are at least 110%, but less than 115% of the EBITDA
Target for such year, Employee shall be paid an amount equal to 10%
of so much of his Base Salary as was paid with respect to such year.
(iii) If the Financial Results of the Company for a fiscal
year during the Term are at least 115% but less than 120% of the
EBITDA Target for such year, Employee shall be paid an amount equal
to 15% of so much of his Base Salary as was paid with respect to
such year.
(iv) If the Financial Results of the Company for a fiscal year
during the Term equal or exceed 120% of the EBITDA Target for such
year, the Employee shall be paid an amount equal to 20% of so much
of his Base Salary as was paid with respect to such year.
(d) For the purpose of this Agreement (1) the term "EBITDA Target" shall
mean the Company's projected earnings before interest, taxes, depreciation and
amortization, as contained in the Company's annual budget which is approved by
the Board (without reference to any adjustments or revision, upwards or
downwards, to such projected earnings which are subsequently approved by the
Board as part of any subsequent revision to such annual budget), (2) the term
"Financial Results" shall mean the Company's annual financial results reflected
in the Company's annual audited financial statements and (3) the Company's 1997
fiscal year shall be deemed to begin as of the date hereof.
(e) Any bonus due under Section 4(b) and (c) shall be paid to the Employee
within 30 days of the publication of the Company's annual audited financial
statements for the relevant year.
(f) Employee shall be entitled to receive a bonus (if any) with respect to
a fiscal year during the Term pursuant to the terms of Section 4(b) and (c) of
this Agreement if the Employee shall be employed by the Company on the last day
of such fiscal year. Such entitlement shall not thereafter be affected by the
subsequent termination of Employee's employment with the Company pursuant to any
provision of Section 6 of this Agreement.
5. Other Employee Benefits.
(a) During the Term, the Employee shall be entitled (i) to vacation time
in accordance with the Company's policy from time to time in effect; (ii) to
participate in all
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employee insurance and other fringe benefit programs, including, without
limitation, life, health, dental and accident insurance plans and long term
disability now or hereafter maintained by the Company for senior executive or
other salaried personnel for which the Employee is eligible; and (iii) to
participate in a pension plan with terms similar to those applicable to
executives of the Company.
(b) As of the date hereof, MBW Investors LLC has issued to the Employee 30
Class D Units (as such term is defined in the Amended and Restated Limited
Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996
(the "LLC Agreement")). These 30 Class D Units are part of an aggregate of 100
Class D Units issued or to be issued to the Employee, C. Xxxx Xxxxxxx and other
initial members of operating management to be hired after the date hereof. As
provided in the LLC Agreement, additional Class D Units may be issued by MBW
Investors LLC. During the Term, (i) the Employee shall consult with the Chairman
of MBW Investors LLC regarding the amounts of any issuances of Class D Units to
any person other than the Employee, C. Xxxx Xxxxxxx, the direct reports of the
Employee, the Chairman or the Chief Executive Officer of the Company, or the
direct reports of such Chairman or Chief Executive Officer; and (ii) the
Employee shall be entitled to receive the documents delivered under Section
9.1(b) of the LLC Agreement at the times set forth therein.
6. Termination Provisions.
(a) Termination for Cause. The Board may terminate the Employee's
employment hereunder for Cause, as hereinafter defined, immediately upon written
notice to the Employee. For purposes of this Agreement, "Cause" shall mean (i)
embezzlement, theft or other misappropriation of any property of the Company or
any Affiliate, (ii) gross or willful misconduct resulting in substantial loss to
the Company or any Affiliate or substantial damage to the reputation of the
Company or any Affiliate, (iii) any act involving moral turpitude which results
in a conviction for a felony involving moral turpitude, fraud or
misrepresentation, (iv) gross neglect of his assigned duties to the Company or
any Affiliate, (v) gross breach of his fiduciary obligations to the Company or
any Affiliate, or (vi) any chemical dependence which materially affects the
performance of his duties and responsibilities to the Company or any Affiliate;
provided that in the case of the misconduct set forth in clauses (iv) and (vi)
above, such misconduct shall continue for a period of 30 days following written
notice thereof by the Company to the Employee. During the Term, the Employee
shall be entitled to only one such notice and right to cure for any single act
or event. If the Employee's employment is terminated for Cause, the Employee
shall be entitled to receive only the unpaid portion of the Base Salary then in
effect which has accrued to the date of termination, any other payments
generally available to departing employees of the Company (such as unused
vacation and personal days) and any bonus pursuant to Section 4 for the
preceding fiscal year which has not been paid as of the date of
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such termination. The Employee shall not be entitled to receive any severance
payment with respect to such termination.
(b) Termination By Reason of Permanent Disability. If at any time during
the Term the Employee has been unable, as a result of physical or mental illness
or incapacity, to perform his duties hereunder for a period of four consecutive
months or for an aggregate of more than six months in any twelve month period (a
"Permanent Disability"), the Employee's employment hereunder may be terminated
by the Board upon thirty days' written notice to the Employee. If the Employee's
employment is terminated by reason of Permanent Disability, the Employee shall
be entitled to receive only the unpaid portion of the Base Salary then in effect
which has accrued to the date of termination, plus any other payments generally
available to departing employees of the Company (such as unused vacation and
personal days), plus any bonus pursuant to Section 4 for the preceding fiscal
year which has not been paid as of the date of such termination, plus an amount
equal to six months of Employee's Base Salary.
(c) Termination By Reason of Death. The Employee's employment hereunder
shall automatically terminate on the date of his death. If the Employee's
employment is so terminated by his death, the Company shall pay to the
Employee's estate in addition to the unpaid portion of the Base Salary then in
effect through date of Employee's death plus an amount equal to six months of
Employee's Base Salary, plus any other payments generally available to departing
employees of the Company (such as unused vacation and personal days), plus any
bonus pursuant to Section 4 for the preceding fiscal year which has not been
paid as of the date of the Employee's death. Such amount shall be paid within
thirty days after the date of his death if a personal representative has been
appointed by the end of such thirty day period or, if a personal representative
has not been appointed by the end of such thirty day period, promptly after a
personal representative has been appointed.
(d) Termination Without Cause. The Board may terminate the
Employee's employment hereunder at any time for any reason without Cause in
which case the Employee shall be entitled to receive an amount (the "Severance
Amount") equal to the Base Salary the Employee would have been entitled to
receive through the end of the then current Term (without giving effect to any
future extension pursuant to Section 2 hereof). The Severance Amount shall be in
lieu of any other severance payment to which Employee may be otherwise entitled
under any other severance plan maintained by the Company. The Severance Amount
shall be paid within 30 days of such termination. In addition, the Employee
shall be entitled to receive any other payments generally available to departing
employees of the Company (such as unused vacation and personal days), plus any
bonus pursuant to Section 4 for the preceding fiscal year which has not been
paid as of the date of such termination, plus, to the extent the Company
achieves the required percentage of the
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EBITDA Target for the fiscal year in which such termination occurs, a pro rata
portion of any Base Bonus under Section 4(b) and of any Supplemental Bonus under
Section 4(c) with respect to such fiscal year that Employee would have earned if
he had remained employed for the entire fiscal year and not been terminated,
based on the actual number of days during such year that Employee was employed
by the Company.
(e) Termination by Employee. Notwithstanding any other provisions of this
Agreement, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term for any of the following reasons: (i) a material breach by the Company of
any provision of this Agreement that remains uncorrected for 30 days following
written notice of such breach by Employee to the Company or (ii) for any other
reason whatsoever, in the sole discretion of the Employee, upon 90 days prior
written notice to the Company. If the Employee terminates his employment with
the Company pursuant to clause (i) of this Section 6(e), the Employee shall be
entitled to receive the Severance Amount plus any other payments generally
available to departing employees of the Company (such as unused vacation and
personal days), plus any bonus pursuant to Section 4 for the preceding fiscal
year which has not been paid as of the date of such termination. If the Employee
terminates his employment with the Company pursuant to clause (ii) of this
Section 6(e), the Employee shall be entitled to receive the unpaid portion of
the Base Salary then in effect which has accrued to the date of termination plus
any other payments generally available to departing employees of the Company
(such as unused vacation and personal days), plus any bonus pursuant to Section
4 for the preceding fiscal year which has not been paid as of the date of such
termination.
7. Covenants of the Employee.
(a) Non-Competition. Until the later of (x) the first anniversary of the
date of the termination of the Employee's employment hereunder and (y) the end
of the then current Term in effect on the date of such termination, the Employee
shall not, directly or indirectly, be associated with any entity which competes
with the Company or any of its Affiliates that are subsidiaries of MBW Investors
LLC or for which the Employee renders substantial services and whose primary
business is, or personally engage in, the same or similar grocery product line
of business of the Company or any of its Affiliates, whether as a director,
officer, employee, agent, consultant, partner, owner, independent contractor or
otherwise. For the purpose of this Agreement, the term "Affiliate" means, with
respect to the Company, any person or entity which, directly or indirectly,
controls, is controlled by or under common control with the Company, with
"control" to be based on the ownership of 50% or more of the voting securities
(or their equivalent) of a particular entity.
(b) Non-Solicitation of Employees of the Employer. Until the later of (x)
the first anniversary of the date of the termination of the employment of the
Employee
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hereunder and (y) the end of the then current Term in effect on the date of such
termination, the Employee shall not, and shall cause each business or entity
with which he shall become associated in any capacity not to, solicit for
employment or employ any person who is then, or who was at any time after the
date four months prior to the date of such termination, employed in a
professional or managerial position by the Company, its subsidiaries or
Affiliates.
(c) Confidentiality. The Employee agrees and acknowledges that the
Confidential Information (as hereinafter defined) of the Company and its
subsidiaries and affiliates, is valuable, special and unique to their business;
that such business depends on such Confidential Information; and that the
Company wishes to protect such Confidential Information by keeping it
confidential for the use and benefit of the Company and its subsidiaries and
Affiliates. Based on the foregoing, the Employee agrees to undertake the
following obligations with respect to such Confidential Information:
(i) the Employee agrees to keep any and all Confidential Information
in trust for the use and benefit of the Company and its subsidiaries and
Affiliates;
(ii) the Employee agrees that, except as required by applicable law
or as authorized in writing by the Board, he will not at any time during
or after the termination of his employment hereunder, disclose, directly
or indirectly, any Confidential Information of the Company or any of its
subsidiaries or Affiliates;
(iii) the Employee agrees to take all reasonable steps necessary, or
reasonably requested by the Company, to ensure that all Confidential
Information is kept confidential for the use and benefit of the Company
and its subsidiaries and Affiliates; and
(iv) the Employee agrees that, upon termination of his employment
hereunder or at any other time the Company may in writing so request, he
will promptly deliver to the Company all materials constituting
Confidential Information (including all copies thereof) that are in his
possession or under his control. The Employee further agrees, that if
requested by the Company, to return any Confidential Information pursuant
to this subparagraph (iv), he will not make or retain any copy or extract
from such materials.
For purposes of paragraph (c) of this Section 7, "Confidential
Information" means any and all information developed by or for the Company or
any of its subsidiaries or Affiliates of which the Employee gains or has
acquired knowledge during or prior to the
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Term by reason of his employment with the Company that is (A) not generally
known in any industry in which the Company or any of its subsidiaries or
Affiliates is or may become engaged or (B) not publicly available. Confidential
Information includes, but is not limited to, any and all information developed
by or for the Company or any of its subsidiaries or Affiliates concerning plans,
marketing and sales methods, customer lists, materials, processes, business
forms, procedures, devices, plans for development of products, services or
expansion into new areas or markets, internal operations, and any trade secrets
and proprietary information of any type owned by the Company or any of its
subsidiaries or Affiliates, together with all written, graphic and other
materials relating to all or any part of the same.
8. Successors; Assignment.
(a) The Company. The Company may assign any of its rights and obligations
hereunder, without the written consent of the Employee, in connection with a
merger, consolidation or sale of all or substantially all of the business or
assets of the Company. This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns.
(b) The Employee. Neither this Agreement nor any right or interest
hereunder may be assigned by the Employee, his beneficiaries, or legal
representatives without the prior written consent of the Board; provided,
however, that nothing in this Section 8 shall preclude (i) the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives of
the Employee or his estate from assigning any rights hereunder to distributees,
legatees, beneficiaries, testamentary trustees or other legal heirs of the
Employee.
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered by hand, mailed by
first-class registered or certified mail, postage prepaid and return receipt
requested, or delivered by overnight courier addressed as follows:
(i) If to the Company:
MBW Foods Inc.
Community Corporate Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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with a copy to:
MBW Investors LLC
c/o Dartford Partnership, L.L.C.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
with a copy to:
XxXxxx De Leeuw & Co.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
(ii) If to the Employee:
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
or, in each case, at such other address as may from time to time be specified to
the other party in a notice similarly given.
10. Governing Law; Jurisdiction. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York applicable to contracts executed and to be performed
entirely within said State. Any judicial proceeding brought against any of the
parties to this Agreement or any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of New York or
in the United States District Court for the Southern District of New York, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement accepts the jurisdiction of said courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
foregoing consent to jurisdiction shall not be deemed to confer rights on any
person other than the respective parties to this Agreement.
11. Expenses. If a dispute arises out of or related to this Agreement, if
either party to the Agreement brings legal action to enforce the terms of the
Agreement, the party who prevails in such legal action, whether plaintiff or
defendant, in addition to the remedy or relief obtained in such legal action,
shall be entitled to recover his or its expenses incurred in such legal action,
including without limitation, court costs and attorneys fees. A party shall be
deemed to have prevailed in such a legal action if such action is concluded
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pursuant to a court order or final judgment in favor of such party which is not
subject to appeal, a settlement agreement or dismissal of the principal claims.
12. Entire Agreement. This Agreement contains the entire agreement of the
parties and their Affiliates relating to the subject matter hereof and
supersedes all prior agreements, representations, warranties and understandings,
written or oral, with respect thereto.
13. Severability. If any term or provision of this Agreement or the
application thereof to any person, property or circumstance shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons, property or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall remain valid and enforceable to
the fullest extent permitted by law.
14. Remedies.
(a) Injunctive Relief. The Employee acknowledges and agrees that the
covenants and obligations of the Employee contained in subsections (a), (b) and
(c) of Section 7 hereof relate to special, unique and extraordinary matters and
are reasonable and necessary to protect the legitimate interests of the Company
and its subsidiaries and Affiliates and that a breach of any of the terms of
such covenants and obligations will cause the Company irreparable injury for
which adequate remedies at law are not available. Therefore the Employee agrees
that the Company shall be entitled to an injunction, restraining order, or other
equitable relief from any court of competent jurisdiction, restraining the
Employee from any such breach.
(b) Remedies Cumulative. The Company's rights and remedies under this
Section 14 are cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.
15. Withholding Taxes. The Company may deduct any federal, state or local
withholding or other taxes from any payments to be made by the Company hereunder
in such amounts which the Company reasonably determine are required to deduct
under applicable law.
16. Amendments, Miscellaneous, etc. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by the party against which such change, waiver, discharge or
termination is sought to be enforced. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the
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same instrument. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
17. Survival. The covenants set forth in Sections 4(f), 6 and 7 of this
Agreement shall survive and shall continue to be binding upon the parties
notwithstanding the termination of this Agreement for any reason whatsoever. The
covenants set forth in Section 7 of this Agreement shall be deemed and construed
as separate agreements independent of any other
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provision of this Agreement. The existence of any claim or cause of action by
the Employee against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Company of any or all
covenants.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first written above.
MBW FOODS INC.
By:/s/ Xxx Xxxxx
----------------------------------------
Title: Executive Vice President
/s/ Xxxxxx X. Xxxxxxx
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