AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
99.4
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT (“Agreement”) is dated as of _____________, 2006,
between TASTY BAKING COMPANY, a Pennsylvania corporation (the “Company”), and
XXXXXXX X. XXXXX (“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company and the Executive entered into an Employment Agreement dated as
of
August 14, 2002, a First Amendment to Employment Agreement dated as of January
9, 2004, and a second Amendment to Employment Agreement dated as of August
19,
2004 (collectively, the “Original Agreement”), regarding the employment of the
Executive as the President and Chief Executive Officer of the Company effective
October 7, 2002.
WHEREAS,
Executive and the Company desire to amend and restate the Original Agreement
to
incorporate the currently effective provisions of the Original Agreement into
a
single document, to amend and/or modify certain provisions and to conform the
Original Agreement to the non-qualified deferred compensation provisions of
Section 409A of the Internal Revenue Code of 1986, as amended.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained and of
the
mutual benefits herein provided, and intending to be legally bound hereby,
the
Company and Executive hereby amend and restate the Original Agreement, effective
as of July 27, 2006, except as otherwise stated herein, as follows:
Section
1.
Term
of
Employment.
The
Company hereby employs Executive as President and Chief Executive Officer of
the
Company, and Executive accepts such employment by the Company, on the terms
and
conditions herein contained and subject to termination only as hereinafter
provided. The term of employment of Executive under this Agreement shall
commence on October 7, 2002 (the “Commencement Date”) and effective, July 27,
2006, the Agreement shall be renewed for a three-year term and on every one
year
anniversary of July 27, 2006, shall be renewed for an additional three-year
term, unless either party gives notice of non-renewal to the other party in
writing at least 90 days prior to July 27 of the applicable year. Upon
termination of this Agreement, Employee shall be eligible only for the benefits
set forth in Section 6 hereof and he shall be entitled to no other benefits.
The
period from the Commencement Date through the termination or expiration of
the
term of this Agreement (including all renewal terms) is referred to as the
“Employment Period”. The Company shall use best efforts consistent with the
faithful discharge of the fiduciary duties of the Board to cause Executive
to be
elected to the Board and retained as a member of the Board during the term
hereof.
Section
2.
Duties.
(a) During
the
Employment Period, Executive shall serve as President and Chief Executive
Officer of the Company and shall have such other duties, responsibilities and
authority and perform such other services for the Company as are consistent
with
Executive’s background, training and experience as may from time to time be
assigned to Executive by the Board of the Company.
(b) During
the
Employment Period, Executive shall use his best efforts to carry out his duties
and responsibilities hereunder and devote his entire working time and effort
to
the business and affairs of the Company (except for permitted vacation, illness
or disability) and shall not, in any advisory or other capacity, work for any
other individual, firm or entity without first having obtained the written
consent of the Board. Notwithstanding the foregoing, nothing contained in this
Agreement shall preclude Executive from devoting reasonable periods of time
to
serve on the boards of directors of other organizations, including charitable
and community organizations, provided that such activities do not interfere
in
any material fashion (as determined by the Board in its sole discretion) with
the regular and satisfactory performance of Executive’s duties under this
Agreement, and, in the sole judgment of the Board (or any committee thereof),
do
not compete with or present a conflict of interest with the interests of the
Company.
(c) Employee
agrees to provide reasonable cooperation at the request of the Company in any
efforts to obtain “key-man” life insurance on Executive’s life.
Section
3. Compensation.
(a) During
the
Employment Period, the Company shall pay Executive a base salary at the annual
rate of no less than $400,000, which amount may be increased from time to time
at the discretion of the Board in accordance with the Company’s existing policy
regarding general increases. Payment shall be made in accordance with the
Company’s regular practice for Senior Executive (as defined in Section 4(a)
below) employees as in effect from time to time.
(b) In
addition to the Executive’s base salary, as increased from time to time,
Executive shall be entitled to participate in the normal course of business
in
the Annual Incentive Plan of the Company (a copy of which has been provided
to
Executive) and to receive annually such cash bonus payments as may be granted
to
him under such Plan from time to time. The target bonus, size of the bonus
pool
and bonus allocated to each participant in any year are subject to the
discretion of the Compensation Committee of the Board and to the approval of
the
Board.
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Section
4.
Additional
Perquisites.
(a) The
Company will reimburse Executive for all reasonable expenses properly incurred
by Executive in the performance of Executive’s duties hereunder in accordance
with policies established from time to time by the Board for employees who
have
either an Employment Agreement or a Change of Control Agreement with the Company
(“Senior Executives”).
(b) During
the
Employment Period, Executive shall be entitled to participate, in accord with
the terms thereof, in any present or future bonus, life insurance, disability
insurance, medical insurance, pension, Supplemental Executive Retirement Plan,
Thrift, ESOP, Restricted Stock Incentive Plan, long-term incentive plan, stock
option (whether incentive or non qualified) or other employee benefit,
compensation or incentive plan adopted by the Company in which Senior Executives
are generally permitted to participate.
(c) In
the
event Executive elects not to obtain life insurance (in excess of the basic
$10,000 of coverage paid for by the Company) under the Company’s life insurance
program for executives, but maintains or obtains life insurance through other
policies, the Company agrees to reimburse Executive for the cost of such other
insurance up to the amount which the Company would have paid for an equivalent
amount of life insurance under the Company’s life insurance program. Executive
acknowledges that the amount reimbursed by the Company will be reported as
W-2
income to Executive. In addition, provided Executive is in good health and
insurable at regular rates, the Company shall obtain for the benefit of the
Executive, and maintain and pay the premiums for, a term life insurance policy
in the amount of (i) One Million Dollars ($1,000,000.00) for the period
beginning on the Commencement Date and ending on the fifth anniversary of the
Commencement Date, and (ii) an additional One Million Dollars ($1,000,000.00)
beginning on October 1, 2004 or as soon as practicable thereafter and ending
on
the fifth anniversary of the Commencement Date. Executive shall be the owner
of
such policy (unless such insurance is effected through the Company’s group life
insurance program) and shall have the sole right to designate the beneficiaries
of such policy. Executive acknowledges that the Company will report as W-2
income to Executive the premiums paid on such policy.
(d) During
the
Employment Period, the Company shall provide Executive with the exclusive
personal and business use of an automobile (and bear all costs of fuel,
maintenance, repairs and insurance thereon) of a make, quality and cost
consistent with the Company’s policies from time to time in effect with regard
to vehicles for Senior Executives, or a replacement automobile of similar
prestige, appointments and cost. Executive acknowledges that the Company will
report as W-2 income to Executive the value of the personal use of such vehicle.
(e) Executive
shall be entitled to paid vacation (taken consecutively or in segments) in
accordance with the vacation policy of the Company as it exists for Senior
Executives from time to time, currently six (6) weeks during each fiscal year,
adjusted pro rata for any partial fiscal year during the term hereof.
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(f) During
the
Employment Period, the Company shall reimburse Executive for the dues and fees
for membership at not more than two (2) business or country clubs of his
choosing, subject to the approval of the Compensation Committee of the Board.
Executive acknowledges that the amount reimbursed by the Company will be
reported as W-2 income to Executive.
(g) The
Company shall provide to Executive supplemental retirement income benefits
in
accordance with the terms of the supplemental executive retirement plan
agreement attached hereto as Exhibit A (“SERP”).
(h) Beginning
July 27, 2006, and continuing during the term of this Agreement, the Company
shall reimburse Executive for up to $10,000 per annum for personal professional
services. Executive acknowledges that any such reimbursements will be reported
by the Company as W-2 income to the Executive.
Section
5. Termination
of Employment.
(a)
This
Agreement and the Employment Period shall cease and terminate upon the
occurrence of any of the events specified below:
(i) On
the
date of the death of the Executive;
(ii) By
the
Company in the event Executive shall become and remain “totally disabled” as
defined in Section 5(c) below;
(iii) By
the
Company for “cause” as defined in Section 5(b) below;
(iv) By
the
Company at any time without cause;
(v) By
the
Executive for “Good Reason” as defined in Section 5(d) below;
(vi) Upon
the
expiration of the then current term of this Agreement if either the Company
or
Executive gives timely notice of its or his election not to renew this
Agreement;
(vii) By
Executive at any time without Good Reason by resigning and giving the Company
90
days prior written notice thereof;
(viii) Either
by
Executive at any time during the period beginning six (6) months after a “Change
of Control” as defined in Section 5(e) below and ending 18 months after such
Change of Control, by giving written notice to the Company 90 days prior to
the
effective date of such termination, or by the Company (other than for cause)
at
any time during the period ending on the last day of the eighteenth calendar
month following the date of such Change of Control; and
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(ix) By
either
the Company or the Executive, on the “normal retirement date” (as defined in the
Company’s Pension Plan) of Executive, by giving 90 days notice prior to the
effective date of such termination;
(b) For
purposes of this Agreement, “cause” shall mean any of the following:
(i) Executive’s
conviction in a court of law of any crime or offense which constitutes a felony,
which conviction, in the good faith judgment of the Board, makes him unfit
for
continuing employment, prevents him from effective management of the Company,
or
materially and adversely affects the reputation or business activities of the
Company;
(ii) Dishonesty
or willful misconduct which materially and adversely affects the reputation
or
business activities of the Company and which, if capable of cure, continues
after written notice thereof to Executive (provided that prior to termination
for such reason, the Company shall give Executive written notice of the acts
constituting grounds for such termination and in the event such acts are capable
of being cured, the Company shall give Executive a period of 20 days within
which to cease or correct such acts, such that there is no longer grounds for
termination for cause, and if Executive fails to cease or correct such acts
the
Agreement shall be deemed terminated), or misappropriation of funds;
(iii) Substance
abuse, including abuse of alcohol or use of illegal narcotics, or other drugs
or
substances, for which Executive fails to undertake and maintain treatment within
15 days after being requested so to do by the Company; or
(iv) Executive’s
continuing material failure or refusal to perform his duties substantially
in
accordance with the terms of this Agreement, or to carry out in all material
respects the lawful directives of the Board (other than such failure resulting
from Executive’s incapacity due to injury, physical or mental illness,
disability or death); provided that prior to any termination of employment
pursuant to this clause (iv), the Company shall give Executive written notice
of
the acts constituting grounds for such termination and in the event such acts
are capable of being cured, the Company shall give Executive a period of 20
days
within which to cease or correct such acts, such that there is no longer grounds
for termination for cause, and if Executive fails to cease or correct such
acts
the Agreement shall be deemed terminated
(c) For
purposes of this Agreement, “totally disabled” shall mean a physical or mental
incapacity or disability which renders the Executive unable, with reasonable
accommodation, to perform the services required of him under this Agreement
for
a period of 180 days or more during any period of 12 consecutive months. Such
disability shall be subject to the written determination of a qualified
physician who shall be reasonably acceptable to the Company and the Executive
(or his personal representative in the event that Executive does not have the
legal capacity at such time to make such judgment). In the event that Executive
qualifies as being “totally disabled” within the meaning of the Company’s Long
Term Disability Plan, the Executive shall be entitled to receive long term
disability payments under such plan notwithstanding any termination of his
employment hereunder, during such period of disability, and Executive shall
be
entitled to the same benefits that any other employee of the Company would
enjoy
under the Long Term Disability Plan.
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(d) For
purposes of this Agreement, “Good Reason” shall mean (i) a material change in
the authority, duties and responsibilities of the Executive so as to be
inconsistent with those of president and chief executive officer of the Company,
(ii) the relocation of the Executive’s place of employment to a place (other
than the Company’s Oxford plant) outside a radius of 30 miles from the Company’s
Hunting Park Avenue plant in Philadelphia, (iii) the failure of the Company
to
obtain an agreement, satisfactory to the Executive, from any successor or assign
of the Company to assume and agree to perform this Agreement, (iv) the Company’s
continued failure to perform its duties hereunder in any material respect,
which
failure has not been cured within 20 days after written notice of such failure
(with specific reference to this Section of the Agreement) has been given by
Executive to the Company, (v) a material reduction in indemnification provided
by the Company to the Executive, except in the event that such a reduction
in
indemnification is applicable to all directors and officers of the Company
on a
uniform basis, or (vi) Executive ceases involuntarily to be a member of the
Board of Directors (other than by reason of death, disability or termination
for
cause).
(e) For
purposes of this Agreement, a “Change of Control” of the Company shall be deemed
to occur (i) upon any Change of Control of a nature that would be required
to be
reported in response to Item 6(e) of Schedule 14A or Item 5.01 of Form 8-K
(or
any successor provisions thereto) promulgated under the Securities Exchange
Act
of 1934, as amended and the regulations thereunder (“Exchange Act”); (ii) upon
the acquisition by any person or group of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of
twenty-five percent (25%) or more of the combined voting power of the Company’s
outstanding securities then entitled to vote generally in the election of
directors, excluding however acquisitions by the Company or any of its
subsidiaries, or any employee benefit plan sponsored or maintained by the
Company, or by a corporation pursuant to a reorganization, merger,
consolidation, division or issuance of securities of the Company if the
conditions described in clauses (v) (A) and (B) below are satisfied; (iii)
if
individuals who constitute the Board as of the date of this Agreement
(“Incumbent Board”), cease for any reason to constitute at least a majority of
the Board during any twenty-four (24) month period; provided, however, that
any
individual becoming a director subsequent to the date of this Agreement whose
election, or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Incumbent Board; (iv) the
consummation of a sale of all or substantially all of the assets of the Company
or the complete liquidation or dissolution of the Company; or (v) upon a
reorganization, merger, consolidation, division, or issuance of securities
of
the Company, in each case unless following such transaction (A) not less than
sixty percent (60%) of the outstanding equity securities of the corporation
resulting from or surviving such transaction and of the combined voting power
of
the outstanding voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned by the holders of the
Company’s common stock immediately prior to such transaction in substantially
the same proportions as their ownership immediately prior to such transaction,
and (B) at least a majority of the members of the board of directors of the
resulting or surviving corporation were members of the Incumbent
Board.
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Section
6. Effect
of Termination.
(a) Upon
termination of this Agreement as a result of the death of Executive (as provided
in Section 5(a)(i) above), the Company shall pay Executive’s base salary through
the end of the month in which his death occurs, such payments being made to
the
Executive’s estate. In addition, the Company shall pay to Executive’s estate (i)
any bonus to which Executive is entitled under Section 3(b) hereof for the
fiscal year ending on or immediately prior to the date of Executive’s death,
(ii) any bonus to which Executive is entitled under Section 3(b) hereof for
the
fiscal year in which his death occurs, which bonus shall be commensurate with
bonuses paid to other Senior Executives for such year relative to bonuses
previously paid to such Executive, prorated for the period during such year
that
Executive actually worked, (iii) any unpaid accrued benefits through the date
of
his death due to Executive under this Agreement, the SERP or any employee
benefit plan in which the Executive was a participant, (iv) reimbursement for
any expenses to which Executive is entitled through the date of his death under
the terms of this Agreement, and (v) any indemnification obligations to which
Executive may become entitled from the Company whether by contract or pursuant
to the Company’s charter or Bylaws.
(b) Upon
termination of this Agreement by reason of the Executive’s becoming totally
disabled (as provided in Section 5(a)(ii) above), Executive shall be entitled
to
the benefits, and the Company shall be obligated to provide benefits to
Executive, equivalent to those due upon termination of this Agreement as a
result of death of the Executive (as provided in Section 6(a) above), plus
all
benefits accruing under any long term disability insurance plan maintained
by
the Company. The bonus under clause (i) of Section 6(a) shall be calculated
for
the fiscal year prior to the year in which this Agreement is terminated under
Section 5(a)(ii) above; the bonus under clause (ii) of Section 6(a) shall be
calculated for the fiscal year in which such termination occurs. All other
benefits and expenses shall be determined as of the date such termination
occurs.
(c) Upon
termination of this Agreement: by the Company for cause (as provided in Section
5(a)(iii) above); by the Executive without Good Reason (as provided in Section
5(a)(vii) above); by the Executive as a result of his non-renewal of this
Agreement (as provided in Section 5(a)(vi) above); or by either the Company
or
Executive effective upon the normal retirement date of Executive (as provided
in
Section 5(a)(ix) above), then Executive shall have no further right, title
or
interest to any payments required to be made in accordance with this Agreement,
and the Company shall have no further obligation to Executive hereunder, except
for (i) the unpaid portion, if any, of base salary computed on a pro rata basis
through the effective date of such termination, (ii) any bonus to which
Executive is entitled under Section 3(b) hereof for the fiscal year ending
on or
immediately prior to the effective date of such termination, (iii) any unpaid
accrued benefits due to Executive through the date of such termination under
this Agreement, the SERP (except that the Executive shall have no rights under
the SERP in the event his employment is terminated by the Company for cause
under Sections 5(b)(i), 5(b)(ii) or 5(b)(iii) above) or any employee benefit
plan in which Executive was a participant, (iv) reimbursement for any expenses
to which Executive is entitled through the date of such termination under the
terms of this Agreement, and (v) any indemnification obligations to which
Executive may become entitled from the Company whether by contract or pursuant
to the Company’s charter or Bylaws.
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(d) Upon
termination of this Agreement: by the Company without cause (as provided in
Section 5(a)(iv) above); by the Company as a result of its non-renewal of this
Agreement (as provided in Section 5(a)(vi) above); or by the Executive for
“Good
Reason” (as provided in Section 5(a)(v) above), then the Executive shall be
entitled to receive, in lieu of all other damages and benefits to which
Executive may otherwise be entitled as a direct or indirect result of such
termination, (i) a lump sum payment equal to Executive’s annual base salary
compensation then in effect which otherwise would have been payable for the
remainder of the current term of this Agreement, (ii) a lump sum payment equal
to two times the greater of (x) the Executive’s target bonus under Tasty Baking
Company’s Annual Incentive Plan for the fiscal year in which the termination
occurred, or (y) the average of the annual bonuses paid or payable to the
Executive during the two full fiscal years immediately prior to the termination,
(iii) medical and life insurance benefits equivalent to those provided to
Executive prior to termination (provided Executive satisfies the insurability
criteria and complies with the conditions of such plans) for a period equal
to
the remainder of the current term of this Agreement, (iv) a lump sum payment
equal to any payments to which Executive would have been entitled to have
contributed to the SERP, based on Executive’s base salary and bonus for the
calendar year immediately prior to the calendar year in which the termination
occurs, for a period equal to the remainder of the current term of this
Agreement, (v) any unpaid accrued benefits due to Executive under this
Agreement, or any employee benefit plan in which Executive was a participant,
through the date of such termination, (vi) reimbursement for any expenses to
which Executive is entitled under the terms of this Agreement through the date
of such termination, and (vii) any indemnification obligations to which
Executive may become entitled from the Company whether by contract or pursuant
to the Company’s charter or Bylaws. The payments made pursuant to this Section
6(d) are expressly conditioned upon Executive’s first signing a valid general
release and waiver in a form reasonably acceptable to each of Executive and
the
Company, pursuant to which Executive shall release and waive all claims that
he
may have against the Company, its affiliates, officers, directors, employees
and
agents, arising during or related in any way to the Executive’s employment with
the Company, except for the Company’s continuing obligations hereunder. Except
as provided by Section 11, below, payments by the Company hereunder shall
commence within 30 days after delivery of such executed release provided
Executive has not revoked acceptance of the release.
(e) Upon
termination of this Agreement: by the Company (other than for cause) within
18
months after a Change of Control; by the Company prior to a Change of Control
and the Executive reasonably demonstrates that his termination was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control and who effectuates a Change
of Control (a “Third Party”) or termination otherwise occurred in connection
with, or in anticipation of, a Change of Control which actually occurs; by
the
Executive for Good Reason and the Executive reasonably demonstrates that such
action constituting Good Reason was taken at the request of a Third Party or
otherwise occurred in connection with, or in anticipation of, a Change of
Control; or by the Executive upon a Change of Control pursuant to the terms
of
Section 5(a)(viii) above, then the Executive shall be entitled to receive,
in
lieu of all other damages and benefits to which Executive may otherwise be
entitled as a direct or indirect result of such termination, (i) a lump sum
payment equal to three times his annual base salary then in effect, (ii) a
lump
sum payment equal to three times the greater of (x) the Executive’s target bonus
under Tasty Baking Company’s Annual Incentive Plan for the fiscal year in which
the Change of Control occurred, or (y) the average of the annual bonuses paid
or
payable to the Executive during the two full fiscal years immediately prior
to
the Change of Control, (iii) medical and life insurance benefits for a period
of
36 months after the date of termination equivalent to those provided to
Executive prior to his termination (provided Executive satisfies the
insurability criteria and complies with the conditions of such plans), (iv)
a
lump sum payment equal to any payments to which Executive would have been
entitled to have contributed to the SERP, based on Executive’s base salary and
bonus for the calendar year immediately prior to the calendar year in which
the
Change of Control occurs, for a period of 36 months, less any additional annual
contribution credits that are guaranteed under the SERP; (v) any unpaid accrued
benefits due to Executive under this Agreement, or any employee benefit plan
in
which Executive was a participant, through the date of such termination, (vi)
reimbursement for any expenses to which Executive is entitled under the terms
of
this Agreement through the date of such termination, and (vii) any
indemnification obligations to which Executive may become entitled from the
Company whether by contract or pursuant to the Company’s charter or Bylaws. To
the extent that the Company deems it undesirable to cover Executive under the
Company’s group medical or life insurance plans, then the Company shall provide
Executive with the same level of coverage under individual policies or pay
cash
to Executive equal to the cost to the Company for such benefits to Executive
immediately prior to termination of his employment. The payments made pursuant
to this Section 6(e) are expressly conditioned upon Executive’s first signing a
valid general release and waiver in a form reasonably acceptable to each of
Executive and the Company, pursuant to which Executive shall release and waive
all claims that he may have against the Company, its affiliates, officers,
directors, employees and agents, arising during or related in any way to the
Executive’s employment with the Company, except for the Company’s continuing
obligations hereunder. Except as provided by Section 11, below, payments by
the
Company hereunder shall commence within 30 days after delivery of such executed
release provided Executive has not revoked acceptance of the
release.
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Executive
and the Company expressly agree that in no event shall the aggregate amount
of
change of control benefits payable to Executive hereunder plus the amount of
change of control benefits payable to all other Senior Executives of the Company
exceed three percent (3%) of the total transaction value for such change of
control, as such value and percentages are then determined by a
nationally-recognized executive compensation consulting firm or investment
banking firm at the time of such change of control. The Company shall have
the
Accountants (as defined below) determine promptly after a Change of Control
the
aggregate amount of change of control benefits payable by the Company to
Executive and all other Senior Executives of the Company, and the amount, if
any, by which the cap set forth in the preceding sentence is exceeded. Such
excess shall be allocated among Executive and all other Senior Executives of
the
Company receiving change of control benefits in the same proportion as the
total
amount of their individual change of control benefits relates to the aggregate
amount of change of control benefits for all such persons as a
group.
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In
the
event that the benefits provided for in this subsection (e) or otherwise payable
to the Executive constitute “parachute payments” within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”), that are
subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then the Executive shall receive (i) a one-time payment from the Company
sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an
additional one-time payment from the Company sufficient to pay the additional
excise tax and federal and state income taxes arising from the Excise Tax
Gross-Up made by the Company to the Executive pursuant to this subsection (e)
(the “Additional Gross-Up”); provided, however, that the Company shall only pay
the Excise Tax Gross-Up and Additional Gross-Up if the cumulative after-tax
value of such payments to the Executive equals or exceeds $25,000. In the event
that the cumulative after-tax value of such payments to the Executive is less
than $25,000, then the Executive’s benefits hereunder shall be either (x)
delivered in full, or (y) delivered as to such lesser extent which would result
in no portion of such benefits being subject to the Excise Tax, whichever of
the
foregoing amounts, taking into account the applicable federal, state and local
income and employment taxes and the Excise Tax, results in the receipt by the
Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
the Excise Tax. Unless the Company and the Executive otherwise agree in writing,
the determination of the Executive’s excise tax liability and the amount
required to be paid under this Section 6(e) shall be made in writing in good
faith by a nationally or regionally recognized independent accounting firm
chosen by the Company and consented to by Executive (which consent shall not
be
unreasonably withheld) (the “Accountants”). In the event that the Excise Tax
incurred by the Executive is determined by the Internal Revenue Service to
be
greater or lesser than the amount so determined by the Accountants, the Company
and the Executive agree to promptly make such additional payment, including
interest and any tax penalties, to the other party as the Accountants reasonably
determine is appropriate. For purposes of making the calculations required
by
this Section 6(e), the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on interpretations
concerning the application of the Code for which there is a “substantial
authority” tax reporting position. 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 6(e).
The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 6(e).
(f) Executive
shall have no mitigation obligation with respect to the benefits payable to
Executive under this Section 6. Notwithstanding any termination of this
Agreement, Executive shall remain obligated under the provisions of Sections
9,
10 and 13(c) of this Agreement.
(g) In
the
event of a Change of Control and regardless of whether Executive’s employment is
terminated in connection with such Change of Control, one hundred percent (100%)
of any outstanding incentive awards (including restricted stock and performance
shares or units, stock options or stock appreciation rights) shall vest or
become exercisable immediately and any restrictions thereon shall lapse;
provided, however, nothing in this paragraph shall prevent the Company from
exercising any rights it may have pursuant to any employee benefit plan (or
grant agreement executed thereunder) in the event the Executive is terminated
for Cause.
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(h) Except
as
otherwise expressly provided herein, this Agreement and all of the liabilities
and obligations of the parties hereunder shall cease and terminate effective
upon the termination of the Employment Period.
Section
7.
Assignment.
This
Agreement shall not be assignable by the Company except to a successor to the
Company or its business by way of merger, acquisition, purchase of all or
substantially all of its assets or otherwise and the Company shall require
of
any such successor that this Agreement be binding upon and inure to the benefit
of any such parent, subsidiary or successor. This Agreement shall not be
assignable by Executive but it shall be binding upon and inure to the benefit
of
Executive’s heirs, executors, administrators and legal
representatives.
Section
8.
Notices.
All
notices, requests, demands and other communications hereunder must be in writing
and shall be deemed to have been given if delivered by hand or mailed by first
class, registered mail, return receipt requested, postage and registry fees
prepaid, and addressed as follows:
|
(a)
|
If
to the Company, to:
|
Tasty
Baking Company
|
|||
|
0000
Xxxxxxx Xxxx Xxxxxx
|
|||||
|
Xxxxxxxxxxxx,
XX 00000
|
|||||
|
Attention:
Secretary
|
|||||
|
(b)
|
If
to the Executive, to:
|
Xxxxxxx
X. Xxxxx
|
|||
|
[Address]
|
Addresses
may be changed by notice in writing signed by the addressee.
Section
9.
Confidential
Information; Non-Solicitation.
(a) Executive
agrees to hold in a fiduciary capacity for the benefit of the Company all of
the
Company’s business secrets and confidential information, knowledge and data
relating to the Company or any of its affiliated companies and their respective
businesses, which shall have been obtained by the Executive during his
employment by the Company or any of its affiliated companies, including without
limitation, information relating to such matters as finances, operations,
processes, product recipes, new products in development, sales methods,
equipment, techniques, plans, formulae, products, methods and know-how, customer
requirements and names of suppliers. Executive’s obligations under this Section
9(a) shall not be deemed violated in the event that (i) Executive discloses
any
such information pursuant to order of a court of competent jurisdiction,
provided Executive has notified the Company of such potential legal order and
provided the Company with the opportunity to challenge or limit the scope of
the
disclosure, or (ii) such information becomes generally available from a source
other than the Company, any of its affiliates, or any of their employees when
such source is legally entitled, to the best of Executive’s knowledge, to make
such information available, except that notwithstanding anything herein which
may be construed to the contrary, in no event shall Executive be permitted
to
use or disclose any of the Company’s product recipes.
-11-
(b) Executive
agrees, as a condition to the Company’s agreeing to employ him pursuant to the
terms of this Agreement and to the performance by the Company of its obligations
hereunder, including but not limited to payments to Executive after termination
of this Agreement, during the term of this Agreement and any renewals or
extensions hereof, and for a period of two (2) years thereafter, Executive
shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or entity, whether individually or in conjunction
with any other person, or as an employee, agent, consultant, representative,
partner or holder of any interest in any other person, firm, entity or other
association:
(i) Solicit,
entice or induce any Customer (as defined below) to become a client, customer,
OEM, distributor or reseller of any other person, firm or entity with respect
to
products and services the same or similar to those then sold or under
development by the Company or to cease doing business with the Company, and
Executive shall not approach any such person, firm or entity for such purpose
or
authorize or knowingly approve the taking of any such actions by any other
person;
(ii) Solicit,
entice or induce, directly or indirectly, any person who presently is or at
any
time during the term hereof, including any renewals or extensions hereof, was
an
employee, contractor or business associate of the Company to become employed
or
engaged by any other person, firm or entity or to cease their employment or
other business relationship with the Company, and Executive shall not approach
any such employee, contractor or business associate for such purpose; or
(iii) Render
services to, consult for, become employed by, own or have a financial or other
interest in any person or entity that manufactures and/or provides products
or
services competing with the products or services then sold, licensed or under
development by the Company.
For
purposes of this Section 9(b), a “Customer” means (x) any person or entity which
at the time of determination is, or shall have been within two years prior
to
such time, a client, customer, OEM, distributor or reseller of the Company,
or
(y) any person or entity to whom a detailed written proposal has been made
within twelve (12) months immediately preceding the time of determination.
(c) Executive
agrees that in the event of breach of any of his obligations under this Section
9, the Company would suffer irreparable harm for which there is no adequate
remedy at law, and that such harm may be impossible to measure in monetary
damages. Accordingly, in addition to any other remedies which the Company may
have at law or in equity, the Company shall have the right to have all
obligations, undertakings, agreements and other provisions of this Agreement
specifically performed by Executive, and the Company shall be entitled to an
injunction restraining Executive from violating the provisions hereof and shall
have the right to obtain preliminary and permanent injunctive relief to secure
specific performance, and to prevent a breach or contemplated breach, of this
Agreement. In such event, the Company shall be entitled to an accounting and
repayment of all profits, compensation, remunerations or benefits which
Executive, directly or indirectly, has realized or may realize as a result
of,
growing out of, or in conjunction with, any violation of this Agreement. Such
remedies shall be in addition to and not in limitation of any relief or other
rights or remedies to which the Company is or may be entitled at law or in
equity or under this Agreement.
-12-
(d) If
any
part of this Section or the application thereof is construed to be invalid
or
unenforceable, then the other parts of this Section or the application thereof
shall not be affected and shall be given full force and effect without regard
to
the invalid or unenforceable provisions. If any provision in this Section is
held to be unenforceable because of the area covered, the duration, or the
scope
thereof, then the court making such determination shall have the power to reduce
the area and/or duration and/or scope thereof, and the provision shall then
be
enforceable in its modified form.
(e) Executive
acknowledges that he will be able to earn a livelihood without violating the
provisions of Section 9 of this Agreement. Executive further acknowledges that
his rights have been limited by this Agreement only to the extent reasonably
necessary to protect the legitimate interests of the Company and as
consideration for the Company’s entering into this Agreement.
Section
10. Mandatory
Mediation/Arbitration.
The
procedures set forth in this Section 10 shall constitute the sole and exclusive
procedures for the resolution of (i) any dispute under this Agreement or (ii)
any other dispute between the parties, except for any dispute related to an
alleged violation of Section 9 hereof or any claims by the Company for
injunctive relief. The parties shall first attempt to resolve any dispute
through mediation conducted in Philadelphia, Pennsylvania. The party seeking
relief shall notify the other party in writing of the basis of the claim and
the
relief sought, and the parties shall meet to agree upon a neutral mediator.
If
the parties do not promptly agree on a neutral mediator, then any of the parties
may notify J.A.M.S./Endispute, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, to initiate
selection of a mediator from the J.A.M.S./Endispute Panel of Neutrals. The
Company shall pay the fees and expenses of the mediator. If the mediator is
unable to facilitate a settlement of the dispute within a reasonable period
of
time, as determined by the mediator, the mediator shall issue a written
statement to the parties to that effect and the aggrieved party(ies) may then
seek relief through arbitration, which shall be binding, before a single
arbitrator pursuant to the Commercial Arbitration Rules (“Rules”) of the
American Arbitration Association (the “Association”). The place of arbitration
shall be Philadelphia, Pennsylvania. Arbitration may be commenced at any time
(after the mediator issues the written statement provided in the fourth sentence
of this Section 10) by any party seeking arbitration by written notice to the
other party(ies) by first class mail, postage prepaid. The arbitrator shall
be
selected by the joint agreement of the parties, but if the parties do not so
agree within (30) business days after the date of the notice referred to above,
the selection shall be made pursuant to the Rules from the panels of arbitrators
maintained by the Association, and such arbitrator shall be neutral, impartial,
independent of the parties and others having any known interest in the outcome,
shall abide by the ABA and AAA Code of Ethics for neutral arbitrators and shall
have no ex parte communications about the dispute with either party. The
arbitrator shall render a written decision within 60 days of completion of
the
arbitration. Any award rendered by the arbitrator shall be final, conclusive
and
binding upon the parties hereto and there shall be no right of appeal therefrom.
Judgment upon the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. The costs and expenses of arbitration, including
fees and expenses of the arbitrator, shall be paid by the Company. The
arbitrator shall not be permitted to award punitive or similar type damages
under any circumstances. With respect to an alleged violation of Section 9
hereof or any claim by the Company for injunctive relief, the Company, without
prejudice to or compliance with the procedures set forth in this Section 10,
is
expressly permitted to institute legal proceedings to obtain a temporary
restraining order, a preliminary and permanent injunction or other equitable
relief.
-13-
Xxxxxxx
00. Xxxxxxx
000X Xxxxxxxxxxxx.
(x)
If and
only to the extent necessary to satisfy the requirements of Section 409A of
the
Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and
other guidance promulgated thereunder by the Internal Revenue Service (hereafter
referred to as “Section 409A”), the payments, compensation and benefits provided
to the Executive by this Agreement shall be subject to the restrictions of
Section 409A.
(b)
In the
event of the termination of the Agreement by reason of the Executive being
totally disabled, as provided in Section 5(c) above, Executive shall be entitled
to the benefits under Section 6(b) above at such time and in such amounts as
provided by Section 6(b). However, if any stock of the Company is
publicly-traded on an established securities market or otherwise as of the
date
of Executive’s termination of employment:
(i)
any
bonus amounts shall be paid to the Executive in accordance with Section 6(b),
but not later than 2-1/2 months after the end of the calendar year in which
the
Executive becomes totally disabled.
(ii)
reimbursement for expenses which would be excludable from the Executive’s income
or which would be deductible business expenses under Section 162 of the Code
(without regard to adjusted gross income limitations) and payment of
indemnification obligations which would be excludable from the Executive’s
income shall be promptly made to the Executive in accordance with Section 6(b),
but not later than the end of the second calendar year following the date of
the
Executive’s termination due to becoming totally disabled, or such later date as
may be permitted by Section 409A.
(iii)
reimbursement for any expenses which would otherwise be includable in the
Executive’s income and payment of any indemnification obligations which would be
includable in the Executive’s income shall be made in accordance with Section
6(b) above, but not earlier than the date that is six months after the
Executive’s termination of employment due to becoming totally disabled.
(c)
In the
event of the termination of the Agreement by the Company for cause, by the
Executive without Good Reason, by the Executive as a result of non-renewal
of
the Agreement, or by the Company or the Executive upon the normal retirement
date of Executive as set forth in Section 6(c) above, Executive shall be
entitled to the benefits under Section 6(c) at such time and in such amounts
as
provided by Section 6(c). However, if any stock of the Company is
publicly-traded on an established securities market or otherwise as of the
date
of Executive’s termination of employment:
-14-
(i)
any
bonus amount shall be payable to Executive in accordance with Section 6(c),
but
not later than 2-1/2 months after the end of the calendar year in which
Executive terminates employment for any of the reasons described in Section
6(c).
(ii)
reimbursement for expenses which would be excludable from the Executive’s income
or which would be deductible business expenses under Section 162 of the Code
(without regard to adjusted gross income limitations) shall be promptly made
to
the Executive in accordance with Section 6(c), but not later than the end of
the
second calendar year following the date of the Executive’s termination of
employment for any of the reasons described in Section 6(c), or such later
date
as may be permitted by Section 409A.
(iii)
reimbursement for any expenses which would otherwise be includable in the
Executive’s income and payment of any indemnification obligations which would be
includable in the Executive’s income shall be made in accordance with Section
6(c), but not earlier than the date that is six months after the Executive’s
termination of employment for any of the reasons described in Section 6(c).
(d)
In the
event of the termination of the Agreement by the Company without cause or as
a
result of its non-renewal of the Agreement, or by the Executive for “Good
Reason” as set forth in Section 6(d) above, Executive shall be entitled to the
payments, compensation and benefits under Section 6(d) at such time and in
such
amounts as provided by Section 6(d). However, if any stock of the Company is
publicly-traded on an established securities market or otherwise as of the
date
of Executive’s termination of employment:
(i)
payments of annual base salary, bonus amounts and lump sum SERP equivalent
payments, set forth in Section 6(d), shall commence not earlier than six months
following the Executive’s termination of employment. If the Executive would have
otherwise received any salary and/or bonus payments during the first six months
after termination of employment but for this paragraph (d), such payments shall
be made in a single sum to the Executive on the first business day following
the
date that the six months after his termination of employment. In addition,
the
Company shall pay the Executive interest on such payments that are delayed
because of this paragraph at the Xxxxx’x Xx rate for corporate bonds as of the
last business day preceding the beginning of the calendar year in which such
payments would have been otherwise paid to the Executive pursuant to Section
6(d) above.
(ii)
reimbursement for expenses which would be excludable from the Executive’s income
or which would be deductible business expenses under Section 162 of the Code
(without regard to adjusted gross income limitations) and payment of
indemnification obligations which would be excludable from Executive’s income
shall be promptly made to the Executive in accordance with Section 6(d), but
not
later than the end of the second calendar year following the date of the
Executive’s termination of employment, or such later date as may be permitted by
Section 409A.
-15-
(iii)
reimbursement for any expenses which would otherwise be includable in the
Executive’s income and payment of any indemnification obligations which would be
includable in the Executive’s income shall be made in accordance with Section
6(d), but not earlier than the date that is six months after the Executive’s
termination of employment.
(e)
In the
event of termination of Executive’s employment other than for “cause”, as
defined in Section 5(b), above, following, prior to or in anticipation of a
Change of Control, as set forth in Section 6(e) above, Executive shall be
entitled to the payments, compensation and benefits described in Section 6(e).
However, if any stock of the Company (or its successor) is publicly-traded
on an
established securities market or otherwise as of the date of Executive’s
termination of employment:
(i)
payments of annual base salary, cash bonus amounts, lump sum SERP equivalent
payments, as set forth in Section 6(e), and, if applicable, Excise Tax Gross-Up
and Additional Tax Gross-Up, shall commence not earlier than the date that
is
six months following the Executive’s termination of employment. If the Executive
would have otherwise received any salary, bonus payments, lump sum SERP
equivalent payments, Excise Tax Gross-Up or Additional Tax Gross-Up during
the
first six months after termination of employment but for this subparagraph
(i),
such payments shall be made in a single sum to the Executive on the first
business day following the date that is six months after his termination of
employment. In addition, the Company shall pay the Executive interest on
payments that are delayed because of this subparagraph (i) at the Xxxxx’x Xx
rate for corporate bonds as of the last business day preceding the beginning
of
the calendar year in which such payments would have otherwise been paid to
the
Executive pursuant to Section 6(b).
(ii)
if
the Company determines to provide life insurance coverage to the Executive
in
accordance with Section 6(e) above (provided Executive satisfies the
insurability criteria and complies with the conditions of the plan), the
Executive must timely pay to the Company all premiums that are due prior to
six
months following Executive’s termination of employment. The Company will pay all
premiums that are due for such life insurance coverage in accordance with
Section 6(e) starting six months after the Executive’s termination of employment
and shall reimburse the Executive for the premiums that the Executive has paid
on the first business day following the date that is six months after the
Executive’s termination of employment. If, pursuant to Section 6(e), the Company
decides to pay cash to the Executive equal to the cost of providing group or
individual life insurance coverage to the Executive in lieu of providing life
insurance coverage, the Company shall pay such cash to the Executive on the
first business day following the date that is six months after the Executive’s
termination of employment. If the Company decides to pay cash to the Executive
in lieu of life insurance coverage, the Company shall give written notice to
the
Executive of such decision at least 15 days prior to the lapse of
Company-provided life insurance coverage for the Executive.
(iii)
reimbursement for any expenses which would be excludable in the Executive’s
income (or which would be deductible business expenses under Section 162 of
the
Code (without regard to adjusted gross income limitations) and payment of
indemnification obligations which would be excludable in Executive’s income
shall be promptly made to the Executive in accordance with Section 6(e), but
not
later than the end of the second calendar year following the date of the
Executive’s termination of employment, or such later date as may be permitted by
Section 409A.
-16-
(iv)
reimbursement for any expenses and which would otherwise be includable in the
Executive’s income and payment of any indemnification obligations which would be
includable in the Executive’s income shall be made in accordance with Section
6(e), but not earlier than the date that is six months after the Executive’s
termination of employment.
Section
12. Legal Fees.
The
Company shall reimburse the Executive for all reasonable legal fees and expenses
incurred in good faith by the Executive as a result of any dispute with any
party (including, but not limited to, the Company and/or any affiliate of the
Company) regarding the payment of any benefit provided for in this Agreement
pursuant to Section 6(e) (including, but not limited to, all such fees and
expenses incurred in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code), plus in each
case
interest on any delayed payment at the applicable Federal rate provided for
in
Section 7872 (f)(2)(A) of the Code. Such payments shall be made within five
(5)
business days after delivery of the Executive’s written requests for payment
accompanied by such evidence of fees and expenses incurred as the Company
reasonably may require.
Section
13. Miscellaneous.
(a) This
Agreement is the entire agreement and understanding between the parties hereto
and supersedes all prior agreements and understandings, oral or written,
relating to the subject matter hereof, and no change, alteration or modification
hereof may be made except in writing signed by both parties hereto.
(b) The
headings in this Agreement are for convenience of reference only and shall
not
be considered as part of this Agreement nor limit or otherwise affect the
meaning hereof.
(c) This
Agreement shall in all respects be governed by and construed and enforced in
accordance with the substantive laws of the Commonwealth of
Pennsylvania.
(d) If
any
section, paragraph, term or provision of this Agreement, or the application
thereof, is determined by a competent court or tribunal to be invalid or
unenforceable, then the other parts of such section, paragraph, term or
provision shall not be affected thereby and shall be given full force and effect
without regard to the invalid or unenforceable portions; and the parties
specifically authorize and agree that the court or tribunal shall modify the
section, paragraph, term or provision hereof which is so determined to be
invalid or unenforceable, and the parties specifically authorize and agree
to
such modification.
-17-
IN
WITNESS
WHEREOF, the parties hereto have executed and delivered this Agreement as of
the
date first above written.
|
ATTEST:
|
TASTY
BAKING COMPANY
|
|
| _______________________________ |
By:___________________________________
|
|
|
Secretary
|
Xxxxx
X. Xxxxxxxx
|
|
|
Chairman
of the Board
|
||
|
(SEAL)
|
||
| _______________________________ | ____________________________ | |
|
Witness
|
Xxxxxxx
X. Xxxxx
|
-18-
