Exhibit 10.2
SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into as of April 15, 1999
between ESKIMO PIE CORPORATION, a Virginia corporation ("Eskimo Pie"), and
Xxxxxxx X. Xxxxxxxx ("Executive").
1. Definitions of Certain Terms. For purposes of this Agreement,
(a) a "Termination" shall occur if Executive's employment by
Purchaser is terminated by Purchaser at any time within two years following Sale
of the Flavors Division for reasons other than:
(i) for Cause (as defined in Section 3(a));
(ii) as a result of Executive's death, permanent disability,
or retirement at or after the first day of the month
following the month in which Executive attains age 65
("Normal Retirement Date");
(b) a "Termination" shall also occur if Executive's employment by
Purchaser is terminated by Executive for Good Reason (as defined in Section 4)
within two years following Sale of the Flavors Division; and
(c) "Sale of the Flavors Division" shall mean the consummation of
the sale or disposition by Eskimo Pie of substantially all the assets or
business of its Flavors Division to a third party ("Purchaser").
2. Benefit upon Termination. Except as provided in Section 3, upon
Termination, Eskimo Pie agrees to provide or cause Purchaser to provide to
Executive the benefits described in Section 2(a) below, subject to the
limitations set forth in Sections 2(b) and (c) below:
(a) Benefit Payment. Executive shall receive (i) within five
business days of Termination a lump sum payment in cash in an amount equal to
one times Executive's annual base salary as in effect on the date hereof or as
the same may be increased from time to time and (ii) no later than the end of
the month following the month of Termination a lump sum payment in cash in an
amount equal to Executive's actual bonus incentive (including any proration), if
any, payable for 1999.
(b) Other Benefit Plans and Perquisites. The benefit payable upon
Termination in accordance with this Section 2 is not intended to exclude
Executive's participation in any benefit plans or enjoyment of other perquisites
which are available to executive personnel generally in the class or category of
Executive or to preclude such other compensation or benefits as may be
authorized from time to time by Purchaser.
(c) No Duty to Mitigate. Executive's entitlement to benefits
hereunder shall not be governed by any duty to mitigate his damages by seeking
further employment nor offset by any compensation which he may receive from
future employment.
(d) Interest on Delayed Payments. If payment of any benefit due to
Executive under this Section 2 is not timely made, Executive shall be entitled
to interest on the amount not timely paid at 120% of the applicable federal
rate, compounded semi-annually, under Section 1274(d) of the Code determined at
the time Sale of the Flavors Division occurs, such interest to accrue from the
date such payment is due through the date of payment thereof.
3. Conditions to the Obligations of Eskimo Pie and Purchaser. Eskimo
Pie shall have no obligation to provide or cause Purchaser to provide to
Executive the benefit described in Section 2 hereof if the following event shall
occur:
(a) Termination for Cause. Purchaser shall terminate Executive's
employment for Cause. For purposes of this Agreement, termination of employment
for "Cause" shall mean termination solely for dishonesty, conviction of a
felony, or willful unauthorized disclosure of confidential information of
Purchaser.
4. Termination for Good Reason. Executive may terminate his employment
with Purchaser following Sale of the Flavors Division for Good Reason and shall
be entitled to receive the benefit described in Section 2 hereof. For purposes
of this Agreement, "Good Reason" shall mean:
(a) a reduction by Purchaser in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
(b) Purchaser's requiring Executive to be based anywhere other than
(i) Richmond, Virginia, (ii) Milwaukee, Wisconsin or (iii) any location which
Executive agrees in writing is not objectionable, except for required travel on
Purchaser's business to an extent substantially consistent with Executive's
present business travel obligations;
(c) except in the event of reasonable administrative delay, the
failure by the Purchaser to pay to Executive any portion of Executive's current
compensation within seven (7) days of the date such compensation is due;
(d) the failure of Eskimo Pie or Purchaser to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 9 hereof;
(e) the failure by Purchaser to provide Executive with participation
in any compensation plan in which Executive participates immediately prior to
Sale of the Flavors Division that is material to Executive's total compensation,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by
Purchaser to provide Executive with participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of Executive's participation
relative to other participants, as it existed at the time of Sale of the Flavors
Division; or
(f) the failure by Purchaser to provide Executive with benefits
substantially similar in the aggregate to those enjoyed by Executive under any
of Eskimo Pie's life insurance, medical, health and accident, disability plans,
or other welfare and defined benefit plans (qualified and non-qualified) in
which Executive was participating at the time of Sale of the Flavors Division,
the taking of any action by Purchaser which would directly or indirectly
materially reduce any of such benefits or deprive Executive of any material
fringe benefit enjoyed by Executive at the time of Sale of the Flavors Division,
or the failure by Purchaser to provide Executive with the number of paid
vacation days to which Executive is entitled on the basis of years of service
with Eskimo Pie in accordance with Eskimo Pie's normal vacation policy in effect
at the time of Sale of the Flavors Division.
5. Other Covenants. Upon Termination, if Executive is entitled to
receive the benefit described in Section 2, then:
(a) At Executive's request, Purchaser shall arrange outplacement
services for Executive, at Purchaser's expense, for a period of one year
following Termination.
(b) Executive and/or his qualified dependents shall be provided
coverage, at his/their expense, under any medical benefit plans covering him
and/or them at the time of Termination in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to
time.
6. Confidentiality: Non-Solicitation: Cooperation.
(a) Confidentiality. At all times following Termination, Executive
will not, without the prior written consent of Eskimo Pie and Purchaser,
disclose to any person, firm or corporation any confidential information of
Eskimo Pie or its subsidiaries or affiliates or Purchaser which is now known to
him or which hereafter may become known to him as a result of his employment or
association with Eskimo Pie or Purchaser and which could be helpful to a
competitor; provided, however, that the foregoing shall not apply to
confidential information which becomes publicly disseminated by means other than
a breach of this Agreement.
(b) Non-Solicitation. For a period of three years following the date
of Termination, Executive will not induce or attempt to induce, either directly
or indirectly, any management or executive employee of Eskimo Pie or of any of
its subsidiaries or affiliates or of Purchaser to terminate his or her
employment.
(c) Cooperation. At all times following Termination, Executive will
furnish such information and render such assistance and cooperation as may
reasonably be requested in connection with any litigation or legal proceedings
concerning Eskimo Pie or any of its subsidiaries or affiliates (other than any
legal proceedings concerning Executive's employment) or of Purchaser. In
connection with such cooperation, Eskimo Pie or Purchaser will pay or reimburse
Executive for reasonable expenses actually incurred.
(d) Remedies for Breach. It is recognized that damages in the event
of breach of Sections 6(a) and (b) above by Executive would be difficult, if not
impossible, to ascertain, and it is therefore specifically agreed that Eskimo
Pie and Purchaser, in addition to and without limiting any other remedy or right
it may have, shall have the right to an injunction or other equitable relief in
any court of competent jurisdiction, enjoining any such breach. The existence of
this right shall not preclude Eskimo Pie or Purchaser from pursuing any other
rights and remedies at law or in equity which Eskimo Pie or Purchaser may have.
7. Term of Agreement. This Agreement shall commence on the date hereof
and shall remain in force until the earlier of December 31, 1999 or a "Change in
Control" as that term is defined in the Executive Severance Agreement dated as
of September 1, 1997 between Eskimo Pie and Executive; provided, however, that
if Sale of the Flavors Division occurs during the term of this Agreement, this
Agreement shall continue in effect for a period of 24 months beyond the month in
which the Sale of the Flavors Division occurred. This Agreement shall terminate
automatically in the event of a Change in Control, it being the express intent
of the parties that no benefit shall be payable under this Agreement in the
Event of a Change in Control.
Notwithstanding the foregoing, this Agreement shall terminate if either
Eskimo Pie or Executive terminates the employment of Executive before Sale of
the Flavors Division occurs. Except as otherwise provided in Section 9(b), this
Agreement shall also terminate upon the Executive's death or permanent
disability.
8. Adjudication and Expenses.
(a) If a dispute or controversy arises under or in connection with
this Agreement, Executive shall be entitled to an adjudication in an appropriate
court of the State of Virginia, or in any other court of competent jurisdiction.
Alternatively, Executive, at Executive's option, may seek an award in
arbitration to be conducted by a single arbitrator under the Commercial
Arbitration Rules of the American Arbitration Association.
(b) If any contest or dispute shall arise under this Agreement
involving the failure or refusal of Eskimo Pie to perform fully in accordance
with the terms hereof, Eskimo Pie shall reimburse Executive, on a current basis,
for all legal fees and expenses, if any, incurred by Executive in connection
with such contest or dispute (regardless of the result thereof), together with
interest in an amount equal to the prime rate of BankAmerica from time to time
in effect, but in no event higher than the maximum legal rate permissible under
applicable law, such interest to accrue from the date Eskimo Pie receives
Executive's statement for such fees and expenses through the date of payment
thereof. Such reimbursement shall include the cost of attorney's fees in
reviewing this Agreement in connection with such contest or dispute and in
negotiating or attempting to negotiate a settlement of such contest or dispute
prior to Executive's making such claim or commencing any action or proceeding
and in settling any matter relating to this Agreement.
(c) If any claim, action or proceeding (including without limitation
a claim, action or proceeding by Executive against Eskimo Pie) occurs with
respect to this Agreement other than one described in Section 8(b), Eskimo Pie
shall pay or reimburse Executive for all costs and expenses, including without
limitation court costs and attorneys' fees, incurred by Executive as a result
thereof, provided that if the claim, action or proceeding is by Executive
against Eskimo Pie, Executive is successful in whole or in part on the merits or
otherwise in such claim, action or proceeding. Such reimbursement shall include
interest in an amount equal to the prime rate of BankAmerica from time to time
in effect, but in no event higher than the maximum legal rate permissible under
applicable law, such interest to accrue from the date Eskimo Pie receives
Executive's statement for such fees and expenses through the date of payment
thereof.
9. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be binding upon
Eskimo Pie and its successors and assigns. Eskimo Pie will require (i) any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of Eskimo
Pie and (ii) the Purchaser and its successors to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that Eskimo Pie
would be required to perform it if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable hereunder if Executive had continued to
live, any such amount, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there is no such designee, Executive's estate.
10. Miscellaneous.
(a) Assignment. No right, benefit or interest hereunder shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, except by will or the laws of descent and
distribution, and any attempt thereat shall be void; and no right, benefit or
interest hereunder shall, prior to receipt of payment, be in any manner liable
for or subject to the recipient's debts, contracts, liabilities, engagements or
torts.
(b) Construction of Agreement. Nothing in this Agreement shall be
construed to amend any provision of any plan or policy of Eskimo Pie. This
Agreement is not, and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by Eskimo Pie or by any of its subsidiaries
and affiliates.
(c) Statutory References. Any reference in this Agreement to a
specific statutory provision shall include that provision and any comparable
provision or provisions of future legislation amending, modifying, supplementing
or superseding the referenced provision.
(d) Amendment. This Agreement may not be amended, modified or
terminated except by written agreement of both parties.
(e) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
(f) Severability. If any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
together shall constitute one agreement.
(h) Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to withholding of taxes,
filing, making of reports and the like, and Eskimo Pie shall use its best
efforts to satisfy promptly all such requirements.
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters covered
hereby.
Each of the parties has therefore caused this Agreement to be executed
on its or his behalf as of the date first written above.
ESKIMO PIE CORPORATION
By /s/ Xxxxx X. Xxxxx
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EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx
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