Exhibit 10.7
EMPLOYMENT AGREEMENT
This AGREEMENT, made and entered into by and between Aurora
Foods Inc., a Delaware corporation (together with its successors and
assigns permitted under this Agreement, the "Company"), and Xxxxxx
Xxxxxxxxx (the "Executive").
WHEREAS, in light of current conditions, the Company is
considering various strategic initiatives, including but not limited
to a financial restructuring;
WHEREAS, the Company believes that the Executive's
knowledge, skill and experience will be essential in enabling the
Company to successfully implement any such strategic initiatives;
WHEREAS, the Company desires to employ the Executive and
to enter into an agreement embodying the terms of such employment
(this "Agreement") and the Executive desires to accept such
employment, subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Company and the Executive (individually a "Party" and together the
"Parties") agree as follows:
1. Definitions.
(a) "Base Salary" shall mean the salary granted to the
Executive pursuant to Section 4.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Cause" shall mean termination of the Executive
based on (i) conduct which is a material violation of Company policy
or which is fraudulent or unlawful or which materially interferes with
the ability of the Executive to perform his duties, (ii) misconduct
which results in damage or injury to the Company, including damage to
its reputation, or (iii) negligence in the performance of, or willful
failure to perform, the Executive's duties and responsibilities.
(d) "Chairman" shall mean the Chairman of the Board.
(e) "Constructive Termination" by the Executive shall
mean termination based on the occurrence without the Executive's
express consent of any of the following: (i) a significant diminution
by the Company of the Executive's role with the Company or a
significant detrimental change in the nature and/or scope of the
Executive's status with the Company, other than for Cause or
Disability or (ii) a reduction in the Executive's Base Salary, other
than for Cause or Disability. The Executive shall further be required
to comply with the provisions of Section 8(d)(j) of this Agreement
with respect to a Constructive Termination.
(f) "Disability" shall mean the Executive's inability to
substantial1y perform his duties and responsibilities under this
Agreement by reason of any physical or mental incapacity for a period
of 180 consecutive days.
(g) "Effective Date" shall mean the date of
execution of this Agreement. Change in Control has occurred
(h) "Restructuring Date" shall mean the earlier of the
following dates: (x) the date on which a recapitalization or
restructuring (including, without limitation, through any exchange,
conversion, cancellation, forgiveness, retirement and/or a material
modification or amendment to the terms, conditions or covenants
thereof) of the Company's indebtedness for borrowed money (including
debt securities and trade debt), including pursuant to a repurchase or
an exchange transaction, or a solicitation of consents, waivers,
acceptances or authorizations is consummated or (y) the date on which
a plan of reorganization that is confirmed by a bankruptcy court
becomes effective or the Company otherwise emerges from Chapter 11, as
a result of which the business of the Company is maintained on an
ongoing basis, whether maintained by the Company, the debtor in
possession or by an entity that has acquired all or substantially all
of the Company's or debtor in possession's assets, or (z) the
disposition to one or more third parties in one or a series of related
transactions of (i) all or a significant portion of the equity
securities of the Company by the security holders of the Company or
(ii) all or a significant portion of the assets (including the
assignement of any executory contracts) or businesses of the Company
or its subsidiaries (other than the sale of frozen pizza and home meal
replacement businesses), in either case, including through a sale or
exchange of capital stock, options or assets, a lease of assets with
or without a purchase option, a merger, consolidation or other
business combination, an exchange or tender offer, a recapitalization,
the formation of a joint venture, partnership or similar entity, or
any similar transaction..
(i) "Term of Employment" shall mean the period commencing
on the Effective Date and ending on the earlier of (i) the
Restructuring Date or (ii) any date after December 31, 2003, of which
either party provides the other with ninety (90) days advance written
notice of the expiration of the term.
2. Term of Employment. Subject to Section 9, the Company hereby
employs the Executive, and the Executive hereby accepts such
employment for the Term of Employment.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall
be, employed and serve as the Chief Restructuring Officer of the
Company (or such other position or positions as may be agreed upon in
writing by the Executive and the Company) and be responsible for
managing and implementing the restructuring of the Company as directed
by the Chairman and the Board. The Executive shall devote
substantially all of his business time, attention and skill to the
performance of such duties and responsibilities, and shall use his
best efforts to promote the interests of the Company. The Executive
shall have all authority commensurate with such position. The
Executive shall not without the prior written approval of the Board,
engage in any other business activity which is in violation of
policies established from time to time by the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving on the boards of
directors of a reasonable number of other corporations or the boards
of a reasonable number of trade associations and/or charitable
organizations (subject to the reasonable approval of the Board), (ii)
engaging in charitable activities and community affairs, and (iii)
managing his personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of
his duties and responsibilities as an executive officer of the
Company.
(c) The Executive is expected to perform his services
hereunder primarily at the Company's headquarters. To that end, the
Company shall provide the Executive with office space at its
headquarters in St. Louis, Missouri that are commensurate with the
Executive's duties hereunder.
4. Base Salary. During the Term of Employment, the Executive
shall be paid an annualized Base Salary, payable in bi-weekly
installments, of three hundred thousand dollars ($300,000.00).
5. Success Payment. Provided the Executive is employed by the
Company on the Restructuring Date, the Executive shall be entitled to
receive, promptly, not later than ten business days following the
Restructuring Date, a lump sum cash payment of five hundred thousand
dollars ($500,000.00)
6. Employee Benefit Programs. During the Term of Employment,
the Executive shall be eligible to participate in all employee pension
and welfare benefit plans and programs made available generally to the
Company's senior-level executives (other than the CEO) or to its
employees generally, as such plans or programs may be in effect from
time to time, including, without limitation, pension, profit sharing,
savings and other retirement plans or programs, medical (including
annual executive physicals), dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other
pension or retirement plans or programs and any other employee welfare
benefit plans or programs that may be sponsored by the Company from
time to time, including any plans that supplement the above-listed
types of plans or programs, whether funded or unfunded; provided,
however, that the Executive shall not be eligible to participate in
any annual performance bonus or long term incentive plan or program.
At Executive's request, the Company shall provide an extension of
medical benefits for twelve (12) months after termination, and
Executive shall have the option to pay for an additional twelve (12)
months of COBRA coverage, the first six (6) of which shall be
reimbursed to Executive by the Company ; provided, that such medical
benefits coverage shall cease if Executive obtains employment with
another company that provides medical coverage.
7. Reimbursement of Business and Other Expenses; Perquisites;
Vacations.
(a) The Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this
Agreement and the Company shall promptly reimburse him for all
reasonable business expenses incurred in connection with carrying out
the business of the Company, subject to documentation in accordance
with the Company's policy. The Company shall pay all reasonable legal
and financial advisor expenses not to exceed two thousand five hundred
dollars ($2,500) incurred in connection with the preparation of this
Agreement.
(b) Through April 30, 2004, the Company shall reimburse
the Executive for personal financial (including tax) counseling (other
than legal fees) not to exceed five thousand dollars ($5,000) by a
firm or consultant to be chosen by the Executive.
(c) The Executive shall be entitled to three weeks paid
vacation per year.
(d) The Company agrees to continue and maintain a
directors' and officers' liability insurance policy covering the
Executive to the extent the Company provides such coverage for its
other executive officers or former officers.
(e) During the Term of Employment, the Company shall
reimburse the Executive for reasonable living expenses incurred by the
Executive while residing in the St. Louis, Missouri area. The Company
shall make to the Executive additional payments on a fully grossed-up
basis to cover applicable federal, state and local income and excise
taxes, when and to the extent, if any, that such taxes are payable by
the Executive with respect to benefits provided under this Section
(e).
8. Termination of Employment.
(a) Termination Due to Death. In the event the
Executive's employment is terminated due to his death, his estate or
his beneficiaries as the case may be, shall be entitled to the
following:
(i) Base Salary through the date of death;
(ii) any amounts earned, accrued or owing to the
Executive but not yet paid under this Agreement; and
(iii) other or additional benefits in accordance
with applicable plans and programs of the Company.
(b) Termination Due to Disability. In the event the
Executive's employment is terminated due to his Disability, he shall
be entitled to
(i) any amounts earned, accrued or owing to the
Executive but not yet paid under this agreement; and
(ii) any benefits through the Company's long-term
disability plans and programs of the Company.
(c) Termination by the Company for Cause. In the event
the Company terminates the Executive's employment for Cause, he shall
be entitled to:
(i) Base Salary through the date of the termination;
(ii) any amounts eamed, accrued or owing to the
Executive but not yet paid under this Agreement; and
(iii) other or additional benefits in accordance
with applicable plans or programs of the Company.
(d) Termination Without Cause or Constructive Termination.
(i) A Constructive Termination shall not take effect
unless the provisions of this paragraph 8(d)(i) are complied with. The
Company shall be given written notice by the Executive of the intention
to terminate his employment on account of a Constructive Termination,
such notice (A) to state in detail the particular act or acts or
failure or failures to act that constitute the grounds on which the
proposed Constructive Termination is based and (B) to be given upon
the Executive learning of such act or acts of failure or failures to
act. The Company shall have 30 days after the date that such written
notice has been given to the Company in which to cure such conduct, to
the extent such cure is possible.
(ii) In the event the Executive's employment is
terminated by the Company without Cause, other than due to Disability
or death, or in the event there is a Constructive Termination, the
Executive shall be entitled to receive:
(A) Base Salary through the date of
termination of the Executive's employment;
(B) if such termination occurs prior to the
Restructuring Date, a lump sum cash payment equal to the Executive's
annual Base Salary in effect on the date of termination of the
Executive's employment (or in the event a reduction in Base Salary is
the basis for a Constructive Termination, then the Base Salary in
effect immediately prior to such reduction);
(C) if such termination occurs prior to the
Restructuring Date and the Restructuring Date occurs within 12 months
following such termination, a lump sum cash payment of two hundred
thousand dollars ($200,000) be paid promptly, but in no event later
than 10 business days, following the Restructuring Date;
(D) any amounts earned, accrued or owing to
the Executive but not yet paid under this Agreement; and
(E) continued participation in all medical,
dental, hospitalization and life insurance coverage and in other
employee welfare benefit plans or programs in which he was
participating on the date of the termination of his employment for
twelve (12) months after termination, and Executive shall have the
option to pay for an additional twelve (12) months of COBRA coverage;
provided, that such benefits coverage shall cease if Executive obtains
employment with another company that provides medical coverage; and
provided, further, that (x) if the Executive is precluded from
continuing his participation in an employee benefit plan or program as
provided in this clause, he shall be provided with the after-tax
economic equivalent of the benefits provided under the plan or program
in which he is unable to participate for the period specified in this
clause (E) of this Section 8(d), (y) the economic equivalent of any
benefit foregone shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining such benefit himself on an
individual basis, and (z) payment of such after-tax economic
equivalent shall be made quarterly in advance.
(e) Voluntary Termination. In the event of a termination
of employment by the Executive on his own initiative, other than a
termination due to death or Disability or a Constructive Termination,
the Executive shall have the same entitlements as provided in Section
8(c) above for a termination for Cause. A voluntary termination under
this Section 8(f) shall be effective upon 30 days' prior written
notice to the Company and shall not be deemed a breach of this
Agreement.
(f) Nature of Payments. Any amounts due under this
Section 8 are in the nature of severance payments considered to be
reasonable by the Company. Failure to qualify for any such payment is
not in the nature of a penalty.
(g) Exclusivity of Severance Payments. Upon termination
of the Executive's employment during the Term of Employment, he shall
not be entitled to any payments or benefits from the Company, other
than as provided herein, or any payments by the Company on account of
any claim by him of wrongful termination, including claims under any
federal, state or local human and civil rights or labor laws, other
than the payments and benefits provided hereunder, except for any
benefits which may be due the Executive in normal course under any
employee benefit plan of the Company which provides benefits after
termination of employment.
(h) Restrictive Covenants. The Executive agrees that any
right to receive any payments and/or benefits hereunder, other than
Base Salary and/or any other compensation already earned by the
Executive and required to be paid by state law other than under this
Agreement, will cease and be immediately forfeited if the Executive
breaches the provisions of Section 9 below. The foregoing is in
addition to the rights of the Company under Section 9.
(i) Release of Claims. As a condition of the Executive's
entitlement to the payment and/or delivery of any of the severance
rights and benefits provided in this Section 8 (other than in the
event of the Executive's death), the Executive shall be required to
execute and honor a release of claims in the form reasonably requested
by the Company.
(j) Termination at Will, Notwithstanding anything herein
to the contrary, the Executive's employment with the Company is
terminable at will with or without Cause; provided, however, that a
termination of the Executive's employment shall be governed in
accordance with the terms hereof.
9. Restrictive Covenants.
(a) Confidential Information. During the Term of
Employment and at all times thereafter, Executive agrees that he will
not divulge to anyone or make use of any Confidential Information
except in the performance of his duties as an executive of the Company
or when legally required to do so (in which case the Executive shall
give prompt written notice to the Company in order to allow the
Company the opportunity to object or otherwise resist such
disclosure). "Confidential Information" shall mean any knowledge or
information of any type relating to the business of the Company or any
of its subsidiaries or affiliates, as well as any information obtained
from customers, clients or other third parties, including, without
limitation, all types of trade secrets and confidential commercial
information. The Executive agrees that he will return to the Company
immediately upon termination, any and all documents, records or
reports (including electronic information) that contain any
Confidential Information. Confidential Information shall not include
information (i) that is or becomes part of the public domain, other
than through the breach of this Agreement by the Executive or (ii)
regarding the Company's business or industry properly acquired by the
Executive in the course of his career as an executive in the Company's
industry and independent of the Executive's employment by the Company.
The Executive acknowledges that the Company has expended, and will
continue to expend, significant amounts of time, effort and money in
the procurement of its Confidential Information, that the Company has
taken all reasonable steps in protecting the secrecy of the
Confidential Information, that said Confidential Information is of
critical importance to the Company.
(b) Non-Disparagement. The Executive agrees that, during
the term of employment and thereafter (including following the
Executive's termination of employment for any reason), the Executive
will not make statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take any
action which may, directly or indirectly, disparage the Company or any
subsidiary or affiliate or their respective officers, directors,
employees, advisors, businesses or reputations. Notwithstanding the
foregoing, nothing in this Agreement shall preclude either the
Executive or the Company from making truthful statements or
disclosures that are required by applicable law, regulation or legal
process.
(c) Cooperation. The Executive agrees to cooperate with
the Company, during the term of employment and thereafter (including
following the Executive's termination of employment for any reason),
by being reasonably available to testify on behalf of the Company or
any subsidiary or affiliate in any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, and to
assist the Company, or any subsidiary or affiliate, in any such
action, suit or proceeding, by providing information and meeting and
consulting with the Board or its representatives or counsel, or
representatives or counsel to the Company, or any subsidiary or
affiliate, as reasonably requested. The Company agrees to reimburse
the Executive for all expenses actually incurred in connection with
his provision of testimony or assistance.
(d) Remedies. The Executive agrees that any breach of
the terms of this Section 9 would result in irreparable injury and
damage to the Company for which the Company would have no adequate
remedy at law; the Executive therefore also agrees that in the event
of said breach or any reasonable threat of breach, the Company shall
be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach
by the Executive and/or any and all persons and/or entities acting for
and/or with the Executive. The terms of this paragraph shall not
prevent the Company from pursuing any other available remedies for any
breach or threatened breach hereof, including, but not limited to,
remedies available under this Agreement and the recovery of damages.
(e) Continuing Operation. The provisions of this Section
9 shall survive any termination of this Agreement and the Term of
Employment, and the existence of any claim or cause of action by the
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the
Company of the covenants and agreements of this Section. The Executive
agrees to cooperate with the Company, during the term of employment
and thereafter (including following the Executive's termination of
employment for any reason), by being reasonably available to testify
on behalf of the Company or any subsidiary or affiliate in any action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any subsidiary or
affiliate, in any such action, suit or proceeding, by providing
information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the
Company, or any subsidiary or affiliate, as reasonably requested. The
Company agrees to reimburse the Executive for all expenses actually
incurred in connection with his provision of testimony or assistance.
10. Assignability; Binding Nature. This Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive) and
assigns. No rights or obligations of the Company under this Agreement
may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties
of the Company, as contained in this Agreement, either contractually
or as a matter of law. The Company further agrees that, in the event
of a sale or reorganization transaction as described in the preceding
sentence, it shall take whatever action it legally can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. No rights Or
obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of law,
except as otherwise provided herein.
11. Entire Agreement This Agreement contains the entire
understanding and agreement between the Parties concerning the subject
matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral,
between the Parties with respect thereto provided, however, that this
Agreement shall not supersede any separate written commitments by the
Company with respect to indemnification.
12. Miscellaneous Provisions.
(a) No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Company. No waiver by either Party of any
breach by the other Party of any condition or provision contained in
this Agreement to be performed by such other Party shall be deemed a
waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as
the case may be.
(b) In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force
and effect to the fullest extent permitted by law.
(c) The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's employment
to the extent necessary to the intended preservation of such rights
and obligations.
(d) The Executive shall be entitled, to the extent
provided under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's death or a
judicial determination of his incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to
refer to his beneficiary, estate or other legal representative.
(e) All amounts required to be paid by the Company shall
be subject to reduction in order to comply with applicable Federal,
state and local tax withholding requirements, except as otherwise
provided herein.
(f) The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control
or affect the meaning or construction of any provision of this
Agreement.
(g) This Agreement may be executed in two or more
counterparts.
13. Governing Law/Jurisdiction. This Agreement shall be
governed by and construed and interpreted in accordance with the laws
of Missouri without reference to principles of conflict of laws.
Subject to Section 14, the Company and the Executive hereby consent to
the jurisdiction the United States District Court of St. Louis,
Missouri for purposes of resolving any dispute under this Agreement.
The Company and the Executive further agree that any service of
process or notice requirements in any such proceeding shall be
satisfied if the rules of such court relating thereto have been
substantially satisfied. The Company and the Executive hereby waive,
to the fullest extent provided by applicable law, any objection which
it or the Executive may now or hereafter have to such jurisdiction and
any defense of inconvenient forum, pursuant to Section 9( d) hereof.
14. Notices. Any notice given to a party shall be in writing
and shall be deemed to have been given when delivered personally or
sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Company: Aurora Foods Inc.
00000 Xxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 000000
Attention: General Counsel
If to the Executive: Xxxxxx Xxxxxxxxx
C/o Aurora Foods Inc.
00000 Xxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 000000
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date provided below.
Aurora Foods Inc.
Date: July 1, 2003 By: /s/ Xxxx Xxxxxxxx
-------------------------
Executive
Date: July 1, 2003 By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Xxxxxx Xxxxxxxxx
