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EXHIBIT 10(l)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN
HANOVER FOODS CORPORATION AND XXXX X. XXXXXXXX
This document, dated as of February 13, 1997, shall constitute
Amendment No. 1 to an Employment Agreement dated as of June 12, 1995 (the
"Employment Agreement") between Hanover Foods Corporation (the "Employer")and
Xxxx X. Xxxxxxxx (the "Employee).
Background
As of June 12, 1995, Employer and Employee entered into the Employment
Agreement. The parties desire to amend the Employment Agreement as set forth
herein.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Definitions
The definitions contained in the Employment Agreement shall
apply to this Amendment No. 1.
2. Amendments
The following provisions of the Employment Agreement shall be
amended as follows:
Section 4.1.1 Change this Section to
read in full as follows, effective retroactively as if such change were
originally contained in the Employment Agreement:
"4.1.1 During the initial Contract Year of the Term from
April 1, 1994 to April 1, 1995, at the rate of Four Hundred and Ninety-eight
Thousand, Eight Hundred and Sixty-six ($498,866) Dollars per annum."
Section 7.: Change this Section to read in full as
follows, effective retroactively as if such change were originally contained in
the Employment Agreement:
"7. BONUSES The Employer shall pay an annual bonus in
cash or Class A common stock of the Employer of equal value, at the sole option
of the Employee.
"7.1 The bonus shall be equal to the sum of
the following:
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"7.1.1 if Pre-tax Earnings of the Employer
are $5 million or more in any Contract Year of the Term, the bonus shall equal
$100,000 plus ten (10%) percent of Pre-tax Earnings over $5 million, but in no
event shall the total bonus payable under this Section 7.1.1, plus the total
amount payable under Section 4 hereof, exceed $1 million in any Contract Year;
if Pre-tax Earnings of the Employer are below $5 million in any Contract Year
of the Term, no bonus is payable under this Section 7.1.1.
Plus
"7.1.2 a bonus equal to the gross
dollar value (if any) of 1,500 performance units which shall be valued at the
end of each Contract Year of the Term as set forth in Addendum No. 2 hereto.
The bonus computed pursuant to Addendum No. 2 is based upon the relative prior
five-year performance of the Employer (using the five-year average sales growth
and operating profits) as compared to an industry peer group. The industry peer
group shall consist of the following companies: Xxxxxxx Xxxxx Foods (Rochester,
NY), Seneca Foods Corp. (Pittsford, NY), Xxxxxxx USA, Inc. (Green Bay, WI),
United Foods, Inc. (Bells, TN) and Xxxx Foods (Franklin Park, IL). It is the
intention of the parties that the industry peer group data will be appropriately
and fairly adjusted to provide, to the extent feasible, a consistent method of
comparing the performance of the Employee against the performance of top
management in the industry peer group. In the case of any dispute concerning the
interpretation of Addendum No. 2, the firm of Towers Xxxxxx shall resolve such
dispute and their determination shall be final, binding and conclusive upon the
Employer and the Employee.
"7.2 For purposes of determining the Employee's bonuses under this
Section 7, the Pre-Tax Earnings of the Employer shall be adjusted to account
for the impact of any changes in accounting methods and to eliminate the effect
of any unusual or non-recurring items."
The Employee hereby agrees to waive any accrued rights he may have
under the unamended Employment Agreement to a bonus for the Contract Year
beginning April 1, 1996, which bonus the Employee and Employer acknowledge
could amount, based upon the projected Pre-tax Earnings of the Employer, to
over $2 million, and, instead, Employee hereby agrees to accept the bonus
formula set forth in this Amendment No. 1 for the Contract Year beginning April
1, 1996.
The Employee shall repay to the Employer the amount of the net excess
compensation overpayment for Contract Years beginning prior to April 1, 1996 as
a result of the changes made in this Amendment No. 1 to Section 4 and Section 7
of the Employment Agreement, which changes are retroactive to the date of the
Employment Agreement; such repayment to the Employer shall be made without
interest. It is agreed that the amount of the repayment due from the Employee
to the Employer for such net excess compensation overpayment with respect to
Contract Years beginning prior to April 1, 1996 is $83,024. The $83,024 shall
be repaid by the Employee to the Employer solely out of the amount of the
Salary increases hereafter due to the
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Employee for Contract Years beginning on and after April 1, 1997 by reason of
the provisions of Section 4.1.2, and the Employee shall have no other liability
for such repayment.
Section 9.1: Add the following sentence to the end
of Section 9.1:
"Notwithstanding the foregoing, if the
Employer, acting through its Board of Directors (provided that a majority of
its members were also directors on January 1, 1997), at any time after January
1, 1998, requests that the Employee cease to be Chairman of the Board and
Chairman of the Employer, but continue as Chief Executive Officer and President
of the Employer, the Employee shall relinquish his title as Chairman of the
Board and Chairman of the Employer, but shall continue as Chief Executive
Officer and President of the Employer with all of the powers, duties and
authorities normally associated with those positions; in such event, the
By-Laws of the Employer shall be amended to reflect that the Chief Executive
Officer need not be Chairman of the Board or Chairman of the Employer."
Section 12: Add the following sentence to the end
of Section 12:
"Notwithstanding the foregoing, in no
event may the total vacation time exceed six weeks during any Contract Year."
Section 22.5: Change the words "termination
pay" to "supplemental pension payments" in Section 22.5 and change the words
"termination benefits" to "supplemental pension benefits."
Section 22.5.1.1 Change the words in Section
22.5.1.1 from "Without cause; or" to "Without cause by the Employer; or"
Section 23: Change the first sentence to
read in full as follows: "At any time after January 1, 1998, the Employee may
retire from the employ of the Employer if the Employee, at least thirty (30)
days before the intended date of retirement, gives the Employer written notice
specifying the intended date of retirement." Add the following sentence at the
end of Section 23: "If the Employee elects to retire prior to the age of 65,
the supplemental pension payments provided for in Section 24 shall be reduced
by using the following formula: for each of the first sixty (60) calendar
months by which the retirement date precedes the age of 65, the supplemental
pension payments shall be reduced by five-ninths (5/9) of one percent and for
each such calendar month in excess of sixty (60) calendar months the
supplemental pension payments shall be reduced by five-eighteenths (5/18) of
one percent.
Section 24: Change the first sentence of
this Section to read in full as follows: "Commencing not later than thirty
(30) days after the applicable Triggering Date or, if earlier, the date the
Employee elects to retire, and in consideration of Employee's past services,
Employer shall pay compensation to Employee or to his surviving spouse at a per
annum rate equal to 60% of the amount of the Employee's Average Annual
Compensation during the
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Measurement Period, subject to reduction pursuant to Section 23 in the event
the Employee elects to retire prior to age 65."
Section 25: Change the words "termination
benefits" to "supplemental pension benefits" in Section 25.
Section 25.1.2: Delete this provision.
Section 25.2: Delete this provision.
Section 25.3: Delete this provision.
Section 25.4: Delete this provision.
Section 26: Change the title of Section 26
from "Security" to "Security and Acceleration." Change
Section 26 to read in full as follows:
"26.1 In order to secure Employer's obligations to Employee and his
surviving spouse under this Agreement, Employer shall, if and when requested by
the Employee or his surviving spouse at any time after January 1, 1998, and
provided that the cost does not exceed $25,000 per annum, cause a reputable
bank reasonably acceptable to Employee to issue a Letter of Credit, in the face
amount designated by Employee and in the form attached as Exhibit "A" ("Letter
of Credit"), to be issued to the Employee or his surviving spouse as
beneficiary, or, in lieu thereof, establish a mutually acceptable escrow
arrangement. The Letter of Credit shall not expire sooner than one year and
thirty (30) days after the date of its issuance. Employer shall maintain the
Letter of Credit in effect at all times during the Term and any other period of
time during which the Employee is entitled to any payments or benefits under
Sections 22.5, 24 or 25 of this Agreement.
"26.2 Employee will not present a draft under the Letter of Credit
for payment unless (i) he shall have first made written demand on Employer for
direct payment of the amount sought and Employer has not made full payment in
cash to the Employee as required by this Agreement within thirty (30) days
after the date of delivery of the written demand or (ii) a renewed Letter of
Credit is not provided to the Employer at least thirty (30) days prior to the
expiration date of the existing Letter of Credit. Employee shall not draw any
funds under the Letter of Credit with respect of costs or expenses already
reimbursed to him by Employer.
"26.3 If the Employer fails to pay the Employee any of the
compensation or benefits (including, but not limited to, the supplemental
pension payments and benefits) due to him under this Agreement, within thirty
(30) days after having received written notice from the Employee of such
failure to pay, the Employee shall have the right to accelerate future payments
of all sums due to Employee under this Agreement."
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3. Amended Employment Agreement Continues in Full Force and Effect.
There are no amendments to the Employment Agreement except as
specified herein. The Employment Agreement, as amended hereby, shall continue
in full force and effect and constitutes the entire understanding of the
parties with respect to its subject matter. Employee agrees that the
compensation set forth in this Amendment No. 1 for the Contract Year of the
Term beginning April 1, 1996 shall constitute his sole compensation due from
the Employer with respect to such Contract Year, and hereby waives any rights
to additional compensation for any period prior to the date of this Amendment
No. 1.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
ATTEST/WITNESS: HANOVER FOODS CORPORATION
/s/ Xxxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx (SEAL)
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WITNESS/ATTEST: EMPLOYEE:
/s/ Xxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxxx (SEAL)
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HANOVER FOODS CORPORATION APPENDIX NO. 2
CEO INCENTIVE ALTERNATIVES
LONG TERM COMPONENT
Features:
At the beginning of each year, 1,500 performance units are granted to the CEO.
Units valued at the end of the year based on performance relative to industry
peers.
Performance measures are five year average Sales Growth and Pre-Tax Earnings.
No cap on unit values.
Unit values at different performance levels are represented in matrix form as
follows:
110% 0 90 108 116 124 132 140 148
109% 0 86 104 112 120 128 136 144
108% 0 82 100 108 116 124 132 140
107% 0 78 96 104 112 120 128 136
106% 0 74 92 100 108 116 124 132
105% 0 70 88 96 104 112 120 128
104% 0 66 84 92 100 108 116 124
103% 0 62 80 88 96 104 112 120
Average 102% 0 58 76 84 92 100 108 116
Sales 101% 0 54 72 80 88 96 104 112
Growth 100% 0 50 68 76 84 92 100 108
99% 0 46 64 72 80 88 96 104
98% 0 42 60 68 76 84 92 100
97% 0 38 56 64 72 80 88 96
96% 0 34 52 60 68 76 84 92
95% 0 30 48 56 64 72 80 88
94% 0 26 44 52 60 68 76 84
93% 0 22 40 48 56 64 72 80
92% 0 18 36 44 52 60 68 76
91% 0 14 32 40 48 56 64 72
90% 0 10 18 26 34 42 50 58
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0 0 0 0 0 0 0 0
90% 92% 94% 96% 98% 100% 102%
Average Earnings
110% 156 164 172 180
109% 152 160 168 176
108% 148 156 164 172
107% 144 152 160 168
106% 140 148 156 164
105% 136 144 152 160
104% 132 140 148 156
103% 128 136 144 152
Average 102% 124 132 140 148
Sales 101% 120 128 136 144
Growth 100% 116 124 132 140
99% 112 120 128 136
98% 108 116 124 132
97% 104 112 120 128
96% 100 108 116 124
95% 96 104 112 120
94% 92 100 108 116
93% 88 96 104 112
92% 84 92 100 108
91% 80 88 96 104
90% 66 74 82 90
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0 0 0 0
104% 106% 108% 110%
Average Earnings
Average Sales Growth = Hanover Sales Growth (5 year average)/ Industry 5 year
average.
Average earnings = Hanover 5 year average earnings(%)/ Industry average 5 year
earnings(%)
Formula to calculate awards on either axis = {[(Actual Hanover/Actual Industry)
- 90%] x 400} + 10
Total value/unit = (Sales Growth Formula Calculation + Earnings Formula
Calculation)
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February 13, 1997
Xx. Xxxx X. Xxxxxxxx, Chairman & CEO
Hanover Foods Corporation
X.X. Xxx 000
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxxx:
To induce Xxxx X. Xxxxxxxx to execute Amendment No. 1 of even date
herewith ("Amendment No. 1") his Employment Agreement dated as of June 12, 1995
with Hanover Foods Corporation, Hanover Foods Corporation agrees to defend,
indemnify and hold harmless Xxxx X. Xxxxxxxx and his estate and surviving
spouse from any claim, loss, damage, liability or expense (including, but not
limited to, investigative costs, court costs and reasonable attorney's fees)
arising, directly or indirectly, out of (a) the execution or delivery of such
Amendment No. 1, or (b) the Employment Agreement as amended by Amendment No. 1
including, but not limited to, any claims which have been or may in the future
be brought against Xxxx X. Xxxxxxxx in his capacity as a voting trustee or as a
director, officer or shareholder of Hanover Foods Corporation.
Hanover Foods Corporation shall be entitled to designate counsel for
Xxxx X. Xxxxxxxx provided such designation is reasonable.
HANOVER FOODS CORPORATION
BY:/s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx, Esq.
Agreed:
/s/ Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx
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