KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the 31st day of January,
2002, by and between FRESH BRANDS, INC., a Wisconsin corporation (the
"Company"), and ____________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Company or one of its
subsidiaries in a key executive capacity and the Executive's services are
valuable to the conduct of the business of the Company;
WHEREAS, the Company recognizes that circumstances in which a change
in control of the Company occurs, through acquisition or otherwise, are highly
disruptive and will cause uncertainty about the Executive's future employment
with the Company without regard to the Executive's competence or past
contributions and that such uncertainty may adversely affect the Company;
WHEREAS, Fresh Brands Distributing, Inc. (formerly Xxxxxxx Sav-O
Stores, Inc.) ("FBDI") and the Executive entered into a Key Executive Employment
and Severance Agreement, dated as of October 19, 1990, (as amended to date, the
"Existing KEESA"); and
WHEREAS, the Company and the Executive desire to enter into this
Agreement, which shall supersede and replace the Existing KEESA, to ensure that
any proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively, with reference only to the best
interests of the Company and its shareholders and without undue regard for the
Executive's personal interests.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means the
Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement, the terms
"Affiliate" and "Associate" shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person shall
be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or (B) securities issuable upon exercise of Rights issued
pursuant to the terms of the Company's Rights Agreement with Firstar Bank,
N.A., dated as of October 12, 2001, as amended from time to time, at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if the agreement,
arrangement or understanding: (A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and regulations under the Act and (B) is not also then reportable on a
Schedule 13D under the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in Section 1(c)(ii) above) or disposing of any voting
securities of the Company.
(d) Cause. "Cause" for termination of the Executive's employment after
a Change in Control of the Company shall, for purposes of this Agreement, be
limited to (i) the engaging by the Executive in intentional conduct not taken in
good faith which has caused demonstrable and serious financial injury to the
Company, as evidenced by a determination in a binding and final judgment, order
or decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action, suit or
proceeding, whether civil, criminal, administrative or investigative; (ii)
conviction of a felony (as evidenced by binding and final judgment, order, or
decree of a court of competent jurisdiction, in effect after exhaustion or lapse
of all rights of appeal) which substantially impairs the Executive's ability to
perform his duties or responsibilities; and (iii) continuing willful and
unreasonable refusal by the Executive to perform the Executive's duties or
responsibilities (unless significantly changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of this Agreement,
a "Change in Control of the Company" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Act. Without limiting the inclusiveness
of the definition in the preceding sentence, a Change in Control of the Company
shall be deemed to have occurred if:
(i) any Person (other than (i) an Affiliate of the Company, (ii)
any employee benefit plan of the Company or of any Affiliate of the
Company, including any
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Retirement Savings Plan or (iii) any Person organized, appointed or
established pursuant to the terms of any such benefit plan) is or becomes
the Beneficial Owner of securities of the Company representing at least 20%
of the combined voting power of the Company's then outstanding securities;
(ii) two or more of the members of the Board are not Continuing
Directors;
(iii) there shall be consummated (x) any consolidation, merger,
share exchange or other business combination of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a consolidation, merger, share
exchange or other reorganization of the Company in which the holders of the
Company's Common Stock immediately prior to the consolidation, merger,
share exchange or other reorganization have the same proportionate
ownership of common stock of the surviving corporation immediately after
the consolidation, merger, share exchange or other reorganization, or (y)
any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, of the assets of the
Company; or
(iv) the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
(f) Code. For purposes of this Agreement, the term "Code" means the
Internal Revenue Code of 1986, including any amendments thereto or successor tax
codes thereof.
(g) Continuing Director. For purposes of this Agreement, the term
"Continuing Director" means any member of the Board of Directors of the Company
who was (i) a member of such Board on the date hereof, (ii) elected by a
majority of the Continuing Directors then on such Board or (iii) recommended to
be elected as a member of the Board by a majority of the Continuing Directors
then on such Board.
(h) Covered Termination. For purposes of this Agreement, the term
"Covered Termination" means any termination of the Executive's employment where
the Termination Date is any date on or prior to the end of the Employment
Period.
(i) Discretionary Termination. For purposes of this Agreement,
"Discretionary Termination" means the determination by the Executive at any time
during the sixty (60) day period commencing one year after the occurrence of a
Change in Control of the Company, as evidenced by the Executive's delivery to
the Company of a Notice of Termination during such period, to terminate this
Agreement and his employment hereunder for any reason whatsoever in his sole
discretion with or without good faith, and regardless of whether the Company has
terminated or is terminating Executive for any reason, including for "Cause."
(j) Employment Period. For purposes of this Agreement, the term
"Employment Period" means a period commencing on the date of a Change in Control
of the Company, and ending at 11:59 p.m. Milwaukee time on the third anniversary
of such date.
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(k) Good Reason. For purposes of this Agreement, the Executive shall
have a "Good Reason" for termination of employment after a Change in Control of
the Company in the event of:
(i) any breach of this Agreement by the Company or one of its
Affiliates, including, but not limited to, the failure to make any of the
payments due hereunder;
(ii) the removal of the Executive from, or any failure to reelect
the Executive to, any of the positions held by Executive with the Company
or one of its Affiliates on the date of the Change in Control of the
Company or any other positions with the Company or one of its Affiliates to
which the Executive shall thereafter be elected or assigned, except in the
event that such removal or failure to reelect relates to the termination by
the Company or one of its Affiliates of the Executive's employment for
Cause;
(iii) a good faith determination by the Executive that there has
been a significant adverse change, without the Executive's written consent,
in the Executive's working conditions or status from such working
conditions or status in effect immediately prior to the Change in Control
of the Company, including but not limited to (A) a significant change in
the nature or scope of the Executive's authority, powers, functions, duties
or responsibilities, or (B) a reduction in the level of support services,
staff, secretarial and other assistance, office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement referred to
in Section 17(a) hereof as provided therein.
(l) Person. For purposes of this Agreement, the term "Person" shall
mean any individual, firm, partnership, corporation or other entity and shall
include any successor (by merger or otherwise) of such entity.
(m) Retirement Savings Plan. For purposes of this Agreement, the term
"Retirement Savings Plan" means the Fresh Brands Distributing, Inc. Retirement
Savings Plan (as such plan may be renamed from time to time) and any similar
plan administered by the Company or any of its Affiliates as in effect
immediately prior to the Change in Control of the Company.
(n) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 17(a) hereof or as set forth below, the term
"Termination Date" means (i) if the Executive's employment is terminated by the
Executive's death, the date of death; (ii) if the Executive's employment is
terminated by reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the effective date of such early retirement which is
set forth in such written agreement; (iii) if the Executive's employment is
terminated by reason of disability pursuant to Section 12 hereof, the earlier of
thirty (30) days after the Notice of Termination is given or one day prior to
the end of the Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good Reason or
disability pursuant to Section 12), the date the Notice of Termination is given;
(v) if the
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Executive's employment is terminated by the Executive pursuant to a
Discretionary Termination, the date the Notice of Termination is given and (vi)
if the Executive's employment is terminated by the Company or one of its
Affiliates (as applicable) (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty
(30) days after the Notice of Termination is given or one day prior to the end
of the Employment Period. Notwithstanding the foregoing,
(A) If termination is by the Company or one of its Affiliates for
Cause as defined in Section 1(d)(iii) of this Agreement and if the
Executive has cured the conduct constituting such Cause as described
in the Notice of Termination delivered by the Company or one of its
Affiliates (as applicable) within such thirty (30) day or shorter
period, then the Executive's employment hereunder shall continue as if
no such Notice of Termination had been delivered.
(B) If the Company or one of its Affiliates shall, in good faith,
give a Notice of Termination for Cause or by reason of disability and
the Executive in good faith notifies the Company that a dispute exists
concerning the termination within the fifteen (15) day period
following receipt thereof, then the Executive may elect to continue
his employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Cause or disability (as the case may be)
did exist, the Termination Date shall be the earlier of (1) the date
on which the dispute is finally determined, either (x) by mutual
written agreement of the parties or (y) in accordance with Section 23
hereof, (2) the date of the Executive's death, or (3) one day prior to
the end of the Employment Period. If the Executive so elects and it is
thereafter determined that Cause or disability (as the case may be)
did not exist, then the employment of the Executive hereunder shall
continue after such determination as if the Company had not delivered
its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues,
until the Termination Date, if any, as if such Notice of Termination
had not been delivered except that, if it is finally determined that
the Executive's employment was properly terminated for the reason
asserted in the Notice of Termination, the Executive shall in no case
be entitled to a Termination Payment (as hereinafter defined) arising
out of events occurring after such Notice of Termination was
delivered.
(C) If the Executive shall, in good faith, give a Notice of
Termination for Good Reason or by reason of disability and the Company
notifies the Executive that a dispute exists concerning the
termination within the fifteen (15) day period following receipt
thereof, then the Executive may elect to continue his employment
during such dispute and the Termination Date shall be determined under
this paragraph. If the Executive so elects and it is thereafter
determined that Good Reason or disability (as the case may be) did
exist, the Termination Date shall be the earlier of (1) the date on
which the dispute is finally determined, either (x) by mutual written
agreement of the parties or (y) in accordance with Section 23 hereof,
(2) the date of the Executive's death or (3) one day prior to the end
of the Employment Period. If the Executive so elects and it is
thereafter
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determined that Good Reason or disability (as the case may be) did not
exist, then the employment of the Executive hereunder shall continue
after such determination as if the Executive had not delivered the
Notice of Termination asserting Good Reason or disability (as the case
may be) and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Executive had not delivered the
Notice of Termination except that, if it is finally determined that
Good Reason or disability (as the case may be) did exist, the
Executive shall in no case be denied the benefits described in
Sections 8(b) and 9 hereof (including a Termination Payment) based on
events occurring after the Executive delivered his Notice of
Termination.
(D) Except as provided in Paragraphs (B) and (C) above and other
than a Discretionary Termination (which cannot be subject to dispute
by the Company), if the party receiving the Notice of Termination in
good faith notifies the other party that a dispute exists concerning
the termination within the fifteen (15) day period following receipt
thereof and it is finally determined that the reason asserted in such
Notice of Termination did not exist, then (1) if such Notice was
delivered by the Executive, the Executive will be deemed to have
voluntarily terminated his employment and (2) if delivered by the
Company or one of its Affiliates, the Company and all of its
Affiliates will be deemed to have terminated the Executive other than
by reason of Cause.
2. Termination or Cancellation Prior to Change in Control. The
Company, its Affiliates and the Executive shall each retain the right to
terminate the employment of the Executive at any time prior to a Change in
Control of the Company. In the event the Executive's employment is terminated
prior to a Change in Control of the Company, this Agreement shall be terminated
and cancelled and of no further force and effect and any and all rights and
obligations of the parties hereunder shall cease.
3. Employment Period. If a Change in Control of the Company occurs
when the Executive is employed by the Company or one or more of its Affiliates,
the Company and its Affiliates (as applicable) will continue thereafter to
employ the Executive during the Employment Period, and the Executive will remain
in the employ of the Company and its Affiliates (as applicable), in accordance
with and subject to the terms and provisions of this Agreement (including,
without limitation, the Executive's right to exercise a Discretionary
Termination), and the terms of this Agreement shall expressly supersede the
terms and conditions of any other then existing employment arrangement or
agreement between the Company and/or its Affiliates and the Executive.
4. Duties. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may hereafter be conducted. The services which are to be performed
by the Executive hereunder are to be rendered in the same metropolitan area in
which the Executive
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was employed at the time of such Change in Control of the Company, or in such
other place or places as shall be mutually agreed upon in writing by the
Executive and the Company from time to time. Without the Executive's consent the
Executive shall not be required to be absent from such metropolitan area more
than forty-five (45) days in any twelve (12) month period.
5. Compensation. During the Employment Period, the Executive shall be
compensated as follows:
(a) Base Salary. The Executive shall receive, at such intervals and in
accordance with such standard policies of the Company as may be in effect
immediately prior to the Change in Control of the Company, an annual base salary
in cash equivalent of not less than the Executive's annual base salary as in
effect immediately prior to the Change in Control of the Company (which base
salary shall, unless otherwise agreed in writing by the Executive, include the
current receipt by the Executive of any amounts which, prior to the Change in
Control of the Company, the Executive had elected to defer, whether such
compensation is deferred under Section 401(k) of the Code or otherwise), subject
to adjustment as hereinafter provided.
(b) Reimbursement of Expenses. The Executive shall, at such intervals
and in accordance with such standard policies as may be in effect immediately
prior to the Change in Control of the Company, be reimbursed for any and all
monies advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company or any of
its Affiliates, including travel expenses.
(c) Salaried Employee Benefit Plans. The Executive shall be included,
to the extent eligible thereunder (which eligibility shall not be conditioned on
the Executive's salary grade or on any other requirement which excludes persons
of comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control of
the Company), in any and all plans providing benefits for the salaried employees
of the Company or the Affiliate by which the Executive is employed in general,
including but not limited to group life insurance, hospitalization, health,
medical, dental, profit sharing (including any Retirement Savings Plan) and
stock bonus plans; provided, that, in no event shall the aggregate level of
benefits under such plans in which the Executive is included be less than the
aggregate level of benefits under plans of the type referred to in this Section
5(c) in which the Executive was participating immediately prior to the Change in
Control of the Company.
(d) Vacations and Holidays. The Executive shall annually be entitled
to not less than the amount of paid vacation and not fewer than the number of
paid holidays to which the Executive was entitled annually immediately prior to
the Change in Control of the Company or such greater amount of paid vacation and
number of paid holidays as may be made available annually to other executives of
the Company of comparable status and position to the Executive.
(e) Executive Benefit Plans. The Executive shall be included in all
plans providing additional benefits to executives of the Company of comparable
status and position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under such
plans be less
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than the aggregate level of benefits under plans of the type referred to in this
Section 5(e) in which the Executive was participating immediately prior to the
Change in Control of the Company.
6. Annual Compensation Adjustments. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee thereof) will
consider and appraise, at least annually, the contributions of the Executive to
the Company's operating efficiency, growth, cash flow from operations and
operating profits, and, in accordance with the Company's practice prior to the
Change in Control of the Company, due consideration shall be given to the
appropriate annual bonus to be paid to the Executive and to the upward
adjustment of the Executive's base compensation rate, at least annually,
commensurate with (i) increases generally given to other executives of the
Company of comparable status and position to the Executive, and (ii) as the
scope of the Company's operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is a Covered
Termination for Cause or due to the Executive's voluntarily terminating his
employment, other than for Good Reason, disability pursuant to Section 12 or a
Discretionary Termination (any such terminations to be subject to the procedures
set forth in Section 13 hereof), then the Executive shall be entitled to receive
only Accrued Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment.
(a) If there is a Covered Termination (a) that is a Discretionary
Termination, (b) that is a termination by reason of death, (c) that is a
termination by reason of disability pursuant to Section 12, (d) by the Executive
for Good Reason or (e) by the Company or one of its Affiliates other than by
reason of Cause, then the Executive shall be entitled to receive, and the
Company shall promptly pay, Accrued Benefits pursuant to Section 9(a) hereof
and, in lieu of further base salary for periods following the Termination Date,
as liquidated damages and severance pay, the Termination Payment pursuant to
Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive is entitled to
Accrued Benefits and the Termination Payment, then the Executive shall be
entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the Company,
outplacement services on an individualized basis provided by a nationally
recognized executive placement firm selected by the Company.
(ii) Until the later of (a) the third anniversary of the
Termination Date or (b) the Executive's sixty-fifth birthday, the Executive
and the Executive's wife shall continue to be covered by the same or
equivalent life insurance, hospitalization, health, medical and dental
coverage as provided hereunder immediately prior to the date the Notice of
Termination is given, with all costs and expenses (including premiums,
deductibles and co-pay charges) associated with such life insurance,
hospitalization, health, medical and dental coverage paid by the Company.
In the event that the Executive dies prior to the later of (a) the third
anniversary of the Termination Date or (b) the Executive's sixty-fifth
birthday, his wife shall, until her sixty-fifth birthday,
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continue to be covered by the same or equivalent life insurance,
hospitalization, health, medical and dental coverage as was required
hereunder immediately prior to the Executive's death, with all costs and
expenses (including premiums, deductibles and co-pay charges) associated
with such life insurance, hospitalization, health, medical and dental
coverage paid by the Company.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the Executive's
"Accrued Benefits" shall include the following amounts, payable as described
herein: (i) all base salary for the time period ending with the Termination
Date; (ii) reimbursement for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company or its Affiliates for the time period ending
with the Termination Date; (iii) any and all other cash earned through the
Termination Date and deferred at the election of the Executive or pursuant to
any deferred compensation plan then in effect; (iv) a lump sum payment of the
bonus or incentive compensation otherwise payable to the Executive with respect
to the year in which termination occurs under all bonus or incentive
compensation plan or plans in which the Executive is a participant; and (v) all
other payments and benefits to which the Executive may be entitled as
compensatory fringe benefits or under the terms of any benefit plan, including
severance payments under severance policies of the Company and its Affiliates
(as applicable) and practices as in effect immediately prior to the Change in
Control of the Company. Payment of Accrued Benefits shall be made promptly in
accordance with the prevailing practice with respect to Subsections (i) and (ii)
or, with respect to Subsections (iii), (iv) and (v), pursuant to the terms of
the benefit plan or practice establishing such benefits.
(b) Termination Payment. The Termination Payment shall be an amount
equal to three (3) times the sum of (i) the Executive's annual base salary, as
in effect immediately prior to the Change in Control of the Company, as adjusted
upward from time to time pursuant to Section 6 hereof, plus (ii) the higher of
(a) the average of the two highest annual bonuses (if any) paid to the Executive
in the three years immediately prior to the Change in Control of the Company or
(b) the average of the two highest annual bonuses (if any) paid to the Executive
in the three years immediately prior to the date of the Covered Termination.
Except as otherwise provided herein, the Termination Payment shall be paid to
the Executive in cash no later than ten (10) business days after the Termination
Date; provided, however, the Termination Payment shall be paid immediately upon
receipt by the Company of a Notice of Termination relating to a Discretionary
Termination (regardless of any differing effective date of the Executive's
employment termination). The Executive shall not be required to mitigate the
amount of the Termination Payment by securing other employment or otherwise, nor
will such Termination Payment be reduced by reason of the Executive securing
other employment or for any other reason.
(c) Gross-Up Payment.
(i) Notwithstanding any other provision of this Agreement, if any
portion of any payment under this Agreement, or under any other agreement
with or plan of the Company or any of its Affiliates (in the aggregate, the
"Total Payments"), would
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constitute an "excess parachute payment," the Company shall pay Executive
an additional amount (the "Gross-Up Payment") such that the net amount
retained by Executive after deduction of any excise tax imposed under
Section 4999 of the Code, any interest charges or penalties in respect of
the imposition of such excise tax (but not any federal, state or local
income tax, or employment tax) on the Total Payments, and any federal,
state and local income tax, employment tax, and excise tax upon the payment
provided for by this Section 9(c), shall be equal to the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income tax and employment taxes at the
highest marginal rate of federal income and employment taxation in the
calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state
and locality of Executive's domicile for income tax purposes on the date
the Gross-Up Payment is made, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and
local taxes.
(ii) For purposes of this Agreement, the terms "excess parachute
payment" and "parachute payments" shall have the meanings assigned to them
in Section 280G of the Code and such "parachute payments" shall be valued
as provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 280G(d)(4) of the Code (or any
successor provision). Promptly following a Covered Termination or notice by
the Company to the Executive of its belief that there is a payment or
benefit due the Executive which will result in an excess parachute payment
as defined in Section 280G of the Code, the Executive and the Company, at
the Company's expense, shall obtain the opinion (which need not be
unqualified) of nationally recognized tax counsel ("National Tax Counsel")
selected by the Company's independent auditors and reasonably acceptable to
the Executive (which may be regular outside counsel to the Company), which
opinion sets forth (i) the amount of the Base Period Income, (ii) the
amount and present value of Total Payments, (iii) the amount and present
value of any excess parachute payments, and (iv) the amount of any Gross-Up
Payment. As used in this Agreement, the term "Base Period Income" means an
amount equal to the Executive's "annualized includible compensation for the
base period" as defined in Section 280G(d)(1) of the Code. For purposes of
such opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Section 280G(d)(3) and (4) of the Code
(or any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive.
The opinion of National Tax Counsel shall be addressed to the Company and
the Executive and shall be binding upon the Company and the Executive. If
such National Tax Counsel so requests in connection with the opinion
required by this Section 9(c), the Executive and the Company shall obtain,
at the Company's expense, and the National Tax Counsel may rely on, the
advice of a firm of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by the Executive
solely with respect to its status under Section 280G of the Code and the
regulations thereunder. Within five (5) days after the National Tax
Counsel's opinion is received by the Company and the Executive, the Company
shall pay (or cause to be paid) or distribute (or cause to be distributed)
to or for the benefit of Executive such amounts as are then due to
Executive under this Agreement.
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(iii) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Total Payments or
Gross-Up Payment, a change is finally determined to be required in the
amount of taxes paid by Executive, appropriate adjustments shall be made
under this Agreement such that the net amount which is payable to the
Executive after taking into account the provisions of Section 4999 of the
Code shall reflect the intent of the parties as expressed in this Section
9, in the manner determined by the National Tax Counsel.
(iv) The Company agrees to bear all costs associated with, and to
indemnify and hold harmless, the National Tax Counsel of and from any and
all claims, damages, and expenses resulting from or relating to its
determinations pursuant to this Section 9(c), except for claims, damages or
expenses resulting from the gross negligence or willful misconduct of such
firm.
10. Death. In the event of a Covered Termination due to the
Executive's death, the Executive's estate, heirs and beneficiaries shall receive
all the Executive's Accrued Benefits through the Termination Date and the
Termination Payment in accordance with Section 9(b).
11. Retirement. If, during the Employment Period, the Executive and
the Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date; provided, that if the
Executive's employment is terminated by the Executive for Good Reason,
disability or a Discretionary Termination or by the Company other than by reason
of Cause and the Executive also, in connection with such termination, elects
voluntary early retirement, the Executive shall also be entitled to receive a
Termination Payment pursuant to Section 9(b) hereof.
12. Termination for Disability. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties hereunder on a full-time
basis for six (6) consecutive months and, within thirty (30) days after the
Company or the Executive notifies the other in writing that it intends to
terminate the Executive's employment (which notice shall not constitute the
Notice of Termination contemplated below), the Executive shall not have returned
to the performance of the Executive's duties hereunder on a full-time basis, the
Executive or Company and its Affiliates (as the case may be) may terminate the
Executive's employment pursuant to a Notice of Termination given in accordance
with Section 13 hereof. In the event the Executive's employment is terminated on
account of the Executive's disability in accordance with this Section 12, the
Executive shall receive Accrued Benefits in accordance with Section 9(a) and the
Termination Payment in accordance with Section 9(b) hereof and shall remain
eligible for all benefits provided by any long term disability programs for
which the Executive is eligible and that are in effect at the time of such
termination.
13. Termination Notice and Procedure. Any Covered Termination by the
Company, any of its Affiliates or the Executive shall be communicated by written
Notice of
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Termination to the Executive, if such Notice is given by the Company or one of
its Affiliates, and to the Company, if such Notice is given by the Executive,
all in accordance with the following procedures and those set forth in Section
24 hereof:
(a) If such termination is for disability, Cause or Good Reason, the
Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination. (No such
detail need be provided for a Discretionary Termination).
(b) Any Notice of Termination by the Company or one of its Affiliates
shall have been approved, prior to the giving thereof to the Executive, by
a resolution duly adopted by a majority of the directors of the Company (or
any successor corporation) then in office.
(c) The Executive shall have thirty (30) days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or act,
if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement.
(d) The recipient of the Notice of Termination shall personally
deliver or mail in accordance with Section 24 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such
Notice within fifteen (15) days after receipt thereof, provided, however,
that a Notice of Termination relating to a Discretionary Termination shall
not be subject to dispute for any reason by the Company or otherwise. After
the expiration of such fifteen (15) days (or immediately upon receipt of a
Notice of Termination relating to a Discretionary Termination), the
contents of the Notice of Termination shall become final and not subject to
dispute.
14. Confidentiality Obligations of the Executive; Noncompetition.
(a) During and following the Executive's employment by the Company,
the Executive shall hold in confidence and not directly or indirectly disclose
or use or copy or make lists of any confidential information or proprietary data
of the Company, except to the extent authorized in writing by the Board of
Directors of the Company or required by any court or administrative agency,
other than to an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of duties as an executive of the Company. Confidential information
shall not include any information known generally to the public or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that of the Company. All records,
files, documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into contact
with, shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment.
(b) The Executive agrees that, in the event of a Covered Termination
in which the Executive has or will receive a Termination Payment, for a period
of one year after the Termination Date or until the end of the Employment
Period, whichever is shorter, the Executive
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shall not, within the State of Wisconsin, except as permitted by the Company's
prior written consent (which shall not be unreasonably withheld), participate in
the management of any business which is a direct and substantial competitor of
the Company or one of its Affiliates. The ownership of less than five percent of
any class of securities of any corporation listed on a national securities
exchange or regularly traded over the counter even though such corporation may
be a competitor of the Company or one of its Affiliates as specified above,
shall not be deemed as constituting a financial interest in such competitor.
15. Expenses and Interest. If, after a Change in Control of the
Company, a good faith dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or if any legal or arbitration
proceeding shall be brought in good faith to enforce or interpret any provision
contained herein, or to recover damages for breach hereof, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of interest
announced by U.S. Bank, N.A. (or any successor thereto) from time to time as its
prime or base lending rate from the date that payments to him should have been
made under this Agreement. Within ten (10) days after the Executive's written
request therefor, the Company shall pay to the Executive, or such other person
or entity as the Executive may designate in writing to the Company, the
Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Except as provided in Section 9(c) of this Agreement,
each and every payment made hereunder by the Company shall be final, and the
Company will not seek to recover all or any part of such payment from the
Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
17. Successors.
(a) If the Company sells, assigns or transfers all or substantially
all of its business and assets to any Person, or if the Company merges into or
consolidates or otherwise combines with any Person, then the Company shall
assign all of its right, title and interest in this Agreement as of the date of
such event to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive, to
expressly assume and agree to perform from and after the date of such assignment
all of the terms, conditions and provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such agreement shall be a breach of
this Agreement constituting "Good Reason" hereunder, except that for purposes of
implementing the foregoing, the date upon which such transfer or other
succession becomes effective shall be deemed the Termination Date. In case of
such assignment by the Company and of assumption and agreement by such Person,
as used in this Agreement, "Company" shall thereafter mean such Person which
executes and
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delivers the agreement provided for in this Section 17 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, and this Agreement shall inure to the benefit of and be enforceable by such
Person. The Executive shall, in his discretion, be entitled to proceed against
any or all of such Persons, any Person which theretofore was such a successor to
the Company (as defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights of the Executive
hereunder. Except as provided in this Section 17(a), this Agreement shall not be
assignable by the Company. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11 and 12 hereof if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives.
18. Termination of Existing KEESA. Executive acknowledges that he is
not, as of the date hereof, entitled to any benefits under the Existing KEESA.
The Existing KEESA is superseded in its entirety by this Agreement and the
Existing KEESA shall, as of the date hereof, be of no further force or effect.
19. Severability. The provisions of this Agreement shall be regarded
as divisible, and if any of said provisions or any part hereof are declared
invalid or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
20. Amendment. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
21. Withholding. The Company and its Affiliates shall be entitled to
withhold from amounts to be paid to the Executive hereunder any federal, state
or local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not exceed the
minimum amount required to be withheld by law. The Company and its Affiliates
shall be entitled to rely on an opinion of nationally recognized tax counsel if
any question as to the amount or requirement of any such withholding shall
arise.
22. Certain Rules of Construction. No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.
23. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out of
this Agreement shall, at the Executive's election, be determined by arbitration
under the rules of the American Arbitration Association then in effect or by
litigation. Executive shall be entitled to the rights set forth in Section 15 to
recover
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his costs with respect to any such dispute. Whether the dispute is to be settled
by arbitration or litigation, the venue for the arbitration or litigation shall
be Sheboygan, Wisconsin or, at the Executive's election, if the Executive is no
longer residing or working in the Sheboygan, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides. The
parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
24. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13(d) hereof, shall be
deemed given when actually received by the Executive or actually received by the
Company's Secretary or any officer of the Company other than the Executive. If
mailed, such notices shall be mailed by United States registered or certified
mail, return receipt requested, addressee only, postage prepaid, if to the
Company or any of its Affiliates, to Fresh Brands, Inc., Attention: Secretary,
0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 and to Xxxxx & Xxxxxxx, Attention:
Xxxxxx X. Xxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or if to
the Executive, at the address set forth below the Executive's signature to this
Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
25. No Waiver. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
26. Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
FRESH BRANDS, INC.
By:
------------------------------------
[Officer]
[Title]
EXECUTIVE
---------------------------------------
[Name]
[Address]
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