EMPLOYMENT AGREEMENT
Exhibit 10.58
AGREEMENT, dated as of the 23rd day of October, 2009, by and among Xxxxxxx Foods, Inc., a Delaware corporation having its principal executive offices in Minnetonka, Minnesota (the “Company”), Xxxxx X. Xxxxx, Xx. (the “Executive”), and for the purposes of Section 2(c) hereof, Xxxxxxx Foods Investors, LLC, a Delaware limited liability company and ultimate controlling entity of the Company (“Holdings”).
WHEREAS, the Executive is willing to serve the Company on the terms and conditions set forth below.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. Subject to the terms and conditions of this Agreement, including Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve in the employ of the Company, for the period commencing on October 26, 2009 (the “Effective Date”) and ending on the second anniversary of such Effective Date (the “Initial Employment Period”), provided, however, that commencing on the second anniversary of the Effective Date and each subsequent anniversary thereafter, the Employment Period shall automatically be extended for one additional year. Each such additional year during which this Agreement shall be extended is referred to herein as a “Renewal Year”. The Initial Employment Period and all Renewal Years, collectively, are referred to hereinafter as the “Employment Period”
i. During the Employment Period, the Executive shall serve as President and Chief Executive Officer of the Company with the appropriate authority, duties and responsibilities attendant to such positions. Executive will be elected to the Board of Directors of the Company and each of its subsidiaries
ii. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his business attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities; provided, however, that nothing herein shall prohibit Executive from devoting reasonable periods of time to personal, non-competitive business activities and to charitable and professional activities, in Executive’s own discretion and during such hours as he is not obligated to perform any services for the Company.
iv. Relocation, Commuting and Living Expenses. The Executive will have a full-time rented living accommodation within reasonable commuting distance of the principal executive office of the Company on or before November 30, 2009. The Executive will pay all costs of any temporary housing, house hunting trips and commuting. At the time of the Executive’s permanent relocation to Minnesota, the Company shall reimburse Executive all reasonable closing costs associated with the sale of his existing home (including attorney fees) and the purchase of a new home in the Minneapolis area (including attorney fees, title search and title insurance fees, loan origination costs and fees, and so forth). The Company further agrees to pay for the relocation of household goods to Executive’s new residence in Minnesota. The Executive shall provide the
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Company with documentation substantiating all costs to be reimbursed under this Section 2(b)(iv) within 60 days of the incurrence of such costs. The Company shall reimburse the Executive within 30 days of receiving such substantiation.
e. Signing Bonus. Upon the Effective Date, the Executive shall be entitled to a signing bonus of $250,000, which bonus will be paid promptly following the date hereof.
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i. the continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or
ii. the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company, or
iii. conviction of a felony or the entry of a guilty or nolo contendere plea by the Executive with respect to any felony charge.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the
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Board or upon the instructions of the Chief Executive Officer (while the Executive does not serve as such) or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than 75% of the entire membership of the Board (excluding the Executive) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii) or (iii) above, and specifying the particulars thereof in detail.
i. the assignment to the Executive of any duties inconsistent with the Executive’s title and position (including status, offices and reporting requirements), authority, duties or responsibilities as contemplated by Section 2(a)(i) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; provided that it is specifically understood that within six months of a Change in Control, the Company shall have the flexibility to appoint the Executive to a reporting relationship different from that which existed prior to the Change in Control, to make an immaterial change in Executive’s duties or to change the Executive’s title; provided that, Executive shall not have a stature less than that of a Divisional President (it being understood that equivalent positions may have different titles) and Executive shall report directly to the Chief Executive Officer (or equivalent position) of the acquiror’s parent company;
ii. any failure by the Company to comply with any of the provisions of Section 2(b) of this Agreement, or, following a Change in Control, the failure by the Company to review and provide increases in Annual Base Salary in a manner that is consistent with the acquiror’s review and compensation policy for other senior executives, in each case other than an isolated and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
iii. the failure of the Company upon a Change in Control to (A) continue in effect any employee benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in which Executive is participating immediately prior to such Change in Control or the taking of any action by the Company which would adversely affect Executive’s participation in or reduce
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Executive’s benefits under any such plan, unless Executive is permitted to participate in other plans providing Executive with substantially comparable benefits, or (B) provide Executive with paid vacation in accordance with the most favorable past practice of the Company as in effect for Executive immediately prior to such Change in Control;
iv. any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement for Cause, death or Disability;
v. any failure by the Company to comply with and satisfy Section 8(c) of this Agreement; or
vi. any requirement that the Executive be based anywhere more than fifty (50) miles from the principal executive office of the Company.
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issuance of capital stock or otherwise) more than 50% of the voting stock of the Company, (b) such party or parties, directly or indirectly, acquire assets constituting all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis, or (c) prior to an initial public offering of the Company Common Stock pursuant to an offering registered under the 1933 Act, Xxxxxx X. Xxx Equity Fund V, L.P., a Delaware limited partnership, or its affiliates, cease to have the ability to elect, directly or indirectly, a majority of the Board of Directors of the Company.
4. Obligations of the Company upon Termination.
i. the Company shall pay to the Executive or his estate or beneficiaries in a lump sum in cash within 30 days after the Date of Termination the sum of (x) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, and (y) the product of (1) the Target Bonus and (2) a fraction, the numerator of which is the number of months, which shall include partial months, in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is 12, to the extent not theretofore paid (the sum of the amounts described in clauses (x) and (y) shall be hereinafter referred to as the “Accrued Obligations”);
ii. to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive or his estate or beneficiaries any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy or practice of or contract or agreement with the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and
iii. the Company shall pay to the Executive or his estate or beneficiaries in cash an amount equal to the product of (x) two (2) and (y) the sum of the Executive’s current Annual Base Salary and Target Bonus, payable in twenty-four (24) equal monthly installments in accordance with the Company’s regular payroll practices, commencing the month following the Date of Termination.
b. By the Company for Cause; By the Executive Other than for Good Reason. If the Executive’s employment is terminated for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (i) his Annual Base Salary through the Date of Termination to the extent theretofore unpaid and (ii) the Other Benefits.
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c. By the Company Other than for Cause, Death or Disability; By the Executive for Good Reason. If, during the Employment Period, the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than for Cause and other than on account of death or Disability;
i. the Company shall pay to the Executive:
1. in one lump sum in cash within thirty (30) days after the Date of Termination, the Accrued Obligations; and
2. the amount equal to the product of (x) two (2) and (y) the sum of the Executive’s current Annual Base Salary and Target Bonus, payable in twenty-four (24) equal monthly installments in accordance with the Company’s regular payroll practices, commencing the month following the Date of Termination; and
ii. the Company shall provide the Executive with the Other Benefits.
i. Notwithstanding any other provision in this Agreement to the contrary, (A) any benefits to which the Executive becomes entitled under this Agreement due to the termination of the Executive’s employment, shall not be paid or provided until the Executive has incurred a “separation from service” with the Company within the meaning of Section 409A of the Code, if the earlier provision or payment would result in a violation of Section 409A of the Code and (B) to the extent required by Section 409A of the Code, payment of such benefits shall commence no earlier than the earlier of (1) the first day of the first month commencing at least six (6) months following the date of the Executive’s separation from service with the Company or (2) the Executive’s death; provided, that any amount the payment of which is delayed by application of clause (B) of this Section 4(f) shall be paid as soon as possible following the expiration of the applicable period under such clause (B) with interest at the rate provided in section 1274(b)(2)(B) of the Code.
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ii. Notwithstanding anything to the contrary, no payment or benefits provided under this Agreement in respect of one taxable year shall affect the amounts payable in any other taxable year. No such amounts due to the Executive under this Agreement shall be subject to liquidation or exchange for another benefit.
iii. It is intended that each installment of payments or benefits hereunder shall be treated as a separate “payment” for purposes of Section 409A of the Code.
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such customer, supplier, licensee or business relation and the Company or any subsidiary or (iv) directly or indirectly acquire or attempt to acquire an interest in any business relating to the business of the Company or any of its subsidiaries and with which the Company or any of its subsidiaries has entertained discussions or has requested and received information relating to the acquisition of such business by the Company or its subsidiaries in the one-year period immediately preceding Executive’s termination of employment with the Company.
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7. Full Settlement; Arbitration.
a. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement; and such amounts shall not be reduced whether or not the Executive obtains other employment.
b. Other than with respect to the enforcement of Section 5 hereof, the Parties agree that all claims relating to this Agreement shall be subject to arbitration in the State of Minnesota in accordance with the rules of the American Arbitration Association in the State of Minnesota. The non-prevailing party in such arbitration shall pay, to the full extent permitted by law, all legal fees and expenses (including arbitration expenses) which the prevailing party may reasonably incur as a result of any contest pursued or defended against in good faith by the prevailing party regarding the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the prevailing party about the amount of any payment pursuant to this Agreement). Any reimbursement payable to the Executive under this Section 7(b) shall be made no later than the later of (i) the end of the year in which the arbitration is finally resolved, and (ii) the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.
a. This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
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b. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
c. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid.
a. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
b. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxx X. Xxxxx, Xx.
000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxx, Esq.
Xxxxxxxxxx Xxxxxxxx, P.C.
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
If to the Company:
Xxxxxxx Foods, Inc.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Secretary
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with a copy to:
Xxxxxx X. Xxx Equity Fund V, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxx
Xxxx Xxxxxx
Xxxxxx X. Xxxxxxx
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.
c. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
d. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
e. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section (3)(c)(i)-(v) of this Agreement (unless such action is expressly waived or consented to by the Executive), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
f. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.
g. Subject to the provisions of Section 3(d), there shall be no limitation on the ability of the Company to terminate the Executive at any time with or without Cause.
h. If the Executive has commenced his employment hereunder as of the Effective Date, the Company shall pay upon delivery of an invoice therefore fifty percent (50%) of the Executive’s legal fees and costs in connection with the preparation, negotiation and execution of this Agreement, the Senior Management Unit Subscription Agreement and the other documents contemplated hereby; provided that, in no event shall the Company be obligated to pay more than $7,500.00 for such fees and expenses. Any reimbursement payable to the Executive under this Section 9(h) shall be made within 30 days of the delivery of an invoice, but no reimbursement will be made after the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.
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/s/ Xxxxx X. Xxxxx, Xx. | ||
Xxxxx X. Xxxxx, Xx. | ||
XXXXXXX FOODS, INC. | ||
By: | ||
/s/ Xxxxx X. Xxxxxxxxx | ||
Name: Xxxxx X. Xxxxxxxxx | ||
Title: Exec. Chairman, CEO, President | ||
XXXXXXX FOODS INVESTORS, LLC | ||
By: | ||
/s/ Xxxxx X. Xxxxxxxxx | ||
Name: Xxxxx X. Xxxxxxxxx | ||
Title: Exec. Chairman, CEO, President |