THIS
AGREEMENT, made and entered into as of the 5th day of December, 2005, by
and between FRESH BRANDS, INC., a Wisconsin corporation (the “Company”),
and XXXXXXXX X. XXXXXXXX (the “Executive”).
W I T N E S S E T H :
WHEREAS,
the Company and the Executive entered into that certain Key Executive Employment and
Severance Agreement on July 1, 2004 (the “Agreement”);
WHEREAS,
the Company has entered into that certain Agreement and Plan of Merger among Certified
Holdings, Inc., Pillow Acquisition Corp. and the Company, dated as of this date (the
“Merger Agreement”) that provides for the merger of the Pillow Acquisition
Corp. and the Company (the “Merger”);
WHEREAS,
the Company has in effect a 2005 annual bonus plan, pursuant to which the Executive may be
entitled to a cash payment after the close of 2005 to reward the Executive for his
performance with respect to the 2005 fiscal year;
WHEREAS,
as a condition to the obligation of the parties to the Merger Agreement to effectuate the
Merger, the Agreement is required to be amended to provide that any payment made under the
Company’s 2005 annual bonus plan will not increase the severance amount payable under
the Agreement;
WHEREAS,
the parties desire to amend the Agreement to exclude the 2005 bonus payment from being
considered under the Agreement contingent on the Effective Time of the Merger (as that
term is defined in the Merger Agreement); and
WHEREAS,
the Company and Executive also desire to amend the Agreement to reflect changes required
by the provisions of Internal Revenue Code Section 409A, to be retroactively effective to
January 1, 2005.
NOW,
THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:
Amendment Contingent on
Merger
Effective on the Effective Time of
the Merger, the first sentence of Section 9(b) is revised to read in its entirety as
follows:
| |
“The
Termination Payment shall be an amount equal to two (2) 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,
but excluding, for purposes of calculating the amount under
subsections (a) or (b), any bonus paid in 2006 with respect to the
2005 annual performance period.” |
Amendments for
409A. Effective as of January 1, 2005, the Agreement is amended as follows:
| 1. |
Section
1(m), definition of “Termination Date,” is amended by adding the
following to the end thereof: |
| |
“Notwithstanding
the foregoing, the Executive’s termination of employment must also be considered a
“separation from service” within the meaning of Code Section 409A and the
regulations promulgated thereunder. If the Executive is considered to have terminated
employment due to the “insignificant services” rule under the regulations, the
Executive will be deemed to have voluntarily terminated employment if the Executive
consents in writing to provide such insignificant services; otherwise, the Executive will
be considered to have terminated employment for Good Reason on the date the insignificant
services begin.” |
| 2. |
Section
5(a) is amended to provide that the base salary to be paid to the Executive
shall not include any amounts previously deferred by the Executive, except to
the extent the Executive is permitted to cancel or revise a deferral election
under Code Section 409A. |
| 3. |
Section
8(b)(i) is amended to read as follows: |
| |
“The
Executive shall receive, at the expense of the Company, reasonable outplacement services
on an individualized basis provided by a nationally recognized executive placement firm
selected by the Company; provided that such services must be utilized by the
Executive within the period ending on December 31 of the second calendar year following
the calendar year in which the Executive’s Termination Date occurs.” |
| 4. |
Section
9(a)(iv) is amended by eliminating the phrase “lump sum.” [The result
is that bonuses will be paid in accordance with the form of payment under the
bonus plan.] |
| 5. |
The
first paragraph of Section 9(b) is amended by adding the following to the end
thereof: |
| |
“Notwithstanding
the foregoing, if the Executive is a “specified employee” within the meaning of
Code Section 409A on his Termination Date, the Termination Payment shall be paid on the
first day of the seventh (7th) month following the month in which the
Termination Date occurs.” |
| 6. |
The
last sentence of Section 15 is amended to read as follows: |
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| |
“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;
provided that no such Company reimbursement shall be made after December 31 of the
second calendar year following the calendar year in which the Executive’s Termination
Date occurs.” |
| 7. |
Section
19 is amended to read in its entirety as follows: |
| |
“This
Agreement may not be amended or modified at any time except by written instrument executed
by the Company and the Executive; provided that the Company shall amend or modify
this Agreement without the Executive’s consent in order to conform the terms of this
Agreement to the requirements of Code Section 409A, and any such amendment shall be made
in a manner that is the minimum needed in order for the Agreement to comply with Code
Section 409A; provided further that to the extent any amendment made herein is not
needed for the Agreement to comply with Code Section 409A, the Company shall further amend
the Agreement to reinstate any benefit or right that was provided under the terms of the
original Agreement to the minimum extent required for the Agreement to comply with Code
Section 409A.” |
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.
|
FRESH BRANDS, INC. |
|
By /s/ Xxxxx X. Xxxxxxxxxx |
|
Xxxxx X. Xxxxxxxxxx |
|
President and Chief Operating Officer |
|
EXECUTIVE |
|
/s/ Xxxxxxxx X. Xxxxxxxx |
|
Xxxxxxxx X. Xxxxxxxx |
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