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EXHIBIT 10.25
FORM OF EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT is made this ____ day of _____________, 1998, by and
between KEEBLER FOODS COMPANY, a Delaware corporation ("Company"), and Xxx X.
Xxxx ("Executive").
RECITALS
In order to confirm the terms of Executive's employment with Company,
the Company and the Executive hereby agree as follows; Executive is willing to
perform services for the Company and accept the protections afforded under the
terms and conditions hereinafter set forth.
1. TERM. The term of this Agreement ("Term") shall commence upon the
closing of the public offering of the Company's stock which occurs subsequent
to the date of this Agreement but prior to March 31, 1998, (the "Commencement
Date") and, subject to the terms hereof, shall terminate on the third
anniversary thereof. If the said public offering does not occur prior to March
31, 1998, this Agreement shall be void and of no force or effect.
2. DUTIES AND COMPENSATION.
2.1 DUTIES.
As of the Commencement Date, the Executive is President and Chief
Executive Officer of the Company, and his duties shall consist of those duties
and responsibilities currently performed by him in said office plus such other
duties consistent with those generally applicable to a person bearing said
title which are assigned to him by the Company's Chairman of its Board of
Directors "Board". The Board may also change his title.
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2.2 COMPENSATION.
(a) The Executive's annual base salary shall be the amount
currently in effect as of the Commencement Date or such greater amount
as may be determined by the Board from time to time. In addition, the
Executive shall be entitled to participate in the Company's short-term and
long-term incentive plans, as in effect from time to time. The
Compensation Committee of the Board shall maintain said total compensation
of the Executive at a level above the fiftieth percentile for chief
executive officers of companies comparable to Keebler as determined by a
nationally recognized compensation consulting firm selected by the
Compensation Committee.
(b) The Executive shall be permitted to participate in the Company's
pension benefit plans and welfare benefit plans according to the terms
thereof, as the same may be amended from time to time by the Company.
3. TERMINATION OF EMPLOYMENT. The Board or Executive may terminate
Executive's employment at any time for any reason upon thirty (30)
days' prior written notice; said prior notice shall not be required in the
event of a termination by the Company for Cause, or by the Executive for Good
Reason, as defined hereinafter, or due to Executive's death or Permanent
Disability. In the event of termination of the Executive's employment by the
Company for Cause, the Executive's active service, authority, responsibilities
and compensation shall cease immediately, but formal termination of employment
shall only be effective upon the fifth business day after notice thereof is
delivered to the Executive.
3.1 VOLUNTARY TERMINATION BY EXECUTIVE; DISCHARGE FOR CAUSE; DEATH OR
PERMANENT DISABILITY.
(a) In the event that Executive's employment is terminated:
(i) by the Company for Cause (as defined in Section 3.1(b));
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(ii) by Executive for any reason other than Good Reason (as
defined in Section 3.1(c)); or
(iii) due to Executive's death or Permanent Disability (as
defined in Section 3.1(d)),
Executive shall only be entitled to receive any earned but unpaid
compensation, including base salary through the date of termination only,
any earned but unpaid bonus of Executive with respect to the Company's
fiscal year preceding his termination in which Executive was employed by
Company, and any benefits under existing Company benefit plans to which he
is otherwise entitled under applicable law or the terms of such plans
(collectively, "Earned Compensation"). Executive shall not be entitled,
among other things, to the payment of any bonus in respect of all or any
portion of the fiscal year in which such termination occurs, other than as
otherwise provided hereinafter. If, however, Executive's employment is
terminated due to Executive's death or Permanent Disability (as defined in
Section 3.1(d)), Executive or his beneficiary described in Section 9 shall
be paid the full amount of the bonus, if any, which he would have received
if his employment had continued until the end of the fiscal year in which
such termination occurs, which bonus payment shall be paid to Executive or
his said beneficiary at such time and in such manner as bonuses in respect
of such fiscal year are generally paid to other employees of the Company,
as well as a full year's base salary during the twelve (12) months
following said death or Permanent Disability. Termination of Executive
for Cause shall be made by delivery to Executive of a written notice from
the Chairman of the Board at the direction of the Board
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setting forth in reasonable detail the reasons for such termination.
Termination by Executive for Good Reason shall be effected by delivery to
the Chairman of the Board of a notice from the Executive setting forth in
reasonable detail the reasons for such termination.
(b) For purposes of this Agreement, "Cause" means any of the
following:
(i) malfeasance or gross misconduct by Executive
in connection with his employment or malfeasance or gross
misconduct or which produces material loss or damage to or
has a material adverse effect on the reputation of the
Company, which shall include but not be limited to
instances of sexual harassment or violations of the
Company's nondiscrimination policies;
(ii) continuing refusal by Executive to perform his employment
duties or any lawful direction of the Chairman of the
Board, within ten (10) days after written notice of any
such refusal to perform such duties or direction was given
to Executive;
(iii) any breach of the provisions of Section 8 of this Agreement
by Executive or any other material breach of this Agreement
by Executive; or
(iv) the conviction of Executive of, or plea of nolo contendere
by Executive to,
(A) any felony under federal, state or local laws; or
(B) a misdemeanor which involves dishonesty or fraud or
produces material loss or damage to or has a
material adverse effect on the reputation of the
Company.
(c) For purposes of this Agreement, "Good Reason" shall mean:
(i) (A) the assignment to the Executive of any duties
inconsistent in any material adverse respect with the
Executive's authority, duties or responsibilities either as
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contemplated by Section 2 of this Agreement or as
existing on the date hereof, or (B) any change in the
Executive's title from President and Chief Executive
Officer of the Company, or (C) any other action by the
Company which results in a material diminishment in such
authority, duties or responsibilities, other than action or
in action which is remedied by the Company within 15 days
after receipt of written notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 2 of this Agreement, other than any
failure which is remedied by the Company within 15 days
after receipt of written notice thereof given by the
Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as permitted by
this Agreement;
(iv) any relocation by the Company of the Executive's primary
office location outside the Standard Metropolitan
Statistical Area in which said office is currently located;
(v) any reduction in the total potential annual compensation of
the Executive, consisting of base salary or
potential bonus (but not including diminution in bonus
as a consequence of economic performance of the Company);
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(vi) an adverse change in employee benefits other than a change
which results from an amendment or alteration of the
Company's employee benefit plans which affect its salaried
employees generally;
(d) For purposes of this Agreement, "Permanent Disability"
shall mean a disability that would entitle Executive to receive benefits
under the Company's Long-Term Disability Plan applicable to Senior
Executive Officers as in effect from time to time, which prevents the
Executive from performing his duties hereunder for 180 consecutive days or
more.
3.2 TERMINATION OTHER THAN FOR CAUSE. If Executive's employment is
terminated (i) by the Company other than (a) for Cause or (b) due to
Executive's death or Permanent Disability, or (ii) by the Executive for Good
Reason, Executive, upon execution of a release in a form satisfactory to the
Company, shall receive severance benefits in the form of:
(1) continuation of base salary as in effect on the date of
termination for the balance of the Term, but in no case less than one
(1) year of continuation of base salary, payable in accordance with the
ordinary payroll practices of the Company, and if such termination occurs
where the remaining portion of the Term is less than one (1) year, base
salary shall be continued for no less than one (1) year from the date of
termination;
(2) continued coverage under the Company's health and medical
plans for the balance of the Term; provided, however, that any such
continued coverage may be satisfied by the Company's payment of the
premiums required to be paid
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by Executive to maintain such coverage under the Consolidated Omnibus
Budget and Reconciliation Act of 1985 ("COBRA") and the COBRA period shall
run during such period of continued coverage; to the extent that such
coverage is not available for former employees under the terms of said
plans, the Company may provide said benefits through the purchase of
equivalent insurance at the Company's expense; and
(3) the Company shall pay to Executive any earned bonus for
the preceding fiscal year and a full bonus for the fiscal year in which
a termination under this Section 3.2 occurs, as well as for any full fiscal
year remaining within the Term, and a prorated portion (based on days
remaining within the Term (or a one year extension thereof referred to
above) in said fiscal year divided by total days in said year) for any
portion of a fiscal year remaining within the Term (or a one year extension
thereof referred to above), payable at such time and in such manner as
bonuses in respect of such fiscal year are generally payable to employees
of the Company. For purposes of said bonus calculation, the actual
performance of the Company, or a relevant division, during the bonus
measurement period will be used and it will be assumed that Executive
achieved a "neutral" performance as to the personal goals aspect, if any,
of the bonus formula; and
(4) Any interest which the Executive may have in the Company's
Supplemental Executive Retirement Plan shall become fully vested in
accordance
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with terms of such plan up to and through the date through which
severance benefits are payable hereunder.
3.3 TERMINATION FOLLOWING CHANGE IN CONTROL
(a) If the Executive's employment is terminated by the Company without
Cause or by the Executive with Good Reason following a Change in Control (as
defined in (b) below) during the period from the date of said Change in
Control and prior to the second anniversary of the Change in Control, the
Executive's base salary shall be continued for a period of two (2) years from
said termination, and the Company shall pay any earned but unpaid bonus for the
preceding fiscal year and full bonuses for any fiscal years ending within said
two (2) years and a pro rated portion (based on the days remaining within such
fiscal year which ends within the two year period divided by the total days in
such fiscal year) for any portion of a fiscal year remaining within said
two-year period. Bonuses shall be paid at the time and in the manner they are
otherwise payable to employees of the Company. For purposes of said bonus
calculation, the actual performance of the Company, or a relevant division,
during the bonus measurement period will be used and it will be assumed that
Executive achieved a "neutral" performance as to the personal goals aspect, if
any, of the bonus formula.
(b) For purposes hereof, a "Change in Control" shall be deemed to
occur on the earliest of:
(i) The effective time of any purchase, sale, merger,
consolidation or other transaction after which any person,
corporation, partnership or other entity other than
Flowers Industries, Inc. ("Flowers") or its
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Affiliates, the then current management of the
Company or of Flowers or any member of the immediate family
of said management, or any employee benefit plan of
Company or of Flowers ("Permitted Owners") shall own
more than fifty percent (50%) of the outstanding capital
stock of the Company which stock is entitled to vote for
the election of directors.
(ii) If it occurs during the first three years
beginning on the Commencement Date, the effective time
of any purchase, sale, merger, consolidation or other
transaction after which any person, corporation, partnership
or other entity other than the then current management of
the Company or Flowers or any member of the immediate family
of said management, or any employee benefit plan of Company
or of Flowers ("Permitted Owners") shall own more than fifty
percent (50%) of the outstanding capital stock of Flowers
which stock is entitled to vote for the election of
directors.
(iii) The effective time of a transfer to an entity other than
a Permitted Owner of substantially all of the property
of the Company.
(iv) Continuing Directors at any time fail to constitute a
majority of the Board of Directors of the Company.
"Continuing Directors" shall mean the members of the Board
of Directors as of the date hereof, plus any new directors
whose nominations were approved by at
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least a majority of the Continuing Directors in office at
the time of the election of any such new directors.
For the purposes of this Agreement, the term "Affiliate" shall be as
defined in Rule 405 of the General Rules and Regulations under the Securities
Act of 1933, as amended.
(c) Notwithstanding the Term stated in Section 1 above, so long as
the Executive remains employed by the Company the provisions of this Section 3.3
shall automatically be extended upon expiration of the Term for successive
one-year periods.
3.4 INDEMNIFICATION OF EXECUTIVE. During the Term of this
Agreement, and thereafter with respect to any act occurring within said Term,
the Company agrees to continue in force any indemnification agreements or
obligations which are in effect as of the date hereof, and which would provide
indemnification to Executive, including any such provisions of the Company's
Articles of Incorporation or By-laws.
3.5 NO FURTHER OBLIGATIONS. After the termination of Executive's
employment and payment of all amounts due to Executive under the terms of this
Agreement, the obligations of the Company under this Agreement to make any
further payments, or provide any benefits specified herein (other than benefits
required to be provided by applicable law or under the terms of any employee
benefit of the Company in which the Executive was a participant) to Executive
shall thereupon cease and terminate.
4. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company: Chairman of the Board
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Keebler Foods Company
Xxx Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
with a copy to: Xxxxxx X. X'Xxxxx, Esq.
Keebler Foods Company
Xxx Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
To Executive: Xxx X. Xxxx
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Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
5. SEPARABILITY. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
6. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
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7. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION, NON-COMPETITION.
(a) Executive shall not, without the prior written consent of
the Company, use, divulge, disclose or make accessible to any other
person, firm, partnership, corporation or other entity any Confidential
Information pertaining to the business of the Company or any of its
affiliates, except (i) while employed by the Company, in the business of
and for the benefit of the Company, or (ii) when required to do so by a
court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof)
with jurisdiction to order Executive to divulge, disclose or make
accessible such information. For purposes of this Section 8(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other
non-public, proprietary and confidential information of the Company or its
affiliates or customers, that in any case, is not otherwise available to
the public (other than by Executive's breach of the term hereof).
(b) Executive agrees that any payments made under the terms
of Section 3.2 hereof shall be deemed to be payments in respect of
Executive's non-competition as contemplated under the terms of
Section 26(a) of the Management Stockholder's Agreement between
Inflo Holdings Corporation and Executive as of
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January 26, 1996, as amended, which section is hereby specifically
incorporated into this Agreement by reference.
9. BENEFICIARIES, REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary of
beneficiaries to receive any compensation or benefit payable hereunder
following Executive's death, and may change such election, in either case by
giving the Company written notice thereof. In the event of Executive's death
or a judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
10. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 10 are in addition to the survivorship provisions of
any other section of this Agreement. Section 12(b) of this Agreement shall
survive any termination hereof until all non-qualified options under any
non-qualified stock option agreement issued to the Executive pursuant to the
1996 Stock Purchase and Option Plan for Key Employees of INFLO Holdings
Corporation and Subsidiaries (the "1996 Non-Qualified Stock Option Agreement")
are exercised or otherwise expire by their terms.
11. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Illinois, without
reference to rules relating to conflicts of law.
12. EFFECT ON PRIOR AGREEMENTS.
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(a) This Agreement contains the entire understanding between the
parties hereto and supersedes in all respects any prior agreement or
understanding between the Company or any affiliate of the Company and
Executive as to employment matters, other than with respect to any equity
arrangements that the Company and Executive have previously entered into or
any arrangements with respect to the relocation of the Executive.
(b) Any termination of employment of the Executive, whether or not
for Cause hereunder or otherwise, shall be effective as to this Agreement
but shall not also be considered to be a termination for "Cause" as
such term is defined in Section 1.2 of the 1996 Non-Qualified Stock
Option Agreement (the "1996 Option Agreement"), nor will such termination
in any way subject the Executive to the operation of Section 3.2(e) of
the 1996 Option Agreement, unless said termination is for conduct which
would be a reasonable basis for an indictment of a felony and is
reasonably likely to be injurious to the Company.
13. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
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14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which will be deemed an original.
KEEBLER FOODS COMPANY
By:____________________________________
Xxx X. Xxxx
President and Chief Executive Officer
EXECUTIVE
_______________________________________
Name:__________________________________
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