AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is dated as of August 19, 2002, between TASTY BAKING
COMPANY, a Pennsylvania corporation (the "Company"), and XXXX X. XXXXX
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, Executive has served as the President and Chief Executive
Officer of the Company and, as such, has made and is currently making a
significant contribution to the Company's business; and
WHEREAS, the Board has appointed a new Chief Executive Officer
effective October 7, 2002; and WHEREAS, the Board of Directors of the Company
(the "Board") believes that the continued services of Executive as an employee
and as Chairman of the Board will be of great value and importance to the
Company and is desirous of ensuring the continuation of Executive's services for
a period of years to contribute to a smooth transition of duties to the new
Chief Executive Officer, and to perform such other tasks as the Board of
Directors may deem appropriate; and
WHEREAS, the Board believes that during the aforementioned
transitionary phase, it is appropriate to increase Executive's base salary and
to eliminate longer-term, incentive-oriented compensation; and
WHEREAS, Executive and the Company are currently obligated under a
certain Employment Agreement dated as of July 1, 1988; and
WHEREAS, Executive and the Company are willing to enter into an amended
and restated employment agreement upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of the mutual benefits herein provided, and intending to be
legally bound hereby, the Company and Executive hereby agree as follows:
Section 1. Term of Employment. The Company hereby employs Executive (i)
through October 6, 2002, as Chairman of the Board, President and Chief Executive
Officer, and (ii) from October 7, 2002 solely as Chairman of the Board, and
Executive accepts such employment by the Company in each case, on the terms and
conditions herein contained and subject to termination only as hereinafter
provided (the period from the date hereof through termination of this Agreement
as hereinafter provided is referred to as the "Employment Period").
Section 2. Duties. During the Employment Period, Executive shall have
such duties, responsibility and authority and perform such services for the
Company as are consistent with Executive's background, training and experience
as may from time to time be assigned to Executive by the Board of the Company.
For the period from the date hereof through October 6, 2002, Executive shall
serve as Chairman of the Board, President and Chief Executive Officer of the
Company; for the period from October 7, 2002 through the end of the Employment
Period, Executive shall serve as a full-time employee of the Company in the
capacity of Chairman of the Board. In his capacity as Chairman of the Board, the
Executive shall be employed on a full-time basis to perform such tasks as the
Board of Directors may deem appropriate, such as (but not limited to) supporting
the efforts of, and serving as day-to-day advisor to, the Chief Executive
Officer, assisting in evaluating and implementing acquisitions and joint
ventures, advising on industry background and conditions, and assisting in the
smooth transition of management responsibilities to the new Chief Executive
Officer.
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Section 3. Compensation.
(a) Commencing on January 1, 2002 and thereafter during the
Employment Period, the Company shall pay Executive a base salary at the annual
rate of $700,000.00. Payment shall be made in accordance with the Company's
regular practice for Senior Executive employees as in effect from time to time.
(b) Effective January 1, 2002, Executive shall not be entitled to
participate in the Management Incentive Bonus Plan of the Company.
Section 4. Additional Terms.
(a) The Company will reimburse Executive for all reasonable
expenses properly incurred by Executive in the performance of Executive's duties
hereunder in accordance with policies established for Senior Executives of the
Company from time to time by the Board.
(b) Except as provided in Section 3(b), above, during the
Employment Period, Executive shall be entitled to participate, in accord with
the terms thereof, in any present or future insurance, pension, SERP, Thrift,
ESOP, or other employee benefit, compensation or incentive plan adopted by the
Company for Senior Executives generally; provided however, Executive will not
receive any new or additional stock options or stock based incentives after the
date hereof.
(c) During the Employment Period, the Company shall provide
Executive with the exclusive use of the automobile (and bear all costs of fuel,
maintenance, repairs and insurance thereon) as heretofore provided to Executive
by the Company for Executive's use, or a replacement automobile of similar
prestige and appointments.
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Section 5. Termination of Employment Period.
(a) The Employment Period and the Executive's employment by the
Company shall cease and terminate upon the earliest to occur of the events
specified below:
(i) The later of April 30, 2004 and the day after the
Company holds its annual meeting of shareholders in 2004 (assuming the Company
is then an independent publicly-owned corporation), but in no event later than
June 30, 2004.
(ii) The death of Executive. If Executive dies during the
term of this Agreement, Executive's salary through the end of the month in which
death occurs shall be paid to Executive's estate.
(iii) The Executive's election of early retirement prior to
the date applicable under Section 5(a)(i) for termination.
(iv) Termination of Executive's employment for Cause. For
these purposes "Cause" for termination of Executive shall be limited to actions
by Executive involving willful malfeasance or gross negligence or failure to act
by Executive involving willful and material nonfeasance which, at the time of
such willful malfeasance or gross negligence or willful and material
nonfeasance, would tend to have a materially adverse effect on the Company.
(b) In the event that Executive becomes "totally disabled" within
the meaning of the Company's Long Term Disability Plan, the Employment Period
shall be suspended (to resume following suspension unless otherwise terminated)
during any period in which Executive is entitled to receive long term disability
payments under such plan and, during such period of suspension, Executive shall
not be entitled to any compensation under Section 3 hereof, but shall be
entitled to the same benefits that any other employee of the Company would enjoy
under the
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Long Term Disability Plan; provided however, in no event shall the Employment
Period or suspension thereof extend beyond the period set forth in Section
5(a)(i) above.
(c) Except as otherwise expressly provided herein, this Agreement
and all of the liabilities and obligations of the parties hereunder shall cease
and terminate effective upon the termination of the Employment Period.
(d) If (i) Executive's employment hereunder is terminated by the
Company other than pursuant to Section 5(a) hereof, (ii) Executive terminates
his employment hereunder because his authority, duties or responsibilities are
altered so as to be inconsistent with the provisions of Section 2 hereof and
Executive's background, training and experience, or (iii) Executive terminates
his employment hereunder because of the Company's continued failure to perform
its duties hereunder in any material respect, which failure has not been cured
within 20 days after notice of such failure has been given by Executive to
Company, then the Executive shall be entitled to receive, in lieu of all other
damages and benefits to which Executive may otherwise be entitled as a direct or
indirect result of the termination of Executive's employment in breach of the
terms hereof, (A) his annual base salary then in effect for each full year and
any portion thereof (with the base salary prorated for such portion of a full
year) through the remaining balance of the Employment Period, (B) health and
life insurance coverages provided by the Company from time-to-time to Senior
Executives of the Company at the cost of the Company through the remaining
balance of the Employment Period, and (C) supplemental retirement benefits under
the Executive's Supplemental Executive Retirement Plan Agreement as modified by
the provisions set forth on Exhibit A hereto which modifications shall
automatically take effect upon Executive's execution and delivery to the Company
of a release in the form attached as Exhibit B hereto (provided such release is
executed and delivered within 90 days
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after the effective date of the termination of his employment) and such release
having become effective under all applicable laws after the revocation period
set forth in paragraph (iv) of such release. In the event that Executive fails
to execute and deliver the release in a timely fashion, or such release shall
not have become effective under all applicable laws, then Executive shall not be
entitled to the benefits under clause (C) of the preceding sentence. Payments
under clauses (A) and (B) in the preceding sentence shall be made no less often
than monthly.
Section 6. Assignment. This Employment Agreement shall not be
assignable by the Company except to a majority-owned subsidiary or parent entity
of the Company or to a successor to the Company and its business by way of
merger, acquisition, purchase of assets or otherwise and this Employment
Agreement is and shall be binding upon and inure to the benefit of any such
parent, subsidiary or successor. This Employment Agreement shall not be
assignable by Executive but it shall be binding upon and inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
Section 7. Notices. All notices, requests, demands and other
communications hereunder must be in writing and shall be deemed to have been
given if delivered by hand or mailed by first class, registered mail, return
receipt requested, postage and registry fees prepaid, and addressed as follows:
(e) If to the Company, to: Tasty Baking Company
0000 Xxxxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Secretary
(f) If to the
Executive, to:
Xxxx X. Xxxxx 000
Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx,
XX 00000
Addresses may be changed by notice in writing signed by the addressee.
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Section 8. Confidential Information. Executive agrees to hold in a
fiduciary capacity for the benefit of the Company all of the Company's business
secrets and confidential information, knowledge and data relating to the Company
or any of its affiliated companies and their respective businesses, which shall
have been obtained by the Executive during his employment by the Company or any
of its affiliated companies, including without limitation, information relating
to such matters as finances, operations, processes, product recipes, new
products in development, sales methods, equipment, techniques, plans, formulae,
products, methods and know-how, customer requirements and names of suppliers.
The obligations under this Section 8 shall survive the termination of this
Agreement and any termination of Executive's employment with the Company or any
of its affiliates. Executive's obligations under this Section 8 shall not be
deemed violated in the event that (i) Executive discloses any such information
pursuant to order of a court of competent jurisdiction, provided Executive has
notified the Company of such potential legal order and provided the Company with
the opportunity to challenge or limit the scope of the disclosure, or (ii) such
information becomes generally available from a source other than the Company,
any of its affiliates, or any of their employees when such source is legally
entitled, to the best of Executive's knowledge, to make such information
available. Executive agrees that in the event of breach of any of his
obligations under this Section 8, Company shall be entitled to an injunction
restraining Executive from violating the provisions hereof and he further agrees
that an action for damages does not provide an adequate remedy for his violation
of this Section 8.
Section 9. Mediation/Arbitration. Except as provided in Section 8
above, the parties shall attempt to resolve any dispute through mediation
conducted in Philadelphia, Pennsylvania. If the parties do not promptly agree on
a neutral mediator, then any of the parties may notify
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J.A.M.S./Endispute, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, to initiate selection
of a mediator from the J.A.M.S/Endispute Panel of Neutrals. The Company shall
pay the fees and expenses of the mediator. If the mediator is unable to
facilitate a settlement of the dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written statement to the
parties to that effect and the aggrieved party(ies) may then seek relief through
arbitration, which shall be binding, before a single arbitrator pursuant to the
Commercial Arbitration Rules ("Rules") of the American Arbitration Association
(the "Association"). The place of arbitration shall be Philadelphia,
Pennsylvania. Arbitration may be commenced at any time by any party seeking
arbitration by written notice to the other party(ies) by first class mail,
postage prepaid. The arbitrator shall be selected by the joint agreement of the
parties, but if the parties do not so agree within (30) business days after the
date of the notice referred to above, the selection shall be made pursuant to
the Rules from the panels of arbitrators maintained by such Association, and
such arbitrator shall be neutral, impartial, independent of the parties and
others having any known interest in the outcome, shall abide by the ABA and AAA
Code of Ethics for neutral arbitrators and shall have no ex parte communications
about the dispute with either party. The arbitrator shall render a written
decision within one hundred eighty (180) days of appointment. Any award rendered
by the arbitrator shall be final, conclusive and binding upon the parties hereto
and there shall be no right of appeal therefrom. Judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The costs and expenses of arbitration, including legal fees and
expenses of the arbitrator, shall be paid by the parties as the arbitrator may
assess. The arbitrator shall not be permitted to award punitive or similar type
damages under any circumstances. The procedures set forth in this Section 9
shall constitute the sole and exclusive procedures for the resolution of any
dispute under this
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Agreement, except for any dispute related to an alleged violation of Section 8
hereof, in which case Company, without prejudice to or compliance with the
procedures set forth in this Section 9, is expressly permitted to institute
legal proceedings to obtain a temporary restraining order, a preliminary and
permanent injunction or other equitable relief.
Section 10. Miscellaneous. This Agreement is the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings, oral or written, relating to the subject matter hereof, and no
change, alteration or modification hereof may be made except in writing signed
by both parties hereto. The headings in this Agreement are for convenience of
reference only and shall not be considered as part of this Agreement nor limit
or otherwise affect the meaning hereof. This Agreement shall in all respects be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ATTEST: TASTY BAKING COMPANY
By:
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Secretary Xxxx X. Xxxxxxx, Executive
Vice President
(SEAL)
----------------------------------- -----------------------------------
Witness Xxxx X. Xxxxx, Executive
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EXHIBIT A
SERP INSERT
TASTY BAKING COMPANY
ARTICLE I.
3. Early Retirement.
(a) In the event that the Employee shall elect early retirement
pursuant to the terms of the Employer's Pension Plan, he shall be entitled to
receive benefits in accordance with paragraph 1 above, but such benefits shall
be reduced in the same proportion as the benefits which are due under the
Employer's Pension Plan are reduced as the result of early retirement. However,
in the event that the Employee's employment with the Employer is terminated
prior to Employee's reaching age 60 (i) as provided in Section 5(d) of that
certain Amended and Restated Employment Agreement dated as of August 19, 2002
between Employer and Employee ("Employment Agreement") or (ii) within
twenty-four (24) months after a change of control, as defined in Article VIII,
Section 3, in each case, for any reason other than death or by the Employer for
cause (as defined in the Employment Agreement), Employer shall be obligated to
pay additional benefits to Employee under this Agreement as follows: if Employee
elects to commence receiving early retirement benefits under the Employer's
Pension Plan on or after age 60, Employer shall be obligated to pay benefits to
Employee under this Agreement to make Employee whole for any actuarial reduction
in his benefits that would otherwise be applicable under this Agreement and
under the Employer's Pension Plan in excess of the reduction that would be
applicable to Employee if he terminated employment at age 60 and elected
immediate early retirement under the Employer's Pension Plan.
ARTICLE VIII.
3. "Change of Control"
(a) For purposes of this Agreement, a "change of control" of the
Employer shall be deemed to occur (i) upon any change of control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
or Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as
amended and the regulations thereunder ("Exchange Act"); (ii) upon the
acquisition by any person or group of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of twenty-five percent (25%) or more of
the combined voting power of the Employer's outstanding securities then entitled
to vote generally in the election of directors, excluding however acquisitions
by the Employer or any of its subsidiaries, or any employee benefit plan
sponsored or maintained by the Employer, or by a corporation pursuant to a
reorganization, merger, consolidation, division or issuance of securities if the
conditions described in clauses (vi) (A) and (B) below are satisfied; (iii) if
individuals who constitute the Board of Directors of the Employer ("Board") as
of the date hereof ("Incumbent Board"), cease for any reason to constitute at
least a majority of the Board during any twenty-
four (24) month period; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Incumbent Board; (iv) if the Employer shall meet the
delisting criteria of the New York Stock Exchange (or any successor stock
exchange or automated trading system on which the Employer's common stock is
then traded); (v) if the Board shall approve the sale of all or substantially
all of the assets of the Employer or recommend the adoption of a plan of
complete liquidation or dissolution of the Employer; or (vi) upon approval by
the shareholders of the Employer of a reorganization, merger, consolidation,
division, or issuance of securities, in each case unless following such
transaction (A) not less than sixty percent (60%) of the outstanding equity
securities of the corporation resulting from or surviving such transaction and
of the combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned by the holders of the Employer common stock immediately prior
to such transaction in substantially the same proportions as their ownership
immediately prior to such transaction, and (B) at least a majority of the
members of the board of directors of the resulting or surviving corporation were
members of the Incumbent Board.
[Note: Modifications to SERPs approved by the Board April 22, 1988 shall also be
included.]
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EXHIBIT "B"
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RELEASE
KNOW ALL MEN BY THESE PRESENTS that XXXX X. XXXXX, for himself, and his
agents, representatives, heirs, executors, administrators, insurers, successors
and assigns, and all persons, corporations or other entities connected therewith
which might claim by, through or under them or any of them (all of whom are
hereby individually and collectively referred to in this paragraph as
"Releasors"), do hereby release, remise and forever discharge TASTY BAKING
COMPANY, its respective direct and indirect subsidiaries, affiliates, investors,
insurers, successors, assigns, and each of their agents, servants, shareholders,
employees, officers, directors, trustees, representatives and attorneys, and
each of their heirs, successors, executors and administrators (all of whom are
hereinafter individually and collectively referred to in this paragraph as
"Releasees"), of and from any and all claims, demands, causes of action,
actions, rights, damages, judgments, costs, compensation, suits, debts, dues,
accounts, bonds, covenants, agreements, expenses, attorneys' fees, damages,
penalties, punitive damages and liability of any nature whatsoever, in law or in
equity or otherwise, which Releasors have had, now have, shall or may have in
the future, whether known or unknown, foreseen or unforeseen, suspected or
unsuspected, by reason of any cause, matter or thing whatsoever, including those
relating to Xx. Xxxxx' employment with Tasty Baking Company ("Company") and the
termination of that employment, except as expressly provided in the immediately
following sentence. Notwithstanding anything contained in this Release to the
contrary, Xxxx X. Xxxxx does not release, remise or discharge the Releasees of
or from any claims which he may have under (i) the Company's qualified
retirement plans or 401k plans; (ii) that certain Supplemental Executive
Retirement Program Agreement originally dated June 10, 1987 between the Company
and Xx. Xxxxx, as amended, and the rabbi trust with respect to such program;
(iii) any plans which the Company may have in effect from time-to-time, as they
may be modified from time-to-time, to provide medical and/or life insurance
benefits to retirees; (iv) that certain Amended and Restated Employment
Agreement dated August 19, 2002 between Xx. Xxxxx and the Company, for damages
arising out of the Company's breach thereunder, but limited only to the amounts
set forth in Section 5(d) thereof, all other damages being expressly released,
and (v) the indemnification provisions contained in the Company's Articles of
Incorporation and/or Bylaws, and/or any indemnification agreement in favor of
Xx. Xxxxx, relating to indemnification of officers and/or directors.
This paragraph and its subparagraphs are intended to comply with
section 201 of the Older Workers' Benefits Act of 1990, as amended.
(i) By the execution of this release, Xxxx X. Xxxxx acknowledges that
he is giving up all claims related to his employment with Company and the
termination of that employment, including but not limited to, claims for breach
of contract or implied contract, wrongful, retaliatory or constructive
discharge, negligence, misrepresentation, fraud, detrimental reliance,
promissory estoppel, defamation, invasion of privacy, impairment of economic
opportunity, intentional or negligent inflection of emotional distress, any and
all other torts, and claims for attorney's fees, as well as the following
statutory claims described below.
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(ii) Xxxx X. Xxxxx further acknowledges that various state and federal
laws prohibit discrimination based on age, gender, race, color, national origin,
religion, handicap or veterans status. These include Title VII of the Civil
Rights Act of 1964, 42 U.S.C. ss.2000e et seq. and the Civil Rights Act of 1991
(relating to gender, national origin, and certain other kinds of job
discrimination); the Age Discrimination in Employment Act, 29 U.S.C. 626 et
seq., (relating to age discrimination in employment), the Older Workers Benefit
Protection Act, 29 U.S.C. ss.626, the Rehabilitation Act of 1973, the Civil
Rights Act of 1866 and 1871, the Americans with Disabilities Act and the
Pennsylvania Human Relations Act. He also understands and acknowledges that
there are various federal and state laws governing wage and hour issues,
including but not limited to the Fair Labor Standards Act, Pennsylvania wage and
hour laws, and the Equal Pay Act of 1963 (relating to all the above forms of job
discrimination). He acknowledges that he is giving up any claims he may have
under any of these statutes and under any other federal, state or municipal
statute, ordinance, executive order or regulation relating to discrimination in
employment, wage and hour issues, or in any way pertaining to his employment
relationship with Company. He understands and acknowledges that this release
applies to all such employment-related claims which he now has or may have to
the date of this Agreement.
(iii) Xxxx X. Xxxxx hereby certifies that Company has advised him that
he has at least 21 days (a) to consider and review this Release and his
Employment Agreement and its consequences with an attorney of his choosing, and
(b) if he accepts the terms of this Release and his Employment Agreement, to
forward an executed copy of this Release to Company in accordance with Section 7
of his Employment Agreement.
(iv) Xxxx X. Xxxxx also acknowledges and understands that he has seven
(7) days from the execution of this Release to advise Company that he is
revoking this Release, and understand that if he has not revoked this Release by
the end of the seven-day period, this Release will be effective and in full
force. He understands that any revocation he makes shall be in writing, sent by
facsimile, hand delivery or overnight mail, to Company in accordance with
Section 7 of his Employment Agreement.
(v) In the event that his acceptance of this Release is revoked (as set
forth in the last sentence of paragraph (iv)), then he shall immediately return
to Company any payments made to him under Section 5(d)(D) of his Employment
Agreement.
Releasor agrees that he will not, at any time hereafter, nor will he
permit, at any time hereafter, any person acting under his direction or control
to, initiate, maintain, or prosecute, or in any way knowingly aid, directly or
indirectly, in the initiation, maintenance, or prosecution of, any claim, demand
suit, accounting, or cause of action against the Releasees, or any of them,
arising out of, or in any way connected with any matter, thing, transaction,
occurrence, act or omission with respect to which a release is being provided
hereunder.
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IN WITNESS WHEREOF, and intending to be legally bound, the Releasor
hereto has executed and delivered this Release as of the _____ day of
___________________, 200_.
-----------------------------------------
Xxxx X. Xxxxx
STATE OF :
:
COUNTY OF :
On this, the ______ day of _________________, 200__, before me, the
undersigned officer, personally appeared XXXX X. XXXXX known to me
(satisfactorily proven) to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------------------------------
Notary Public
My Commission Expires:
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