EXHIBIT 99.1
EMPLOYMENT, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL AND OTHER AGREEMENTS.
Xxxxxxxx Employment Agreement. Pursuant to the Xxxxxxxx Agreement, Xx.
Xxxxxxxx serves as the Chairman of the Board, President and Chief Executive
Officer of the Company. The Xxxxxxxx Agreement has a term ending on December
31, 1998, but automatically extends for an additional one-year term unless
either party elects not to extend the term (the "Employment Period"). See
"Report of the Compensation Committee of the Board of Directors--Compensation
of Chief Executive Officer" for information regarding the salary and bonus
provisions of the Xxxxxxxx Agreement. Bonuses payable under the Xxxxxxxx
Agreement are payable in cash or common stock (based on the market price on
the payment date) or a combination thereof as selected by Xx. Xxxxxxxx,
subject to such limitation on the number of shares as the Committee may have
set for the year.
The Company granted to Xx. Xxxxxxxx options to purchase, in the aggregate, a
number of shares of the Company's common stock equal to 5% of the total number
of shares outstanding on the date of the grant (as adjusted to reflect the
number of shares issued in the rights offering made pursuant to the offering
prospectus dated September 19, 1994) at an option price per share equal to the
greater of the exercise price under such rights offering ($9.00) or the fair
market value on the date of the grant. Nine percent of such options vested on
December 31, 1994, and 18.2% of such options vested on December 31, 1995, with
the remaining such options to vest on December 31 of each of the subsequent
four years if Xx. Xxxxxxxx remains an employee and the Company meets the
specified earnings target for such year. The options terminate 10 years from
the date of grant and must be exercised within 90 days after Xx. Xxxxxxxx
ceases to be an employee.
In the event that Xx. Xxxxxxxx'x employment is terminated during the
Employment Period other than for "Cause" (as defined in the Xxxxxxxx
Agreement), or if Xx. Xxxxxxxx terminates his employment for "Good Reason" or
within eighteen months after a "Change of Control" (as those terms are defined
in the Xxxxxxxx Agreement), the Company will be required to pay him an amount
equal to two times the sum of his base salary for the previous twelve-month
period plus the amount of his performance bonus, if any, for the previous
fiscal year. Upon a Change of Control, all outstanding option shares not
previously vested will vest, provided Xx. Xxxxxxxx is an employee on such
date. In the event of the death of Xx. Xxxxxxxx between July 31, 1997 and
January 1, 2000 while an employee of the Company, all outstanding option
shares not previously vested will vest. Xx. Xxxxxxxx is entitled to employee
benefit arrangements on a comparable basis with other senior executives, and
to financial, tax planning and consulting services.
Xxxxxx Agreement. Pursuant to the terms of a letter agreement (the "Xxxxxx
Agreement") with the Company, Xx. Xxxxxx receives an annual salary of $225,000
and, for the first year of his employment, a monthly living allowance of
$2,000 in lieu of certain other allowances. Pursuant to the Xxxxxx Agreement,
he is eligible for an annual bonus of up to 50% of his base salary if certain
performance objectives are met. In addition, Xx. Xxxxxx received a signing
bonus of $65,000 and was granted options to purchase, in the aggregate, 68,814
shares of Common Stock at an exercise price per share of $9.00. These options
have a vesting schedule similar to Xx. Xxxxxxxx'x. Upon a "Change of Control
Event" (as defined in the Stock Incentive Plan) or in the event of the death
of Xx. Xxxxxx, all outstanding option shares not previously vested will vest,
provided Xx. Xxxxxx is an employee on the date of such event. In the event Xx.
Xxxxxx is terminated for any reason other than dishonesty or malfeasance, he
will be entitled to receive his base salary for a period of six months from
the termination date. In addition, the Company and Xx. Xxxxxx have entered
into a Transition Employment Agreement. See "Compensation of Directors and
Executive Officers--Employment, Termination of Employment, Change-in-Control
and Other Agreements--Transition Employment Agreements".
O'Ray Employment Agreement. Effective as of October 9, 1995, Xx. X'Xxx and
the Company entered into an employment agreement (the "O'Ray Agreement")
pursuant to which Xx. X'Xxx serves as Senior Vice President of the Company and
President of the Specialty Brands Division. The O'Ray Agreement provides for
an annual salary of $210,000 and a signing bonus of $50,000. In addition, Xx.
X'Xxx received options to purchase 68,814 shares of Company Common Stock at an
exercise price of $13.50 per share, which have a vesting schedule similar to
Xx. Xxxxxxxx'x options adjusted to reflect the different grant date.
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The O'Ray Agreement also provides that in fiscal 1996 the Company will pay
Xx. X'Xxx a minimum cash bonus of $75,000, subject to upward adjustment. Any
amount of cash incentive in excess of such amount shall be provided by the
Company's Cash Incentive Plan conditioned upon the Specialty Brands Division
achieving the performance targets established for 1996. Such cash incentive is
payable in February 1997.
If Xx. X'Xxx'x employment is terminated by the Company for "Cause" (as
defined in the O'Ray Agreement) or as a result of a voluntary termination, the
Company will pay Xx. X'Xxx his base compensation through the date specified as
his last day of employment. If Xx. X'Xxx'x employment is terminated during the
term of the O'Ray Agreement by the Company without Cause, the Company will pay
Xx. X'Xxx an amount equal to one-half of his annual base compensation.
Xxxxxxxxx Agreements. Effective as of December 11, 1995, Xx. Xxxxxxxxx and
the Company entered into an employment agreement (the "Xxxxxxxxx Agreement")
pursuant to which Xx. Xxxxxxxxx serves as Senior Vice President of the Company
and President of the KPR Foods Division. The term of the Xxxxxxxxx Agreement
is from December 11, 1995 until December 10, 2000. The Xxxxxxxxx Agreement
provides for an annual salary of $175,000 as President of the KPR Foods
Division. Xx. Xxxxxxxxx will also receive an annual salary of $40,000 in
payment of his duties as Senior Vice President. In addition, Xx. Xxxxxxxxx
received options to purchase 12,000 shares of Company Common Stock at an
exercise price of $13.125 per share, which have a vesting schedule similar to
Xx. Xxxxxxxx'x options adjusted to reflect the different grant date.
If Xx. Xxxxxxxxx'x employment is terminated during the term of the Xxxxxxxxx
Agreement by reason of death, the Company shall pay to Xx. Xxxxxxxxx'x estate
his base compensation as though employment was terminated by the Company
without "Cause" (as defined in the Xxxxxxxxx Agreement) and the bonus, if any,
for the bonus period in which the "Termination Date" (as defined in the
Xxxxxxxxx Agreement) occurs. If Xx. Xxxxxxxxx'x employment is terminated
during the term of the Xxxxxxxxx Agreement by disability, Xx. Xxxxxxxxx will
continue to receive his base compensation for a period of one year and the
bonus, if any, for the bonus period in which the disability occurs until the
Xxxxxxxxx Agreement is terminated. Xx. Xxxxxxxxx shall also continue to
receive all compensation payable under the Company's disability benefit
programs then in effect through the expiration of the term of the Xxxxxxxxx
Agreement. Thereafter, benefits shall be determined under the retirement,
insurance and other compensation programs. If Xx. Xxxxxxxxx'x employment is
terminated by the Company for Cause or as a result of a voluntary termination,
the Company will pay Xx. Xxxxxxxxx his base compensation through the date
specified as his last day of employment. If Xx. Xxxxxxxxx'x employment is
terminated during the term of the Xxxxxxxxx Agreement by the Company without
Cause, the Company will pay Xxxxxxxxx an amount equal to his base compensation
for a period not to exceed one year.
In connection with the acquisition of KPR Holdings, L.P. ("KPR") pursuant to
the Purchase Agreement dated November 14, 1995 (the "KPR Agreement"), the
Company has agreed to certain contingent payments payable in Common Stock of
the Company or cash, at the option of the sellers, aggregating approximately
$14.3 million over the next three years based on the attainment of specified
earning levels by KPR. If the sellers elect to receive the contingent payment
in Common Stock of the Company, it will be payable based on a price of $13.125
per share. The right to this contingent payment is currently held by KPR
Holdings, Inc., one of the sellers, and Xx. Xxxxxxxxx holds an equity position
in KPR Holdings, Inc. In addition, in connection with the acquisition of KPR,
KPR entered into a lease agreement with BAM Corporation pursuant to which BAM
leases to KPR the production and office facility located in Fort Worth, Texas
(the "Lease"). The Lease is for a period of ten years, with base rental
payments of approximately $71,000 per month. KPR has the option, pursuant to
the Lease, to purchase the leased facility based on its fair market value. Xx.
Xxxxxxxxx and other members of his immediate family own all of the equity
securities of BAM Corporation.
Xxxx Agreements. Effective as of December 11, 1995, Xx. Xxxx and the Company
entered into an employment agreement (the "Xxxx Agreement") pursuant to which
Xx. Xxxx serves as Vice President of the Company and President of Kettle
Cooked Foods, a subdivision of the KPR Foods Division. The term of the Xxxx
Agreement is from December 11, 1995 until December 10, 2000. The Xxxx
Agreement provides for an annual
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salary of $175,000. In addition, Xx. Xxxx received options to purchase 12,000
shares of Company Common Stock at an exercise price of $13.125, per share
which have a vesting schedule similar to Xx. Xxxxxxxx'x options adjusted to
reflect the different grant date.
If Xx. Xxxx'x employment is terminated during the term of the Xxxx Agreement
by reason of death, the Company shall pay to Xx. Xxxx'x estate his base
compensation as though employment was terminated by the Company without
"Cause" (as defined in the Xxxx Agreement) and the bonus, if any, for the
bonus period in which the "Termination Date" (as defined in the Xxxx
Agreement) occurs. If Xx. Xxxx'x employment is terminated during the term of
the Xxxx Agreement by disability, Xx. Xxxx will continue to receive his base
compensation for a period of one year and the bonus, if any, for the bonus
period in which the disability occurs until the Xxxx Agreement is terminated.
Xx. Xxxx shall also continue to receive all compensation payable under the
Company's disability benefit programs then in effect through the expiration of
the term of the Xxxx Agreement. Thereafter, benefits shall be determined under
the retirement, insurance and other compensation programs. If Xx. Xxxx'x
employment is terminated by the Company for Cause or as a result of a
voluntary termination, the Company will pay Xx. Xxxx his base compensation
through the date specified as his last day of employment. If Xx. Xxxx'x
employment is terminated during the term of the Xxxx Agreement by the Company
without Cause, the Company will pay Xxxx an amount equal to his base
compensation for a period not to exceed one year.
Xx. Xxxx holds an equity position in KPR Holdings, Inc. which is entitled to
the contingent payment under the KPR Agreement as described above. See "--
Employment, Termination of Employment, Change-In-Control and Other
Agreements--Xxxxxxxxx Agreements".
Xxxxxx Agreement. Xx. Xxxxxx resigned as of August 11, 1995. Pursuant to the
terms of an employment agreement between Xxxxxx X. Xxxxxx and the Company, Xx.
Xxxxxx received his base compensation through the date specified as his last
day of employment.
Xxxxxxxx Separation Agreement. As a result of the sale of the Retail
Division on May 30, 1995, Xx. Xxxxxxxx resigned as Senior Vice President of
the Company and President of the Retail Division as of June 30, 1995. Xx.
Xxxxxxxx and the Company entered into a Separation Agreement dated May 25,
1995 (the "Xxxxxxxx Separation Agreement") concerning the payment of certain
consideration upon his resignation. Pursuant to the Xxxxxxxx Separation
Agreement, Xx. Xxxxxxxx received his base salary through June 30, 1995 and
under the terms of his employment agreement a one-time bonus payment of
$70,000. The Company made a separation payment to Xx. Xxxxxxxx in the amount
of $400,000.
Transition Employment Agreements. The Company has entered into Transition
Employment Agreements ("Agreement") with each of 13 of the key employees of
the Company, including all of the executive officers listed in the "Summary
Compensation Table" above, other than Xx. Xxxxxxxx (each an "Executive"). The
Agreements are effective for a period of two years (the "Term" of the
Agreement) after a "Change of Control" (as defined in the Agreement), which
includes, among other things, a change in stock ownership whereby a person or
group acquires a sufficiently large block of Common Stock which, when voted
with shares solicited by proxy or written consent solicitation without the
benefit of a management supported proxy, would enable such person or group to
elect a member of the Board of Directors and will include (i) a sale by JLL of
all of its interest in the Company, and (ii) a sale of the Company, if
Proposal IV is adopted. If the Executive's employment is terminated by the
Company without "Cause" (as defined in the Agreement) or by the Executive for
"Good Reason" (as defined in the Agreement), within two years following a
Change of Control, then (i) for the remainder of the Term of the Agreement the
Executive shall continue to be paid his or her "Compensation" (as defined in
the Agreement); (ii) all "Stock Options", "Performance Shares", and shares of
"Restricted Stock" (as such terms are defined in the Agreement) held by the
Executive shall vest; and (iii) the Executive shall have a period of three
months to exercise any such Stock Options. The Agreement also provides that
the Company will indemnify the Executives to the fullest extent permitted by
the Certificate of Incorporation, the Company's bylaws, and Delaware law;
confidentiality and noncompetition covenants by the Executives; notice
requirements prior to termination; and for continuation of pre-Change of
Control pay levels after a Change of Control. The
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Company intends to amend the Agreements and/or the stock option agreements to
provide for automatic vesting of any stock options, Performance Shares and
shares of Restricted Stock, following a Change of Control as redefined under
Proposal IV. Xx. Xxxxxx'x Agreement has been amended to provide for such
automatic vesting after a Change of Control.
Officer Separation Pay Plan. In 1995, the Company adopted a separation pay
plan for corporate officers which takes effect on termination of employment of
a corporate officer other than by voluntary resignation or for "Cause" (as
defined in the plan). The plan provides that separation pay will be made up of
a lump sum of 100% of current annual base salary and current allowances (e.g.,
auto allowance) for a 20-week period for a corporate officer who has served
for less than two years and for a 9-month period for an officer who has served
two years or more. Such officer will be eligible for outplacement service
(selected and paid for by the Company) as needed. If a corporate officer is
terminated for death, disability or Cause, then no separation payment will be
made. At the time of separation, unused but accrued vacation will be paid in
addition to earned but unpaid bonus(es).
Foodbrands America, Inc. Retirement & Profit Sharing Plan. The Retirement &
Profit Sharing Plan, formerly the Xxxxxxxx Companies Incorporated Retirement &
Profit Sharing Plan, provides that all eligible employees of the Company who
have attained the age of 21, have completed one year of service and are not
subject to a collective bargaining agreement are permitted to contribute up to
15% of their salary to the Retirement & Profit Sharing Plan. The Company makes
contributions on behalf of each participant of a matching amount up to an
employee contribution of 3% of such employee's salary. The Company also makes
a 1% seed contribution to the employee's account up to $250. Employees become
fully vested in Company matching contributions and profit sharing accounts in
the Retirement & Profit Sharing Plan after three years of employment with the
Company. The Company made a profit-sharing contribution to the Retirement &
Profit Sharing Plan for Fiscal 1995. The profit-sharing contribution amount
was determined and authorized by the Board of Directors of the Company. Upon
severance from service with the Company, participants are entitled to a
distribution in a single lump sum of their vested interest in the Retirement &
Profit Sharing Plan.
Foodbrands America, Inc. 1992 Stock Incentive Plan Pursuant to the terms of
the 1992 Stock Incentive Plan, awards granted under the Plan may, in the
discretion of the Committee be immediately vested, fully earned and
exercisable upon the termination of a participant's employment within the two
year period following a "Change of Control Event" (as defined in the 1992
Stock Incentive Plan) except (i) if such award has been terminated due to acts
such as fraud, misrepresentation and embezzlement or (ii) as otherwise
provided in any employment agreement. This Section of the 1992 Stock Incentive
Plan has been proposed to be amended. See "PROPOSAL IV. AMENDMENTS TO THE 1992
STOCK INCENTIVE PLAN".
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