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EXHIBIT 10.24
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 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 Chief Executive Officer ("CEO"). 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.
(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 Company 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.
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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));
(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
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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 CEO or an officer senior to
Executive setting forth in reasonable detail the reasons for such termination.
Termination by Executive for Good Reason shall be effected by delivery to the
CEO 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
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 CEO, 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.
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(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 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;
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(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);
(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
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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 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
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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 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
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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 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.
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(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
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
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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: Chief Executive Officer
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
_____________________________
_____________________________
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
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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.
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
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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 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
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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.
(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.
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13. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which will be deemed an original.
KEEBLER FOODS COMPANY
By:________________________________
Chairman of the Board
EXECUTIVE
___________________________________
Name: Xxx X. Xxxx
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