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EXHIBIT 10.23
CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT
THIS AGREEMENT is made as of the 11th day of August, 2000 between
Vlasic Foods International Inc. (the "Company") and Xxxxxx X. Xxxxxxxxx (the
"Executive").
WHEREAS, Executive and Company desire to enter into an agreement relating
to the confidential information of the Company and the Executive's potential
competition with the Company;
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, intending to be legally bound and subject to the terms
and conditions stated in this Agreement, it is hereby agreed as follows:
1. Effectiveness of the Agreement.
(a) The provisions of this Agreement shall only become effective
if: (i) there is a Change in Control, as defined in paragraph 2 below; and (ii)
Executive's employment with the Company is terminated within two years of the
Change in Control pursuant to a "Qualifying Termination," as defined in
subparagraph 1(b) below. If the provisions of this Agreement do become
effective, the terms contained in the "Vlasic Foods International Confidential
Information and Non-Competition Agreement - U.S. New Employee," dated April 6,
1998 between Executive and Company (the "Prior Agreement") shall be null and
void. If the provisions of this Agreement do not become effective, the
provisions of the Prior Agreement shall continue to apply.
(b) A "Qualifying Termination" for purposes of subparagraph 1(a)
means that the Executive's employment with the Company is terminated (other than
by reason of death): (1) by the Company other than for Cause or Disability; (2)
by the Executive for Good Reason; or (3) by the Executive for any reason
whatsoever (other than death) during the Window Period. For purposes of this
subparagraph 1(b), the following definitions shall apply:
(i) A termination for "Cause" shall mean a termination
evidenced by a resolution adopted in good faith by two-thirds of the Board of
Directors of the Company (the "Board of Directors") that: (A) the Executive
intentionally and continually failed to substantially perform Executive's duties
with the Company (other than a failure resulting from the Executive's incapacity
due to physical or mental illness) which failure continued for a period of at
least thirty (30) days after a written notice of demand for substantial
performance had been delivered to the Executive specifying the manner in which
the Executive had failed to substantially perform; or (B) the Executive engaged
in conduct that constituted willful gross misconduct that was demonstrably and
materially injurious to the Company, monetarily or otherwise, misappropriated
funds, made one or more willful and material misrepresentations to the directors
or officers of the Company, was grossly negligent in the performance of the
Executive's duties having a material adverse effect on the business, operations,
assets, properties or financial condition of the Company, or entered into
competition with the Company; provided however, that no termination of the
Executive's employment shall be for Cause as set forth in clause (B) above until
(x) there shall have been delivered to the Executive a copy of a written notice
setting forth that the Executive was guilty of the conduct set forth in clause
(B) and specifying the particulars thereof in detail, and (y) the Executive
shall have been provided an opportunity to be heard by the Board of Directors
(with the assistance of the Executive's counsel if the Executive so desires). No
act, nor failure to act, on the Executive's part, shall be considered "willful"
unless Executive acted, or failed to act, with an absence of good faith and
without a reasonable belief that Executive's action or failure to act was in the
best interest of the Company. Notwithstanding anything contained in this
Agreement to the contrary, no failure to perform by the Executive after a notice
of termination is given by the Executive shall constitute Cause for purposes of
this Agreement.
(ii) "Disability" shall mean a physical or mental infirmity
which impairs the Executive's ability to substantially perform the Executive's
duties under this Agreement for a period of one-hundred-eighty (180) consecutive
days.
(iii) "Good Reason" shall mean the occurrence after a Change
in Control of any of the events or conditions described in (1) through (10)
below:
(2)
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(1) an assignment to the Executive of any duties
materially inconsistent with, or a reduction or change by the Company in the
nature or scope of the authority, duties or responsibilities of the Executive
from those assigned to or held by the Executive immediately prior thereto;
(2) any removal of the Executive from the positions
held immediately prior to the Change in Control, except in connection with
promotions to positions of greater responsibility and prestige;
(3) any reduction by the Company in the Executive's
compensation as in effect immediately prior to the Change in Control or as
the same may be increased thereafter;
(4) revocation or any modification of any employee
benefit plan, or any action taken pursuant to the terms of any such plan, that
materially reduces the opportunity of the Executive to receive benefits under
any such plan;
(5) a transfer or relocation of the site of
employment of the Executive immediately preceding the Change in Control, without
the Executive's express written consent, to a location more than fifty (50)
miles distant therefrom, or that is otherwise an unacceptable commuting distance
from the Executive's principal residence at the date of the Change in Control;
(6) a requirement that the Executive undertake
business travel to an extent substantially greater than the Executive's business
travel obligations immediately prior to the Change in Control;
(7) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the Company;
(8) any material breach by the Company of any
provision of this Agreement;
(9) any purported termination of the Executive's
employment for Cause by the Company which does not comply with the terms of
subparagraph 1(b)(i); or
(10) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any successor or assign of the
Company to assume and agree to perform this Agreement.
Any event or condition described in this paragraph 1(b)(iii) which occurs prior
to a Change in Control but which the Executive reasonably demonstrates: (i) was
at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control (a "Third Party"); or (ii)
otherwise arose in connection with or in anticipation of a Change in Control,
shall constitute Good Reason for purposes of this Agreement notwithstanding that
it occurred prior to the Change in Control. The Executive's right to terminate
his employment pursuant to this paragraph 1(b)(iii) shall not be affected by his
incapacity due to physical or mental illness.
(iv) "Window Period" shall mean the thirty (30) day period
beginning one year after a Change in Control.
2. Definition of Change-In-Control.
For purposes of this Agreement, a "Change in Control" shall mean any of
the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"); provided however,
that for purposes of this Agreement, the Voting Securities acquired directly
from Company by any Person shall be excluded from the determination of such
Person's Beneficial Ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting Securities
then outstanding); or
(b) The individuals who, as of the later of April 1, 1998 or the
first date that the membership of the Board of Directors reaches seven (7), are
members of the Board of Directors (the "Incumbent Board"), cease for any reason
to constitute at least two-thirds of the Board; provided however, that if the
election, or nomination for election by the Company's shareowners, of any new
director was approved by a vote of at least two-thirds of the
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Incumbent Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; or
(c) Approval by shareowners of Company of: (1) a merger or
consolidation involving the Company if the shareowners of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding Voting Securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation; or (2) a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or
(d) Acceptance by shareowners of the Company of shares in a share
exchange if the shareowners of Company, immediately before such share exchange,
do not own, directly or indirectly, immediately following such share exchange,
more than eighty percent (80%) of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because twenty-five percent (25%) or more of the then outstanding Voting
Securities is acquired by:
(i) a trustee or other fiduciary holding securities under
one or more employee benefit plans maintained by the Company or any of its
subsidiaries;
(ii) any entity that, immediately prior to such acquisition,
is entirely owned (directly or indirectly) by shareowners of Company in the same
proportions as their ownership of stock in the Company immediately prior to such
acquisition;
(iii) any "Grandfathered Xxxxxxxx Family shareowner" (as
hereinafter defined); or
(iv) any Person who has acquired such Voting Securities
directly from any Grandfathered Xxxxxxxx Family shareowner but only if such
Person has executed an agreement that is approved by two-thirds of the Board of
Directors and pursuant to which such Person has agreed that he or she (or they)
will not increase his or her (or their) Beneficial Ownership (directly or
indirectly) to thirty percent (30%) or more of the outstanding Voting Securities
(the "Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person.
For purposes of this Agreement, "Grandfathered Xxxxxxxx Family shareowner" means
at any time a "Xxxxxxxx Family shareowner" (as hereinafter defined) who or which
is at the time in question the Beneficial Owner solely of: (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from the Company, (x) Voting Securities acquired directly from
another Grandfathered Xxxxxxxx Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Xxxxxxxx Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from the Company or from another Grandfathered Xxxxxxxx
Family shareowner by any "Xxxxxxxx Grandchild" (as hereinafter defined);
provided that the aggregate amount of Voting Securities so acquired by each such
Xxxxxxxx Grandchild shall not exceed five percent (5%) of the Voting Securities
outstanding at the time of such acquisition. A "Xxxxxxxx Family shareowner" who
or which is at the time in question the Beneficial Owner of Voting Securities
that are not specified in clauses (v), (w), (x), (y) and (z) of the immediately
preceding sentence shall not be a Grandfathered Xxxxxxxx Family shareowner at
the time in question. For purposes of this Section, "Xxxxxxxx Family
shareowners" means individuals who are descendants of the late Xx. Xxxx X.
Xxxxxxxx, Xx. and/or the spouses, fiduciaries and foundations of such
descendants. A "Xxxxxxxx Grandchild" means as to each particular grandchild of
the late Xx. Xxxx X. Xxxxxxxx, Xx., all of the following taken collectively:
such grandchild, such grandchild's descendants and/or the spouses, fiduciaries
and foundations of such grandchild and such grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject
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Person becomes the Beneficial Owner of any additional Voting Securities that
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
(e) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment with the Company is terminated within
one year prior to a Change in Control and the Executive reasonably demonstrates
that such termination (i) was at the request of a Third Party (as defined in
subparagraph 1(b)(iii) who effectuates a Change in Control or (ii) otherwise
occurred in connection with or in anticipation of, a Change in Control, then for
all purposes of this Agreement, the date of a Change in Control shall mean the
date immediately prior to the date of the Executive's termination of employment
with the Company.
3. Confidential Information.
(a) During Executive's employment with Company or its subsidiaries
or affiliates, or their successors or assigns, whether existing now or in the
future (collectively "Vlasic Companies"), Executive has received and has had
access to confidential proprietary information about Vlasic Companies and its
worldwide businesses, including but not limited to information about costs,
profits, sales, marketing or business plans, existing or prospective customers,
suppliers, possible acquisitions or divestitures, potential new products or
markets, personnel, know-how, formulae, recipes, processes, equipment,
discoveries, inventions, research, technical or scientific information and other
data not available to the public (whether or not patentable or copyrightable),
none of which is part of the general knowledge of the industry ("Information").
(b) During and after Executive's employment with Vlasic Companies
("Executive's Employment"), Executive will not disclose, use, or appropriate
Information for his own use or for the use of others, directly or indirectly,
except as required in the performance of Executive's duties to Vlasic Companies
or as required by law or any judicial proceeding. Executive hereby acknowledges
that any unauthorized disclosure, use, or appropriation of Information would be
highly prejudicial to Vlasic Companies. Executive further hereby acknowledges
that such Information as is acquired and used by Vlasic Companies is a special,
valuable and unique asset.
(c) Executive hereby acknowledges that all originals and copies of
files, writings, reports, memoranda, diaries, notebooks, notes of meetings or
presentations, data, computer tapes, discs or other storage devices, drawings,
charts, photographs, slides, patents, or any other form of record which contains
Information created or produced for, at the direction of or by Vlasic Companies,
or its employees or agents ("Records") are confidential and proprietary and
shall remain the exclusive property of Vlasic Companies. In the event that
Executive's Employment terminates for any reason, Executive shall deliver all
Records to Vlasic Companies, upon request or before the last day of Executive's
Employment.
4. Business Diversion. For a period of three (3) years after
Executive's Employment with Vlasic Companies terminates, Executive will not,
directly or indirectly, divert or take away, or attempt to divert or take away,
any customers or business of Vlasic Companies whom Executive serviced, called
upon, or solicited during Executive's Employment, or with whom Executive became
acquainted as a result of Executive's Employment.
5. Employee Solicitation. During Executive's Employment, and for a
three (3) year period after Executive's Employment terminates, Executive will
not, directly or indirectly, solicit for employment, employ, interfere with or
attempt to entice away from Vlasic Companies any individual who is employed by
Vlasic Companies at the time of such solicitation, employment, interference, or
enticement. Notwithstanding the foregoing, general solicitations of employment
published in a journal, newspaper or other publication of general circulation
and not specifically directed towards such employees shall not be deemed to
constitute solicitation for purposes of this paragraph 5.
6. Competition.
(a) During Executive's Employment with Vlasic Companies, and for a
three (3) year period after Executive's Employment with Vlasic Companies
terminates, Executive will not, directly or indirectly, own, advise, manage,
operate, join, control, receive compensation or benefits from, or participate in
the ownership, management, operation, or control of, or be employed or be
otherwise connected in any manner with, any business or entity which directly or
indirectly Competes (as defined in subparagraph 6(b)) with Vlasic Companies, in
any part of the world in which Vlasic Companies do business.
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(b) "Competes," as used in this Agreement, means engages in, or
plans to engage in, the production, marketing or selling of any of the
following:
(i) a pickle, pepper or relish product;
(ii) a frozen breakfast, frozen entree, frozen dinner or
frozen pot pie; or,
(iii) a barbecue sauce.
(c) Notwithstanding the foregoing:
(i) This Agreement will not preclude Executive from being a
passive investor wherein Executive owns less than 1% of the issued and
outstanding shares of any class of shares of any corporation listed on any
recognized stock exchange, including without limitation, the New York Stock
Exchange or the American Stock Exchange, or quoted on NASDAQ.
(ii) This Agreement will not preclude Executive from joining
a company or other business entity which Competes with Vlasic Companies, as
Chief Executive Officer, Chief Operating Officer, or a similar high-level
executive position, but only if the aggregated gross revenues for such entity
and its affiliates from all the products listed in subparagraphs 6(b)(i) through
6(b)(iii) (the "Prohibited Products") do not exceed five percent (5%) of the
total gross revenues of such competing entity and its affiliates.
(iii) This Agreement will not preclude Executive from joining
a subsidiary, division or other business unit within a company or other business
entity which engages in the production, marketing or selling of any of the
Prohibited Products; provided that Executive does not (1) directly or indirectly
own, operate, control, advise, counsel, or manage; (2) act as a consultant for;
or (3) have any other involvement or connection with, direct or indirect, that
portion of such entity that engages in the production, marketing or selling of
any of the Prohibited Products.
(iv) This Agreement will not preclude Executive from
employment, consulting, ownership, operation, management or other relationships
with companies or other business entities which: (1) engage in the distribution
of the Prohibited Products in the food-service channels of distribution, but
which do not produce, market or sell the Prohibited Products in the retail
channels of distribution; or (2) are grocery or food wholesalers or retailers.
(d) Executive hereby acknowledges that any employment or
relationship in violation of this Agreement would necessarily require Executive
to use or rely on Information to which Executive became privy during the course
of Executive's Employment.
7. Payment to Executive. In consideration of the covenants made in this
Agreement, should the terms of this Agreement become effective as a result of
the occurrence of both of the events described in paragraph 1(a)(i) and (ii)
then, at that time, Company shall pay to Executive the sum of $3,500,000 (the
"Non-compete Payment"). The Non-compete Payment shall be made in a single lump
sum payment within 30 days of the termination of Executive's Employment. The
Company shall withhold from the Non-compete Payment all taxes or other
withholdings which the Company reasonably believes are required to be withheld
under applicable federal, state or local law.
8. Assignment of Agreement. This Agreement, or any portion of the
Agreement or the covenants contained herein, may be assigned by the Company,
without the consent of Executive, at any time and for any reason (or no reason
at all), to any company or companies, or other entity or entities, which
succeed, or obtain substantial assets of a business of, Vlasic Companies.
9. Enforcement of Agreement; Legal Proceedings.
(a) Executive agrees that the restrictions in this Agreement
are necessary to protect the legitimate interests of Vlasic Companies, and
impose no undue hardship on Executive. Executive further agrees that the breach
or threatened breach of any provision of this Agreement will result in
irreparable injury to Vlasic Companies, which shall have, in addition to any and
all remedies of law and other consequences under this Agreement, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of the obligations contained herein. Executive consents to the
issuance of any restraining or preliminary restraining order or injunction,
which arises from, directly or indirectly, any use, disclosure or conduct by
Executive in violation of this
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Agreement. Executive agrees that, if Vlasic Companies or its assignees prevail
in any suit or proceeding under this Agreement, Executive will pay Vlasic
Companies or its assignees all of their attorneys fees, costs and expenses
incurred in connection with such suit or proceeding or the enforcement of their
rights under this Agreement, regardless of whether the scope of the obligations
contained herein are reformed by the court.
(b) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey
without giving effect to the conflict of laws principles thereof. Each party
hereto consents to subject matter and in personam jurisdiction and venue in the
United States District Court of New Jersey. In the event it is determined that
the United States District Court of New Jersey should lack subject matter
jurisdiction for any reason, the parties consent to the jurisdiction and venue
in a court of competent jurisdiction in Camden County in the State of New
Jersey.
10. Survival. This Agreement shall survive the termination of
Executive's Employment for any reason.
11. No Contract of Employment. This Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the
Executive, or any obligation on the Executive to remain in the employment of
the Company.
12. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
13. Severability or Reform by the Court. In the event that any provision
of this Agreement is deemed by a court of competent jurisdiction to be broader
than permitted by applicable law, then such provision shall be reformed so that
it is enforceable to the fullest extent permitted by applicable law.
14. Entire Agreement. This Agreement, along with the Prior Agreement,
constitutes the entire understanding between the parties with regard to the
subject matter of this Agreement. This Agreement and the Prior Agreement
supersede all prior agreements, understandings and arrangements, oral or
written, between the parties with respect to the subject matter of this
Agreement.
EXECUTIVE HEREBY ACKNOWLEDGES THAT HE HAS READ THE ABOVE DOCUMENT AND HAS BEEN
GIVEN ADEQUATE TIME TO CONSULT WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOICE.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
ATTEST: VLASIC FOODS INTERNATIONAL INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxx
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Secretary
XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
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(8)
