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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
BY AND BETWEEN
INTERNATIONAL HOME FOODS, INC.
AND
C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of this
22nd day of February, 1999 (the "Effective Date"), by and between INTERNATIONAL
HOME FOODS, INC., a Delaware corporation (the "Company"), and C. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ (the "Executive").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company and its stockholders
to assure that the Company will have the continued dedication of Executive; and
WHEREAS, the Company and Executive desire to enter into a compensation
arrangement to assure retention of Executive in the future.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants herein, the parties hereto agree as follows:
1. Employment Period. Subject to Section 3, the Company hereby agrees
to continue Executive in its employ, and Executive hereby agrees to remain in
the employ of the Company, in accordance with the terms and provisions of this
Agreement, during the period (the "Employment Period") commencing on the date of
this Agreement (the "Effective Date") and ending on the third anniversary of the
Effective Date. On the first day of the third year of the Employment Period (the
"Notification Date"), the Board shall notify Executive in writing if it does not
intend to continue Executive's employment with the Company following the
Employment Period. In such event, in lieu of any Severance Amount that may be
payable pursuant to Section 3(c)(ii)(C), the Company shall pay to Executive upon
his termination of employment an amount equal to one and one half (1 1/2) times
the aggregate amount of Annual Base Compensation at the time of termination less
the amount of Annual Base Compensation earned from the Notification Date through
the date of termination.
2. Terms of Employment.
(a) Positions and Duties. During the term of Executive's
employment with the Company, Executive shall serve as Chief Executive Officer
(or such other position or positions as Executive and the Board shall mutually
agree) and, in so doing, shall report to the
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Board. Executive shall have supervision and control over, and responsibility
for, the day to day management and operational functions of the Company. During
the term of Executive's employment with the Company (excluding any periods of
vacation and sick leave), Executive shall devote sufficient time to the business
and affairs of the Company necessary to discharge the responsibilities assigned
to Executive hereunder. The Company recognizes and acknowledges that Executive
is involved in other activities, including the management of other businesses,
and it shall not be a violation of this Agreement for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii) deliver lectures or
fulfill speaking engagements or (iii) manage other businesses or personal
investments, so long as such activities do not significantly interfere with the
performance of Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(b) Compensation, Benefits and Expenses.
(i) Annual Base Compensation. During the term of
Executive's employment with the Company, Executive shall receive an annual base
salary of not less than $2,600,000 ("Annual Base Salary"). In addition,
Executive shall be entitled to receive an annual bonus ("Annual Bonus") of not
less than $1,000,000 upon the achievement of performance criteria as shall be
established by the Board.
(ii) Investment Benefit Plans. During the term of
Executive's employment with the Company, Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other executives of the Company
("Investment Plans").
(iii) Welfare Benefit Plans. During the term of
Executive's employment with the Company, Executive and his family shall be
eligible for participation in, and shall receive all benefits under, welfare
benefit plans, practices, policies and programs applicable generally to other
executives of the Company ("Welfare Plans").
(iv) Expenses. During the term of Executive's
employment with the Company, Executive shall be entitled to receive prompt
reimbursement for all reasonable employment related expenses incurred by
Executive.
(v) Automobile Allowance. During the term of
Executive's employment with the Company, the Company shall provide Executive
full use of an automobile of Executive's choice.
3. Termination of Employment.
(a) Reasons for Termination. Executive's employment with the
Company may be terminated during the Employment Period (i) by the Company with
or without Cause, (ii) by Executive with or without Good Reason, or (iii) by
either the Company or Executive upon
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Executive's Disability. Executive's employment with the Company shall
automatically terminate upon Executive's death.
(b) Definitions. The following terms shall have the following
meanings for purposes of this Agreement.
(i) "Annual Base Compensation" shall mean, at any
given time, the aggregate amount of (i) the Annual Base Salary and (ii) the then
budgeted Annual Bonus for Executive; provided that in no event shall Annual Base
Compensation be less than $3,600,000. Calculations required herein based upon
Annual Base Compensation shall be determined as if the Annual Base Compensation
is earned evenly throughout the year based upon a 365-day year.
(ii) "Cause" shall mean (A) fraud on the part of
Executive that has caused demonstrable and serious injury to the Company or (B)
conviction of, or plea of nolo contendre to, a felony; provided, however, that
no act or omission shall constitute "Cause" for purposes of this Agreement
unless the Board provides Executive (a) written notice clearly and fully
describing the particular acts or omissions which the Board reasonably believes
in good faith constitutes "Cause" and (b) an opportunity, within 30 days
following his receipt of such notice, to meet in person with the Board to
explain or defend the alleged acts or omissions relied upon by the Board and, to
the extent practicable, to cure such acts or omissions. Further, no act or
omission shall constitute fraud if Executive reasonably believed such act or
omission was in the best interests of the Company. Executive shall have the
right to contest a determination of Cause by the Company by requesting
arbitration in accordance with the terms of Section 6.1 hereof.
(iii) "Change in Control" shall mean (A) any "person"
(as such term is used in Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) other than Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇
Incorporated and/or its affiliates ("▇▇▇▇▇ Muse") becoming the direct or
indirect "beneficial owner" (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities, (B)
individuals who at the Effective Date constitute the members of the Board and
any new director, whose election to the Board or nomination for election to the
Board by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then in office who either were directors at the
Effective Date or whose election or nomination for election was previously so
approved, ceasing for any reason to constitute a majority of the Board, (C) the
Company merging with or consolidating into any other entity, or the stockholders
of the Company and the holders of voting securities of any other entity
participating in a securities exchange (other than a merger, consolidation or
exchange which (1) would result in the holders (and/or their affiliates) of the
voting securities of the Company outstanding immediately prior thereto holding
immediately thereafter securities representing more than 70% of the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger, consolidation or exchange and (2) would result in
Executive being the chief executive officer of such surviving entity), or (D)
the stockholders of the Company approving a plan of complete liquidation of the
Company or an
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agreement or agreements for the sale or disposition by the Company (in one or a
series of related transactions) of all or substantially all of the Company's
assets, or such a plan commencing other than in connection with a merger,
consolidation or exchange which does not constitute a Change in Control under
the preceding clause (C).
(iv) "Disability" means (A) Executive's incapacity
due to a permanent mental or physical illness that prevents Executive from
performing his duties or (B) a physical condition that renders the performance
by Executive of his duties hereunder a serious threat to the health and well
being of Executive. Disability shall be determined by a physician acceptable to
Executive (or his legal representative).
(v) "Good Reason" means (A) the assignment to
Executive of any duties inconsistent with Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof, (B) a material breach by the Company of this Agreement or any stock
option agreement between the Company and Executive, (C) the occurrence of a
Change in Control, (D) a reduction, without the consent of Executive, in the
amount of annual bonus paid to Executive by the Company in any given year as
compared to the immediately preceding year (other than as a result of the
Company's failure to achieve bonus criteria established by the Board), or (E)
any removal of Executive, or any failure to reelect Executive, as a director of
the Company.
(c) Obligations of the Company upon Termination.
(i) With Cause; Without Good Reason. If, during the
term of Executive's employment with the Company, the Company shall terminate
Executive's employment with the Company for Cause, or Executive shall terminate
his employment with the Company without Good Reason, then:
(A) the Company shall pay to Executive in
cash within 10 days after the date of such termination the sum of (x) any Annual
Base Compensation earned through the date of termination to the extent not
theretofore paid by the Company, (y) any compensation previously deferred by
Executive and (z) any vacation pay earned through the date of termination not
theretofore paid by the Company (in the aggregate, the "Accrued Obligation");
and
(B) the Company shall pay to Executive any
amounts arising from Executive's participation in, or benefits under, any
Investment Plans (the "Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of the Investment Plans.
(ii) Without Cause; With Good Reason; Death;
Disability. If, during the term of Executive's employment with the Company, the
Company shall terminate
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Executive's employment with the Company without Cause, Executive shall terminate
his employment with the Company with Good Reason, or Executive's employment with
the Company shall terminate due to Executive's death or Disability, then:
(A) the Company shall pay to Executive in
cash within 10 days after the date of such termination the amount of the Accrued
Obligation;
(B) the Company shall pay to Executive the
Accrued Investments in accordance with the terms and conditions of the
Investment Plans;
(C) the Company shall pay to Executive in
cash within 10 days after the date of such termination an amount (the "Severance
Amount") that is equal to the greater of (i) the aggregate amount of Annual Base
Compensation that would have been earned by Executive from the date of such
termination through the end of the Employment Period had Executive's employment
with the Company not been so terminated and (ii) one and one half (1 1/2) times
the aggregate amount of Annual Base Compensation at the time of termination. If
the termination occurs following the third anniversary of this Agreement, the
Severance Amount shall equal one and one half (1 1/2) times the aggregate amount
of Annual Base Compensation at the time of termination;
(D) any and all options to purchase shares
of the Company's common stock, par value $.01 per share, granted by the Company
to the Executive (including, without limitation, options granted under the
Company's 1997 Stock Option Plan) shall automatically become fully vested and
immediately exercisable in full. The provisions of this Section 3(c)(ii)(D)
shall not apply in the event of a termination of the Executive's employment with
the Company by the Executive for Good Reason if the Good Reason arises from the
occurrence of a Change in Control; and
(E) for the remainder of the Employment
Period (or such longer period as the welfare Plans may provide), the Company
shall continue benefits provided under the Welfare Plans to Executive and his
family at least equal to those that would have been provided had Executive's
employment with the Company not been terminated (the "Welfare Benefit
Continuation"); provided, however, that if Executive becomes employed with
another employer and is eligible to receive similar benefits under that
employer's plans, the benefits described in this paragraph (E) shall be
secondary to and not duplicative of those similar benefits.
(d) Effect on Benefit Plans. The foregoing payments and
benefits shall be in addition to and not in lieu of any payments or benefits to
which Executive and his dependents may otherwise be entitled to under the
Company's compensation and employee benefit plans, programs, policies or
practices. Nothing herein shall restrict the Company's right to amend any plan,
practice, policy or program in a manner generally applicable to similarly
situated active executives, in which event Executive shall be entitled to
participate on the same basis (including payment of applicable contributions) as
similarly situated active executives of the Company.
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(e) No Mitigation. Executive shall not be obligated to seek
new employment or take any other action to mitigate the benefits to which
Executive is entitled hereunder. Except as contemplated by Section 3(c)(ii)(E)
with respect to the Welfare Benefit Continuation, such benefits shall not be
reduced whether or not Executive obtains new employment.
4. Mutual Release. Payment of the Severance Amount shall be conditioned
upon the execution by Executive and the Company of a valid mutual release, to be
prepared by the Company, in which Executive and the Company mutually release the
other, to the maximum extent permitted by law, from any and all claims either
may have against the other that relate to or arise out of Executive's employment
or termination of employment, except such claims arising under this Agreement,
any employee benefit plan or any other written plan or agreement.
5. Excise Taxes.
(a) Determination and Payment. If it is determined that any
payment, distribution or other benefit to Executive, whether pursuant to this
Agreement or otherwise (a "Payment"), would be subject to any tax (e.g. excise
tax under Section 4999 of the Internal Revenue Code of 1986) other than income
tax (such tax, together with any interest and penalties related thereto are
hereinafter collectively referred to as an "Excise Tax"), then the Company shall
promptly pay to Executive an additional payment ("Gross-Up Payment") in an
amount such that Executive retains, after payment of all taxes, and all interest
and penalties with respect thereto (including, without limitation, income tax
and Excise Tax imposed upon the Gross-Up Payment), an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment. The determination of
the amount of any Gross-Up Payment shall be made by a certified public
accounting firm selected jointly by the Company and Executive (the "Accounting
Firm"), the fees and expenses of which shall be paid by the Company.
(b) Contesting. Executive shall promptly notify the Company of
any claim that, if successful, would require the payment of the Gross-Up
Payment. Without the consent of the Company, Executive shall not pay such claim
prior to the date that the payment of taxes with respect to such claim is due.
If the Company notifies Executive in writing prior to such due date that it
desires to contest the claim, Executive shall take all actions in connection
with contesting the claim reasonably requested by the Company (including
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company); provided, however, that the Company shall
pay all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, from any tax (including interest and penalties
with respect thereto) imposed as a result thereof.
6. Claims.
(a) Arbitration of Claims. Executive shall settle by
arbitration any dispute or controversy arising in connection with this
Agreement, whether or not such dispute involves a plan subject to the Employee
Retirement Income Security of 1974, as amended. Such arbitration
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shall be conducted in accordance with the rules of the American Arbitration
Association before a panel of three arbitrators sitting in Dallas, Texas. The
award of the arbitrators shall be final and nonappealable, and judgment may be
entered on the award of the arbitrators in any court having proper jurisdiction.
All expenses of such arbitration shall be borne by the Company.
(b) Payment of Legal Fees and Costs. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of any action taken
pursuant to the terms of this Agreement, or of the validity or enforceability
of, or liability under, any provision of this Agreement, or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the rate of 8% per annum.
(c) Agent for Service of Legal Process. Service of legal
process upon the Company with respect to a claim under this Agreement shall be
made upon the General Counsel of the Company.
7. Tax Withholding. All payments to the Executive under this Agreement
will be subject to the withholding of all applicable employment and income
taxes.
8. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
9. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no succession had taken place.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. This
Agreement may not be modified in any manner except by a written instrument
signed by both the Company and Executive.
11. Notices. Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:
To Executive:
C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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To the Company:
INTERNATIONAL HOME FOODS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
12. Validity. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, such provision shall be fully severable, this
Agreement shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect.
Furthermore, in lieu of such illegal, invalid or unenforceable provision there
shall be added automatically as part of this Agreement a provision as similar in
terms as may be possible and be legal, valid and enforceable.
13. Non-Competition. In the event that Executive's employment with the
Company is terminated (other than a termination in connection with the
occurrence of a Change-in-Control) and Executive receives payment of the
Severance Amount, for the remainder of the Employment Period Executive shall not
engage in or promote any business within the United States that is principally
engaged in the business of manufacturing and marketing canned name brand food
products in the same categories as the core products of the Company at the time
of termination; provided that the foregoing shall not prohibit Executive from
owning less than 10% of the voting securities of any publicly traded company so
long as Executive does not otherwise engage in or promote the activities of that
company.
14. Governing Law. The provisions of this Agreement shall be construed
in accordance of the laws of the state of New Jersey, without giving effect to
that states choice of law provisions.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date and year first above written.
INTERNATIONAL HOME FOODS, INC.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Member of the Board of Directors
EXECUTIVE
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C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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