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Exhibit 10.31
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 2nd day of September 2005, by and
among
Birds Eye Holdings, LLC, a Delaware limited
liability company ("BE Holdings"),
and Neil Harrison (the "Executive").
WHEREAS, the BE Holdings desires that Executive serve as an
employee
of Birds Eye Foods, Inc., a Delaware
corporation having its principal executive
offices in Rochester, New York (the
"Company") and an indirectly wholly-owned
subsidiary of BE Holdings, and the
Executive is willing to accept employment
with the Company, all on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants
contained
herein and other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties
hereby agree as follows:
1. Employment Period. Subject to the terms and conditions of
this
Agreement, including Section 3, BE Holdings
agrees to cause the Company to
employ the Executive, and the Executive
hereby accepts employment with the
Company, for the period commencing on the
September 8, 2005 (the "Effective
Date") and ending as provided in the next
sentence (such period, the "Employment
Period"). The Employment Period shall end
on the fourth anniversary of the date
hereof; provided, that the Employment
Period shall automatically be renewed for
successive one-year periods, unless the
Company or Executive gives the other
party written notice of the election not to
renew the Employment Period at least
90 days prior to the expiration of the
Employment Period; provided, however, the
Employment Period shall be subject to early
termination as provided in Section 3
hereof.
2. Terms of Employment.
(a) Position and Duties. During the Employment Period, the
Executive shall serve as President and
Chief Executive Officer of the Company
with the appropriate authority, duties and
responsibilities as are customarily
attendant to such position at other
similarly situated companies with
significant private equity ownership,
subject, in all instances, to the general
supervisory power of the Company's board of
directors (the "Board") under
applicable corporate law. During the
Employment Period, the Executive shall
serve as a member of the management
committee of BE Holdings, the board of
directors of Birds Eye Holdings, Inc. ("BE
Inc.") and the Board as its Chairman.
Upon the termination or expiration of the
Employment Period, Executive shall
resign as a member of the management
committee, board of directors or any
equivalent body of BE Holdings and its
subsidiaries (including the Company and
BE Inc.), as the case may be and such
obligation to resign shall survive the
termination of this Agreement.
(i) During the Employment Period, Executive shall report
solely and directly to the Board and
excluding any periods of vacation and sick
leave to which the Executive is entitled,
Executive agrees to devote
substantially all of his business time and
attention to the business and affairs
of the Company and to use the Executive's
reasonable best efforts to perform
faithfully and efficiently the duties and
responsibilities assigned to Executive
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hereunder; provided, however, that
Executive may serve as a member of the board
of directors of one other corporation or
other entity (and on any committee
thereof) if approved by the Board.
(b) Compensation.
(i) Annual Base Salary. Effective immediately, and during
the Employment Period, the Executive shall
receive an annual base salary (as in
effect from time to time, the "Annual Base
Salary") of at least $600,000, which
Annual Base Salary shall be payable in
regular installments in accordance with
the Company's general payroll practices.
The Annual Base Salary will be subject
to periodical review and may be increased
in accordance with Company policy.
Once increased, the Annual Base Salary
cannot be decreased.
(ii) Annual Bonus. During the Employment Period, the
Executive shall participate in such bonus
arrangements as may be approved by the
Compensation Committee of the Board (the
"Compensation Committee") (the
aggregate of all payments made under such
bonus arrangements during any fiscal
year being herein referred to as the
"Annual Bonus"). Executive's "Target Bonus"
for any fiscal year will be no less than
$350,000 and shall be payable upon the
achievement of the Bonus Criteria (as
defined below) for such fiscal year and
such other factors as may be determined by
the Board. In addition, with respect
to each fiscal year during the Employment
Period, Executive shall have the
opportunity to earn an additional bonus of
at least $400,000 upon the
achievement of the Superior Bonus Criteria
(as defined below) for such fiscal
year and such other factors as may be
determined by the Board that are
communicated to Executive in accordance
with the next sentence. Within the first
three months of any fiscal year during the
Employment Period (other than with
respect to the fiscal year ending June 30,
2006 ("Fiscal 2006")), the Board
shall in good faith, and in consultation
with Executive, establish and
communicate to Executive (x) EBITDA and net
debt reduction targets for the
Company and its subsidiaries for such
fiscal year (collectively, the "Bonus
Criteria") and (y) additional extraordinary
performance targets for the Company
and its subsidiaries that are reflective of
extraordinary performance
(collectively, the "Superior Bonus
Criteria"), and any additional factors or
objectives related to the achievement of
such additional bonus. The
communication to Executive referred to in
the preceding sentence may be in the
form of materials distributed to him as a
member of the Board. The Bonus
Criteria for any fiscal year shall be
adjusted in good faith by the Board if the
Company or any subsidiary engages in any
significant acquisition or disposition
outside the ordinary course of business
during such fiscal year. Notwithstanding
the foregoing, subject to Executive's,
continued employment, Executive shall be
entitled to a guaranteed bonus for Fiscal
2006 of $350,000 pro-rated for the
actual number of days the Executive was
employed by the Company during Fiscal
2006. The Annual Bonus shall be paid within
30 days of receipt by the Company of
the audited financial statements for the
fiscal year of the Company to which it
relates. As used herein, "EBITDA" shall
mean the Company's and its subsidiaries'
earnings before interest, taxes,
depreciation and amortization calculated on a
consolidated basis consistent with the
Company's past practice of calculating
"operating EBITDA" for internal reporting
purposes.
(iii) Employee Benefit Plans. During the Employment Period,
except as otherwise expressly provided
herein, the Executive shall be entitled
to participate in all compensation,
incentive, employee benefit, welfare and
other plans and programs and fringe
benefits (collectively, "Employee Benefit
Plans") on a basis no less favorable than
that are
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generally provided to any other senior
executive officer of the Company. In
addition, within 60 days of the Effective
Date, the Company shall, at its
expense, procure a term life insurance
policy covering Executive's life during
the Employment Period in the face amount of
up to $1,500,000 subject to the
total cost of such insurance to the Company
being no more than $12,000 per
annum, payable to one or more beneficiaries
designated by Executive and
Executive shall co-operate and make himself
available for any medical
examination reasonably required by the
Company in connection therewith.
(iv) Residence in Rochester. Executive shall establish a
permanent residence in the Rochester, NY
area by purchasing a residence as soon
as reasonably practicable after the
Effective Date but in any event within six
months of the date of this Agreement and in
connection therewith shall be
entitled to an one-time expense
reimbursement of reasonable costs and expenses
incurred by Executive for purchasing a new
residence in the Rochester, NY area.
Such reimbursement shall, in any event,
include (x) reasonable costs and fees
incurred in connection with the search for
and purchase of a new residence in
the Rochester, New York metropolitan area,
including a reasonable number of
house hunting trips for Executive and his
spouse (which shall include air fare,
lodging, meals and other incidental
expenses) (other than mortgage discount
points) and, the physical move of
Executive's belongings and family (if and to
the extent applicable) and (y) for a period
of six (6) months following the
Effective Date (or, if earlier, until
Executive purchases a residence in
Rochester, NY) (A) temporary living
expenses of up to $5,000 per month and (B)
two (2) airline tickets per month for
travel between Rochester and Executive's
place of residence. During the Employment
Period, Executive shall perform his
duties hereunder during the business week
of the Company (which shall include
every business day commencing on Monday and
ending on Friday of each week) at
the corporate headquarters of the Company
at Rochester, New York (except when
Executive is engaged in business travel in
connection with his responsibilities
hereunder).
(v) Vacation. During the Employment Period, Executive shall
be entitled to four (4) weeks of paid
vacation during each calendar year,
pro-rated, in the case of the 2005 calendar
year, for the actual number of days
the Executive was employed by the Company
during the 2005 calendar year.
Executive may carry over accrued, unused
vacation to subsequent calendar years
but in no event shall Executive be entitled
to utilize more than six (6) weeks
of vacation time in any calendar year.
(c) Indemnification and Insurance. Executive shall be entitled
to
indemnification, to the fullest extent
permitted by law, as a director or
officer of the Company (including
advancement of litigation expenses upon
executing a customary undertaking in favor
of the Company to return such
advances to the extent it is finally
determined that Executive is not entitled
to indemnification) in accordance with the
certificate of incorporation of the
Company. The Company shall insure
Executive, or shall cause Executive to be
insured, under directors' and officers'
liability insurance at the same level as
other directors and officers of the Company
are covered from time to time during
the Employment Period and a period of six
years thereafter.
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3. Termination of Employment.
(a) Death, Disability or Non-renewal. The Executive's
employment
shall terminate automatically upon the
Executive's death during the Employment
Period or upon non-renewal of the
Employment Period by the Company or Executive
as provided in Section 1 above. If the
Company determines in good faith that the
Disability of the Executive has occurred
during the Employment Period (pursuant
to the definition of Disability set forth
below), it may give to the Executive
written notice in accordance with Section
8(c) of this Agreement of its
intention to terminate the Executive's
employment. In such event, the
Executive's employment with the Company
shall terminate effective on the receipt
of such notice by the Executive (the
"Disability Effective Date"). For purposes
of this Agreement, "Disability" shall mean
a determination by the Board in its
good faith judgment with input from
appropriate medical personnel that Executive
is unable to substantially perform his job
responsibilities as a result of
chronic illness, physical, mental or any
other disability for a period of 180
days or more in any 365 consecutive day
period. The Executive shall co-operate
and make himself available for any medical
examination reasonably required by
the Company with respect to any
determination of the Disability of the
Executive.
(b) With or Without Cause. The Company may terminate the
Executive's employment during the
Employment Period with or without Cause. Any
termination of the Executive's employment
during the Employment Period for Cause
shall be made by providing a Notice of
Termination within sixty (60) days of the
Board being informed of the occurrence of
the relevant event or events
constituting Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) Executive is indicted or charged with, or pleads guilty
or nolo contendere to, (A) a felony or (B)
a crime involving moral turpitude
that is either materially detrimental to
the Company or that which brings the
Company into public disgrace or
disrepute;
(ii) in carrying out his duties hereunder, Executive engages
in conduct that constitutes gross neglect
or willful misconduct that, in either
case, results in material economic harm or
is materially detrimental to the
Company;
(iii) Executive breaches any material provision of the
Employment Agreement (including Section 5
hereof), and such breach has not been
cured prior to 30 days following notice
from the Company;
(iv) Executive engages in willful gross misconduct in the
operation of the Company or in connection
with Company activities that brings
the Company into public disgrace or
disrepute;
(v) Executive's repeated refusal to perform duties or
responsibilities as reasonably directed by
the Board; or
(vi) Executive engages in willful misconduct resulting in or
intended to result in direct personal gain
to Executive at the Company's
expense.
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(c) Good Reason. The Executive's employment may be terminated
by
the Executive for Good Reason. For purposes
of this Agreement, "Good Reason"
shall mean a termination by Executive of
his employment on thirty (30) days'
written notice given by him to the Company
following the occurrence of any of
the following events, which notice shall be
given within sixty (60) days
following Executive becoming aware of such
occurrence, without his express prior
written consent, unless all grounds for
termination shall have been fully cured
prior to thirty (30) days after he gives
notice to the Company requesting cure:
(i) any failure of the Company to continue Executive as
President and Chief Executive Officer of
the Company and as Chairman of the
Board provided, that after a Change of
Control (as defined below), failure of
the Executive to be appointed or nominated
to the board of directors of a
successor shall not constitute "Good
Reason";
(ii) any material diminution in Executive's responsibilities
or authorities under the Employment
Agreement; the appointment of another person
whose duties are inconsistent with
Executive's role as Chief Executive Officer
and Chairman of the Board; or the
assignment to Executive of duties that are
materially inconsistent with, or materially
impair his ability to perform, the
duties then assigned to him; or any change
in the reporting structure so that
Executive is required to report to any
person other than the Board; provided
that within six months of a Change in
Control, the Company shall have the
flexibility to appoint Executive to a
reporting relationship different from that
which existed prior to the Change in
Control, to make immaterial changes in
Executive's duties (which changes in the
aggregate shall not be material), or to
change Executive's title provided that
Executive shall not have the stature less
than that of a Divisional President, and it
is understood that equivalent
positions may have different titles;
provided further that in no event shall any
diminution of position, authority, duties
or responsibilities of the Executive
resulting solely from the consummation of
one or more dispositions of assets or
business lines constitute "Good Reason"
hereunder so long as subsequent to any
such disposition the Company's primary
business continues to be the marketing
and sale of branded frozen vegetable
products;
(iii) if as a condition to his continued employment,
Executive's principal place of work is
relocated more than 75 miles from the
location of the current corporate
headquarters of the Company in Rochester, New
York and Pittsburgh, PA other than any
relocation effected pursuant to a
recommendation by Executive;
(iv) subject to the terms and conditions of that certain
letter agreement dated as of the date
hereof between BE Holdings and Executive,
failure by BE Holdings to issue to
Executive the limited liability company units
of BE Holdings specified therein within the
time periods specified therein;
(v) any material breach by the Company of any of its
obligations under the Employment Agreement
which has not been cured prior to 30
days following notice from Executive of
such breach; or
(vi) any failure of the Company to obtain the assumption in
writing of its obligations under the
Employment Agreement by any successor to
all or substantially all of its business or
assets within thirty (30) days after
any reconstruction,
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amalgamation, combination, merger,
consolidation, sale, liquidation, dissolution
or similar transaction; provided that no
such assumption shall be required to be
obtained in connection with any
dispositions of assets or business lines by the
Company or any of its subsidiaries so long
as subsequent to any such disposition
the Company's primary business continues to
be the marketing and sale of branded
frozen vegetable products.
As used herein, "Change in Control" means
the consummation of a transaction,
whether in a single transaction or in a
series of related transactions that are
consummated contemporaneously (or
consummated pursuant to contemporaneous
agreements), with any other party or
parties on an arm's-length basis, pursuant
to which such party or parties (a) acquire
(whether by merger, stock purchase,
recapitalization, reorganization,
redemption, issuance of capital stock or
otherwise) more than 50% of the voting
stock of the Company or (b) acquire
assets constituting all or substantially
all of the assets of the Company and
its subsidiaries on a consolidated basis;
provided that nothing in clause (a) or
(b) shall include any dispositions of
assets or business lines by the Company or
any of its subsidiaries so long as
subsequent to any such disposition the
Company's primary business continues to be
the marketing and sale of branded
frozen vegetable products.
(d) Notice of Termination. Any termination by the Company or by
the Executive shall be communicated by
Notice of Termination to the other party
hereto given in accordance with Section
8(c) of this Agreement. For purposes of
this Agreement, a "Notice of Termination"
means a written notice which (i)
indicates the specific termination
provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in
reasonable detail the facts and
circumstances claimed to provide a basis
for termination of the Executive's
employment under the provision so indicated
and (iii) if the Date of Termination
(as defined below) is other than the date
of receipt of such notice, specifies
the termination date (which date shall be
not more than thirty days after the
giving of such notice). The failure by the
Executive or the Company to set forth
in the Notice of Termination any fact or
circumstance which contributes to a
showing of Good Reason or Cause shall not
waive any right of the Executive or
the Company, respectively, hereunder or
preclude the Executive or the Company,
respectively, from asserting such fact or
circumstance in enforcing the
Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the
Company other than for Disability,
the date of receipt of the Notice of
Termination or any later date specified
therein within 30 days of such notice, (ii)
if the Executive's employment is
terminated by reason
