EXHIBIT
10.56
SPECIALTY FOODS CORPORATION
AMENDED AND RESTATED
ANNUAL BONUS PLAN, 2000
ARCHWAY - MOTHER'S COOKIE COMPANIES
AMENDED AND RESTATED
ANNUAL BONUS PLAN
1. PURPOSES
Specialty Foods Corporation ("SFC") has established the Annual
Bonus Plan as a vehicle for motivating and rewarding designated
executives whose responsibilities have a significant impact on
the key short-term business objectives of SFC and its
Subsidiaries (as hereinafter defined) and for encouraging
retention of such executives through the Retention Date (as
hereafter defined). Annual incentive awards are determined by
the relative success of SFC and its Business Units (as
hereinafter defined) in achieving specific annual financial
objectives. The Plan provides the opportunity for participants
to receive incentive compensation when financial results meet or
exceed these pre-established goals. This Plan supersedes the
Archway-Mother's Cookie Companies Annual Bonus Plan 2000
effective January 1, 2000.
2. DEFINITION OF TERMS
The following defined terms will have the meanings set forth
below for purposes of the Plan:
a. Annual Salary shall mean the annualized base salary in
effect for a Participant on December 31, 2000 or on the date of a
Change of Control that occurs prior to December 31, 2000.
b. Award shall mean the cash payment made to Participants under
the Plan.
c. Business Unit shall mean a subsidiary or a group of
subsidiaries for which a target bonus is established by SFC. For
purposes of this Plan, "Business Unit" shall mean Mother's Cake
and Cookie Co., Archway Cookies, L.L.C. and Lew-Mark Baking.
d. Cause shall mean the Participant's admission or conviction
of a felony, the Participant's commission of an act of dishonesty
in the course of his or her duties, the Participant's repeated
disregard of policy directives of SFC or the Subsidiaries, or the
Participant's breach of his or her fiduciary responsibilities or
duties as an employee of SFC or the Subsidiaries.
e. Change of Control shall mean a sale or transfer, directly or
indirectly, of all of the outstanding stock of the Business Unit
or substantially all of the assets of the Business Unit to an
unaffiliated entity.
f. Compensation Committee shall mean the committee designated
as such by the Board of Directors of SFC.
g. EBITDA shall mean, with respect to any Business Unit, an
amount reasonably determined by SFC as such Business Unit's
income from operations (including annual bonus accruals as an
expense), plus depreciation of property, plant and equipment, and
amortization of intangible assets, but not including gain/loss on
asset sales. EBITDA shall exclude $2.0 million related to the
unbudgeted pension benefit from the sale of Metz Baking Company.
The actual incremental 2000 EBITDA benefits related to
acquisitions made in 2000 (other than Lew-Mark), if any, will
also be excluded for purposes of determining 2000 EBITDA.
h. Good Reason shall mean the occurrence and continuation at
any time following a Change of Control of any of the following
(without the Participant's express prior written consent) after
written notice provided by the Participant and the failure by the
Business Unit or its successors to remedy such event within
thirty (30) days after receipt of such notice:
(i) a reduction in the Participant's Base Salary;
(ii) a relocation of the Participant's
principal place of business to any location which is not
within 50 miles of the Participant's business location at
the time of a Change of Control;
(iii) a material adverse change in the
Participant's job responsibilities or level of authority; or
(iv) any material failure to comply with the
terms of this Plan by the Business Unit or its successors.
i. Participant shall mean an employee designated by SFC to
participate in the Plan, provided the authority to designate
Participants may be delegate by SFC to the Business Unit.
j. Plan shall mean this Amended and Restated Annual Bonus Plan.
k. Plan Year shall mean January 1, 2000 through December 31,
2000.
l. Retention Date shall mean December 31, 2000 or in the event
of a Change of Control, the date that is thirty (30) days
following a Change of Control.
m. SFC shall mean Specialty Foods Corporation.
n. Subsidiary shall mean a direct or indirect subsidiary of SFC
which is included in SFC's consolidated tax return.
3. ELIGIBILITY FOR PARTICIPATION
An Award may be granted for the Plan Year to each Participant who
is in active service during the Plan Year; provided, however,
that such Participant has completed at least two (2) months of
active service with SFC or a Subsidiary during the Plan Year.
Except as otherwise provided in this Section 3 or in Section 6
below, a Participant must be employed by SFC, the Business Unit
or their successors through the Retention Date to receive an
Award.
The Award applicable to a Participant otherwise eligible to
receive an Award under the Plan shall be prorated over the Plan
Year, or the Participant shall be ineligible to receive an Award
for the Plan Year, subject to the provisions in Section 6
entitled "Incentive Awards Upon Change of Control," as determined
below:
(1) promotion into or demotion from - prorate Award from the date of
a level of management eligible entrance or exit
for Awards after the beginning
of the Plan Year
(2) receipt of disability benefits - prorate Award to the nearest
for more than six months in the month based on time of service
Plan Year under SFC's or any while not receiving disability
Subsidiary's disability plan benefits
(3) receipt of disability benefits - no reduction in applicable
for six months or less in the Award
Plan Year under SFC's or any
Subsidiary's disability plan
(4) normal retirement, early - prorate Award based on the date
retirement with the approval of of retirement or transfer
SFC or transfer to another
Subsidiary during the Plan Year
(5) leave of absence during the - prorate Award based on the date
Plan Year when the leave commences
(6) death during the Plan Year - prorate Award to date of death
(7) early retirement during the - no Award (except as provided in
Plan Year without the approval Section 6)
of SFC
(8) resignation before the - no Award (except as provided in
Retention Date Section 6)
(9) demotion during the Plan Year - no Award (except as provided in
because of unsatisfactory Section 6)
performance to a position that
is not covered
(10) termination without Cause - no Award (except as provided in
during the Plan Year Section 6)
(11) dismissal for Cause during or - no Award
after the Plan Year (but before
payment) by SFC or a Subsidiary
Notwithstanding any other provision of the Plan, with respect to
eligible Participants transferred between Subsidiaries during the
Plan Year, the Subsidiary last employing the Participant during
the Plan Year shall determine and pay the entire annual Award, if
any, for the Plan Year. SFC shall have discretion in making any
accounting allocations between Subsidiaries to properly reflect
time spent with each Subsidiary.
4. PERFORMANCE MEASUREMENT
The standard used to determine performance of the Business Unit
will be EBITDA of such Business Unit. One hundred percent (100%)
of the target is based on EBITDA performance. The threshold
(minimum), target and maximum EBITDA objectives for the Business
Unit have been recommended by the Chief Executive Officer of SFC
and approved by the Compensation Committee and are reflected in
the attached schedule entitled "2000 Annual Bonus Plan Payout
Schedule".
5. GENERAL INCENTIVE AWARD GUIDELINES
Target incentive awards will be expressed as a percent of
annualized salary (e.g., 10%). These percentages determine the
amount that will be paid in the event that the performance of the
applicable Business Unit meets objectives. Target incentive
awards will be established for various levels of Participants.
Maximum award opportunities will be set for the Business Unit.
However, this maximum award may be exceeded with approval of the
Compensation Committee. Threshold (minimum) performance (at
which a Participant receives 0% bonus) will also be set for the
Business Unit. See attached schedule entitled "2000 Annual Bonus
Plan Payout Schedule" for the target incentive awards and
threshold levels established for the Business Unit for this Plan
Year.
To determine the Awards for actual performance between the
threshold, target and maximum EBITDA targets set by the
Compensation Committee, a percent of the target award will be
calculated by means of interpolation (see attached schedule
entitled "2000 Annual Bonus Plan Payout Schedule").
6. INCENTIVE AWARD GUIDELINES UPON A CHANGE OF CONTROL
a. Vesting of Award Upon Change of Control
Upon a Change of Control, a Participant shall earn the right to
receive an Award under the Plan based on the actual EBITDA
performance for the Business Unit at the time of such Change of
Control as compared to the budgeted EBITDA performance objectives
for the Business Unit at the time of such Change of Control, as
determined by SFC (the "Prorated EBITDA Target"); provided,
however, that a Participant shall not earn the right to receive
an Award under this provision unless the actual EBITDA
performance for the Business Unit at the time of such Change of
Control is at least equal to 90% of the Prorated EBITDA Target.
In the case of such Change of Control, (i) the Prorated EBITDA
Target shall be substituted for the target set forth on the
Amended and Restated 2000 Annual Bonus Payout Schedule attached
hereto, (ii) the maximum objective shall be 110% of the Prorated
EBITDA Target and (iii) the threshold (minimum) objective shall
be 90% of the Prorated EBITDA Target. Thereafter, the
Participant's Award shall be prorated upon a Change of Control to
the date of the Change of Control (e.g. if the Change of Control
occurs on September 30, the Participants Award shall be
multiplied by .75).
b. Condition of Continued Employment Upon Change of Control
The payment to a Participant of the Award described in paragraph
(a) of this Section is expressly conditioned upon such
Participant's continued employment with SFC, the Business Unit or
their successors through the Retention Date (except as provided
in Section 3), unless, after the Change of Control and prior to
the Retention Date, the Participant (i) is terminated by SFC, the
Business Unit or their successors without Cause or (ii)
voluntarily terminated employment with Good Reason as defined
herein or in the event such participant has an employment
agreement or severance agreement, as defined in such other
agreement.
c. Payment of Award Upon a Change of Control
The payment of the Award described in paragraph (a) of this
Section shall be made in accordance with the timing and the terms
specified in Section 7(b) of the Plan.
7. ADMINISTRATIVE GUIDELINES
a. Adjustments in Financial Performance Measurements
In order to effectuate the purpose of the Plan, SFC may make
adjustments in the criteria established for the Plan Year
which reflect any extraordinary changes that may have
occurred during the Plan Year or which significantly alter
the basis upon which such performance levels were
determined. Such changes may include, without limitation,
changes in acquisitions, accounting practices, tax,
regulatory or other laws or regulations, divestitures,
financings, or economic changes not in the ordinary course
of business cycles. Any adjustments made by SFC can be made
at any time and in any manner that SFC in its sole
discretion deems appropriate, and any and all such
adjustments shall be conclusive and binding upon all parties
concerned.
b. Approval and Payment of Bonus Awards
Award payments are subject to the approval of the
Compensation Committee and will normally occur concurrently
with payment for the last pay period in February of the year
following the Plan Year. Payments will normally be made by
ordinary payroll methods.
Except in the case of death, disability, retirement,
demotion, promotion, leave of absence, transfer to another
subsidiary, or, in certain cases, a Change of Control, a
Participant must be employed by SFC, the Business Unit or
their successors, on the Retention Date to receive an Award.
In cases of death, disability, retirement, demotion,
promotion, leave of absence or transfer to another
subsidiary, the Participant or the designated beneficiary
(as designated with respect to a Participant's life
insurance policy held through SFC or a Subsidiary) shall
receive the Award to the extent and in the amount specified
in the Section 3 entitled "Eligibility for Participation."
In the case of a Change of Control, the Participant shall
receive the Award to the extent and in the amount specified
in Section 6 entitled "Incentive Awards Upon Change of
Control."
8. GENERAL RULES
a. Effective Date. This Plan shall have an effective date of
January 1, 2000.
b. Restatement. This Plan is an amendment and restatement of
the Archway-Mother's 2000 Annual Bonus Plan as effective on
January 1, 2000 (the "Prior Plan"). This Plan supersedes and
replaces the Prior Plan.
c. Amendment. The Plan has been adopted by the Compensation
Committee and may be amended from time to time, in any respect,
by such Committee. Any such amendment may add to, amend, reduce
or cancel any and all rights in regard to the Plan.
d. Accruals. SFC reserves the right, in its sole discretion,
to determine the nature and amount of all accruals that are to be
recorded on the books of the Subsidiaries at the end of the Plan
Year.
e. Administration. The Vice President and General Counsel of
SFC shall be responsible for the general operation and
administration of the Plan and shall have the authority to
interpret the Plan and to adopt administrative rules and
regulations governing its operation.
f. Termination. The Plan may be terminated at any time by the
Compensation Committee. Upon such termination, all rights of a
Participant to amounts not then awarded to Participants shall be
null and void. However, amounts previously accrued through the
date of the Plan termination based pro rata on EBITDA shall not
be affected.
g. Continued Employment. Participation in the Plan shall not
give any employee any right to remain in the employment of SFC or
any Subsidiary. The Plan is not to be construed as a contract of
employment for any period and does not alter the "employee-at-
will" employment status of any Participant.
h. Employment Taxes. Award payments under the Plan shall be
treated as wages and shall be subject to income, FICA and any
other applicable withholding taxes and deductions at the time
received as required by applicable law or regulation, as in
effect from time to time.
i. Employment Agreements. If a Participant is party to an
employment agreement, the terms of which relate to annual bonuses
and which are inconsistent with the terms of this Plan, the terms
of such employment agreement shall govern to the extent of such
inconsistency.
j. Unfunded Plan. The obligations under this Plan shall be
unfunded. Neither SFC nor any of the Subsidiaries shall be
required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any Award
under this Plan.
k. Successors Bound. The rights and obligations of the
Business Unit hereunder shall inure to the benefit of and be
binding upon the successors of the Business Unit.
l. Assignment. Participants shall not assign any rights
granted to them by the terms of this Plan or encumber in any way
their interests herein; provided, however, that in the event of a
Participant's death, any payments then due and owing will be made
when due as provided in Section 7(b) entitled "Approval and
Payment of Bonus Awards."
m. Effect of Plan. This Plan shall have a term expiring on the
earlier of (1) the date on which all Awards earned under the
Plan, if any, are paid to Participants and (2) the date on which
a determination is made by the Compensation Committee that no
Awards have been earned under the Plan (provided that the
authority to determine that no Awards have been earned under the
Plan may be delegated by the Compensation Committee to SFC and by
SFC to the Business Unit). At such time, the Plan shall expire
and be of no further force or effect.
n. Governing Law/Jurisdiction. The substantive law (and not
the law of conflicts) of the State of Illinois will govern all
questions concerning the construction, validity and
interpretation of this Plan and the performance of the
obligations imposed by this Plan. The parties hereby waive their
rights to request or demand a trial by jury in the event
controversy arises under this Plan.
o. Headings. The headings used herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Plan.
Archway - Mother's Cookies
2000 Annual Bonus Plan Payout Schedule
($'s expressed in millions)
EBITDA
____________________________
$
EBITDA % Payout
--------- ---------
200% Award - Maximum 36.30 200
35.64 180
34.98 160
34.32 140
33.66 120
Target 33.00 100
32.34 90
31.68 80
31.02 70
30.36 60
Minimum 29.70 50
Below 29.70 0
_______________________________________________________________________
EBITDA Payout Calculation
EBITDA % Payout (A) EBITDA Between 29.7
and 33.0
[(EBITDA - 29.7) divided by .066] + 50 = % payout
EBITDA % Payout (B) EBITDA Between 33.0
and 36.3
[(EBITDA - 33.0) divided by .033] + 100 = % payout
