SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998 Commission File Number 33-68958
SPECIALTY FOODS ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2488183
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 Lake Cook Road
Suite 550 60015
Deerfield, IL (Zip Code)
(Address of principal
executive offices)
(847) 405-5300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------- --------
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
Reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
-------
State the aggregate market value of voting stock held by non-
affiliates of the Registrant. No market presently exists for the
Registrant's Common Stock.
Number of shares of common stock outstanding as of March 17,
1999: 62,768,000 shares.
Documents incorporated by reference: None.
TABLE OF CONTENTS
Page
--------
PART I
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security
Holders 9
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 7A. Quantitative and Qualitative Disclosure
about Market Risk 16
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure 16
PART III
Item 10. Directors and Executive Officers of the
Registrant 17
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial
Owners and Management 25
Item 13. Certain Relationships and Related Transactions 28
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 30
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of the federal securities laws,
including, without limitation, Item 3 - Legal Proceedings and
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations. These forward-looking
statements reflect the Company's expectations and are based on
currently available information. When used in this Report, the
words "anticipates," "believes," "expects," "intends" and similar
expressions as they relate to the Company or its management are
intended to identify such forward looking statements. Actual
results, performance, achievements or other information may vary
materially from those expressed in, or implied by such forward-
looking statements and are subject to numerous risks and
uncertainties. Factors that could cause actual results to differ
materially from those in forward-looking statements include:
general economic conditions; industry conditions, including
competition, consolidation and cost and availability of raw
materials; weather; interest rates; access to capital markets and
the timing of and value received in connection with asset
divestitures. No assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they will have on the
results of operations and financial condition of the Company.
<PAGE> 2
PART I
Item 1. Business
Specialty Foods Acquisition Corporation ("SFAC"), a Delaware
corporation, is a leading producer, marketer and distributor of
bakery products, including bread, cookies and other baked goods
throughout the United States. The Company's bakery operations
include Metz Baking Company ("Metz"), Mother's Cake & Cookie Co.
("Mother's"), Archway Cookies, Inc. ("Archway") and Andre-Boudin
Bakeries, Inc. ("Boudin"). SFAC owns all of the capital stock of
Specialty Foods Corporation ("SFC"). SFAC, SFC and their
subsidiaries, including Metz, Mother's, Archway and Boudin are
referred to herein as the "Company".
Operations
The Company operates principally in one segment of business -
bakery products (bread, cookies, baked goods and bakery cafes).
The Company believes its cookie operations are the third largest
in the nation and that the Company has a leading regional
position in multiple product lines within the bread and baked
goods markets of the baking industry. The Company operates one
of the largest food distribution systems in the U.S. with a
network of more than 2,385 direct-store-delivery ("DSD") routes
across 45 states.
Metz, established in 1922 and headquartered in Deerfield,
Illinois, is a leading retail bread company serving a sixteen
state area of the Midwestern United States. Metz's product line
includes breads, buns, rolls and sweet goods. These products are
marketed by Metz under the Taystee, Holsum, Old Home, Master,
Country Hearth, Egekvist, D'Italiano, Pillsbury and Healthy
Choice brand names and numerous private labels. Metz distributes
its products through a company-owned direct-store-delivery
("DSD") system to retail grocers, club stores, mass merchants,
convenience stores and other outlets.
Mother's, founded in 1914 and based in Oakland, California, is
the second largest retail cookie producer and distributor in the
Western United States. Mother's products are marketed under the
Mother's, Mrs. Wheatley's, Bakery Wagon and Marie Lu brand names.
Mother's sells its cookie products primarily to retail grocers in
14 states through a DSD system that is primarily company-owned.
Mother's also sells nationally through club stores, mass
merchandisers and other outlets.
Archway, headquartered in Battle Creek, Michigan and established
in 1936, is one of the nation's leading cookie makers and is the
leading producer of homestyle soft cookie varieties. Archway
bakes more than one billion cookies annually, producing more than
60 varieties of cookies, including homestyle, holiday and sugar
free products under the Archway brand name. Archway distributes
its cookies through an independent DSD network and franchisees
that resell to retail food outlets and chain stores throughout
the U.S. and Canada.
Boudin, which is based in San Francisco and was founded in the
Gold Rush of 1849, is a leading marketer of premium branded
specialty breads and bread-related products. Boudin sells most
of its products through 46 company owned and operated bakery
cafes in California (37), Chicago (7) and Dallas (2). Boudin
also distributes some of its products through its own direct-mail
catalog and a limited number of retail grocers.
<PAGE> 3
Acquisition Strategy
In 1998, the Company completed five acquisitions of bakery
companies that complement the Company's existing business, expand
its geographic scope and strengthen its competitive position.
The Company's acquisition strategy is consistent with many of the
other larger companies in the baking industry. In recent years,
the bread industry has undergone substantial consolidation as
several larger regional competitors (most notably, Interstate
Brands, Earthgrains Company and Flowers Industries) have expanded
their businesses through the acquisition of smaller regional
companies. Similarly, leading cookie manufacturers such as
Keebler have continued to pursue strategic acquisitions of
smaller cookie makers. These consolidations and acquisitions are
being driven by the opportunity to increase sales and market
share, and reduce costs through the combining of manufacturing,
distribution and administrative capabilities.
In October 1998, the Company acquired Archway which, together
with Mother's, creates the nation's third largest cookie
business. The Archway acquisition provides the Company with a
strong, established brand name, more diversified product lines
and a nation-wide presence. The Archway acquisition also
provides opportunities to realize significant operational and
distribution synergies. The Company acquired the capital stock
of Archway for approximately $90 million. In addition, the
Company used approximately $26 million to repay certain
indebtedness of Archway. The Company also completed four
smaller, strategic bread acquisitions in 1998. Boudin acquired
Pane Corporation, doing business as San Diego Bread Company,
which sells a variety of specialty breads, including a private
label sourdough that complements Boudin's premium sourdough bread
brand in California. The acquisition of the San Diego Bread
Company provides Boudin with the opportunity to strengthen its
position in Southern California. Metz also acquired three bakery
companies in 1998: (i) Clear Lake Bakery, Inc., which bakes and
distributes a variety of bread, buns, rolls, doughnuts and sweet
rolls throughout Iowa; (ii) Grandma Sycamore's, which distributes
its brand name bread throughout Utah and neighboring states; and
(iii) Eagle (Rock Island) Bakery which produces private label
bread and buns distributed in Iowa and Illinois. These bread
acquisitions provide significant opportunity for reducing costs
and strengthening Metz's competitive position in its core
Midwestern geography.
The Company intends to continue to selectively acquire bakery
businesses to build enterprise value through the realization of
significant cost synergies. The Company has identified other
potential acquisition candidates with a range of synergy
opportunities that arise from a combination with its existing
bakery business.
Divestitures
SFC has entered into a definitive agreement to sell all of the
capital stock of its subsidiary HMFS Holdings, Inc. ("HMFS" and,
together with its operating subsidiary, H&M Food Systems Company,
Inc., "H&M"), a leading producer of specialty meats and meat-
based prepared foods for restaurants and food manufacturers, for
approximately $132 million (the "H&M Sale"). Subject to required
regulatory approval, the Company expects to close the H&M Sale in
the second quarter of 1999. The Company expects to realize net
cash proceeds of approximately $110 million from the H&M Sale
after repurchasing H&M's accounts receivable, establishing a $5
million one-year escrow and paying transaction costs. The
Company currently expects to utilize a portion of the net
proceeds to make investments in its bakery businesses, including
acquisitions, and to pay down indebtedness. H&M's results have
been reported as a discontinued operation in the Company's
financial statements. The total sales and earnings before
interest, taxes, depreciation and amortization ("EBITDA") of H&M
in 1998 were $181.0 million and $16.0 million, respectively.
<PAGE> 4
Financing Structure
The Company's financing structure at the date of this Report
consists of the following: $122.8 million Revolving Credit
Facility at the operating subsidiary level ("Revolving Credit
Facility"); $169.1 million Term Loan Facility at the SFC level
("Term Loan Facility"); $225 million of 10 1/4% Senior Notes due
2001 issued by SFC ("10 1/4% Senior Notes"); $150 million of 11
1/8% Senior Notes due 2002 issued by SFC ("11 1/8% Senior
Notes"); $200 million of 11 1/4% Senior Subordinated Notes due
2003 issued by SFC ("Senior Subordinated Notes"); 13% Senior
Secured Discount Debentures due 2005 issued by SFAC with an
accreted value at December 31, 1998 of $295.2 million ("Senior
Debentures"); and 11% Senior Subordinated Discount Debentures due
2006 issued by SFAC with an accreted value at December 31, 1998
of $134.7 million ("Subordinated Debentures"). In addition, the
Company is a party to an accounts receivable securitization
facility pursuant to which the accounts receivable of the
Company's operating subsidiaries are transferred to a master
trust ("Accounts Receivable Facility"). The maximum amount of
accounts receivable that can be sold to the Accounts Receivable
Facility is $75 million. The Revolving Credit Facility, Term
Loan Facility and Accounts Receivable Facility were refinanced in
March, 1998. The Term Loan and Revolving Credit Facilities have
a final maturity date of January 31, 2000. The Accounts
Receivable Facility also has a final maturity date of January 31,
2000 and begins to amortize on December 15, 1999.
In October 1998, the Company commenced private exchange offers
(the "Exchange Offers") for certain series of publicly-held debt
of both SFAC and SFC. The offers are to exchange such series of
SFAC and SFC existing debt for new debt securities of two new
intermediate holding companies. Both Exchange Offers remain
outstanding as of the date of this Report. SFAC is offering
certain holders of its Senior Debentures the opportunity to
exchange their existing debt for new 13% Senior Secured Discount
Debentures (the "New Senior Debentures") of a new intermediate
holding company. The New Senior Debentures include provisions
which (i) extend the cash pay interest and maturity dates, (ii)
give SFAC a call option at prescribed discounts of accreted value
and (iii) provide holders of its Senior Debentures who consent to
the exchange up to an aggregate of ten percent of the equity
interest of a new intermediate holding company. Holders of more
than 50% of the Senior Debentures have indicated their agreement
to exchange the Senior Debentures for New Senior Debentures. SFC
is offering certain holders of its existing notes the opportunity
to exchange their existing debt for new notes (the "New Notes")
of another new intermediate holding company. The New Notes have
substantially the same terms and covenants as the existing notes
and will remain structurally senior to the New Senior Debentures.
The holders of SFC's public debt are being offered $5 per $1,000
note to consent to the transaction. In addition, SFC is seeking
the consent of its Revolving Credit Facility and Term Loan
Facility lenders to amend their agreements to conform to the new
holding company structure.
SFAC, SFC and each subsidiary of SFC is a separate corporate
entity. Because the Company conducts substantially all of its
business through its subsidiaries, the ability of SFAC, SFC or
any new intermediate holding company to meet its obligations
under its indebtedness and to its creditors will be dependent on
the earnings and cash flow of its subsidiaries and the ability of
its subsidiaries to pay dividends and to advance funds to it. In
addition, rights of SFAC, SFC and any new intermediate holding
company and the rights of such companies' creditors and
securities holders, including the holders of debt securities, to
participate in the assets of any subsidiary upon such
subsidiary's liquidation or recapitalization will be subject to
prior claims of such subsidiary's creditors, except to the extent
that such company may itself be a creditor with recognized claims
against any such subsidiary.
<PAGE> 5
SFAC and SFC were formed in June 1993 to acquire (the
"Acquisition") the North American food businesses (the "Acquired
Companies" or the "Predecessor Company") of Beledia N.V., a
subsidiary of Artal Group S.A.
Competition
The Company's bakery businesses compete in the highly competitive
bakery products industry. Competition is likely to increase due
to continued industry consolidation and overcapacity in certain
areas of the country. Competitors include multi-product large
food companies (such as Bestfoods), national bakers (such as
Interstate Brands and Earthgrains), cookie
companies with national distribution (such as Keebler and
Nabisco) and numerous smaller regional and local companies. Many
of the Company's larger competitors have significantly greater
financial, marketing and other resources than the Company, while
smaller competitors may have lower fixed costs and greater operating
flexibility. The Company is also more highly leveraged than most
of its competitors, which may place it at a competitive
disadvantage or restrict the Company's ability to implement its
acquisition strategy in a consolidating industry. The Company
does not encounter material foreign competition. Competition is
based on a number of factors including price, quality, brand
loyalty, service, freshness, marketing effectiveness and
obtaining access to retail outlets and adequate shelf space.
Raw Materials
The Company is a major purchaser of flour, sugar, vegetable oils,
and other agricultural products, as well as plastic, paper and
corrugated products for packaging materials. Although the
Company has some long-term contracts, the bulk of such raw
materials are purchased on the open market or pursuant to short-
term agreements. The prices paid for food product raw materials
generally reflect external forces, among which weather conditions
and commodity market activities are the most significant.
Although the prices of the principal raw materials used by the
Company can be expected to fluctuate as a result of government
actions and/or market forces (which would directly affect the
cost of products and value of inventories), such materials are
generally in adequate supply and available from numerous sources.
Occasionally, and where possible, the Company makes advance
purchases of commodities significant to its business in order to
lock in what is perceived to be favorable pricing and to protect
itself from basic market price fluctuations. The Company seeks
to pass through increases in the costs of commodity ingredients
to its customers where possible. The Company's ability to do so
is dependent primarily upon competitive conditions and pricing
methodologies employed in the various geographies in which the
Company conducts its business.
Trademarks, Patents and Licenses
The Company owns or licenses a number of trademarks and
tradenames which management believes provide significant value to
several of the Company's product lines because of their
recognition by customers and consumers. The Company owns or
licenses a number of patents, but such patents and licenses are
not considered material to the conduct of the Company's
businesses, and the Company does not believe that any of its
businesses are substantially dependent on patent protection.
<PAGE> 6
Seasonality, Working Capital
The Company's business is moderately seasonal with higher sales,
operating profit and cash flows generally occurring in the
second, third and fourth quarters of the year. This seasonality
is due primarily to higher bread and cookie sales in the summer
and fall months, as well as the holiday season.
Customers, Sales and Backlog
No one customer accounts for more than 10% of the Company's net
sales. In general, the backlog of orders is not deemed to be
significant or material for an understanding of the Company's
businesses.
Environmental Matters
The past and present business operations of the Company and the
past and present ownership and operation of real property by the
Company are subject to extensive and changing federal, state and
local environmental laws and regulations pertaining to the
discharge of materials into the environment, the handling and
disposition of wastes (including solid and hazardous wastes) or
otherwise relating to protection of the environment. Compliance
with federal, state and local environmental laws and regulations
is not expected to have a material impact on the Company's
capital expenditures, earnings or competitive position. No
assurance can be given, however, that additional environmental
issues relating to presently known matters or identified sites or
to other matters or sites will not require additional, currently
unanticipated investigation, assessment or expenditures.
Regulation
Public Health
The Company is subject to the Federal Food, Drug and Cosmetic Act
and regulations administered by the Food and Drug Administration
("FDA"). These comprehensive regulatory schemes govern, among
other things, the manufacture, composition, ingredient labeling,
packaging and safety of food. For example, the FDA regulates
manufacturing practices for food through its current "good
manufacturing practices" regulations, specifies the called
standards of identity ("recipes") for certain foods, including
many of the kinds of products marketed by the Company's
subsidiaries, and prescribes the format and content of certain
information required to appear on the labels of food products.
The Company has revised the labeling of its products to comply
with regulations promulgated by the FDA pursuant to the Nutrition
Labeling and Education Act of 1990. These regulations require
nutritional labeling on all foods that are a meaningful source of
nutrition, including many of the Company's products, and place
limitations on the use of certain terms while requiring the use
of other terms.
The operations and the products of the Company's business also
are subject to state and local regulation through such measures
as licensing of plants, enforcement by state health agencies of
various state standards and inspection of the facilities.
<PAGE> 7
Federal Trade Commission
The Company is subject to certain regulations by the Federal
Trade Commission ("FTC"). Advertising of the Company's
businesses is subject to regulation by the FTC pursuant to the
Federal Trade Commission Act and the regulations promulgated
thereunder.
Employee Safety Regulations
The Company is subject to certain health and safety regulations
including regulations issued pursuant to the Occupational Safety
and Health Act. These regulations require the Company to comply
with certain manufacturing, health and safety standards to
protect its employees from accidents.
Employees
As of December 31, 1998, the Company employed approximately 8,300
persons. Approximately 62% of the Company's labor force are or
will be covered by collective bargaining agreements upon
completion of current negotiations.
Item 2. Properties
The Company uses various owned and leased plants, warehouses, and
other facilities in its operations. These facilities are located
primarily in the Midwest and California. Management believes
that the facilities are properly equipped with machinery suitable
for this use. Such facilities and related equipment are well
maintained generally and are adequate for the conduct of current
operations. Management also believes that the Company's
facilities have sufficient capability and capacity to meet the
Company's long-term needs. The following is a summary of
significant facilities that were operated by the Company as of
December 31, 1998.
Number of Facilities
-----------------------------------------
Owned Leased Total
----- ------ -----
25 61 86
Substantially all of the Company's owned facilities are subject
to mortgages for the benefit of the lenders under the Revolving
Credit Facility.
In addition, the Company operates a number of retail outlets and
retail bakery stores.
Item 3. Legal Proceedings
On May 20, 1993, prior to the SFC acquisition from Artal, Cacique,
Inc. ("Cacique") commenced proceedings against certain former subsidiaries
of the Company ("Stella") in the California Superior Court, Alameda County
relating to "Hispanic" - style cheese ("Product") produced by Stella
between 1993 and September 1994. In November 1997, Stella was
sold to a third party, but the Company has retained liability with
respect to this proceeding, has indemnified the purchaser in connection
therewith and continues to control the defense of this action.
<PAGE> 8
Cacique's complaint asserts causes of action for misappropriation of
trade secrets, trademark interference, inducing breach of contract,
interference with business relations, unfair competition and conspiracy
to commit certain of the causes previously stated. Cacique claims damages
for lost profits of approximately $14 million in addition to
punitive damages and attorneys' fees. Stella filed a cross-complaint
seeking approximately $14 million in damages based upon allegations
that Cacique had engaged in predatory pricing practices.
This proceeding is currently scheduled for trial in the second
quarter of 1999. The Company intends to continue to vigorously
defend against Cacique's allegations and pursue its claims
against Cacique. Although any litigation has an element of
uncertainty and no assurances therefore can be given, management
believes that the ultimate resolution of this matter will not
have a material adverse effect on the Company's financial
condition or results of operations.
In addition, the Company is involved in contractual disputes,
administrative and legal proceedings and investigations of
various types, arising out of the ordinary course of business.
Although any litigation, proceeding or investigation has an
element of uncertainty, the Company does not believe that any
single matter, if adversely determined, would have a material
adverse effect on the Company's financial condition or results of
operations. The Company does not believe at this time that there
is a reasonable possibility that all or a majority of such
matters will be decided against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of security holders of
SFAC, through the solicitation of proxies or otherwise, since the
filing by the Company of its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998.
<PAGE> 9
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
There is no public market for the common stock, par value $.01
per share ("Common Stock"), of SFAC. On March 17, 1999, the
Common Stock was held of record by 62 persons or entities. This
number of holders does not include beneficial owners for whom
Cede & Co. or others may act as nominee.
SFAC has never paid any cash dividends on shares of the Common
Stock. The ability of SFAC to pay dividends is restricted by
provisions of the indentures governing the Senior Debentures and
the Subordinated Debentures of SFAC, the Revolving Credit
Facility and the Term Loan Facility. Refer to "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations" and footnote 13 to the accompanying
financial statements for additional discussion of such
restrictions.
In 1996, SFC and Stella Foods, Inc., a former subsidiary of SFC
all of the capital stock of which was sold by SFC in 1997
("Stella"), sold an insurance receivable (the "Purchased
Receivable") generated in connection with a fire at Stella's
Lena, Wisconsin facility to Acadia Partners, L.P. ("Acadia"),
Keystone, Inc. ("Keystone") and Haas Wheat Advisory Partners
Incorporated ("HW Advisory Partners"), each of which are
stockholders of SFAC. The aggregate face amount of the Purchased
Receivable and the aggregate purchase price paid therefore was:
Acadia, face amount $8,775,000 and purchase price of $8,643,375;
Keystone, face amount of $8,775,000 and purchase price of
$8,643,375; and HW Advisory Partners, face amount of $1,950,000
and purchase price of $1,920,750.
In June 1997, Acadia, Keystone and HW Advisory Partners each
agreed to convert its interests in the Purchased Receivable (the
"Equity Conversion Transaction") into units consisting of one
share of Series A Preferred Stock, par value $1,000 per share, of
SFAC (the "Series A Preferred Stock") and warrants to purchase
395.1 shares of Common Stock (the "Warrants"). In consideration
of the Equity Conversion Transaction, on June 27, 1997 Acadia
received 8,775 shares of Series A Preferred Stock and 8,775
Warrants to purchase an aggregate of 3,467,002 shares of Common
Stock, Keystone received 8,775 shares of Series A Preferred Stock
and 8,775 Warrants to purchase an aggregate of 3,467,002 shares
of Common Stock, and HW Advisory Partners received 1,950 shares
of Series A Preferred Stock and 1,950 Warrants to purchase an
aggregate of 770,445 shares of Common Stock. The Series A
Preferred Stock has a liquidation value of $1,000 per share and a
cumulative dividend rate of 16% per annum. As of December 31,
1998, the preferred stock had dividends in arrears of $4,706,000.
Presently, the outstanding debt instruments of the Company
prevent the declaration or payment of dividends on the preferred
stock. The preferred stock is cumulative, non-convertible, non-
participating, and non-redeemable by the holder or the Company
prior to August 16, 2006. Thereafter, any holder or the Company
may redeem all or a portion of the preferred stock provided that
such redemption would not cause or result in a default in any
outstanding debt instrument of the Company or its subsidiaries at
such time. The Warrants have a term of ten years and an exercise
price of $0.021332 per share of Common Stock. The Equity
Conversion Transaction was made in reliance upon the exemption
provided by Section 4(2) of the Securities Act of 1933, as
amended, for transactions not involving a public offering.
<PAGE> 10
Item 6. Selected Financial Data
(In millions, except per share data)
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Net Sales $742 $718 $706 $704 $667
==== ==== ==== ==== ====
(Loss) from $(106) $(112) $(326) $(245) $(97)
continuing ====== ====== ====== ====== =====
operations (1)(2)
Income (loss) from $10 $165 $(161) $(61) $45
discontinued ====== ====== ====== ====== =====
operations (1)(2)(3)
Loss per share $(1.69) $(1.78) $(5.12) $(3.84) $(1.50)
from continuing ====== ====== ====== ====== ======
operations (1)(2)
Earnings (loss) $0.16 $2.61 $(2.53) $(0.95) $0.69
per share from ====== ====== ====== ====== ======
discontinued
operations (1)(2)
Total Assets $534 $518 $515 $979 $1,237
====== ====== ====== ====== ======
Long-Term Debt $1,250 $1,134 $1,173 $1,134 $1,071
===== ======= ====== ====== ======
(1) In 1996, the loss and loss per share from continuing
operations included a goodwill write-down of $203 million
and $3.19 per share, respectively, while discontinued
operations included a goodwill write-down of $152 million
and $2.39 per share, respectively.
(2) In 1995, the loss and loss per share from continuing
operations included a goodwill write-down of $157 million
and $2.45 per share, respectively, while discontinued
operations included a goodwill write-down of $97 million and
$1.51 per share.
(3) Interest expense is not allocated to discontinued
operations.
<PAGE> 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This Annual Report or Form 10-K contains forward-looking
statements within the meaning of the federal securities laws
which reflect the Company's expectations and are based on
currently available information. Actual results, performance,
achievements or other information may vary materially from such
statements and are subject to future known and unknown risks and
uncertainties and events including those discussed herein.
The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items in the
Company's statements of operations.
1998 1997 1996
----- ----- -----
Net sales 100.0% 100.0% 100.0%
Cost of sales 44.4 44.8 46.5
----- ----- -----
Gross profit 55.6 55.2 53.5
Operating expenses:
Selling, distribution, general and
administrative 51.3 51.2 49.6
Amortization of intangible assets 0.2 0.1 1.0
Goodwill write-down - - 28.9
----- ----- -----
Total operating expenses 51.5 51.3 79.5
----- ----- -----
Operating profit (loss) 4.1 3.9 (26.0)
Interest expense, net 18.0 18.8 18.7
Other expenses, net 0.4 0.7 1.4
----- ----- -----
Loss from continuing operations (14.3)% (15.6)% (46.1)%
===== ===== =====
Results of Operations
1998 Compared to 1997
Consolidated net sales from continuing operations increased 3.4%
to $742.3 million in 1998 compared to $718.1 million in 1997.
The increase in net sales was attributed to volume gains at Metz
and the inclusion of ten weeks of Archway sales in 1998 partially
offset by one less week of sales due to 1997's fifty-three week
year, changes in customer mix and lower pricing at Mother's. The
volume gains at Metz resulted from the expansion into central
Illinois and new private label business.
The Company's gross profit margin increased to 55.6% in 1998 from
55.2% in 1997. The gross profit margin percentage was favorably
impacted by product mix at Mother's and lower commodity costs at
Metz. Offsetting these favorable trends were inflationary
increases in manufacturing costs and higher depreciation expense.
Selling, distribution, general and administrative ("SDG&A")
expenses increased $12.8 million or 3.5% in 1998 to $380.8
million. However, as a percentage of sales, SDG&A expenses were
held constant in 1998. SDG&A increases were attributed to the
inclusion of Archway for ten weeks in 1998, contractual wage
increases, Mother's advertising campaign and Metz's new business
initiatives. Headcount reductions at both Mother's and Metz
reduced the level of SDG&A expenditures in 1998.
<PAGE> 12
Interest expense, net in 1998 decreased $0.5 million or 0.4% to
$134.0 million from $134.5 million in 1997. The decrease is
primarily due to reduced borrowings under the Revolving Credit
Facility throughout the year and interest earned on cash
equivalents, offset by the additional indebtedness due to the
accretion of interest on SFAC's Senior and Subordinated
Debentures.
Other expense, net was $3.1 million in 1998 compared to $4.7
million in 1997. The reduction is primarily due to a decrease in
the loss on disposals of property, plant, and equipment in 1998.
As a result of the above factors, net loss from continuing
operations decreased to $106.0 million in 1998 compared to $112.3
million in 1997.
The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.
Because of the Company's highly leveraged capital structure,
EBITDA is an important performance measure used by the Company
and its stakeholders. The Company believes that EBITDA provides
additional information for determining its ability to meet future
obligations and debt service requirements. However, EBITDA is
not indicative of operating income or cash flow from operations
as determined under generally accepted accounting principles.
The Company's EBITDA from continuing operations in 1998 and 1997
is calculated as follows:
(In thousands)
--------------
1998 1997
---- ----
Continuing Operations:
Operating profit $30,511 $27,358
Amortization 1,471 900
Depreciation 25,733 20,187
------- -------
57,715 48,445
Discontinued Operations (H&M only) 15,977 13,078
------- -------
$73,692 $61,523
======= =======
1997 Compared to 1996
Consolidated net sales from continuing operations increased 1.7%
to $718.1 million in 1997 compared to $706.0 million in 1996.
Net sales increased $12.1 million principally due to increased
cafe sales at Boudin and an additional week of sales due to the
operating units' fifty-three week year in 1997.
The Company's gross profit margin increased to 55.2% in 1997 from
53.5% in 1996 primarily driven by margin gains due to lower
commodity costs.
SDG&A expenses increased $17.6 million or 5.0% in 1997 to $368.0
million. Selling expenses increased primarily due to increased
store personnel for Boudin's new cafes and increased promotional
spending at Mother's. Distribution expenses increased due to the
inflationary cost increases in the DSD systems at Metz and
Mother's. General and administrative expenses decreased
primarily due to a reduction in SFC corporate overhead expenses
and non-recurring 1996 severance expense related to former senior
executives of the Company.
<PAGE> 13
Interest expense, net in 1997 increased $2.1 million or 1.6% to
$134.5 million from $132.4 million in 1996. This increase was
principally due to the additional indebtedness associated with
the accretion of interest on SFAC's Senior and Subordinated
Debentures.
Other expense, net was $4.7 million in 1997 compared to $9.1
million in 1996. The decrease is primarily due to a decrease in
the loss on disposals of property, plant, and equipment in 1997.
As a result of the above factors and the goodwill write-off of
$203.3 million in 1996, net loss from continuing operations
decreased to $112.3 million in 1997 compared to $325.8 million in
1996.
The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.
The extraordinary loss of $5.7 million in 1997 resulted from the
write-off of deferred financing costs associated with the
Revolving Credit Facility, Term Loan Facility and Accounts
Receivable Facility, each of which were refinanced in the first
quarter of 1998.
Liquidity and Capital Resources
In 1998, net cash used in operating activities totaled $44.8
million, including cash requirements of $19.6 million related to
continuing operations, $13.5 million related to working capital
and $11.7 million for discontinued businesses. Net of the
effects of acquisitions, the use of cash related to working
capital is primarily due to the reduction in accounts payable of
$8.5 million as the Company took advantage of certain discount
opportunities, a decrease in accrued expenses of $12.4 million
for expenditures associated with acquisition liabilities and
restructuring payments, offset by cash provided of $8.9 million
from increased funding under the accounts receivable facility.
Net cash used in operating activities in 1997 was $97.6 million.
The increase in net cash used in operating activities in 1997 as
compared to 1996 was primarily attributable to the increased cash
requirements of discontinued operations, payment of accrued
acquisition liabilities, restructuring payments, and reductions
in accounts payable and accrued expenses. In 1996, cash used by
operating activities of $8.3 million was principally due to the
increased loss from continuing operations offset by net cash
provided by discontinued operations and increased funding under
the accounts receivable facility.
Net cash used by investing activities totaled $239.6 million in
1998. The activity in 1998 was primarily attributable to the use of
$135.0 million to acquire businesses, the purchase of $35.4
million of transportation and production equipment previously
leased and planned capital expenditures. In 1997, cash provided
by investing activities of $344.7 million was primarily
attributable to the net proceeds from the divestiture of business
units, offset by capital expenditures. In 1996, cash provided by
investing activities of $56.8 million resulted from the net
proceeds from the sale of B&G Foods, Inc. and Burns & Ricker, Inc
and sale-leaseback transactions, offset by capital expenditures.
Net cash provided by financing activities amounted to $56.0
million in 1998, primarily due to additional borrowings under the
Company's Revolving Credit Facility, offset by refinancing costs
and scheduled payments on long-term debt. Net cash used in
financing activities amounted to $61.0 million in 1997 as a
paydown of revolving credit borrowings and normal payments on
long-term debt were partially offset by an issuance of redeemable
preferred stock. In 1996, cash used by financing activities of
$1.9 million was primarily due to payments of long-term debt and
refinancing costs slightly offset by increased revolver
borrowings.
<PAGE> 14
Based upon the above, the net increase (decrease) in cash in
1998, 1997 and 1996 was $(228.4) million, $186.1 million and
$46.5 million, respectively.
In March 1998, the Company refinanced its Revolving Credit
Facility, Term Loan Facility and Accounts Receivable Facility
with a new syndicate of financial institutions. The provisions
of the Revolving Credit Facility and Term Loan Facility contain
certain restrictive covenants that require the Company to
maintain specified leverage and interest coverage ratios and
other limitations regarding capital expenditures, sales of
assets, loans and investments and encumbrances of assets. In
addition, the Company's ability to incur additional indebtedness
is significantly limited under such facilities.
As of December 31, 1998, the Company has a cash balance of $5.9
million and has $75.0 million of borrowings under its $122.8
million Revolving Credit Facility. Outstanding letters of credit
of $10.2 million as of December 31, 1998 reduce available funds
under the facility.
In 1999, working capital requirements are projected to be lower
than 1998 and capital expenditures are planned to be
substantially reduced from 1998 levels. The Company will
continue to pursue selective bakery acquisitions. Management
believes that available funds and proceeds from the H&M sale
should be adequate to fund the Company's 1999 operations, capital
expenditures and acquisitions. However, there can be no
assurance that available funds will be adequate to meet such
needs.
The Revolving Credit Facility and Term Loan Facility mature in
January 2000. The Accounts Receivable Facility begins to
amortize December 15, 1999 and matures in January 2000.
Additionally, SFAC's 13% Senior Secured Discount Debentures are
currently scheduled to become cash pay interest obligations in
February 2000 and SFAC's ability to meet its cash debt service
obligations is dependent upon cash dividends from SFC.
Currently, due to covenant restrictions, SFC is unable to make
such dividends. By the year 2000, the Company's ability to meet
its cash debt service requirements will be dependent upon
refinancing a significant portion of its indebtedness.
Currently, the Company is pursuing an exchange offer more fully
described under Item 1- Business- Financing Structure and in Note
13 to the accompanying financial statements. The proposed
exchange offer would extend by four years the cash pay interest
date of SFAC's 13% Senior Secured Discount Debentures. If the exchange
offer is completed, the Company also plans to pursue
an extension of the term of SFC's Revolving Credit Facility, Term
Loan Facility and Accounts Receivable Facility. Management
believes that completion of an exchange offer and the extension
of its senior secured indebtedness are essential elements in
continuing to operate the Company's business as currently conducted.
There can be no assurance, however, that the Company will be successful
in completing the proposed exchange offer or extending the term
of its senior secured indebtedness.
Year 2000 Issues
The Year 2000 ("Y2K") issue is the result of computer programs
using a two-digit format, as opposed to four digits, to define
the applicable year. Such computer systems will be unable to
interpret dates beyond the year 1999, which could cause system
failures and other computer errors, resulting in business and
operational disruptions. In 1998, the Company developed a three-
phase program to address the Y2K issue as it relates to its
information systems and other computer-based operations. Phase I
was the identification of those Company systems which could be
impacted by the Y2K issue. Phase I was completed in 1998. Phase
II, which was substantially completed during 1998, included the
development and implementation of the corrective steps necessary
to ensure Y2K compliance. The Company anticipates the completion
of Phase III, the final testing of all systems potentially at
risk to ensure remediation of any Y2K issues, by mid-1999. The
Company has identified three major areas it believes are
essential for the successful resolution of any Y2K issues: (1)
<PAGE> 15
financial and informational system applications, (2)
manufacturing applications and (3) third-party relationships.
The Company has completed its review of its systems and has
contacted software suppliers to assess major areas of potential
exposure due to the Y2K issue. While a number of the Company's
systems have been determined to be Y2K compliant, certain
applications required remediation. The Company has substantially
completed its remediation and is currently replacing certain non-
Y2K compliant hardware and software as well as testing Y2K
software changes. Such efforts are expected to be completed by
the second quarter of 1999. In addition, the Company has
contacted key third parties, most of which expect to be Y2K
compliant by mid-1999.
The Company has already spent approximately $0.5 million to
identify, modify and replace those systems with likely exposure
to Y2K issues and expects to spend approximately an additional
$0.8 million to complete this compliance program.
The Company is not able to determine the potential impact of a
failure of some or all of its systems in the event its compliance
efforts are not completely successful, nor has the Company been
able to assess the potential effect on its operations and
financial condition caused by systems failures or disruptions to
any of its suppliers, customers, service providers or other major
third parties.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
During 1998, the Company entered into interest rate swap
agreements to reduce its exposure to changes in the cost of its
variable rate borrowings as required by its Term Loan Facility.
Under the interest rate swap agreements, which expire in January
2000, the Company receives floating rate payments from the
counterparties based upon the three-month LIBOR and makes fixed
rate payments at 5.753% and 5.765% to the respective
counterparties. The payments are calculated based upon a
notional principal amount of $100 million. The net differential
of interest to be paid or received under the remaining agreements
is recognized as incurred. In 1998, net payments totaling $30
thousand were made to the counterparties. Off-balance-sheet risk
from the interest rate swap agreements at December 31, 1998
includes the risk associated with changes in market values and
interest rates. The counterparties to the agreements are major
financial institutions.
Item 8. Financial Statements and Supplementary Data
See Index to Financial Information on page F-1.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
<PAGE> 16
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
- ----------
The number of persons presently serving on the Board of Directors
of SFAC is ten. Set forth below are the names, ages, other
positions and offices held and a brief account of the business
experience for each director. All members of the Board of
Directors serve until a successor is elected.
Name Age Other Positions
- --- --- ---------------
Robert B. Haas 51 Chairman of the Board of SFAC and
SFC since June 1993 and Chairman of
the Board of Haas Wheat & Partners
Incorporated, a private investment
firm ("Haas Wheat"), since 1992;
Chairman of the Board of Haas &
Partners Incorporated, a private
investment firm, since 1989. Mr.
Haas is Chairman of the Board of
Playtex Products, Inc., NBC
Acquisition Corp. and Nebraska Book
Company, Inc. and a Director of
Sybron International Corporation.
Thomas J. Baldwin 40 Director of SFAC and SFC since May
1996; Chief Executive Officer of
Christmas Corner, Inc. since January
1995 and President of PB Ventures
since July 1994. Mr. Baldwin was
also Managing Director of Invus
Group, Ltd. from 1990 through
February 1995.
Lawrence S. 43 Director of SFAC and SFC since
Benjamin February 1997; President and Chief
Executive Officer of SFAC and SFC
since January 1997; and President
and Chief Executive Officer of
Stella Foods, Inc. ("Stella") (a
former subsidiary of the Company)
from August, 1994 until December
1997. Mr. Benjamin held various
positions from 1986 through August
1994 with operating units of Kraft
General Foods, Inc., including
President of All American Gourmet
Company, Vice President of Kraft
Frozen Products Group and Vice
President and General Manager of the
Specialty Ingredients Unit of Kraft.
J. Taylor Crandall 45 Director of SFAC and SFC since
August 1993; Vice President and
Chief Financial Officer of Keystone,
Inc., an affiliate of the Company
("Keystone"), since October 1986 and
President, Director and sole
stockholder of Acadia MGP, Inc.
(managing general partner of Acadia
FW Partners, L.P., the sole general
partner of Acadia Partners, L.P., an
affiliate of the Company ("Acadia"))
since March 1992. Mr. Crandall also
is a Director of Bell & Howell
Company, Physicians Reliance
Network, Sunterra Corp., Integrated
Orthopedics and Washington Mutual.
<PAGE> 17
Jerry M. Meyer 58 Director of SFAC and SFC since June
1996. Mr. Meyer also is a Director
of Century Capital Financial, Inc.
and City National Bank in Kilgore
and Longview, Texas.
Andrew J. Nathanson 41 Director of SFAC and SFC since
August 1993 and Managing Director of
Donaldson, Lufkin & Jenrette
Securities Corporation since January
1991. Mr. Nathanson also is a
Director of Duane Reade, Inc.
David G. Offensend 45 Director of SFAC and SFC since
August 1993 and Founder of Evercore
Partners, LLC since October 1995.
Mr. Offensend was also Managing
Director of Oak Hill Partners, Inc.
and its predecessor from April 1990
to September 1995; Vice President
and Director of Acadia MGP, Inc.
from March 1992 to September 1995;
and Vice President of Keystone from
March 1992 to September 1995.
Marc C. Particelli 44 Director of SFAC and SFC since
November 1997 and Managing Director
of Oak Hill Partners, Inc. since
August 1997. Mr. Particelli was
Principal of Odyssey Partners L.P.
from October 1995 to August 1997 and
Senior Vice President of Booz Allen
& Hamilton Inc. prior to October
1995.
Anthony P. Scotto 52 Director of SFAC and SFC since
August 1993 and Managing Director of
Oak Hill Partners, Inc. and its
predecessor since March 1988 and
Consultant to Oak Hill Capital
Management, Inc. since November
1998. Mr. Scotto also is a Director
of Ivex Packaging Corporation,
Holophane Corporation and Grove
Worldwide LLC
Douglas D. Wheat 48 Director of SFAC and SFC since June
1993 and President of Haas Wheat
since November 1992; Mr. Wheat was
Co-Chairman of Grauer & Wheat, Inc.,
a private investment firm, from
April 1989 to October 1992. Mr.
Wheat also is a Director of Playtex
Products, Inc.
<PAGE> 18
Executive Officers
- ------------------
Set forth below are the names, ages, positions held and a brief
account of the business experience for each executive officer of
SFAC and certain executive officers of the Company's subsidiaries
who may be deemed executive officers of SFAC. No family
relationship exists among the identified executive officers.
Executive officers of SFAC are elected by and serve at the
discretion of the Board of Directors of SFAC.
Name Age Other Positions
- ---- --- ---------------
Lawrence S. 43 See Directors.
Benjamin
William D. Day 44 President and Chief Executive
Officer of H&M since August 1997.
Mr. Day held various positions with
Stella, including Vice President of
Operations from January 1995 through
August 1997. Prior to 1995, Mr. Day
held various positions with Kraft
General Foods, Inc.
Robert L. Fishbune 43 Vice President and Chief Financial
Officer of SFAC and SFC since May
1996. Mr. Fishbune was a Partner at
Coopers & Lybrand L.L.P. from 1988
until May 1996.
Henry J. Metz 48 Chairman of Metz since January 1999.
Mr. Metz was Chief Executive Officer
of Metz from August 1993 through
December 1998 and President of Metz
from February 1983 to April 1998.
Mr. Metz was Chief Operating Officer
of Metz from 1988 until August 1993.
Patrick J. O'Dea 37 President and Chief Executive Officer of
Mother's since April 1997. Mr. O'Dea
was Vice President, Retail of Stella
from 1995 to March 1997. Prior to
joining Stella, Mr. O'Dea spent 12 years
with Procter & Gamble, most recently as
Director of Marketing for its Snack Food
Business.
David E. Schreibman 31 Vice President and General Counsel -
Business Units of SFAC and SFC since
October 1998. Mr. Schreibman was Chief
Counsel - Mergers and Acquisitions for
the Sara Lee Corporation from October
1995 to October 1998. Prior to October
1995, Mr. Schreibman was in private law
practice with Sidley & Austin.
Lawrence J. Strain 46 President of Andre-Boudin Bakeries, Inc.
since January 1999. Vice President of
Bakery Operations from August 1990 to
December 1998. Prior to 1990, Mr.
Strain was Vice President and operating
partner of Boudin International, Inc.
<PAGE> 19
Item 11. Executive Compensation
Summary Compensation Table
The following table shows compensation for the years ended
December 31, 1998, December 31, 1997 and December 31, 1996 of Mr.
Benjamin, the President and Chief Executive Officer of SFAC and
SFC ("CEO"), and each of the four most highly compensated
executive officers (excluding the CEO) of the Company (including
its operating subsidiaries). The Company has an annual bonus
plan and a long-term incentive plan pursuant to which executive
officers of the Company may participate.
The compensation set forth in this table is repeated in Summary
Compensation Table listed in SFC's Annual Report on Form 10-K for
the year-ended December 31, 1998. The CEO and four most highly
compensated executive officers of the Company hold their
respective positions for both SFAC and SFC, however, these
officers are not compensated separately by each entity.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
Securities
Name and Underlying
Principal Other Annual Options/ All Other
Position Year Salary($) Bonus($) Compensation $ (1) SARs(#)(2) Compensation ($)
- -------- ---- -------- ---------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence S. 1998 625,000 1,071,000 (3) 89,000 - 101,000(4)
Benjamin 1997 560,000 1,015,000 84,000 1,600,000 89,000
President and 1996 320,000 72,000 - 50,000 -
Chief Executive
Officer of SFAC
and SFC
William D. Day 1998 300,000 528,000 - - 8,500(5)
President and 1997 209,000 215,000 31,000 - 600
Chief 1996 145,000 - - 15,000 400
Executive
Officer of H&M
Robert L. 1998 376,000 174,000 (3) 62,000 - 64,000(6)
Fishbune 1997 350,000 298,000 62,000 100,000 80,000
Vice President 1996 191,000 150,000 51,000 100,000 29,000
and Chief Financial
Officer of SFAC
and SFC
Henry J. Metz 1998 338,000 262,500 - - 500(7)
Chief Executive 1997 334,000 251,000 - - 1,000
Officer of 1996 320,000 240,000 93,000 50,000 72,000
Metz
Patrick J. O'Dea 1998 295,000 225,000 - - 30,300(8)
President and 1997 260,000 260,000 - - 207,000
Chief 1996 184,000 - - 20,000 400
Executive
Officer of Mother's
</TABLE>
(1) The amounts set forth for Mr. Benjamin include $71,000 and
$76,000 for tax reimbursement payments made in 1997 and
1998, respectively. The amounts for Mr. Fishbune in 1996,
1997 and 1998 include $43,000, $50,000 and $49,000,
respectively, for tax reimbursement payments. In 1997, Mr.
Day received $31,000 in tax reimbursement. In 1996, Mr.
Metz received $54,000 of tax reimbursement payments and
$39,000 for personal use of the Metz airplane.
(2) Options were generally granted to employees of the Company, including
the named executive officers, pursuant to the 1994 Stock
Option Plan, which was amended in February, 1995 (the "Stock
Option Plan"). Options granted are either non-qualified
stock options ("NQSOs") or incentive stock options ("ISOs").
Options granted generally have a ten year term.
<PAGE> 20
(3) The amounts set forth for Messrs. Benjamin and Fishbune do not
include certain bonus amounts which will be finalized following
the completion of the sale of H&M.
(4) In 1998, SFC made a $90,000 contribution to a retirement
account maintained by Mr. Benjamin. Mr. Benjamin (and Mr.
Fishbune) have established such accounts into which they
contribute up to 15% of base pay (on an after-tax basis) to
annuity or money-market funds. The Company provides
contributions to the employee's retirement account and a
reimbursement for taxes incurred as a result of such
contributions. The amounts set forth for 1998 for Mr.
Benjamin also include life insurance premiums ($3,000) and
personal financial planning services ($8,000).
(5) The amounts set forth for Mr. Day in 1998 include life
insurance premiums ($1,500) and reimbursement of moving and
relocation expenses ($7,000).
(6) In 1998, SFC made a $56,000 contribution to a retirement
account maintained by Mr. Fishbune (see note 3 for a
description of the account). The amounts set forth for 1998
for Mr. Fishbune also include life insurance premiums
($1,500) and personal financial planning services ($6,500).
(7) In 1998, Mr. Metz received a $500 reimbursement for
relocation expenses.
(8) The amounts set forth for Mr. O'Dea in 1998 include a
$30,000 relocation allowance and payment of $300 in life
insurance premiums.
Aggregated Options/SARs Exercised In Last Fiscal Year And Year-
End Option/SAR Values
The following table sets forth for the named executive officers
aggregated information concerning the number of shares of Common
Stock underlying unexercised stock options at December 31, 1998
and the value of unexercised, in-the-money options at that date.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------------ ------------------
Lawrence S. Benjamin 900,000/900,000 (1)
President and Chief
Executive Officer of
SFAC and SFC
William D. Day 18,750/6,250 (1)
President and Chief
Executive Officer of H&M
Robert L. Fishbune 100,000/100,000 (1)
Vice President
and Chief Financial
Officer of SFAC and
SFC
Henry J. Metz 153,750/31,250 (1)
Chief Executive Officer
of Metz
Patrick J. O'Dea 26,250/8,750 (1)
President and Chief
Executive Officer of
Mother's
<PAGE> 21
(1) All of the options listed in this table have an
exercise price of $0.021322 per share of Common
Stock. Due to the fact that the Common Stock is
not publicly traded, it is not currently possible
to calculate a precise value for the Common Stock.
In October 1997, the Board of Directors of SFAC
realized that certain previously granted stock
options had exercise prices which exceeded the
fair market value of the Common Stock. In view of
the diminished value, the Board of Directors of
SFAC determined that adjusting the exercise price
of stock options previously awarded to existing
employees (including the named executive officers)
was in the best interests of the Company. On
October 30, 1997, the Board of Directors of SFAC
repriced the exercise price of existing options
from $0.726703211 to $0.021322 per share of Common
Stock, which the Board of Directors of SFAC
determined was not below the fair market value of
the Common Stock.
Metz-Mother's Cake & Cookie Company Consolidated
Pension Plan for Non-Union Employees
The following table indicates the estimated annual
benefits payable upon retirement for the specified
compensation and years of service classifications under
the Metz-Mother's Cake & Cookie Company Consolidated
Pension Plan for Non-Union Employees (the "Pension
Plan"). Messrs. Metz and O'Dea are the only named
executive officers participating in the Pension Plan.
Pension Plan Table For The Pension Plan
Annual Final
Average
Compensation Years of Service
------------- ------------------------------------------
15 20 25 30 35
--- --- --- --- ---
125,000 $23,988 $32,547 $41,105 $49,564 $49,664
150,000 $29,369 $39,834 $50,299 $60,764 $60,764
175,000 $33,833 $46,466 $59,100 $71,734 $71,734
200,000 $37,495 $52,035 $66,575 $81,115 $81,115
225,000 $41,158 $57,604 $74,050 $90,497 $90,497
250,000 $42,746 $60,038 $77,291 $94,564 $94,564
300,000 $42,746 $60,018 $77,291 $94,564 $94,564
350,000 $42,746 $60,018 $77,291 $94,564 $94,564
400,000 $42,746 $60,018 $77,291 $94,564 $94,564
450,000 $42,746 $60,018 $77,291 $94,564 $94,564
500,000 $42,746 $60,018 $77,291 $94,564 $94,564
<PAGE> 22
Compensation under the Pension Plan generally refers to total
annual cash compensation (up to $160,000 for 1998, as limited by
the Code section 401(a)(17)), including pre-tax salary deferrals,
but excluding certain specified items such as compensation
received under the Metz Long-Term Incentive Compensation Plan,
the Mother's Long-Term Incentive Compensation Plan, the Metz
Annual Bonus Incentive Plan and the Mother's Annual Bonus
Incentive Plan.
The amount of compensation covered under the Plan in 1998 for
Messrs. Metz and O'Dea was $160,000 (as limited by Code section
401(a)(171). As of December 31, 1998, Mr. Metz had approximately
27 years of credited service under the Pension Plan and Mr. O'Dea
has approximately one and one-half years of credited service
under the Pension Plan. Benefits are computed on a straight life
annuity basis and are not subject to deduction for Social
Security or other offset amounts.
Certain Employment Arrangements
The following summaries of certain employment agreements and arrangements
are not necessarily complete and are subject to, and are qualified in
their entirety by reference to, the text of the agreements and
arrangements, copies of which are listed as exhibits hereto and have
either been filed as exhibits herewith or incorporated by
reference herein.
Employment Agreement with Mr. Benjamin
- -------------------------------------
SFAC, SFC and certain subsidiaries of SFAC and SFC (collectively, the
"Employers") entered into an Amended and Restated Executive
Employment Agreement dated as of March 15, 1999 with Mr. Benjamin
effective January 1, 1999. The Employment Agreement for Mr. Benjamin
provides for the initial term of employment to end June 30, 2001,
which term will automatically be renewed for additional one-year extension
periods unless the renewal is canceled by the Employers or Mr. Benjamin upon
six months prior notice. In addition, upon termination in certain
circumstances, the Employers will make post-termination salary and bonus
payments to such executive (or his estate). The Employment Agreement
provides for an initial base salary of $655,000 and an annual target
bonus of 75% of base salary upon attainment by the Company of specified
EBITDA targets.
Mr. Benjamin's Employment Agreement also provides that Mr.
Benjamin may be entitled to receive, under certain circumstances,
payments to offset (at least in part) certain tax consequences to
him as a result of his exercise of stock options, the receipt of
certain payments and/or his termination in connection with a
change of control of SFAC or SFC. These payments are limited in some
circumstances to the tax savings actually realized by the Employers
and in other circumstances by various dollar amounts.
Mr. Benjamin has agreed to be bound by certain confidentiality,
non-competition and non-solicitation restrictions set forth in
his Employment Agreement.
Employment Agreement with Mr. Fishbune
- ---------------------------------------
SFAC, SFC and certain subsidiaries of SFAC and SFC
(collectively, the "Employers") entered into an Amended and Restated
Executive Employment Agreement dated as of March 15, 1999 with
Mr. Fishbune effective January 1, 1999. The Employment Agreement
for Mr. Fishbune provides for the initial term of employment to end December
31, 2000, which term will automatically be renewed for additional one-
year extension periods unless the renewal is canceled by the Employers
or Mr. Fishbune upon six months' prior notice. In addition, upon
termination in certain circumstances, the Employers will make post-
termination salary and bonus payments to such executive (or his estate).
The Employment Agreement provides for an
<PAGE> 23
initial base salary of $400,000 and an annual target bonus of
75% of base salary upon attainment by the Company of specified
EBITDA targets.
Mr. Fishbune's Employment Agreement also provides that Mr.
Fishbune may be entitled to receive, under certain circumstances,
payments to offset (at least in part) certain tax consequences to
him as a result of his exercise of stock options, the receipt of
certain payments and/or his termination in connection with a
change of control of SFAC or SFC. These payments are limited in
some circumstances to the tax savings actually realized by
the Employers and in other circumstances by various dollar amounts.
Mr. Fishbune has agreed to be bound by certain confidentiality,
non-competition and non-solicitation restrictions set forth in
his Employment Agreement.
Employment Agreement with Mr. O'Dea
- ----------------------------------
SFC, Mother's and MCC-DSD Holdings, Inc. (parent company of
Mother's and a wholly owned subsidiary of SFC) entered into an
Amended and Restated Executive Employment Agreement with Mr.
O'Dea effective July 15, 1997. The Employment Agreement for Mr.
O'Dea provides for the initial term of employment to end December
31, 2000, subject to earlier termination under certain enumerated
circumstances. The Employment Agreement provides for an initial
base salary of $280,000 and an annual target bonus of 75% of base
salary upon attainment by the Company of specified performance
targets. In addition, upon termination in certain circumstances,
the Employers will make post-termination salary and bonus payments
to such executive (or his estate).
Mr. O'Dea has agreed to be bound by certain confidentiality, non-
competition and non-solicitation restrictions set forth in his
Employment Agreement.
Severance Agreement with Mr. Day
- --------------------------------
Mr. Day entered into a Severance Agreement with SFC and H&M as of
August 29, 1997. The Severance Agreement provides that upon a
sale or change in control of H&M, that results in a termination
of Mr. Day's employment with H&M, H&M will pay Mr. Day his unpaid
base salary and payments of his base salary for the 12 month
period following such termination.
Divestiture Award Agreements
- ----------------------------
Certain of the executive officers and other key employees of the
Company and its subsidiaries, including Messrs. Benjamin, Day,
Fishbune and Metz have entered into Divestiture Award Agreements
with the Company. Pursuant to these agreements, a recipient will
receive or has received a percentage of the net cash proceeds
received by the Company (after deducting fees and expenses) in
the event of a sale of various subsidiaries of the Company.
Change in Control Arrangements
- ------------------------------
Under the Mother's Amended and Restated Supplemental Long-Term
Incentive Compensation Plan, adopted in 1999 (the "Mother's LTIP"),
certain management employees, which include certain named executive
officers, are eligible to receive awards based upon the total value of
Mother's. Determination of award payments under the Mother's
LTIP will be made on June 1, 2001 or earlier in the event of a
change in control. The amounts of the awards under the
Mother's LTIP are offset, in certain cases, by amounts payable
under certain of the Deferred Bonus Agreements described below.
<PAGE> 24
Certain of the executive officers and other key employees of the
Company, including Messrs. Benjamin, Fishbune, Day, Metz and
O'Dea, entered into Deferred Bonus Agreements with the Company,
pursuant to which these employees are entitled to receive
deferred bonus payments in amounts equal to their bonus payments
under the Company's annual bonus plans. Payments of amounts
vested that relate to bonuses earned through 1998 will be made on
March 31, 1999 and January 15, 2000. The payment of amounts vested
that relate to bonuses earned through 1998 that are scheduled to be
paid on March 31, 1999 will be waived by Messrs. Benjamin and
Fishbune upon receipt of payments under the Divestiture Award
Agreements with such executive officers relating to H&M described
above. In addition, with respect to Messrs. Benjamin, Fishbune
and O'Dea, payments of amounts vested that relate to bonuses
that may be earned for 1999 and 2000 will be made on March 31, 2001.
However, in the event of a change in control, the awards that
relate to bonuses earned prior to the change in control vest
immediately and will be paid within 90 days.
Compensation of Directors
- -------------------------
Employees of SFAC, SFC or their subsidiaries do not receive any
additional compensation for services as a director or on
committees of the board of directors of SFAC, SFC or any of their
subsidiaries. Directors of SFAC, SFC or their subsidiaries are
reimbursed for reasonable out-of-pocket expenses incurred in
connection with attendance at Board of Directors and committee
meetings and are covered by director's liability insurance. Each
of Messrs. Baldwin and Meyer also receive directors fees of
$20,000 annually.
Compensation Committee Interlocks and Insider Participation In
- --------------------------------------------------------------
Compensation Decisions
- ----------------------
J. Taylor Crandall, Robert B. Haas, Anthony P. Scotto and Douglas
D. Wheat are all of the members of the compensation committee of
the Board of Directors of each of SFAC and SFC ("Compensation
Committee"). Each of Messrs. Crandall, Haas, Scotto and Wheat
owns a beneficial interest in or is an executive officer of one
or more of the entities that have entered into financial advisory
arrangements with SFC as described below.
Messrs. Haas and Wheat are controlling shareholders and are
Chairman of the Board and President, respectively, of Haas Wheat.
Haas Wheat was a party to a financial advisory agreement with SFC
pursuant to which Haas Wheat agreed to provide certain financial
advisory and other consulting services to SFC for a five-year
period in consideration for an annual fee of $700,000. The Board
of Directors approved a one-year extension of the agreement in
August 1998.
J. Taylor Crandall is Vice President and Chief Financial Officer
of Keystone and is President, Director and sole stockholder of
Acadia MGP, Inc., the managing general partner of Acadia FW
Partners, L.P., the sole general partner of Acadia. Mr. Scotto
is a Managing Director of Oak Hill Partners, Inc. and its
predecessor. Each of Penobscot-MB Partners ("Penobscot"), an
affiliate of Acadia, and Keystone entered into a five-year
financial advisory agreement with SFC, pursuant to which they
were paid an annual fee, $200,000 per year in the case of
Penobscot and $100,000 per year in the case of Keystone. The
Board of Directors approved a one-year extension of the agreement
in August 1998.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, as of March 17, 1999, certain
information regarding the beneficial ownership of voting
securities of SFAC by (i) each person known by SFAC to be the
beneficial owner of more than 5% of any class of SFAC's voting
securities, (ii) each of the directors and named executive
officers of SFAC, and (iii) all executive officers and directors
of SFAC.
<PAGE> 25
Percentage of
Name and Address of Number of Shares Outstanding Shares
Beneficial Owner of Common Stock of Common Stock (a)
- ------------------- ----------------- --------------------
Acadia Partners, L.P. (b) 27,063,347 40.86%
201 Main Street
Fort Worth, Texas 76102
Keystone, Inc. (c) 9,358,502 14.13%
201 Main Street
Fort Worth, Texas 76102
Artal Luxembourg S.A. (d) 5,959,327 9.49%
Aandorenstraat 2
3300 Tienen, Belgium
Robert B. Haas (e) 5,881,496 9.26%
300 Crescent Court,
Suite 1700
Dallas, Texas 75201
UBS Capital LLC (f) 5,366,913 8.55%
299 Park Avenue
New York, New York 10171
DLJ Merchant Banking 3,812,562 6.07%
Partners, L.P. (g)
277 Park Avenue
New York, New York 10172
Thomas J. Baldwin -- --
J. Taylor Crandall (b) -- --
Jerry M. Meyer -- --
Andrew J. Nathanson (g) -- --
David G. Offensend -- --
Marc C. Particelli -- --
Anthony P. Scotto (b) -- --
Douglas D. Wheat (h) 2,396,776 3.82%
Henry J. Metz (i) 1,217,750 1.93%
Lawrence S. Benjamin (j) 1,001,771 1.57%
William D. Day (k) 25,000 *
Robert L. Fishbune (l) 125,000 *
Patrick J. O'Dea (m) 35,000 *
<PAGE> 26
All directors and 10,732,793 16.54%
executive officers
as a group (b)(g)
_________________
* Less than 1%
(a) The holdings of all of the stockholders listed in this table
may be diluted by the exercise of warrants set forth in footnotes
(b), (c) and (e) below or options which, under employment
arrangements and stock option plans approved by SFAC and SFC,
may be granted to certain employees. The Stock Option Plan
makes available to certain operating company employees and
headquarter employees options to purchase 5,852,917 shares of
Common Stock.
(b) Acadia's shares of Common Stock include shares owned by FWHY-
Coinvestments VII Partners, L.P. ("FWHY"), SFC Partners,
L.P. ("SFCP") and SFC Partners II, L.P. ("SFCII"), parties
related to Acadia. Acadia's shares of Common Stock also
include 3,467,002 shares of Common Stock issuable upon the
exercise of 8,775 Warrants issued by SFAC in favor of Acadia
pursuant to a Warrant Agreement dated June 27, 1997. See
"Item 13 - Certain Relationships and Related Transactions."
The general partner of Acadia is Acadia FW Partners, L.P.
("Acadia FW"), the managing general partner of which is
Acadia MGP, Inc. ("Acadia MGP"), a corporation controlled by
J. Taylor Crandall. In addition, Mr. Crandall controls
Group 31, Inc., the general partner of each of FWHY, SFCP
and SFCII. Therefore, Acadia FW and Acadia MGP may be
deemed to beneficially own the shares of Common Stock held
by Acadia, SFCP, SFCII and FWHY. Mr. Scotto is a limited
partner of SFCII and disclaims beneficial ownership of the
shares of Common Stock held by SFCII. The address of Acadia
FW. Acadia MGP, FWHY, SFCP, SFCII and Mr. Crandall is 201
Main Street, Fort Worth, Texas 76102.
(c) Keystone's shares of Common Stock include 3,467,002 shares
of Common Stock issuable upon the exercise of 8,775 Warrants
issued by SFAC in favor of Keystone pursuant to a Warrant
Agreement dated June 27, 1997. See "Item 13-Certain
Relationships and Related Transactions." Keystone is
controlled by Robert M. Bass. As such, Mr. Bass may be
deemed to beneficially own the shares of Common Stock held
by Keystone. The address of Mr. Bass and Keystone is 201
Main Street, Fort Worth, Texas 76102.
(d) The parent entity of Artal Luxembourg S.A. is Artal Group
S.A., a Luxembourg company.
(e) Mr. Haas' shares of Common Stock include 101,011 shares
owned by HWP. Specialty Subsidiary Partners, 25,253 shares
owned by HWP Specialty Subsidiary Partners II, and 1,000,000
shares owned by the Haas Family Long-Term Trust. Mr. Haas'
shares of Common Stock also include 770,445 shares of Common
Stock issuable upon the exercise of 1,950 Warrants issued by SFAC
in favor of Mr. Haas pursuant to a Warrant Agreement dated
September 19, 1997. See "Item 13 - Certain Relationships and
Related Transactions." The shares owned by HWP Specialty
Subsidiary Partners and HWP Specialty Subsidiary Partners II
also are beneficially owned by Mr. Douglas Wheat.
(f) Union Bank of Switzerland owns indirectly 100% of the
capital stock of UBS Capital LLC.
(g) The following entities hold shares of Common Stock: DLJ
Merchant Banking Partners, L.P. ("DLJMBP"); DLJ
International Partners, C.V. ("DLJIP"); DLJ Offshore
Partners, C.V. ("DLJOP"); DLJ Merchant Banking Funds, Inc.
("DLJMBF"); DLJ First ESC L.L.C. ("DLJESC"), an "employee
securities corporation" (as defined in the Investment
Company Act of 1940) formed to hold securities of employees
<PAGE> 27
of DLJMBP, DLJIP, DLJOP and DLJESC); and Donaldson, Lufkin &
Jenrette Securities Corporation (collectively, the "DLJ
Entities"). Except for his allocable portion of the shares
held by DLJESC, Mr. Nathanson disclaims beneficial ownership
of the shares of Common Stock held by the DLJ Entities.
(h) Mr. Wheat's shares of Common Stock include 101,011 shares
owned by HWP Specialty Subsidiary Partners and 25,253 shares
owned by HWP Specialty Subsidiary Partners II, which also
are beneficially owned by Mr. Robert B. Haas and 150,000
shares owned by the Carrol Wheat Jr. Children's Trust, for
which Mr. Wheat serves as a trustee.
(i) Mr. Metz's shares of Common Stock include 185,000 shares
that Mr. Metz has the right to acquire upon the exercise of
options.
(j) Mr. Benjamin's shares of Common Stock include 925,000 shares
that Mr. Benjamin has the right to acquire upon the exercise
of options.
(k) Mr. Day's shares of Common Stock include 25,000 shares that Mr. Day
has the right to acquire upon the exercise of options.
(l) Mr. Fishbune's shares of Common Stock include 125,000 shares
that Mr. Fishbune has the right to acquire upon the exercise of
of options.
(m) Mr. O'Dea's shares of Common Stock include 35,000 shares that
Mr. O'Dea has the right to acquire upon the exercise of options.
Item 13. Certain Relationships and Related Transactions
Stockholders' Agreement
Simultaneously with the closing of the Acquisition, Haas Wheat,
Acadia, Keystone, UBS Capital, Artal Luxembourg S.A. and DLJMBP
(in some cases acting through affiliates) (collectively, with
certain of their affiliates, the "Principal Stockholders")
acquired Common Stock of SFAC at a price of $0.726703211 per
share. On August 16, 1993, the Principal Stockholders entered
into a stockholders' agreement governing the relationships among
such stockholders (the "Stockholders' Agreement"). Subsequent
transferees of the Common Stock that are affiliates of the
Principal Stockholders or members of management have also agreed
to be bound by the Stockholders' Agreement. The Stockholders'
Agreement imposes on the parties thereto certain restrictions and
conditions on the transfer of Common Stock, subject to certain
exceptions. The Stockholders' Agreement provides the parties
with the right to participate in certain sales of Common Stock by
other parties. The parties to the Stockholders' Agreement were
granted certain preemptive rights with respect to issuance of
Common Stock by SFAC and the right, in certain circumstances, to
have their Common Stock registered for public sale under the
Securities Act of 1933. The Stockholders' Agreement also sets
forth provisions relating to corporate governance of SFAC.
Pursuant to the Stockholders' Agreement, Acadia has the right to nominate
three Directors, Keystone has the right to nominate two Directors, Haas Wheat
has the right to nominate two Directors, and UBS Capital, Artal Belgium S.A.
and DLJMBP each have the right to nominate one Director. Under certain
conditions Acadia and Keystone can increase the number of
Directors they can nominate.
<PAGE> 28
Certain Transactions with Stockholders of SFAC
Certain of the Principal Stockholders and their affiliates were
paid financial advisory fees by the Company in 1998 pursuant to
financial advisory agreements with the Company. In 1998, the
Board of Directors of SFC extended the terms of the financial
advisory agreements between SFC and each of Haas Wheat, Penobscot
and Keystone for one year. In 1998, SFC paid Haas Wheat an
annual fee of $700,000, Penobscot an annual
fee of $200,000 and Keystone an annual fee of $100,000. See
"Item 11 -Executive Compensation -Compensation Committee Interlocks
and Insider Participation in Compensation Decisions."
In November, 1996, SF Leasing L.L.C. (of which Acadia and
Keystone each owns a 45% interest and Haas Wheat owns a 10%
interest) purchased from Metz all of the equipment at a
manufacturing facility for $3,222,000 (which price was based on
the appraised value of such equipment), and leased such equipment
back to Metz in a transaction that was deemed by the parties to
be equivalent to an arms length transaction. In September 1998,
SF Leasing, L.L.C. resold to Metz all of the equipment at that
manufacturing facility for $3,013,381. During 1998, SF Leasing
L.L.C. received $614,439 in rental payments from Metz. The Board
of Directors of the Company determined that the foregoing
transactions were on terms no less favorable to the Company and
Metz than could otherwise have been obtained by the Company and
Metz in a transaction with an unaffiliated third party.
In December 1998, the Company retained Donaldson, Lufkin and
Jenrette Securities Corporation ("DLJ", an affiliate of DLJMBP)
to serve as the Company's financial advisor in connection with
its proposed sale of H&M. Upon completion of the sale of H&M, the
Company will pay DLJ approximately $1,600,000 as compensation for
such financial advisory services.
In March 1998, the Company paid DLJ $5,092,000 in connection with
the Company's refinancing of its Revolving Credit Facility and
Term Loan Facility. DLJ acts as the Syndication Agent and
Collateral Agent under both Loan Agreements. In 1998, the
Company paid DLJ a $100,000 retainer in connection with the
Company's currently outstanding Exchange Offers.
Tax Sharing Agreement
SFAC and SFC have entered into a tax sharing agreement pursuant
to which SFC agreed to pay to SFAC its pro rata share of SFAC's
consolidated income tax liability. SFC and each of its
subsidiaries are also parties to a tax sharing agreement pursuant
to which each such subsidiary has agreed to pay to SFC its pro
rata share of SFC's consolidated income tax liability.
<PAGE> 29
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements
Reference is made to the information set forth in Part II,
Item 8 of this Report, which information is incorporated
herein by reference.
(a)(2) Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission have been omitted because they are not required
under the related instructions, are not applicable, or the
information has been provided in the consolidated financial
statements, the notes thereto or the related financial statement
schedule.
(b) Reports on Form 8-K
The following Reports on Form 8-K were filed by
the Company during the fourth quarter of 1998 and
the first quarter of 1999:
(1) A Current Report on Form 8-K dated October
14, 1998 was filed under Item 5 - Other
Events and Item 7 - Exhibits: Announcement
of execution of definitive agreements to
acquire Archway and of commencement of the
Exchange Offers.
(2) A Current Report on Form 8-K dated October
26, 1998 was filed under Item 5 - Other
Events: Announcement of the completion of the
acquisition of Archway.
(3) A Current Report on Form 8-K dated March 10, 1999 was
filed under Item 5 - Other Events and Item 7 - Exhibits:
Announcement of execution of definitive agreement to sell H&M.
(c) Exhibits
Exhibit
Number Description of Document
------- ------------------------
3.1 Amended and Restated Certificate of
Incorporation of SFAC. (Incorporated by
reference to Exhibit 3.1 to SFAC's
Report on Form 10-Q for the Quarter
ended June 30, 1997)
3.2 Amended and Restated By-Laws of SFAC.
(Incorporated by reference to Exhibit
3.2 to SFAC's Report on Form 10-K for
the year ended December 31, 1994)
4.1 Indenture, dated as of August 16, 1993,
between SFAC and United States Trust
Company of New York, as Trustee
("Trustee"), governing the 13% Senior
Secured Discount Debentures due 2005.
(Incorporated by reference to Exhibit
4.1 to SFAC's Registration Statement on
Form S-4 (Registration No. 33-68958))
<PAGE> 30
4.2 Amendment No. 1 to the Indenture
governing the 13% Senior Secured
Discount Debentures, dated as of October
28, 1994, between SFAC and the Trustee.
(Incorporated by reference to Exhibit
10.49 to SFAC's Report on Form 10-Q for
the Quarter ended September 30, 1994)
4.3 Registration Rights Agreement, dated as
of August 16, 1993, among SFAC, SFC and
the purchasers named therein.
(Incorporated by reference to Exhibit
4.3 to SFAC's Registration Statement on
Form S-4 (Registration No. 33-68958))
4.4 Form of 11% Senior Subordinated Discount Debentures
issued by SFAC. (Incorporated by reference to Exhibit 10.27
to SFAC's Registration Statement on Form S-4 (Registration
No. 33-68958))
4.5 Form of Amendment No. 1, dated as of
October 28, 1994, to the 11% Senior
Subordinated Discount Debentures issued
by SFAC. (Incorporated by reference to
Exhibit 10.50 to SFAC's Report on Form
10-Q for the Quarter ended September 30,
1994)
4.6 Indenture, dated as of August 16, 1993,
between SFC and the Trustee governing
the 10 1/4% Senior Notes due 2001.
(Incorporated by reference to Exhibit
10.28 to SFC's Registration Statement on
Form S-4 (Registration No. 33-68956))
4.7 Amendment No. 1 to the Indenture
governing the 10 1/4% Senior Notes due
2001, dated as of October 28, 1994,
between SFC and the Trustee.
(Incorporated by reference to Exhibit
10.47 to SFAC's Report on Form 10-Q for
the Quarter ended September 30, 1994)
4.8 Indenture, dated as of August 16, 1993,
between SFC and the Trustee governing
the 11 1/4% Senior Subordinated Notes
due 2003. (Incorporated by reference to
Exhibit 10.29 to SFAC's Registration
Statement on Form S-4 (Registration No.
33-68958))
4.9 Amendment No. 1 to the Indenture
governing the 11 1/4% Senior
Subordinated Notes due 2003, dated as of
October 28, 1994, between SFC and the
Trustee. (Incorporated by reference to
Exhibit 10.48 to SFAC's Report on Form
10-Q for the Quarter ended September 30,
1994)
4.10 Indenture, dated as of July 17, 1995,
between SFC and the Trustee governing
the 11 1/8% Senior Notes due 2002.
(Incorporated by reference to Exhibit to
4.6 SFAC's Report on Form 10-Q for the
Quarter ended June 30, 1995)
4.11 Registration Rights Agreement, dated as
of July 17, 1995, among SFC and the
initial purchasers of the 11 1/8% Senior
Notes due 2002 issued by SFC.
(Incorporated by reference to Exhibit
4.7 to SFC's Report on Form 10-Q for the
Quarter ended June 30, 1995)
10.1 Stock Purchase Agreement, dated as of
August 9, 1993, among the sellers party
thereto and SFC. (Incorporated by
reference to Exhibit 10.1 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
<PAGE> 31
10.2 Amendment No. 1, dated as of August 16,
1993, to the Stock Purchase Agreement
among the sellers party thereto and SFC.
(Incorporated by reference to Exhibit
10.2 to SFAC's Registration Statement on
Form S-4 (Registration No. 33-68958))
10.3 Security Escrow Agreement, dated as of
August 16, 1993, by and among the
sellers party thereto and SFC.
(Incorporated by reference to Exhibit
10.3 to SFAC's Registration Statement on
Form S-4 (Registration No. 33-68958))
10.4 Purchase Agreement, dated as of August
16, 1993, among SFAC, SFC and the
purchasers named therein. (Incorporated
by reference to Exhibit 10.4 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.5 Securities Purchase Agreement, dated as
of August 16, 1993, among SFAC and the
purchasers named therein. (Incorporated
by reference to Exhibit 10.5 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.6 Amendment No. 1 to Securities Purchase
Agreement, dated as of December 20,
1993, among SFAC and the purchasers
named therein. (Incorporated by
reference to Exhibit 10.6 to SFAC's
Report on Form 10-K for the year ended
December 31, 1993)
10.7 Lock-Up Letter, dated as of August 16,
1993, among SFAC and the holders of the
Subordinated Debentures named therein.
(Incorporated by reference to Exhibit
10.6 to SFAC's Registration Statement on
Form S-4 (Registration No. 33-68958))
10.8 Stockholders Agreement, dated as of
August 16, 1993, among SFAC and certain
of its stockholders. (Incorporated by
reference to Exhibit 10.7 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.9 Amendment No. 1, dated as of December
20, 1993, to Stockholders Agreement
among SFAC and certain of its
stockholders. (Incorporated by
reference to Exhibit 10.9 to SFAC's
Report on Form 10-K for the year ended
December 31, 1993)
10.10 Stockholders Agreement, dated as of
August 16, 1993, among SFAC and its
stockholders. (Incorporated by
reference to Exhibit 10.8 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.11 Amendment No. 1 to the Stockholders
Agreement, dated as of August 19, 1994,
among SFAC and its stockholders.
(Incorporated by reference to Exhibit
10.51 to SFAC's Report on Form 10-Q for
the Quarter ended September 30, 1994)
10.12 Registration Rights Agreement, dated as
of August 16, 1993, among SFAC and the
holders of the Subordinated Debentures
named therein. (Incorporated by
reference to Exhibit 10.9 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.13 Financial Advisory Agreement, dated as
of August 16, 1993, among SFAC, SFC and
Penobscot. (Incorporated by reference
to Exhibit 10.10 to SFAC's Registration
Statement on Form S-4 (Registration No.
33-68758))
<PAGE> 32
10.14 Financial Advisory Agreement, dated as
of August 16, 1993, among SFAC, SFC and
Keystone. (Incorporated by reference to
Exhibit 10.11 to the SFAC's Registration
Statement on Form S-4 (Registration No.
33-68958))
10.15 Financial Advisory Agreement, dated as
of August 16, 1993, among SFAC, SFC and
Haas Wheat. (Incorporated by reference
to Exhibit 10.12 to SFAC's Registration
Statement on Form S-4 (Registration No.
33-68958))
10.16 Financial Advisory Agreement, dated as
of August 16, 1993, among SFAC, SFC and
UBS Capital. (Incorporated by reference
to Exhibit 10.13 to SFAC's Registration
Statement on Form S-4 (Registration No.
33-68958))
10.17 Financing Commitment Fee Agreement,
dated as of August 16, 1993, among SFAC,
SFC and Acadia. (Incorporated by
reference to Exhibit 10.14 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.18 Financing Commitment Fee Agreement,
dated as of August 16, 1993, among SFAC,
SFC and Keystone. (Incorporated by
reference to Exhibit 10.15 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.19 Financing Commitment Fee Agreement,
dated as of August 16, 1993, among SFAC,
SFC and UBS Capital. (Incorporated by
reference to Exhibit 10.16 to SFAC's
Registration Statement on Form S-4
(Registration No. 33-68958))
10.20 Tax Sharing Agreement, dated as of
August 16, 1993, among SFAC, SFC and
certain subsidiaries of SFC.
(Incorporated by reference to Exhibit
10.17 to SFAC's Registration Statement
on Form S-4 (Registration No. 33-68958))
10.21 Tax Sharing Agreement, dated as of
August 16, 1993, between SFAC and SFC.
(Incorporated by reference to Exhibit
10.18 to SFAC's Registration Statement
on Form S-4 (Registration No. 33-68958))
10.22 Corporate Services Agreement, dated as
of June 30, 1994, between SFAC and SFC.
(Incorporated by reference to Exhibit
10.14 to SFC's Report on Form 10-K for
the year ended December 31, 1994)
10.23 Equity Investment Agreement, dated as of
May 13, 1997, by and among SFAC, Acadia,
Keystone and Haas Wheat. (Incorporated
by reference to Exhibit 10.93 to SFAC's
Report on Form 10-Q for the Quarter
ended June 30, 1997)
10.24 Term Loan Agreement, dated as of March
16, 1998, among SFC, various financial
institutions, DLJ Capital Funding, Inc.,
as syndication agent, and ABN Amro Bank
N.V., as administrative agent.
(Incorporated by reference to Exhibit
10.24 to SFAC's Report on Form 10-K for
the year ended December 31, 1997)
10.25 Revolving Credit Agreement, dated as of
March 16, 1998, among certain
subsidiaries of SFC, various financial
institutions, DLJ Capital Funding, Inc.,
as syndication agent, and ABN Amro Bank
N.V., as administrative agent.
(Incorporated by reference to Exhibit
10.25 to SFAC's Report on Form 10-K for
the year ended December 31, 1997)
<PAGE> 33
10.26 Pooling Agreement, dated as of November
16, 1994, by and among Specialty Foods
Finance Corporation ("SFFC"), SFC, as
Master Servicer, and Chase Manhattan
Bank ("Chase"), as Trustee (the "Pooling
Agreement"). (Incorporated by reference
to Exhibit 10.29 to SFAC's Report on
Form 10-K for the year ended December
31, 1994)
10.27 Series 1994-1 Supplement to the Pooling
Agreement, dated as of November 16,
1994, by and among SFFC, SFC, as Master
Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.30 to SFAC's Report on Form 10-K for
the year ended December 31, 1994)
10.28 Series 1996-1 Supplement to the Pooling
Agreement, dated as of August 1, 1996,
by and among SFFC, SFC, as Master
Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.67 to SFAC's Report on Form 10-Q for
the Quarter ended September 28, 1996)
10.29 Amendment No. 1 Series to 1996-1
Supplement, dated as of November 29,
1996, by and among SFFC, SFC, as Master
Servicer, and Chase, as initial VFC
Certificate holder, and Chase, as
Trustee. (Incorporated by reference to
Exhibit 10.34 to SFAC's Report on Form
10-K for the year ended December 31,
1996)
10.30 Amendment No. 2 to Series 1996-1
Supplement, dated as of December 13,
1996, by and among SFFC, SFC, as Master
Servicer, and Chase, as initial VFC
Certificate holder, and Chase, as
Trustee. (Incorporated by reference to
Exhibit 10.26 to SFC's Report on Form 10-
K for the year ended December 31, 1996)
10.31 Series 1997-1 Supplement to the Pooling
Agreement, dated as of January 31, 1997,
by and among SFFC, SFC, as Master
Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.36 to SFAC's Report on Form 10-K for
the year ended December 31, 1996)
10.32 Series 1998-1 Certificate Purchase
Agreement, dated as of March 31, 1998,
by and among SFFC, SFC, as Master
Servicer and Bankers Trust Company, as
Agent. (Incorporated by reference to
Exhibit 10.78 to SFAC's Report on Form
10-Q for the Quarter ended March 31,
1998)
10.33 Series 1998-1 Supplement, dated as of
March 31, 1998, to the Pooling
Agreement, dated as of November 16,
1994, by and among SFFC, SFC, as Master
Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.79 to SFAC's Report on Form 10-Q for
the Quarter ended March 31, 1998)
10.34 SFC Master Trust Amendment No. 5 to each
of the Pooling Agreement and Receivables
Sale Agreement and Amendment No. 1 to
the Servicing Agreement. (Incorporated
by reference to Exhibit 10.80 to SFAC's
Report on Form 10-Q for the Quarter
ended March 31, 1998)
<PAGE> 34
10.35 Amendment to Series 1998-1 Supplement,
dated as of March 31, 1998, by and among
SFFC, SFC, as Master Servicer, Chase, as
Trustee, and Bankers Trust, as the sole
VFC Certificate holder under that
certain Certificate Purchase Agreement.
(Incorporated by reference to Exhibit
10.81 to SFAC's Report on Form 10-Q for
the Quarter ended March 31, 1998)
10.36 Performance Guaranty, dated as of March
31, 1998, by and among SFC, as Master
Servicer, in favor of SFFC.
(Incorporated by reference to Exhibit
10.82 to SFAC's Report on Form 10-Q for
the Quarter ended March 31, 1998)
10.37 Amended and Restated Receivables Sales
Agreement, dated as of November 16,
1994, by and among SFFC, SFC, as Master
Servicer, and certain subsidiaries to
SFC. (Incorporated by reference to
Exhibit 10.31 to SFAC's Report on Form
10-K for the year ended December 31,
1994)
10.38 Servicing Agreement, dated as of
November 16, 1994, by and among SFFC,
SFC, as Master Servicer, and certain
subsidiaries of SFC. (Incorporated by
reference to Exhibit 10.32 to SFAC's
Report on Form 10-K for the year ended
December 31, 1994)
10.39 Amendment No. 1 to SFC Master Trust
Pooling and Servicing Agreements, dated
as of December 16, 1996, by and among
SFFC, SFC, a Master Servicer, and Chase,
as Trustee. (Incorporated by reference
to Exhibit 10.38 to SFAC's Report on
Form 10-K for the year ended December
31, 1996)
10.40 Amendment No. 2 to SFC Master Trust
Pooling Agreement, dated as of December
27, 1996, by and among SFFC, SFC, as
Master Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.40 to SFAC's Report on Form 10-K for
the year ended December 31, 1996)
10.41 Amendment No. 3 to SFC Master Trust
Pooling Agreement, dated as of February
24, 1997, by and among SFFC, SFC, as
Master Servicer, and Chase, as Trustee.
(Incorporated by reference to Exhibit
10.41 to SFAC's Report on Form 10-K for
the year ended December 31, 1996)
10.42 Amendment No. 1 to Amended and Restated
Receivables Sale Agreement, dated as of
December 16, 1996, by and among SFFC,
SFC, as Master Servicer, and certain
subsidiaries of SFC. (Incorporated by
reference to Exhibit 10.42 to SFAC's
Report on Form 10-K for the year ended
December 31, 1996)
10.43 Amendment No. 2 to Amended and Restated
Receivables Sale Agreement, dated as of
December 27, 1996, by and among SFFC,
SFC, as Master Servicer, and certain
subsidiaries of SFC. (Incorporated by
reference to Exhibit 10.43 to SFAC's
Report on Form 10-K for the year ended
December 31, 1996)
10.44 Amendment No. 3 to Amended and Restated
Receivables Sale Agreement, dated as of
February 24, 1997, by and among SFFC,
SFC, as Master Servicer, and certain
subsidiaries of SFC. (Incorporated by
reference to Exhibit 10.44 to SFAC's
Report on Form 10-K for the year ended
December 31, 1996)
<PAGE> 35
10.45* Amended and Restated Executive
Employment Agreement, dated as of March
15, 1999, among SFAC, SFC and Lawrence
S. Benjamin.
10.46 Executive Securities Purchase Agreement,
dated as of December 15, 1994, among
Lawrence S. Benjamin, SFAC and SFC.
(Incorporated by reference to Exhibit
10.58 to SFAC's Report on Form 10-K for
the year ended December 30, 1995)
10.47 Stock Purchase Agreement, dated as of
June 15, 1995, between Lawrence S.
Benjamin and SFAC. (Incorporated by
reference to Exhibit 10.59 to SFAC's
Report on Form 10-K for the year ended
December 30, 1995)
10.48 Securities Purchase Agreement, dated as
of August 1, 1995, between Lawrence S.
Benjamin and SFAC. (Incorporated by
reference to Exhibit 10.60 to SFAC's
Report on Form 10-K for the year ended
December 30, 1995)
10.49 Amendment to Securities Purchase
Agreement, dated as of January 2, 1996,
between Lawrence S. Benjamin and SFAC.
(Incorporated by reference to Exhibit
10.61 to SFAC's Report on Form 10-K for
the year ended December 30, 1995)
10.50* Amended and Restated Executive
Employment Agreement, dated as of March
15, 1999, among SFAC, SFC and Robert L. Fishbune.
10.51* Executive Employment Agreement, dated as
of July 15, 1997, among SFC, Mother's,
MCC-DSD Holdings, Inc. and Patrick J. O'Dea.
10.52* Severance Agreement, dated as of August
27, 1997, among SFC, H&M and William D. Day.
10.53 Stock Purchase Agreement dated as of
June 15, 1995, between Henry J. Metz and
SFAC. (Incorporated by reference to
Exhibit 10.46 to SFC's Registration
Statement on Form S-4 (Registration No.
33-94836))
10.54 Form of Executive Securities Purchase
Agreement among certain named executive
officers, respectively, and the
Principal Stockholders, SFAC and SFC
(with schedule showing differing
material terms for each such officer's
agreement). (Incorporated by reference
to Exhibit 10.40 SFAC's Report on Form
10-K for the year ended December 31, 1993)
10.55* Mother's Cake & Cookie Co. Amended and
Restated Supplemental Long Term
Incentive Compensation Plan
10.56 Stock Option Agreement, dated as of
October 27, 1997, between SFAC and
Lawrence S. Benjamin. (Incorporated by
reference to Exhibit 10.52 to SFAC's
Report on Form 10-K for the year ended
December 31, 1997)
10.57 Deferred Bonus Agreement, dated as of
October 27, 1997, between SFC and
Lawrence S. Benjamin. (Incorporated by
reference to Exhibit 10.53 to SFAC's
Report on Form 10-K for the year ended
December 31, 1997)
<PAGE> 36
10.58 Special Bonus Agreement, dated December
21, 1997, between SFC and Lawrence S.
Benjamin. (Incorporated by reference to
Exhibit 10.54 to SFAC's Report on Form
10-K for the year ended December 31, 1997)
10.59* Retention Bonus Agreement, dated March
15, 1999, between SFC and Lawrence S.
Benjamin.
10.60* Participation Award Agreement, dated as of March
15, 1999 between Mother's and Lawrence S.
Benjamin.
10.61 Deferred Bonus Agreement, dated July 15,
1997, between SFC and Robert L.
Fishbune. (Incorporated by reference to
Exhibit 10.55 to SFAC's Report on Form
10-K for the year ended December 31, 1997)
10.62* Retention Bonus Agreement, dated March
15, 1999, between SFC and Robert L. Fishbune.
10.63* Deferred Bonus Agreement, dated June 16,
1998, between Boudin and Larry Strain.
10.64* Deferred Bonus Agreement, dated July 15, 1997
between H&M and William D. Day.
10.65* Deferred Bonus Agreement, dated July 15,
1997, between Mother's and Patrick J. O'Dea.
10.66* Retention Bonus Agreement, dated March
15, 1999, between Mother's and Patrick J. O'Dea.
10.67* Retention Bonus Agreement, dated March
15, 1999, between SFC and David E. Schreibman.
10.68 Deferred Bonus Agreement, dated July 15,
1997, between Metz and Henry J. Metz.
(Incorporated by reference to Exhibit
10.57 SFAC's Report on Form 10-Q for the
Quarter ended March 31, 1998)
10.69* Form of Letter regarding Deferred Bonus
Agreements listed as Exhibits 10.57, 10.61,
10.65 and 10.68.
10.70* Divestiture Award Agreement, dated April
8, 1998 by and between H&M and William D. Day.
10.71 Divestiture Award Agreement, dated
October 27, 1997, between Stella Foods,
Inc. ("Stella") and Lawrence S.
Benjamin. (Incorporated by reference to
Exhibit 10.59 to SFAC's Report on Form
10-K for the year ended December 31, 1997)
10.72 Divestiture Award Agreement, dated July
15, 1997, between Stella and Robert L.
Fishbune. (Incorporated by reference to
Exhibit 10.60 to SFAC's Report on Form
10-K for the year ended December 31, 1997)
10.73* Divestiture Award Agreement, dated March
15, 1999, between Metz and Robert L.
Fishbune.
<PAGE> 37
10.74 Divestiture Award Agreement, dated July
15, 1997, between Metz and Henry J.
Metz. (Incorporated by reference to
Exhibit 10.65 to SFAC's Report on Form
10-K for the year ended December 31,
1997)
10.75* Divestiture Award Agreement, dated March
15, 1999, between H&M and Lawrence S. Benjamin.
10.76* Divestiture Award Agreement, dated March
15, 1999, between Metz and Lawrence S. Benjamin.
10.77* Divestiture Award Agreement, dated March
15, 1999, between H&M and Robert L. Fishbune.
10.78* Divestiture Award Agreement, dated March 15,
1999, between Mother's and Robert L. Fishbune.
10.79* Divestiture Award Agreement, dated March
15, 1999, between Boudin and Robert L. Fishbune.
10.80* Divestiture Award Agreement, dated
October 19, 1998, between H&M and David E.
Schreibman
10.81* Divestiture Award Agreement, dated March
15, 1999, between Metz and David E. Schreibman
10.82* Divestiture Award Agreement, dated March
15, 1999, between Mother's and David E.
Schreibman
10.83* Divestiture Award Agreement, dated March
15, 1999, between Boudin and David E.
Schreibman
10.84 Amended and Restated SFAC 1994 Stock
Option Plan. (Incorporated by reference
to Exhibit 10.39 to SFAC's Report on
Form 10-K for the year ended December 31, 1994)
10.85 Amended and Restated Metz Baking Company
Pension Plan for Non-Union Employees.
(Incorporated by reference to Exhibit 10.52 to SFAC's
Report on Form 10-K for the year ended December 31, 1994)
10.86 Amended and Restated Mother's Cake & Cookie Co.
Retirement Plan. (Incorporated by reference to Exhibit
10.51 to SFAC's Report on Form 10-K for the year
ended December 31, 1994.)
10.87* Coordination Document for the Metz-Mother's Cake %
Cookie Co. Consolidated Pension Plan
10.88 Stock Purchase Agreement, dated as of
November 26, 1996, between SFC and B
Companies Acquisition Corporation.
(Incorporated by reference to Exhibit
10.80 to SFAC's Report on Form 10-K for
the year ended December 31, 1996)
<PAGE> 38
10.89 Stock Purchase Agreement, dated as of
November 7, 1997, by and among SFC,
Saputo Group Inc. and Saputo
Acquisition, Inc. (Incorporated by
reference to Exhibit 10.94 to SFAC's
Report on Form 8-K dated as of December 22, 1997)
10.90 Stock Purchase Agreement, dated as of October 13,
1998, by and among SFC, Archway and the Archway
Shareholders. (Incorporated by reference to Exhibit 10.83
SFAC's Report on Form 8-K dated as of October 26, 1998)
10.91* Form of 1998 Annual Bonus Plan
10.92* Form of 1999 Annual Bonus Plan
21.1* Subsidiaries of SFAC
27* Financial Data Schedule
* Filed herewith.
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15
(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
SPECIALTY FOODS ACQUISITION
CORPORATION
By: /s/ LAWRENCE S. BENJAMIN
------------------------
Lawrence S. Benjamin
President and Chief Executive
Officer
March 31, 1999
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the
registrant and in the capacities and on the dates
indicated.
Signature and Title Capacity Date
- ------------------- ------------------- ---------------
/s/ LAWRENCE S. BENJAMIN Principal Executive March 31, 1999
- ------------------------ Officer and Director
Lawrence S. Benjamin
President and Chief
Executive Officer
/s/ ROBERT L. FISHBUNE Principal Financial March 31, 1999
- ---------------------- and Accounting Officer
Robert L. Fishbune
Vice President and
Chief Financial Officer
<PAGE> 41
Signature and Title Capacity Date
- ------------------- ------------------ ---------------
/s/ ROBERT B. HAAS Chairman of the March 31, 1999
- ------------------ Board of Directors
Robert B. Haas
/s/ THOMAS J.BALDWIN Director March 31, 1999
- --------------------
Thomas J. Baldwin
/s/ J. TAYLOR CRANDALL Director March 31, 1999
- ----------------------
J. Taylor Crandall
/s/ JERRY M. MEYER Director March 31, 1999
- ------------------
Jerry M. Meyer
/s/ ANDREW J. NATHANSON Director March 31, 1999
- -----------------------
Andrew J. Nathanson
/s/ DAVID G. OFFENSEND Director March 31, 1999
- ----------------------
David G. Offensend
/s/ MARC C. PARTICELLI Director March 31, 1999
- ----------------------
Marc C. Particelli
/s/ ANTHONY P. SCOTTO Director March 31, 1999
- ---------------------
Anthony P. Scotto
/s/ DOUGLAS D. WHEAT Director March 31, 1999
- ---------------------
Douglas D. Wheat
<PAGE> 42
INDEX TO FINANCIAL INFORMATION
Page
----
Independent Auditors' Report F-2
Consolidated Balance Sheets -
December 31, 1998 and 1997 F-3
Consolidated Statements of Operations -
Years ended December 31, 1998, 1997, and 1996 F-4
Consolidated Statements of Changes in Stockholders'
Equity-Years ended December 31, 1998, 1997, and 1996 F-5
Consolidated Statements of Cash Flows -
Years ended December 31, 1998, 1997, and 1996 F-6
Notes to Financial Statements F-7 to F-24
Schedule
---------
Financial Statement Schedule:
Condensed Financial Information of Registrant I F-25 to F-27
All other financial statement schedules are omitted as not
applicable or because the required information is presented
in the consolidated financial statements or related notes.
<PAGE> F-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Specialty Foods Acquisition Corporation:
We have audited the accompanying consolidated balance sheets
of Specialty Foods Acquisition Corporation and Subsidiaries
as of December 31, 1998 and 1997 and the related
consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1998. In
connection with our audits of the financial statements, we
also have audited the related financial statement schedule.
These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Specialty Foods Acquisition
Corporation and Subsidiaries as of December 31, 1998 and
1997 and the results of their operations and their cash
flows for each of the years in the three-year period ended
December 31, 1998 in conformity with generally accepted
accounting principles. Also in our opinion, the related
financial statement schedule when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information
set forth therein.
KPMG LLP
Chicago, Illinois
March 19, 1999
<PAGE> F-2
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
December 31,
--------------------
1998 1997
------ -------
Assets
Current assets:
Cash and cash equivalents $ 5,881 $ 234,267
Accounts receivable, net 19,327 15,504
Inventories 23,366 20,188
Net assets of discontinued operations 86,632 65,192
Other current assets 7,234 7,157
---------- ----------
Total current assets 142,440 342,308
Property, plant, and equipment, net 234,944 146,023
Intangible assets, net 113,438 842
Other noncurrent assets 43,573 28,334
---------- ----------
Total assets $ 534,395 $ 517,507
========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 3,450 $ 2,561
Accounts Payable 37,779 41,925
Accrued expenses 80,741 80,906
---------- ----------
Total current liabilities 121,970 125,392
Long-term debt 1,250,198 1,134,355
Other noncurrent liabilities 31,355 30,645
---------- ----------
Total liabilities 1,403,523 1,290,392
---------- ----------
Redeemable preferred stock 19,500 19,500
Stockholders' equity:
Common stock: par value $0.01;
authorized 100,000 shares;
issued 64,648 shares 646 646
Additional paid-in capital 42,750 42,750
Accumulated deficit (930,659) (834,416)
Cost of common shares in treasury (1,365) (1,365)
---------- ----------
Total stockholders' equity (888,628) (792,385)
---------- ----------
Total liabilities and
stockholders' equity $ 534,395 $ 517,507
========== ===========
See accompanying notes to consolidated financial statements.
<PAGE> F-3
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
Years ended December 31,
--------------------------------------------
1998 1997 1996
----- ----- -----
Net sales $ 742,315 $ 718,105 $ 705,996
Cost of sales 329,567 321,851 328,422
--------- --------- ---------
Gross profit 412,748 396,254 377,574
--------- --------- ---------
Operating expenses:
Selling, distribution,general and
administrative expenses 380,766 367,996 350,431
Amortization of intangibles 1,471 900 7,032
Goodwill write-down - - 203,304
--------- --------- ---------
382,237 368,896 560,767
--------- --------- ---------
Operating profit (loss) 30,511 27,358 (183,193)
Other:
Interest expense, net 133,961 134,546 132,373
Other expense, net 3,129 4,729 9,132
--------- --------- ---------
Loss before income taxes (106,579) (111,917) (324,698)
Provision (benefit) for income taxes (613) 380 1,093
--------- --------- ---------
Loss from continuing operations (105,966) (112,297) (325,791)
Discontinued operations:
Earnings (loss) 10,324 31,404 (146,273)
Gain (loss) on disposal (601) 133,130 (14,514)
--------- --------- ---------
9,723 164,534 (160,787)
--------- --------- ---------
Income (loss) before
extraordinary items (96,243) 52,237 (486,578)
Extraordinary items - (5,714) -
--------- --------- ---------
Net income (loss) $ (96,243) $ 46,523 $ (486,578)
========= ========= =========
Earnings (loss) per basic
and diluted share:
From continuing operations $ (1.69) $ (1.78) $ (5.12)
From discontinued operations 0.16 2.61 (2.53)
Extraordinary items - (0.09) -
--------- --------- ---------
Net income (loss) $ (1.53) $ 0.74 $ (7.65)
========= ========= =========
Weighted average shares
outstanding-basic and diluted 62,768 63,097 63,638
========= ========= =========
See accompanying notes to consolidated financial statements.
<PAGE> F-4
<TABLE>
<CAPTION>
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
Common Stock Additional Cumulative Treasury Stock
---------------- paid-in Accumulated translation --------------
Shares Amount Capital deficit adjustment Shares Amount
------ ------ -------- --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 64,648 $ 646 $ 42,750 $ (394,361) $ (837) 174 $ (126)
Shares issued - - - - - (159) 116
Purchase of treasury stock, net - - - - - 1,144 (836)
Cumulative translation adjustment - - - - 837 - -
Net loss - - - (486,578) - - -
------ ------ ------- ---------- ------- ------ -------
Balance at December 31, 1996 64,648 $ 646 $ 42,750 $ (880,939) $ - 1,159 $ (846)
Purchase of treasury stock, net - - - - - 721 (519)
Net income - - - 46,523 - - -
------- ------ ------- --------- ------- ------ --------
Balance at December 31, 1997 64,648 $ 646 $ 42,750 $ (834,416) $ - 1,880 $ (1,365)
Net loss - - - (96,243) - - -
------- ------ ------- ---------- ------- ------ --------
Balance at December 31, 1998 64,648 $ 646 $ 42,750 $ (930,659) $ - 1,880 $ (1,365)
======= ====== ======= ========== ======= ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> F-5
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Years ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
Loss from continuing operations $ (105,966) $ (112,297) $ (325,791)
Adjustments to reconcile to net cash
from continuing operating activities:
Depreciation and amortization 27,204 21,087 27,868
Debt issuance cost amortization 10,109 6,120 6,081
Accretion of interest 48,601 43,148 38,285
Write-down of goodwill - - 203,304
Loss on disposal of property, plant,
and equipment, net 436 1,521 5,747
Changes in assets and liabilities, net of
effects from acquisitions of businesses:
Accounts receivable 8,916 6,241 14,612
Inventories 1,338 398 214
Prepaid expenses and other assets 274 1,576 (5,987)
Accounts payable (8,478) (9,093) 2,064
Accrued expenses and other (15,551) (14,785) (1,756)
--------- --------- ---------
Net cash used by continuing
operating activities (33,117) (56,084) (35,359)
Net cash provided (used)
by discontinued operations (11,717) (41,564) 27,055
--------- --------- ---------
Net cash used by operating activities (44,834) (97,648) (8,304)
Cash flows from investing activities:
Acquisitions of businesses, net of
cash acquired (135,035) - -
Net proceeds from divestitures
of businesses - 384,096 69,333
Capital expenditures (91,445) (36,071) (25,218)
Cash restricted for the purchase of
property, plant and equipment (8,017) - -
Proceeds from sale leaseback, net - - 13,370
Other (5,061) (3,281) (727)
--------- --------- --------
Net cash provided (used) by
investing activities (239,558) 344,744 56,758
Cash flows from financing activities:
Increase (decrease) in revolving credit 75,000 (78,300) 5,700
Payments on long-term debt (6,115) (3,529) (2,303)
Payments of debt issuance costs (12,879) - (3,738)
Issuance of redeemable preferred stock - 19,500 -
Other - 1,319 (1,574)
--------- --------- --------
Net cash provided (used) by
financing activities 56,006 (61,010) (1,915)
Increase (decrease) in cash
and cash equivalents (228,386) 186,086 46,539
Balance - beginning of year 234,267 48,181 1,642
---------- --------- --------
Balance - end of year $ 5,881 $ 234,267 $ 48,181
========== ========= ========
See accompanying notes to consolidated financial statements.
<PAGE> F-6
(1) Company Background
Specialty Foods Acquisition Corporation ("SFAC") through its
direct, wholly-owned subsidiary, Specialty Foods Corporation
("SFC"), is a leading producer, marketer and distributor of
bakery products, including retail bread, cookies and other
baked goods. The continuing operations of SFC consist of the
following operating companies:
Metz Baking Company ("Metz") - Metz is a leading retail
bread company serving a sixteen state area of the Midwestern
United States. Metz's product line includes breads, buns,
rolls and sweet goods.
Mother's Cake & Cookie Co. ("Mother's") - Mother's is
the second largest retail cookie producer and distributor in
the Western United States. Mother's sells its branded
cookie products primarily to retail grocers.
Archway Cookies, Inc. ("Archway") - Acquired in 1998,
Archway is one of the nation's leading cookie makers,
producing more than one billion cookies annually. Archway
sells its branded cookie products through a network of
independent distributors who resell to retail food outlets
and chain stores throughout the U.S. and Canada.
Andre-Boudin Bakeries, Inc. ("Boudin") - Boudin is a
leading marketer of premium branded specialty breads and
bread-related products. Boudin sells most of its products
through a chain of 46 bakery cafes and kiosks located in
California and the greater Chicago area.
The Company's discontinued operations are described in
Note 3.
(2) Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements are presented on a
consolidated basis. All significant intercompany accounts
and transactions have been eliminated. Acquisitions recorded
as purchases are included in the Consolidated Statement of
Operations from the date of acquisition. Divestitures
reported as discontinued operations have been removed from
continuing operations and reclassified to discontinued
operations in accordance with Accounting Principles Board
Opinion No. 30.
<PAGE> F-7
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and related disclosures at
the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications
Certain amounts included in the 1997 and 1996 financial
statements have been reclassified to conform to the manner in
which the 1998 financial statements have been presented.
Cash Equivalents
Cash equivalents represent investments in overnight bank
deposits and commercial paper with a maturity of less than
three months.
Inventories
Inventories are stated at the lower of cost or market. Cost
is determined principally by the first-in, first-out (FIFO)
method.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost.
Depreciation is provided by the straight-line method over the
assets' estimated useful lives or, in the case of leasehold
improvements, over the terms of the leases, if shorter, as
follows:
Years
-------
Buildings and improvements 7-40
Machinery and equipment 3-20
Office furniture and vehicles 3-10
Expenditures for maintenance, repairs, and minor replacements
are charged to current operations. Expenditures for major
replacements and betterment are capitalized.
The cost and related accumulated depreciation of property and
equipment retired or sold is eliminated from the property and
equipment accounts at the time of retirement or sale, and the
resulting gain or loss is reported in the Consolidated
Statement of Operations.
<PAGE> F-8
Intangible Assets
Intangible assets, which consist primarily of the excess of
cost over fair value of net assets acquired, are amortized on
a straight-line basis over the periods of expected benefit,
which range from five to forty years. The Company annually
evaluates whether events and circumstances have occurred that
indicate that the remaining estimated useful life of
intangible assets may warrant revision or that the remaining
balance of intangible assets may not be recoverable. When
factors indicate that intangible assets should be evaluated
for possible impairment, the Company assesses recoverability
of intangible assets based on its expectations concerning
operating cash flows after interest and capital expenditures.
An impairment is recorded if the discounted value of such
cash flows is less than the recorded value of the intangible
assets. The Company utilizes a discount rate which reflects
its weighted average cost of capital. Based on application
of this methodology, an impairment was recorded in 1996 (see Note 5).
Deferred Debt Issuance Costs
Deferred debt issuance costs are being amortized by the
straight-line method over the terms of the related debt
agreements and are classified as other noncurrent assets.
Advertising Costs
Advertising costs are expensed as incurred.
(3) Discontinued Operations
In March 1999, SFC signed a definitive agreement to sell its
subsidiary, H&M Food Systems Company, Inc. ("H&M"), for $132
million. H&M is a producer of custom formulated, pre-cooked
meat products that are sold primarily to national restaurant
chains and prepared-food producers. SFC will realize net
cash proceeds of approximately $110 million after it has
repurchased H&M's financed accounts receivable, established a
$5 million one-year escrow and paid transaction costs. Upon
the closing of this transaction, expected in the second
quarter of 1999, SFC will report a gain on the sale of H&M.
In addition, during 1997 and 1996 the Company divested of:
Stella Foods, Inc. ("Stella") - One of the largest
specialty cheese producers in the United States with
distribution to retail grocers, foodservice accounts, and
commercial food processors. The sale of Stella was
completed on December 5, 1997 for $405 million.
Gai's Seattle French Baking Company ("Gai's") - A
restaurant and institutional bakery operation serving the
northwestern United States. The sale of Gai's was completed
on February 24, 1997.
San Francisco French Bread ("SFFB") - A sourdough
hearth bread operation located in California. The sale of
SFFB was completed on March 31, 1997.
<PAGE> F-9
A restaurant and institutional bakery operated by Metz
located in Illinois. The sale of this bakery was completed
on August 23, 1997.
Bloch and Guggenheimer, Inc. ("B&G")/Burns & Ricker,
Inc. ("B&R") - Pickle, pepper, and specialty snack food
businesses operated under common management. The sale of
the combined business of B&G/B&R was completed on December
27, 1996.
These divestitures have been reported as discontinued
operations in the accompanying financial statements in
accordance with Accounting Principles Board Opinion No. 30.
Operating results for these businesses, including revenues of
$181,038, $935,424, and $1,333,194 for 1998, 1997, and 1996,
respectively, as well as the applicable goodwill write-down
of $152,360 in 1996, have been reclassified to discontinued
operations. No interest expense has been allocated to
discontinued operations.
In 1998, the earnings from discontinued operations relate
solely to H&M. The net loss on disposal of discontinued
operations for 1998 consists of adjustments to the estimated
losses on the sale of Gai's, SFFB, and the Illinois
restaurant and institutional bakery. The net gain on
disposal of discontinued operations for 1997 consisted of the
gain realized on the sale of Stella and Gai's, an adjustment
to the estimated loss on the disposal of SFFB, and the loss
realized on disposal of the Illinois restaurant and
institutional bakery. The net loss on disposal of
discontinued operations for 1996 consisted of the realized
loss on the sale of B&G/B&R, estimated loss on the sale of
SFFB, and the 1996 operating losses from the measurement date
through the disposal date of B&G/B&R, SFFB and of Gai's.
Net assets of the discontinued operations as of December 31,
1998 and 1997 related to H&M and consisted of the following:
1998 1997
---- ----
Accounts receivable, net of allowance $ 3,587 $ 3,658
Inventories 16,824 15,388
Plant and equipment, net 53,205 41,852
Other assets 4,852 1,011
Goodwill, net 18,069 18,592
Accounts payable (6,727) (10,058)
Accrued expenses and other liabilities (3,178) (5,251)
------ -------
$ 86,632 $ 65,192
====== =======
<PAGE> F-10
(4) Acquisitions
On October 26, 1998, SFC acquired all of the outstanding
capital stock of Archway, a privately held Michigan
corporation, from the previous stockholders. The purchase
price totaled approximately $90,000 plus $26,000 to repay
certain indebtedness of Archway.
Additionally, in 1998, SFC also acquired four retail bakeries
in separate transactions for a total aggregate consideration
of $19,600.
All of the acquisitions have been accounted for as purchases
and, accordingly, the respective purchase prices have been
allocated to the applicable assets and liabilities based upon
their estimated fair values as of the acquisition date. On a
combined basis, the excess of the purchase price over the
fair values of the net assets acquired was approximately
$110,000 and has been recorded as goodwill, which is being
amortized on a straight-line basis over 40 years. The
acquisitions were funded by a combination of cash and
borrowings under SFC's existing revolving credit facility.
Operating results of acquired businesses have been included
in the Consolidated Statements of Operations since their
respective acquisition dates.
The following unaudited pro forma consolidated results of
operations are presented as if the above acquisitions had
been made at the beginning of the periods presented.
1998 1997
---- ----
Net sales $ 831,533 $ 828,243
Net earnings (loss) from continuing operations $ (110,590) $ (115,026)
Net earnings (loss) per share from
continuing operations $ (1.76) $ (1.82)
The consolidated pro forma information is not necessarily
indicative of the combined results that would have occurred
had the acquisitions been made at the beginning of the
periods presented or the future results of the combined
operations and do not include projected cost reductions and
revenue increases of the combined operations. Additionally,
pro forma net sales exclude sales of Archway's franchisees
and third party distributor mark-up.
(5) Goodwill Write-Down
As described under "Intangible Assets" in Note 2, "Summary of
Significant Accounting Policies", the Company annually
evaluates its intangible assets. Based on the Company's
goodwill assessment, a write-down of goodwill was recorded in
the fourth quarter of 1996, which is presented in the
accompanying Consolidated Statements of Operations as
follows:
Continuing operations $ 203,304
Discontinued operations 152,360
--------
$ 355,664
========
<PAGE> F-11
In determining the amounts of the goodwill write-down, the
Company developed its best estimate of future operating cash
flows, after interest and capital expenditures, over the
remaining useful life of the goodwill. The Company's
estimates were based on recent historic financial trends and
then current market conditions. The goodwill of each
business was evaluated separately for impairment. Individual
business unit sales growth projections ranged from two to
five percent. Interest costs were allocated based on the
relative level of investment in each business. Each of the
Company's fixed-rate debt obligations were assumed to be
refinanced at existing interest rates. The Company
calculated the present value of estimated future cash flows
using a discount rate which represented its weighted average
cost of capital of 11.8% in 1996.
As of December 31, 1998, there was $109,745 of goodwill on
the Company's balance sheet resulting from acquisitions made
during 1998. Management believes the Company's remaining
goodwill will be recovered over its useful life.
(6) Acquisition Liabilities
In connection with the formation of the Company and
subsequent acquisitions, estimated liabilities were recorded
for the expected cash expenditures to consolidate facilities,
streamline operations, and settle environmental, legal and
tax matters. In 1998, $4,450 of additional estimated
acquisition liabilities were recorded as a result of current
year acquisitions. Cash expenditures associated with
acquisition liabilities were $4,440, $14,043, and $10,593
for 1998, 1997, and 1996, respectively. As of December 31,
1998, there are $15,797 of remaining acquisition liabilities,
of which $4,899 is classified as current.
(7) Extraordinary Items
In the first quarter of 1998, the Company refinanced its
accounts receivable, revolver, and term loan financing
facilities. Due to this early extinguishment of debt, the
Company wrote-off deferred debt issuance costs related to
these facilities of $5,714 and has recorded them as
extraordinary items in 1997.
(8) Accounts Receivable
Specialty Foods Finance Corporation ("SFFC"), a wholly-owned
subsidiary of SFC, was established for the purpose of
acquiring substantially all of the trade accounts receivable
generated by the operating subsidiaries of SFC. Under the
terms of the Accounts Receivable Facility ("Facility"), SFFC
sells for cash an undivided interest in eligible accounts
receivable.
Under the terms of the Facility, the maximum amount of
eligible receivables that can be sold to the Facility is
$75,000. The amount outstanding under the Facility varies
based upon the level of eligible receivables and advance rate
factors. As of December 31, 1998, the amount outstanding
under the Facility was $50,000. The discount on receivables
sold is included in other expense and totaled $2,445, $1,933,
and $1,846 in 1998, 1997, and 1996, respectively.
<PAGE> F-12
Trade accounts receivable are reported net of the allowance
for doubtful accounts of $1,149 and $1,099 in 1998 and 1997,
respectively.
(9) Inventories
The components of inventories are as follows:
1998 1997
---- ----
Raw materials and packaging $ 12,244 $ 9,477
Work in progress 264 452
Finished goods 8,593 7,662
Other 3,209 2,681
------ ------
24,310 20,272
Less obsolescence and other
allowances (944) (84)
------ ------
$ 23,366 $ 20,188
====== ======
(10) Property, Plant, and Equipment
The components of property, plant and equipment are as
follows:
1998 1997
---- ----
Land $ 11,586 $ 10,898
Buildings and improvements 90,963 72,130
Machinery and equipment 136,732 104,676
Office furniture and vehicles 63,320 29,248
Construction in progress 36,734 8,639
------- -------
339,335 225,591
Less accumulated depreciation (104,391) (79,568)
------- -------
$ 234,944 $ 146,023
======= =======
Depreciation expense was $25,733, $20,187, and $20,836 in
1998, 1997, and 1996, respectively.
(11) Restricted Cash
In 1998, the Company entered into various agreements to
purchase certain machinery, equipment and building
improvements. Funds were designated for these purchases and
deposited in an escrow account which amounted to $7,915 as of
December 31, 1998. The escrow account is classified as a
noncurrent asset.
<PAGE> F-13
(12) Accrued Expenses
The components of accrued expenses are as follows:
1998 1997
---- ----
Accrued payroll $ 8,782 $ 6,229
Other taxes payable 4,087 3,085
Workers' compensation 11,896 9,768
Compensated absences 7,491 6,236
Accrued interest 21,869 21,518
Acquisition liabilities 4,899 7,582
Other 21,717 26,488
------- -------
$ 80,741 $ 80,906
======= =======
(13) Long-Term Debt
Long-term debt consists of the following:
1998 1997
----- -----
Revolving Credit Facility $ 75,000 $ -
Term Loan Facility 169,080 173,750
10 1/4% Senior Notes due 2001 225,000 225,000
11 1/8% Senior Notes due 2002 150,000 150,000
11 1/4% Senior Subordinated Notes
due 2003 200,000 200,000
13% Senior Secured Discount Debentures
due 2005 295,191 260,258
11% Senior Subordinated Discount
Debentures due 2006, payable
to related parties 134,698 121,043
Other 4,679 6,865
---------- ----------
1,253,648 1,136,916
Less current portion (3,450) (2,561)
--------- ---------
$ 1,250,198 $ 1,134,355
========= =========
During March 1998, the Company refinanced its Revolving
Credit Facility ("Revolver") and Term Loan Facility ("Term
Loan") with a new syndicate of financial institutions. Both
facilities mature on January 31, 2000. Proceeds from these
facilities can be used to finance working capital
requirements and are available for other corporate purposes,
including acquisitions.
As required under the terms of the Revolver and Term Loan
Agreements, the Company reduced the commitment amount
available under the Revolver from $125,000 to $122,801 and
the Term Loan was reduced to $169,080 with excess asset sale
proceeds during 1998. The Company is required to make
quarterly payments on the Term Loan in the amount of $434.
The Revolver bears an interest rate of LIBOR plus 250 basis
points. The Revolver is secured by the assets of the
operating companies. Amounts outstanding under the Revolver
totaled $75,000 as of December 31, 1998. In addition to
amounts outstanding under the Revolver, letters of credit
<PAGE> F-14
commitments totaling $10,200 as of December 31, 1998 reduce
available funds under the Revolver.
The Term Loan bears an interest rate of LIBOR plus 375 basis
points. The Term Loan is secured by the assets of SFC and a
pledge of the stock of each of the direct subsidiaries of
SFC.
Semi-annual interest payments are required through maturity
on the 10 1/4% Senior Notes and the 11 1/4% Senior
Subordinated Notes on February 15 and August 15 each year.
Semi-annual interest payments are required through maturity
on the 11 1/8% Senior Notes on April 1 and October 1 each
year.
The Senior Secured Discount Debentures accrete at an interest
rate of 13% up to the maturity amount of $319,250 on August
15, 1999. Beginning February 15, 2000, semi-annual interest
payments are required through the maturity date on August 15,
2005. The Senior Subordinated Discount Debentures are held
by stockholders of the Company and accrete at an interest
rate of 11% up to the maturity amount of $185,067 on August
15, 2001. Beginning February 15, 2002, semi-annual interest
payments are required through the maturity date on August 15,
2006.
The 10 1/4% and 11 1/8% Senior Notes, the 11 1/4% Senior
Subordinated Notes and the 11% Senior Subordinated Discount
Debentures are unsecured. The 13% Senior Secured Discount
Debentures are secured by a first priority lien on and a
security interest in all of the outstanding capital stock of
SFC and all intercompany notes, if any, owing to the Company.
During the fourth quarter of 1998, the Company commenced
private exchange offers for its publicly held debt. Under
the offers, existing debt of SFC and SFAC held by certain
holders would be exchanged for the debt of two new
intermediate holding companies. SFAC is offering certain
holders of its Senior Debentures the opportunity to exchange
their existing debt for new 13% Senior Secured Discount
Debentures (the "New Senior Debentures") of a new
intermediate holding company. The New Senior Debentures
include provisions which extend the cash pay interest and
maturity dates, give SFAC a call option at prescribed
discounts of accreted value and provide consenting holders of
its Senior Debentures up to an aggregate of ten percent of
the equity interest of the new intermediate holding company.
SFC is offering certain holders of its existing notes the
opportunity to exchange their existing debt for new notes
(the "New Notes") of another intermediate holding company.
The New Notes have substantially the same terms and covenants
as the existing notes and will remain structurally senior to
the New Senior Debentures. In addition, SFC is seeking the
consent of its Term Loan and Revolver lenders to amend
existing agreements to conform to the new holding company
structure. The proposed exchange offer has not been
consummated. Remaining on the Company's balance sheet are
unamortized deferred financing fees of approximately $18,000
related to the existing debt that is subject to the exchange
offer. Upon the completion of the exchange offer, this
amount would be written off as an extraordinary item.
Other long-term debt consists primarily of miscellaneous
notes payable with interest rates ranging from 7.9% to 10.5%
at December 31, 1998.
<PAGE> F-15
The provisions of the Term Loan and the Revolver contain
covenants which require the Company to maintain specified
leverage and interest coverage ratios. The Company also has
other limitations regarding capital expenditures, sales of
assets, loans and investments, encumbrances of assets and
assumption of additional indebtedness. In addition, the
agreements governing the Term Loan and the Revolver and the
indentures governing the Senior Notes and the Senior
Subordinated Notes contain certain restrictive covenants,
including, to the detriment of the holders of the Senior
Debentures and the Senior Subordinated Debentures, certain
covenants that restrict or prohibit (with de minimis
exceptions) SFC's ability to pay dividends or make other
distributions to SFAC. Specifically, as a result of the
Company's net losses and accumulated deficit, SFC's ability
to make distributions to SFAC under the indentures of the
Senior Notes and the Senior Subordinated Notes has been
impaired and these indentures will require modification
before any such distribution to SFAC can be made.
Aggregate maturities of debt are as follows:
1999 $ 3,450
2000 243,308
2001 225,234
2002 150,259
2003 200,277
Thereafter 431,120
----------
Total aggregate maturities $ 1,253,648
==========
Cash paid for interest was $82,508, $85,603, and $90,533 for
the years ended December 31, 1998, 1997, and 1996,
respectively.
(14) Financial Instruments
Concentration of Credit Risk
The Company's exposure to credit loss in the event of
nonpayment of accounts receivable by customers is represented
in the amount of those receivables. The Company performs
ongoing credit evaluations of its customers' financial
condition and generally requires no collateral from those
customers. As of December 31, 1998, the Company does not
believe it has any significant concentration of credit risk
with respect to its trade accounts receivable.
Financial Instruments With Off-Balance-Sheet Risk
During 1998, the Company entered into interest rate swap
agreements to reduce its exposure to changes in the cost of
its variable rate borrowings as required by its Term Loan
Agreement. Under the interest rate swap agreements, which
expire in January 2000, the Company receives floating rate
payments from the counterparties based upon the three-month
LIBOR and makes fixed rate payments at 5.753% and 5.765% to
the respective counterparties. The payments are calculated
based upon a notional principal amount of $100,000. The net
differential of interest to be paid or received under the
remaining agreements is recognized as incurred. In 1998, net
<PAGE> F-16
payments totaling $30 were made to the counterparties. Off-
balance-sheet risk from the interest rate swap agreements at
December 31, 1998 includes the risk associated with changes
in market values and interest rates. The counterparties to
the agreements are major financial institutions.
Fair Value of Financial Instruments
The Company's financial instruments include long-term debt
and the interest rate swap agreements. The estimated fair
value and carrying amount of long term debt including current
maturities but excluding related party Senior Subordinated
Discount Debentures at December 31, 1998 are as follows:
Estimated
Carrying Fair
Amounts Values
----------- -----------
Financial liabilities:
Long-term debt, including
current maturities $ 1,118,950 $ 728,184
Interest rate swap agreements $ - $ (906)
The fair value of long-term debt and the interest rate swap
agreements have been determined based on quoted market prices
and market interest rates at December 31, 1998.
(15) Lease Commitments
The Company leases equipment and facilities under various
noncancelable operating leases. Future minimum lease
payments under all noncancelable operating leases are as
follows:
1999 $ 11,668
2000 10,879
2001 9,530
2002 8,337
2003 6,406
Thereafter 24,443
---------
Total minimum lease payments $ 71,263
=========
Total rental expense for 1998, 1997, and 1996 was $17,318,
$19,557, and $17,018 respectively.
In 1998, the Company purchased certain transportation and
production equipment which had been subject to operating
lease arrangements. The cost of purchasing these leased
assets was approximately $35,400.
<PAGE> F-17
(16) Income Taxes
The provision (benefit) for income taxes for 1998, 1997, and
1996 relates to state and Canadian income taxes payable
(refundable). An effective tax rate reconciliation is not
presented because the Company has no federal tax currently payable or
deferred income tax expense due to its net operating loss position.
The components of net deferred taxes are as follows:
1998 1997
---- ----
Deferred tax assets related to:
Accrued expenses and other liabilities $ 72,570 $ 57,518
Net operating losses and credits 90,799 65,197
Other 3,351 6,538
-------- --------
Total deferred tax assets 166,720 129,253
Valuation allowance 149,552 113,357
-------- --------
Total net deferred tax assets 17,168 15,896
Deferred tax liabilities related to:
Depreciation 17,168 15,541
Inventories - 355
-------- --------
Total deferred tax liabilities 17,168 15,896
-------- --------
Net deferred tax asset (liability) $ - $ -
======== ========
At December 31, 1998, the Company has federal net operating
loss carryforwards of $235,000 including $9,000 of loss
carryforwards from predecessor companies, which are subject
to limitations that may substantially limit future
utilization. Also at December 31, 1998, the Company has
$127,000 of state net operating loss carryforwards and $3,000
of state tax credit carryforwards. The net operating loss
carryforwards and state tax credits exclude H&M's allocable
portions. Net operating loss and credit carryforwards expire
in varying amounts through the year 2018.
Cash paid (received) for income taxes was $(613), $123 and
$432 for 1998, 1997, and 1996, respectively.
<PAGE> F-18
(17) Litigation and Other Contingencies
Litigation
The Company has retained liability with respect to a
proceeding against Stella. In 1993, Stella was alleged to
have misappropriated confidential and proprietary trade
secrets of a competitor and infringed upon the competitor's
purported trademark. Stella has filed a cross complaint
against the competitor for predatory pricing practices. The
proceeding is scheduled for trial during the second quarter
of 1999. The Company continues to vigorously defend against
the allegations and pursue its claim. Although any
litigation has an element of uncertainty, management believes
the ultimate resolution of this matter will not have a
material adverse effect on the Company's financial condition
or results of operations.
In the normal course of business activities, the Company is a
party to certain legal proceedings and claims. Although the
outcome of such matters cannot be determined with certainty,
it is management's opinion that the final outcome will not
have a material adverse effect on the Company's financial
position or results of operations.
Other
Various operating subsidiaries are self-insured or retain a
portion of losses with the respect to workers' compensation
claims. Accordingly, the Company provides irrevocable
letters of credit or surety bonds which total $10,200 at
December 31, 1998 to state regulatory agencies or insurance
companies.
(18) Employee Benefits
Pension and Other Post-retirement Benefits
Certain of the operating subsidiaries sponsor single-
employer, non-contributory, defined benefit pension plans.
The operating subsidiaries also participate in numerous multi-
employer, non-contributory, defined benefit pension plans.
Substantially all of the Company's employees are covered by
the defined benefit or multi-employer plans. Certain of the
subsidiaries also sponsor post-retirement health care benefit
plans.
<PAGE> F-19
Benefits for employees are based on various factors including
length of service and average compensation. Contributions
are funded to the extent deductible for federal income tax
purposes.
The following table provides a reconciliation of the changes
in the plans' benefit obligations and fair value of assets
during the years ended December 31, 1998 and December 31,
1997 and a summary of the funded status as of December 31,
1998 and December 31, 1997:
Pension Plans Post-retirement Medical
---------------------------------------------------
1998 1997 1998 1997
---- ---- ---- ----
Change in Benefit Obligation
Benefit obligation
at beginning of year $ 61,072 $ 54,218 $ 8,226 $ 9,886
Service cost 2,248 1,914 393 345
Interest cost 4,111 3,956 542 602
Participant contributions - - 29 -
Plan amendments 35 1,220 - -
Settlement (gain) or loss - - - (1,295)
Benefits paid (3,609) (2,527) (591) (339)
Actuarial (gain) or loss 1,371 2,291 111 (973)
------- ------- ------- -------
Benefit obligation
at end of year $ 65,228 $ 61,072 $ 8,710 $ 8,226
======= ======= ======= =======
Change in Plan Assets
Fair value of plan assets
at beginning of year $ 62,167 $ 57,854 $ - $ -
Actual return on plan assets 7,368 6,840 - -
Benefits paid (3,609) (2,527) - -
Other 1,028 - - -
------- ------- ------- -------
Fair value of plan
assets at end of year $ 66,954 $ 62,167 $ - $ -
======= ======= ======= =======
Summary of Funded Status
Funded status $ 1,726 $ 1,095 $ (8,710) $ (8,226)
Unrecognized transition
amount (274) (381) - -
Unrecognized prior service
cost 1,447 1,561 - -
Unrecognized net (gain)
or loss (11,593) (11,241) (3,243) (4,816)
------- ------- ------- -------
Accrued benefit cost $ (8,694) $ (8,966) $(11,953) $ (13,042)
======= ======= ======== =======
Amounts Recognized in
Consolidated Balance Sheets
Accrued expenses $ 2,842 $ 2,464 $ - $ 251
Other non-current liabilities 5,852 6,502 11,953 12,791
-------- ------- ------- -------
$ 8,694 $ 8,966 $ 11,953 $ 13,042
======== ======= ======= =======
<PAGE> F-20
One of the Company's qualified pension plans had a projected
benefit obligation in excess of plan assets as of December
31, 1998 and 1997. The projected benefit obligation,
accumulated benefit obligation and fair value of plan assets
for this plan was $13,815, $13,815, and $12,675,
respectively, as of December 31, 1998 and $12,669, $12,669,
and $11,616, respectively, as of December 31, 1997.
The following table provides the components of net periodic
benefit cost for the plans for the fiscal years ended
December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
Pension Plans Post-retirement Medical
-------------------------------------------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
the period $ 2,248 $ 1,914 $ 2,116 $ 393 $ 345 $ 446
Interest cost on the benefit
obligation 4,111 3,956 3,658 542 602 661
Expected return on plan assets (6,175) (5,087) (6,290) - - -
Net amortization and deferral - - 1,583 - - (832)
Transition amount (107) (107) - - - -
Prior service costs 149 146 - - - -
(Gain)/loss (498) (607) - (805) (292) -
------- ------- ------- ------- ------- -------
Net periodic benefit cost $ (272) $ 215 $ 1,067 $ 130 $ 655 $ 275
======= ======= ======= ======= ======= =======
</TABLE>
Gains and losses in excess of 10% of the greater of the
benefit obligation or the market-related value of assets are
amortized over the average remaining service period of active
participants for pension plans. Gains and losses in excess
of 10% of the benefit obligation are amortized over five
years for the post-retirement plan.
The Company sponsors defined benefit health care plans that
provide post-retirement medical and life benefits to certain
full-time employees who meet minimum age and service
requirements. The plans are contributory, with retiree
contributions adjusted annually, and contain other cost-
sharing features such as deductibles and co-insurance. The
accounting for these plans anticipates future cost-sharing
changes to the written plans that are consistent with the
Company's expressed intent to increase the retiree
contribution rate annually for the expected general inflation
rate for the year.
<PAGE> F-21
The assumptions used in the measurement of the Company's
benefit obligations are shown in the following table:
Post-retirement
Pension Plans Medical
---------------------------------------
1998 1997 1998 1997
---- ---- ---- ----
Discount Rate (Y/E Disclosures) 6.75% 7.00% 6.50% to 6.75% 7.00%
Salary Scale 4.00% 4.00% N/A N/A
Long Term Rate of Return on Assets 10.00% 9.00% N/A N/A
For measurement purposes, a 9.5% annual rate of increase in
the per capita cost of covered health care benefit was
assumed for 1998. The rate is assumed to decrease gradually
to 5.5% for 2002 and remain at that level thereafter.
The health care trend rate used to determine the pre-age 65
accumulated post-retirement benefit obligation was 14% for
1998, decreasing to 6% by the year 2002 and beyond. A flat
16 % rate per year is used for the post-age 65 obligation.
Increasing the assumed health care trend rate by 1% each year
would increase the accumulated post-retirement benefit
obligation as of December 31, 1998 and 1997 approximately
$664 and $658, respectively, and the aggregate of the service
and interest cost components of 1998, 1997, and 1996 net
retiree healthcare expense approximately $97, $98, and $134
respectively. Decreasing the assumed health care trend rate
by 1% each year would decrease the accumulated post-
retirement benefit obligation as of December 31, 1998
approximately $547, and the aggregate of the service and
interest cost components for 1998 net retiree healthcare
expense approximately $79.
Certain of the operating subsidiaries also participate in
various multi-employer defined benefit pension plans on
behalf of employees pursuant to various collective bargaining
agreements. Contributions to these plans included in
continuing operations amounted to approximately $15,441,
$14,822, and $14,535 for the years ended December 31, 1998,
1997, and 1996, respectively.
The Company has various defined contribution plans which
cover non-bargaining unit employees meeting eligibility
requirements. Contributions to these plans were
approximately $1,915, $1,444, and $1,296 for the years ended
December 31, 1998, 1997, and 1996, respectively.
Long Term Incentive Compensation Plans
The Company has adopted long-term incentive compensation
plans for several of its businesses which provide for cash
awards upon the achievement of specified earnings or
enterprise values. Amounts related to long-term incentive
plans will be accrued when amounts due participants vest. As
of December 31, 1998, no amounts have been accrued.
<PAGE> F-22
(19) Stock-Based Compensation Plans
The Company's stock option plans provide for the granting of
non-qualified stock options and incentive stock options to
certain key employees, directors and consultants of the
Company. Generally, options outstanding under the Company's
stock option plans (i) are granted at prices which equate to
the fair value of the stock at the date of grant, (ii) vest
ratably over a four year service vesting period, and (iii)
expire ten years subsequent to award.
The exercise price per share is $.02 for current employees
and $.73 for former employees. A summary of the status of
the Company's stock options as of December 31, 1998, 1997,
and 1996 and changes during the years ended on those dates is
presented below:
Number of Shares
----------------------------
1998 1997 1996
---- ---- ----
Outstanding at beginning of year 3,632 3,436 4,589
Granted 500 1,400 933
Exercised - - -
Terminated (236) (1,204) (2,086)
----- ------ ------
Outstanding at year-end 3,896 3,632 3,436
===== ====== ======
Options exercisable at year-end 2,013 1,376 1,819
===== ====== ======
Options available for future grant 1,957 2,221 2,417
===== ====== ======
The Company applies Accounting Principles Board Opinion No.
25 and related Interpretations in accounting for its stock
compensation plans. Accordingly, no compensation cost has
been recognized for its stock compensation plans. The
Company has evaluated the requirements of FASB Statement No.
123 and has determined that it does not have a material
impact on the Company's financial position or results of
operations.
(20) Related Party Transactions
Certain Transactions with Stockholders of and Affiliates
of Stockholders of SFAC
Certain of SFAC's stockholders and their affiliates
previously entered into financial advisory arrangements (the
"Financial Advisory Agreements") with SFAC's subsidiary, SFC.
Haas Wheat & Partners ("Haas Wheat"), Penobscot
("Penobscot"), an affiliate of Acadia Partners, L.P.
("Acadia"), and Keystone, Inc. ("Keystone") each entered into
such Financial Advisory Agreements. In August 1998, the
Board of Directors approved a one-year extension of the
financial advisory arrangements. Under the terms of the
Financial Advisory Agreements, SFC pays Haas Wheat an annual
fee of $700 (a portion of which Haas Wheat is obligated by
agreement to remit to Acadia), Penobscot an annual fee of
$200, and Keystone an annual fee of $100.
In June 1997, pursuant to an agreement among the Company,
Acadia, Keystone, and Haas Wheat ("the signing
stockholders"), the signing stockholders purchased a total of
19,500 units of equity for an aggregate purchase price of
$19,500. Each unit was comprised of one share of cumulative
<PAGE> F-23
preferred stock of the Company and one warrant to purchase
395.1 shares of common stock of the Company, at an exercise
price of $0.02 per share.
The shares of preferred stock are in the aggregate face
amount of $19,500 and have a par value of $1 per share. The
shares of preferred stock have a liquidation value of $1 per
share and are entitled to a dividend rate of 16% per annum.
As of December 31, 1998, the preferred stock had dividends in
arrears of $4,706. Presently, no dividends can be declared
or paid since such declaration or payment would cause or
result in default of outstanding debt instruments of the
Company. The preferred stock is cumulative, non-convertible,
non-participating, and non-redeemable by the holder or the
Company prior to August 16, 2006. Thereafter, any holder or
the Company may redeem all or a portion of the preferred
stock provided that such redemption would not cause or result
in a default in any outstanding debt instrument of the
Company or its subsidiaries at such time.
In 1996, SF Leasing L.L.C. (of which Acadia and Keystone each
owns a 45% interest and Haas Wheat owns a 10% interest)
purchased from Metz all of the equipment at a manufacturing
facility for $3,222 (which was based on the appraised value
of such equipment) and leased such equipment back to Metz.
During 1998, the Company made rental payments totaling $614
to SF Leasing L.L.C. for equipment that was leased by the
Company. In September 1998, the Company repurchased from SF
Leasing L.L.C. this equipment for an aggregate amount of
$3,013.
In June 1997, the Company retained Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ", an affiliate of
DLJMBP, which is a stockholder of the Company), to serve as
the Company's financial advisor in connection with its sale
of Stella. The Company paid DLJ approximately $5,400 as
compensation for such financial advisory services. In
December 1998, DLJ was retained as the financial advisor for
the sale of H&M. Upon the completion of the H&M sale, the
Company will pay DLJ approximately $1,600.
In March 1998, the Company paid DLJ $5,092 in connection with
the Company's refinancing of its Revolving Credit Facility
and Term Loan Facility. DLJ served as the Syndication Agent
and Collateral Agent under both Loan Agreements.
(21) Other Expense (Income)
Other expense (income) is comprised of the following:
1998 1997 1996
---- ---- ----
Loss on disposal of property, plant
and equipment $ 436 $ 1,521 $ 5,747
Discount on receivables sold 2,445 1,933 1,846
Other 248 1,275 1,539
------- ------- -------
$ 3,129 $ 4,729 $ 9,132
======= ======= =======
<PAGE> F-24
Schedule I
----------
Page 1
SPECIALTY FOODS ACQUISITION CORPORATION
Condensed Balance Sheets
(In thousands)
December 31,
------------------------
1998 1997
---- ----
Assets
Cash $ 1 $ 1
Investment in SFC (450,974) (403,804)
Deferred debt issuance costs 4,235 4,843
Due from SFC 7,499 7,376
Other assets - -
-------- --------
Total assets $ (439,239) $ (391,584)
======== ========
Liabilities and Stockholders' Equity
Senior secured discount debentures $ 295,191 $ 260,258
Senior subordinated discount debentures 134,698 121,043
-------- --------
Total liabilities 429,889 381,301
Redeemable preferred stock 19,500 19,500
Stockholders' equity:
Common stock 646 646
Additional paid-in capital 42,750 42,750
Accumulated deficit (930,659) (834,416)
Cost of common shares in treasury (1,365) (1,365)
-------- --------
Total stockholders' equity (888,628) (792,385)
-------- --------
Total liabilities and stockholders' equity $ (439,239) $ (391,584)
======== ========
The accompanying condensed financial statements should be read in
conjunction with the consolidated financial statements of the
Company.
<PAGE> F-25
Schedule I Cont.
--------------
Page 2
SPECIALTY FOODS ACQUISITION CORPORATION
Condensed Statements of Operations
(In thousands)
Years Ended December 31,
-------------------------------------
1998 1997 1996
---- ---- ----
Equity in earnings (loss) of SFC $ (46,166) $ 91,361 $ (446,550)
Operating expenses 972 945 968
------ ------- -------
Income (loss) from operations (47,138) 90,416 (447,518)
------- ------- -------
Nonoperating expense:
Interest expense (48,601) (43,148) (38,285)
Amortization of deferred debt issuance costs (609) (609) (609)
------- ------- -------
Total nonoperating expenses (49,210) (43,757) (38,894)
-------- ------- -------
Income (loss) before income taxes (96,348) 46,659 (486,412)
Income taxes (105) 136 166
-------- ------- -------
Net income (loss) $ (96,243) $ 46,523 $ (486,578)
======== ======= ========
The accompanying condensed financial statements should be read in
conjunction with the consolidated financial statements of the
Company.
<PAGE> F-27
Schedule I Cont.
---------------
Page 3
SPECIALTY FOODS ACQUISITION CORPORATION
Condensed Statements of Cash Flows
(In thousands)
Years Ended December 31,
----------------------------------
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ (96,243) $ 46,523 $ (486,578)
Debt issuance cost amortization 609 609 609
Accretion of interest 48,601 43,148 38,285
Equity in earnings of SFC 46,166 (91,361) 446,550
Changes in operating assets and liabilities:
Other assets - - (91)
--------- --------- ---------
Net cash (used) by operating activities (867) (1,081) (1,225)
Cash flows from financing activities:
Purchase of treasury stock - - (837)
Proceeds from issuance of treasury stock - - 117
Dividend from subsidiary 1,004 1,122 3,671
Issuance of preferred stock - 19,500 -
Purchase of Senior Secured
Discount Debentures - - (1,712)
Advances from SFC 122 (18,375) (37)
Other (259) (1,166) 23
--------- --------- --------
Net cash provided by financing activities 867 1,081 1,225
Net increase in cash and cash equivalents - - -
Cash at beginning of period 1 1 1
--------- --------- --------
Cash at end of period $ 1 $ 1 $ 1
========= ========= ========
The accompanying condensed financial statements should be read in
conjunction with the consolidated financial statements of the
Company.
<PAGE> F-27
EXHIBIT 10.45
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Agreement"), effective as of March 15, 1999, among
SPECIALTY FOODS ACQUISITION CORPORATION, a Delaware
corporation ("SFAC"), SPECIALTY FOODS CORPORATION, a
Delaware corporation ("SFC"), METZ BAKING COMPANY, a
Delaware corporation ("Metz"), MOTHER'S CAKE AND COOKIE CO.,
a California corporation ("Mother's"), ARCHWAY COOKIES,
L.L.C., a Delaware Limited Liability corporation ("Archway")
and ANDRE-BOUDIN BAKERIES, INC., a California corporation
("Boudin"), and LAWRENCE S. BENJAMIN (the "Executive").
This Agreement replaces that certain Amended and Restated
Executive Employment Agreement dated as of January 1, 1997
among SFAC, SFC, and the Executive. SFAC and SFC are
sometimes referred to herein as the "Parent Companies" and
SFAC, SFC, Metz, Mother's, Archway, and Boudin are sometimes
herein referred to individually as an "Employer" and are
sometimes referred to collectively as the "Employers".
The Employers wish to employ the Executive, and the
Executive wishes to accept such employment, on the terms and
conditions set forth in this Agreement.
Accordingly, the Employers and the Executive hereby
agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment Duties. The Employers hereby
employ the Executive for the Term (as defined in Section 2),
to render exclusive and full-time services to the Employers,
as President and Chief Executive Officer of each of the
Parent Companies and as a member of the Board of Directors
of the Parent Companies, and to perform such other duties
(consistent with the customary duties of a corporate
officer) as may be assigned to the Executive by the Board of
Directors of the Parent Companies (collectively, the
"Boards").
1.2 Acceptance. The Executive hereby accepts
such employment and agrees to render the services described
above. During the Term, the Executive agrees to devote the
Executive's entire business time, energy and skill to such
employment, and to use the Executive's best efforts, skill
and ability to promote the Employer's interests. The
Executive further agrees to accept election, and to serve
during all or any part of the Term, as an officer or
director of any Employer or any subsidiary of any Employer,
without any compensation therefor other than that specified
in this Agreement, if elected to any such position by the
shareholders of any Employer, the Boards or the shareholders
or Board of Directors of any such subsidiary, as the case
may be.
2. Terms of Employment.
2.1 The Term. The term of the Executive's
employment under this Agreement (the "Term") shall commence
as of January 1, 1999 (the "Effective Date") and shall,
unless sooner terminated pursuant to Section 2.3 hereof, end
on June 30, 2001 or on such later December 31 to which the
Term is extended pursuant to Section 2.2.
2.2 Extension. On December 31 of each calendar
year starting with December 31, 2000, the then scheduled
expiration date of the Term shall automatically be extended,
without any action required of either the Executive or the
Employers, for twelve additional months, unless the
Executive, on the one hand, or the Employers, on the other
hand, shall have given written notice of non-extension to
the other no later than such December 31. If such written
notice of non-extension is given, the Term shall end on the
then-scheduled termination date (taking into account any
previous extensions pursuant to this Section 2.2). By way
of example, unless written notice of non-extension is given
by December 31, 2000, the otherwise scheduled expiration
date of June 30, 2001 shall be extended to June 30, 2002.
2.3 Early Termination. The Term shall end
earlier than the June 30, 2001 termination date scheduled in
accordance with the foregoing provisions of this Article 2,
if sooner terminated pursuant to Article 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to
be rendered pursuant to this Agreement, the Employers agree
to pay the Executive during the 12 months of the Term ending
on December 31, 1999, a base salary at an annual rate of
$655,000 (the "Base Salary"). The annual Base Salary rate
may be increased from time to time, in the sole discretion
of the Boards.
3.2 Bonus. In addition to the amounts to be paid
to the Executive pursuant to Section 3.1, the Executive will
be eligible to receive with respect to each fiscal year of
the Employers commencing with their fiscal year ending
December 31, 1999, an incentive bonus (the "Incentive
Bonus") equal to a percentage of Base Salary for such fiscal
year based on the achievement of the Employers of
performance targets ("Performance Targets") to be set in the
beginning of such fiscal year by the compensation committee
of the Boards, such that if the minimum Performance Target
is not achieved, the Incentive Bonus shall be zero; if the
intermediate Performance Target is achieved, the Incentive
Bonus shall be equal to 75% of Base Salary; and if the
maximum Performance Target is achieved, the Incentive Bonus
shall be equal to 150% of Base Salary (provisions for pro
rata Incentive Bonus amounts for achievements between the
minimum Performance Target and the intermediate Performance
Target or between the intermediate Performance Target and
the maximum Performance Target, as the case may be, shall
also be established). The Incentive Bonus for each fiscal
year shall be paid to the Executive within 30 days of the
receipt by the Employers of their audited financial
statements for such fiscal year. If, in a given fiscal
year, the Employers achieve Performance Targets such that an
Incentive Bonus exceeding 50% of Base Salary is to be paid
to the Executive for such year, the Executive may, in his
sole discretion, elect to receive the amount (the "Excess
Amount") by which such Incentive Bonus exceeds 50% of the
Base Salary for such year either: (1) in cash, or (ii) in a
combination of 11% Senior Subordinated Discount Debentures
due 2006 of SFAC ("Subordinated Debentures") and common
stock, par value $0.01 per share, of SFAC ("Common Stock").
Such combination shall consist of Subordinated Debentures
with a then accreted value (calculated assuming an 11%
annual implied rate of return) (the "Accreted Value") equal
to 63% of the Excess Amount and shares of Common Stock with
a then Fair Market Value (as defined in Article 11 hereof)
equal to 37% of the Excess Amount. At Executive's request,
the Employers will inform the Executive of such Fair Market
Value reasonably in advance of the time the Executive must
make such election. All Subordinated Debentures and Common
Stock issued to the Executive as part of an Incentive Bonus
under this Section 3.2 shall hereafter be referred to as
"Bonus Securities". Bonus Securities shall vest immediately
upon issuance and accordingly shall for all purposes under
this Agreement be treated as and included in the definition
of Vested Securities (as defined below in Section 3.5.2).
3.3 Business Expenses. The Employer shall pay or
reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive during the Term in the
performance of the Executive's services under this
Agreement, upon presentation of expense statements or
vouchers or such other supporting information as the
Employers customarily require of their other senior
executives.
3.4 Vacation. During the Term, the Executive
shall be entitled to a paid vacation period or periods taken
in accordance with the vacation policy of the Employers
during each year of the Term; provided, that the Executive
shall be entitled to not less than four (4) weeks paid
vacation for each year of the Term.
3.5 Fringe Benefits; Securities Investment; Stock
Options.
3.5.1 Benefits. During the Term, the
Executive shall be entitled to all benefits for which the
Executive shall be eligible under any long term incentive
plan, qualified pension plan, 401(k) plan, annuity plan,
group insurance plan or other so-called "fringe" benefit
plan which the Parent Companies provide to their executive
officers generally, including, without limitation, the SFC
Executive Retirement Annuity Plan. In addition, the
Employers shall (i) pay dues and normal operating
assessments relating to the Executive's membership at a
Chicagoland Country Club (it being understood that
initiation fees will not be paid by the Employers) and
reimburse the Executive for any business entertainment and
meeting fees incurred by the Executive at such club, (ii)
pay for a full comprehensive annual physical examination of
the Executive, (iii) pay the reasonable fees in connection
with personal financial counseling on behalf of the
Executive, including fees relating to tax return
preparation, and (iv) pay all charges in connection with the
use of an AT&T calling card (the use of which shall be
restricted to the Executive and the Executive's spouse).
3.5.2 Securities Investment. Pursuant to
an Executive Securities Purchase Agreement dated as of
December 15, 1994 (the "Closing Date"), between the
Executive and the Employers, the Executive purchased from
SFAC a combination of 11% Senior Subordinated Discount
Debentures of SFAC due 2006 (the "Subordinated Debentures")
and common stock, par value $0.01 per share, of SFAC (the
"Common Stock") for an aggregate purchase price of $10,000.
The Subordinated Debentures and Common Stock purchased
pursuant to this Section 3.5.2 (the "Initial Securities")
shall be considered vested securities ("Vested Securities")
as follows: (i) 25% of the Initial Securities shall become
Vested Securities on the Closing Date, (ii) an additional
25% of such Initial Securities shall become Vested
Securities on the 181st day following the Closing Date,
(iii) an additional 25% of the Initial Securities shall
become Vested Securities on the first anniversary of the
Closing Date, and (iv) the remaining 25% of such Initial
Securities shall become Vested Securities on the 181st day
following the first anniversary of the Closing Date; each
such 25% block of Initial Securities to be comprised of 25%
of the Subordinated Debentures sold to the Executive under
this Section 3.5.2 and 25% of the shares of Common Stock
sold to the Executive under this Section 3.5.2. Vested
Securities shall be transferable by the Executive, subject
only to restrictions ("Transfer Restrictions") on the
transfer of Initial Securities set forth in (i) the
Stockholders Agreement, dated as of August 16, 1993, among
SFAC and its principal stockholders, as amended (the
"Principal Stockholders Agreement"), (ii) the Stockholders
Agreement, dated as of August 16, 1993, among SFAC and all
of its stockholders, as amended (the "Investors Stockholders
Agreement"), and (iii) the Securities Purchase Agreement,
dated as of August 16, 1993, among SFAC, its principal
Stockholders and all holders of the Subordinated Debentures,
as amended (the "Securities Purchase Agreement"); provided,
that any Vested Securities transferred pursuant to an
exemption from Transfer Restrictions for transfer to
Affiliates provided for in Section 2.1(a)(ii) of the
Principal Stockholders Agreement or Section 6.4(a) of the
Securities Purchase Agreement shall remain subject to the
Employers' repurchase rights, and shall be benefited by the
Executive's (or his Beneficiary's) right to require
repurchase, under Article 4 hereof. Initial Securities not
yet vested shall not be transferable; except, that the
Executive may transfer such Initial Securities (i) in
connection with the Executive's exercise of rights as an
Other Stockholder (as defined in the Principal Stockholders
Agreement) under Section 2.1(b) of the Principal
Stockholders Agreement or as an Other Holder (as defined in
the Securities Purchase Agreement) under Section 6.4(a) of
the Securities Purchase Agreement, so long as the Executive
has previously transferred all of his Vested Securities as a
"Transferor" or an "Other Stockholder" under Section 2.1(b)
of the "Principal Stockholders" Agreement, as a "Transferor"
or "Other Holder" under Section 6.4(a) of the Securities
Purchase Agreement or in a registered public offering; or
(ii) to the Executive's spouse or children or a trust
established for their benefit (so long as such trust is
controlled by the Executive or his estate), which Initial
Securities, notwithstanding such transfer to the Executive's
spouse or children or to such trust, shall remain subject to
the Employers' repurchase rights, and shall be benefited by
the Executive's (or his Beneficiary's) right to require
repurchase, under Article 4 hereof; (iii) in a registered
public offering in which the Executive has a right to
participate pursuant to Article 1 of Exhibit A to the
Principal Stockholders Agreement, so long as the Executive
is not an "Initiating Holder" (as defined herein); provided,
that this clause (iii) shall apply only if the Executive has
previously transferred all Vested Securities in the manner
described in clause (i) above or will transfer all of such
Vested Securities in connection with such public offering;
or (iv) in order to comply with the requirements of
Section 2.2 of the Principal Stockholders Agreement.
3.5.3 Management Option and Bonus. The
Executive shall continue to participate in the management
stock option plan (the "Option Plan").
3.5.4 Tax Equalization Amounts. If in
any calendar year (the "Exercise Year"), the Executive
exercises one or more Options, the Employers shall make a
payment to the Executive equal to the Tax Equalization
Amount, computed in the manner set forth below. Except as
provided in paragraph (d) below, the Tax Equalization Amount
shall be paid no later than April 15 of the year following
the Exercise year.
(a) The Tax Equalization Amount shall
equal the lesser of (i) the Employers' Tax Benefit Amount,
or (ii) the Executive Tax Rate Differential Amount.
(b) The Employers' Tax Benefit Amount
shall equal the excess, if any, of (i) the amount of
consolidated Federal income tax liabilities that the
Employers would have had for the taxable year of the
Employers that includes the last day of the Exercise Year
(the "Applicable Employer Taxable Year"), without taking
into account any deduction to which the Employers are
entitled directly by reason of the exercise of such Options,
over (ii) the amount of consolidated Federal income tax
liability of the Employers for the Applicable Employer
Taxable Year, taking into account any deduction to which the
Employers are entitled directly by reason of the exercise of
such Options. The amount of the Employers' Tax Benefit
Amount shall be determined by the Accounting Firm (as
defined in Section 3.9).
(c) The Executive's Tax Rate
Differential Amount shall equal the amount obtained by
dividing "x" by "y," where "x" equals the excess, if any, of
(i) the Executive's Federal income tax liability for the
Exercise Year, over (ii) the amount of Federal income tax
liability that the Executive would have had for the Exercise
Year if income recognized directly by reason of the exercise
of the Options exercised in the Exercise Year ("Option
Income") had been treated as long-term capital gain, and "y"
equals the number obtained by subtracting the Executive's
marginal Federal income tax rate for ordinary compensation
income under Subtitle A and Section 3101 of the Code
(expressed by a decimal) (the "Income Tax Rate") from one;
such that, by way of example, if the Executive's Option
Income for the Exercise Year were $100,000 and the Income
Tax Rate were 40% and the Federal tax rate applicable to
long-term capital gains were 28%, the Tax Rate Differential
Amount would equal $20,000, calculated as follows: The
amount described in clause (i) above would, in such case, be
$40,000 and the amount described in clause (ii) above would,
in such case, be $28,000, and therefore the excess of the
clause (i) amount over the clause (ii) amount would, in such
case, be $12,000 --- $12,000 divided by 0.6 equals $20,000
($12,000/1-0.4 = $20,000). The amount of the Executive's
Tax Rate Differential Amount shall be determined by the
Accounting Firm.
(d) If (i) for any Exercise Year, the
Employers' Tax Benefit Amount is less than the Executive's
Tax Rate Differential (a "Shortfall"), and (ii) in any of
the seven following taxable years of the Employer
immediately following the Applicable Employer Taxable year
(a "Subsequent Year"), there is a Subsequent Year Employers'
Tax Benefit Amount (as defined below) attributable to such
Exercise Year, then the Employers shall make a payment to
the Executive no later than April 15 of the year following
such Subsequent Year equal to the lesser of (A) the
Subsequent Year Employers' Tax Benefit Amount with respect
to such Exercise Year, or (B) the excess, if any, of (I) the
Shortfall with respect to such Exercise Year, over (II) any
amounts previously paid to the Executive pursuant to this
Section 3.5.5(d) with respect to such Exercise Year. For
purposes of this Section 3.5.5(d), the Subsequent Year
Employers' Tax Benefit Amount with respect to a particular
Exercise Year and Subsequent Year shall equal the excess, if
any, of (x) the amount of Federal income tax liability that
the Employers would have had for the Subsequent Year (the
"Applicable Employer Subsequent Taxable Year"), without
taking into account any deduction to which the Employers are
entitled directly by reason of the exercise of Options by
the Executive during the Exercise Year or any subsequent
taxable year of the Executive (including by way of a net
operating loss carryover), over (y) the amount of Federal
income tax liability of the Employers for the Applicable
Employer Subsequent Taxable Year taking into account any
deduction to which the Employers are entitled (in any year)
directly by reason of the exercise of Options exercised by
the Executive in the Exercise Year but not in any subsequent
taxable year of the Executive (including by way of a net
operating loss carryover). The amount of the Subsequent
Year Employers' Tax Benefit Amount shall be determined by
the Accounting Firm.
(e) For purposes of this Section 3.5.5,
the Federal income tax liability of any person shall mean
all liabilities of such person under Subtitle A and
Section 3101 of the Code.
3.6 Automobile. In addition, the Executive will
receive an automobile allowance of $1,100.00 per month
during the term of this Agreement.
3.7 Withholding. All compensation of the
Executive by the Employers provided for in this Agreement,
whether in the form of cash, securities or "fringe"
benefits, shall be subject to such deductions or amounts to
be withheld as required by applicable law and regulations.
Whenever compensation provided for under this Agreement is
to be delivered to the Executive in a form other than cash,
the Employers may require as a condition of delivery that
the Executive remit to the Employers an amount sufficient to
satisfy all federal, state and other governmental
withholding tax requirements related thereto. If the
compensation referred to in the preceding sentence is in the
form of securities (whether by the vesting of securities or
otherwise), the Employers shall, if the Executive so
requests and the Employers consent (such consent not to be
withheld unreasonably), satisfy the requirements of the
preceding sentence, to the extent permitted by applicable
law, by deducting from the number of securities otherwise
deliverable to the Executive, a number of securities having
a fair market value equal to the amount required to satisfy
all federal, state and other governmental withholding tax
requirements related thereto.
3.8 Source of Payment; Joint and Several
Obligations; Nature of Certain Payments. Any amounts
payable to or on behalf of the Executive under this
Agreement shall be paid by the Employers on an allocated
basis in accordance with the services rendered by the
Executive to each Employer; provided that the Employers
shall be jointly and severally liable for all amounts
payable to or on behalf of the Executive hereunder. No
payment made to the Executive pursuant to Section 3.5.4 or
3.9 shall be deemed, for any purpose, a payment of purchase
price for Common Stock or Subordinated Debentures.
3.9 Certain Additional Payments by the Employers.
(a) Anything in this Agreement to the
contrary notwithstanding, in the event that (i) a
Section 280G Change (as defined below) occurs and (ii) any
payment, distribution, other compensation or benefit by any
Employer to (or for the benefit of) the Executive pursuant
to the terms of this Agreement or any other plan or
agreement in which the Executive participates, as now in
effect or as amended from time to time (hereinafter, a
"Payment"), is determined (as hereinafter provided) to be
subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Code (or any similar tax that may
hereafter be imposed), the Employers shall pay to the
Executive an additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments (as
defined below) and any federal, state and local income tax
and Excise Tax upon the additional amount provided for by
this paragraph (a), shall be equal to the Total Payments;
provided, however, that the aggregate payments required to
be paid to or for the benefit of the Executive pursuant to
this Section 3.9 shall not exceed $5 million, plus, an
amount equal to the interest and penalties, if any,
attributable to the portion of the Excise Tax for which the
Gross-Up Payment, as limited by this proviso, reimburses the
Executive. Thus, by way of example, if a Gross Up Payment
equal to $10 million would be due, but for the proviso set
forth in the preceding sentence the Employers' obligation
with respect to interest and penalties imposed on the
Executive with respect to the Excise Tax shall be limited to
an amount equal to 50% of such Interest and penalties.
(b) Subject to the provisions of
Section 3.9(c), all determinations required to be made under
this Section 3.9 including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment
and, subject to the provisions below, the assumptions to be
utilized in arriving at such determination, shall be made by
KPMG Peat Marwick (or other independent auditor of the
Employers at the time) (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Employers and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment with respect to which a Gross-Up Payment is owing,
or such earlier time as is requested by the Employers. All
fees and expenses of the Accounting Firm shall be paid
solely by the Employers. Any Gross-Up Payment, as
determined pursuant to this Section 3.9, shall be paid by
the Employers to the Executive within five business days of
the receipt of the Accounting Firm's determination. The
parties acknowledge that unless the Accounting Firm is able
to provide the Executive with the opinion described in the
third following sentence with respect to such Payment, the
Accounting Firm shall determine the amount of the Gross-Up
Payment that is due at the time of any Payment. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
result in the imposition of the negligence or similar
penalty. Any determination by the Accounting Firm shall be
binding upon the Employers and the Executive. The parties
hereto acknowledge that, as a result of uncertainty in the
application of Section 4999 of the Code, it is possible that
Gross-Up Payments will not have been made by the Employers
that should have been made (hereinafter, an "Underpayment"),
consistent with the provisions of this Section 3.9. In the
event that the Executive is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Employers to or
for the benefit of the Executive, unless the Executive has
failed to comply with Section 3.9(c) and such failure has
materially deprived the Employers of the right to contest
any claim by the Internal Revenue Service with respect to
such payments.
For purposes of determining the amount of the
Gross-Up payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation for the calendar year in which the Gross-Up
Payment is to be made and the applicable state and local
taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payments is to be made,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes.
(c) The Executive shall notify the Employers
in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the
Employers of a Gross-Up Payment. Such notification shall be
given as soon as practicable but, in any event, no later
than ten business days after the Executive is informed in
writing of such claim and shall apprise the Employers of the
nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Employers (or
such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Employers
notify the Executive in writing prior to the expiration of
such period that they desire to contest such claim, and if
the Employers acknowledge in writing their liability,
subject to the limitations set forth in Section 3.9(a), to
the Executive pursuant to this Section 3.9 with respect to
any amounts payable in connection with such claim, the
Executive shall:
(i) give the Employers any information
reasonably requested by the Employer and reasonably
available to the Executive relating to such claim;
(ii) take all such actions in connection
with contesting such claim as the Employers shall
reasonably request in writing from time to time,
including, without limitation, accepting legal
representation with respect to such claim by an
attorney selected by the Employers and agreeing to
extend the statute of limitations as requested by the
Employers;
(iii) cooperate with the Employers in
good faith in order to effectively contest such claim;
and
(iv) permit the Employers to participate
in any proceeding relating to such claim;
provided, however, that the Employers shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation of the foregoing
provisions of this Section 3.9(c), the Employers shall
control all proceedings taken in connection with such
contest and, at their sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at their sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Employers shall determine; provided, however, that if
the Employers direct the Executive to pay such claim and sue
for a refund, the Employers shall advance the amount of such
payment to the Executive, on an interest-free, after-tax
basis. Furthermore, the Employers' control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive
of an amount advanced by the Employers pursuant to Section
3.9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Employers' complying with the requirements of Section
3.9(c)), promptly pay to the Employers the amount of such
refund (together with any interest received or credited
thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the
Employers pursuant to Section 3.9(c), a determination is
made that the Executive shall not be entitled to any refund
with respect to such claim and the Employers do not notify
the Executive in writing of their intent to contest such
denial of refund prior to the expiration of 30 days after
such determination, then to the extent of the Gross-Up
Payment such advance shall be forgiven and shall not be
required to be repaid and shall, to such extent, offset the
amount of Gross-Up Payment required to be paid, and the
remaining portion of such advance shall forthwith become due
payable.
(e) For purposes of this Agreement:
A "Section 280G Change" shall mean a
"change in ownership or effective control" of either
Employer or a "change in the ownership of a substantial
portion of the assets" of either Employer, in each case
within the meaning of Section 280G(b)(2)(A)(i) of the Code.
A "Public Offering" shall mean an
initial public offering of stock of either Employer if at
any time thereafter stock of either Employer is "readily
tradable on an established securities market or otherwise"
(within the meaning of Section 280G(b)(5)(A)(ii) of the
Code).
"Total Payments" shall mean any payment
or benefits received or to be received by the Executive
under this Agreement or any other plan or agreement in which
the Executive participates, as now in effect or as amended
from time to time, including the plans discussed in Section
3.5.3 and benefits granted the Executive under that certain
Stock Purchase Agreement dated as of June 15, 1995 by and
among the Executive and the Employers (the "Stock Purchase
Agreement").
3.10 Performance Based Competition. It is the
intention of the parties that, if Section 162(m) of the Code
is or will be applicable with respect to one or more
payments hereunder, the Executive will consider in good
faith any requests by the Employers to take actions to cause
such payments to meet the requirements of Section
162(m)(4)(B) or (C) of the Code, and thus to be excluded
from the definition of "applicable employee remuneration"
within the meaning of Section 162(m)(4) of the Code.
4. Termination.
4.1 Death. If the Executive shall die during the
Term, upon the date of the Executive's death:
(a) the Term shall terminate and no further
amounts or benefits shall be payable hereunder, except that
the Employers shall be obligated to pay to the Beneficiary
(as defined below), within 60 days of the date of the
Executive's death, (i) all unpaid Base Salary accrued
through and including the date of the Executive's death,
(ii) a lump sum amount equal to Base Salary for 18 months,
at the rate in effect on the date of the Executive's death
(the "Annual Base Salary Upon Death"), and (iii) an
additional lump sum bonus amount equal to the sum of (x) 75%
of 1.5 x Annual Base Salary Upon Death and (y) 75% of Annual
Base Salary Upon Death pro rated for the period commencing
on the first day of the fiscal year during which the
Executive's death occurred and ending on the date of
Executive's death; it being understood that such 75% bonus
level has been agreed to because it is impossible to
determine the performance of the Employers for future
periods; provided that the amounts to be paid by the
Employers under (ii) and (iii) above shall be reduced by any
payments received by the Beneficiary under life insurance
policies the premiums for which have been paid by the
Employers. The "Beneficiary" shall be (i) the beneficiary
designated by the Executive on a form prescribed for such
purpose by the Employers, or (ii) in the absence of such
designation, the Executive's executor or legal
representative, in such capacity;
(b) for the 180 days following such date,
the Employers shall have the right to purchase (i) all but
not less than all of the Vested Securities and of the Vested
Acquired Securities (as defined in that certain Securities
Purchase Agreement dated as August 1, 1995 (the "August
Purchase Agreement"), at a price equal to the Full Value (as
defined below) thereof on the date of the Executive's death,
and/or (ii) all but not less than all other Initial
Securities and Initial Acquired Securities (as defined in
the August Purchase Agreement), at cost, plus, in the case
of the Subordinated Debentures, accreted discount thereon
through and including the date of such purchase; provided,
that Initial Securities and Initial Acquired Securities that
would have vested within the six-month period following the
date of the Executive's death shall be treated for all
purposes under this Section 4.1, as Vested Securities or as
Vested Acquired Securities, as the case may be. "Full
Value" means (i) the case of the Subordinated Debentures,
the then accreted value thereof (calculated assuming an 11%
annual implied rate of return), and (ii) in the case of the
Common Stock, the Fair Market Value (as defined in Section
10.2 hereof) thereof;
(c) for the 180 days following such date,
the Beneficiary shall have the right to require the
Employers to purchase (subject to Section 4.6 hereof) all
but no less than all of the Vested Securities and the Vested
Acquired Securities, at a price equal to the Full Value
thereof on the date of the Executive's death, together with
all but not less than all of the other Initial Securities,
at cost, plus, in the case of the Subordinated Debentures
included among such other Initial Securities and the Initial
Acquired Securities, accreted discount thereon through and
including the date of such purchase, and
(d) for the 180 days following such date,
the Employers shall have the right to repurchase all but not
less than all of the Purchased Shares, as defined in the
Stock Purchase Agreement, at a price equal to the Fair
Market Value thereof as of the date of the Executive's
death, provided, that the proceeds shall first be used to
pay any outstanding principal of and interest accrued but
not paid under the Note (as defined in the Stock Purchase
Agreement); and
(e) for the 180 days following such date,
the Beneficiary shall have the right to require the
Employers to repurchase all but not less than all of the
Purchased Shares (subject to Section 4.6 hereof), at a price
equal to the Fair Market Value thereof on the date of the
Executive's death, provided that the proceeds shall first be
used to pay any outstanding principal of and interest
accrued but not paid under the Note.
4.2 Disability.
4.2.1 If during the Term the Executive shall
become physically or mentally disabled, whether totally or
partially, such that the Executive is unable to perform the
Executive's services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating
six months during any twelve month period, the Employers may
on any day (the "Disability Termination Date") after the
last day of the six consecutive months of disability or the
day on which the shorter periods of disability shall have
equaled an aggregate of six months (but, in each case,
before the Executive has recovered from such disability), by
written notice to the Executive, terminate the Term (a
"Disability Termination") and no further amounts or benefits
shall be payable hereunder, except that the Employers shall
be obligated to pay to the Executive within 60 days of the
Disability Termination Date, (i) all unpaid Base Salary
accrued through and including the Disability Termination
Date, (ii) a lump sum amount equal to Base Salary for 18
months, at the rate in effect on the Disability Termination
Date (the "Annual Base Salary Upon Disability"), and (iii)
an additional lump sum bonus amount equal to the sum of (x)
75% of 1.5 x Annual Base Salary Upon Disability and (y) 75%
of Annual Base Salary Upon Disability prorated for the
period commencing on the first day of the fiscal year during
which the Disability Termination occurred and ending on the
Disability Termination Date; it being understood that such
75% bonus level has been agreed to because it is impossible
to determine the performance of the Employers for future
periods. If the Executive shall die before receiving all
amounts required to be paid by the Employers in accordance
with the foregoing, such amounts shall be paid to the
Beneficiary.
4.2.2 In the event of a Disability Termination
(a) for the 180 days following the
Disability Termination Date, the Employers shall have the
right to purchase (i) all but not less than all of the
Vested Securities and the Vested Acquired Securities, at a
price equal to the Full Value thereof on the Disability
Termination Date, and/or (ii) all but not less than all
other Initial Securities and Initial Acquired Securities, at
cost, plus, in the case of the Subordinated Debentures,
accreted discount thereon through and including the date of
such purchase; provided, that Initial Securities and Initial
Acquired Securities that would have vested within the six-
month period following the Disability Termination Date shall
be treated, for all purposes under this Section 4.2.2, as
Vested Securities or as Vested Securities, as the case may
be;
(b) for the 180 days following the
Disability Termination Date, the Executive shall have the
right to require the Employers to purchase (subject to
Section 4.6 hereof) all but not less than all of the Vested
Securities and the Vested Acquired Securities, at a price
equal to the Full Value thereof on the Disability
Termination Date, together with all but not less than all of
the other Initial Securities and Initial Acquired
Securities, at cost, plus, in the case of the Subordinated
Debentures included among such other Initial Securities,
accreted discount thereon through and including the date of
such purchase;
(c) for the 180 days following the
Disability Termination Date, the Employers shall have the
right to repurchase all but not less than all of the
Purchased Shares at a price equal to the Fair Market Value
thereof on the Disability Termination Date; provided, that
the proceeds shall first be used to pay any outstanding
principal of and interest accrued but not paid under the
Note; and
(d) for the 180 days following the
Disability Termination Date, the Executive shall have the
right to require the Employers to repurchase all but not
less than all of the Purchased Shares (subject to Section
4.6 hereof), at a price equal to the Fair Market Value
thereof on the Disability Termination Date; provided, that
the proceeds shall first be used to pay any outstanding
principal of and interest accrued but not paid under the
Note.
4.3 Cause; Voluntary Termination.
4.3.1 In the event of the conviction of the
Executive of any felony involving intentional conduct on the
part of the Executive, the conviction of the Executive of
any lesser crime or offense involving the illegal use or
conversion of property of the Employers or any of their
subsidiaries or affiliates, the willful misconduct by the
Executive in connection with the performance of the
Executive's duties hereunder (which shall not be deemed to
include an action by the Executive taken in good faith in
the best interest of the Employers) or the continued breach
by the Executive of any material provision of this Agreement
after notice of such breach has been actually received by
the Executive from the Employers (the "deemed receipt"
provisions of Article 8 hereof being inapplicable to this
Section 4.3.1), the Employers may at any time, by written
notice to the Executive, terminate the Term (a "Termination
For Cause") and, upon such Termination For Cause, the Term
shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive, within 60 days of the date of termination, all
unpaid Base Salary accrued, and provide the Executive with
all benefits and expense reimbursement to which the
Executive would otherwise be entitled, through and including
the date of termination.
4.3.2 Upon a voluntary termination of the term
by the Executive (a "Voluntary Termination") without Good
Reason (as defined in Section 4.4.2), the Term shall
terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder; provided, that the
Employers shall be obligated to pay to the Executive, within
60 days of the date of termination, all unpaid Base Salary
accrued, and provide the Executive with all benefits and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination.
4.3.3 Upon either a Termination For Cause or a
Voluntary Termination without Good Reason, for the 180 days
following the date of termination, the Employers shall have
the right to purchase (i) all but not less than all of the
Vested Securities, at a price equal to the Full Value
thereof on the date of termination, and/or (ii) all but not
less than all other Initial Securities, at cost, plus, in
the case of the Subordinated Debentures, accreted discount
thereon through and including the date of such purchase,
and/or (iii) all but not less than all of the Vested
Purchased Shares, at a price equal to the Fair Market Value
thereof on the date of termination, and/or (iv) all but not
less than all other Purchased Shares which are unvested on
the date of such termination, at cost, provided, that the
proceeds shall first be used to pay any outstanding
principal of and interest accrued but not paid under the
Note. The Executive shall not have the right to require the
Employer to repurchase such Vested Securities, Initial
Securities, Vested Purchased Shares and Initial Purchased
Shares.
4.4 Termination by Employers Without Cause;
Termination by the Executive for Good Reason.
4.4.1 Upon a Termination Without Cause
(as defined below) or a Voluntary Termination with Good
Reason (as defined below):
(a) the Employers shall pay to the
Executive, within 60 days of the date of termination, all
unpaid Base Salary accrued, and provide the Executive with
all benefits and expense reimbursement to which the
Executive would otherwise be entitled, through and including
the date of termination;
(b) subject to Sections 4.4.4 and
4.4.6, the Employers shall pay the following to the
Executive:
(i) the Employers shall continue
payments of Base Salary to the Executive (the
"Continued Salary"), at the rate and at such times as
are in effect on the date of termination (the "Base
Salary Upon Termination"), for the 18 month period
following the date of termination (the "Payment
Period"), except as provided in Section 4.4.4,
(ii) the Employers shall continue
health and life insurance benefits during the Payment
Period (the "Continued Benefits"), and
(iii) the Employers shall pay
to the Executive, at the end of the Payment Period, a
bonus (the "Continued Bonus," and together with the
Continued Salary and the Continued Benefits, the
"Continued Payments") in an amount equal to 75% of the
aggregate base salary paid to the Executive during the
period commencing on the day after the last day of the
last fiscal year completed prior to the date of
termination and ending on the last day of the Payment
Period; it being understood that such 75% bonus level
has been agreed to because it is impossible to
determine the performance of the Employers for future
periods;
(c) for the 180 days following the date
of termination, the Employers shall have the right to
purchase (i) all but not less than all of the Vested
Securities and the Vested Acquired Securities, at a price
equal to the Full Value thereof on the date of termination,
and/or (ii) all but not less than all other Initial
Securities and Initial Acquired Securities, at cost, plus,
in the case of the Subordinated Debentures, accreted
discount thereon through and including the date of such
purchase;
(d) for the 180 days following the date
of termination, the Executive shall have the right to
require the Employers to purchase (subject to Section 4.6
hereof) all but not less than all of the Vested Securities
and the Vested Acquired Securities, at a price equal to the
Full Value thereof on the date of termination, together with
all but not less than all of the other Initial Securities
and Initial Acquired Securities, at cost, plus, in the case
of the Subordinated Debentures included among such other
Initial Securities, accreted discount thereon through and
including the date of such purchase;
(e) within 180 days of the date of
termination, the Employers shall have the right to
repurchase all but not less than all of the Purchased Shares
at a price equal to the Fair Market Value thereof on the
date of termination; provided, that the proceeds shall first
be used to pay any outstanding principal of and interest
accrued but not paid under the Note; and
(f) for the 180 days following the date
of termination, the Executive shall have the right to
require the Employers to repurchase (subject to Section 4.6
hereof) all but not less than all of the Purchased Shares at
a price equal to the Fair Market Value thereof on the date
of termination; provided, that the proceeds shall first be
used to pay any outstanding principal of and interest
accrued but not paid under the note.
4.4.2. Definitions:
(a) "Termination Without Cause" means
the termination of the Term by the Employers for reasons
other than those described in Sections 4.1, 4.2 or 4.3.
(b) "Good Reason" means:
(i) the continuation of any of the
following (without the Executive's express prior consent)
after written notice provided by the Executive and the
failure by the Employers to remedy such event within thirty
(30) days after receipt of such notice:
(A) a reduction in the
Executive's Base Salary, as in effect at the date
hereof pursuant to Section 2.2 or as in effect pursuant
to increases from time to time made during the Term;
(B) failure by the
Employers to pay to the Executive an Incentive
Bonus, as provided for in this Agreement;
(C) a failure by the
Employers to provide any benefit or compensation
plan (including any pension, profit sharing,
annuity, life insurance, health, accidental death
or dismemberment or disability plan), or any
substantially similar benefit or compensation
plan, which has been made available to other
comparable executives of the Employees on terms no
less favorable to the Executive than the terms
offered to such other executives; provided,
however, that nothing in this clause (iii) shall
be construed to mean that the Employers shall be
constrained from amending or eliminating any
benefit or compensation plan as such is applied to
the Executive and to other comparable executives
of the Employers; provided, further, that a
failure by the Employers to include the Executive
in any stock option plan or bonus plan shall not
constitute Good Reason hereunder;
(D) the assignment to the
Executive of any duties materially inconsistent with
the Executive's position as President and Chief
Executive Officer of the Parent Companies;
(E) a materially adverse
change in the Executive's title or the line of
authority through which the Executive is required to
report, it being understood that the Executive shall at
all times report to the Boards;
(F) failure by the Employers
to obtain the written agreement of any successor in
interest to the business of the Employers to assume and
perform the obligations of the Employers under this
Agreement;
(G) a relocation of the
corporate headquarters of the Employers requiring the
Executive to relocate to a place other than the greater
Chicago, Illinois metropolitan area; or
(H) any material breach of
this Agreement by the Employers; or
(ii) termination at the election of the
Executive within 180 days following a Change of Control
(as defined in Section 4.4.6).
4.4.3. In the event of a Termination
Without Cause or a Voluntary Termination for Good Reason,
the Executive shall not be required to mitigate his damages
hereunder; provided, however, that, notwithstanding the
foregoing, if there are any damage hereunder by reason of
the events of termination described above which are
"contingent on" a Section 280G Change within the meaning of
Section 280G(b)(2)(A) of the Code after a Public Offering
(i) the Executive shall be required to mitigate such damages
hereunder, including any such damages theretofore paid, but
not in excess of the extent, if any, necessary to prevent
the Employers from losing any tax deductions to which they
would otherwise be entitled in connection with such damages
if they were not so "contingent on" a Section 280G Change
(provided, that, the parties agree that this clause (i)
shall not require the Executive to violate Section 5.2
hereof) and (ii) in addition to any obligation under the
preceding clause (i), and without duplication of any amounts
required to be paid to the Employers thereunder, if any such
termination occurs and the Executive, whether or not
required to mitigate his damages under clause (i) above,
thereafter obtains other employment, the total compensation
received in connection with such other employment, whether
paid to the Executive or deferred for his benefit, for
services prior to the end of the Modified Payment Period (as
defined below) (up to the aggregate amount of damages
described in Section 4.4.1(b)) shall be paid over to the
Employers as received with respect to such period.
Notwithstanding the provisions of this Section 4.4.3, the
Employers shall not have the right to enforce their rights
under this Section 4.4.3 by set off against or by otherwise
withholding any amounts receivable by the Executive (or
payable on the Executive's behalf) under this Agreement upon
or following the time at which they are required to be paid
under this Agreement.
4.4.4 In the event that any amounts or other
benefit payable pursuant to Section 4.4 or 4.5 (other than
Section 4.4.6) (including, but not limited to, the Continued
Payments, the receipt of any security upon the exercise of
any Option, or the lapse of any direct or indirect
restriction on the ability to transfer any such security for
the fair market value thereof) would be deemed "contingent
on" a Section 280G Change (within the meaning of Section
280G(b)(2)(A) of the Code) that occurs subsequent to a
Public Offering:
(a) the Continued Salary shall be paid, the
Continued Bonus shall be calculated by reference to and the
Continued Benefits shall be provided for the shorter of (i)
18 months following the date of termination, and (ii) the
remainder of the Term (even if such remaining period is less
than twelve months)(the "Modified Payment Period"), and
(b) the Continued Salary and the Continued
Bonus (as modified in clause (a) of this Section 4.4.4)
shall be paid to the Executive by the Employers, within 60
days of the date or termination, in a lump sum, which lump
sum shall be discounted to the present value, on the date of
payment, if the Continued Salary (as if paid at the times
the Base Salary would have been paid to the Executive under
Section 2.2 if the Executive had been employed by the
Employers during the Modified Payment Period) and the
Continued Bonus (as if paid on the last day of the Modified
Payment Period) at the Discount Rate. "Discount Rate" shall
mean the discount rate described in Section 280G(d)(4) of
the Code. The parties hereby elect, to the extent permitted
for purposes of such Section 280G(d)(4), to base the
Discount Rate on the applicable federal rate in effect on
the date hereof.
4.4.5 It is the intention of the parties that,
if there has been a Public Offering and a Section 280G
Change occurs, payments to be made to the Executive in the
event of a Termination Without Cause or a Voluntary
Termination for Good Reason qualify as "reasonable
compensation for personal services to be rendered on or
after the date of the change" within the meaning of Section
280G(b)(4)(A) of the Code and Q&A 42(b) of Proposed
Regulation Section 1.280G-1 thereunder (as amended from time
to time), and the provisions of this Agreement shall, in the
event of any ambiguity, be interpreted in a manner
consistent with the foregoing.
4.4.6 Upon Termination Without Cause or a
Voluntary Termination with Good Reason that occurs both (i)
prior to a Public Offering, and (ii) following a Change of
Control (as defined below) all unvested Initial Securities
shall become Vested Securities. A "Change of Control"
shall, for the purposes of this Agreement, be deemed to have
occurred upon the date, if any, at which (i) with respect to
SFAC, a person or group (as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended)
other than Acadia Partners, L.P., Keystone, Inc., HWP
Partners, L.P. and their respective Affiliates (as defined
in Section 2.1(a) of the Principal Stockholders Agreement)
(such person or group being a "Non-Affiliate") has the
collective ability to directly or indirectly designate a
majority of the members of the SFAC Board (whether by
contract or otherwise) or (ii) with respect to SFC, a
transaction (including a sale, merger or other similar
transaction, but excluding any transaction among only SFAC,
SFC and or their subsidiaries) (x) pursuant to which all or
substantially all of the assets of SFC (as exist on the date
hereof) are sold to Non-Affiliates, (y) pursuant to which
Non-Affiliates acquire the collective ability to designate
directly or indirectly a majority of the Board of Directors
of SFC (by contract or otherwise) or (z) which the
compensation committee of the Board of Directors of SFC
determines, in its discretion, to be a change in control.
4.5 Termination by Non-Extension of Term. Upon a
termination of the Term by reason of the non-extension of
the Term pursuant to Section 2.2:
(a) without regard to whether notice of such
termination is given by the Employers or the Executive, the
Term shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive all unpaid Base Salary accrued, and provide the
Executive with all Base Salary, benefits, bonuses and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination
of the Term;
(b) if such termination occurs by reason of the
giving by any party of a notice of non-extension, for the
180 days following the date of termination of the Term, the
Employers shall have the right to repurchase (i) all but not
less than all of the Vested Securities and the Vested
Acquired Securities, at a price equal to the Full Value
thereof on the date of termination of the Term and/or (ii)
all but not less than all other Initial Securities and
Initial Acquired Securities, at cost, plus, in the case of
the Subordinated Debentures, accreted discount thereon
through and including the date of such purchase; and
(c) for the 180 days following the date of
termination, the Employers shall have the right to
repurchase all but not less than all of the Purchased Shares
at a price equal to the Fair Market Value thereof on the
date of termination of the Term; provided that the proceeds
shall first be used to pay any outstanding principal of and
interest accrued but not paid under the Note.
(d) in addition to the provisions of clauses (a),
(b) and (c) above, if the Employers give notice of non-
extension pursuant to Section 2.2:
(i) unless the notice on non-extension would
be deemed "contingent on" a Section 280G Change (within
the meaning of Section 280G(b)(2)(A) of the Code) that
occurs subsequent to a Public Offering, the Employers
shall continue payments of Base Salary to the Executive
(the "Non-Renewal Continued Salary"), at the rate and
at such times as are in effect on the date of the
termination of the Term (the "Non-Renewal Base
Salary"), for the 18 month period following the date of
termination of the Term (the "Non-Renewal Payment
Period");
(ii) the Employers shall provide the
Continued Benefits during the Non-Renewal Payment
Period; and
(iii) for the 180 days following the date
of termination of the Term, the Executive shall have
the right to require the Employers to purchase (subject
to Section 4.6 hereof) (i) all but not less than all of
the Vested Securities and the Vested Acquired
Securities, at a price equal to the Full Value thereof
on the date of termination of the Term, and/or (ii) all
but not less than all of the Initial Securities and
Initial Acquired Securities, at cost, plus, in the case
of the Subordinated Debentures, accreted discount
thereon through and including the date of such
purchase.
(e) for the 180 days following termination of the
Term, the Executive shall have the right to require the
Employers to purchase (subject to Section 4.6 hereof) all
but not less than all of the Purchased Shares at a price
equal to the Fair Market Value thereof on the date of
termination of the Term; provided, that any proceeds from
any such purchase and sale shall first be used to pay any
outstanding principal of and interest accrued but not paid
under the Note.
4.5.1 Certain Provisions Regarding Termination
by Non-Extension. Following a notice of termination of the
term by reason of the non-extension of the Term pursuant to
Section 2.2, the Executive shall remain entitled to the
protection of Sections 4.1, 4.2 and 4.3 of this Agreement
and shall receive the benefits payable under such Sections
in the event the Executive's death or disability or a
Termination Without Cause or a Voluntary Termination with
Good Reason occurs between the time the notice of non-
extension occurs pursuant to Section 2.2 and the end of the
Term.
4.6 Certain Provisions Regarding Repurchase
Obligations. The rights of the Executive (or the
Beneficiary, as the case may be) to require the Employers to
purchase Securities from the Executive pursuant to Article 4
hereof ("Put Rights") shall be limited by this Section 4.6.
The Executive (or the Beneficiary) shall not have the right
to require the Employers to purchase any securities pursuant
to Article 4 to the extent that such purchase (i) would
constitute or cause a breach or violation of or a default
(whether immediately or with notice or lapse of time or
both) under any debt agreement of the Employers or of any of
their subsidiaries (whether currently in existence or
entered into subsequent to the date hereof) or (ii) would
violate any law applicable to the Employers. If the
Employers can buy some but not all of the securities that
the Executive (or the Beneficiary) have requested the
Employers to purchase (the "Put Securities"), the Employers
shall purchase as many Put Securities as can be purchased
without causing such breach, default or violation.
Thereafter, at the time it becomes possible for the
Employers to repurchase all (but not less than all)
remaining Put Securities without causing such breach,
default or violation, the Employers shall promptly purchase
all such remaining Put Securities. In the event that either
the Term Loan Agreement, dated as of March 16, 1998, among
SFC, certain lenders listed therein and DLJ Capital Funding,
Inc., as Syndication Agent, or the Revolving Credit
Agreement dated as of March 16, 1998, among the Revolving
Credit Borrowers signatory thereto, the lenders named
therein and DLJ Capital Funding, Inc., as Syndication Agent,
imposes restrictions on the Employers' ability to satisfy
the Executive's Put Rights, the Employers shall, at the time
such Put Rights are required to be satisfied, use all
commercially reasonable efforts to obtain amendment to or
waivers from such agreements that have the effect of
removing such restrictions.
5. Protection of Confidential Information: Non-
Competition; No Solicitation.
5.1 In view of the fact that the Executive's work
for the Employers will bring the Executive into close
contact with many confidential affairs of the Employers not
readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest
confidence all confidential matters of the Employers,
including, without limitation, to the extent the following
are confidential, trade secrets, "know how", customer lists,
pricing policies, operational methods, technical processes,
formulae, inventions and research projects, and other
business affairs of the Employers, learned by the Executive
heretofore or hereafter, and not to disclose them to anyone
outside of the Employers, either during or after the
Executive's employment with the Employers, except in the
course of performing the Executive's duties hereunder or
with the Employers' express written consent; and
5.1.2 To deliver promptly to the Employers
on termination of the Executive's employment by the
Employers, or at any time the Employers may so request, all
memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof)
relating to the Employers' business and all property
associated therewith, which the Executive may then possess
or have under the Executive's control unless such
information is necessary to enable the Executive to file any
federal or state tax return or make any other report or
filing or take any other action required by any law,
regulation or order of any court or regulatory commission,
department or agency.
Notwithstanding the foregoing, nothing
contained in this Section 5.1 shall restrict the Executive
from using, disclosing or retaining any information (i)
which is in the public domain or could readily be known or
determined without being employed by the Employers or which
enters the public domain through no breach of the
Executive's obligations to the Employers, (ii) which the
Executive acquired prior to his employment by the Employers,
(iii) which the Executive properly acquired or acquires from
parties independent of the Employers, (iv) which the
Executive is required to disclose by law, regulation, order
or legal process, (v) which is desirable to establish the
Executive's claim or defense in any litigation between the
parties, provided that the Executive uses his best efforts
to ensure that confidential treatment will be afforded such
information.
5.2 During the term of the Executive's employment
by the Employers and, in the event of the termination of the
Executive's employment for any reason, for the 180-day
period immediately following the date of termination, the
Executive shall not, directly or indirectly, enter the
employ of, or render any services to, any person, firm or
corporation engaged in any business competitive with the
business of the Employers or of any of their subsidiaries;
in any state in which any such business is conducted or in
which the Employers have specific plans to conduct business
at the time of such termination, the Executive shall not
engage in such business on the Executive's own account; and
the Executive shall not become interested in any such
business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee,
trustee, consultant, or in any other relationship or
capacity; provided, however, that nothing contained in this
Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to one percent (1%)
of the outstanding shares of capital stock of any public
corporation. The Executive shall not be deemed to be in
breach of this Section 5.2 because (i) a public corporation
of which he owns more than 1% of the outstanding capital
stock begins to engage in any such prohibited activities or
(ii) his ownership interest in a public corporation engaged
in such activities increases to more than 1% of such
corporation's issued and outstanding capital in either case
without any volitional act on the part of the Executive, if,
in the case of either clause (i) or (ii) above, within sixty
(60) days of learning of such event, the Executive disposes
of the amount of capital stock necessary to cause his
ownership to be less than 1% of the amount of such capital
stock issued and outstanding.
5.3 When the Executive's employment by the
Employers terminates for any reason whatsoever, then during
the period commencing on the date of such termination and
ending on the second anniversary thereof, the Executive
shall not without the express written consent of SFAC,
directly or indirectly, (i) solicit any employee of the
Employers or of any of their subsidiaries to terminate his
employment with the Employers or with such subsidiary or
(ii) hire any such employee.
5.4 If the Executive commits a breach, or
threatens to commit a breach, of any of the provisions of
Sections 5.1, 5.2 or 5.3 hereof, the Employers shall have,
in addition to any other remedies they may have, the
following rights and remedies:
5.4.1 The right and remedy to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause
irreparable injury to the Employers and that money damages
will not provide an adequate remedy to the Employers; and
5.4.2 The right and remedy to require the
Executive to account for and pay over to the Employers all
compensation, profits, monies, accruals, increments or other
benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting
a breach of any of the provisions of the preceding
paragraph, and the Executive hereby agrees to account for an
pay over such Benefits to the Employers.
5.4.3 Each of the rights and remedies
enumerated above shall be independent of the other, and
shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Employers under
law or in equity.
5.5 If any of the covenants contained in Section
5.1, 5.2 or 5.3, or any part thereof, hereafter is construed
to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.6 If any of the covenants contained in Section
5.1, 5.2 or 5.3, or any part thereof, is held to be
unenforceable because of the duration of such provision or
the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the
duration and/or area of such provision and, in its reduced
form, said provision shall then be enforceable.
5.7 The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in
Sections 5.1, 5.2 and 5.3 upon the courts of any state
within the geographical scope of such covenants where the
Executive is engaged in activities in violation of such
covenants or the Employers are damaged or harmed in any way
by the Executive's violation of such covenants. In the
event that the courts of any one or more of such states
shall hold such covenants wholly unenforceable by reason of
the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not
bar or in any way affect the Employer's right to the relief
provided above in the courts of any other states within the
geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above
covenants as they relate to each state being for this
purpose severable into diverse and independent covenants.
6. Inventions and Patents. The Executive agrees that
all processes, technologies and inventions (collectively
"Inventions"), including new contributions, improvements,
ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him while employed by the
Employers shall belong to the Employers, provided that such
Inventions grew out of the Executive's work with the
Employers or any of their subsidiaries or affiliates, are
related in any manner to the business (commercial or
experimental) of the Employers or any of their subsidiaries
or affiliates or are conceived or made on the Employers'
time or with the use of the Employers' facilities or
materials. The Executive shall further: (a) promptly
disclose such Inventions to the Employers; (b) assign to the
Employers, without additional compensation, all patent and
other rights to such Inventions for the United States and
foreign countries; (c) sign all papers necessary to carry
out the foregoing; and (d) give testimony in support of the
Executive's inventorship.
7. Intellectual Property. The Employers shall be the
exclusive owners of all the products and proceeds of the
Executive's services with the Employers, including, but not
limited to, all materials, ideas, concepts, formats,
suggestions, developments, arrangements, packages, programs
and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and
during the Executive's employment by the Employers, free and
clear of any claims by the Executive (or anyone claiming
under the Executive) of any kind or character whatsoever
(other than the Executive's right to receive payments
hereunder). The Executive shall, at the request of the
Employers, execute such assignments, certificates or other
instruments as the Employers may from time to time deem
necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend their right, title or
interest in or to any such properties.
8. Notices. All notices, requests, consents and
other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight
courier or mailed first-class, postage prepaid, by
registered or certified mail (notices mailed shall be deemed
to have been given on the date mailed) or sent by
telecopier, as follows (or to such other address as either
party shall designate by notice in writing to the other in
accordance herewith):
If to the Employers, to:
Specialty Foods Acquisition Corporation
Specialty Foods Corporation
Metz Baking Company
Mother's Cake and Cookie Co.
Archway Cookies
Andre-Boudin Bakeries
c/o Specialty Foods Corporation
520 Lake Cook Road
Suite 550
Deerfield, Illinois 60015
Telecopier: 847/405-5310
Attention: Vice President and General Counsel
with copies to:
Haas Wheat & Partners Incorporated
300 Crescent Court, Suite 1700
Dallas, Texas 75201
Telecopier: 214/871-8317
Attention: Robert B. Haas and Douglas D.
Wheat
and:
Keystone, Inc.
201 Main Street, Suite 3100
Forth Worth, Texas 76102
Telecopier: 817/338-2064
Attention: J. Taylor Crandall
and:
Oak Hill Partners, Inc.
Park Avenue Tower
65 East 55th Street, 32nd Floor
New York, New York 10022
Telecopier: 212/754-5685
Attention:Anthony P. Scotto
If to the Executive, to:
Mr. Lawrence S. Benjamin
787 E. Illinois Avenue
Lake Forest, Illinois 60045
9. General.
9.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Illinois applicable to agreements made and to be
performed entirely in Illinois; provided, that all
provisions of this Agreement governing the issuance and
rights in respect of securities of SFAC, including, without
limitation, Initial Securities and Vested Securities, shall
be governed by and construed in accordance with the laws of
the State of Delaware.
9.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating
to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound
by or liable for any alleged representation, promise of
inducement not so set forth.
9.4 This Agreement, and the Executive's rights
and obligations hereunder, may not be assigned by the
Executive. The Employers may assign their rights, together
with their obligations, hereunder (i) to any subsidiary of
or successor-in-interest to any of them, or (ii) to third
parties in connection with any sale, transfer or other
disposition of all or substantially all of the business or
assets of any of them; in any event the obligations of the
Employers hereunder shall be binding on their successors or
permitted assigns, whether by merger, consolidation or
acquisition of all or substantially all of either of their
businesses or assets.
9.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time
to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this
Agreement.
9.6 This Agreement or any amendment hereto may be
signed in any number of counterparts, each of which shall be
an original, but all of which taken together shall
constitute one agreement (or amendment as the case may be).
9.7 This Agreement shall be of no force or effect
until it has been approved by, the Compensation Committees
of the Boards.
10. Certain Definitions.
10.1 As used herein the term "subsidiary" shall
mean any corporation or other business entity controlled
directly or indirectly by the corporation or other business
entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or
indirectly controlling, controlled by or under common
control with the corporation or other business entity in
question.
10.2 As used herein, the "Fair Market Value" of
the Common Stock shall mean the fair market value of the
Common Stock determined by the SFAC Board in good faith on a
going concern basis without regard to any minority discount
(the "Initial Value"), which determination shall be
evidenced by a resolution of the SFAC Board and the Initial
Value shall be the Fair Market Value of the Common Stock for
all purposes; provided, that following the termination of
the Executive's employment by the Employers, for any reason,
pursuant to Article 4 hereof, if the Executive or the
Beneficiary disagrees with the SFAC Board's determination
that the Initial Value is the fair market value of the
Common Stock and delivers written notice of such
disagreement to the Employers within 30 days after the date
on which the SFAC Board's determination of the Initial Value
is communicated to the Executive or the Beneficiary, the
Fair Market Value of the Common Stock shall be determined in
a binding arbitration proceeding, the arbitrator for which
shall be a nationally recognized investment banking firm
selected jointly by the Employers and the Executive (or the
Beneficiary, as the case may be); provided, that if the
Employers and the Executive (or the Beneficiary, as the case
may be) cannot agree on an arbitrator, an arbitrator shall
be selected in accordance with the rules of the American
Arbitration Association. Notwithstanding the foregoing, (i)
if the Fair Market Value, as determined by the Arbitrator
(the "Arbitration Value"), does not deviate from the Initial
Value by an amount equal to more than 10% of the Initial
Value then the Fair Market Value shall equal the Initial
Value for all purposes, and (ii) if the Arbitration Value
deviates from the Initial Value by an amount equal to more
than 10% of the Initial Value (whether such deviation is
higher or lower than the Initial Value) then the Fair Market
Value shall equal the Arbitration Value for all purposes.
If, following an arbitration proceeding, the Arbitration
Value exceeds an amount equal to the sum of (x) the Initial
Value plus (y) an amount equal to 10% of the Initial Value,
the Employers shall pay all costs associated with the
arbitration; in all other cases, the Executive (or the
Beneficiary, as the case may be) shall pay all of such
costs.
10.3 Survival. The provisions of Sections 5,
6 and 7 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
SPECIALTY FOODS ACQUISITION
CORPORATION
By: /s/ Robert Fishbune
Name: Robert Fishbune
Title: Vice President
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
SPECIALTY FOODS CORPORATION
By: /s/ Robert Fishbune
Name: Robert Fishbune
Title: Vice President
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
METZ BAKING COMPANY
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
MOTHER'S CAKE &COOKIE CO.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
ARCHWAY, L.L.C.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
ANDRE-BOUDIN BAKERIES, INC.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
/s/ Lawrence S. Benjamin
----------------------------------
LAWRENCE S. BENJAMIN
::ODMA\PCDOCS\CHICAGO4\811901\3 March 23,1999 16:57
EXHIBIT 10.50
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
March 15, 1999, among SPECIALTY FOODS ACQUISITION
CORPORATION, a Delaware corporation ("SFAC"), SPECIALTY
FOODS CORPORATION, a Delaware corporation ("SFC"), METZ
BAKING COMPANY, a Delaware Corporation ("Metz"), MOTHER'S
CAKE AND COOKIE CO., a California corporation ("Mother's"),
ARCHWAY COOKIES, L.L.C., a Delaware limited liability
company ("Archway") and ANDRE-BOUDIN BAKERIES, INC., a
California corporation ("Boudin") and ROBERT L. FISHBUNE
(the "Executive"). This Agreement replaces that Amended and
Restated Executive Employment Agreement dated as of May 13,
1996 (as amended as of June 30, 1997) among SFAC, SFC and
the Executive. SFAC and SFC are sometimes referred to
herein as the "Parent Companies" and SFAC, SFC, Metz,
Mother's, Archway and Boudin are each sometimes herein
referred to individually as an "Employer" and are sometimes
referred to collectively as the "Employers."
The Employers wish to employ the Executive, and the
Executive wishes to accept such employment, on the terms and
conditions set forth in this Agreement.
Accordingly, the Employers and the Executive hereby
agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment Duties. The Employers hereby
employ the Executive for the Term (as defined in Section 2),
to render exclusive and full-time services to the Employers,
as Vice President and Chief Financial Officer of the Parent
Companies, and to perform such other duties (consistent with
the customary duties of a corporate officer) as may be
assigned to the Executive by the Board of Directors
(collectively, the "Boards") or Chief Executive Officer of
the Parent Companies.
1.2 Acceptance. The Executive hereby accepts
such employment and agrees to render the services described
above. During the Term, the Executive agrees to devote the
Executive's entire business time, energy and skill to such
employment, and to use the Executive's best efforts, skill
and ability to promote the Employers' interests. The
Executive further agrees to accept election, and to serve
during all or any part of the Term, as an officer or
director of any Employer or any subsidiary of any Employer,
without any compensation therefor other than that specified
in this Agreement, if elected to any such position by the
shareholders of any Employer, the Boards or the shareholders
or Board of Directors of any such subsidiary, as the case
may be.
2. Terms of Employment.
2.1 The Term. The term of the Executive's
employment under this Agreement (the "Term") shall commence
on January 1, 1999 (the "Effective Date") and shall, unless
sooner terminated pursuant to Section 2.3 hereof, end on
December 31, 2000 or on such later December 31 to which the
Term is extended pursuant to Section 2.2.
2.2 Extension. On June 30 of each calendar year
starting with June 30, 2000, the then scheduled expiration
date of the Term shall automatically be extended, without
any action required of either the Executive or the
Employers, for twelve additional months, unless the
Executive, on the one hand, or the Employers, on the other
hand, shall have given written notice of non-extension to
the other no later than such June 30. If such written
notice of non-extension is given, the Term shall end on the
then-scheduled termination date (taking into account any
previous extensions pursuant to this Section 2.2). By way
of example, unless written notice of non-extension is given
by June 30, 2000, the otherwise scheduled expiration date of
December 31, 2000 shall be extended to December 31, 2001.
2.3 Early Termination. The Term shall end
earlier than the December 31 termination date scheduled in
accordance with the foregoing provisions of this Articles 2,
if sooner terminated pursuant to Article 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to
be rendered pursuant to this Agreement, the Employers agree
to pay the Executive during the 12 months of the Term ending
on December 31, 1999, a base salary at an annual rate of
$400,000 (the "Base Salary"). The annual Base Salary rate
may be increased from time to time, in the sole discretion
of the Boards.
3.2 Bonus. In addition to the amounts to be paid
to the Executive pursuant to Section 3.1, the Executive will
be eligible to receive with respect to each fiscal year of
the Employers commencing with their fiscal year ending
December 31, 1999, an incentive bonus (the "Incentive
Bonus") equal to a percentage of Base Salary for such fiscal
year based on the achievement of the Employers of
performance targets ("Performance Targets") to be set in the
beginning of such fiscal year by the compensation committee
of the Boards, such that if the minimum Performance Target
is not achieved, the Incentive Bonus shall be zero; if the
intermediate Performance Target is achieved, the Incentive
Bonus shall be equal to 75% of Base Salary; and if the
maximum Performance Target is achieved, the Incentive Bonus
shall be equal to 150% of Base Salary (provisions for pro
rata Incentive Bonus amounts for achievements between the
minimum Performance Target and the intermediate Performance
Target or between the intermediate Performance Target and
the maximum Performance Target, as the case may be, shall
also be established). The Incentive Bonus for each fiscal
year shall be paid to the Executive within 30 days of the
receipt by the Employers of their audited financial
statements for such fiscal year.
3.3 Business Expenses. The Employers shall pay
or reimburse the Executive for all reasonable expenses
actually incurred or paid by the Executive during the Term
in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or
vouchers or such other supporting information as the
Employers customarily require of their other senior
executives.
3.4 Vacation. During the Term, the Executive
shall be entitled to a paid vacation period or periods taken
in accordance with the vacation policy of the Employers
during each year of the Term; provided, that the Executive
shall be entitled to not less than four (4) weeks paid
vacation for each year of the Term.
3.5 Fringe Benefits; Securities Investment; Stock
Options.
3.5.1 Benefits. During the Term, the
Executive shall be entitled to all benefits for which the
Executive shall be eligible under any long term incentive
plan, qualified pension plan, 401(k) plan, annuity plan,
group insurance plan or other so-called "fringe" benefit
plan which the Parent Companies provide to their executive
officers generally, including, without limitation, the SFC
Executive Retirement Annuity Plan. In addition, the
Employers shall pay the reasonable fees in connection with
personal financial counseling on behalf of the Executive,
including fees relating to tax return preparation.
3.5.3 Management Option and Bonus. The
Executive shall continue to participate in the management
stock option plan (the "Option Plan") of the Employers.
3.6 Automobile. In addition, the Executive will
receive an automobile allowance of $1,100.00 per month
during the term of this Agreement.
3.7 Withholding. All compensation of the
Executive by the Employers provided for in this Agreement,
whether in the form of cash, securities or "fringe"
benefits, shall be subject to such deductions or amounts to
be withheld as required by applicable law and regulations.
Whenever compensation provided for under this Agreement is
to be delivered to the Executive in a form other than cash,
the Employers may require as a condition of delivery that
the Executive remit to the Employers an amount sufficient to
satisfy all federal, state and other governmental
withholding tax requirements related thereto. If the
compensation referred to in the preceding sentence is in the
form of securities (whether by the vesting of securities or
otherwise), the Employers shall, if the Executive so
requests and the Employers consent (such consent not to be
withheld unreasonably), satisfy the requirements of the
preceding sentence, to the extent permitted by applicable
law, by deducting from the number of securities otherwise
deliverable to the Executive, a number of securities having
a fair market value equal to the amount required to satisfy
all federal, state and other governmental withholding tax
requirements related thereto.
3.8 Sources of Payment; Joint and several
obligations; Nature of Certain Payments. Any amounts
payable to or on behalf of the Executive under this
Agreement shall be paid by the Employers on an allocated
basis in accordance with the services rendered by the
Executive to each Employer; provided that the Employers
shall be jointly and severally liable for all amounts
payable to or on behalf of the Executive hereunder. No
payment made to the Executive pursuant to Section 3.9 shall
be deemed, for any purpose, a payment of purchase price for
Common Stock or Subordinate Debentures.
3.9 Certain Additional Payments by the Employers.
(a) Anything in this Agreement to the
contrary notwithstanding, in the event that (i) a Section
280G Change (as defined below) occurs and (ii) any payment,
distribution, other compensation or benefit by any Employer
to (or for the benefit of) the Executive pursuant to the
terms of this Agreement or any other plan or agreement in
which the Executive participates, as now in effect or as
amended from time to time (hereinafter, a "Payment"), is
determined (as hereinafter provided) to be subject to the
tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the
Employers shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the
Total Payments (as defined below) and any federal, state and
local income tax and Excise Tax upon the additional amount
provided for by this paragraph (a), shall be equal to the
Total Payments; provided, however, that the aggregate
payments required to be paid to or for the benefit of the
Executive pursuant to this Section 3.9 shall not exceed 400%
of the Base Salary in effect pursuant to Section 3.1 in the
year in which the Section 280G Change occurs, plus an amount
equal to the interest and penalties, if any, attributable to
the portion of the Excise Tax for which the Gross-Up
Payment, as limited by this provision, reimburses the
Executive.
(b) Subject to the provisions of Section
3.9(c), all determinations required to be made under this
Section 3.9 including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and,
subject to the provisions below, the assumptions to be
utilized in arriving at such determination, shall be made by
KPMG Peat Marwick (or other independent auditor of the
Employers at the time) (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Employers and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment with respect to which a Gross-Up Payment is owing,
or such earlier time as is requested by the Employers. All
fees and expenses of the Accounting Firm shall be paid
solely by the Employers. Any Gross-Up Payment, as
determined pursuant to this Section 3.9, shall be paid by
the Employers to the Executive within five business days of
the receipt of the Accounting Firm's determination. The
parties acknowledge that unless the Accounting Firm is able
to provide the Executive with the opinion described in the
third following sentence with respect to such Payment, the
Accounting Firm shall determine the amount of the Gross-Up
Payment that is due at the time of any Payment. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
result in the imposition of the negligence or similar
penalty. Any determination by the Accounting Firm shall be
binding upon the Employers and the Executive. The parties
hereto acknowledge that, as a result of uncertainty in the
application of Section 4999 of the Code, it is possible that
Gross-Up Payments will not have been made by the Employers
that should have been made (hereinafter, an "Underpayment"),
consistent with the provisions of this Section 3.9. In the
event that the Executive is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Employers to or
for the benefit of the Executive, unless the Executive has
failed to comply with Section 3.9(c) and such failure has
materially deprived the Employers of the right to contest
any claim by the Internal Revenue Service with respect to
such payments.
For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation for the calendar year in which the Gross-up
Payment is to be made and the applicable state and local
taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payments is to be made,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes.
(c) The Executive shall notify the Employers
in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the
Employers of a Gross-Up Payment. Such notification shall be
given as soon as practicable but, in any event, no later
than ten business days after the Executive is informed in
writing of such claim and shall apprise the Employers of the
nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Employers (or
such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Employers
notify the Executive in writing prior to the expiration of
such period that they desire to contest such claim, and if
the Employers acknowledge in writing their liability,
subject to the limitations set forth in Section 3.9(a), to
the Executive pursuant to this Section 3.9 with respect to
any amounts payable in connection with such claim, the
Executive shall:
(i) give the Employers any
information reasonably requested by the Employers
and reasonably available to the Executive relating
to such claim;
(ii) take all such actions in
connection with contesting such claim as the
Employers shall reasonably request in writing from
time to time, including, without limitation,
accepting legal representation with respect to
such claim by an attorney selected by the
Employers and agreeing to extend the statute of
limitations as requested by the Employers;
(iii) cooperate with the Employers
in good faith in order to effectively contest such
claim; and
(iv) permit the Employers to
participate in any proceeding related to such
claim;
provided, however, that the Employers shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation of the foregoing
provisions of this Section 3.9(c), the Employers shall
control all proceedings taken in connection with such
contest and, at their sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at their sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Employers shall determine; provided, however, that if
the Employers direct the Executive to pay such claim and sue
for a refund, the Employers shall advance the amount of such
payment to the executive, on an interest-free, after-tax
basis. Furthermore, the Employers' control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive
of an amount advanced by the Employers pursuant to Section
3.9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Employers' complying with the requirements of Section
3.9(c)), promptly pay to the Employers the amount of such
refund (together with any interest received or credited
thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the
Employers pursuant to Section 3.9(c), a determination is
made that the Executive shall not be entitled to any refund
with respect to such claim and the Employers do not notify
the Executive in writing of their intent to contest such
denial of refund prior to the expiration of 30 days after
such determination, then to the extent of the Gross-Up
Payment such advance shall be forgiven and shall not be
required to be repaid and shall, to such extent, offset the
amount of Gross-Up Payment required to be paid, and the
remaining portion of such advance shall forthwith become due
and payable.
(e) For purposes of this Agreement:
A "Section 280G Change" shall mean a
"change . . . in the ownership or effective control" of
either Employer or a "change . . . in the ownership of a
substantial portion of the assets" of either Employer, in
each case within the meaning of Section 280G(b)(2)(A)(i) of
the Code.
A "Public Offering" shall mean an
initial public offering of stock of either Employer if at
any time thereafter stock of either Employer is "readily
tradable on an established securities market or otherwise"
(within the meaning of Section 280G(b)(5)(A)(ii) of the
Code).
"Total Payments" shall mean any payments
or benefits received or to be received by the Executive
under this Agreement or any other plan or agreement in which
the Executive participates, as now in effect or as amended
from time to time, including the plans discussed in Section
3.5.3.
3.10 Performance Based Compensation. It is the
intention of the parties that, if Section 162(m) of the Code
is or will be applicable with respect to one or more
payments hereunder, the Executive will consider in good
faith any requests by the Employers to take actions to cause
such payments to meet the requirements of Section
162(m)(4)(B) or (C) of the Code, and thus to be excluded
from the definition of "applicable employee remuneration"
within the meaning of Section 162(m)(4) of the Code.
4. Termination.
4.1 Death. If the Executive shall die during the
Term, upon the date of the Executive's death the Term shall
terminate and no further amounts or benefits shall be
payable hereunder, except that the Employers shall be
obligated to pay to the Beneficiary (as defined below) in
exchange for a release in form and substance acceptable to
the Employers acting reasonably, within 60 days of the date
of the Executive's death, (i) all unpaid Base Salary accrued
through and including the date of the Executive's death,
(ii) a lump sum amount equal to Base Salary for one year, at
the rate in effect on the date of the Executive's death (the
"Annual Base Salary Upon Death"), and (iii) an additional
lump sum bonus amount equal to the sum of (x) 75% of Annual
Base Salary Upon Death and (y) 75% of Annual Base Salary
Upon Death pro rated for the period commencing on the first
day of the fiscal year during which the Executive's death
occurred and ending on the date of Executive's death; it
being understood that such 75% bonus level has been agreed
to because it is impossible to determine the performance of
the Employers for future periods, provided that the amounts
to be paid by the Employers under (ii) and (iii) above shall
be reduced by any payments received by the Beneficiary under
life insurance policies the premiums for which have been
paid by the Employers. The "Beneficiary" shall be (i) the
beneficiary designated by the Executive on a form prescribed
for such purpose by the Employers, or (ii) in the absence of
such designation, the Executive's executor or legal
representative, in such capacity;
4.2 Disability.
4.2.1 If during the Term the Executive shall
become physically or mentally disabled, whether totally or
partially, such that the Executive is unable to perform the
Executive's services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating
six months during any twelve month period, the Employers may
on any day (the "Disability Termination Date") after the
last day of the six consecutive months of disability or the
day on which the shorter periods of disability shall have
equaled an aggregate of six months (but, in each case,
before the Executive has recovered from such disability), by
written notice to the Executive, terminate the Term (a
"Disability Termination") and no further amounts or benefits
shall be payable hereunder, except that the Employers shall
be obligated to pay to the Executive in exchange for a
release in form and substance acceptable to the Employers
acting reasonably, within 60 days of the Disability
Termination Date, (i) all unpaid Base Salary accrued through
and including the Disability Termination Date, (ii) a lump
sum amount equal to Base Salary for one year, at the rate in
effect on the Disability Termination Date (the "Annual Base
Salary Upon Disability"), and (iii) an additional lump sum
bonus amount equal to the sum of (x) 75% of Annual Base
Salary Upon Disability and (y) 75% of Annual Base Salary
Upon Disability prorated for the period commencing on the
first day of the fiscal year during which the Disability
Termination occurred and ending on the Disability
Termination Date; it being understood that such 75% bonus
level has been agreed to because it is impossible to
determine the performance of the Employers for future
periods. If the Executive shall die before receiving all
amounts required to be paid by the Employers in accordance
with the foregoing, such amounts shall be paid to the
Beneficiary.
4.3 Cause; Voluntary Termination.
4.3.1 In the event of the conviction of the
Executive of any felony involving intentional conduct on the
part of the Executive, the conviction of the Executive of
any lesser crime or offense involving the illegal use or
conversion of property of the Employers or any of their
subsidiaries or affiliates, the willful misconduct by the
Executive in connection with the performance of the
Executive's duties hereunder (which shall not be deemed to
include an action by the Executive taken in good faith in
the best interest of the Employers) or the continued breach
by the Executive of any material provision of this Agreement
after notice of such breach has been actually received by
the Executive from the Employers (the "deemed receipt"
provisions of Article 8 hereof being inapplicable to this
Section 4.3.1), the Employers may at any time, by written
notice to the Executive, terminate the Term (a "Termination
For Cause"), and upon such Termination For Cause, the Term
shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive in exchange for a release in form and substance
acceptable to the Employers acting reasonably, within 60
days of the date of termination, all unpaid Base Salary
accrued, and provide the Executive with all benefits and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination.
4.3.2. Upon a voluntary termination of the
term by the Executive (a "Voluntary Termination") without
Good Reason (as defined in Section 4.4.2), the Term shall
terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder; provided, that the
Employers shall be obligated to pay to the Executive in
exchange for a release in form and substance acceptable to
the Employers acting reasonably, within 60 days of the date
of termination, all unpaid Base Salary accrued, and provide
the Executive with all benefits and expense reimbursement to
which the Executive would otherwise be entitled, through and
including the date of termination.
4.4 Termination by Employers Without Cause;
Termination by the Executive for Good Reason.
4.4.1 Upon a Termination Without Cause (as
defined below) or a Voluntary Termination with Good Reason
(as defined below):
(a) the Employers shall pay to the
Executive, within 60 days of the date of termination, all
unpaid Base Salary accrued, and provide the Executive with
all benefits and expense reimbursement to which the
Executive would otherwise be entitled, through and including
the date of termination,
(b) subject to Sections 4.4.4, the
Employers shall, in exchange for a release in form and
substance acceptable to the Employers acting reasonably, pay
the following to the Executive:
(i) the Employers shall
continue payments of Base Salary to the Executive
(the "Continued Salary"), at the rate and at such
times as are in effect on the date of termination
(the "Base Salary Upon Termination"), for the 12
month period following the date of termination
(the "Payment Period"), except as provided in
Section 4.4.4,
(ii) the Employers shall
continue health and life insurance benefits during
the Payment Period (the "Continued Benefits"), and
(iii) the Employers shall
pay to the Executive, at the end of the Payment
Period, a bonus (the "Continued Bonus," and
together with the Continued Salary and the
Continued Benefits, the "Continued Payments") in
an amount equal to 75% of the aggregate base
salary paid to the Executive during the period
commencing on the day after the last day of the
last fiscal year completed prior to the date of
termination and ending on the last day of the
Payment Period; it being understood that such 75%
bonus level has been agreed to because it is
impossible to determine the performance of the
Employers for future periods,
4.4.2 Definitions:
(a) "Termination Without Cause" means
the termination of the Term by the Employer for reasons
other than those described in Sections 4.1, 4.2 or 4.3.
(b) "Good Reason" means:
(i) the continuation of any of the
following (without the Executive's express prior
consent) after written notice provided by the
Executive and failure by the Employers to remedy
such event within thirty (30) days after receipt
of such notice:
(A) a reduction
in the Executive's Base Salary, as in
effect at the date hereof pursuant to
Section 2.2 or as in effect pursuant
to increases from time to time made
during the Term;
(B) failure by the
Employers to pay to the Executive an Incentive
Bonus, as provided for in this Agreement;
(C) a failure by the
Employers to provide any benefit or compensation
plan (including any pension, profit sharing,
annuity, life insurance, health, accidental death
or dismemberment or disability plan), or any
substantially similar benefit or compensation
plan, which has been made available to other
comparable executives of the Employers on terms no
less favorable to the Executive than the terms
offered to such other executives; provided,
however, that nothing in this clause (iii) shall
be construed to mean that the Employers shall be
constrained from amending or eliminating any
benefit or compensation plan as such is applied to
the Executive and to other comparable executives
of the Employers; provided, further, that a
failure by the Employers to include the Executive
in any stock option plan or bonus plan shall not
constitute Good Reason hereunder;
(D) the assignment to
the Executive of any duties materially
inconsistent with the Executive's position as Vice
President and Chief Financial Officer of the
Parent Companies;
(E) a materially adverse
change in the Executive's title or the line of
authority through which the Executive is required
to report, it being understood that the Executive
shall at all times report to either the Chief
Executive Officer of the Parent Companies;
(F) failure by the
Employers to obtain the written agreement of any
successor in interest to the business of the
Employers to assume and perform the obligations of
the Employers under this Agreement;
(G) a relocation of
the corporate headquarters of the Employers
requiring the Executive to relocate to a place
other than the greater Chicago, Illinois
metropolitan area; or
(H) any material breach
of this Agreement by the Employers; or
(ii) termination at the Election of
the Executive within 180 days following a Change of Control
(as defined in Section 4.4.6).
4.4.3 In the event of a Termination Without
Cause or a Voluntary Termination for Good Reason, the
Executive shall not be required to mitigate his damages
hereunder; provided, however, that, notwithstanding the
foregoing, if there are any damages hereunder by reason of
the events of termination described above which are
"contingent on" a Section 280G Change in the meaning of
Section 280G(b)(2)(A) of the Code after a Public Offering
(i) the Executive shall be required to mitigate such damages
hereunder, including any such damages theretofore paid, but
not in excess of the extent, if any, necessary to prevent
the Employers from losing any tax deductions to which they
would otherwise be entitled in connection with such damages
if they were not so "contingent on" a Section 280G Change
(provided, that, the parties agree that this clause (i)
shall not require the Executive to violate Section 5.2
hereof) and (ii) in addition to any obligation under the
preceding clause (i), and without duplication of any amounts
required to be paid to the Employers thereunder, if any such
termination occurs and the Executive, whether or not
required to mitigate his damages under clause (i) above,
thereafter obtains other employment, the total compensation
received in connection with such other employment, whether
paid to the Executive or deferred for his benefit, for
services prior to the end of the Modified Payment Period (as
defined below) (up to the aggregate amount of damages
described in Section 4.4.1(b)) shall be paid over to the
Employers as received with respect to such period.
Notwithstanding the provisions of this Section 4.4.3, the
Employers shall not have the right to enforce their rights
under this Section 4.4.3 by set off against or by otherwise
withholding any amounts receivable by the Executive (or
payable on the Executive's behalf) under this Agreement upon
or following the time at which they are required to be paid
under this Agreement.
4.4.4 In the event that any amounts or other
benefit payable pursuant to Section 4.4 or 4.5 (including,
but not limited to, the Continued Payments, the receipt of
any security upon the exercise of any Option, or the lapse
of any direct or indirect restriction on the ability to
transfer any such security for the fair market value
thereof) would be deemed "contingent on" a Section 280G
Change (within the meaning of Section 280G(b)(2)(A) of the
Code) that occurs subsequent to a Public Offering:
(a) the Continued Salary shall be paid,
the Continued Bonus shall be calculated by reference to and
the Continued Benefits shall be provided for the shorter of
(i) 12 months following the date of termination, and (ii)
the remainder of the Term (even if such remaining period is
less than twelve months) (the "Modified Payment Period"),
and
(b) the Continued Salary and the
Continued Bonus (as modified in clause (a) of this Section
4.4.4) shall be paid to the Executive by the Employers,
within 60 days of the date of termination, in a lump sum,
which lump sum shall be discounted to the present value, on
the date of payment, of the Continued Salary (as if paid at
the times the Base Salary would have been paid to the
Executive under Section 2.2 if the Executive had been
employed by the Employers during the Modified Payment
Period) and the Continued Bonus (as if paid on the last day
of the Modified Payment Period) at the Discount Rate.
"Discount Rate" shall mean the discount rate described in
Section 280G(d)(4) of the Code. The parties hereby elect,
to the extent permitted for purposes of such Section
280G(d)(4), to base the Discount Rate on the applicable
federal rate in effect on the date hereof.
4.4.5 It is the intention of the parties that, if
there has been a Public Offering and a Section 280G Change
occurs, payments to be made to the Executive in the event of
a Termination Without Cause or a Voluntary Termination for
Good Reason qualify as "reasonable compensation for personal
services to be rendered on or after the date of the change"
within the meaning of Section 280G(b)(4)(A) of the Code and
Q&A 42(b) of Proposed Regulation Section 1.280G-1 thereunder
(as amended from time to time), and the provisions of this
Agreement shall, in the event of any ambiguity, be
interpreted in a manner consistent with the foregoing.
4.4.6 A "Change of Control" shall, for the
purposes of this Agreement, be deemed to have occurred upon
the date, if any, at which (i) with respect to SFAC, a
person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) other than
Acadia Partners, L.P., Keystone, Inc., HWP Partners, L.P.
and their respective Affiliates (as defined in Section
2.1(a) of the Principal Stockholders Agreement) (such person
or group being a Non- Affiliate) has the collective ability
to directly or indirectly designate a majority of the
members of the SFAC Board (whether by contract or otherwise)
or (ii), with respect to SFC, a transaction (including a
sale, merger or other similar transaction, but excluding any
transaction among only SFAC, SFC and/or their subsidiaries)
(x) pursuant to which all or substantially all of the assets
of SFC (as exist on the date hereof) are sold to Non-
Affiliates (y) pursuant to which Non-Affiliates acquire the
collective ability to designate directly or indirectly a
majority of the Board of Directors of SFC (by contact or
otherwise) or (z) which the compensation committee of the
Board of Directors of SFC determines, in its discretion, to
constitute a change in control.
4.5 Termination by Non-Extension of Term. Upon a
termination of the Term by reason of the non-extension of
the Term pursuant to Section 2.2:
(a) without regard to whether notice of such
termination is given by the Employers or the Executive, the
Term shall terminate and the Executive shall be entitled to
receive no further amounts or benefits hereunder; provided,
that the Employers shall be obligated to pay to the
Executive all unpaid Base Salary accrued, and provide the
Executive with all Base Salary, benefits, bonuses and
expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination
of the Term;
(b) in addition to the provisions of clauses
(a) above, if the Employers give notice of non-extension
pursuant to Section 2.2:
(i) unless the notice of non-extension
would be deemed "contingent on" a Section 280G Change
(within the meaning of Section 280G(b)(2)(A) of the
Code) that occurs subsequent to a Public Offering, the
Employers shall, in exchange for a release in form and
substance acceptable to the Employers acting
reasonably, continue payments of Base Salary to the
Executive (the "Non-Renewal Continued Salary"), at the
rate and at such times as are in effect on the date of
the termination of the Term (the "Non-Renewal Base
Salary"), for the 12 month period following the date of
termination of the Term (the "Non-Renewal Payment
Period"); and
(ii) the Employers shall provide the
Continued Benefits during the Payment Period.
4.5.1 Certain Provisions Regarding Termination
by Non-Extension. Following a notice of termination of the
term by reason of the non-extension of the Term pursuant to
Section 2.2, the Executive shall remain entitled to the
protection of Sections 4.1, 4.2 and 4.3 of this Agreement
and shall receive the benefits payable under such Sections
in the event the Executive's death or disability or a
Termination Without Cause or a Voluntary Termination with
Good Reason occurs between the time the notice of non-
extension occurs pursuant to Section 2.2 and the end of the
Term.
5. Protection of Confidential Information: Non-
Competition; No Solicitation.
5.1 In view of the fact that the Executive's work
for the Employers will bring the Executive into close
contact with many confidential affairs of the Employers not
readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest
confidence all confidential matters of the Employers,
including, without limitation, to the extent the following
are confidential, trade secrets, "know how," customer lists,
pricing policies, operational methods, technical processes,
formulae, inventions and research projects, and other
business affairs of the Employers, learned by the Executive
heretofore or hereafter, and not to disclose them to anyone
outside of the Employers, either during or after the
Executive's employment with the Employers, except in the
course of performing the Executive's duties hereunder or
with the Employers' express written consent; and
5.1.2 To deliver promptly to the Employers
on termination of the Executive's employment by the
Employers, or at any time the Employers may so request, all
memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof)
relating to the Employers' business and all property
associated therewith, which the Executive may then possess
or have under the Executive's control unless such
information is necessary to enable the Executive to file any
federal or state tax return or make any other report or
filing or take any other action required by any law,
regulation or order of any court or regulatory commission,
department or agency.
Notwithstanding the foregoing, nothing
contained in this Section 5.1 shall restrict the Executive
from using, disclosing or retaining any information (i)
which is in the public domain or could readily be known or
determined without being employed by the Employers or which
enters the public domain through no breach of the
Executive's obligations to the Employers, (ii) which the
Executive acquired prior to his employment by the Employers,
(iii) which the Executive properly acquired or acquires from
parties independent of the Employers, (iv) which the
Executive is required to disclose by law, regulation, order
or legal process, (v) which is desirable to establish the
Executive's claim or defense in any litigation between the
parties, provided that the Executive uses his best efforts
to ensure that confidential treatment will be afforded such
information.
5.2 During the term of the Executive's employment
by the Employers and, in the event of the termination of the
Executive's employment for any reason, for the 180-day
period immediately following the date of termination, the
Executive shall not, directly or indirectly, enter the
employ of, or render any services to, any person, firm or
corporation engaged in any business competitive with the
business of the Employers or of any of their subsidiaries;
in any state in which any such business is conducted or in
which the Employers have specific plans to conduct business
at the time of such termination, the Executive shall not
engage in such business on the Executive's own account; and
the Executive shall not become interested in any such
business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee,
trustee, consultant, or in any other relationship or
capacity; provided, however, that nothing contained in this
Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to one percent (1%)
of the outstanding shares of capital stock of any public
corporation. The Executive shall not be deemed to be in
breach of this Section 5.2 because (i) a public corporation
of which he owns more than 1% of the outstanding capital
stock begins to engage in any such prohibited activities or
(ii) his ownership interest in a public corporation engaged
in such activities increases to more than 1% of such
corporation's issued and outstanding capital stock in either
case without any volitional act on the part of the
Executive, if, in the case of either clause (i) or (ii)
above, within sixty (60) days of learning of such event, the
Executive disposes of the amount of capital stock necessary
to cause his ownership to be less than 1% of the amount of
such capital stock issued and outstanding.
5.3 When the Executive's employment by the
Employers terminates for any reason whatsoever, then during
the period commencing on the date of such termination and
ending on the second anniversary thereof, the Executive
shall not without the express written consent of SFAC,
directly or indirectly, (i) solicit any employee of the
Employers or of any of their subsidiaries to terminate his
employment with the Employers or with such subsidiary or
(ii) hire any such employee.
5.4 If the Executive commits a breach, or
threatens to commit a breach, of any of the provisions of
Sections 5.1, 5.2 or 5.3 hereof, the Employers shall have,
in addition to any other remedies they may have, the
following rights and remedies:
5.4.1 The right and remedy to have the
provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause
irreparable injury to the Employers and that money damages
will not provide an adequate remedy to the Employers; and
5.4.2 The right and remedy to require the
Executive to account for and pay over to the Employers all
compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by
the Executive as the result of any transactions constituting
a breach of any of the provisions of the preceding
paragraph, and the Executive hereby agrees to account for
and pay over such Benefits to the Employers.
5.4.3 Each of the rights and remedies
enumerated above shall be independent of the other, and
shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Employers under
law or in equity.
5.5 If any of the covenants contained in Section
5.1, 5.2 or 5.3, or any part thereof, hereafter is construed
to be invalid or unenforceable, the same shall not affect
the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.6 If any of the covenants contained in Section
5.1, 5.2 or 5.3 or any part thereof, is held to be
unenforceable because of the duration of such provision or
the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the
duration and/or area of such provision and, in its reduced
form, said provision shall then be enforceable.
5.7 The parties hereto intend to and hereby
confer jurisdiction to enforce the covenants contained in
Sections 5.1, 5.2 and 5.3 upon the courts of any state
within the geographical scope of such covenants where the
Executive is engaged in activities in violation of such
covenants or the Employers are damaged or harmed in any way
by the Executive's violation of such covenants. In the
event that the courts of any one or more of such states
shall hold such covenants wholly unenforceable by reason of
the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not
bar or in any way affect the Employers' right to the relief
provided above in the courts of any other states within the
geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above
covenants as they relate to each state being for this
purpose severable into diverse and independent covenants.
6. Inventions and Patents. The Executive agrees
that all processes, technologies and inventions
(collectively "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or
not, conceived, developed, invented or made by him while
employed by the Employers shall belong to the Employers,
provided that such Inventions grew out of the Executive's
work with the Employers or any of their subsidiaries or
affiliates, are related in any manner to the business
(commercial or experimental) of the Employers or any of
their subsidiaries or affiliates or are conceived or made on
the Employers' time or with the use of the Employers'
facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Employers; (b)
assign to the Employers, without additional compensation,
all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers
necessary to carry out the foregoing; and (d) give testimony
in support of the Executive's inventorship.
7. Intellectual Property. The Employers shall be
the exclusive owners of all the products and proceeds of the
Executive's services with the Employers, including, but not
limited to, all materials, ideas, concepts, formats,
suggestions, developments, arrangements, packages, programs
and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and
during the Executive's employment by the Employers, free and
clear of any claims by the Executive (or anyone claiming
under the Executive) of any kind or character whatsoever
(other than the Executive's right to receive payments
hereunder). The Executive shall, at the request of the
Employers, execute such assignments, certificates or other
instruments as the Employers may from time to time deem
necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend their right, title or
interest in or to any such properties.
8. Notices. All notices, requests, consents and
other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight
courier or mailed first-class, postage prepaid, by
registered or certified mail (notices mailed shall be deemed
to have been given on the date mailed) or sent by
telecopier, as follows (or such other address as either
party shall designate by notice in writing to the other in
accordance herewith):
If to the Employers, to:
Specialty Foods Acquisition Corporation
Specialty Foods Corporation
Metz Baking Company
Mother's Cake and Cookie Co.
Archway Cookies
Andre-Boudin Bakeries
c/o Specialty Food Corporation
520 Lake Cook Road
Suite 550
Deerfield, Illinois 60015
Telecopier: 847/405-3310
Attention: Chief Executive Officer
If to the Executive, to:
Mr. Robert Fishbune
1309 Fox Glen Drive
St. Charles, Illinois 60174
9. General.
9.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Illinois applicable to agreements made and to be
performed entirely in Illinois.
9.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating
to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound
by or liable for any alleged representation, promise of
inducement not so set forth.
9.4 This Agreement, and the Executive's rights
and obligations hereunder, may not be assigned by the
Executive. The Employers may assign their rights, together
with their obligations, hereunder (i) to any subsidiary of
or successor-in-interest to any of them, or (ii) to third
parties in connection with any sale, transfer or other
disposition of all or substantially all of the business or
assets of any of them; in any event the obligations of the
Employers hereunder shall be binding on their successors or
permitted assigns, whether by merger, consolidation or
acquisition of all or substantially all of either of their
businesses or assets.
9.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time
to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this
Agreement.
9.6 This Agreement or any amendment hereto may be
signed in any number of counterparts, each of which shall be
an original, but all of which taken together shall
constitute one agreement (or amendment as the case may be).
9.7 This Agreement shall be of no force or effect
until it has been approved by the Boards.
10. Certain Definitions.
10.1 As used herein the term "subsidiary" shall
mean any corporation or other business entity controlled
directly or indirectly by the corporation or other business
entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or
indirectly controlling, controlled by or under common
control with the corporation or other business entity in
question.
10.2 Survival. The provisions of Sections 5, 6
and 7 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of March 15, 1999.
SPECIALTY FOODS ACQUISITION COPORATION
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: President and Chief
Executive Officer
SPECIALTY FOODS CORPORATION
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President and
General Counsel
METZ BAKING COMPANY
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
MOTHER'S CAKE &COOKIE CO.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
ARCHWAY, L.L.C.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
ANDRE-BOUDIN BAKERIES, INC.
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
/s/ Robert L. Fishbune
ROBERT L. FISHBUNE
EXHIBIT 10.51 Execution Copy (2)
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of July
15, 1997, by and among MCC-DSD HOLDINGS, INC., a Delaware
corporation ("Holdings"), MOTHER'S CAKE & COOKIE CO., a
California corporation ("Mother's), SPECIALTY FOODS CORPORATION,
a Delaware corporation ("SFC"), and PATRICK J. O'DEA (the
"Executive"). Holdings, Mother's and SFC are each sometimes
herein referred to individually as an "Employer" and are
sometimes referred to collectively as the "Employers."
The Employers wish to employ the Executive, and the
Executive wishes to accept such employment, on the terms and
conditions set forth in this Agreement.
Accordingly, the Employers and the Executive hereby agree as
follows:
1. Employment, Duties and Acceptance.
1.1 Employment Duties. The Employers hereby employ
the Executive for the Term (as defined in Section 2), to render
exclusive and full-time services to the Employers, as the
President and Chief Executive Officer of Holdings and Mother's
(or in such other capacity as may be agreed to in writing by the
parties to this Agreement), and to perform such other duties
(consistent with the customary duties of a corporate officer of a
subsidiary corporation as may be assigned to the Executive by the
Board of Directors of SFC, Holdings and Mother's (collectively,
the "Boards"), and the Chief Executive Officer of SFC.
1.2 Acceptance. The Executive hereby accepts such
employment and agrees to render the services described above.
During the Term, the Executive agrees to devote the Executive's
entire business time, energy and skill to such employment, and to
use the Executive's best efforts, skill and ability to promote
the Employers' interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an
officer or director of any subsidiary of either Employer, without
any compensation therefor other than that specified in this
Agreement, if elected to any such position by the shareholders of
either Employer or the shareholders or Board of Directors of any
such subsidiary, as the case may be.
2. Terms of Employment.
2.1 The Term. The term of the Executive's employment
under this Agreement (the "Term") shall commence as of the date
of this Agreement (the "Effective Date") and shall, unless sooner
terminated pursuant to Section 2.2 hereof, end on December 31,
2000. If the Executive remains employed by the Employers after
December 31, 2000, then the Term shall be deemed to be ended and
the Executive's employment shall be employment at will unless the
parties otherwise agree in writing.
2.2 Early Termination. The Term shall end earlier
than the December 31, 2000 if sooner terminated pursuant to
Article 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be
rendered pursuant to this Agreement, the Employers agree to pay
the Executive a base salary at an annual rate of $280,000 (the
"Base Salary"). The annual Base Salary rate may be increased
from time to time, in the sole discretion of the Boards.
3.2 Bonus; Relocation Allowance.
3.2.1 In addition to the amounts to be paid to
the Executive pursuant to Section 3.1, the Executive will be
eligible to receive with respect to each fiscal year of the
Employers commencing with their fiscal year ending December 31,
1997, an incentive bonus (the "Incentive Bonus") equal to a
percentage of Base Salary for such fiscal year based on the
achievement by the Employers of performance targets ("Performance
Targets") to be set in the beginning of such fiscal year by the
compensation committee of the Boards, such that if the minimum
Performance Target is not achieved, the Incentive Bonus shall be
zero; if the intermediate Performance Target is achieved, the
Incentive Bonus shall be equal to 75% of Base Salary; and if the
maximum Performance Target is achieved, the Incentive Bonus shall
be equal to 150% of Base Salary (provisions for pro rata
Incentive Bonus amounts for achievements between the minimum
Performance Target and the intermediate Performance Target or
between the intermediate Performance Target and the maximum
Performance Target, as the case may be, shall also be
established). The Incentive Bonus for each fiscal year shall be
paid to the Executive within 30 days of the receipt by the
Employers of their audited financial statements for such fiscal
year. Notwithstanding anything herein to the contrary, Executive
shall, subject to the Employers meeting required performance
objectives, receive a bonus for the year ended December 31, 1997
calculated in a manner as if the Executive had been employed by
the Employers pursuant to this Agreement beginning on January 1,
1997. Notwithstanding the foregoing, in no event shall the bonus
payable to the Executive for the year ended December 31, 1997 be
less than $70,000.
3.2.2 In addition to the amounts to be paid to
the Executive pursuant to Section 3.1, the Executive will be
eligible to receive a relocation bonus equal to $30,000 per year
on July 15, 1997, April 1, 1998 and April 1, 1999; provided that
Executive remains employed by the Company on each such date (the
"Relocation Bonus").
3.3 Business Expenses. The Employers shall pay or
reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive during the Term in the
performance of the Executive's services under this Agreement,
upon presentation of expense statements or vouchers or such other
supporting information as the Employers customarily require of
their other senior executives.
3.4 Vacation. During the Term, the Executive shall be
entitled to a paid vacation period or periods taken in accordance
with the vacation policy of the Employers during each year of the
Term; provided, that the Executive shall be entitled to not less
than four (4) weeks paid vacation for each year of the Term.
Vacation time not taken in the year it is granted shall not carry-
over to the following year.
3.5 Fringe Benefits; Securities Investment; Stock
Options.
3.5.1 Benefits. During the Term, the
Executive shall be entitled to all benefits for which the
Executive shall be eligible under any long term incentive plan,
qualified pension plan, 401(k) plan, annuity plan, group
insurance plan or other so-called "fringe" benefit plan which
Mother's provides to its executive officers generally.
3.5.2 Management Option and Bonus. The
Executive shall participate in the management stock option plan
(the "Option Plan") of the Employers and may from time to time
receive grants in addition to the grants Executive has already
received.
3.6 Withholding. All compensation of the Executive by
the Employers provided for in this Agreement, whether in the form
of cash, securities or "fringe" benefits, shall be subject to
such deductions or amounts to be withheld as required by
applicable law and regulations. Whenever compensation provided
for under this Agreement is to be delivered to the Executive in a
form other than cash, the Employers may require as a condition of
delivery that the Executive remit to the Employers an amount
sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto. If the
compensation referred to in the preceding sentence is in the form
of securities (whether by the vesting of securities or
otherwise), the Employers shall, if the Executive so requests and
the Employers consent (such consent not to be withheld
unreasonably), satisfy the requirements of the preceding
sentence, to the extent permitted by applicable law, by deducting
from the number of securities otherwise deliverable to the
Executive, a number of securities having a fair market value
equal to the amount required to satisfy all federal, state and
other governmental withholding tax requirements related thereto.
3.7 Source of Payment; Nature of Certain Payments.
Any amounts payable to or on behalf of the Executive under this
Agreement shall be paid by Mother's unless the Executive
otherwise consents in writing.
4. Termination.
4.1 Death. If the Executive shall die during the
Term, upon the date of the Executive's death the Term shall
terminate and no further amounts or benefits shall be payable
hereunder, except that the Employers shall be obligated to pay to
the Beneficiary (as defined below) in exchange for a release in
form and substance acceptable to the Employers acting reasonably,
within 60 days of the date of the Executive's death, (i) all
unpaid Base Salary accrued through and including the date of the
Executive's death, (ii) a lump sum amount equal to Base Salary
for one year, at the rate in effect on the date of the
Executive's death (the "Annual Base Salary Upon Death"), (iii) a
lump sum equal to $30,000 representing the amount of one
Relocation Bonus payable to the Executive, and (iv) an additional
lump sum bonus amount equal to the sum of (x) 75% of Annual Base
Salary Upon Death and (y) 75% of Annual Base Salary Upon Death
pro rated for the period commencing on the first day of the
fiscal year during which the Executive's death occurred and
ending on the date of Executive's death; it being understood that
such 75% bonus level has been agreed to in satisfaction of any
actual bonus for the year in which the Executive's death occurs
because it is impossible to determine the performance of the
Employers for future periods. The "Beneficiary" shall be (i) the
beneficiary designated by the Executive on a form prescribed for
such purpose by the Employers, or (ii) in the absence of such
designation, the Executive's executor or legal representative.
4.2 Disability. If during the Term the Executive
shall become physically or mentally disabled, whether totally or
partially, such that the Executive is unable to perform the
Executive's services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating six
months during any twelve month period, the Employers may on any
day (the "Disability Termination Date") after the last day of the
six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of
six months (but, in each case, before the Executive has recovered
from such disability), by written notice to the Executive,
terminate the Term (a "Disability Termination") and no further
amounts or benefits shall be payable hereunder, except that the
Employers shall be obligated to pay to the Executive in exchange
for a release in form and substance acceptable to the Employers
acting reasonably, within 60 days of the Disability Termination
Date, (i) all unpaid Base Salary accrued through and including
the Disability Termination Date, (ii) a lump sum amount equal to
Base Salary for one year, at the rate in effect on the Disability
Termination Date (the "Annual Base Salary Upon Disability"),
(iii) a lump sum equal to $30,000 representing the amount of one
Relocation Bonus payable to the Executive, and (iv) an additional
lump sum bonus amount equal to the sum of (x) 75% of Annual Base
Salary Upon Disability and (y) 75% of Annual Base Salary Upon
Disability prorated for the period commencing on the first day of
the fiscal year during which the Disability Termination occurred
and ending on the Disability Termination Date; it being
understood that such 75% bonus level has been agreed to in
satisfaction of any actual bonus for the year in which the
Executive's death occurs because it is impossible to determine
the performance of the Employers for future periods. If the
Executive shall die before receiving all amounts required to be
paid by the Employers in accordance with the foregoing, such
amounts shall be paid to the Beneficiary.
4.3 Cause; Voluntary Termination.
4.3.1 In the event of the conviction of the
Executive of any felony involving intentional conduct on the part
of the Executive, the conviction of the Executive of any lesser
crime or offense involving the illegal use or conversion of
property of the Employers or any of their subsidiaries or
affiliates, the willful misconduct by the Executive in connection
with the performance of the Executive's duties hereunder (which
shall not be deemed to include an action by the Executive taken
in good faith in the best interest of the Employers) or the
continued breach by the Executive of any material provision of
this Agreement after notice of such breach has been actually
received by the Executive from the Employers (the "deemed
receipt" provisions of Article 8 hereof being inapplicable to
this Section 4.3.1), the Employers may at any time, by written
notice to the Executive, terminate the Term (a "Termination For
Cause") and, upon such Termination For Cause, the Term shall
terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder; provided, that the
Employers shall be obligated to pay to the Executive in exchange
for a release in form and substance acceptable to the Employers
acting reasonably, within 60 days of the date of termination, all
unpaid Base Salary accrued, and provide the Executive with all
benefits and expense reimbursement to which the Executive would
otherwise be entitled, through and including the date of
termination.
4.3.2. Upon a voluntary termination of the term
by the Executive (a "Voluntary Termination") without Good Reason
(as defined in Section 4.4.2), the Term shall terminate and the
Executive shall be entitled to receive no further amounts or
benefits hereunder; provided, that the Employers shall be
obligated to pay to the Executive in exchange for a release in
form and substance acceptable to the Employers acting reasonably,
within 60 days of the date of termination, all unpaid Base Salary
accrued, and provide the Executive with all benefits and expense
reimbursement to which the Executive would otherwise be entitled,
through and including the date of termination.
4.4 Termination by Employers Without Cause;
Termination by the Executive for Good Reason.
4.4.1 Upon a Termination Without Cause (as
defined below) or a Voluntary Termination with Good Reason (as
defined below):
(a) the Employers shall pay to the
Executive, within 60 days of the date of termination, all unpaid
Base Salary accrued, and provide the Executive with all benefits
and expense reimbursement to which the Executive would otherwise
be entitled, through and including the date of termination,
(b) subject to Sections 4.4.4 and 4.4.6, the
Employers shall, in exchange for a release in form and substance
acceptable to the Employers acting reasonably, pay the following
to the Executive:
(i) the Employers shall continue
payments of Base Salary to the Executive (the
"Continued Salary"), at the rate and at such times as
are in effect on the date of termination (the "Base
Salary Upon Termination"), for the 12 month period
following the date of termination (the "Payment
Period"),
(ii) the Employers shall continue
medical, dental and life insurance benefits during the
Payment Period (the "Continued Benefits"),
(iii) the Employers shall pay
$30,000 on the date April 1 occurring during the
Payment Period in satisfaction of the Relocation Bonus
payable to the Executive on such date, and
(iv) the Employers shall pay to the
Executive, at the end of the Payment Period, a bonus
(the "Continued Bonus," and together with the Continued
Salary and the Continued Benefits, the "Continued
Payments") in an amount equal to 75% of the aggregate
base salary paid to the Executive during the period
commencing on the day after the last day of the last
fiscal year completed prior to the date of termination
and ending on the last day of the Payment Period; it
being understood that such 75% bonus level has been
agreed to because it is impossible to determine the
performance of the Employers for future periods.
4.4.2 Definitions:
(a) "Termination Without Cause" means the
termination of the Term by the Employers for reasons other than
those described in Sections 4.1, 4.2 or 4.3.
(b) "Good Reason" means the continuation of
any of the following (without the Executive's express prior
consent) after written notice provided by the Executive and the
failure by the Employers to remedy such event within thirty (30)
days after receipt of such notice:
(i) a reduction in the Executive's
Base Salary, as in effect at the date hereof pursuant
to Section 2.2 or as in effect pursuant to increases
from time to time made during the Term;
(ii) failure by the Employers to
pay to the Executive an Incentive Bonus or Relocation
Bonus, to the extent earned as provided for in this
Agreement;
(iii) a failure by the
Employers to provide any benefit or compensation plan
(including any pension, profit sharing, annuity, life
insurance, health, accidental death or dismemberment or
disability plan), or any substantially similar benefit
or compensation plan, which has been made available to
other comparable executives of Mother's on terms no
less favorable to the Executive than the terms offered
to such other executives; provided, however, that
nothing in this clause (iii) shall be construed to mean
that the Employers shall be constrained from amending
or eliminating any benefit or compensation plan as such
is applied to the Executive and to other comparable
executives of Mother's; provided, further, that a
failure by the Employers to include the Executive in
any stock option plan or bonus plan shall not
constitute Good Reason hereunder;
(iv) the assignment to the
Executive of any duties materially inconsistent with
the Executive's position as an executive officer of
Mother's;
(v) a materially adverse change in
the Executive's title or the line of authority through
which the Executive is required to report (it being
understood that the Executive shall at all times report
to either the Chief Executive Officer or the Chief
Operating Officer of SFC) without the prior written
consent of the Executive;
(vi) any reason whatsoever upon the
election of the Executive at any time during the period
occurring 90 to 180 days after the sale by SFC of a
majority of the capital stock of Holdings or Mother's
or all or substantially all of the assets of Mother's;
(vii) a relocation of the
corporate headquarters of Mother's requiring the
Executive to relocate to a place other than the greater
San Francisco Bay area; or
(viii) any material breach of
this Agreement by the Employers.
4.4.3 In the event of a Termination Without
Cause or a Voluntary Termination for Good Reason, the Executive
shall not be required to mitigate his damages hereunder;
provided, however, that, notwithstanding the foregoing, if there
are any damages hereunder by reason of the events of termination
described above which are "contingent on" a Section 280G Change
(as defined below) within the meaning of Section 280G(b)(2)(A) of
the Code after a Public Offering (as defined below) (i) the
Executive shall be required to mitigate such damages hereunder,
including any such damages theretofore paid, but not in excess of
the extent, if any, necessary to prevent the Employers from
losing any tax deductions to which they would otherwise be
entitled in connection with such damages if they were not so
"contingent on" a Section 280G Change (provided, that, the
parties agree that this clause (i) shall not require the
Executive to violate Section 5.2 hereof) and (ii) in addition to
any obligation under the preceding clause (i), and without
duplication of any amounts required to be paid to the Employers
thereunder, if any such termination occurs and the Executive,
whether or not required to mitigate his damages under clause (i)
above, thereafter obtains other employment, the total
compensation received in connection with such other employment,
whether paid to the Executive or deferred for his benefit, for
services prior to the end of the Modified Payment Period (as
defined below) (up to the aggregate amount of damages described
in Section 4.4.1(b)) shall be paid over to the Employers as
received with respect to such period. Notwithstanding the
provisions of this Section 4.4.3, the Employers shall not have
the right to enforce their rights under this Section 4.4.3 by set
off against or by otherwise withholding any amounts receivable by
the Executive (or payable on the Executive's behalf) under this
Agreement upon or following the time at which they are required
to be paid under this Agreement.
4.4.4 In the event that any amounts or other
benefit payable pursuant to Section 4.4 or 4.5 (other than
Section 4.4.6) (including, but not limited to, the Continued
Payments, the receipt of any security upon the exercise of any
Option, or the lapse of any direct or indirect restriction on the
ability to transfer any such security for the fair market value
thereof) would be deemed "contingent on" a Section 280G Change
(within the meaning of Section 280G(b)(2)(A) of the Code) that
occurs subsequent to a Public Offering:
(a) the Continued Salary shall be paid, the
Continued Bonus shall be calculated by reference to and the
Continued Benefits shall be provided for the shorter of (i) 12
months following the date of termination, and (ii) the remainder
of the Term (even if such remaining period is less than twelve
months) (the "Modified Payment Period"), and
(b) the Continued Salary and the Continued
Bonus (as modified in clause (a) of this Section 4.4.4) shall be
paid to the Executive by the Employers, within 60 days of the
date of termination, in a lump sum, which lump sum shall be
discounted to the present value, on the date of payment, of the
Continued Salary (as if paid at the times the Base Salary would
have been paid to the Executive under Section 2.2 if the
Executive had been employed by the Employers during the Modified
Payment Period) and the Continued Bonus (as if paid on the last
day of the Modified Payment Period) at the Discount Rate.
"Discount Rate" shall mean the discount rate described in Section
280G(d)(4) of the Code. The parties hereby elect, to the extent
permitted for purposes of such Section 280G(d)(4), to base the
Discount Rate on the applicable federal rate in effect on the
date hereof.
4.4.5 It is the intention of the parties that,
if there has been a Public Offering and a Section 280G Change
occurs, payments to be made to the Executive in the event of a
Termination Without Cause or a Voluntary Termination for Good
Reason qualify as "reasonable compensation for personal services
to be rendered on or after the date of the change" within the
meaning of Section 280G(b)(4)(A) of the Code and Q&A 42(b) of
Proposed Regulation Section 1.280G-1 thereunder (as amended from
time to time), and the provisions of this Agreement shall, in the
event of any ambiguity, be interpreted in a manner consistent
with the foregoing.
4.4.6 For purposes of this Agreement:
(a) A "Section 280G Change" shall mean a
"change in the ownership or effective control" of either Employer
or a "change .in the ownership of a substantial portion of the
assets" of either Employer, in each case within the meaning of
Section 280G(b)(2)(A)(i) of the Code.
(b) A "Public Offering" shall mean an
initial public offering of stock of either Employer if at any
time thereafter stock of either Employer is "readily tradable on
an established securities market or otherwise" (within the
meaning of Section 280G(b)(5)(A)(ii) of the Code).
5. Protection of Confidential Information: Non-
Competition; No Solicitation.
5.1 In view of the fact that the Executive's work for
the Employers will bring the Executive into close contact with
many confidential affairs of the Employers not readily available
to the public, and plans for future developments, the Executive
agrees:
5.1.1 To keep and retain in the strictest
confidence all confidential matters of the Employers, including,
without limitation, to the extent the following are confidential,
trade "know how," secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions
and research projects, and other business affairs of the
Employers, learned by the Executive heretofore or hereafter, and
not to disclose them to anyone outside of the Employers, either
during or after the Executive's employment with the Employers,
except in the course of performing the Executive's duties
hereunder or with the Employers' express written consent; and
5.1.2 To deliver promptly to the Employers on
termination of the Executive's employment by the Employers, or at
any time the Employers may so request, all memoranda, notes,
records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the Employers'
business and all property associated therewith, which the
Executive may then possess or have under the Executive's control
unless such information is necessary to enable the Executive to
file any federal or state tax return or make any other report or
filing or take any other action required by any law, regulation
or order of any court or regulatory commission, department or
agency.
Notwithstanding the foregoing, nothing contained
in this Section 5.1 shall restrict the Executive from using,
disclosing or retaining any information (i) which is in the
public domain or could readily be known or determined without
being employed by the Employers or which enters the public domain
through no breach of the Executive's obligations to the
Employers, (ii) which the Executive acquired prior to his
employment by the Employers, (iii) which the Executive properly
acquired or acquires from parties independent of the Employers,
(iv) which the Executive is required to disclose by law,
regulation, order or legal process, (v) which is desirable to
establish the Executive's claim or defense in any litigation
between the parties, provided that the Executive uses his best
efforts to ensure that confidential treatment will be afforded
such information.
5.2 During the term of the Executive's employment by
the Employers and, in the event of the termination of the
Executive's employment for any reason, for the 180-day period
immediately following the date of termination, the Executive
shall not, directly or indirectly, enter the employ of, or render
any services to, any person, firm or corporation engaged in any
business competitive with the business of the Employers or of any
of their subsidiaries; in any state in which any such business is
conducted or in which the Employers have specific plans to
conduct business at the time of such termination, the Executive
shall not engage in such business on the Executive's own account;
and the Executive shall not become interested in any such
business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee,
trustee, consultant, or in any other relationship or capacity;
provided, however, that nothing contained in this Section 5.2
shall be deemed to prohibit the Executive from acquiring, solely
as an investment, up to one percent (1%) of the outstanding
shares of capital stock of any public corporation. The Executive
shall not be deemed to be in breach of this Section 5.2 because
(i) a public corporation of which he owns more than 1% of the
outstanding capital stock begins to engage in any such prohibited
activities or (ii) his ownership interest in a public corporation
engaged in such activities increases to more than 1% of such
corporation's issued and outstanding capital stock in either case
without any volitional act on the part of the Executive, if, in
the case of either clause (i) or (ii) above, within sixty (60)
days of learning of such event, the Executive disposes of the
amount of capital stock necessary to cause his ownership to be
less than 1% of the amount of such capital stock issued and
outstanding.
5.3 When the Executive's employment by the Employers
terminates for any reason whatsoever, then during the period
commencing on the date of such termination and ending on the
second anniversary thereof, the Executive shall not without the
express written consent of SFC, directly or indirectly, (i)
solicit any employee of the Employers or of any of their
subsidiaries to terminate his employment with the Employers or
with such subsidiary or (ii) hire any such employee.
5.4 If the Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.1, 5.2 or
5.3 hereof, the Employers shall have, in addition to any other
remedies they may have, the following rights and remedies:
5.4.1 The right and remedy to have the
provisions of this Agreement specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that
any such breach or threatened breach will cause irreparable
injury to the Employers and that money damages will not provide
an adequate remedy to the Employers; and
5.4.2 The right and remedy to require the
Executive to account for and pay over to the Employers all
compensation, profits, monies, accruals, increments or other
benefits (collectively "Benefits") derived or received by the
Executive as the result of any transactions constituting a breach
of any of the provisions of the preceding paragraph, and the
Executive hereby agrees to account for and pay over such Benefits
to the Employers.
5.4.3 Each of the rights and remedies
enumerated above shall be independent of the other, and shall be
severally enforceable, and all of such rights and remedies shall
be in addition to, and not in lieu of, any other rights and
remedies available to the Employers under law or in equity.
5.5 If any of the covenants contained in Section 5.1,
5.2 or 5.3, or any part thereof, hereafter is construed to be
invalid or unenforceable, the same shall not affect the remainder
of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
5.6 If any of the covenants contained in Section 5.1,
5.2 or 5.3, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered
thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision
shall then be enforceable.
5.7 The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 5.1,
5.2 and 5.3 upon the courts of any state within the geographical
scope of such covenants where the Executive is engaged in
activities in violation of such covenants or the Employers are
damaged or harmed in any way by the Executive's violation of such
covenants. In the event that the courts of any one or more of
such states shall hold such covenants wholly unenforceable by
reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar
or in any way affect the Employers' right to the relief provided
above in the courts of any other states within the geographical
scope of such covenants as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they
relate to each state being for this purpose severable into
diverse and independent covenants.
6. Inventions and Patents. The Executive agrees that all
processes, technologies and inventions (collectively
"Inventions"), including new contributions, improvements, ideas
and discoveries, whether patentable or not, conceived, developed,
invented or made by him while employed by the Employers shall
belong to the Employers, provided that such Inventions grew out
of the Executive's work with the Employers or any of their
subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Employers or any of
their subsidiaries or affiliates or are conceived or made on the
Employers' time or with the use of the Employers' facilities or
materials. The Executive shall further: (a) promptly disclose
such Inventions to the Employers; (b) assign to the Employers,
without additional compensation, all patent and other rights to
such Inventions for the United States and foreign countries; (c)
sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of the Executive's inventorship.
7. Intellectual Property. The Employers shall be the
exclusive owners of all the products and proceeds of the
Executive's services with the Employers, including, but not
limited to, all materials, ideas, concepts, formats, suggestions,
developments, arrangements, packages, programs and other
intellectual properties that the Executive may acquire, obtain,
develop or create in connection with and during the Executive's
employment by the Employers, free and clear of any claims by the
Executive (or anyone claiming under the Executive) of any kind or
character whatsoever (other than the Executive's right to receive
payments hereunder). The Executive shall, at the request of the
Employers, execute such assignments, certificates or other
instruments as the Employers may from time to time deem necessary
or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend their right, title or interest in or to any
such properties.
8. Notices. All notices, requests, consents and other
communications required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given if
delivered personally, sent by overnight courier or mailed first-
class, postage prepaid, by registered or certified mail (notices
mailed shall be deemed to have been given on the date mailed) or
sent by telecopier, as follows (or to such other address as
either party shall designate by notice in writing to the other in
accordance herewith):
If to the Employers, to:
Specialty Foods Acquisition Corporation
Specialty Foods Corporation
520 Lake Cook Road
Suite 520
Deerfield, Illinois 60015
Telecopier: 847/405-5310
Attention: Chief Executive Officer
If to the Executive, to:
Mr. Patrick J. O'Dea
c/o Mother's Cake & Cookie Co.
810 81st Avenue
Oakland, California 94621
Telecopier: 510/613-0621
9. General.
9.1 This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Illinois
applicable to agreements made and to be performed entirely in
Illinois.
9.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any alleged
representation, promise of inducement not so set forth.
9.4 This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The
Employers may assign their rights, together with their
obligations, hereunder (i) to any subsidiary of or successor-in-
interest to any of them, or (ii) to third parties in connection
with any sale, transfer or other disposition of all or
substantially all of the business or assets of any of them; in
any event the obligations of the Employers hereunder shall be
binding on their successors or permitted assigns, whether by
merger, consolidation or acquisition of all or substantially all
of either of their businesses or assets.
9.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. The failure of a party at any time
or times to require performance of any provision hereof shall in
no manner affect the right at a later time to enforce the same.
No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in
this Agreement.
9.6 This Agreement or any amendment hereto may be
signed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one
agreement (or amendment as the case may be).
9.7 Survival. The provisions of Sections 5, 6 and 7
shall survive any termination of this Agreement.
10. Certain Definitions.
10.1 As used herein the term "subsidiary" shall mean
any corporation or other business entity controlled directly or
indirectly by the corporation or other business entity in
question, and the term "affiliate" shall mean and include any
corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the
corporation or other business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
SPECIALTY FOODS CORPORATION
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: President & CEO
MCC-DSD HOLDINGS, INC.
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: Vice President
MOTHER'S CAKE & COOKIE CO.
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: Vice President
/s/ Patrick J. O'Dea
--------------------
PATRICK J. O'DEA
EXHIBIT 10.52
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is made as of
this 29th day of August, 1997 by and among SPECIALTY FOODS
CORPORATION, a Delaware corporation ("SFC"), H&M FOOD SYSTEMS
COMPANY, INC., a Delaware corporation ("H&M"), and WILLIAM D. DAY
(the "Executive"). SFC and H&M are each sometimes referred to
herein individually as an "Employer" and are sometimes referred
to together as the "Employers".
1. Certain of the officers of H&M have expressed concern
about a loss of employment that could result in the event of a
sale or change of control of H&M.
2. In order to induce certain officers of H&M, including
the Executive, not to terminate their employment with H&M in
contemplation of a proposed sale or change of control of H&M, the
Employers desire to provide certain severance benefits to such
officers, including the Executive, if the employment of such
officers is terminated following a sale or change of control of
H&M.
NOW THEREFORE, in consideration of the foregoing, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Termination Resulting from Sale. Upon a Sale
Termination (as defined below):
(a) H&M shall pay to the Executive within 30 days
of the date of termination, all unpaid Base Salary (as defined
below) accrued, and provide the Executive with all benefits and
expense reimbursement to which the Executive would otherwise be
entitled, through and including the date of termination.
(b) In exchange for a General Release in form and
substance reasonably satisfactory to the Employers, H&M shall pay
to the Executive the following:
(i) H&M shall continue payments of Base
Salary to the Executive for the 12-
month period following the date of
termination (the "Payment Period")
at such times as are in effect on
the day prior to the Sale; and
(ii) H&M shall continue medical and
dental insurance benefits during
the Payment Period as in effect for
other employees in like positions.
(c) All payments owed to the Executive pursuant
to Section 1(b) shall be offset by any severance payments paid to
the Executive by the Employers or their successors.
Section 2. Definitions.
(a) "Base Salary" means the Executive's annual
base salary in effect (i) on the day prior to a Sale, or (ii) at
the time of execution of this Agreement, whichever is higher.
(b) "Good Reason" means the continuation of any
of the following (without the Executive's express prior written
consent) after written notice provided by the Executive and the
failure by the Employers to remedy such event within thirty (30)
days after receipt of such notice:
(i) a reduction in the Executive's Base
Salary;
(ii) a relocation of the Executive's
principal place of business to any
location which is not within the
greater Dallas/Ft. Worth
metropolitan area;
(iii)a material adverse change in
the Executive's job
responsibilities or level of
authority, it being understood that
the Executive is the Chief
Executive Officer in a subsidiary
of a consolidated group of
companies; and
(iv) any material breach of this
Agreement by the Employers or their
successors.
Section 3. No Mitigation. In the event of a Sale
Termination, the Executive shall not be required to mitigate the
payments or benefits to be received by the Executive hereunder by
securing other employment, or otherwise.
Section 4. Continued Employment. This Agreement is not
a contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of Executive's continued
employment by H&M or its successor. The Employers reserve all
rights to cause the Executive's employment to be terminated at
any time with or without cause.
Section 5. Successors Bound. The rights and obligations
of the Employers hereunder shall inure to the benefit of and are
binding upon the successors of the Employers.
Section 6. Notices and Other Documents. All payments,
requests, notices and the like may be made to the Executive by
mailing the same to the Executive at the address set forth below
or at such other address as the Executive may file in writing
with H&M for that purpose. Notices, requests and the like sent
by the Executive to H&M shall be sufficient if mailed to
Specialty Foods Corporation, 25 Tri-State International Office
Center, Suite 250, Lincolnshire, Illinois 60069, Attention:
Vice President, Human Resources (with a copy to the General
Counsel of SFC), or to such address as SFC may furnish to the
Executive for this purpose from time to time in writing.
Section 7. Employment Taxes. All payments made under
this Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as required
by applicable law or regulation, as in effect from time to time.
Section 8. Term. This Agreement shall have a term
expiring on December 31, 1999. If a sale shall not have occurred
by December 31, 1999, this Agreement shall expire and be of no
further force or effect.
Section 9. General.
(a) This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Illinois applicable to agreements made and to be performed
entirely in Illinois.
(b) The section headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
(c) This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
alleged representation, promise of inducement not so set forth.
(d) This Agreement and the Executive's rights and
obligations hereunder may not be assigned by the Executive. The
Employers may assign their rights, together with their
obligations hereunder (i) to any successor-in-interest to either
of them; or (ii) to third parties in connection with any sale,
transfer or other disposition of all or substantially all of the
business or assets of either of them; in any event the
obligations of the Employers hereunder shall be binding on their
successors or permitted assigns, whether by merger, consolidation
or acquisition of all or substantially all of either of their
businesses or assets.
(e) This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. The failure of a party at any time
or times to require performance of any provision hereof shall in
no manner affect the right at a later time to enforce the same.
No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in
this Agreement.
(f) This Agreement, or any amendment hereto, may
be signed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one
agreement (or amendment as the case may be).
IN WITNESS WHEREOF, this Agreement has been duly executed by
each of the parties hereto as of the date first written above.
EXECUTIVE:
/s/ William D. Day
------------------
Name: William D. Day
Address: 1943 W. Telemark Cir.
Green Bay, WI 54313
SPECIALTY FOODS CORPORATION
By: /s/ Robert B. Aiken
-------------------
Name: Robert B. Aiken
Title: Vice President
H&M FOOD SYSTEMS COMPANY, INC.
By: /s/ Robert B. Aiken
-------------------
Name: Robert B. Aiken
Title: Vice President
EXHIBIT 10.55
MOTHER'S CAKE & COOKIE CO.
AMENDED AND RESTATED
SUPPLEMENTAL
LONG TERM INCENTIVE PLAN
MOTHER'S CAKE & COOKIE CO.
AMENDED AND RESTATED SUPPLEMENTAL LONG TERM INCENTIVE PLAN
Section 1. Purpose. The purpose of the Mother's Cake &
Cookie Co. Supplemental Long Term Incentive Plan is to promote
the interests of Mother's Cake & Cookie Co. and Specialty Foods
Corporation, its parent corporation, by attracting, incenting and
rewarding certain key executives of Mother's Cake & Cookie Co.
to: (a) create economic value; (b) focus management's attention
on overall corporate performance and thereby promote cooperation
and teamwork among management; and (c) provide executives with a
direct economic interest in the attainment of long term business
objectives. This Plan supersedes the Mother's Cake & Cookie Co.
Supplemental Long Term Incentive Plan effective October 31, 1997
and the Mother's Cake and Cookie Co. Supplemental Long Term
Incentive Plan for the President and Chief Executive Officer
effective as of June 30, 1997 pursuant to Section 8 of such plans
as a result of the acquisition of Archway Cookies, L.L.C.
Section 2. Definitions. As used in this Plan,
capitalized terms shall have the meanings set forth below:
(a) "Board of Directors" shall mean the board of
directors of SFC, as in place from time to time.
(b) "Change of Control" shall mean a sale or transfer
of all of the outstanding stock of Holdings or the Company or
substantially all of the assets of Holdings or the Company to an
unaffiliated entity.
(c) "Change of Control Payment" shall mean a payment
to be made to a Participant in accordance with Section 4(a).
(d) "Company" shall mean Mother's Cake & Cookie Co., a
California corporation and its subsidiaries, including Archway
Cookies, L.L.C., a Delaware limited liability corporation.
(e) "Effective Date" shall mean March 15, 1999.
(f) "EBITDA" shall mean the amount determined on a
consolidated basis for Holdings and the Company (as reflected on
the consolidated financial statements of Holdings and the
Company) for the Measuring Fiscal Year equal to the consolidated
(i) income from operations, plus (ii) depreciation of its
property, plant and equipment and amortization of intangible
assets of Holdings and the Company.
(g) "Employee" shall mean an employee of the Company.
(h) "Fair Market Value" shall mean:
(i) In the event of
a potential Change of Control
Payment, the aggregate net
cash proceeds received by
Holdings, the Company and/or
SFC (and its subsidiaries)
(after deducting all
transaction fees and expenses
incurred by Holdings, the
Company and/or SFC in
connection with such Change of
Control); and
(ii) In the event of
a potential Terminal Value
Payment, the Fair Market Value
of Holdings and the Company,
as of the Terminal Value
Measurement Date, as
determined by multiplying the
EBITDA of the Measuring Fiscal
Year by a factor of nine and a
half (9.5). By way of
example, if the EBITDA of the
Measuring Fiscal Year equaled
$25.0 million, the Fair Market
Value would equal $237.5
million.
(i) "Fiscal Year" shall mean the calendar year ending
December 31, whether or not such period is the fiscal year end of
Holdings and the Company.
(j) "Holdings" shall mean MCC-DSD Holdings, Inc., a
Delaware corporation and the parent corporation of the Company.
(k) "Measuring Fiscal Year" shall mean the Fiscal Year
of Holdings and the Company ending December, 2000.
(l) "Participant" shall mean an Employee designated by
the Board of Directors to participate in the Plan.
(m) "Participant Award" shall mean an award granted by
the Board of Directors to a Participant pursuant to Section 3 of
a specified Participation Rate, as evidenced by the issuance of a
Participant Award Agreement by the Company in favor of the
Participant.
(n) "Participant Award Agreement" shall mean an
agreement in the form of Exhibit A.
(o) "Participation Rate" shall mean, with respect to
any Participant, the Threshold Participation Rate, if any, plus
the Value Increase Participation Rate awarded to such Participant
pursuant to his or her Participant Award.
(p) "Plan" shall mean the Mother's Cake & Cookie Co.
Supplemental Long Term Incentive Plan, as may be amended from
time to time.
(q) "SFC" shall mean Specialty Foods Corporation, the
parent corporation of Holdings and the Company.
(r) "Terminal Value Measuring Date" shall mean December 31,
2000.
(s) "Terminal Value Payment" shall mean a payment to
be made to a Participant in accordance with Section 4(b).
(t) "Threshold Participation Rate" shall mean, with
respect to any Participant, the percentage of the Threshold
Amount, if any, granted to such Participant pursuant to his or
her Participant Award.
(u) "Threshold Value" shall mean an amount equal to
$216 million.
(v) "Value Increase Participation Rate" shall mean,
with respect to any Participant, the percentage of the Value
Increase Amount granted to such Participant pursuant to his or
her Participant Award.
(w) "Value Increase Amount" shall mean:
(i) In determining
the amount of a Change of
Control Payment, an amount
equal to the Fair Market Value
as determined in connection
with such Change of Control
minus the Threshold Value; or
(ii) In determining
the amount of a Terminal Value
Payment, an amount equal to
the Fair Market Value as
determined at the Terminal
Value Measurement Date minus
the Threshold Value.
Section 3. Eligibility. Participants in the Plan shall
be designated by the Board of Directors (provided that such
Authority may be designated to SFC and by SFC to the Company) and
shall consist of those Employees (whether or not employed on the
Effective Date) who, in the sole discretion of the Board of
Directors, have the potential to make a significant impact on the
financial results of Holdings and the Company. The Board of
Directors' designation of an Employee as a Participant and the
grant of a Participation Award to a Participant shall be
evidenced by an instrument or instruments in the form of the
Participant Award Agreement. Participation Awards previously
granted to Participants which have been forfeited pursuant to
Section 6 due to termination of employment may be regranted to
other Participants. There is no minimum or maximum number of
Participant Awards that may be granted to a Participant.
Section 4. Awards.
(a) Change of Control Payment. In the event of a
Change of Control, each Participant that has received a
Participant Award shall become entitled to receive an amount
equal to such Participant's Threshold Participation Rate, if any,
multiplied by the Threshold Amount plus such Participant's Value
Increase Participation Rate multiplied by the Value Increase
Amount (as determined in connection with such Change of Control).
Such amounts shall be paid in accordance with Section 5(a).
(b) Terminal Value Payment. In the event that a
Change of Control has not occurred prior to June 1, 2001, each
Participant that has received a Participant Award shall become
entitled to receive an amount equal to such Participant's
Threshold Participation Rate, if any, multiplied by the Threshold
Amount plus such Participant's Value Increase Participation Rate
multiplied by the Value Increase Amount (as determined as of the
Terminal Value Measurement Date). Such amounts shall be paid in
accordance with Section 5(b).
(c) Offset for Deferred Bonus Payments. The amount of
each Participant Award shall be reduced by the amount of any
retention bonus payments under the 1999-2000 Retention Bonus Plan
made to each such Participant by the Company or SFC if so
specified in such Participant's award.
Section 5. Time and Form of Award Payments.
(a) Timing of Payment; Change in Control. Awards
payable under the Plan as a result of a Change in Control shall
be paid to Participants by the Company no later than ninety (90)
days following the occurrence of such Change of Control.
(b) Timing of Payment; Terminal Value Payment Date.
Awards payable under the Plan in the event a Change of Control
has not occurred by June 1, 2001 shall be paid to Participants by
the Company in one installment to be paid on June 1, 2001.
(c) Eligibility. Except as set forth in Section 6
below, a Participant must be an Employee at the time a payment is
due in order to receive such payment.
(d) Method of Payment. All awards shall be paid in
cash, without interest thereon.
(e) Termination of Plan Upon Payment. Participants
shall be entitled to not more than one payment under this Plan.
Upon a Change of Control Payment or Terminal Value Payment, this
Plan shall terminate and shall be of no further force or effect.
Section 6. Termination of Employment.
(a) Change of Control. To receive a Change of Control
Payment, a Participant must remain employed by the Company
through the occurrence of a Change of Control and for a period of
ninety (90) days thereafter, unless following such Change of
Control but prior to the end of such ninety (90) day period, the
Participant dies or becomes disabled (as defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended) or is
terminated by the Company or its successor for any reason other
than cause, in which case such Participant (or his beneficiary)
shall be paid in accordance with the terms of the Plan.
(b) Terminal Value Payment. To receive a Terminal Value
Payment, a Participant must remain employed by the Company
through June 1, 2001.
Section 7. Administration. The Plan shall be
administered by the Board of Directors. The Board may establish
rules and regulations for the administration of the Plan, impose
conditions with respect to competitive employment or other
activities with respect to any such awards, and establish the
written form to be used to evidence such awards. The Board of
Directors shall have full authority to construe and interpret the
terms and provisions of the Plan, to adopt, alter, waive and
repeal such administrative rules, guidelines and practices
governing the Plan and to perform all acts, including delegation
of its responsibilities, as it shall, from time to time, deem
advisable, and to otherwise supervise the administration of the
Plan. All such rules, regulations and interpretations relating
to the Plan which are adopted by the Board of Directors shall be
conclusive and binding on all parties. The Board of Directors
may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award granted hereunder, in
the manner and to the extent it shall deem necessary to carry the
Plan into effect. No member of the Board of Directors or any
person or committee to whom responsibilities are delegated shall
be liable for any action or determination made in good faith with
respect to the Plan.
Section 8. Adjustments. In the event of any
acquisition, divestiture or other corporate transaction of any
kind involving the Company or its subsidiaries (which does not
constitute a Change of Control) which the Committee, in its sole
discretion, reasonably determines to be of such a kind or nature
as to make appropriate an amendment or adjustment to the Plan or
any Participation Awards granted thereunder in order to
effectuate the intent and purposes of the Plan, the Committee
may, in its sole discretion, make such amendment or adjustment.
Section 9. Amendments and Termination. The Board of
Directors may amend or terminate the Plan at any time; provided,
however, that, except as set forth in Section 8, no such
amendment or termination shall materially and adversely impair
the rights of any Participant hereunder without the written
consent of Participants who, as of the time of such amendment or
termination, hold the right to receive at least 66% of the total
amounts which may then be payable pursuant to all of the
Participant Awards which remain outstanding at such time;
provided, however, that nothing contained herein shall limit or
restrict the discretionary powers granted to the Board of
Directors in Sections 1 through 8 hereof.
Section 10. Miscellaneous.
(a) No Right to Awards or Continued Employment. No
Employee shall have any claim or right to be granted an award
under the Plan. Neither this Plan nor any action taken hereunder
shall be construed as giving any Employee any right to be
retained in the employ of the Company or any subsidiary or
affiliate thereof. Each Employee acknowledges that he or she is
an "at-will" employee of the Company. Each Employee further
acknowledges that nothing contained herein shall alter such "at-
will" employment status.
(b) No Rights of a Stockholder. The receipt of
Participant Awards by a Participant shall not entitle the
Participant to vote, to receive dividends or distributions, to
audit or review the Company's books and records, or to otherwise
act as a stockholder of the Company.
(c) Unfunded Plan. The Company shall not 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
the Plan.
(d) Taxes/Other Deductions. The Company shall have
the right to deduct from all awards paid under the Plan any
federal, state or local taxes required by law to be withheld with
respect to such payments. In addition, the Company shall have
the right to deduct from all awards paid under the Plan to a
Participant any amounts owed by such Participants to the
arbitrator pursuant to the provisions of Section 2(h).
(e) Relationship to Other Benefits. No payment under
the Plan shall be taken into account in determining any benefits
to which a Participant may be entitled under any bonus, pension,
profit sharing, group insurance or other compensation or benefit
plan, program or arrangement of the Company or any of its
affiliations.
(f) Nontransferability. No award made hereunder may
be assigned, pledged or transferred, except, in the event of
death of a Participant, by will or the laws of descent and
distribution, and any attempt to assign, pledge or transfer such
rights shall be void. Any payments required under the Plan
during a Participant's lifetime shall be made only to the
Participant. In the event any conflicting demands are made upon
the Company with respect to any payments due as a result of this
Plan, provided that the Company shall not have received prior
written notice that said conflicting demands have been finally
settled by court adjudication, arbitration, joint order or
otherwise, the Company may pay to the Participant any and all
amounts it determines to be due hereunder and thereupon the
Company shall be fully relieved and discharged of any further
duties or liabilities under the Plan with respect to such
payment.
(g) Governing Law/Jurisdiction. This Plan shall be
governed by, and construed in accordance with, the laws of the
State of Illinois applicable to agreements made and to be
performed entirely within such State (without regard to any
conflict of law provisions that might indicate the applicability
of any other laws). SFC, the Company and each Participant who is
granted a Participant Award (as a condition to such grant) hereby
irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Illinois and
of the United States of America located in the City of Chicago
for any actions, suits or proceedings arising out of or relating
to the Plan and agrees not to commence any action, suit or
proceeding relating hereto except in such courts. The parties
hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising under
the Plan in the courts of the State of Illinois or the United
States of America located in the City of Chicago, and hereby
further irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an
inconvenient forum.
(h) Expenses. The Company shall bear all expenses
incurred in connection with the administration of the Plan, but
shall not be responsible for taxes or other expenses incurred by
the Participants.
(i) Entire Agreement. This Plan and the Exhibit A
applicable to each Participant set forth the entire agreement and
understanding of the parties relating to the subject matter
hereof, and supersede all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise of inducement not so set forth.
Section 11. Effective Date. Subject to the approval of
the Board of Directors, this Plan shall become effective as of
March 15, 1999.
EXHIBIT A
Date of Grant:
Participant:
Participation Rate:
Control Number:
MOTHER'S CAKE & COOKIE CO.
SUPPLEMENTAL LONG TERM INCENTIVE PLAN
PARTICIPATION AWARD AGREEMENT dated as of March __,
1999 by and between MOTHER'S CAKE & COOKIE CO., a California
corporation (the "Company"), and ______________________ (the
"Participant").
All words and phrases not otherwise expressly defined
herein shall have the same meanings as are ascribed to such
words and phrases in the Mother's Cake & Cookie Co.
Supplemental Long Term Incentive Plan (the "Plan").
The Board of Directors has determined that the
objectives of the Plan will be furthered by granting to the
Participant Participation Units in the Plan.
In consideration of the foregoing and of the mutual
undertakings set forth in this Agreement, the Company and
the Participant agree as follows:
Section 1 Grant of Participation Unit. Subject to the
provisions of the Plan and this Agreement, the Company
hereby grants to the Participant a [Threshold Participation
Rate and a] Value Increase Participation Rate under the Plan
equal to [the sum of] the following:
[a. an amount equal to________ percent
(__%) of the Threshold Value (the "Threshold
Participation Rate"); plus
b.] an amount equal to _______ percent
(__%) of the Value Increase Amount (the
"Value Increase Participation Rate").
[Only to the extent applicable, as determined by the Board
in its discretion: Notwithstanding anything herein to the
contrary, the amount of an award payable to a Participant
under this Plan shall be reduced by the amount of any
payments made under the 1999-2000 Retention Bonus Program to
such Participant by the Company or SFC.]
Section 2 Plan Provisions to Prevail. This Agreement
shall be subject to all of the terms and provisions of the
Plan, which are incorporated hereby and made a part hereof.
In the event there is any inconsistency between the
provisions of this Agreement and the Plan, the provisions of
the Plan shall govern.
Section 3 Participant's Acknowledgments. The
Participant agrees and acknowledges that he has received and
read a copy of the Plan, and accepts this grant upon all of
the terms thereof.
Section 4 Non-Transferability. No grant to the
Participant under the Plan shall be assignable or
transferable by the Participant (whether by operation of law
or otherwise and whether voluntarily or involuntarily),
other than by will or by the laws of descent and
distribution. During the lifetime of the Participant, all
rights granted to the Participant under the Plan shall be
exercisable only by the Participant.
Section 5 Notices. Any notice to be given to SFC
hereunder shall be in writing and shall be addressed to
Specialty Foods Corporation, 520 Lake Cook Road, Deerfield,
IL 60015, Attention: Vice President and General Counsel or
at such other address as SFC may hereafter designate to the
Participant by notice as provided herein. Any notice to be
given to Mother's hereunder shall be in writing and shall be
addressed to Mother's Cake & Cookie Co., 810 81st Avenue,
Oakland, CA 94621, Attention: Vice President - Human
Resources. Any notice to be given to the Participant
hereunder shall be addressed to the Participant at the
address of the Participant's principal place of employment
or at such other address as the Participant may hereafter
designate to SFC by notice as provided herein. Notices
hereunder shall be deemed to have been duly given when
received by personal delivery or by registered or certified
mail to the party entitled to receive the same.
Section 6 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties
hereto and the successors and assigns of the Company and, to
the extent set forth in the Plan, the heirs and personal
representatives of the Participant.
Section 7 Modifications to Agreement. This Agreement
may not be altered, modified, changed or discharged, except
by a writing signed by or on behalf of both the Company and
the Participant.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
MOTHER'S CAKE, & COOKIE CO.,
a California corporation
By: /s/ Patrick O'Dea
Name: Patrick O'Dea
Title: President and Chief
Executive Officer
Agreed to and Accepted:
Participant
EXHIBIT 10.59
March 15, 1999
Mr. Lawrence S. Benjamin
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Larry:
We are pleased to inform you that you are eligible to
participate in a retention bonus plan that has been adopted
by Specialty Foods Corporation (the "Company"). Under this
plan, you will receive bonus payments in consideration for
your continued employment by the Company or any affiliate or
subsidiary of the Company (collectively, the "SFC
Companies"). The terms and conditions of this bonus are set
forth below.
1. Retention Bonus Payment.
(a) Subject to the provisions of Section 2, you
are eligible to receive a one-time bonus (the "Retention
Bonus") in an amount equal to the aggregate gross amount of
cash payments which you receive from the SFC Companies for
annual bonus payments covering the fiscal years 1999 and
2000. In no event shall any payments made to you (x) for
base salary or (y) or under any other plan, agreement, award
or bonus, other than the Annual Bonus Plan, be included in
calculating the amount of the Retention Bonus.
(b) The entire amount of the Retention Bonus
shall be paid on the earlier of (x) the date occurring
ninety (90) days after a Change of Control of SFAC or the
Company and (y) March 31, 2001.
2. Conditions. The payment of all or any part of the
Retention Bonus potentially payable to you hereunder is
expressly conditioned upon your continued employment with
the Company through March 31, 2001, unless you are
terminated by the Company prior to such date for other than
Cause or you Voluntarily Terminate with Good Reason (as each
such term is defined in your Employment Agreement in effect
with SFC on the date hereof).
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in
this Agreement shall create any right or duty of your
continued employment by the Company or its successor.
Except as otherwise provided in your Employment Agreement,
the Company reserves all rights to cause your employment to
be terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company nor
any of its 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
Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing
the same to you at the address set forth below or at such
other address as you may file in writing with the Company
for that purpose. Notices, requests and the like sent by
you to the Company shall be sufficient if mailed to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Vice President and General
Counsel, or to such other address as the Company may furnish
to you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on June 30, 2001, at which time it shall
expire and be of no further force or effect, except to the
extent that rights of payment have accrued to you hereunder
prior to such date.
10. 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 Agreement and the performance of
the obligations imposed by this Agreement. The parties
hereby waive their rights to request or demand a trial by
jury in the event controversy arises under this Agreement.
11. Definition of Change of Control. "Change of
Control" shall mean (i) with respect to Specialty Foods
Acquisition Corporation ("SFAC") or the Company, a
transaction pursuant to which a person or group (as such
term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934), other than Acadia Partners, L.P., Keystone,
Inc., HWP Specialty Partners, L.P. and their respective
"affiliates" (as such term is defined in Section 2.1 of the
Principal Stockholders Agreement, dated as of August 16,
1993, among SFAC and its principal stockholders) (such
person or group being a "Non-Affiliate"), acquires the
collective ability to designate directly or indirectly a
majority of the members of the board of directors of SFAC or
SFC (whether by contract or otherwise), and (ii) with
respect to the Company, a transaction (including a sale,
merger, or other similar transaction, but excluding any
transaction among only SFAC, SFC and/or their subsidiaries)
(x) pursuant to which all or substantially all the assets of
the Company (as exist on the date hereof) are sold to Non-
Affiliates, (y) pursuant to which Non-Affiliates acquire the
collective ability to designate directly or indirectly a
majority of the Board of Directors of Holdings or the
Company (whether by contract or otherwise) or (z) which the
committee determines, in its discretion, to constitute a
Change of Control.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise or inducement not so set forth.
13. Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended and the
terms or covenants hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of
a waiver, by the party waiving compliance. The failure of a
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14. Headings. The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and
return one copy to us.
Very truly yours,
SPECIALTY FOODS CORPORATION
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President and
General Counsel
Agreed to this ___ day of March, 1999
/s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Address:______________________
________________________
________________________
EXHIBIT 10.60
Date of Grant:
Participant: Lawrence S. Benjamin
Participation Rate:
Control Number:
MOTHER'S CAKE & COOKIE CO.
AMENDED AND RESTATED SUPPLEMENTAL LONG TERM INCENTIVE PLAN
PARTICIPATION AWARD AGREEMENT dated as of March 15,
1999 by and between MOTHER'S CAKE & COOKIE CO., a California
corporation (the "Company"), and LAWRENCE S. BENJAMIN (the
"Participant").
All words and phrases not otherwise expressly defined
herein shall have the same meanings as are ascribed to such
words and phrases in the Mother's Cake & Cookie Co. Amended
and Restated Supplemental Long Term Incentive Plan (the
"Plan").
The Board of Directors has determined that the
objectives of the Plan will be furthered by granting to the
Participant Participation Units in the Plan.
In consideration of the foregoing and of the mutual
undertakings set forth in this Agreement, the Company and
the Participant agree as follows:
Section 1 Grant of Participation Unit. Subject to the
provisions of the Plan and this Agreement, the Company
hereby grants to the Participant a Participation Rate under
the Plan equal to three percent (3%) of the Value Increase
Amount (the "Value Increase Participation Rate").
Section 2 Plan Provisions to Prevail. This Agreement
shall be subject to all of the terms and provisions of the
Plan, which are incorporated hereby and made a part hereof.
In the event there is any inconsistency between the
provisions of this Agreement and the Plan, the provisions of
the Plan shall govern.
Section 3 Participant's Acknowledgments. The
Participant agrees and acknowledges that he has received and
read a copy of the Plan, and accepts this grant upon all of
the terms thereof.
Section 4 Non-Transferability. No grant to the
Participant under the Plan shall be assignable or
transferable by the Participant (whether by operation of law
or otherwise and whether voluntarily or involuntarily),
other than by will or by the laws of descent and
distribution. During the lifetime of the Participant, all
rights granted to the Participant under the Plan shall be
exercisable only by the Participant.
Section 5 Notices. Any notice to be given to SFC
hereunder shall be in writing and shall be addressed to
Specialty Foods Corporation, 520 Lake Cook Road, Deerfield,
IL 60015, Attention: Vice President and General Counsel or
at such other address as SFC may hereafter designate to the
Participant by notice as provided herein. Any notice to be
given to Mother's hereunder shall be in writing and shall be
addressed to Mother's Cake & Cookie Co., 810 81st Avenue,
Oakland, CA 94621, Attention: Vice President - Human
Resources. Any notice to be given to the Participant
hereunder shall be addressed to the Participant at the
address of the Participant's principal place of employment
or at such other address as the Participant may hereafter
designate to SFC by notice as provided herein. Notices
hereunder shall be deemed to have been duly given when
received by personal delivery or by registered or certified
mail to the party entitled to receive the same.
Section 6 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties
hereto and the successors and assigns of the Company and, to
the extent set forth in the Plan, the heirs and personal
representatives of the Participant.
Section 7 Modifications to Agreement. This Agreement
may not be altered, modified, changed or discharged, except
by a writing signed by or on behalf of both the Company and
the Participant.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
MOTHER'S CAKE, & COOKIE CO.,
a California corporation
By: /s/ Patrick O'Dea
-------------------------
Name: Patrick O'Dea
Title: President and Chief
Executive Officer
Agreed to and Accepted:
/s/ Lawrence S. Benjamin
- ------------------------
Lawrence S. Benjamin
EXHIBIT 10.62
March 15, 1999
Mr. Robert L. Fishbune
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Bob:
We are pleased to inform you that you are eligible to
participate in a retention bonus plan that has been adopted
by Specialty Foods Corporation (the "Company"). Under this
plan, you will receive bonus payments in consideration for
your continued employment by the Company or any affiliate or
subsidiary of the Company (collectively, the "SFC
Companies"). The terms and conditions of this bonus are set
forth below.
1. Retention Bonus Payment.
(a) Subject to the provisions of Section 2, you
are eligible to receive a one-time bonus (the "Retention
Bonus") in an amount equal to the aggregate gross amount of
cash payments which you receive from the SFC Companies for
annual bonus payments covering the fiscal years 1999 and
2000. In no event shall any payments made to you (x) for
base salary or (y) or under any other plan, agreement, award
or bonus, other than the Annual Bonus Plan, be included in
calculating the amount of the Retention Bonus.
(b) The entire amount of the Retention Bonus
shall be paid on the earlier of (x) the date occurring
ninety (90) days after a Change of Control of SFAC or the
Company and (y) March 31, 2001.
2. Conditions. The payment of all or any part of the
Retention Bonus potentially payable to you hereunder is
expressly conditioned upon your continued employment with
the Company through March 31, 2001, unless you are
terminated by the Company prior to such date for other than
Cause or you Voluntarily Terminate with Good Reason (as each
such term is defined in your Employment Agreement in effect
with SFC on the date hereof).
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in
this Agreement shall create any right or duty of your
continued employment by the Company or its successor.
Except as otherwise provided in your Employment Agreement,
the Company reserves all rights to cause your employment to
be terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company nor
any of its 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
Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing
the same to you at the address set forth below or at such
other address as you may file in writing with the Company
for that purpose. Notices, requests and the like sent by
you to the Company shall be sufficient if mailed to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Vice President and General
Counsel, or to such other address as the Company may furnish
to you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on June 30, 2001, at which time it shall
expire and be of no further force or effect, except to the
extent that rights of payment have accrued to you hereunder
prior to such date.
10. 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 Agreement and the performance of
the obligations imposed by this Agreement. The parties
hereby waive their rights to request or demand a trial by
jury in the event controversy arises under this Agreement.
11. Definition of Change of Control. "Change of
Control" shall mean, (i) with respect to Specialty Foods
Acquisition Corporation ("SFAC") or the Company, a
transaction pursuant to which a person or group (as such
term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934), other than Acadia Partners, L.P., Keystone,
Inc., HWP Specialty Partners, L.P. and their respective
"affiliates" (as such term is defined in Section 2.1 of the
Principal Stockholders Agreement, dated as of August 16,
1993, among SFAC and its principal stockholders) (such
person or group being a "Non-Affiliate"), acquires the
collective ability to designate directly or indirectly a
majority of the members of the board of directors of SFAC or
SFC (whether by contract or otherwise), and (ii) with
respect to the Company, a transaction (including a sale,
merger, or other similar transaction, but excluding any
transaction among only SFAC, SFC and/or their subsidiaries)
(x) pursuant to which all or substantially all the assets of
the Company (as exist on the date hereof) are sold to Non-
Affiliates, (y) pursuant to which Non-Affiliates acquire the
collective ability to designate directly or indirectly a
majority of the Board of Directors of Holdings or the
Company (whether by contract or otherwise) or (z) which the
committee determines, in its discretion, to constitute a
Change of Control.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise or inducement not so set forth.
13. Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended and the
terms or covenants hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of
a waiver, by the party waiving compliance. The failure of a
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14. Headings. The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and
return one copy to us.
Very truly yours,
SPECIALTY FOODS CORPORATION
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: President and Chief
Executive Officer
Agreed to this ___ day of March, 1999
/s/ Robert L. Fishbune
Name: Robert L. Fishbune
Address:______________________
________________________
________________________
EXHIBIT 10.63 June 16, 1998
Mr. Larry Strain
c/o Andre-Boudin Bakeries Inc.
132 Hawthorne Street
San Francisco, Ca 94107
Dear Larry:
We are pleased to inform you that you are eligible to
participate in a new deferred bonus plan (the "Deferred
Bonus Plan") that has been adopted by Andre-Boudin Bakeries,
Inc. (the "Company"). Under the Deferred Bonus Plan, you
will receive bonus payments in consideration for your
continued employment by the Company, Specialty Foods
Corporation ("SFC") or any affiliate or subsidary of the
Company or SFC (collectively, the "SFC Companies"). The
terms and conditions of this bonus are set forth below:
1. Annual Bonus. The Board of Directors of the Company
has determined to award you a bonus of $20,475 for 1997 (the
"1997 Bonus"). This award is equal to 50% of your 1997
target bonus. In addition, to the extent that you continue
to be employed by the Company on March 31, 1999, the Company
will pay you a bonus equal to $49,000 as additional
compensation for your performance in 1998 (the "1998
Bonus"). Moreover, if the EBITDA for the Company exceeds
$2,000,000 for fiscal year 1998, and provided that you
continue to be employed by the Company, the Company will pay
you an additional $49,000 (the "Special Bonus") in
accordance with the terms and conditions of the Annual Bonus
Plan. In addition, you will be eligible to receive a bonus,
at the discretion of the Board of Directors of the Company,
for fiscal year 1999.
2. Deferred Bonus Payment. Subject to the provisions of
Section 3, you are eligible to receive a one-time bonus (the
"Deferred Bonus") on March 31, 2000 in an amount equal to
the sum of (a) the 1997 Bonus; (b) 1998 Bonus; (c) the
Special Bonus; and (d) any bonus awarded for 1999, other
than any payments under the Andre-Boudin Bakeries, Inc.
Supplemental Long-Term Incentive Plan.
3. Conditions. The payment of all or any part of the
Deferred Bonus potentially payable to you hereunder is
expressly conditioned upon your continuing to be employed by
the Company through March 31, 2000, unless your continued
employment with the Company terminates prior to such date as
a result of a change of control.
4. Continued Employment. This Agreement is not a contract
of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company or its successor.
5. Unfunded Plan. The Company's obligations under this
Agreement shall be unfunded. Neither the Company, SFC or
any of their 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
Agreement.
6. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
7. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
8. Notices and Other Documents. All payments, requests,
notices and the like may be made to you by mailing the same
to you as the address set forth below or as such other
address as you may file in writing with the Company for that
purpose. Notices, requests, and the like sent by you to the
Company shall be sufficient if mailed to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield,
Illinois 60015, Attention: Vice President, Human Resources,
or to such other address as the Company may furnish to you
for this purpose from time to time.
9. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
10. Effect on Agreement. This Agreement shall have a term
expiring on March 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent
that rights of payment have accrued to you hereunder prior
to such date.
11. 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 Agreement and the performance of
the obligations imposed by this Agreement. The parties
hereby waive their rights to request or demand as trial by
jury in the event controversy arises under this Agreement.
If the foregoing correctly sets forth your understanding
of the Agreement between us, please sign both copies of this
Agreement in the place indicated below and return one copy
to us.
Very truly yours,
ANDRE-BOUDIN BAKERIES, INC.
By: ______________________
Name: John R. Reisenberg
Title: Vice President
Agreed to this ___ day of
_______________, 1998
_______________________
Name: Larry Strain
Address: _______________
EXHIBIT A
Deferred Bonus Plan
Larry Strain
Year Earned Bonus Paid
----------- ----------
1997 $20,475
1998 $49,000
1998 Special Bonus TBD
1999 TBD
TOTAL TBD
EXHIBIT 10.64
July 15, 1997
Mr. William Day
c/o Stella Foods, Inc.
1088 Springhurst Drive
Green Bay, Wisconsin 54304-9024
Dear Bill:
We are pleased to inform you that you are eligible to
participate in a deferred bonus plan that has been adopted by
Stella Foods, Inc. (the "Company"). Under this plan, you will
receive bonus payments in consideration for your continued
employment by the Company, Specialty Foods Corporation ("SFC") or
any affiliate or subsidiary of the Company or SFC (collectively,
the "SFC Companies"). The terms and conditions of this bonus are
set forth below:
1. Deferred Bonus Payment.
(a) Subject to the provisions of Section 2, you are
eligible to receive a one-time bonus (the "Deferred Bonus") in an
amount equal to the sum of:
(i) The aggregate gross amount of cash
payments which you have already received
from the SFC Companies for annual bonus
payments covering the fiscal years 1994
through 1996 (the "Retroactive Bonus").
You and the Company agree that the
amount of the Retroactive Bonus which
you have received equals $137,690.00 and
consists of the payments set forth on
Exhibit A hereto; and
(ii) The aggregate gross amount of cash
payments which you receive from the SFC
Companies for annual bonus payments
covering the fiscal years 1997 and 1998
(the "Future Bonus"). The amount of the
Future Bonus shall be reasonably
determined by the Company in a manner
consistent with the calculation of the
Retroactive Bonus (as set forth herein).
In no event shall any payments made to
you (x) for base salary, (y) under the
Long Term Incentive Compensation Plan of
any of the SFC Companies dated July 11,
1997 (the "LTI Plans"), or (z) under the
Divestiture Award Bonus Plan dated July
15, 1997 be included in calculating the
amount of the Deferred Bonus.
(b) The amount of the Deferred Bonus payable to you
shall be reduced by the amount of any payments made to you under
the LTI Plans. In the event that payments made to you under the
LTI Plans exceed the amount of the Deferred Bonus, no amounts of
Deferred Bonus shall be payable to you hereunder.
(c) The Deferred Bonus (as reduced by the LTI Plan
payments pursuant to clause (b)) shall be paid as follows:
(i) Forty percent (40%) of such amount shall
be paid on the earliest of (x) the date
occurring ninety (90) days after a
Change in Control of the Company (as
defined in the Stella LTI Plan), (y) the
date of which the first installment is
paid under the LTI Plans, and (z) March
31, 1999 (the "First Payment"); and
(ii) The remaining sixty percent (60%) of
such amount shall be paid on the
earliest of (x) the date occurring
ninety (90) days after a Change in
Control of the Company (as defined in
the Stella LTI Plan), (y) the date on
which the second installment is paid
under the LTI Plans, and (z) March 31,
2000 (the "Second Payment").
2. Conditions. The payment of all or any part of the
Deferred Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) To earn the right to receive the First Payment,
you must remain employed by the Company through January 15, 1999,
unless (i) you are terminated by the Company prior to such date
for other than cause or (ii) you are terminated by the Company
(for other than cause) or resign following a Change in Control;
and
(b) To earn the right to receive the Second Payment,
you must remain employed by the Company through January 15, 2000,
unless (i) you are terminated by the Company prior to such date
for other than cause or (ii) you are terminated by the Company
(for other than cause) or resign following a Change in Control.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your repeated violation of any reasonable rule or
regulation of the Company after written notice, or (iv) your
arrest or conviction for the commission of any felony or other
crime involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a contract
of employment. Nothing expressed or implied in this Agreement
shall create any right or duty of your continued employment by
the Company or its successor. The Company reserves all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under this
Agreement shall be unfunded. Neither the Company, SFC or any of
their 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 Agreement.
5. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be binding
upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments, requests,
notices and the like may be made to you by mailing the same to
you at the address set forth below or at such other address as
you may file in writing with the Company for that purpose.
Notices, requests and the like sent by you to the Company shall
be sufficient if mailed to Stella Foods, Inc., 25 Tri-State
International Office Center, Suite 250, Lincolnshire, Illinois
60069, Attention: Vice President, Human Resources, or to such
other address as the Company may furnish to you for this purpose
from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a term
expiring on June 30, 2000, at which time it shall expire and be
of no further force or effect, except to the extent that rights
of payment have accrued to you hereunder prior to such date.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
If the foregoing correctly sets forth your understanding of
the Agreement between us, please sign both copies of this
Agreement in the place indicated below and return one copy to us.
Very truly yours,
STELLA FOODS, INC.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: President & CEO
Agreed to this 15th day of July, 1997
/s/ William Day
Name: William Day
Address:
-----------------------------
-----------------------------
-----------------------------
EXHIBIT A
Deferred Bonus Plan
William Day
Year Earned Bonus Paid
----------- ----------
1994 $ 0
1995 76,440
1996 61,250
Total $137,690
EXHIBIT 10.65
July 15, 1997
Mr. Patrick J. O'Dea
c/o Mother's Cake & Cookie Co.
810 81st Avenue
Oakland, California 94621
Dear Pat:
We are pleased to inform you that you are eligible to
participate in a deferred bonus plan that has been adopted by
Mother's Cake & Cookie Co. (the "Company"). Under this plan, you
will receive bonus payments in consideration for your continued
employment by the Company, Specialty Foods Corporation ("SFC") or
any affiliate or subsidiary of the Company or SFC (collectively,
the "SFC Companies"). The terms and conditions of this bonus are
set forth below:
1. Deferred Bonus Payment.
(a) Subject to the provisions of Section 2, you are
eligible to receive a one-time bonus (the "Deferred Bonus") in an
amount equal to the sum of:
(i) The aggregate gross amount of cash
payments which you have already received
from the SFC Companies for annual bonus
payments covering the fiscal years 1994
through 1996 (the "Retroactive Bonus").
You and the Company agree that the
amount of the Retroactive Bonus which
you have received equals $207,985.00 and
consists of the payments set forth on
Exhibit A hereto; and
(ii) The aggregate gross amount of cash
payments which you receive from the SFC
Companies for annual bonus payments
covering the fiscal years 1997 and 1998
(the "Future Bonus"). The amount of the
Future Bonus shall be reasonably
determined by the Company in a manner
consistent with the calculation of the
Retroactive Bonus (as set forth herein).
In no event shall any payments made to
you (x) for base salary, (y) under the
Long Term Incentive Compensation Plan of
any of the SFC Companies dated July 1997
(including, without limitation, the
Supplemental Long-Term Incentive Plan of
the Company dated July, 1997) (the "LTI
Plans"), or (z) under the Divestiture
Award Bonus Plan dated July 1997 be
included in calculating the amount of
the Deferred Bonus.
(b) The Deferred Bonus shall be paid as follows:
(i) Forty percent (40%) of such amount shall be
paid on the earlier of (x) the date occurring
ninety (90) days after a Change in Control of
the Company (as defined in the LTI Plans),
and (y) March 31, 1999 (the "First Payment");
and
(ii) The remaining sixty percent (60%) of such
amount shall be paid on the earlier of (x)
the date occurring ninety (90) days after a
Change in Control of the Company (as defined
in the LTI Plans), and (y) March 31, 2000
(the "Second Payment").
2. Conditions. The payment of all or any part of the
Deferred Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) To earn the right to receive the First Payment,
you must remain employed by the Company through January 15, 1999,
unless (i) your continued employment with the Company terminates
prior to such date as a result of a Termination without Cause or
a Voluntary Termination with Good Reason (as each such term is
defined in your Employment Agreement dated July 15, 1997), or
(ii) a Change of Control occurs prior to such date.
(b) To earn the right to receive the Second Payment,
you must remain employed by the Company through January 15, 2000,
unless (i) your continued employment with the Company terminates
prior to such date as a result of a Termination without Cause or
a Voluntary Termination with Good Reason, or (ii) a Change of
Control occurs prior to such date.
3. Continued Employment. This Agreement is not a contract
of employment. Nothing expressed or implied in this Agreement
shall create any right or duty of your continued employment by
the Company or its successor.
4. Unfunded Plan. The Company's obligations under this
Agreement shall be unfunded. Neither the Company, SFC or any of
their 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 Agreement.
5. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be binding
upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments, requests,
notices and the like may be made to you by mailing the same to
you at the address set forth below or at such other address as
you may file in writing with the Company for that purpose.
Notices, requests and the like sent by you to the Company shall
be sufficient if mailed to Mother's Cake & Cookie Co., 810 81st
Avenue, Oakland, California 94621, Attention: Vice President,
Human Resources, or to such other address as the Company may
furnish to you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a term
expiring on June 30, 2000, at which time it shall expire and be
of no further force or effect, except to the extent that rights
of payment have accrued to you hereunder prior to such date.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
If the foregoing correctly sets forth your understanding of
the Agreement between us, please sign both copies of this
Agreement in the place indicated below and return one copy to us.
Very truly yours,
MOTHER'S CAKE & COOKIE CO.
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this 15th day of July, 1997
/s/ Patrick J. O'Dea
- --------------------
Name: Patrick J. O'Dea
Address:
EXHIBIT 10.66
March 15, 1999
Mr. Patrick J. O'Dea
c/o Mother's Cake & Cookie Co.
810 81st Avenue
Oakland, CA 94621
Dear Pat:
We are pleased to inform you that you are eligible to
participate in a retention bonus plan that has been adopted
by Mother's Cake & Cookie Co. (the "Company"). Under this
plan, you will receive bonus payments in consideration for
your continued employment by the Company, Specialty Foods
Corporation ("SFC") or any affiliate or subsidiary of the
Company or SFC (collectively, the "SFC Companies"). The
terms and conditions of this bonus are set forth below.
1. Retention Bonus Payment.
(a) Subject to the provisions of Section 2, you
are eligible to receive a one-time bonus (the "Retention
Bonus") in an amount equal to the aggregate gross amount of
cash payments which you receive from the SFC Companies for
annual bonus payments covering the fiscal years 1999 and
2000. In no event shall any payments made to you (x) for
base salary or (y) or under any other plan, agreement, award
or bonus, other than the Annual Bonus Plan, be included in
calculating the amount of the Retention Bonus.
(b) The entire amount of the Retention Bonus
shall be paid on the earlier of (x) the date occurring
ninety (90) days after a Change of Control of the Company
and (y) March 31, 2001.
2. Conditions. The payment of all or any part of the
Retention Bonus potentially payable to you hereunder is
expressly conditioned upon your continued employment with
the Company through March 31, 2001, unless you are
terminated by the Company prior to such date for other than
Cause or you Voluntarily Terminate with Good Reason (as each
such term is defined in your Employment Agreement in effect
with SFC on the date hereof).
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in
this Agreement shall create any right or duty of your
continued employment by the Company or its successor.
Except as otherwise provided in your Employment Agreement,
the Company reserves all rights to cause your employment to
be terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC
nor any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing
the same to you at the address set forth below or at such
other address as you may file in writing with the Company
for that purpose. Notices, requests and the like sent by
you to the Company shall be sufficient if mailed to Mother's
Cake & Cookie Co., 810 81st Avenue, Oakland, CA 94621,
Attention: Vice President - Human Resources, with a copy to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Vice President and General
Counsel, or to such other address as the Company may furnish
to you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on June 30, 2001, at which time it shall
expire and be of no further force or effect, except to the
extent that rights of payment have accrued to you hereunder
prior to such date.
10. 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 Agreement and the performance of
the obligations imposed by this Agreement. The parties
hereby waive their rights to request or demand a trial by
jury in the event controversy arises under this Agreement.
11. Definition of Change of Control. "Change of
Control" shall mean a sale or transfer of all of the
outstanding stock of the Company or substantially all of the
assets of the Company to an unaffiliated entity.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise or inducement not so set forth.
13. Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended and the
terms or covenants hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of
a waiver, by the party waiving compliance. The failure of a
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14. Headings. The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and
return one copy to us.
Very truly yours,
MOTHER'S CAKE & COOKIE CO.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this 15th day of March, 1999
/s/ Patrick J. O'Dea
Name: Patrick J. O'Dea
Address:______________________
________________________
________________________
EXHIBIT 10.67
March 15, 1999
Mr. David E. Schreibman
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear David:
We are pleased to inform you that you are eligible to
participate in a retention bonus plan that has been adopted
by Specialty Foods Corporation (the "Company"). Under this
plan, you will receive bonus payments in consideration for
your continued employment by the Company or any affiliate or
subsidiary of the Company (collectively, the "SFC
Companies"). The terms and conditions of this bonus are set
forth below.
1. Retention Bonus Payment.
(a) Subject to the provisions of Section 2, you
are eligible to receive a one-time bonus (the "Retention
Bonus") in an amount equal to the aggregate gross amount of
cash payments which you receive from the SFC Companies for
annual bonus payments covering the fiscal years 1999 and
2000. In no event shall any payments made to you (x) for
base salary or (y) or under any other plan, agreement, award
or bonus, other than the Annual Bonus Plan, be included in
calculating the amount of the Retention Bonus.
(b) The entire amount of the Retention Bonus
shall be paid on the earlier of (x) the date occurring
ninety (90) days after a Change of Control of SFAC or the
Company and (y) March 31, 2001.
2. Conditions. The payment of all or any part of the
Retention Bonus potentially payable to you hereunder is
expressly conditioned upon your continued employment with
the Company through March 31, 2001, unless you are
terminated by the Company prior to such date for other than
Cause.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in
this Agreement shall create any right or duty of your
continued employment by the Company or its successor. The
Company reserves all rights to cause your employment to be
terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company nor
any of its 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
Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing
the same to you at the address set forth below or at such
other address as you may file in writing with the Company
for that purpose. Notices, requests and the like sent by
you to the Company shall be sufficient if mailed to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Chief Financial Officer, or
to such other address as the Company may furnish to you for
this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on June 30, 2001, at which time it shall
expire and be of no further force or effect, except to the
extent that rights of payment have accrued to you hereunder
prior to such date.
10. 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 Agreement and the performance of
the obligations imposed by this Agreement. The parties
hereby waive their rights to request or demand a trial by
jury in the event controversy arises under this Agreement.
11. Definitions.
(a) "Cause" shall mean (i) your continued failure
to substantially perform your employment duties (other than
as a result of incapacity due to physical or mental
disability), (ii) your gross negligence or dishonesty, (iii)
your violation of any reasonable rule or regulation of the
Company after written notice, or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
(b) "Change of Control" shall mean, (i) with
respect to Specialty Foods Acquisition Corporation ("SFAC")
or the Company, a transaction pursuant to which a person or
group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934), other than Acadia
Partners, L.P., Keystone, Inc., HWP Specialty Partners, L.P.
and their respective "affiliates" (as such term is defined
in Section 2.1 of the Principal Stockholders Agreement,
dated as of August 16, 1993, among SFAC and its principal
stockholders) (such person or group being a "Non-
Affiliate"), acquires the collective ability to designate
directly or indirectly a majority of the members of the
board of directors of SFAC or SFC (whether by contract or
otherwise), and (ii) with respect to the Company, a
transaction (including a sale, merger, or other similar
transaction, but excluding any transaction among only SFAC,
SFC and/or their subsidiaries) (x) pursuant to which all or
substantially all the assets of the Company (as exist on the
date hereof) are sold to Non-Affiliates, (y) pursuant to
which Non-Affiliates acquire the collective ability to
designate directly or indirectly a majority of the Board of
Directors of Holdings or the Company (whether by contract or
otherwise) or (z) which the committee determines, in its
discretion, to constitute a Change of Control.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise or inducement not so set forth.
13. Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended and the
terms or covenants hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of
a waiver, by the party waiving compliance. The failure of a
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14. Headings. The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and
return one copy to us.
Very truly yours,
SPECIALTY FOODS CORPORATION
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: President and Chief
Executive Officer
Agreed to this ___ day of March, 1999
/s/ David E. Schreibman
Name: David E. Schreibman
Address:______________________
________________________
________________________
EXHIBIT 10.69
[FORM OF AMENDMENT TO DEFERRED BONUS AGREEMENT]
___________________, 1999
___________________
___________________
___________________
___________________
Dear _______________:
In recognition of your significant contributions,
[Metz Baking Company ("Metz")] [Mother's Cake and Cookie Co.
("Mother's")] [Specialty Foods Corporation ("SFC")] (the
"Company") is pleased to inform you that you will receive
60% of your total Deferred Bonus in 1999 under the deferred
bonus agreement entered into by yourself and the Company on
__________ (the "Agreement") as described below.
The Agreement provides for payment to you of
a Deferred Bonus (as defined in the Agreement) payable
in two installments, one in the year 1999 and one in
the year 2000. Section 1(c) of the Agreement currently
provides for payment of forty percent (40%) of the
Deferred Bonus in 1999 and for payment of sixty percent
(60%) of the Deferred Bonus in 2000. The Company has
decided to amend this provision to instead provide for
payment of sixty percent (60%) of the Deferred Bonus in
1999 and for payment of forty percent (40%) of the
Deferred Bonus in 2000. Pursuant to this amendment,
your Deferred Bonus will now be paid as follows:
(i) Sixty percent (60%) of the Deferred Bonus shall be
paid on March 31, 1999; and
(ii) The remaining forty percent (40%) of the Deferred
Bonus shall be paid on the earliest of (x) the date
occurring ninety (90) days after a Change in Control
(as defined in the Agreement) and (y) January 15,
2000, provided that you remain employed by the
Company through such date.
Very truly yours,
[METZ BAKING COMPANY]
[MOTHER'S CAKE AND COOKIE CO.]
[SPECIALTY FOODS CORPORATION]
By:______________________________
Name:____________________________
Title:_____________________________
EXHIBIT 10.70
April 8, 1998
Mr. William Day
H&M Food Systems Company, Inc.
3709 East First Street
Fort Worth, Texas 76111
Dear Bill:
H&M Food Systems Company, Inc. (the "Company") is pleased to
inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale prior to June 30, 2000 (the
"Sale") of the stock or substantially all of the assets of the
Company to a purchaser (the "Purchaser"), subject to the terms
and conditions set forth below:
1. Bonus and Payment Related to Purchase Price. Subject
to the provisions of Section 2, you are eligible to receive a one-
time bonus (the "Sale Bonus") in an amount determined as follows:
(a) One-tenth of one percent (0.1%) of the Purchase
Consideration received by Specialty Foods Corporation ("SFC")
which is less than or equal to $100,000,000; plus
(b) To the extent the Purchase Consideration exceeds
$100,000,000, one and one-half percent (1.5%) of the Purchase
Consideration received by SFC which exceeds $100,000,000, but is
less than $120,000,000; plus
(c) To the extent the Purchase Consideration exceeds
$120,000,000, two percent (2%) of the Purchase Consideration
received by SFC which exceeds $120,000,000.
For purposes of this Agreement, "Purchase
Consideration" shall mean the aggregate net cash proceeds
received by SFC after deducting all fees and expenses incurred by
the Company, SFC and/or their respective affiliates in connection
with the Sale. Exhibit A hereto sets forth three examples of the
calculation of the Sale Bonus.
2. Conditions. The payment of all or any part of the Sale
Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until six (6) months after the date the Sale is
completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of the Sale being consummated prior to
June 30, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your repeated violation of any reasonable rule or
regulation of the Company after written notice; or (iv) your
arrest or conviction for the commission of any felony or other
crime involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a contract
of employment. Nothing expressed or implied in this Agreement
shall create any right or duty of your continued employment by
the Company or its successor. The Company reserves all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under this
Agreement shall be unfunded. Neither the Company, SFC or any of
their 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 Agreement.
5. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be binding
upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments, requests,
notices and the like may be made to you by mailing the same to
you at the address set forth below or at such other address as
you may file in writing with the Company for that purpose.
Notices, requests and the like sent by you to the Company shall
be sufficient if mailed to Specialty Foods Corporation, 520 Lake
Cook Road, Suite 550, Deerfield, Illinois 60015, Attention:
Vice President, Human Resources, or to such other address as the
Company may furnish to you for this purpose from time to time in
writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a term
expiring on June 30, 2000, at which time it shall expire and be
of no further force or effect, except to the extent that rights
of payment have accrued to you hereunder prior to such date.
Notwithstanding the foregoing, you shall only have the right to
collect amounts hereunder on one occasion in connection with the
Sale of the stock or substantially all the assets of the Company
while the Company is owned by SFC. Once such a Sale occurs, you
shall have no further right to collect additional amounts
hereunder upon any subsequent sale. This Agreement supersedes
that certain H&M Divestiture Award Agreement dated July 15, 1997
between you and the Company, which prior Agreement shall
terminate upon the effectiveness of this Agreement.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
If the foregoing correctly sets forth your understanding of
the Agreement between us, please sign both copies of this
Agreement in the place indicated below and return one copy to us.
Very truly yours,
H&M FOOD SYSTEMS COMPANY, INC.
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this 28th day of April, 1998
/s/ William D. Day
- ------------------
Name: William D. Day
Address: 5333 Fossil Creek Blvd., Apt. 222
Halton, TX 76137
EXHIBIT 10.73
March 15, 1999
Mr. Robert L. Fishbune
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Bob:
Metz Baking Company (the "Company") is pleased to
inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to December
31, 2000 (the "Sale") of the stock or substantially all or any
material portion of the assets of the Company to a purchaser,
subject to the terms and conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a bonus (each, a "Sale Bonus") in an amount equal to
0.125% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with a Sale. By way of example, if the Purchase
Consideration equaled $600,000,000, your Sale Bonus would be
$750,000. Each Sale Bonus payable hereunder shall be paid to you
within three (3) months of the completion of a Sale.
2. Conditions. The payment of all or any part of any
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date any Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during any Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in any Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date any Sale
is completed, unless you are terminated after any Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of any Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Metz Baking Company, 520
Lake Cook Road, Suite 520, Deerfield, IL 60015, Attention: Vice
President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Vice President and General Counsel, or to such other
address as the Company may furnish to you for this purpose from
time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. This Agreement supersedes and replaces the Agreement by
and between you and the Company dated July 15, 1997.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Metz Baking Company
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Robert L. Fishbune
Name: Robert L. Fishbune
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.75
March 15, 1999
Mr. Lawrence S. Benjamin
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Larry:
H&M Food Systems Company, Inc.(the "Company") is
pleased to inform you that you are eligible to receive the bonus
payments specified in this letter upon a sale occurring prior to
December 31, 1999 (the "Sale") of the stock or substantially all
of the assets of the Company to a purchaser, subject to the terms
and conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
1.167% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $100,000,000, your Sale Bonus would be
$1,167,000. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
(or one of its subsidiaries) through the date occurring thirty
(30) days after the date the Sale is completed (unless you die,
are terminated as a result of a Disability Termination, are
Terminated without Cause or Voluntarily Terminate with Good
Reason (as each such term is defined in your Employment Agreement
in effect with SFC on the date hereof) after the Sale but prior
to the date occurring thirty (30) days after the Sale);
(b) The closing of the Sale being consummated by
December 31, 1999.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to H&M Food Systems
Company, Inc., 3709 East First Street, Fort Worth, Texas, 76111,
Attention: Vice President - Human Resources, with a copy to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Vice President and General
Counsel, or to such other address as the Company may furnish to
you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 1999, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale. This
Agreement supersedes and replaces the Agreement by and between
you and H&M dated October 27, 1997.
10. Offset of Deferred Bonus Payments. By signing
this Agreement, you acknowledge that, upon receipt of the Sale
Bonus under this Agreement, you thereby waive any right that you
may have, if any, to receive the First Payment (i.e., 60%) under
the Deferred Bonus Agreement by and between you and Specialty
Foods Corporation dated October 27, 1997, as amended on March 15,
1999.
11. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
H&M Food Systems Company, Inc
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.76
March 15, 1999
Mr. Lawrence S. Benjamin
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Larry:
Metz Baking Company (the "Company") is pleased to
inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to June 30,
2001 (the "Sale") of the stock or substantially all or any
material portion of the assets of the Company to a purchaser,
subject to the terms and conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a bonus (each, a "Sale Bonus") in an amount equal to 0.3%
of the Purchase Consideration. For purposes of this Agreement,
"Purchase Consideration" shall mean the aggregate net cash
proceeds received by the Company or Specialty Foods Corporation
("SFC") (after deducting all fees and expenses incurred by the
Company, SFC and/or their respective affiliates) in connection
with a Sale. By way of example, if the Purchase Consideration
equaled $600,000,000, your Sale Bonus would be $1,800,000. Each
Sale Bonus payable hereunder shall be paid to you within three
(3) months of the completion of a Sale.
2. Conditions. The payment of all or any part of any
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
(or one of its subsidiaries) through the date occurring thirty
(30) days after the date any Sale is completed (unless you die,
are terminated as a result of a Disability Termination, are
Terminated without Cause or Voluntarily Terminate with Good
Reason (as each such term is defined in your Employment Agreement
in effect with SFC on the date hereof) after any Sale but prior
to the date occurring thirty (30) days after any Sale);
(b) The closing of any Sale being consummated by June
30, 2001.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Metz Baking Company, 520
Lake Cook Road, Suite 520, Deerfield, IL 60015, Attention: Vice
President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Vice President and General Counsel, or to such other
address as the Company may furnish to you for this purpose from
time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on June 30, 2001, at which time it shall expire and
be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Metz Baking Company
By: /s/ David E. Schreibman
Name: David E. Schreibman
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.77
March 15, 1999
Mr. Robert L. Fishbune
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Bob:
H&M Food Systems Company, Inc.(the "Company") is
pleased to inform you that you are eligible to receive the bonus
payments specified in this letter upon a sale occurring prior to
December 31, 1999 (the "Sale") of the stock or substantially all
of the assets of the Company to a purchaser, subject to the terms
and conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
0.510% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $100,000,000, your Sale Bonus would be
$510,000. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates;
(e) The closing of the Sale being consummated by
December 31, 1999; and
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to H&M Food Systems
Company, Inc., 3709 East First Street, Fort Worth, Texas, 76111,
Attention: Vice President - Human Resources, with a copy to
Specialty Foods Corporation, 520 Lake Cook Road, Suite 550,
Deerfield, IL 60015, Attention: Vice President and General
Counsel, or to such other address as the Company may furnish to
you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 1999, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale. This
Agreement supersedes and replaces the Agreement by and between
you and H&M dated July 15, 1997.
10. Offset of Deferred Bonus Payments. By signing
this Agreement, you acknowledge that, upon receipt of the Sale
Bonus under this Agreement, you thereby waive any right that you
may have, if any, to receive the First Payment (i.e., 60%) under
the Deferred Bonus Agreement by and between you and Specialty
Foods Corporation dated July 15, 1997, as amended on March 15,
1999.
11. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
12. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
H&M Food Systems Company, Inc.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Robert L. Fishbune
Name: Robert L. Fishbune
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.78
March 15, 1999
Mr. Robert L. Fishbune
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Bob:
Mother's Cake & Cookie Co. (the "Company") is pleased
to inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to December
31, 2000 (the "Sale") of the stock or substantially all of the
assets of the Company to a purchaser, subject to the terms and
conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
0.125% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $300,000,000, your Sale Bonus would be
$375,000. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of the Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Mother's Cake & Cookie
Co., 810 81st Avenue, Oakland, CA 94621, Attention: Vice
President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Vice President and General Counsel, or to such other
address as the Company may furnish to you for this purpose from
time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Mother's Cake & Cookie Co.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Robert L. Fishbune
Name: Robert L. Fishbune
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.79
March 15, 1999
Mr. Robert L. Fishbune
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear Bob:
Andre-Boudin Bakeries, Inc. (the "Company") is pleased
to inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to December
31, 2000 (the "Sale") of the stock or substantially all of the
assets of the Company to a purchaser, subject to the terms and
conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
0.125% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $25,000,000, your Sale Bonus would be
$31,250. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of the Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. Except as
otherwise provided in your Employment Agreement in effect with
SFC on the date hereof, the Company and SFC reserve all rights to
cause your employment to be terminated at any time with or
without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Andre-Boudin Bakeries,
Inc., 132 Hawthorne Street, San Francisco, CA 94107, Attention:
Vice President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Vice President and General Counsel, or to such other
address as the Company may furnish to you for this purpose from
time to time in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Andre-Boudin Bakeries, Inc.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ Robert L. Fishbune
Name: Robert L. Fishbune
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.80
October 19, 1998
Mr. David E. Schreibman
c/o Specialty Foods Corporation
520 Lake Cook Road
Suite 520
Deerfield, Illinois 60015
Dear David:
H&M Food Systems Company, Inc. (the "Company") is pleased to
inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale on or prior to June 30, 2000
(the "Sale") of the stock or substantially all of the assets of
the Company to a purchaser (the "Purchaser"), subject to the
terms and conditions set forth below:
1. Bonus and Payment Related to Purchase Price. Subject
to the provisions of Section 2, you are eligible to receive a one-
time bonus (the "Sale Bonus") in an amount equal to .05% of the
Purchase Consideration. For purposes of this Agreement,
"Purchase Consideration" shall mean the aggregate net cash
proceeds received by the Company or Specialty Foods Corporation
("SFC") (after deducting all fees and expenses incurred by the
Company, SFC and/or their respective affiliates in connection
with the Sale). By way of example, if the Purchase Consideration
equaled $100,000,000, your Sale Bonus would be $50,000.00. The
Sale Bonus shall be paid to you within three (3) months of the
completion of the Sale.
2. Conditions. The payment of all or any part of the Sale
Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause; and
(d) The closing of the Sale being consummated on or
before June 30, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your repeated violation of any reasonable rule or
regulation of SFC or the Company after written notice; or (iv)
your arrest or conviction for the commission of any felony or
other crime involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a contract
of employment. Nothing expressed or implied in this Agreement
shall create any right or duty of your continued employment by
SFC, the Company or their respective successors. SFC and the
Company reserve all rights to cause your employment to be
terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under this
Agreement shall be unfunded. Neither the Company, SFC or any of
their 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 Agreement.
5. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be binding
upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments, requests,
notices and the like may be made to you by mailing the same to
you at the address set forth below or at such other address as
you may file in writing with the Company for that purpose.
Notices, requests and the like sent by you to the Company shall
be sufficient if mailed to Specialty Foods Corporation, 520 Lake
Cook Road, Suite 550, Deerfield, Illinois 60015, Attention:
Vice President, Human Resources, or to such other address as the
Company may furnish to you for this purpose from time to time in
writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a term
expiring on June 30, 2000, at which time it shall expire and be
of no further force or effect, except to the extent that rights
of payment have accrued to you hereunder prior to such date.
Notwithstanding the foregoing, you shall only have the right to
collect amounts hereunder on one occasion in connection with the
Sale of the stock or substantially all the assets of the Company
while the Company is owned by SFC. Once such a Sale occurs, you
shall have no further right to collect additional amounts
hereunder upon any subsequent sale.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
If the foregoing correctly sets forth your understanding of
the Agreement between us, please sign both copies of this
Agreement in the place indicated below and return one copy to us.
Very truly yours,
H&M FOOD SYSTEMS COMPANY, INC.
By: /s/ Lawrence S. Benjamin
------------------------
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this 19th day of October, 1998
/s/ David E. Schreibman
- -----------------------
David E. Schreibman
480 N. McClurg Ct., Apt. 1216
Chicago, IL 60611
EXHIBIT 10.81
March 15, 1999
Mr. David E. Schreibman
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear David:
Metz Baking Company (the "Company") is pleased to
inform you that you are eligible to receive the bonus
payments specified in this letter upon a sale occurring
prior to December 31, 2000 (the "Sale") of the stock or
substantially all or any material portion of the assets of
the Company to a purchaser, subject to the terms and
conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a bonus (each, a "Sale Bonus") in an amount equal to
0.05% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate
net cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective
affiliates) in connection with a Sale. By way of example,
if the Purchase Consideration equaled $600,000,000, your
Sale Bonus would be $300,000. Each Sale Bonus payable
hereunder shall be paid to you within three (3) months of
the completion of a Sale.
2. Conditions. The payment of all or any part
of any Sale Bonus potentially payable to you hereunder is
expressly conditioned upon the satisfaction of the following
conditions:
(a) Your continued employment with the Company or
SFC through the date any Sale is completed;
(b) The absence of any material deficiencies in
the performance of your duties and cooperation during any
Sale process as determined by the SFC Board of Directors in
its sole discretion. The factors considered in assessing
whether your performance and cooperation in any Sale process
have been materially deficient include (i) your continued
focus on your regular job responsibilities, (ii) your
maintenance of the confidentiality of non-public
information, and (iii) your positive attitude and
cooperativeness;
(c) Your continued employment with the Company
(or its successor) or SFC until three (3) months after the
date any Sale is completed, unless you are terminated after
any Sale for other than Cause;
(d) Your execution and delivery of agreements
prepared by SFC waiving all claims which you have had or may
have against the Company, SFC and/or their respective
affiliates other than any rights granted to you pursuant to
any annual bonus plan, long-term incentive plan, stock
option plan, deferred bonus plan, written employment
contract, written severance agreement or other formal
written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of any Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean
(i) your continued failure to substantially perform your
employment duties (other than as a result of incapacity due
to physical or mental disability), (ii) your gross
negligence or dishonesty, (iii) your violation of any
reasonable rule or regulation of the Company or SFC after
written notice; or (iv) your arrest or conviction for the
commission of any felony or other crime involving dishonesty
or moral turpitude.
3. Continued Employment. This Agreement is not
a contract of employment. Nothing expressed or implied in
this Agreement shall create any right or duty of your
continued employment by the Company (or its successor) or
SFC. The Company and SFC reserve all rights to cause your
employment to be terminated at any time with or without
cause.
4. Unfunded Plan. The Company's obligations
under this Agreement shall be unfunded. Neither the
Company, SFC nor any of their 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 Agreement.
5. Successors Bound. The rights and obligations
of the Company hereunder shall inure to the benefit of and
be binding upon the successors of the Company.
6. Assignment. You shall not assign any rights
or benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided,
however, that in the event of your death, any payments then
due and owing will be made when due to the legal
representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing
the same to you at the address set forth below or at such
other address as you may file in writing with the Company
for that purpose. Notices, requests and the like sent by
you to the Company shall be sufficient if mailed to Metz
Baking Company, 520 Lake Cook Road, Suite 520, Deerfield, IL
60015, Attention: Vice President - Human Resources, with a
copy to Specialty Foods Corporation, 520 Lake Cook Road,
Suite 550, Deerfield, IL 60015, Attention: Chief Financial
Officer, or to such other address as the Company may furnish
to you for this purpose from time to time in writing.
8. Employment Taxes. All payments made under
this Agreement shall be subject to withholding tax, other
employment taxes and other withholds and deductions as
required by applicable law or regulation, as in effect from
time to time.
9. Effect of Agreement. This Agreement shall
have a term expiring on December 31, 2000, at which time it
shall expire and be of no further force or effect, except to
the extent that rights of payment have accrued to you
hereunder prior to such date. This Agreement supersedes and
replaces the Agreement by and between you and the Company
dated October 19, 1998.
10. 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 Agreement and the
performance of the obligations imposed by this Agreement.
The parties hereby waive their rights to request or demand a
trial by jury in the event controversy arises under this
Agreement.
11. Entire Agreement. This Agreement sets forth
the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all
prior agreements, arrangements and understandings, written
or oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and
neither party shall be bound by or liable for any illegal
representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and
return one copy to us.
Very truly yours,
Metz Baking Company
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ David E. Schreibman
Name: David E. Schreibman
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.82
March 15, 1999
Mr. David E. Schreibman
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear David:
Mother's Cake & Cookie Co. (the "Company") is pleased
to inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to December
31, 2000 (the "Sale") of the stock or substantially all of the
assets of the Company to a purchaser, subject to the terms and
conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
0.05% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $300,000,000, your Sale Bonus would be
$150,000. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of the Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. The Company
and SFC reserve all rights to cause your employment to be
terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Mother's Cake & Cookie
Co., 810 81st Avenue, Oakland, CA 94621, Attention: Vice
President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Chief Financial Officer, or to such other address as
the Company may furnish to you for this purpose from time to time
in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Mother's Cake & Cookie Co.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Title: Vice President
Agreed to this ___ day of March, 1999
/s/ David E. Schreibman
Name: David E. Schreibman
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.83
March 15, 1999
Mr. David E. Schreibman
c/o Specialty Foods Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Dear David:
Andre-Boudin Bakeries, Inc. (the "Company") is pleased
to inform you that you are eligible to receive the bonus payments
specified in this letter upon a sale occurring prior to December
31, 2000 (the "Sale") of the stock or substantially all of the
assets of the Company to a purchaser, subject to the terms and
conditions set forth below:
1. Bonus and Payment Related to Purchase Price.
Subject to the provisions of Section 2, you are eligible to
receive a one-time bonus (the "Sale Bonus") in an amount equal to
0.05% of the Purchase Consideration. For purposes of this
Agreement, "Purchase Consideration" shall mean the aggregate net
cash proceeds received by the Company or Specialty Foods
Corporation ("SFC") (after deducting all fees and expenses
incurred by the Company, SFC and/or their respective affiliates)
in connection with the Sale. By way of example, if the Purchase
Consideration equaled $25,000,000, your Sale Bonus would be
$12,500. The Sale Bonus shall be paid to you within three (3)
months of the completion of the Sale.
2. Conditions. The payment of all or any part of the
Sale Bonus potentially payable to you hereunder is expressly
conditioned upon the satisfaction of the following conditions:
(a) Your continued employment with the Company or SFC
through the date the Sale is completed;
(b) The absence of any material deficiencies in the
performance of your duties and cooperation during the Sale
process as determined by the SFC Board of Directors in its sole
discretion. The factors considered in assessing whether your
performance and cooperation in the Sale process have been
materially deficient include (i) your continued focus on your
regular job responsibilities, (ii) your maintenance of the
confidentiality of non-public information, and (iii) your
positive attitude and cooperativeness;
(c) Your continued employment with the Company (or its
successor) or SFC until three (3) months after the date the Sale
is completed, unless you are terminated after the Sale for other
than Cause;
(d) Your execution and delivery of agreements prepared
by SFC waiving all claims which you have had or may have against
the Company, SFC and/or their respective affiliates other than
any rights granted to you pursuant to any annual bonus plan, long-
term incentive plan, stock option plan, deferred bonus plan,
written employment contract, written severance agreement or other
formal written compensation plan between you and the Company, SFC
and/or their respective affiliates; and
(e) The closing of the Sale being consummated by
December 31, 2000.
For purposes of this Agreement, "Cause" shall mean (i)
your continued failure to substantially perform your employment
duties (other than as a result of incapacity due to physical or
mental disability), (ii) your gross negligence or dishonesty,
(iii) your violation of any reasonable rule or regulation of the
Company or SFC after written notice; or (iv) your arrest or
conviction for the commission of any felony or other crime
involving dishonesty or moral turpitude.
3. Continued Employment. This Agreement is not a
contract of employment. Nothing expressed or implied in this
Agreement shall create any right or duty of your continued
employment by the Company (or its successor) or SFC. The Company
and SFC reserve all rights to cause your employment to be
terminated at any time with or without cause.
4. Unfunded Plan. The Company's obligations under
this Agreement shall be unfunded. Neither the Company, SFC nor
any of their 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 Agreement.
5. Successors Bound. The rights and obligations of
the Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
6. Assignment. You shall not assign any rights or
benefits granted to you by the terms of this Agreement or
encumber in any way your interests herein; provided, however,
that in the event of your death, any payments then due and owing
will be made when due to the legal representative of your estate.
7. Notices and Other Documents. All payments,
requests, notices and the like may be made to you by mailing the
same to you at the address set forth below or at such other
address as you may file in writing with the Company for that
purpose. Notices, requests and the like sent by you to the
Company shall be sufficient if mailed to Andre-Boudin Bakeries,
Inc., 132 Hawthorne Street, San Francisco, CA 94107, Attention:
Vice President - Human Resources, with a copy to Specialty Foods
Corporation, 520 Lake Cook Road, Suite 550, Deerfield, IL 60015,
Attention: Chief Financial Officer, or to such other address as
the Company may furnish to you for this purpose from time to time
in writing.
8. Employment Taxes. All payments made under this
Agreement shall be subject to withholding tax, other employment
taxes and other withholds and deductions as required by
applicable law or regulation, as in effect from time to time.
9. Effect of Agreement. This Agreement shall have a
term expiring on December 31, 2000, at which time it shall expire
and be of no further force or effect, except to the extent that
rights of payment have accrued to you hereunder prior to such
date. Notwithstanding the foregoing, you shall only have the
right to collect the amounts hereunder on one occasion in
connection with the Sale of the stock or substantially all the
assets of the Company while the Company is owned by SFC. Once
such a Sale occurs, you shall have no further right to collect
additional amounts hereunder upon any subsequent sale.
10. 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 Agreement and the performance of the
obligations imposed by this Agreement. The parties hereby waive
their rights to request or demand a trial by jury in the event
controversy arises under this Agreement.
11. Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any
illegal representation, promise or inducement not so set forth.
If the foregoing correctly sets forth your
understanding of the Agreement between us, please sign both
copies of this Agreement in the place indicated below and return
one copy to us.
Very truly yours,
Andre-Boudin Bakeries, Inc.
By: /s/ Lawrence S. Benjamin
Name: Lawrence S. Benjamin
Titl Vice President
Agreed to this ___ day of March, 1999
/s/ David E. Schreibman
Name: David E. Schreibman
Address:_______________________
_______________________________
_______________________________
EXHIBIT 10.87
COORDINATION DOCUMENT FOR THE METZ-MOTHER'S CAKE & COOKIE CO.
CONSOLIDATED PENSION PLAN
Section 1. Purpose. Effective December 31, 1995, the
Metz Baking Company Pension Plan for Non-Union Employees (the "Former
Metz Plan") was merged into the Mother's Cake & Cookie Co.
Retirement Plan (the "Former Mother's Plan") to form the Metz-
Mother's Cake & Cookie Co. Consolidated Pension Plan (the
"Consolidated Plan"). The participants in the respective former
plans continued to be subject to the terms of the prior plan
documents. This Coordination Document is intended to clarify the
applicable terms of the merged plan.
Section 2. Plan Documentation. The Plan shall be
comprised of (i) the document reflecting the terms applicable to
the Former Metz Plan, as from time to time amended (the "Metz
Portion of the Consolidated Plan"), (ii) the document reflecting
the terms applicable to the Former Mother's Plan, as from time to time
amended (the "Mother's Portion of the Consolidated Plan"), and
(iii) this Coordination Document. The documents for the Metz
Portion of the Consolidated Plan and the Mother's Portion of the
Consolidated Plan shall continue to apply to the applicable
employees of Metz Baking Company and Mother's Cake & Cookie Co.,
respectively, except as provided herein.
Section 3. Plan Sponsor. Metz Baking Company is the
plan sponsor of the Consolidated Plan.
Section 4. Administration. The primary responsibility
for the administration of the Consolidated Plan shall be assigned to
the Administrator of the Former Metz Plan. This includes
responsibility for the annual report form. With respect to
benefit issues and claims procedures, the Administrative
Committee and the Administrator of the Former Metz Plan and the
Administrative Committee of the Former Mother's Plan shall
continue to have responsibility for the interpretation of the
plan documents and other functions related to the provision of
benefits to eligible participants assigned under the respective
documents. The authority for investment and trust decisions is
allocated to the Pension Committee.
Section 5. Pension Committee. A Pension Committee
shall be established by the Board of Directors of Metz Baking Company.
The Pension Committee shall operate in a manner consistent with
the rules applicable to the Administrative Committee pursuant to
Section 5.02 of the Metz Portion of the Consolidated Plan. The
Pension Committee shall be responsible for all investment
management decisions, including the appointment and retention of
one or more trustees, the appointment and retention of investment
managers, and the establishment of investment guidelines and
objectives.
Section 6. Coordination with Trust Agreements.
As of the date of adoption hereof, there are two separate trust
agreements with respect to the assets constituting the Consolidated
Plan, one with LaSalle National Bank and the other with Wells Fargo
Bank, National Association. The provisions of such trust
agreements are not amended by this Coordination Document. To the
extent that the trust agreements grant an Administrative
Committee or company the power to amend the trust agreement,
appoint successor trustees, or appoint investment managers, such
Administrative Committee or company shall take such action at the
direction of the Pension Committee.
Section 7. Amendment. The Board of Directors of
Metz Baking Company shall have the sole power to terminate the
Consolidated Plan, to amend the Coordination Document and to amend
the Metz Portion of the Consolidation Plan. The Board of Directors of
Mother's Cake & Cookie Co. shall have the sole power to amend the
Mother's Portion of the Consolidated Plan.
EXHIBIT 10.91
ANNUAL BONUS PLAN
PURPOSES
Specialty Foods Corporation ("SFC") has established the Annual
Bonus Plan (the "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 it's
Subsidiaries (as hereinafter 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.
DEFINITION OF TERMS
The following defined terms will have the meanings set forth for
purposes of the Plan:
a. Annual Salary shall mean the annualized base salary in
effect for a Participant on December 31, 1998.
b. Award shall mean the cash payment made to Participants under
the Annual Bonus Plan.
c. Business Unit shall mean a subsidiary or a group of
subsidiaries for which a target bonus is established by SFC.
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. Compensation Committee shall mean the committee designated
by the Board of Directors of SFC.
f. EBITDA shall mean, with respect to any Business Unit, an
amount reasonably determined by SFC as such Business Unit's
income from operations (including bonus accruals as an
expense, but not including accruals with respect to LTIPs),
plus depreciation of property, plant and equipment, and
amortization of intangible assets, but not including
gain/loss on asset sales. The actual incremental 1998
EBITDA benefits related to the repayment of leases made in
1998, if any, will be excluded for purposes of determining
1998 EBITDA.
g. Participant shall mean employees designated by the
Compensation Committee to participate in the Annual Bonus
Plan, provided the authority to designate participants may
be delegated by the Compensation Committee to SFC and by SFC
to the Business Units.
h. Plan shall mean the Annual Bonus Plan.
i. Plan Year shall mean the year January 1 through December 31
for which the Plan is authorized.
j. SFC shall mean Specialty Foods Corporation.
k. Subsidiary shall mean a direct or indirect subsidiary of SFC
which is included in SFC's consolidated tax return.
ELIGIBILITY FOR PARTICIPATION
An award may be granted for a Plan Year to each Participant who
is in active service during such Plan Year; provided, however,
that such Participant has completed at least two months of active
service with SFC or a Subsidiary during the Plan Year. Except in
the case of death, disability or retirement, a Participant must
be employed by SFC or a Subsidiary on December 31 of the Plan
Year 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 a Plan Year, as determined below:
(1) promotion into or demotion from - prorate 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 to the nearest month
for more than six months in a based on time of service while
Plan Year under SFC's or any not receiving disability
Subsidiary's disability plan benefits
(3) receipt of disability benefits - no reduction in applicable
for six months or less in a Award
Plan Year under SFC's or any
Subsidiary's disability plan
(4) normal retirement, early - prorate based on the date of
retirement with the approval of retirement or transfer
SFC or transfer to another
Subsidiary during a Plan Year
(5) leave of absence during a - prorate based on the date
Plan Year when the leave commences
(6) death during a Plan Year - prorate to date of death
(7) early retirement during a Plan - no Award
Year without the approval of
SFC
(8) resignation during a Plan - no Award
Year
(9) demotion during a Plan Year - no Award
because of unsatisfactory
performance to a position that
is not covered
(10) termination without Cause - no Award
during a Plan Year
(11) dismissal for Cause during or - no Award
after a 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 a
Plan Year, the Subsidiary last employing the Participant during
such Plan Year shall determine and pay the entire annual Award,
if any, for such Plan Year. SFC shall have discretion in making
any accounting allocations between Subsidiaries to properly
reflect time spent with each Subsidiary.
PERFORMANCE MEASUREMENT
The standard used to determine performance of a 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 each Business
Unit will be recommended by the Chief Executive Officer of SFC
and approved by the Compensation Committee.
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 each 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 each
Business Unit.
To determine the awards for actual performance, a percent of the
target award will be calculated (see Bonus Award Payout
Schedule).
ADMINISTRATIVE GUIDELINES
Adjustments in Financial Performance Measurements
In order to effectuate the purpose of the Plan, the Compensation
Committee may make adjustments in the criteria established for
any 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
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
the Compensation Committee can be made at any time and in any
manner that the Compensation Committee in its sole discretion
deems appropriate, and any and all such adjustments shall be
conclusive and binding upon all parties concerned.
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 in cash.
Except in the case of death, disability or retirement, a
Participant must be employed by SFC or a Subsidiary on the last
day of the Plan Year to receive an award. In cases of death,
disability or retirement, 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 entitled "Eligibility for Participation."
GENERAL RULES
The Plan has been adopted by the Board of Directors of SFC and
may be amended from time to time, in any respect, by the Board.
Any such amendment may add to, amend, reduce or cancel any and
all rights in regard to the Plan.
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 a Plan Year.
The Vice President of Human Resources 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.
The Plan may be terminated at any time by the Board of Directors.
Upon such termination, all rights of a Participant to amounts not
then awarded to Participants shall be null and void. However,
amounts previously earned but unpaid as of the date of the Plan
termination shall not be affected.
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.
Award payments under the Plan shall be treated as wages and shall
be subject to income, FICA and any other applicable withholding
taxes at the time received.
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 Bonus Plan, the terms of such employment
agreement shall govern to the extent of such inconsistency.
EXHIBIT 10.92
SPECIALTY FOODS CORPORATION
ANNUAL BONUS PLAN
1999
___________________
ANNUAL BONUS PLAN
1. PURPOSES
Specialty Foods Corporation ("SFC") has established the
Annual Bonus Plan (the "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). 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.
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, 1999.
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 [Andre-Boudin Bakeries, Inc.] [Metz Baking
Company] [Mother's Cake and Cookie Co. and Archway
Cookies. L.L.C.].
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. Compensation Committee shall mean the committee
designated as such by the Board of Directors of SFC.
f. 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.
The actual incremental 1999 EBITDA benefits related to
acquisitions made in 1999, if any, will be excluded for
purposes of determining 1999 EBITDA.
g. Participant shall mean an employee designated by the
Compensation Committee to participate in the Annual
Bonus Plan, provided the authority to designate
Participants may be delegated by the Compensation
Committee to SFC and by SFC to the Business Units.
h. Plan shall mean this Annual Bonus Plan.
i. Plan Year shall mean January 1, 1999 through December
31, 1999.
j. SFC shall mean Specialty Foods Corporation.
k. 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 months of active service with SFC or a Subsidiary
during the Plan Year. Except in the case of death,
disability or retirement, a Participant must be employed by
SFC or a Subsidiary on December 31 of the Plan Year 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, 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
for more than six months in the nearest month based on
Plan Year under SFC's or any time of service while not
Subsidiary's disability plan receiving disability
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
Plan Year without the approval
of SFC
(8) resignation during the Plan - no Award
Year
(9) demotion during the Plan Year - no Award
because of unsatisfactory
performance to a position that
is not covered
(10) termination without Cause - no Award
during the Plan Year
(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 "1999 Annual Bonus Plan Payout Schedule."
5. 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 "1999 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 "1999 Annual Bonus Plan Payout Schedule").
6. ADMINISTRATIVE GUIDELINES
a. Adjustments in Financial Performance Measurements
In order to effectuate the purpose of the Plan, the
Compensation Committee 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 the Compensation Committee can be made
at any time and in any manner that the Compensation
Committee 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 or retirement, a
Participant must be employed by SFC or a Subsidiary on
December 31 of the Plan Year to receive an Award. In cases
of death, disability or retirement, 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."
7. GENERAL RULES
a. Effective Date. This Plan shall have an effective date
of January 1, 1999.
b. Amendment. The Plan has been adopted by the Board of
Directors of SFC and may be amended from time to time,
in any respect, by such Board. Any such amendment may
add to, amend, reduce or cancel any and all rights in
regard to the Plan.
c. 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 a Plan Year.
d. 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.
e. Termination. The Plan may be terminated at any time by
the Board of Directors of SFC. 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.
f. 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.
g. 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.
h. 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.
i. 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.
j. Successors Bound. The rights and obligations of the
Company hereunder shall inure to the benefit of and be
binding upon the successors of the Company.
k. 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 6(b) entitled "Approval and Payment
of Bonus Awards."
l. 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.
m. 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.
n. Headings. The headings used herein are for reference
purposes only and shall not in any way affect the
meaning or interpretation of this Plan.
EXHIBIT 21.1
<TABLE>
<CAPTION> Exhibit
SUBSIDIARIES OF SPECIALTY FOODS ACQUISITION CORPORATION
State of
Name Incorporation
- ---- -------------
<S> <C>
Specialty Foods Acquisition Corporation Delaware
Specialty Foods Corporation Delaware
Specialty Foods Finance Corporation Delaware
SFC-SPV Corp. Delaware
GWI Holdings, Inc. Delaware
GWI, Inc. Delaware
Metz Baking Company Iowa
Metz Baking Company Delaware
The Clear Lake Bakery Delaware
Pacific Coast Baking Co., Inc. Delaware
Belsea Holdings, Inc. Delaware
GSFBC Holdings, Inc. Washington
LANG Holdings, Inc. Washington
GBC Holdings, Inc. Washington
OFBC Holdings, Inc. Washington
SEM Holdings, Inc. Washington
Former VB Holdings, Ltd. British Columbia
SFFB Holdings, Inc. Delaware
SanFran FB, Inc. California
Andre-Boudin Bakeries, Inc. California
Fisherman's Wharf Sourdough French California
Bread Bakeries, Inc.
Boudin International, Inc. California
Steve's Drayage California
Laura Todd of America California
A. Trocano Construction, Inc. California
Gelsi, Inc. California
Pane Corporate (dba San Diego California
Bread Company)
San Francisco Bay Area Equipment and California
Supply California
SanFran SB Holdings, Inc. California
PBI Holdings, Inc. California
San Francisco Baking Cultures California
SFSC, Inc. California
Larraburu Bakery California
MCC-DSD Holdings, Inc. Delaware
Mother's Cake & Cookie Co. California
Archway Cookies, LLC Delaware
HMFS Holdings, Inc. Delaware
H&M Food Systems Company, Inc. Delaware
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 5,881
<SECURITIES> 0
<RECEIVABLES> 20,476
<ALLOWANCES> 1,149
<INVENTORY> 23,366
<CURRENT-ASSETS> 142,440
<PP&E> 339,335
<DEPRECIATION> 104,391
<TOTAL-ASSETS> 534,395
<CURRENT-LIABILITIES> 121,970
<BONDS> 1,006,118
19,500
0
<COMMON> 646
<OTHER-SE> (889,274)
<TOTAL-LIABILITY-AND-EQUITY> 534,395
<SALES> 742,315
<TOTAL-REVENUES> 742,315
<CGS> 329,567
<TOTAL-COSTS> 382,237
<OTHER-EXPENSES> 3,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133,961
<INCOME-PRETAX> (106,579)
<INCOME-TAX> (613)
<INCOME-CONTINUING> (105,966)
<DISCONTINUED> 9,723
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (96,243)
<EPS-PRIMARY> (1.53)
<EPS-DILUTED> (1.53)
</TABLE>
