Execution Copy
NORTHLAND CRANBERRIES, INC.
SEVERANCE AND NONCOMPETITION AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is entered into as of
November 6, 2001, by and between John Swendrowski ("Executive") and Northland
Cranberries, Inc., a Wisconsin corporation (the "Company"). The Company and
Executive are sometimes collectively referred to herein as the "Parties" and
individually as a "Party".
WHEREAS, Executive is an employee of the Company;
WHEREAS, the Company desires to provide, and Executive desires to
receive, certain severance benefits subject to the terms and conditions set
forth in this Agreement;
WHEREAS, the Company and Sun Northland, LLC, a Delaware limited
liability company ("Sun") are parties to a Stock Purchase Agreement, of even
date herewith (the "Stock Purchase Agreement"), whereby Sun shall purchase
shares of the Company's Class A Common Stock, par value $.01 per share and
shares of the Company's Series A Preferred Stock, par value $.01 per share;
WHEREAS, it is a condition of the Stock Purchase Agreement that
Executive enter into this Agreement;
In consideration of the mutual covenants and agreements set forth
herein, the Parties agree as follows:
1. Severance Payments.
(a) If prior to the one year anniversary of the date hereof Executive's
employment with the Company is terminated by the Company or its successors in
interest without Cause or if Executive resigns for Good Reason, Executive shall
be entitled to continue to receive his then-current base salary, which shall be
no lower than his base salary as of the date hereof (the "Base Salary") payable
in regular semi-monthly installments as special severance payments for
six-months from the date of termination, and Executive shall not be entitled to
any other salary, compensation or benefits after termination of his employment
except as otherwise provided herein.
(b) If Executive's employment with the Company is terminated by the
Company for Cause, or upon Executive's resignation without Good Reason, death or
mental or physical disability or incapacity (as determined by the board of
directors (the "Board") of the Company in its good faith judgment) or after the
one year anniversary of the date hereof, Executive shall only be entitled to
receive his Base Salary through the date of termination and shall not be
entitled to any other salary, compensation or benefits from the Company or its
Subsidiaries thereafter other than as provided herein.
(c) Except as otherwise expressly provided herein, all of Executive's
rights to salary, bonuses, fringe benefits and other compensation hereunder or
under any other agreement which accrue or become payable after the termination
or expiration of Executive's employment with the Company shall cease upon such
termination or expiration, other than those expressly required under applicable
law (such as under the Company's 401(k) plan and the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA")). The Company may offset any amounts
Executive owes it or its Subsidiaries against any amounts it or its Subsidiaries
owes Executive. Notwithstanding the foregoing, during the Post-Severance Period,
if any, the Company shall pay 100% of the cost of Executive's health insurance
premiums.
2. Noncompetition and Nonsolicitation Agreement
(a) Noncompetition. Executive agrees that during the Non-Competition
Period, he shall not, directly or indirectly, either for himself or for any
other person, partnership, corporation or company, participate in any business
or enterprise which is a direct and substantial competitor of the Company or its
Subsidiaries as of the date he ceased to be employed by the Company and which is
located in the United States. For purposes of this Agreement, the term
"participate" shall be limited to the performance of services that are the same
or substantially similar to the services Executive provided to the Company
during the period of his employment with the Company. Executive agrees that this
covenant is reasonable with respect to its duration, geographical area and
scope.
(b) Nonsolicitation of Employees. Executive agrees that during the
Non-Competition Period, he shall not induce or attempt to induce any employee of
the Company or any of its Subsidiaries to leave their employ or in any way
interfere with the relationship between the Company or any of its Subsidiaries
and any of their employees.
(c) Nonsolicitation of Former Employees. Executive agrees that during
the Non-Competition Period, he shall not hire any person who was an employee of
the Company or any Subsidiary at any time during Executive's employment with the
Company.
(d) Nonsolicitation of Customers. Executive agrees that during the
Non-Competition Period, he shall not solicit any customer of the Company, or
induce or attempt to induce any customer of the Company from ceasing doing
business with the Company or decreasing the amount of business such customer
does with the Company including, without limitation, customers such as
supermarkets, convenience stores, and other markets which sell the Company's
products.
(e) Nonsolicitation of Company Relationships. Executive agrees that
during the Non-Competition Period, he shall not induce or attempt to induce any
supplier, vendor, licensee, licensor, franchisee or other business relation of
the Company or any of its Subsidiaries to cease doing business with them or in
any way interfere with the relationship between the Company or any of its
Subsidiaries and any such person or business relation (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
(f) Right to Relief. Executive agrees that the Company would suffer
irreparable harm from a breach of any of the covenants or agreements contained
in this Section 2. In the
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event of an alleged or threatened breach by Executive of any of the provisions
of this Section 2, the Company or their successors or assigns may, in addition
to all other rights and remedies existing in its favor, apply to any court of
competent jurisdiction for specific performance and / or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof
(including the extension of the Non-Competition Period) by a period equal to the
length of the violation of this Section 2. In the event of an alleged breach or
violation by Executive of any of the provisions of this Section 2, the
Non-Competition Period shall be tolled until such alleged breach or violation
has been duly cured. Executive agrees that these restrictions are reasonable.
3. Confidential Information.
(a) Third Party Information. Executive understands that the Company and
its affiliates will receive from third parties confidential or proprietary
information ("Third Party Information") subject to a duty on the Company's and
its affiliates' part to maintain the confidentiality of such information and to
use it only for certain limited purposes. During the Executive's employment with
the Company and thereafter, Executive will hold Third Party Information in the
strictest confidence and will not disclose to anyone (other than personnel of
the Company or its affiliates who need to know such information in connection
with their work for the Company or its affiliates) or use, except in connection
with his work for the Company or its affiliates, Third Party Information unless
expressly authorized by the Board in writing or to the extent that the
aforementioned matters become generally known to and available for use by the
public as a result of the Company's disclosure of such information in its public
filings.
(b) Confidential Information. Executive acknowledges that the
information, observations and data relating to the business of the Company and
its Subsidiaries which Executive has obtained as an employee, officer, director
and stockholder of the Company are the property of the Company. Executive agrees
that, to the extent such confidential information does not constitute a Trade
Secret, during the Executive's employment with the Company and for 18 (eighteen)
months thereafter, he shall not use for his own purposes or disclose to any
third party any of such information, observations or data without the prior
written consent of the Board, unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions. Executive agrees that, to the
extent such confidential information does constitute a Trade Secret, during the
Executive's employment with the Company and thereafter until such information is
no longer a Trade Secret, he shall not use for his own purposes or disclose to
any third party any of such information, observations or data without the prior
written consent of the Board. Executive shall either destroy (and deliver to the
Company a written certification that he destroyed) or deliver to the Company
immediately upon termination of employment with the Company for any reason
(whether by resignation, death, disability or termination with or without
Cause), or at any other time, the Board may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documentation (and copies thereof) relating to the business of the Company and
its Subsidiaries which Executive may then possess or have under his control.
(c) Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether patentable or not) which
relate to the actual or anticipated business, research and development or
existing or future products or services of the Company
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and its Subsidiaries and which are conceived, developed or made by him at any
time he is an employee of the Company ("Work Product") are "Works Made for Hire"
and belong to the Company. To the extend any Work Product is not a "Work Made
for Hire", Executive hereby assigns and agrees to assign to the Company all
rights in and to such Work Product. Executive shall promptly disclose all Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Executive's employment with the Company) to
establish and confirm such ownership (including, without limitation,
assignments, powers of attorney and other instruments).
4. Additional Acknowledgments. Executive acknowledges that the
provisions of this Agreement are in consideration of Executive's continued
employment with the Company and other good and valuable consideration as set
forth in this Agreement. In addition, Executive agrees and acknowledges that the
restrictions contained in Sections 2 and 3 do not preclude Executive from
earning a livelihood. In addition, Executive agrees and acknowledges that the
potential harm to the Company of the non-enforcement of Sections 2 and 3
outweighs any potential harm to Executive of its enforcement by injunction or
otherwise. Executive acknowledges that he has carefully read this Agreement and
has given careful consideration to the restraints imposed upon Executive by this
Agreement, and is in full accord as to their necessity for the reasonable and
proper protection of confidential and proprietary information of the Company now
existing or to be developed in the future.
5. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by reputable overnight
courier service or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:
Notices to Executive:
John Swendrowski
c/o Northland Cranberries, Inc.
800 First Avenue South
P.O. Box 8020
Wisconsin Rapids, WI 54495-8020
Fax: (715) 422-6844
Notices to the Company:
Northland Cranberries, Inc.
800 First Avenue South
P.O. Box 8020
Wisconsin Rapids, WI 54495-8020
Fax: (715) 422-6844
Attn: General Counsel
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With copies to:
Sun Northland, LLC
c/o Sun Capital Partners, Inc.
5200 Town Center Road, Suite 470
Boca Raton, FL 33486
Fax: (561) 394-0540
Attn: C. Deryl Couch
and
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Fax: (312) 861-2200
Attn: Douglas C. Gessner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.
6. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
7. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
8. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
9. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
10. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors
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and assigns, except that Executive may not assign his rights or delegate his
duties or obligations hereunder without the prior written consent of the
Company.
11. Choice of Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Wisconsin, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Wisconsin or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Wisconsin.
12. Submission to Jurisdiction. Each Party hereto submits to the
jurisdiction of any state or federal court sitting in Milwaukee, Wisconsin, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
Party hereto waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on any other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 5 above. Nothing in this Section 12, however, shall
affect the right of any Party to bring any action or proceeding arising out of
or relating to this Agreement in any other court or to serve legal process in
any other manner permitted by law or at equity. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.
13. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company (as
approved by the Board) and Executive, and no course of conduct or course of
dealing or failure or delay by any party hereto in enforcing or exercising any
of the provisions of this Agreement (including, without limitation, the
Company's right to terminate Executive's employment for Cause) shall affect the
validity, binding effect or enforceability of this Agreement or be deemed to be
an implied waiver of any provision of this Agreement.
14. Definitions. As used in this Agreement, the following terms have
the following meanings:
"Cause" means any of (i) conviction of a felony, (ii) acts of moral
turpitude, (iii) willful action taken for the purpose of harming Sun or the
Company, (iv) the engaging in an act or acts of substantial dishonesty or
unethical business conduct, in any case materially harming the Company, (v)
gross negligence or reckless activity in the conduct of the business of the
Company (including, without limitation, a material breach of any employee manual
now existing or hereinafter instituted), (vi) failure to abide by any directive
of the Board, or (vii) material abandonment of duties with respect to the
Company; provided, no termination shall be "for Cause" unless the Company has
(i) notified Executive of the act (or failure to act) constituting Cause and
provided Executive with 10 days to cure such act (or failure to act) to the
reasonable satisfaction of the Board (excluding Executive) and (ii) provided
Executive an opportunity, together with Executive's counsel, to be heard before
the Board upon the Company's receipt of a
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written request from the Executive within 5 days after the end of the foregoing
cure period, and such hearing shall take place within 5 days of the Company's
receipt of such notice. Any meeting of the Board or hearing for purposes of this
definition may be telephonic. Notwithstanding the foregoing, in the event
Executive objects to a termination based on any of sections (iii) through (vii)
of the definition of "Bad Cause", Executive and the Company shall arbitrate such
dispute in Chicago, Illinois, with such arbitration to be completed within 60
days of Executive's written request for such arbitration, the arbitrator will
apply Wisconsin law and the decision of the arbitrator with respect to the issue
of whether or not the definition of "Bad Cause" was met shall be final and
nonappealable.
"Good Reason" means any reduction by the Company of Executive's annual
base salary level from its current $420,000 level.
"Non-Competition Period" means the period beginning on the date
Executive ceases to be employed by the Company and ending on the last day of the
Post-Severance Period or, if there is no Post-Severance Period, ending on the
last day of the Severance Period; provided that (a) the Non-Competition Period
shall in no event exceed the eighteen (18) month anniversary of the date
Executive ceases to be employed by the Company, and (b) if there is no Severance
Period, there shall be no Non-Competition Period.
"Post-Severance Period" means such period beginning immediately upon
the termination of the Severance Period and ending at such time as the Board, in
its sole discretion, shall determine, provided that Executive receives, in
regular semi-monthly installments from the Company, payments which shall be
equal to (on an annualized basis) fifty percent (50%) of his base salary from
the Company on the date he ceases to be employed by the Company. The
Post-Severance Period shall end on the date Executive ceases to receive such
regular semi-monthly installments from the Company provided in the foregoing
sentence.
"Severance Period" means the period beginning on the date Executive
ceases to be employed by the Company and ending on the date Executive ceases to
receive severance pay (it being understood that "severance pay" means the
continuation of Executive's base salary as in effect at the time of such
termination), whether pursuant to this Agreement or whether granted at the
discretion of the Board.
"Subsidiaries" shall mean any corporation, limited liability company or
other entity of which the securities or other ownership interests having the
voting power to elect a majority of the board of directors or other governing
body are, at the time of determination, owned by the Company, directly or
through one of more Subsidiaries.
"Trade Secret" shall means information, including without limitation a
formula, pattern, compilation, program, device, method, technique or process
that: (1) derives independent economic value, actual or potential, from not
being generally known to, and not being easily ascertainable by proper means, by
other persons who can obtain economic value from its disclosure or use, and (2)
is the subject of efforts that are reasonable under circumstances to maintain
its secrecy.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Severance and
Noncompetition Agreement as of the date first written above.
NORTHLAND CRANBERRIES, INC.
By:
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Its:
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/s/ John Swendrowski
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JOHN SWENDROWSKI