Exhibit 10.1
Eskimo Pie Corporation
Executive Retention Bonus and Severance Agreement
Eskimo Pie Corporation (the "Company") has adopted an Executive Retention
Bonus and Severance Program (the "Executive Retention Bonus and Severance
Program") designed to encourage executives to remain focused on their job
responsibilities and to continue employment with the Company or a subsidiary in
light of a possible "Sale of the Company" (as that term is defined below)
relating to your employment.
In accordance with established criteria for the Executive Retention Bonus
and Severance Program, you have been selected as a participant in lieu of
participation in the Company's general retention and severance program contained
in the 1999 Company Sale Severance Program under the Eskimo Pie Corporation
Welfare Benefit Plan (the Company's "welfare plan").
1. Executive Retention Bonus. If you are eligible in accordance with the
-------------------------
criteria which follow, you will receive an Executive Retention Bonus consisting
of two installments - one for $56,250 (the "First Installment") and one for
$168,750 (the "Second Installment"), each subject to normal tax and other
applicable withholding and deductions.
In order to receive the First Installment of the Executive Retention Bonus,
you must remain employed in your current position, or in one into which you are
requested by the Company to transfer, during the Retention Period for the First
Installment. In that event, if you satisfy the applicable additional eligibility
criteria described below, you will receive the First Installment on or about
January 15, 2000 (but in no event later than the date the Second Installment of
the Executive Retention Bonus is due) in a lump sum payment.
In order to receive the Second Installment of the Executive Retention
Bonus, you must remain employed in your current position, or in one into which
you are requested by the Company to transfer, during the Retention Period for
the Second Installment. In that event, if you satisfy the applicable additional
eligibility criteria described below, you will receive the Second Installment
within five business days after the Sale of the Company relating to your
employment in a lump sum payment. If for any reason no Sale of the Company
relating to your employment occurs before January 1, 2001, you will not receive
the Second Installment of the Executive Retention Bonus.
2. Severance Benefits. If you cease to be employed by the Company at or
------------------
within one year after the Sale of the Business relating to your employment under
the applicable additional eligibility criteria described below for severance
benefits for any reason (including without limitation your voluntary cessation
of employment) other than Cause (as defined below) or death, you will also be
entitled to severance benefits in the form of extended medical and dental
insurance coverage under the Company's welfare plan for you, your spouse and
your eligible dependents for one year with the Company paying the entire cost of
coverage for such extended coverage period. This extended medical and dental
coverage will not run concurrently with the COBRA coverage period under the
Company's welfare plan, and the applicable COBRA coverage period under the
Company's welfare plan will be available to you and your qualifying
beneficiaries after the end of this extended medical and dental coverage period.
3. Retention Period. The Retention Period began on October 7, 1999. It
----------------
ends for the First Installment of the Executive Retention Bonus on December 31,
1999 or your earlier involuntary termination by the Company for reasons other
than death, permanent disability or Cause (as defined below). It ends for the
Second Installment of the Executive Retention Bonus on the Sale of the Company
relating to your employment or your earlier involuntary termination by the
Company for reasons other
than death, permanent disability or Cause (as defined below). For purposes
hereof, you will automatically be considered involuntarily terminated by the
Company for reasons other than death, permanent disability or Cause if you
voluntarily terminate for Good Reason (as defined below)
4. Sale of the Company. For purposes of this Agreement, the term "Sale of
-------------------
the Company" means any of the following occurring before January 1, 2001:
a) a change in the ownership of the Company resulting in the possession
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 50% of the outstanding stock of the Company (whether by sale or
issuance of stock, reorganization, merger, consolidation or
otherwise) in connection with a transaction contemplated by the
Board of Directors of the Company (the "Board") in connection with
the Board's publicly announced intention to sell the Company or its
assets, including the assets of its subsidiaries (the "Company Sale
Announcement");
b) if you are employed by a subsidiary or a division of the Company,
the sale of the stock of , or substantially all of the assets of,
that subsidiary or that division of the Company;
c) if you are employed in connection with Company-wide matters,
substantially all of your duties and responsibilities as of October
7, 1999 are effectively eliminated by reason of a sale or sales of
the assets or divisions of the Company or of its subsidiaries; or
d) if you are employed in connection with any other operations of the
Company or any subsidiary (including corporate headquarters
operations) which is the subject of or related to any other sale of
assets determined by the Company to result in a cessation of such
operations in connection with the Company Sale Announcement, the
sale of such assets.
5. Cause. For purposes of this Agreement, "Cause" means:
-----
a) dishonesty,
b) conviction of a felony,
c) the willful unauthorized disclosure of confidential information of
the Company or any of its subsidiaries or affiliates, or
d) the willful and continued failure to substantially perform your
duties with the Company or any of its subsidiaries or affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to you by the Board, the Compensation
Committee or its delegate which specifically identifies the manner
in which you have not substantially performed your duties.
For purposes of this provision, no act or failure to act, on your part,
shall be considered "willful" unless it is done, or omitted to be done, by you
in bad faith or without reasonable belief that your action or omission was in
the best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or any
committee of the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by you in good faith
and in the best interests of the Company.
2
6. Good Reason. For purposes of this Agreement, "Good Reason" shall mean
-----------
the occurrence of any of the following without Cause:
a) the assignment to you of any duties which are inconsistent with the
position (including status, offices, titles, and reporting
requirements) or authority in the Company that you held immediately
on October 7, 1999, or a significant adverse alteration in the
nature or status of your responsibilities or the conditions of your
employment from those in effect immediately on October 7, 1999,
provided that any promotion or such change or alteration in your
duties, authority, responsibilities or conditions of employment
which is either accepted or not rejected in writing delivered to the
Board of Directors of the Company within 10 days of such promotion,
change or alteration shall be deemed to have been held or in effect
immediately on October 7, 1999;
b) a reduction by the Company in your annual base salary as in effect
on October 7, 1999 or as the same may be increased from time to
time;
c) if you are principally employed at the Company's principal executive
offices, the relocation of the Company's principal executive offices
to a location outside the Richmond Metropolitan Area or the
Company's requiring you to be based anywhere other than the
Company's principal executive offices except for required travel on
the Company's business to an extent substantially consistent with
your present business travel obligations;
d) except in the event of reasonable administrative delay, the failure
by the Company to pay to you any portion of your current
compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company within seven (7) days of the date such compensation is due;
e) the failure by the Company to continue in effect any compensation
plan in which you participated on October 7, 1999 that is material
to your total compensation, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as it existed on
October 7, 1999;
f) the failure by the Company to continue to provide you with benefits
having an aggregate value of at least 75% of the aggregate value of
the benefits enjoyed by you under any of the Company's life
insurance, medical, health and accident, disability plans, or other
welfare and defined benefit plans (qualified and non-qualified) in
which you were participating on October 7, 1999, the taking of any
action by the Company which would directly or indirectly reduce by
more than 25% the aggregate value of such benefits or deprive you of
any material fringe benefit enjoyed by you on October 7, 1999, or
the failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy in effect on October 7, 1999; or
g) the failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in section 8.l) captioned "Successors" below.
3
7. Additional Eligibility Criteria for Benefits. Eligibility for either
--------------------------------------------
installment of the Executive Retention Bonus and for severance benefits is also
conditioned on the following additional rules, as applicable to the particular
benefit:
a) Voluntary Resignation. You will not receive an Executive Retention
Bonus installment if you voluntarily resign your employment prior to
the last day of the applicable Retention Period other than for Good
Reason.
b) Death, Disability or Involuntary Termination for Cause. You will not
receive an Executive Retention Bonus installment if you die, become
permanently disabled or are involuntarily terminated for Cause by
the Company during the applicable Retention Period.
c) No Other Employment. You will not be eligible for an Executive
Retention Bonus installment or severance benefits under this
Agreement if you engage in any activity during the applicable
Retention Period or, in the case of severance benefits, prior to the
Sale of the Company relating to your employment, which is
inconsistent with the satisfactory performance of your duties
including, but not limited to, engaging in other full-time or
substantially full-time employment, whether as an employee,
consultant or in any other capacity, whether or not you are
compensated for such other employment, or engaging in any other
business activity, whether or not such business activity is pursued
for gain or profit, except as approved in advance in writing by an
authorized representative of the Company.
d) Confidentiality. You agree to maintain the utmost confidentiality of
the existence and the terms of this Agreement and all documentation
or records relating to this Agreement and the Executive Retention
Bonus and Severance Program and not to disclose these matters to any
person or entity without the prior written consent of the Company
unless required otherwise by law or court order. You will not be
eligible for the Executive Retention Bonus or severance benefits
under this Agreement if you violate this confidentially requirement.
e) Resignation as Director and/or Officer. You will not be eligible for
severance benefits under this Agreement unless, promptly after your
cessation of employment with the Company and upon receiving a
written request to do so, you resign as a director and/or officer of
the Company (including of each subsidiary and affiliate of the
Company) for which you are then serving as a director and/or
officer.
f) Waiver of Other Retention, Termination and Severance Benefits and
Participant in General Retention Bonus Program. Eligibility to
receive the Executive Retention Bonus installments and severance
benefits under this Agreement is contingent upon your agreeing to
waive your rights under and terminate your participation in any and
all other retention, termination and severance programs of the
Company and of each subsidiary and affiliate of the Company (whether
by individual agreement or otherwise) now or subsequently existing
during the period this Agreement is in effect (including without
limitation any executive or other severance agreement now in force
and the Company's general retention bonus and severance program for
rank and file employees contained in the 1999 Company Sale Severance
Program), which you may do by signing, dating and returning to the
Company one copy of this Agreement
g) Acceptance of Agreement. Eligibility to receive the Executive
Retention Bonus and severance benefits under this Agreement is
contingent upon your acceptance of the terms
4
of this Agreement by signing, dating and returning to the Company
one copy of this Agreement no later than October 25, 1999.
8. Other Terms and Conditions. The following additional terms and
--------------------------
conditions apply for purposes of this Agreement:
a) No Contract of Employment. This Agreement is not intended to, and
does not, create a contract of employment for any definite period of
time between you and the Company.
b) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby. You may at any time
or from time to time waive any or all of the benefits provided for
herein which have not been received by you at the time of such
waiver. In addition, prior to the last day of the calendar year in
which your cessation of employment occurs, you may waive any or all
rights and benefits provided for herein which have been received by
you; provided that you repay to the Company the amount of the
benefits received (together with interest at the rate provided in
Section l274(b)(2)(B) of the Code). Any waiver of benefits pursuant
to this paragraph shall be irrevocable.
c) Severability. If any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain in full force
and effect to the fullest extent permitted by law.
d) Modification. Any modifications to this Agreement must be approved
in writing by an authorized representative of the Company. No
reduction in your rights under this Agreement may be made without
your written consent.
e) Governing law. This Agreement shall be construed, enforced and
administered in accordance with the laws of the Commonwealth of
Virginia.
f) Excise Tax. If you become entitled to benefits under this Agreement
and if any part or all of such benefits will be subject to the tax
("Excise Tax") imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), then the amount otherwise payable
or provided to you in accordance with this Agreement shall be
reduced as necessary so that no part of such payment shall be
subject to the Excise Tax.
g) No Duty to Mitigate. Your entitlement to benefits hereunder shall
not be governed by any duty to mitigate your damages by seeking
further employment nor offset by any compensation which you may
receive from future employment.
h) Interest on Delayed Payments. If payment or provision of any benefit
due to you under this Agreement is not timely made, you shall be
entitled to interest on the amount not timely paid at 120% of the
applicable federal rate, compounded semi-annually, under Section
1274(d) of the Code determined at the time the Sale of the Business
relating to your employment occurs, such interest to accrue from the
date such benefit is due through the date of payment or provision
thereof.
i) Adjudication. If a dispute or controversy arises under or in
connection with this Agreement, you shall be entitled to an
adjudication in an appropriate court of the Commonwealth of
Virginia, or in any other court of competent jurisdiction.
Alternatively, you, at your option, may seek an award in arbitration
to be conducted by a single arbitrator under the Commercial
Arbitration Rules of the American Arbitration Association.
5
j) Expenses relating to the Company's Failure to Perform. If any
contest or dispute shall arise under this Agreement involving the
failure or refusal of the Company to perform fully in accordance
with the terms hereof other than in connection with a good faith
determination of the existence of Cause, the Company shall reimburse
you, on a current basis, for all legal fees and expenses, if any,
incurred by you in connection with such contest or dispute
(regardless of the result thereof), together with interest in an
amount equal to the prime rate of BankAmerica from time to time in
effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the
date the Company receives your statement for such fees and expenses
through the date of payment thereof. Such reimbursement shall
include the cost of attorney's fees in reviewing this Agreement in
connection with such contest or dispute and in negotiating or
attempting to negotiate a settlement of such contest or dispute
prior to your making such claim or commencing any action or
proceeding and in settling any matter relating to this Agreement.
k) Other Expenses. If any claim, action or proceeding (including
without limitation a claim, action or proceeding by you against the
Company) occurs with respect to this Agreement other than one
described in section 8.j) above, the Company shall pay or reimburse
you for all costs and expenses, including without limitation court
costs and attorney's fees, incurred by you as a result thereof,
provided that if the claim, action or proceeding is by you against
the Company, you are successful in whole or in part on the merits or
otherwise in such claim, action or proceeding. Such reimbursement
shall include interest in an amount equal to the prime rate of
BankAmerica from time to time in effect, but in no event higher than
the maximum legal rate permissible under applicable law, such
interest to accrue from the date the Company receives your statement
for such fees and expenses through the date of payment thereof.
l) Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company
will require any successor which employs you in connection with a
Sale of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if you had remained employed by the
Company. As used in this Agreement, the "Company" shall mean Eskimo
Pie Corporation as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
m) Binding Agreement. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable
hereunder if you had continued to live, any such amount, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee
or, if there is no such designee, your estate.
n) Termination. If no Sale of the Company occurs prior to January 1,
2001, this Agreement shall then terminate.
Eskimo Pie Corporation
By /s/ David B. Kewer
----------------------------
David B. Kewer
President and Chief Executive Officer
6
I HAVE READ AND UNDERSTAND THIS EXECUTIVE RETENTION BONUS AND SEVERANCE
AGREEMENT AND AGREE TO ITS TERMS.
Agreed and Accepted:
/s/ Thomas M. Mishoe, Jr. October 23, 1999
- ------------------------------------ ---------------------
(Name) (Date)
7