EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective
as of February 9, 2007 (the “Agreement Date”), by and between Ascendia Brands,
Inc., a Delaware corporation (the “Company”), and Steven R. Scheyer (the
“Executive”).

WITNESSETH:

WHEREAS, the Company desires to retain the services of the Executive as its
President and Chief Executive Officer and the Executive desires to provide such
services in such capacities to the Company, upon the terms and subject to the
conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and obligations hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:

1. Employment Term. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to enter into employment with the Company, for the
period (the “Term of Employment”) commencing on the first business day that is
at least thirty (30) days after the Agreement Date or such earlier date after
February 28, 2007 as the Company and the Executive may agree (the “Commencement
Date”) and continuing until March 1, 2010, unless the Term of Employment is
terminated sooner pursuant to Section 5 below. The period during the Term of
Employment beginning on the Commencement Date and continuing until March 1, 2008
is referred to as the “First Year.” The period during the Term of Employment
beginning March 1, 2008 and continuing until March 1, 2009 is referred to as the
“Second Year.” The period during the Term of Employment beginning March 1, 2009
and continuing until March 1, 2010 is referred to as the “Third Year.” The First
Year, Second Year, and Third Year are each sometimes referred to individually as
a “Year.”

2. Duties and Extent of Services.

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(a) During the Term of Employment, the Executive shall serve as the President
and Chief Executive Officer of the Company and shall render such executive,
managerial, administrative and other services as are customarily associated with
and incident to such positions and as the Company may, from time to time,
reasonably require consistent with such positions. All employees of the Company
other than the Company’s Executive Chairman shall report, directly or
indirectly, to the Executive as President and Chief Executive Officer and the
Executive, as President and Chief Executive Officer, shall have the exclusive
authority to hire and fire employees (other than the Company’s Executive
Chairman), provided that the terms of any employment or compensation related
agreements with any such employees whose annual base compensation is in excess
of $200,000 or whose targeted annual compensation or aggregate severance is in
excess of $350,000 shall be subject to approval of the Board of Directors of the
Company (the “Board”). The Executive shall report to the Board.

(b) The Company shall nominate the Executive for election to the Board as soon
as practicable following the Commencement Date and throughout the Term of
Employment shall (i) nominate him for re-election on each occasion during the
Term of Employment when his term as a director is scheduled to expire, (ii) in
all proxy and other materials recommend that shareholders vote in favor of
Executive’s election as a director, (iii) not directly or indirectly oppose or
withdraw support from Executive, and (iv) solicit proxies from shareholders
authorizing the named proxy holders to vote in favor of Executive’s candidacy.
The Executive shall also hold such other positions and executive offices of the
Company and/or of any of the Company’s subsidiaries or affiliates as may from
time to time be authorized by the Board, provided that each such position shall
be commensurate with the Executive’s positions described above. The Executive
shall not be entitled to any compensation other than the compensation provided
for herein for serving during the Term of Employment in any other office or
position of the Company or any of its subsidiaries or affiliates, unless the
Board specifically approves such additional compensation.

(c) The Executive shall be a full-time employee of the Company and shall devote
his full business time and efforts to the duties required of him in the
positions described in this Section 2, and in

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such other positions or offices of the Company or its subsidiaries or affiliates
as may be required of him hereunder consistent with such positions.
Notwithstanding the foregoing provisions of this Section 2(c), the Executive may
serve as a non-management director of one or more business or not-for-profit
organizations; provided, however, that the Executive may not serve in such
capacity with respect to more than two (2) organizations at any one time without
the prior written approval of the Board.

(d) The Executive will be afforded a reasonable amount of time after the
Commencement Date to assist with the transition of his successor at Newell
Rubbermaid, subject to performance of Executive’s duties and responsibilities
hereunder and provided that such assistance shall not continue more than thirty
days after the Commencement Date without the consent of the Board.

3. Compensation.

(a) Salary. For his services hereunder, the Company shall pay the Executive a
base salary of Six Hundred and Fifty Thousand Dollars ($650,000) per annum,
subject to review annually at the end of each Year for such increases as the
compensation committee of the Board (the “Compensation Committee”), in its sole
discretion, may determine (such amount, as so increased in the Compensation
Committee’s discretion, the “Base Salary”). Base Salary shall be paid in
accordance with the regular payroll policies of the Company in effect from time
to time.

(b) Incentive Bonus Compensation. For each full Year included in the Term of
Employment, the Executive shall be eligible to earn an annual bonus (each, an
“Annual Bonus”). The amount of each Annual Bonus shall be determined by the
Compensation Committee based on achievement of the annual EBITDA targets (the
“EBITDA Targets”) set forth in Schedule 1 hereto; provided that within sixty
days following the end of the second fiscal quarter of the First Year, the
Compensation Committee will review the EBITDA Targets in consultation with the
Executive and will make any adjustments to the EBITDA Targets that the
Compensation Committee and the Executive agree are reasonable and appropriate.
For each Year, (i) if the Company achieves 100% of its EBITDA Target for such
Year, the Annual Bonus shall be equal to 100% of his Base Salary for that Year,
(ii) if the Company achieves less

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than 100% of its EBITDA Target for such Year, the Annual Bonus shall be ratably
reduced in an amount equal to 5% of Base Salary for the applicable Year for each
1% below 100% of Target EBITDA (with no Annual Bonus if EBITDA is not greater
than 80% of Target EBITDA) and (iii) if the Company achieves more than 100% of
its EBITDA Target for such Year, the Annual Bonus shall be ratably increased in
an amount equal to 1% of Base Salary for the applicable Year for each 1% above
100% of Target EBITDA, up to a maximum Annual Bonus equal to 150% of Base Salary
for such Year. Each Annual Bonus shall be deemed to vest and accrue at the end
of the last day of the Year for which it is earned. Each Annual Bonus shall be
paid as soon as practicable following the end of the Year for which it is
earned, subject to the certification by the Compensation Committee of
achievement of the applicable performance goals described in this Section 3(b)
above and the amount of such Annual Bonus, but in no event later than May 14 of
the calendar year in which such Annual Bonus became vested and accrued.
Notwithstanding the foregoing, the Annual Bonus for the First Year will be equal
to 100% of Base Salary and will be paid on or before the last day of the First
Year.

In addition, the Compensation Committee, in its discretion and without
obligation, may declare and pay the Executive a bonus for any Year based upon
individual or Company performance or other considerations it deems appropriate,
whether or not the performance goals described in Section 3(b) above are met or
exceeded.

(c) Signing Bonus. On or within five (5) days after the Agreement Date, the
Company will pay the Executive a signing bonus in the amount of $2,000,000 (the
“Signing Bonus”). If the Signing Bonus is not paid on or within five (5) days
after the Agreement Date, the amount of the Signing Bonus will be $2,100,000. If
for any reason the Executive does not commence employment under this Agreement
on the Commencement Date he will immediately repay the Signing Bonus upon demand
from the Company. If prior to the first anniversary of the Commencement Date the
Executive’s employment with the Company is terminated for Cause (defined below)
or by his voluntary resignation other than for Good Reason (defined below), he
will repay to the Company a portion of the Signing Bonus determined

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by multiplying the total amount of the Signing Bonus by a fraction, the
denominator of which is 365 and the numerator of which is the number of days
between the Employment Termination Date and the first anniversary of the
Commencement Date. As used herein, the term “Employment Termination Date” means
the date on which the Term of Employment expires or terminates for any reason.

(d) Stock Options. On October 31, 2007, the Company will grant the Executive an
option (the “Option”) to purchase a number of shares of the Company’s common
stock (the “Option Shares”) equal to 4% of the Company’s outstanding stock as of
the Commencement Date (determined on an as-converted, fully-diluted basis). The
per share exercise price of the Option will be the fair market value of a Share
on the date of grant of the Option as determined by the Compensation Committee
in accordance with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and Department of Treasury regulations and other interpretive
guidance issued thereunder. The Option will be granted under the Ascendia Brands
2007 Stock Incentive Plan and will be evidenced by a written stock option
agreement (the “Option Agreement”) containing the terms set forth in Exhibit A
hereto and other reasonable and customary stock option agreement terms not
inconsistent with those set forth in Exhibit A. The number of shares subject to
the Option shall be equitably adjusted in the event of any change in the number
of shares of the company’s common stock outstanding by reason of any stock
dividend or split, reverse stock split, recapitalization, merger, consolidation,
combination or exchange of shares or similar corporate change occurring after
the Commencement Date. The terms of the Plan as applied to the Executive shall
be entirely consistent with the terms of this Agreement.

(e) Special Bonus. On January 1, 2008, the Company will pay the Executive a cash
bonus (the “Special Bonus”) in the amount of $2,500,000, provided that the
Executive has commenced employment under this Agreement on the Commencement Date
and Employment Term has not been terminated prior to January 1, 2008 by the
Company for Cause or by the Executive’s resignation other than for Good Reason.

4. Benefits.

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(a) Standard Benefits. During the Term of Employment, the Executive shall be
entitled to (i) participate in any and all benefit programs and arrangements now
in effect and hereafter adopted and made generally available by the Company to
its senior officers, including but not limited to, pension plans, contributory
and non-contributory Company welfare and benefit plans, disability plans, and
medical, death benefit and life insurance plans, which benefit programs and
arrangements shall in any event provide the Executive with (x) full medical,
dental and vision insurance coverage for the Executive and his spouse and
dependent children, (y) life insurance coverage in an amount equal to at least
$5,000,000, and (z) long-term disability insurance in amounts equal to 70% of
Base Salary and, if reasonably available, based on the Executive’s “own
occupation;” (ii) six weeks paid vacation during each Year to accumulate from
year to year to the extent not used and to be paid in cash to the extent not
taken during the Term of Employment.

(b) Expenses. The Company agrees to pay or reimburse the Executive for all
reasonable travel and business expenses incurred by him in the performance of
his duties hereunder in accordance with the Company’s business expense
reimbursement policies as in effect from time to time.

(c) D&O Insurance. The Company will provide the Executive with directors and
officers liability insurance coverage at customary levels with coverage limits
separate and apart from the Company’s limits and with such coverage continuing
for a period of at least six years following the date on which the Executive
ceases to be an officer or director of the Company.

(d) Certain Legal Fees. The Company will reimburse the Executive for all
reasonable attorneys’ fees incurred by him in connection with the negotiation
and preparation of this Agreement (including special counsel with respect to
Section 409A matters) promptly when and as statements of counsel are submitted
to the Company by the Executive.

(e) Perquisites. Without limiting the foregoing provisions of this Section 4,
during the Term of Employment, the Company shall provide the Executive with the
following perquisites: (i) exclusive use of an automobile selected by the
Executive in Chicago, Illinois, and an automobile selected by the

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Executive in New Jersey, including payment or reimbursement of all associated
registration, insurance, fuel and maintenance costs; (ii) an agreed upon number
of hours of use of Flexjet or other comparable private aircraft program for
domestic business travel and first class travel on all international business
flights; (iii) use of a furnished Company provided residence or condominium in
the borough of Manhattan near the Company’s lower Manhattan office or greater
Princeton, New Jersey area; (iv) an office in the Chicago, Illinois area with a
full-time executive assistant; and (v) reimbursement for his personal tax
preparation expenses that are incurred during the Term of Employment and that
are incurred for the initial filing of his personal tax return for the calendar
year in which the Term of Employment ends provided that the Executive has not
accepted subsequent employment in a senior management or comparable position
prior to such initial filing, which provides for a similar benefit.

5. Termination.

(a) Death or Disability. The Term of Employment shall automatically terminate
upon the death of the Executive or termination by the Company for Disability
(defined below). In the event that the Term of Employment terminates due to the
Executive’s death or is terminated by the Company for Disability, the Executive
(or in the event of his death, his beneficiary or legal representative) shall be
entitled to any and all compensation and benefits accrued through the Employment
Termination Date and, if termination occurs during the First Year or the
Company’s actual EBITDA for the Year in which termination occurs is greater than
80% of the EBITDA Target for such Year, an Annual Bonus for such Year to be paid
at the time and calculated in the manner specified in Section 3(b) above, but
prorated based upon the number of days in such Year included in the Term of
Employment. The Special Bonus, if not paid prior to the Employment Termination
Date, will be payable in accordance with Section 3(e) above. The Executive’s
rights with respect to the Option shall be as provided in the Option Agreement
and his rights and benefits under any other applicable Company plans or programs
shall be as determined under such plans or programs. For purposes of this
Section 5, “Disability” means any disability as defined under the Company’s
applicable disability insurance policy; provided that such

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disability has continued for a period of six (6) consecutive months. Any
termination of the Executive’s employment by the Company for Disability shall be
communicated by written notice of termination specifying the reason for
termination (“Disability Termination Notice”) and the Employment Termination
Date shall be the date of the Executive’s receipt of the Disability Termination
Notice or such later date as may be specified in the Disability Termination
Notice. In the event of the Executive’s death during the Term of Employment, the
Employment Termination Date shall be the date of death.

(b) Termination Without Cause. The Company may terminate the Term of Employment
without “Cause” (defined below) for any or no reason at any time by written
notice to the Executive, in which case the Employment Termination Date shall be
the date of such notice or such other later date as may be specified by the
Company. If the Company terminates the Term of Employment without Cause and the
Executive executes and delivers to the Company and does not revoke, a Release
Agreement in the form attached hereto as Exhibit B, the Executive shall be
entitled to receive, without offset for any claims Company may have against
Executive, (i) all compensation and benefits accrued to the Employment
Termination Date, including, without limitation, any earned but unpaid Annual
Bonus for the Year prior to the Year in which termination occurs; (ii) a lump
sum payment equal to six (6) months of Base Salary at the rate in effect on the
Employment Termination Date, payable within 30 days of the Employment
Termination Date; (iii) provided that an anniversary of the Commencement Date
occurs during the period beginning on the day after the Employment Termination
Date and ending on the date that is six months after the Employment Termination
Date, an amount equal to the Executive’s Annual Bonus for the last Year ending
prior to the Employment Termination Date (or, if the Employment Termination Date
occurs prior to the end of the first Year, the target amount of the Annual
Bonus), such amount, if any, to be paid on the date that is six months and one
day following the Employment Termination Date; (iv) for a period of eighteen
(18) months beginning on the date that is six months and one day following the
Employment Termination Date (the “Continuation Period”) payment of (x) Base
Salary at the rate in effect on the Employment Termination Date in accordance
with the Company’s then

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applicable payroll practices plus (y) on each anniversary of the Commencement
Date during the Continuation Period an amount equal to the Executive’s Annual
Bonus for the last Year ending prior to the Employment Termination Date (or, if
the Employment Termination Date occurs prior to the end of the first Year, the
target amount of the Annual Bonus); and (v) for a period of two years following
the Employment Termination Date, continuation of health and life insurance
benefits on substantially the same terms as applicable during the Term of
Employment; provided that health and life insurance benefits shall cease on the
date the Executive becomes eligible for comparable health and life insurance
benefits through subsequent employment. A counterpart of such Release Agreement
shall be executed by the Company and returned to Executive concurrently with the
delivery by Executive of such Release Agreement. The Special Bonus, if not paid
prior to the Employment Termination Date, will be payable in accordance with
Section 3(e) above. The Executive’s rights with respect to the Option shall be
as provided in the Option Agreement and his rights and benefits under any other
applicable Company plans or programs shall be as determined under such plans or
programs. Notwithstanding anything herein to the contrary, if the Company in
good faith reasonably determines that the Executive is or may be considered to
be a “specified employee” as defined in Section 409A of the Code and the
deferral of the commencement of any payments or benefits otherwise payable
hereunder is necessary in order to avoid the imposition of tax, interest or
other liability under Section 409A of the Code (“409A Liability”), then the
Company shall provide written notice thereof to the Executive and will use its
best efforts to defer the commencement of the payment or provision of any such
payments or benefits that would otherwise be paid or provided by the Company
until the date that is six (6) months and one day following Executive’s
termination of employment with the Company; provided that such deferral shall be
without risk of forfeiture to the Executive with respect to such deferral. In
such event, if the Executive incurs 409A Liability, the Company will promptly
pay the Executive an additional amount (the “409A Reimbursement Amount”) equal
to the amount of any such 409A Liability plus the amount of any

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income and excise tax incurred by the Executive with respect to the 409A
Reimbursement Amount such that the Executive will be in the same position as if
no 409A Liability had been incurred.

(c) Cause. The Company may terminate the Term of Employment for Cause by written
notice to the Executive at any time when Cause exists, in which case the
Employment Termination Date shall be the date of such notice or such later date
as may be specified by the Company. For purposes of this Agreement, no
termination of the Term of Employment will be considered to be for Cause unless
in the initial written notice of termination of the Term of Employment the
Company specifically states to the Executive that termination is for Cause and
indicates the Cause with specificity as to the facts and circumstances. If the
Term of Employment is terminated for Cause, the Company shall have no further
obligations hereunder, except to pay the Executive all compensation and benefits
accrued to the Employment Termination Date. The Executive’s right to participate
in any of the Company’s retirement, insurance and other benefit plans and
programs shall be as determined under such plans and programs. For purposes of
this Agreement, “Cause” means the Executive’s (i) conviction of or plea of nolo
contendere to any felony, (ii) gross negligence, or (iii) willful misconduct
that is materially financially injurious to the Company or is repeated after
written notice from the Company specifying the misconduct or that is not
corrected within twenty days after written notice from the Company specifying
the misconduct, and Cause shall exist from and after the occurrence of any such
event or conduct or, if applicable, expiration of the applicable notice period
with respect to such event or conduct. For purposes of this Section 5(c), the
term “willful misconduct” means the Executive’s knowing contravention of a known
duty or obligation related to or in connection with the Company, its business,
or the Executive’s position as President and Chief Executive Officer, but does
not include any failure or refusal of the Executive to comply with any directive
from the Board which (by itself or cumulatively together with other Board
directives) is (i) inconsistent with the description of his duties, authority or
responsibility in this Agreement or (ii) inconsistent with the duties, authority
or responsibility customarily afforded a president or chief executive officer at
business corporations similar in size and profile to the Company.

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(d) Termination by Executive. The Executive may at any time terminate the Term
of Employment by his voluntary resignation for any or no reason upon thirty (30)
days prior written notice to the Company. If the Term of Employment is
terminated by the Executive’s resignation pursuant to this Section 5(d), the
Company shall pay to the Executive any and all benefits and compensation accrued
through the Employment Termination Date and the Executive’s rights and benefits
under any applicable benefit plans or programs shall be as determined under such
plans or programs.

(e) Termination by Executive for Good Reason. Notwithstanding the above, the
Executive may terminate his employment under this Agreement for Good Reason
(defined below) by written notice to the Company, in which case the Employment
Termination Date shall be the date of such notice or such later date as may be
specified by the Executive (but not later than the scheduled expiration of the
Term of Employment). Any termination of the Term of Employment for Good Reason
pursuant to this Section 5(e) shall be deemed to be a termination by the Company
without Cause and shall be controlled by the provisions of Section 5(b) of this
Agreement. For purposes of this Agreement, the term “Good Reason” means (i) any
material breach by the Company of any of its obligations under this Agreement,
(ii) any material reduction in the Executive’s title, duties, authority or
responsibilities without his consent, or (iii) assignment to the Executive
without his consent of duties or responsibilities materially inconsistent with
his positions and duties described in Section 2 of this Agreement; provided that
the Executive may not terminate the Term of Employment for Good Reason unless he
first gives the Company written notice specifying the Good Reason and the
Company does not cure the Good Reason within twenty days after the date of such
notice.

(f) Effect of Termination. Upon the termination of the Executive’s employment
with the Company for any reason, the Company shall have no further obligations
hereunder, except as otherwise provided herein, and upon such termination, the
Executive shall be deemed to have resigned immediately from all offices and
directorships held by him in the Company or any of its subsidiaries.

6. Certain Covenants.

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In consideration of the mutual promises contained herein the Executive agrees as
follows:

(a) Confidentiality. The Executive will not at any time, directly or indirectly,
disclose or use for any purpose, except in the good faith performance of the
Executive’s duties to the Company, any Confidential Information (as hereinafter
defined). As used herein, “Confidential Information” means all trade secrets and
all other information of a business, financial, marketing, technical or other
nature pertaining to the Company or any subsidiary, including information of
others that the Company or any subsidiary has agreed to keep confidential;
provided, that Confidential Information shall not include any information that
has entered or enters the public domain (other than through breach of the
Executive’s obligations under this Section 6), or which the Executive is
required to disclose by law or legal process. Upon the Company’s request at any
time and for any reason, the Executive shall immediately deliver to the Company
all materials (including all copies) in the Executive’s possession which contain
Confidential Information.

 

(b) Non-Competition.

During the Restriction Period (defined below):

(i)          the Executive will not directly or indirectly, individually or as a
consultant, employee, officer, director, stockholder, partner, member, or in any
other capacity perform or provide services to, or assist any other person to
provide services to, any person or entity whose business competes with the
business of the Company or any of its subsidiaries anywhere in the United States
or anywhere else in the world where the Company or any subsidiary does business
(a “Competitive Business”) if such competition is direct or such services could
reasonably and materially benefit or advantage the Competitive Business by use
or application of Confidential Information; and

(ii)         the Executive will not directly or indirectly, individually or as a
consultant to, or employee, officer, director, stockholder, partner or other
owner or participant in any capacity in any business or entity other than the
Company, solicit or endeavor to entice away from the Company or any subsidiary,
or otherwise interfere with the business relationship of the Company or any
subsidiary with any person, business, or entity who is, or was within the one
year period immediately prior to the date of

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termination of his employment with the Company, an employee of the Company or
any subsidiaries (other than any employee who was the administrative assistant
to the Executive at the time of termination), or a customer or client of,
supplier to or other party having material business relations with the Company
or any subsidiary. The “Restriction Period” means the period commencing on the
Commencement Date and ending either (x) upon expiration of the Continuation
Period in the case of any termination of the Term of Employment pursuant to
Section 5(b) or 5(e) above, or (y) on the first anniversary of the date of
termination of Executive’s employment with the Company in the case of any
termination of the Executive’s employment with the Company other than pursuant
to Section 5(b) or 5(e) above.

(c)          Remedies. Without limiting the remedies available to the Company,
the Executive acknowledges that a breach of any of the covenants contained in
this Section 6 could result in irreparable injury to the Company for which there
might be no adequate remedy at law, and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining
order and/or a preliminary injunction and a permanent injunction restraining the
Executive from engaging in any activities prohibited by this Section 6 or such
other equitable relief as may be required to enforce specifically any of the
covenants of this Section 6. The foregoing provisions of this Section 6 herein
shall survive the termination of this Agreement and shall continue thereafter in
full force and effect in accordance with the terms of this Section 6 herein for
the periods of time contemplated thereby.

7. Deductions and Withholding. The Executive agrees that the Company or its
subsidiaries or affiliates, as applicable, shall withhold from any and all
compensation paid to and required to be paid to the Executive pursuant to this
Agreement, all Federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statutes or
regulations from time to time in effect and all amounts required to be deducted
in respect of the Executive’s coverage under applicable employee benefit plans.
For the purposes of this Agreement and calculations hereunder, all such
deductions and withholdings shall be deemed to have been paid to and received by
the Executive.

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The Company agrees to withhold and pay taxes from and with respect to the
Signing Bonus based upon the Executive’s representation that he is subject to
Illinois and not New Jersey income tax with respect to the Signing Bonus.
Provided the Signing Bonus is paid on or within five (5) days after the
Agreement Date, the Executive shall indemnify the Company, and its shareholders,
directors, officers, agents and employees, for any damages incurred by the
Company in connection with or as a result of the Company’s failure to deduct or
withhold or pay any New Jersey state taxes with respect to the Signing Bonus.

8. Notices. Any notice or other communication required or permitted to be given
under this Agreement shall be in writing and shall be deemed given (i) when
delivered or refused if sent by hand during regular business hours, (ii) three
(3) business days after being sent by United States Postal Service, registered
or certified mail, postage prepaid, return receipt requested, or (iii) on the
next business day when sent by reputable overnight express mail service that
provides tracing and proof of receipt or refusal of items mailed addressed to
the Company or Executive, as the case may be, at the address or addresses set
forth below or such other addresses as the parties may designate in a notice
given in accordance with this Section.

If to the Company:

Ascendia Brands, Inc.

 

2000 Lenox Drive, Suite 202

 

Lawrenceville, NJ 08648

 

Tel: 609-219-0930

 

Attention: Chairman of the Board of Directors

 

with a copy to:

Bachelder & Dowling, P.A.

 

Twenty-Two Free Street, Suite 201

 

Portland, ME 04101-3900

 

Tel: 207-761-8100

 

Attention: Stephan G. Bachelder

 

If to the Executive:

Steven R. Scheyer

 

205 Franklin Drive

 

Glencoe, IL

 

Tel: 847-835-5227

 

with a copy to:

Sugar, Friedberg & Felsenthal LLP

 

30 N. LaSalle Street, Suite 3000

 

Chicago, IL  60602

 

Tel: 312-704-2180

 

Attention: Steven A. Felsenthal

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9. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the transactions contemplated herein, and it
supersedes all prior negotiations, discussions, understandings or agreements
between the parties with respect to its subject matter. All Exhibits and
Schedules attached hereto are a part of this Agreement and are incorporated
herein by reference.

10. Waiver. The excuse or waiver of the performance of any obligation under
Section 6 of this Agreement shall only be effective if evidenced by a written
statement signed by a duly authorized representative of the Company. No delay in
exercising any right or remedy shall constitute a waiver thereof, and no waiver
by the Company or the Executive of the breach of any covenant of this Agreement
shall be construed as a waiver of any preceding or succeeding breach of the same
or any other covenant or condition of this Agreement.

11. Governing Law: Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed therein. Any action to enforce any of the
provisions of this Agreement shall be brought in a court of the State of New
Jersey or in a Federal court located within the State of New Jersey. The parties
consent to the jurisdiction of such courts and to the service of process in any
manner provided by New Jersey law. Each party irrevocably waives any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such court and any claim that such suit, action
or proceeding brought in such court has been brought in an inconvenient forum
and agrees that service of process in accordance with the foregoing sentences
shall be deemed in every respect effective and valid personal service of process
upon such party.

12. Assignability. The obligations of the Executive hereunder may not be
delegated and, except with respect to the designation of beneficiaries in
connection with any of the benefits payable to the Executive hereunder and,
except with respect to the Executive’s interest in life insurance policy

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provided pursuant to Section 4(a) above the Executive may not, without the
Company’s written consent, assign, transfer, convey, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any interest herein. Any
such attempted delegation or disposition shall be null and void and without
effect. The Company and the Executive agree that this Agreement and all of the
Company’s rights and obligations hereunder may be assigned or transferred by the
Company to and shall be assumed by and be binding upon any successor to the
Company. The term “successor” means, with respect to the Company or any of its
subsidiaries, any corporation or other business entity which, by merger,
consolidation, purchase of the assets or otherwise acquires all or a material
part of the assets of the Company.

13. Severability. Each provision hereof is intended to be severable and the
invalidity or illegality of any portion of this Agreement shall not affect the
validity or legality of the remainder.

14. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.

15. Amendment. This Agreement may be amended only by a written instrument
executed by the Company and the Executive.

16. 409A Compliance. The intent of the Executive and the Company is that the
severance and other benefits payable to the Executive under this Agreement not
be deemed “deferred compensation” under, and shall otherwise comply with,
Section 409A of the Code. The Executive and the Company agree to use reasonable
best efforts to amend the terms of this Agreement from time to time as may be
necessary to avoid the imposition of 409A Liability in a manner that does not
materially alter the substantive rights and obligations of the parties hereunder
or otherwise subject the Executive to any risk of forfeiture of a nature or for
a term which does not otherwise exist with respect to such currently
contemplated benefits; provided, however, any such amendment will (i) provide
the Executive payments and benefits in the aggregate at least equal in amount
and present value to those set forth herein and (ii) not in the aggregate,
materially increase the cost to, or liability of, the Company hereunder. To the
extent no such agreement can be reached between the parties, and as a result the

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Executive incurs 409A Liability, the Company will promptly pay the Executive the
409A Reimbursement Amount with respect to such 409A Liability.

17. Registration. On or prior to the issuance of the Option to Executive, the
Company shall register with the Securities and Exchange Commission (“SEC”) on
Form S-8 (the “Form S-8”) the issuance of the Option and the issuance of Option
Shares pursuant to exercise of the Option. By a post-effective amendment to the
Form S-8 filed with the SEC prior to the date that Executive is first able to
sell Option Shares under his agreements with the Company, the Company shall file
with the SEC a reoffer prospectus (the “reoffer prospectus”) that is prepared in
accordance with the requirements of Part I of Form S-3 or such other
requirements as may be set forth in the instructions to SEC Form S-8. The
reoffer prospectus shall cover the sale of all of the Option Shares by
Executive, to the extent permitted by the SEC, and such means of distribution of
the Option Shares as the Executive may request so long as such means of
distribution is in accordance with applicable law. The Company shall file such
documents with the SEC and otherwise use its best efforts to maintain the
effectiveness of the Form S-8 and the reoffer prospectus on an on-going basis.
If the SEC limits the number of Option Shares that may be sold pursuant to the
reoffer prospectus, the Company shall attempt to file additional reoffer
prospectuses with respect to additional Option Shares as the Executive may
reasonably request.

18. Lock-Up. The Option Shares will be subject to a Lock-Up Agreement in the
form attached hereto as Exhibit C to be entered into by the Executive and the
Company simultaneously with the mutual execution and delivery of this Agreement.

19. No Offset. The payment and other obligations of the Company hereunder shall
not be subject to offset.

20. Headings. All headings herein are inserted for convenience and ease of
reference purposes only and are not to be considered in the construction or
interpretation of this Agreement.

21. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall for all purposes constitute one (1) agreement
which is binding on all of the parties hereto.

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Delivery by facsimile or electronic transmission of a signed counterpart shall
be deemed delivery of an original.

22. Due Execution. The Company represents that the execution of this Agreement
on behalf of the Company has been duly authorized by all requisite corporate
action.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the Agreement Date.

 

ASCENDIA BRANDS, INC.

 

 

By: /s/ Andrew W. Sheldrick

 

Name: Andrew W. Sheldrick

 

Title: General Counsel and Secretary

 

 

 

/s/ Steven R. Scheyer

 

Steven R. Scheyer

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SCHEDULE 1

(Annual EBITDA Targets)

 

For the First Year:

$40,000,000

 

For the Second Year:

$50,000,000

 

For the Third Year:

$55,000,000

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EXHIBIT A

(Option Agreement Terms)

 

The Option will become exercisable with respect to 75% of Option Shares (the
“Time Based Shares”) in three equal annual installments at the end of each of
the first three Years, subject to the Executive’s continuous employment with the
Company through the end of the applicable Year, and will become vested with
respect to the remaining 25% of the Option Shares (the “Performance Shares”) in
three equal annual installments at the end of each of the first three Years
based on achievement of the EBITDA Target for the applicable Year, subject to
the Executive’s continuous employment with the Company through the end of the
Year for which such EBITDA Target is met. If the applicable EBITDA Target for
any one or more Years is not met and the aggregate EBITDA achievement for all
three Years is at least 85% of the aggregate EBITDA Targets for all three Years,
at the end of the Third Year, the Option shall become exercisable with respect
to an additional number of Performance Shares such that the Option shall have
become exercisable with respect to the percentage of the Performance Shares that
corresponds to the percentage of aggregate EBITDA achievement, subject to the
Executive’s continuous employment with the Company through the end of the Third
Year. If a Change in Control occurs during the Term of Employment, the Option,
to the extent it has not already become exercisable, will immediately become
exercisable in full.

 

If the Executive elects to sell Options Shares in any Co-Sale Transaction during
the Term of Employment pursuant to the exercise of co-sale rights under that
certain letter agreement of even date between Prentice Capital Management, LP
and the Executive (the “Co-Sale Rights”) and the number of Option Shares he is
entitled and has elected to sell in the Co-Sale Transaction pursuant to exercise
of the Co-Sale Rights (after giving effect to any Option Shares then held by him
and any Option Shares issuable upon exercise of any then-exercisable portion of
the Option) would otherwise be limited by the fact that the Option has not yet
become exercisable with respect to some or all of the Time Based Shares, then
the Option will become exercisable with respect to that number of Time Based
Shares (after giving effect to any Option Shares then held by him and any Option
Shares issuable upon exercise of any then-exercisable portion of the Option)
that the Executive has elected to sell in the Co-Sale Transaction pursuant to
the exercise of the Co-Sale Rights and that the Executive would otherwise not
have been entitled to sell in the Co-Sale Transaction pursuant to exercise of
the Co-Sale Rights solely by reason of the fact that the Option had not yet
become exercisable with respect to those Time Based Shares. For this purpose,
the term “Co-Sale Transaction” means any transaction in which the Executive is
entitled to sell Option Shares pursuant to exercise of the Co-Sale Rights.

 

The Executive may elect to exercise the Option (to the extent it has become
exercisable) in a cashless net exercise (resulting in delivery of a number of
shares having a value equal to the intrinsic value of the Option or portion
thereof exercised, less applicable withholding).

 

In the event of termination of the Term of Employment by the Company other than
for Cause, or in the event of termination by the Executive for Good Reason, or
by reason of death or Disability of the Executive, the Option will become
exercisable to the extent that it would have become exercisable if the Term of
Employment had continued until the earlier of the scheduled expiration of the
Term of Employment or the first anniversary of the Employment Termination Date
and any applicable EBITDA targets for the Year in which the Employment
Termination Date occurred were met, and to the extent so vested, the Option will
remain exercisable until the first anniversary of the Employment Termination
Date.

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In the event of termination of the Executive’s employment after the Third Year
for any reason other than Cause, the Option, to the extent that it shall have
become exercisable prior to termination, shall remain exercisable until the
earlier of the first anniversary of the date of termination of employment and
the scheduled expiration of the Option.

 

For purposes of the Option Agreement, “Change in Control” will be defined as (i)
a sale by the Company of substantially all of its assets in one transaction or a
series of related transactions, (ii) the acquisition by any person, entity, or
group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) who or which is not a direct or indirect owner of the
Company’s equity securities as of the Commencement Date, of (x) the power or
ability, by contract or otherwise, to appoint a majority of the members of the
Board or (y) equity interests in the Company representing over fifty percent
(50%) of the voting power in the Company (including voting power exercisable on
a contingent or deferred basis as well as immediately exercisable voting power),
(iii) a merger or consolidation involving the Company in which holders of the
Company’s equity securities immediately before the merger or consolidation do
not immediately after the merger or consolidation own over fifty percent (50%)
of the voting power in the entity surviving the merger or consolidation
(including voting power exercisable on a contingent or deferred basis as well as
immediately exercisable voting power), (iv) the dissolution and liquidation of
the Company or (v) individuals who, as of the Commencement Date, constitute the
entire Board of Directors of the Company (“Incumbent Directors”) cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the then Incumbent Directors shall be considered as
though such individual was an Incumbent Director or (vi) the class of shares of
the Company which are the subject of this Option Agreement cease to be publicly
traded in the United States. A series of transactions shall be considered
related if they occur within an eighteen (18) month period, but the fact that a
series of transactions occurs over a period longer than eighteen (18) months
shall not preclude such transactions from being related.

 

The Option Agreement terms will not give rise to 409A Liability.

22

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EXHIBIT B

(Form of Release Agreement)

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EXHIBIT B

RELEASE AND NON-DISPARGEMENT AGREEMENT

STEVEN R. SCHEYER

KNOW ALL MEN BY THESE PRESENTS: That the undersigned, Steven R. Scheyer
(“Executive”), on behalf of himself and his heirs, legal representatives,
successors and assigns, and each of them, for good and valuable consideration as
set forth in the Employment Agreement dated _____________ between Executive and
Company (the “Employment Agreement”), does hereby unconditionally, knowingly,
and voluntarily release and forever discharge Ascendia Brands, Inc., a Delaware
corporation (“Company”), and its present and former related companies,
subsidiaries and affiliates, and all of their present and former executives,
officers, directors, owners, shareholders, employees, agents, and attorneys,
including in their individual capacity, and each of its and their successors and
assigns (hereinafter collectively the “Released Parties”), from any and all
known or unknown claims, demands, actions or causes of action based upon events
occurring or omissions on or before the date of the execution of this Release
pertaining to Executive’s employment at the Company or employment with any of
the Released Parties or the termination of Executive’s employment, including,
but not limited to, any claims under: (1) the Americans with Disabilities Act;
the Family and Medical Leave Act; Title VII of the Civil Rights Act; 42 U.S.C.
Section 1981; the Older Workers Benefit Protection Act; the Age Discrimination
in Employment Act of 1967, as amended; the Employee Retirement Income Security
Act of 1974; the Civil Rights Act of 1866, 1871, 1964, and 1991; the
Rehabilitation Act of 1973; the Equal Pay Act of 1963; the Vietnam Veteran’s
Readjustment Assistance Act of 1974; the Occupational Safety and Health Act; and
the Immigration Reform and Control Act of 1986; and any and all other federal,
state or local laws, statutes, ordinances, or regulations pertaining to
employment, discrimination or pay; (2) any state tort law theories under which
an action could have been brought, including, but not limited to, claims of
negligence, negligent supervision, training and retention or defamation; (3) any
claims of alleged fraud and/or inducement, excluding alleged inducement to enter
into this Release; (4) any and all other tort claims relating to the subject
matter of this release; (5) all claims for attorneys’ fees and costs relating to
the subject matter of this release; (6) all claims for physical, mental,
emotional, and/or pecuniary injuries, losses and damages of every kind relating
to the subject matter of this release, including but not limited to earnings,
punitive, liquidated and compensatory damages, and employee benefits; (7) any
and all claims whatsoever arising under any of the Released Parties’ express or
implied contract or under any federal, state, or local law, ordinance, or
regulation, or the Constitution of New Jersey or of the United States relating
to the subject matter of this release; (8) any and all claims whatsoever against
any of the Released Parties for wages, bonuses, benefits, fringe benefits,
vacation pay, or other compensation or for any damages, fees, costs, or
benefits; and (9) any and all claims whatsoever to reinstatement (collectively,
the “Released Claims”); provided, however, that, notwithstanding anything to the
contrary contained herein, this Release shall not cover and the Released Claims
shall specifically exclude those rights and claims of Executive directly or
indirectly arising from or under or related to (A) any plans or agreements
relating to shares, interests or other securities of the

 

B-1

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Company, including, without limitation of the foregoing, any rights the
Executive may have under that certain letter agreement with Prentice Capital
Management, LP dated as of February , 2007 between the Executive and the
Company, (B) any obligation of the Company to provide benefits or payments under
Section 5 of the Employment Agreement; (C) any indemnification and/or
contribution agreements, claims or rights that Executive might have against or
with the Company (or its predecessor) and/or any other Released Parties, (D) the
Consolidated Omnibus Budget Reconciliation Act (COBRA), (E) any profit-sharing
and/or retirement plans or benefits in which Executive has vested rights, or (F)
any rights to assert any defenses in any action or proceeding; provided,
however, that in any action or proceeding brought by any Released Party against
the Executive to assert a claim or claims pertaining to Executive’s employment
at the Company or employment with any of the Released Parties or the termination
of Executive’s employment and based, in whole or any part, upon events occurring
or omissions on or before the date of the execution of this Release, the
Executive may assert any Released Claim against that Released Party and/or any
Affiliate of that Released Party as a counterclaim against that Released Party
and/or any Affiliate of that Released Party in such action or proceeding or as a
cross-claim against that Released Party and/or any Affiliate of that Released
Party. Executive also intends that this Release operate as a waiver of all
unknown claims of the type being released hereunder For purposes of this
Release, (i) the term Affiliate means, with respect to the Company, any legal
entity directly or indirectly controlled by, controlling, or under common
control with the Company and the Company shall be considered an Affiliate of
each of its Affiliates and (ii) the term “control” (including the terms
“controlling,” “controlled by,” and “under common control with”) means the
possession, direct or indirect, of the power or ability to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of securities, by contract, or otherwise.

Executive acknowledges that he has been given the opportunity to review and
consider this Release for twenty-one (21) days from the date he received a copy.
If he elects to sign before the expiration of the twenty-one (21) days,
Executive acknowledges that he will have chosen, of his own free will without
any duress, to waive his right to the full twenty-one (21) day period.

Executive may revoke this Release after signing it by giving written notice to
________________, within seven (7) days after signing it. This Release, provided
it is not revoked, will be effective on the eighth (8th) day after execution.

Executive acknowledges that he has been advised to consult with an attorney
prior to signing this Release.

Each of Executive and the Company covenants and agrees that for a period of five
(5) years after the date hereof, neither Executive nor Company, either directly
or through any of its affiliates, in writing or by any other medium, make any
disparaging, derogatory or negative statement, comment or remark about the
Executive or the Company or any of its officers, directors, employees,
affiliates, subsidiaries, successors and assigns, as the case may be; provided
however, that either party may make such statements, comments or remarks as are
necessary to comply with applicable law.

 

B-2

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Executive is signing this Release knowingly, voluntarily and with full
understanding of its terms and effects. Executive is signing this Release of his
own free will without any duress, being fully informed and after due
deliberation. Executive voluntarily accepts the consideration provided to him
for the purpose of making full and final settlement of all claims referred to
above. This Release shall be governed by and construed in accordance with the
laws of the State of New Jersey.

 

IN WITNESS WHEREOF, Executive has duly executed this Release effective as of
_____________, 20__.

EXECUTIVE:

 

________________________

Name: Steven R. Scheyer

 

AGREED:

ASCENDIA BRANDS, INC.

 

By:

_______________________________

 

Its:_____________________________

 

B-3

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EXHIBIT C

(Form of Lock-Up Agreement)

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