EXHIBIT 10.19
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is entered into
effective as of January 1, 2003, by and between XXXX FOODS COMPANY, a Delaware
corporation (together with its subsidiaries, the "Company"), and <>
(the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board") has determined
that the interests of the Company will be advanced by providing the key
executives of the Company with certain benefits in the event of the termination
of employment of any such executive in connection with or following a Change in
Control (as hereinafter defined).
B. The Board believes that such benefits will enable the Company to
continue to attract and retain competent and qualified executives, will assure
continuity and cooperation of management and will encourage such executives to
diligently perform their duties without personal financial concerns, thereby
enhancing shareholder value and ensuring a smooth transition.
C. The Executive is a key executive of the Company.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
for purposes of this Agreement.
"AFFILIATE" means any entity controlled by, controlling or under common
control with, a person or entity.
"ANNUAL PAY" means the sum of (i) an amount equal to the annual base
salary rate payable to the Executive by the Company at the time of termination
of his or her employment plus (ii) an amount equal to the target bonus
established for the Executive for the Company's fiscal year in which his or her
termination of employment occurs.
"CAUSE" means the Executive's (i) willful and intentional material
breach of this Agreement, (ii) willful and intentional misconduct or gross
negligence in the performance of, or willful neglect of, the Executive's duties,
which has caused material injury (monetary or otherwise) to the Company, or
(iii) conviction of, or plea of nolo contendere to, a felony; provided, however,
that no act or omission shall constitute "Cause" for purposes of this Agreement
unless the Board or the
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Chairman of the Board provides to the Executive (a) written notice clearly and
fully describing the particular acts or omissions which the Board or the
Chairman of the Board reasonably believes in good faith constitutes "Cause" and
(b) an opportunity, within thirty (30) days following his or her receipt of such
notice, to meet in person with the Board or the Chairman of the Board to explain
or defend the alleged acts or omissions relied upon by the Board and, to the
extent practicable, to cure such acts or omissions. Further, no act or omission
shall be considered as "willful" or "intentional" if the Executive reasonably
believed such acts or omissions were in the best interests of the Company.
"CHANGE IN CONTROL" means (1) any "person" (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), but specifically excluding the Company, any wholly-owned subsidiary of
the Company and/or any employee benefit plan maintained by the Company or any
wholly-owned subsidiary of the Company) becomes the "beneficial owner" (as
determined pursuant to Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then outstanding securities;
or (2) individuals who currently serve on the Board, or whose election to the
Board or nomination for election to the Board was approved by a vote of at least
two-thirds (2/3) of the directors who either currently serve on the Board, or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the Board; or (3) the Company or any
subsidiary of the Company shall merge with or consolidate into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding immediately thereafter securities representing more than sixty
percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity (or its ultimate parent, if applicable)
outstanding immediately after such merger or consolidation; or (4) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, or such a plan is commenced.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means all information, whether oral or
written, previously or hereafter developed, acquired or used by the Company or
its subsidiaries and relating to the business of the Company and its
subsidiaries that is not generally known to others in the Company's area of
business, including without limitation trade secrets, methods or practices
developed by the Company or any of its subsidiaries, financial results or plans,
customer or client lists, personnel information, information relating to
negotiations with clients or prospective clients, proprietary software,
databases, programming or data transmission methods, or copyrighted materials
(including without limitation, brochures, layouts, letters, art work, copy,
photographs or illustrations). It is expressly understood that the foregoing
list shall be illustrative only and is not intended to be an exclusive or
exhaustive list of "Confidential Information."
"GOOD REASON" means any of the following events occurring, without the
Executive's prior written consent specifically referring to this Agreement,
within two (2) years following a Change in Control:
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(1) (A) Any reduction in the amount of the Executive's Annual
Pay, (B) any reduction in the amount of Executive's other incentive
compensation opportunities, or (C) any significant reduction in the
aggregate value of the Executive's benefits as in effect from time to
time (unless in the case of either B or C, such reduction is pursuant
to a general change in compensation or benefits applicable to all
similarly situated employees of the Company and its Affiliates);
(2) (A) the removal of the Executive from the position held by
him or her immediately prior to the Change in Control, or (B) any other
significant reduction in the nature or status of the Executive's duties
or responsibilities;
(3) transfer of the Executive's principal place of employment
to a metropolitan area other than that of the Executive's place of
employment immediately prior to the Change in Control; or
(4) failure by the Company to obtain the assumption agreement
referred to in Section 7 of this Agreement prior to the effectiveness
of any succession referred to therein, unless the purchaser, successor
or assignee referred to therein is bound to perform this Agreement by
operation of law.
"TERMINATION PAY" means a payment made by the Company to the Executive
pursuant to Section 2(a)(ii).
2. CHANGE IN CONTROL TERMINATION PAYMENT AND BENEFITS.
(a) Involuntary or Constructive Termination. In the event that
the Executive's employment with the Company or its successor is terminated by
the Company or its successor without Cause or by the Executive for Good Reason
in connection with or within two years after a Change in Control, the Executive
shall be entitled to the following payments and other benefits:
(i) The Company shall pay to the Executive a cash
payment in an amount equal to the sum of (A) the Executive's accrued
and unpaid salary as of his or her date of termination of employment,
plus (B) his or her accrued and unpaid bonus, if any, for the Company's
prior fiscal year, plus (C) an amount equal to the greater of the
following, paid on a pro rata basis for the portion of the year between
January 1 and the date of the Executive's termination of employment:
(x) Executive's target bonus for the year of termination, or (y) the
actual bonus to which the Executive would be entitled in the year of
termination, plus (D) reimbursement for all expenses reasonably and
necessarily incurred by the Executive (in accordance with Company
policy) prior to termination in connection with the business of the
Company. This amount shall be paid on the date of the Executive's
termination of employment.
(ii) The Company shall pay to the Executive a cash
payment in an amount equal to two (2) times the Executive's Annual Pay.
This amount shall be paid by the Company in accordance with Section
2(d) hereof.
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(iii) The Company shall pay to the Executive a cash
payment in an amount equal to the sum of (A) the Executive's unvested
account balance under the Company's 401(k) plan, and (B) two (2) times
the amount of the most recent matching contribution that the Company
paid into the Executive's 401(k) account. This amount shall be paid as
soon as administratively practicable after the date of the Executive's
termination of employment.
(iv) The Executive and his or her eligible dependents
shall be entitled for a period of two (2) years following his or her
date of termination of employment to continued coverage, on the same
basis as similarly situated active employees, under the Company's group
health, dental, long-term disability and life insurance plans as in
effect from time to time (but not any other welfare benefit plans or
any retirement plans); provided that coverage under any particular
benefit plan shall expire with respect to the period after the
Executive becomes covered under another employer's plan providing for a
similar type of benefit. In the event the Company is unable to provide
such coverage on account of any limitations under the terms of any
applicable contract with an insurance carrier or third party
administrator, the Company shall pay the Executive an amount equal to
the cost of such coverage.
(v) The Company shall pay all costs and expenses, up
to a maximum of $25,000, related to outplacement services for the
Executive, the provider of which shall be selected by the Executive in
his or her sole discretion. This amount shall be paid directly to the
provider of such services.
(b) Accelerated Vesting. All of the Executive's unvested
awards under the Company's stock award plans shall automatically and immediately
vest in full upon the occurrence of a Change in Control.
(c) No Duplication; Other Severance Pay. There shall be no
duplication of severance pay in any manner. In this regard, the Executive shall
not be entitled to Termination Pay hereunder for more than one position with the
Company and its Affiliates. If the Executive is entitled to any notice or
payment in lieu of any notice of termination of employment required by Federal,
state or local law, including but not limited to the Worker Adjustment and
Retraining Notification Act, the severance compensation to which the Executive
would otherwise be entitled under this Agreement shall be reduced by the amount
of any such payment in lieu of notice. If Executive is entitled to any severance
or termination payments under any employment or other agreement (other than
stock award agreements) with the Company or any of its Affiliates, the severance
compensation to which Executive would otherwise be entitled under this Agreement
shall be reduced by the amount of such payment. Except as set forth above, the
foregoing payments and benefits shall be in addition to and not in lieu of any
payments or benefits to which the Executive and his or her dependents may
otherwise be entitled to under the Company's compensation and employee benefit
plans. Nothing herein shall be deemed to restrict the right of the Company from
amending or terminating any such plan in a manner generally applicable to
similarly situated active employees of the Company and its Affiliates, in which
event the
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Executive shall be entitled to participate on the same basis (including payment
of applicable contributions) as similarly situated active executives of the
Company and its Affiliates.
(d) Mutual Release. Termination Pay shall be conditioned upon
the execution by the Executive and the Company of a valid mutual release to be
prepared by the Company pursuant to which the Executive and the Company shall
each mutually release each other, to the maximum extent permitted by law, from
any and all claims either party may have against the other that relate to or
arise out of the employment or termination of employment of the Executive,
except such claims arising under this Agreement, any employee benefit plan, or
any other written plan or agreement (a "Mutual Release"). The full amount of
Termination Pay shall be paid in a lump sum in cash to the Executive within ten
(10) days following receipt by the Company of a Mutual Release which is properly
executed by the Executive; provided, however, that in the event applicable law
allows the Executive to revoke the Mutual Release for a period of time, and the
Mutual Release is not revoked during such period, the full amount of Termination
Pay shall be paid to the Executive following the expiration of such period.
3. EXCISE TAXES. If the Company reasonably determines that (i) the
termination benefits payable to the Executive pursuant to this Agreement would
subject the Executive to an excise tax under Section 4999 of the Code, and (ii)
the net amount that the Executive would realize from such benefits on an
after-tax basis would be greater if the benefits payable hereunder were limited,
then the benefits payable hereunder shall be limited such that the Executive's
net payment received on after-tax basis is $1 less than the amount at which the
payment would be subjected to the excise tax under Section 4999 of the Code.
4. CERTAIN COVENANTS BY THE EXECUTIVE.
(a) Covenant Not to Compete. In consideration of the payments
made to the Executive pursuant to this Agreement, the Executive shall not during
the term of his or her employment with the Company and for a period of two years
after termination of the Executive's employment with the Company, directly or
indirectly, become associated with (whether as owner, partner, stockholder,
joint venturer, manager, investor, employee, consultant, independent contractor
or agent) any business engaged in the manufacture, distribution or sale of fluid
dairy products anywhere in the United States with gross annual revenues equal to
or greater than $500 million (provided that the Executive shall not be
restricted hereby from owning or acquiring 5% or less of the outstanding voting
securities of a public company), provided that, the foregoing restriction will
terminate immediately if the Executive's employment with the Company is
terminated by the Company without Cause or by the Executive for Good Reason. The
foregoing provision is not intended to override, supercede, reduce, modify or
affect in any manner any other noncompetition covenant or agreement entered into
between Executive and the Company or any of its Affiliates. Any such covenant or
agreement shall remain in full force and effect in accordance with its terms.
(b) Protection of Confidential Information. The Executive
agrees that he or she will not at any time during or following his or her
employment by the Company, without the Company's prior written consent, divulge
any Confidential Information to any other person or
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entity or use any Confidential Information for his or her own benefit. Upon
termination of employment, for any reason whatsoever, regardless of whether
either party may be at fault, the Executive will return to the Company all
physical Confidential Information in the Executive's possession.
(c) Nondisclosure of Agreement. The Executive agrees, at all
times during his or her employment by the Company, not to disclose or discuss in
any manner (whether to individuals inside or outside the Company), the existence
or terms of, this Agreement without the prior written consent of the Company,
except to the extent required by law.
(d) Non-Solicitation of Employees. The Executive agrees, for
so long as the Executive remains employed by the Company, and for a period of
two years following the termination of the Executive's employment, that the
Executive shall not, either for the Executive's own account, or on behalf of any
other person or entity, solicit, suggest or request that any other person
employed by the Company or one of its Affiliates leave such employment for the
purpose of becoming employed by the Executive or any other person or entity.
(e) Nondisparagement. The Executive and the Company agree
that, for so long as the Executive remains employed by the Company, and for a
period of two years following the termination of the Executive's employment,
neither the Executive nor the Company will make or authorize any public
statement, whether orally or in writing, that disparages the other party hereto
with respect to such other party's business interests or practices; provided,
that neither party shall be restricted in connection with statements made in
context of any litigation, arbitration or similar proceeding involving the other
party hereto.
(f) Extent of Restrictions. The Executive acknowledges that
the restrictions contained in this Section 4 correctly set forth the
understanding of the parties at the time this Agreement is entered into, are
reasonable and necessary to protect the legitimate interests of the Company, and
that any violation will cause substantial injury to the Company. In the event of
any such violation, the Company shall be entitled, in addition to any other
remedy, to preliminary or permanent injunctive relief. If any court having
jurisdiction shall find that any part of the restrictions set forth in this
Agreement are unreasonable in any respect, it is the intent of the parties that
the restrictions set forth herein shall not be terminated, but that this
Agreement shall remain in full force and effect to the extent (as to time
periods and other relevant factors) that the court shall find reasonable.
5. TAX WITHHOLDING. All payments to the Executive under this Agreement
will be subject to the withholding of all applicable employment and income
taxes.
6. SEVERABILITY. In the event that 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 be unaffected thereby and shall
remain in full force and effect.
7. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to
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perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no succession had taken place.
8. ENTIRE AGREEMENT. By executing this Agreement, the Executive agrees
that any and all agreements executed between the Company (or any predecessor of
the Company) and the Executive prior to the date hereof regarding benefits
resulting from a Change in Control are hereby nullified and cancelled in their
entirety, and this Agreement shall substitute for and fully replace any such
prior agreements. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be modified in any manner except by a written instrument signed by both the
Company and the Executive.
9. NOTICES. Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail return receipt requested to
each of the parties as follows:
To the Executive:
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To the Company:
XXXX FOODS COMPANY
0000 XxXxxxxx Xxxxxx, Xxxxx 0000, XX 00
Xxxxxx, Xxxxx 00000
Attn.: General Counsel
Tel.: 000-000-0000
Fax: 000-000-0000
10. GOVERNING LAW. The provisions of this Agreement shall be construed
in accordance of the laws of the State of Delaware, except to the extent
preempted by ERISA or other federal laws, as applicable, without reference to
the conflicts of laws provisions thereof.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date and year first above written.
XXXX FOODS COMPANY
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Title:
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