SEVERANCE AGREEMENT
Severance Agreement dated as of July 30, 1999 between Xxxxxxxxx Xxxxxxxxx
(the "Executive") and Ben & Jerry's Homemade, Inc. (the "Company"), a Vermont
corporation headquartered at 00 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxxx, XX 00000.
WHEREAS, the parties wish to confirm certain severance understandings.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth below and other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereby agree as follows:
1. Severance Payable on Termination by the Company Other Than For Cause,
Death or Disability
1.1 In the event of termination of the Executive by the Company for other
than Cause, Death or Disability, the Executive will be entitled to:
(i) Severance at the Executive's monthly base salary rate immediately
preceding date of notice of termination, payable for six months, plus
(if so approved by the Compensation Committee of the Board of
Directors of the Company or an officer delegated by the Committee) a
second period of up to an additional six months in the event that the
employee has not found other comparable employment, but with payments
in this additional period terminating on the date the Executive
obtains comparable employment; provided that, for officers with three
or more years of employment service at date of termination, severance
at the monthly base salary rate immediately preceding the date of
notice of termination, payable for 12 months;
(ii)Continuation of health, life and other "welfare" insurance
benefits on the same terms as available to employees generally during
the period of severance payments. Other benefits (such as 401(k) or
ESPP or ESOP, which are keyed to employee status) do not continue;
(iii) The severance payments required to be made under (i) above are
not reduced by any other job earnings, i.e. no mitigation;
(iv)for officers with three or more years of service at the date of
termination, payment of the appropriate pro rata percentage (based on
the date of termination in the year) of the next annual cash bonus (if
approved by the Compensation Committee in January/February of the year
following the year of termination) provided that, in addition (if so
approved and if the Company's bottom line financial results for the
year in which termination occurs are not lower than the financial
results for the preceding year), the pro rata percentage, as
determined above, shall be figured on the "base" of a full year's
bonus (which shall in no event be less than the full year's bonus paid
for the prior year) and, for other officers with less than three years
of service at date of termination, payment of the appropriate pro rata
percentage of an amount equal to the next annual cash bonus (if
approved by the Compensation Committee in January/February of the year
following the year of termination).
(v) $15,000 of outplacement services.
1.2 Cause. "Cause", for the purposes of Section 1, is defined as
conviction of any crime, whether or not involving the Company,
constituting a felony; gross neglect or misconduct in the conduct of
the Executive's duties; willful or repeated failure or refusal to
perform such duties may be delegated to the Executive by the CEO.
1.3 Options. Unless provisions in some other agreement between the
Executive and the Company or provisions in the option plan under which
options held by the Executive at the date of termination were granted
are more favorable to the Executive, (i) for Executives with three or
more years of service at date of termination, unvested options that
would have vested in the first six month period after date of
termination shall accelerate and become vested, and then all vested
options may continue to be exercised for six months thereafter and
(ii) for all other Executives all vested options at the date of
termination may continue to be exercised for six months thereafter. In
each case all unvested options remaining unvested at date of
termination shall terminate.
1.4 Confidential Information
a. The Executive agrees to comply with the policies and procedures of
the Company and its Subsidiaries for protecting Confidential
Information and shall never disclose to any Person (except as required
by applicable law) or use for his own benefit or gain, any
Confidential Information obtained by the Executive incident to his
employment or other association with the Company or any of its
Subsidiaries. The Executive understands that this restriction shall
continue to apply after his employment terminates, regardless of the
reason for such termination.
b. All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the
Company or its subsidiaries and any copies, in whole or in part,
thereof (the "Documents") whether or not prepared by the Executive,
shall be the sole and exclusive property of the Company and its
subsidiaries. The Executive shall safeguard all Documents and shall
surrender to the Company at the time his employment terminates or at
such earlier time or times as the CEO or his designee may specify, all
Documents then in the Executive's possession or control.
1.5 Covenant Not To Compete
Restricted Activities. The Executive agrees that some restrictions on
his activities during and after his employment are necessary to
protect the goodwill, Confidential Information and other legitimate
interests of the Company and its Subsidiaries, and that the agreed
restrictions set forth below will not deprive the Executive of the
ability to earn a livelihood:
a. While the Executive is employed by the Company and, after his
employment terminates, for the greater of one year or the period
during which severance payments of base amount are being made (the
"Non-Competition Period"), the Executive shall not, directly or
indirectly, whether as owner, partner, investor, consultant, agent,
employee, co-venturer or otherwise, compete with the business of the
Company or any of its Subsidiaries within the United States, or within
any foreign country in which the Products are sold at the date of
termination of employment, or undertake any planning for any business
competitive with the Company or any of its Subsidiaries. Specifically,
but without limiting the foregoing, the Executive agrees not to engage
in any manner in any activity that is directly or indirectly
competitive with the business of the Company or any of its
Subsidiaries as conducted or which has been proposed by management to
the Board within six months prior to termination of the Executive's
employment. Restricted activity also includes without limitation
accepting employment or a consulting position with any Person who is,
or at any time within twelve (12) months prior to termination of the
Executive's employment has been, a distributor of the Company or any
of its Subsidiaries. For the purposes of this Section 1.5, the
business of the Company and its Subsidiaries shall mean the
manufacture or sale of the Products. "Products" mean all products
planned, researched, developed, tested, manufactured, sold, licensed,
leased or otherwise distributed or put into use by the Company or any
of its Subsidiaries, together with all services provided to third
parties or planned by the Company or any of its Subsidiaries, during
the Executive's employment; as used herein, "planned" refers to a
Product or service which the Company has decided to introduce within
six months from the date as of which such term is applied.
b. The Executive further agrees that during the Non-Competition Period
or in connection with the Executive's termination of employment, the
Executive will not hire or attempt to hire any employee of the Company
or any of its Subsidiaries, assist in such hiring by any Person,
encourage any such employee to terminate his or her relationship with
the Company or any of its Subsidiaries, or solicit or encourage any
customer or vendor of the Company or any of its Subsidiaries to
terminate its relationship with them, or, in the case of a customer,
to conduct with any Person any business or activity which such
customer conducts or could conduct with the Company or any of its
Subsidiaries.
c. The provisions of this Section 1.5 shall not be deemed to preclude
the Executive from employment or engagement during the Non-Competition
Period following termination of employment hereunder by a corporation,
some of the activities of which are competitive with the business of
the Company, if the Executive's activities do not relate, to such
competitive business, and nothing contained in this Section 1.5 shall
be deemed to prohibit the Executive, during the Non-Competition Period
following termination of employment hereunder, from acquiring or
holding, solely as an investment, publicly traded securities of any
competitor corporation so long as such securities do not, in the
aggregate, constitute one-half of 1% of the outstanding voting
securities of such corporation.
d. Without limiting the foregoing, it is understood that the Company
shall not be obligated to continue to make the payments specified in
this Agreement in the event of a material breach by the Executive of
the provisions of Sections 1.4 or 1.5 of this Agreement, which breach
continues without having been cured within 30 days after written
notice to the Executive specifying the breach in reasonable detail.
1.6 Enforcement of Covenants.
The Executive acknowledges that he has carefully read and considered
all the terms and conditions of this Agreement, including the
restraints imposed upon him pursuant to Sections 1.4 and 1.5 hereof.
The Executive agrees that said restraints are necessary for the
reasonable and proper protection of the Company and its Subsidiaries
and that each and every one of the restraints is reasonable in respect
to subject matter, length of time and geographic area. The Executive
further acknowledges that, were he to breach any of the covenants
contained in Sections 1.4 and 1.5 hereof, the damage to the Company
would be irreparable. The Executive therefore agrees that the Company,
in addition to any other remedies available to it, shall be entitled
to seek preliminary and permanent injunctive relief against any breach
or threatened breach by the Executive of any of said covenants,
without having to post bond. The parties further agree that, in the
event that any provision of Section 1.4 or 1.5 hereof shall be
determined by any court of competent jurisdiction to be unenforceable
by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, such provision
shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.
1.7 This Section 1 shall not be applicable while the Executive has an
Employment Agreement providing for severance that would be applicable
to a termination other than for cause on the applicable date of such
termination.
2. Severance Payable After a Change in Control
2.1 In the event of a termination by the Company other than for Cause,
Death or Disability within the first two years after a Change in
Control (as defined) or termination by the Executive within the first
two years after a Change in Control for Good Reason (as defined),
severance shall be payable or provided to the Executive as follows
(and subject to the provisions of the additional subsections of
Section 2):
(i) A single lump sum equal to the sum of (a) one and a half times
(i.e. 18 months) annual base salary for the Executive in effect
immediately prior to the date of the Change in Control or immediately
prior to the date of termination (whichever is greater) and (b) an
amount equal to one and a half times the last year's annual cash bonus
paid to the Executive.
(ii) Health, life and other welfare benefits shall continue for one
year on the same terms available to employees generally.
(iii) The Company's contribution to the 401(k) account of the
Executive shall continue for one year at the same rate (but in no
event lower than the rate in effect prior to the Change in Control) as
applicable to employees generally or, if such continuation is not
permitted by the Company's 401(k) plan, then the amount of the
Company's contribution shall be made by a lump sum payment and/or
distribution of Company stock made to the Executive at the time said
payment/distribution is made to employees generally.
2.2 "Cause" shall have the meaning set forth in Section 1.2 above.
2.3 "Change in Control" shall be defined as follows:
A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have
been satisfied:
(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 35% or more of
the combined voting power of the Company's then outstanding
securities; or
(b) during any period of not more than two consecutive years (not
including any period prior to October 26, 1994), individuals who at
the beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into an
agreement with the Company to effect a transaction described in Clause
(a), (c) or (d) of this Section 2.3) whose election by the Board or
nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or
(c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) 60% or
more of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation, or
(2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires 35% or more of the combined voting power of
the Company's then outstanding securities; or
(d) the shareholders 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 the Company's assets.
Notwithstanding the foregoing provisions of this Section 2.3, a "Change in
Control" will not be deemed to have occurred solely because of (i) the ownership
or acquisition of securities of the Company (or any reporting requirement under
the Securities Exchange Act of 1934) relating thereto by an employee benefit
plan maintained by the Company for the benefit of employees or by ownership of
securities of the Company that were beneficially owned as of December 31,1998 by
any of Xxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxx; provided,
however, that a "Change of Control" under Section 2.3 shall be deemed to have
occurred in the event any of Xxx Xxxxx, Xxxxx Xxxxxxxxxx or Xxxxxxx Xxxxxx
becomes the Beneficial Owner, directly or indirectly, of Common Stock or other
voting securities of the Company representing an amount of beneficial ownership
which is (i) greater than 35% of the combined voting power of the Company's then
outstanding voting securities (the threshold under Section 2.3(a)) and (ii)
greater than the amount beneficially owned by any such Person as of December 31,
1998, by at least 22% of the number of outstanding shares of Common Stock of the
Company as of December 31, 1998 (adjusted for stock splits and the like).
In addition, a Change in Control shall not be deemed to have occurred for
purposes of this Section 2.3 if the Executive is the person obtaining control or
a member of any group obtaining control in the defined Change of Control. [
In the foregoing provisions of this definition of "Change in Control", the
following terms shall have the meanings set forth below:
"Person" in Section 2.3 shall have the meaning given in Section 3 (a) (9)
of the Securities Exchange Act of 1934, as modified and used in Sections 13 9d
and 14 (d) thereof; however, a Person shall not include
(1) the Company or any controlled subsidiary of the Company,
(2) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or
(3) a corporation or other entity owned, directly or indirectly, by
the shareholders of the Company in substantially the same proportions
as their ownership of stock of the Company.
"Beneficial Owner" in Section 2.3 shall have the meaning defined in
Rule 13d-3 under the Securities Exchange Act of 1934 as amended from
time to time.
2.4 "Good Reason" shall be defined as follows:
(i) Failure of the Company to continue the Executive in the position
the Executive had twelve months prior to the date of a Change in
Control or any portion of greater responsibility the Executive may
have held immediately prior to the Change in Control;
(ii) Diminution in the nature or scope of the Executive's
responsibilities, duties or authority; or
(iii) Failure of the Company to provide the Executive the base
amounts, bonus and benefits in accordance with the terms of any
employment agreement in effect immediately prior to the Change in
Control between the Executive and the Company or, if there is no such
employment agreement, the levels of base salary, bonus or aggregate
benefits taken together that were in effect immediately prior to the
Change in Control.
2.5 Options.
Unless provisions in some other agreement (including an option grant)
between the Executive and the Company or applicable provisions in the
option plan under which options held by the Executive were granted are
more favorable to the Executive, and except as may be provided on
terms more favorable to the Executive in Section 1 of this Agreement,
with respect to a termination of the Executive Other Than For Cause,
all unvested options held by the Executive shall accelerate and become
vested immediately prior to the Change in Control and shall continue
to be exercisable for six months.
2.6 Excise Tax Limitation.
Notwithstanding Section 2.1 of this Agreement, in the event that any
Payment (as hereinafter defined) would be subject in whole or in part
to the excise tax (the "Excise Tax") under Section 4999 of the
Internal Revenue Code (the "Code"), then the severance payments
payable under Section 2.1 of this Agreement shall be reduced to the
extent, but only to the extent, necessary so that no portion of any
Payment is subject to the Excise Tax (the "Severance Reduction").
However, no Severance Reduction shall be made unless the net amount of
the Total Payments (as hereinafter defined) after such Severance
Reduction and after deduction of the net amount of federal, state and
local income taxes on such reduced Total Payments would be greater
than the net amount of the Total Payments without the Severance
Reduction but after deduction of the Excise Tax and the net amount of
federal, state and local income taxes on such unreduced Total
Payments. The determination as to whether a Severance Reduction is to
be made and, if so, the amount of any such reduction shall be made by
the firm of certified public accountants that had been acting as the
Company's auditors prior to the Change in Control or by such other
firm of certified public accountants, benefits consulting firm or
legal counsel as the Board may designate for such purpose, with the
approval of the Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's
calculations of the amounts referred to in this Section 2.6 and such
supporting materials as are reasonably necessary for the Executive to
evaluate the Company's calculation.
For purposes of this Section 2.6, the term "Payment" means any
"payment in the nature of compensation" (as that term is used in
Section 280G of the Code") to or for the benefit of the Executive,
whether or not paid pursuant to this Agreement, that is contingent or
under Section 280G of the Code would be presumed to be contingent on a
Change in Control; and the term "Total Payments" means the aggregate
of all Payments.
2.7 Additional Provisions.
The provisions of Section 1.4 shall continue to be applicable after a
termination of employment under Subsection 2.1. The provisions of
Section 1.5 shall remain applicable.
3. Other Provisions
3.1 Assignment.
Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise,
without the prior written consent of the other; provided, however,
that in the event that the Company shall hereafter effect a
reorganization, consolidate with, or merge into, any other Person or
transfer all or substantially all of its properties or assets to any
other Person, the Company shall require such Person or the resulting
entity 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 and provided that nothing in this Section shall limit the
provisions of Section 2.
3.2 Severability.
If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application
of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall be not be
affected thereby, and each portion and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
3.3 Waiver
No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party
to require the performance of any term or obligation of this
Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term
or obligation or be deemed a waiver of any subsequent breach.
3.4 Notices.
Any and all notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States
mail, postage prepaid, registered or certified, and addressed to the
Executive at his last known address on the books of the Company and,
in the case of the Company, at its principal place of business,
attention Chief Executive Officer, with a copy to Ropes & Xxxx,
Attention Xxxxxx X. Xxxxxx, Esq., Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX
00000.
3.5 Entire Agreement.
This Agreement constitutes the entire agreement between the parties
with respect to severance upon a termination by the Company other than
for cause and with respect to severance upon a termination by the
Company other than for cause or by the Executive for Good Reason after
a Change in Control and with respect to Options upon a Change in
Control and supersedes all prior and contemporaneous communications,
representations and understandings, written or oral, with respect
thereto, except (i) as otherwise expressly provided herein and (ii) as
otherwise provided in any other written agreement or benefit plan that
is more favorable to the Executive with respect to severance or
options.
3.6 Amendment.
This Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized officer of the
Company.
3.7 Governing Law, Arbitration and Consent to Jurisdiction.
This is a Vermont contract and shall be construed and enforced under
and be governed in all respects by the laws of the State of Vermont,
without regard to the Vermont internal conflict of laws principles
thereof. The parties each agree to promptly and mutually select a
mediator and promptly mediate in good faith any controversy, claim or
dispute arising between the parties hereto arising out of or related
to this Agreement and its performance or any breach or claimed breach
thereof. In the event that mediation does not resolve any such matter,
then such matter other than any matter in which injunctive relief or
other equitable relief is sought shall be definitively resolved
through binding arbitration conducted in the City of Burlington,
Vermont, by a panel of three (3) arbitrators in accordance with the
then current Commercial Arbitration Rules of the American Arbitration
Association; provided, however, that notwithstanding anything to the
contrary in such Commercial Arbitration Rules, the parties shall be
entitled in the course of any arbitration conducted pursuant to this
Section to seek and obtain discovery from one another to the same
extent and by means of the same mechanisms authorized by Rules 27
through 37 of the Federal Rules of Civil Procedure. The power and
office of the arbitrators shall arise wholly and solely from this
Agreement and the then current Commercial Arbitration Rules of the
American Arbitration Association. The award of the panel or a majority
of them so rendered shall be final and binding, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereto.
To the extent a dispute is not to be arbitrated in accordance with the
foregoing, each of the Company and the Executive (i) irrevocably
submits to the jurisdiction of the United States District Court of
Vermont and to the jurisdiction of the state courts of Vermont for the
purpose of any suit or other proceeding arising out of or based upon
the Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such court, and (ii)
waives, to the extent not prohibited by applicable law, and agrees not
to assert in any such proceedings, any claim that it is not subject to
the jurisdiction of the above-named courts, that he or it is immune
from extraterritorial injunctive relief or other injunctive relief,
that any such proceeding brought or maintained in a court provided for
above may not be properly brought or maintained in such court, should
be transferred to some other court or should be stayed or dismissed by
reason of the pendency of some other proceeding in some other court,
or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
3.8 Protection of Reputation.
During the period of employment and during any period in which
severance payments or benefits are paid or provided under this
Agreement, the Executive agrees that he will take no action which is
intended to, or would reasonably be expected to, harm the Company or
its reputation or which would reasonably be expected to lead to
unwanted or unfavorable publicity to the Company (it being understood
that competition which does not breach Section 1.5 shall not be deemed
to be a breach of this Section).
3.9 Survival.
Cessation or termination of Executive's employment with the Company
shall not result in termination of this Agreement. The respective
obligations of Executive and the rights and benefits afforded to the
Company as provided in this Agreement after termination of employment
shall survive cessation or termination of Executive's employment
hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized officer and by the Executive as of the date first above written.
BEN & JERRY'S HOMEMADE, INC.
/s/Xxxxxxxxx Xxxxxxxxx By:/s/Xxxxx X. Xxxx
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Executive Chief Executive Officer
