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MANAGEMENT CONTINUITY AGREEMENT
AGREEMENT between Agribrands International, Inc., a Missouri corporation
("Agribrands"), and (the
"Executive"), WITNESSETH:
WHEREAS, the Board of Directors (the "Board") has authorized Agribrands
to enter into Management Continuity Agreements with certain key executives of
Agribrands; and
WHEREAS, the Executive is a key executive of Agribrands and has been selected
by the Board to be offered this Management Continuity Agreement; and
WHEREAS, should a third person take steps which might lead to a Change in
Control of Agribrands (as defined herein), the Board believes it imperative
that Agribrands be able to rely upon the Executive to continue in the
Executive's position, and that Agribrands be able to receive and rely upon the
Executive's advice, if it is requested, as to the best interests of Agribrands
and its shareholders without concern that the Executive might be distracted by
the personal uncertainties and risks created by such a Change in Control or
influenced by conflicting interests;
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, Agribrands and the Executive agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
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shall have the meanings set forth below:
a. "Base Amount" shall be the Executive's Base Amount as defined and
determined pursuant to Section 280G of the Code and regulations applicable at
the time of the Executive's Qualifying Termination.
b. "Base Compensation" shall consist of:
(i) The Executive's monthly gross salary for the last full month preceding
the Executive's Qualifying Termination or for the last full month preceding
the Change in Control, whichever is higher. If Executive has elected to
accelerate or defer salary (including the Executive's pre-tax contributions
under the [Agribrands International, Inc. Savings Investment Plan] Agribrands
International, Inc. Deferred Compensation Plan and under any benefit plan
complying with Section 125 of the Code, and any successor plans thereto), said
monthly gross salary shall be calculated as if there had been no acceleration
or deferral.
(ii) One-twelfth of the Executive's last annual bonus, whether paid or
deferred, preceding the Executive's Qualifying Termination or the Change in
Control, whichever is higher (or if the Executive has not been awarded an
annual bonus by Agribrands prior to the Change in Control, then the
Executive's last annual bonus awarded by Xxxxxxx Purina Company, Agribrands'
former parent company).
c. "Change in Control" means (i) the acquisition by any person, entity or
"group" within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of
the aggregate voting power of the then outstanding shares of Stock, other than
acquisitions by Agribrands or any of its subsidiaries or any employee benefit
plan of Agribrands (or any Trust created to hold or invest in issues thereof)
or any entity holding Stock for or pursuant to the terms of any such plan; or
(ii) individuals who shall qualify as Continuing Directors shall have ceased
for any reason to constitute at least a majority of the Board of Directors of
Agribrands. Notwithstanding the foregoing, a Change-in-Control shall not
include a transaction (commonly known as a "Xxxxxx Trust" transaction)
pursuant to which a third party acquires one or more businesses of the Company
by acquiring all of the common stock of the Company while leaving the
Company's remaining businesses in a separate public company, unless the
businesses so acquired constitute all or substantially all of the Company's
businesses.
d. "Code" shall mean the Internal Revenue Code of 1986, as amended.
e. "Company" shall mean Agribrands International, Inc. and its wholly
owned subsidiaries.
f. "Continuing Director" means any member of the Board of Directors of
Agribrands, as of April 1, 1998 while such person is a member of the Board,
and any other director, while such other director is a member of the Board,
who is recommended or elected to succeed the Continuing Director by at least
two-thirds (2/3) of the Continuing Directors then in office.
g. "Disability" shall exist when the Executive suffers a complete and
permanent inability to perform any and every material duty of the Executive's
regular occupation because of injury or sickness.
To determine whether the Executive is Disabled, the Executive shall undergo
examination by a licensed physician and other experts (including other
physicians) as determined by such physician, and the Executive shall cooperate
in providing relevant medical records as requested. The Company and Executive
shall jointly select such physician. If they are unable to agree on the
selection, each shall designate one physician and the two physicians shall
designate a third physician so that a determination of disability may be made
by the three physicians. Fees and expenses of the physicians and other
experts and costs of examinations of the Executive shall be shared equally by
the Company and the Executive. The decision as to the Executive's Disability
made by such physician or physicians shall be binding on the Company and the
Executive.
h. "Discount Rate" means 120% of the applicable Federal rate determined
under Section 1274(d) of the Code and the regulations thereunder at the time
the relevant payments are made.
i. "Employment Agreement" shall mean an agreement so styled providing for
continuation of salary and bonus payments under certain circumstances and
entered into between Agribrands and Executive prior to a Change in Control.
j. "Employment Agreement Termination Payments" shall mean the aggregate of
any payments made to Executive pursuant to the Employment Agreement respecting
periods following Executive's termination of employment contemporaneous with
or subsequent to a Change-in-Control.
k. "Involuntary Termination" shall be any termination of the Executive's
employment with the Company (a) to which the Executive objects orally or in
writing or (b) which follows any of the following:
(i) without the express written consent of the Executive, (a) the
assignment of the Executive to any duties materially inconsistent with the
Executive's positions, duties, responsibilities and status immediately prior
to the Change in Control or (b) a material change in the Executive's titles,
offices, or reporting responsibilities as in effect immediately prior to the
Change in Control and with respect to either (a) or (b) the situation is not
remedied within thirty (30) days after the receipt by the Company of written
notice by the Executive; provided, however, (a) and (b) herein shall not
constitute an "Involuntary Termination" if either situation is in connection
with the Executive's death or disability.
(ii) without the express written consent of the Executive, a reduction in
the Executive's annual salary or opportunity for total annual compensation in
effect immediately prior to the Change in Control which is not remedied within
thirty (30) days after receipt by the Company of written notice by the
Executive.
(iii) without the express written consent of the Executive, the Executive
is required to be based anywhere other than the Executive's office location
immediately preceding the Change in Control, except for required travel on
business to an extent substantially consistent with the business travel
obligations of the Executive immediately preceding the occurrence of the
Change in Control.
(iv) without the express written consent of the Executive, following the
Change in Control (a) failure by the Company to continue in effect any
material benefit or compensation plan, stock ownership plan, stock purchase
plan, stock option plan, life insurance plan, health and accident plan, or
disability plan in which the Executive is participating or entitled to
participate at the time of the Change in Control (or plans providing
substantially similar benefits); or (b) the taking of any action by the
Company that would (1) adversely affect the participation in or materially
reduce the benefits under any of such plans either in terms of the amount of
benefits provided or the level of the Executive's participation relative to
other participants; (2) deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Change in Control; or (3) cause a
failure to provide the number of paid vacation days to which the Executive was
then entitled in accordance with Agribrands' normal vacation policy in effect
immediately prior to the Change in Control, which in either situation (a) or
(b) is not remedied within thirty (30) days after receipt by the Company of
written notice by the Executive.
(v) the liquidation, dissolution, consolidation, or merger of the Company
or transfer of all or substantially all of its assets, unless a successor or
successors (by merger, consolidation, or otherwise) to which all or a
significant portion of its assets have been transferred expressly assumes in
writing all duties and obligations of the Company as here set forth.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to any circumstances set forth above.
l. "Normal Retirement Date" shall be the date on which the Executive
attains age 65.
m. "Parachute Payment" shall mean a parachute payment as defined and
determined pursuant to Section 280G of the Code and regulations applicable at
the time of the Executive's Qualifying Termination.
n. The "Payment Period" shall be the following period commencing with the
first day of the month following that in which a Qualifying Termination
occurs:
(i) if the Qualifying Termination is an Involuntary Termination that
occurs at any time during the ______________year following the Change in
Control -- _____ months;
(ii) if the Qualifying Termination is an Involuntary Termination that
occurs at any time during the ________ year following the Change in Control
--______ months; or
(iii) if the Qualifying Termination is a Voluntary Termination that occurs
at any time during the ___________ years following the Change in Control --
______months,
but in no event shall the Payment Period extend beyond the Executive's Normal
Retirement Date.
o. "Qualifying Termination" shall be the Executive's Voluntary Termination
or Involuntary Termination of employment with the Company except any
termination because of the Executive's death, retirement at or after the
Executive's Normal Retirement Date or Termination for Cause. "Qualifying
Termination" shall not include any change in the Executive's employment status
due to Disability.
p. "Stock" means the common stock of Agribrands or such other security
entitling the holder to vote at the election of Agribrands' directors or any
other security outstanding upon its reclassification, including, without
limitation, any stock split-up, stock dividend or other recapitalization of
Agribrands or any merger or consolidation of Agribrands with any of its
Affiliates.
q. "Termination for Cause" shall be a termination because of:
(i) the continued failure by the Executive to devote reasonable time and
effort to the performance of the Executive's duties (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness) after written demand therefor has been delivered to the Executive by
the Company that specifically identifies how the Executive has not devoted
reasonable time and effort to the performance of the Executive's duties; or
(ii) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise; or
(iii) the Executive's conviction of a felony or a crime involving moral
turpitude;
in any case as determined by the Board upon the good faith vote of not less
than a majority of the directors then in office, after reasonable notice to
the Executive specifying in writing the basis or bases for the proposed
Termination for Cause and after the Executive has been provided an opportunity
to be heard before a meeting of the Board held upon reasonable notice to all
directors; provided, however, that a Termination for Cause shall not include a
termination attributable to:
(i) bad judgment or negligence on the part of the Executive other than
habitual negligence; or
(ii) an act or omission believed by the Executive in good faith to have
been in or not opposed to the best interests of the Company and reasonably
believed by the Executive to be lawful; or
(iii) the good faith conduct of the Executive in connection with a Change
in Control (including the Executive's opposition to or support thereof).
r. "Voluntary Termination" shall be any termination of the Executive's
employment with the Company other than an Involuntary Termination or a
Termination for Cause.
2. Operation of Agreement. This Agreement shall not create any
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obligation on the part of the Company or the Executive to continue their
employment relationship. Anything in this Agreement to the contrary
notwithstanding, no payments shall be made hereunder unless and until there
has been a Change in Control of the Company. This Agreement is not exclusive
with regard to benefits to be provided to the Executive on the Executive's
termination of employment with the Company and shall not affect any other
agreement or arrangement providing for such benefits.
3. Severance Benefits. Provided that the Executive remains in the
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employ of the Company until a Change in Control has occurred, then upon the
Executive's Qualifying Termination within three years after that Change in
Control, the Executive shall be entitled to the following "Severance
Benefits":
a. Payment in a lump sum in cash, within 60 days after the Executive's
Qualifying Termination, of the present value as of the date of the Qualifying
Termination of an income stream equal to the Executive's Base Compensation
payable each month throughout the applicable Payment Period. For purposes of
this subparagraph, present value shall be calculated by application of the
Discount Rate;
b. Continuation during the Payment Period of the Executive's participation
in each savings, life, health, accident and disability plan in which the
Executive was entitled to participate immediately prior to the Change in
Control, upon the same terms and conditions, including those with respect to
spouses and dependents, applicable at such time; provided, however, that if
the terms of any such benefit plan do not permit continued participation by
the Executive, then the Company will arrange, at the Company's sole cost and
expense, to provide the Executive a benefit substantially similar to, and no
less favorable than, on an after-tax basis, the benefit the Executive was
entitled to receive under such plan immediately prior to the Change in
Control; provided further, however, that the benefit to be provided or
payments to be made hereunder may be reduced by the benefits provided or
payments made (in either case on an after-tax basis) by subsequent employer
for the same occurrence or event;
c. Payment, on a current basis, of any actual costs and expenses of
litigation incurred by the Executive, including costs of investigation and
reasonable attorney's fees, in the event the Executive is a party to any legal
action to enforce or to recover damages for breach of this Agreement, or to
recover or recoup from the Executive or the Executive's legal representative
or beneficiary any amounts paid under or pursuant to this Agreement,
regardless of the outcome of such litigation, plus interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
Notwithstanding anything to the contrary contained in this Agreement, the
Executive may, but is not required to, elect to reduce the Severance Benefits
to be provided under this paragraph three of this Agreement so that the
present value of such Severance Benefits, calculated by application of the
Discount Rate, if they constitute Parachute Payments, together with the
present value of all Parachute Payments made by Company to the Executive, are
less than three times the Employee's Base Amount. Whether or not such
Severance Payments shall be reduced and the identity of the Severance Benefits
to be reduced and the amount by which each benefit shall be reduced shall be
within the sole discretion of the Executive. Any such election, if made,
shall be made by the Executive's written notice to Company sent by regular
U.S. mail, postage paid, not later than 45 days following such Executive's
Qualifying Termination.
Notwithstanding anything to the contrary contained herein payments
hereunder will be reduced by the amount of any Employment Agreement
Termination Payments.
The Executive may file with the Secretary or any Assistant Secretary of
Agribrands a written designation of a beneficiary or contingent beneficiaries
to receive the payments described in subparagraph (a) and (b) above in the
event of the Executive's death following the Executive's Qualifying
Termination but prior to payment by the Company. The Executive may from time
to time revoke or change any such designation of beneficiary and any
designation of beneficiary pursuant to this Agreement shall be controlling
over any other disposition, testamentary or otherwise; provided, however, that
if the Company shall be in doubt as to the right of any such beneficiary to
receive such payments, it may determine to pay such amounts to the legal
representative of the Executive, in which case the Company shall not be under
any further liability to anyone. In the event that such designated
beneficiary or legal representative becomes a party to a legal action to
enforce or to recover damages for breach of this Agreement, or to recover or
recoup from the Executive or the Executive's estate, legal representative or
beneficiary any amounts paid under or pursuant to this Agreement, regardless
of the outcome of such litigation, the Company shall pay their actual costs
and expenses of such litigation, including costs of investigation and
reasonable attorneys' fees, plus interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code; provided, however, that the
Company shall not be required to pay such costs and expenses in connection
with litigation to determine the proper payee, among two or more claimants, of
the payments described in subparagraph (a) and (b).
4. Successors to Company: Binding Effect: Assignment. This Agreement
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shall inure to the benefit of and be binding upon the Company and its
successors. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. The Company may not assign this Agreement
other than to a successor to all or substantially all of the business and/or
assets of the Company. The Executive shall have no right to transfer or
assign the right to receive any severance benefit under this Agreement except
as noted in paragraph three above.
5. Missouri Law to Govern. This Agreement shall be governed by the
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laws of the State of Missouri without giving effect to the conflict of laws
provisions thereof:
6. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such modification, waiver or discharge is agreed
to in a writing signed by the Executive and a duly authorized officer of the
Company. No waiver by a party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
7. Taxes; Set-off. All payments to be made to the Executive
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under this Agreement will be subject to required withholding of federal, state
and local income and employment taxes. The right of the Executive to receive
benefits under this Agreement however, shall be absolute and shall not be
subject to any set-off, counter-claim, recoupment, defense, duty to mitigate
or other right the Company may have against the Executive's or anyone else.
8. Severability. The invalidity and unenforceability of any
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particular provision of this Agreement shall not affect any other provision of
this Agreement, and the Agreement shall be construed in all respects as if the
invalid or unenforceable provision were omitted.
IN WITNESS WHEREOF, the undersigned have executed this Agreement this ___
day of April, 1998.
AGRIBRANDS INTERNATIONAL, INC.
___________________________________ By:_________________________________
Executive X. X. Xxxxxxx
Chief Executive Officer
and President
