EXHIBIT 10.11
CHANGE OF CONTROL AGREEMENT
__________________________
__________________________
__________________________
Dear: ____________________
This Change of Control Agreement ("Agreement") is entered into effective
this _____ day of _______________, 2002 between you and Xxxx Food Company, Inc.
You are a key executive at Dole and an integral part of its management. We
recognize that the possibility of a change of control of Dole may result in the
departure or distraction of management to the detriment of Dole and its
stockholders. We wish to assure you of fair severance should your employment
terminate in specified circumstances following a change of control of Dole and
to assure you of certain other benefits upon a change of control. The
capitalized terms used in this Agreement either are defined in the Appendices at
the end of this Agreement or otherwise are defined in the body of this
Agreement. In consideration of your continued employment with Dole and other
good and valuable consideration, you and Xxxx agree as follows:
1. Benefits Following Change of Control and Termination of Employment:
(a) If, during the period beginning on the Change of Control Date and
ending on the second anniversary of the date on which the Change of Control
becomes effective (a "PROTECTED PERIOD"), your employment is terminated,
you (or your beneficiaries, if you are deceased at the time of payment)
will receive the amounts and benefits stated in Exhibit A attached at the
end of this letter agreement, unless your employment is (i) Terminated by
us for Cause or (ii) Terminated by you other than for Good Reason, in which
event, section 1(b) will control. A termination to which this section 1(a)
and Exhibit A applies is called a "QUALIFIED TERMINATION." For all purposes
of this Agreement, if a Fundamental Transaction or an Asset Sale becomes
effective or is consummated that constitutes a Change of Control, you shall
be deemed for all purposes of this Agreement to be employed by the
Corporation on the Change of Control Date if you were employed by the
Corporation on the later of (x) the date of the first public disclosure
that an agreement with respect to such Fundamental Transaction or Asset
Sale has been entered into or (y) the date that is 270 calendar days prior
to the date on which such Fundamental Transaction or Asset Sale becomes
effective or is consummated, and the Change of Control Date shall be deemed
to be such later date, if, after such later date and prior to the date on
which such Fundamental Transaction or Asset Sale becomes effective or is
consummated, your employment with Dole is either (1) Terminated by you on
account of an event or events that would constitute Good Reason if such
event or events occurred after a Change of Control Date, or (2) Terminated
by us other than on account of an event or events that would constitute
Cause if such event or events occurred after a Change of Control Date.
(b) If, during a Protected Period, your employment is (i) Terminated
by us for Cause or (ii) Terminated by you other than for Good Reason, this
Agreement will terminate and our only obligation to you under this
Agreement will be the timely payment of Accrued Obligations. If your
employment is terminated because of death, we will pay the Accrued
Obligations to your estate or beneficiary, as applicable, in a lump sum in
cash or equivalent within 30 days of the date on which we are first
informed of your death.
(c) Any amount payable under this Agreement that is not paid when due
will accrue interest at the prime rate as from time to time in effect at
Xxxxx Fargo Bank, N.A., or its successors or assigns, until paid in full.
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2. Termination: For all purposes of this Agreement, if your employment is
terminated during a Protected Period (a "Termination"), the Termination will
fall into one of four possible categories: (a) Termination by us for Cause; (b)
Termination by us other than for Cause; (c) Termination by you for Good Reason;
and (d) Termination by you other than for Good Reason. Any Termination by us for
Cause other than by your death, or Termination by you for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with section 15. This Agreement is intended by you and us only to
define the different ways in which your employment can terminate during a
Protected Period and the exclusive consequences of that termination in terms of
payments by us. Nothing in this Agreement shall (1) be construed as creating an
express or implied contract of employment, changing your status as an employee
at will, giving you any right to be retained in the employ of Dole, or giving
you the right to any particular level of compensation or benefits nor (2)
interfere in any way with the right of Dole to terminate your employment at any
time with or without Cause, subject in either case to any express payment
obligations of Dole under Section 1 and Exhibit A in the case of a Termination.
3. No Mitigation of Damages; Withholding.
(a) Your rights under this Agreement will be considered severance pay
in consideration of your past service and your continued service from the
date of this Agreement. You will not have any duty to mitigate your damages
or reduce our payments to you under this Agreement by seeking future
employment. The amounts payable to you under this Agreement will not be
reduced or subject to repayment to us as a result of any compensation you
may receive from future employment.
(b) All payments required to be made by us to you under this Agreement
will be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as we may reasonably determine we should
withhold pursuant to law or regulation.
(c) Except as set forth in Exhibit A, our obligation to make the
payments provided for in this Agreement and otherwise to perform our
obligations under this Agreement will not be subject to any set-off,
counterclaim, recoupment, defense or other claim, right or action that we
may have against you.
4. RELEASE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, OUR
OBLIGATION TO MAKE ANY PAYMENT PROVIDED FOR IN THIS AGREEMENT UPON OR AFTER A
TERMINATION OF SERVICE IS EXPRESSLY MADE SUBJECT TO AND CONDITIONED UPON (A)
YOUR PRIOR EXECUTION OF A RELEASE SUBSTANTIALLY IN THE FORM OF EXHIBIT C,
ATTACHED AT THE END OF THIS AGREEMENT, WITHIN 90 DAYS AFTER THE DATE OF
TERMINATION AND (B) YOUR NON-REVOCATION OF SUCH RELEASE IN ACCORDANCE WITH ITS
TERMS. PENDING THE DELIVERY OF THE RELEASE AND EXPIRATION OF ANY AND ALL
APPLICABLE STATUTORY WAITING PERIODS, NO SUCH PAYMENT WILL BE DUE HEREUNDER.
5. Indemnification: In any circumstance where, under our certificate of
incorporation orby-laws, we have the power to indemnify or advance expenses to
you in respect of any judgments, fines, settlements, losses, costs or expenses
(including attorneys' fees) of any nature relating to or arising out of your
activities as an agent, employee, officer or director of Dole or in any other
capacity on behalf of or at the request of Dole, we agree that, if you have
undergone a Qualified Termination, we will promptly, on written request,
indemnify and advance expenses to you to the fullest extent permitted by
applicable law, including but not limited to making such findings and
determinations and taking any and all such actions as we may, under applicable
law, be permitted to have the discretion to take so as to effectuate such
indemnification or advancement. Such agreement by Dole will not be deemed to
impair any other obligation of Dole respecting indemnification of you otherwise
arising out of this or any other agreement or promise of Dole or under our
certificate of incorporation or by-laws.
6. Binding Agreement. This Agreement will be binding upon and inure to the
benefit of you and Dole and will be enforceable by your personal or legal
representatives or successors. If you die during a
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Protected Period while any amounts would still be payable to you under this
Agreement at the time of your death, then such amounts will be paid to your
estate, or such rights will remain exercisable by your estate, respectively, in
accordance with the terms of this Agreement. This Agreement will not otherwise
be assignable by you.
7. Successors. This Agreement will inure to and be binding upon Xxxx'x
successors, including, without limitation, any successor to all or substantially
all of Xxxx'x business and/or assets. Dole will require any such successor to
all or substantially all of the business and/or assets of Dole by sale,
transfer, merger (where Dole is not the surviving corporation), consolidation,
recapitalization, reorganization, lease, distribution, spin-off or otherwise, to
expressly assume in writing this Agreement, unless it is assumed by operation of
law. This Agreement will not otherwise be assignable by Dole.
8. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, will be submitted to final and binding
arbitration, to be held in Los Angeles County, California, before a single
arbitrator, in accordance with California Civil Procedure Code Sections 1280 et
seq. The arbitrator will be selected by mutual agreement of you and us or, if
you and we cannot agree, then by striking from a list of arbitrators supplied by
the American Arbitration Association. The arbitrator will issue a written
opinion revealing, however briefly, the essential findings and conclusions upon
which the arbitrator's award is based. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. We will pay the
arbitrator's fees and arbitration expenses and any other costs associated with
the arbitration hearing. You and we will each bear our respective deposition,
witness, expert and attorneys' fees and other expenses as and to the same extent
as if the matter were being heard in court. If, however, any party prevails on a
statutory claim that affords the prevailing party attorneys' fees and costs, or
if there is a written agreement providing for fees and costs, then the
arbitrator will award reasonable fees to the prevailing party in accordance with
the statute or the written agreement, as appropriate. Any dispute as to the
reasonableness of any fee or cost will be resolved by the arbitrator. Nothing in
this section 8 will affect your or our ability to seek from a court injunctive
or equitable relief.
9. Confidentiality. Except as may be necessary to enter or execute judgment
upon an arbitration award or to the extent required by applicable law, all
claims, defenses and proceedings (including, without limitation, the existence
of a controversy, the fact that there is an arbitration proceeding and the
content of the pleadings, papers, orders, hearings, trials or awards in the
arbitration) will be treated in a confidential manner by the arbitrator, the
parties and their counsel, each of their agents and employees and all others
acting on behalf of or in concert with them. Any controversy relating to the
arbitration, including, without limitation, any action to prevent or compel
arbitration or to confirm, correct, vacate or otherwise enforce an arbitration
award, will be filed under seal with the court, to the extent permitted by law.
10. Restraint on Alienation. None of your benefits, payments, proceeds or
claims under this Agreement will be subject to any claim of any creditor and, in
particular, the same will not be subject to attachment or garnishment or other
legal process by any creditor, nor will you have any right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
of proceeds that you may expect to receive, contingently or otherwise, under
this Agreement. Notwithstanding the preceding sentence, benefits that are in pay
status may be subject to a garnishment or wage assignment or authorized or
mandatory deductions made pursuant to a court order, a tax levy or applicable
law or your elections.
11. TERMINATION PRIOR TO CHANGE OF CONTROL DATE. NOTWITHSTANDING SECTION
14, BUT SUBJECT TO THE LAST SENTENCE OF SECTION 1(A), IF, PRIOR TO THE FIRST
CHANGE OF CONTROL DATE, YOUR EMPLOYMENT WITH DOLE TERMINATES, THEN ALL OF YOUR
RIGHTS UNDER THIS AGREEMENT TERMINATE, AND THIS AGREEMENT WILL BE DEEMED TO HAVE
BEEN TERMINATED ON THE DATE OF YOUR TERMINATION.
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12. Strict Compliance; Severability; Integration. Your or our failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right you or Dole may have hereunder, including, without
limitation, your right to terminate for Good Reason or our right to terminate
for Cause, will not be deemed to be a waiver of such provision or right with
respect to any subsequent lack of compliance, or of any other provision of or
right under this Agreement. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforceability of any other
provision of this Agreement. This Agreement contains the entire agreement
between you and Dole with respect to the subject matter hereof and supersedes,
with respect to the subject matter hereof, all prior or contemporaneous
agreements, understandings and negotiations, whether oral or written, between
you and Dole, including without limitation any employment agreement, change of
control agreement, offer letter or other agreement, if any; and any such
employment agreement, change of control agreement, offer letter or other
agreement, if any, shall be null and void to the extent it provides for any
payment or benefit to you contingent upon the occurrence (alone or with other
events) of a Change of Control or an event that is otherwise deemed to be
comprehended by the term "change of control." You and Dole acknowledge and agree
that no representations, inducements, promises or agreements, orally or
otherwise, have been made by you or Dole regarding the subject matter hereof
that are not contained in this Agreement, and that no other agreement, statement
or promise not contained herein shall be valid or binding with respect to the
subject matter hereof.
13. Choice of Law: This Agreement is made in, and will be governed by, the
laws of the State of California, without regard to the choice of laws or
conflict of laws principles or rules of the State of California or of any other
jurisdiction.
14. Modification or Termination of this Agreement: After the first Change
of Control Date, this Agreement may only be modified or terminated by a writing
signed by both you and us. Before the first Change of Control Date, we may
unilaterally modify or terminate this Agreement, but such unilateral
modification or termination will not be effective until the second anniversary
of the date on which we first give you express written notice of the unilateral
modification or termination (the "MODIFICATION EFFECTIVE Date"); provided,
however, that the unilateral modification or termination shall never become
effective if (1) a Change of Control Date occurs before the Modification
Effective Date and (2) your employment is terminated during the Protected Period
in respect of such Change of Control Date. Nothing in this section 14 shall in
any way eliminate, diminish or restrict the effect of section 11. This Agreement
shall continue in full force and effect until it is terminated in accordance
with the terms of this Agreement.
15. Notices. All notices and other communications under this Agreement must
be in writing and must be given by hand delivery to the other party, by
reputable overnight courier or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to you:
If to Dole:
Xxxx Food Company, Inc.
Xxx Xxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
or to such other address as either party will have furnished to the other in
writing in accordance herewith. Notice and communications will be effective when
actually received by the addressee.
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Please indicate your acceptance of and agreement to the terms of this
Change of Control Agreement by signing and dating below, where indicated, and
returning a signed copy to us.
Sincerely,
XXXX FOOD COMPANY, INC.
By:
---------------------------------
Title:
------------------------------
Agreed and Accepted:
-------------------------------------
Date:
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APPENDIX 1
DEFINITIONS
"ACCRUED OBLIGATIONS" shall mean the sum of (1) your annual base salary
through the date of Termination to the extent not theretofore paid and (2) any
compensation previously deferred by you (together with any accrued interest or
earnings thereon) pursuant to outstanding elections and/or any accrued vacation
pay or paid time off, in each case to the extent not theretofore paid; provided,
that if your employment is Terminated by us for Cause, other than your death,
the date of Termination, for purposes of this definition of Accrued Obligations,
shall be deemed to be the date on which Notice of Termination was given.
"AFFILIATE" shall have the meaning ascribed in Rule 12b-2 promulgated under
the Exchange Act.
"ASSOCIATE" shall have the meaning ascribed in Rule 12b-2 promulgated under
the Exchange Act.
"CHANGE OF CONTROL" shall have the meaning set forth in Appendix 2.
"CHANGE OF CONTROL DATE" shall mean the first date after the date of this
Agreement on which a Change of Control occurs, except as set forth in the last
sentence of Section 1(a).
"XXXXX X. XXXXXXX" shall mean Xxxxx X. Xxxxxxx, a California resident, who,
on the date of this Agreement, is the Chairman and Chief Executive Officer of
Dole.
"DISABILITY" shall mean your absence from, or inability to perform duties
for, Dole on a full-time basis for 90 consecutive business days or 120 business
days in any period of 180 business days as a result of mental or physical
illness or injury that is total and permanent, as determined by a physician
selected by us or our insurers and acceptable to you or your legal
representative (such agreement as to acceptability not to be withheld
unreasonably) and that is not susceptible to reasonable accommodation.
"NOTICE OF TERMINATION" shall mean a written notice which (1) indicates the
specific termination provision in this Agreement relied upon, and (2) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.
"TERMINATION BY US FOR CAUSE," "TERMINATED BY US FOR CAUSE" and "CAUSE"
shall mean Xxxx'x termination of your employment with Dole (during a Protected
Period) pursuant (except under clause (e), below, in which case Dole need not
send a Notice of Termination) to a Notice of Termination given within 120 days
following our becoming aware of the occurrence of any one or more of the
following to the extent (in the case of clause (b) or (c) if remediable) not
remedied in a reasonable period of time after receipt by you of written notice
from us specifying such occurrence (any termination of your employment by Dole
that is not a Termination by us for Cause will be deemed to be a "TERMINATION BY
US OTHER THAN FOR CAUSE"):
(a) You are convicted of, or plead guilty or nolo contendere to, a
felony;
(b) You commit an act of gross misconduct in connection with the
performance of your duties;
(c) You demonstrate habitual negligence in the performance of your
duties;
(d) You commit an act of fraud, misappropriation of funds or
embezzlement in connection with your employment by Dole;
(e) Your death; or
(f) Your Disability.
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Notwithstanding the foregoing, you shall not be deemed to have been
Terminated by us for Cause under clauses (b)--(d) or (f) until the later to
occur of (i) the 30th day after Notice of Termination is given and (ii) the
delivery to you of a certified copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the total number of our
directors at a meeting duly called and held (after reasonable notice to you),
and at which you, together with your counsel, were given an opportunity to be
heard, finding that one or more of the events described in clauses (b)--(d) or
(f) above occurred, and specifying the particulars thereof in detail; provided,
however, we may suspend you and withhold payment of your base salary, other
compensation and benefits from the date that Notice of Termination is given
until the earliest to occur of (i) Termination by us for Cause effected in
accordance with the foregoing procedures (in which case you shall not be
entitled to your base salary, other compensation or benefits for such period),
(ii) a determination by a majority of our directors that none of the events
described in clauses (b)--(d) or (f) above occurred (in which case you shall be
reinstated and paid any of your previously unpaid base salary, other
compensation and benefits for such period), or (iii) the 90th day after Notice
of Termination is given (in which case you shall be reinstated and paid any of
your previously unpaid base salary, other compensation and benefits for such
period).
"TERMINATION BY YOU FOR GOOD REASON" "TERMINATED BY YOU FOR GOOD REASON"
and "GOOD REASON" means your resignation of employment with Xxxx (during the
Protected Period) within 120 days following the occurrence of one or more of the
following to the extent not remedied in a reasonable period of time after
receipt by Dole of written notice from you specifying such occurrence, without
your express written consent (any termination of your employment by you that is
not a Termination by you with Good Reason will be deemed to be a "TERMINATION BY
YOU OTHER THAN FOR GOOD REASON"):
(a) Whether direct or indirect, a significant diminution of your
authority, duties, responsibilities or status inconsistent with and below
those held, exercised and assigned in the ordinary course during the 90 day
period immediately preceding the Change of Control Date, excluding any such
significant diminution that (i) begins prior, and ends on or prior, to the
date on which a Fundamental Transaction or Asset Sale becomes effective or
is consummated that constitutes a Change of Control, and (ii) results from
the affirmative and negative pre-closing operating covenants applicable to
Dole contained in the definitive transaction agreements providing for such
Fundamental Transaction or Asset Sale.
(b) The assignment to you of duties that are inconsistent (in any
significant respect) with, or that impair (in any significant respect) your
ability to perform, the duties customarily assigned to an executive holding
the position you held immediately prior to the Change of Control Date in a
corporation of the size and nature of Dole, or, if you were employed prior
to termination by a Subsidiary or business unit of the Corporation, in a
subsidiary or business unit of the size and nature of the Subsidiary or
business unit of the Corporation in which you were employed;
(c) Relocation of your primary office more than 35 miles from your
current office on the Change of Control Date;
(d) Any material breach by us of this Agreement or any other agreement
with you;
(e) The failure of a successor to Dole (in any transaction that
constitutes a Change of Control), to assume in writing our obligations to
you under this Agreement or any other agreement with you, if the same is
not assumed by such successor by operation of law;
(f) Any reduction in your base salary below your base salary in effect
on the Change of Control Date (or if your base salary was reduced within
180 days before the Change of Control Date, the base salary in effect
immediately prior to such reduction); or
(g) Any non de minimis reduction in your aggregate benefits and other
compensation ("BENEFITS"), provided that a reduction in the aggregate of
not more than 5% in aggregate Benefits in connection with across-the-board
reductions or modifications affecting similarly situated persons of
comparable rank in Dole or a combined organization shall not constitute
Good Reason.
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APPENDIX 2
ADDITIONAL DEFINITIONS
"CHANGE OF CONTROL" shall be deemed to occur if and as of the first day
that any one or more of the following conditions are satisfied, whether
accomplished directly or indirectly, or in one or a series of related
transactions:
(1) any "PERSON" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")),
other than (a) Xxxxx X. Xxxxxxx or (b) following the death of Xxxxx X.
Xxxxxxx, the trustee or trustees of a trust created by Xxxxx X. Xxxxxxx,
becomes the "BENEFICIAL OWNER" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities;
(2) individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (the "INCUMBENT BOARD") cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual who becomes a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's stockholders, was
approved by a vote of at least two-thirds of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, unless the individual's initial assumption
of office occurs as a result of either an actual or threatened election
contest or other actual or threatened tender offer, solicitation of proxies
or consents by or on behalf of a Person other than the Board;
(3) a reorganization, merger, consolidation, recapitalization, tender
offer, exchange offer or other extraordinary transaction involving Dole (a
"FUNDAMENTAL TRANSACTION") becomes effective or is consummated, unless: (a)
more than 50% of the outstanding voting securities of the surviving or
resulting entity (including, without limitation, an entity ("PARENT") which
as a result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly or through
one or more subsidiaries) ("RESULTING ENTITY") are, or are to be,
Beneficially Owned, directly or indirectly, by all or substantially all of
the Persons who were the Beneficial Owners of the outstanding voting
securities of the Corporation immediately prior to such Fundamental
Transaction (excluding, for such purposes, any Person who is or, within two
years prior to the consummation date of such Fundamental Transaction, was,
an Affiliate or Associate (other than an Affiliate of Xxxx Food Company,
Inc. immediately prior to such consummation date) (as each of Affiliate and
Associate are defined in Rule 12b-2 promulgated under the Exchange Act) of
a party to the Fundamental Transaction) in substantially the same
proportions as their Beneficial Ownership, immediately prior to such
Fundamental Transaction, of the outstanding voting securities of the
Corporation and (b) more than half of the members of the board of directors
or similar body of the Resulting Entity (or its parent) were members of the
Incumbent Board at the time of the execution of the initial agreement
providing for such Fundamental Transaction.
(4) A sale, transfer or any other disposition (including, without
limitation, by way of spin-off, distribution, complete liquidation or
dissolution) of all or substantially all of the Corporation's business
and/or assets (an "ASSET Sale") is consummated, unless, immediately
following such consummation, all of the requirements of clauses (3)(a) and
(3)(b) of this definition of Change of Control are satisfied, both with
respect to the Corporation and with respect to the entity to which such
business and/or assets have been sold, transferred or otherwise disposed of
or its parent (a "TRANSFEREE Entity").
The consummation or effectiveness of a Fundamental Transaction or an Asset
Sale shall be deemed not to constitute a Change of Control if more than 50% of
the outstanding voting securities of
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the Resulting Entity or the Transferee Entity, as appropriate, are, or are to
be, Beneficially Owned by Xxxxx X. Xxxxxxx.
"CORPORATION" shall mean Xxxx Food Company, Inc., a Delaware corporation,
and its successors. For purposes of this definition of Corporation, after the
consummation of a Fundamental Transaction or an Asset Sale, the term "successor"
shall include, without limitation, the Resulting Entity or Transferee Entity,
respectively.
"DOLE" shall mean the Corporation and/or its Subsidiaries.
"SUBSIDIARY" shall mean any corporation or other entity a majority or more
of the outstanding voting stock or voting power of which is beneficially owned
directly or indirectly by the Corporation.
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EXHIBIT A
AMOUNT OF SEVERANCE PAY AND BENEFITS FOLLOWING QUALIFIED TERMINATION
If a Qualified Termination occurs, Dole will pay you (except as provided
below) the following, no later than 90 calendar days after the date of
Termination (or 90 days after the Change of Control becomes effective or is
consummated, if you have a Qualified Termination pursuant to the last sentence
of Section 1(a) of the Agreement):
(a) An amount in cash equal to THREE times your annual base salary as
of the date of Termination (or if your annual base salary was reduced
within 180 days before the Change of Control Date, the annual base salary
in effect immediately prior to such reduction);
(b) An amount in cash equal to THREE times your target bonus as of the
date of Termination (or if your target bonus was reduced within 180 days
before the Change of Control Date, the target bonus in effect immediately
prior to such reduction);
(c) An amount in cash equal to THREE times $10,000, in lieu of any
other health and welfare benefits (including medical, life, disability,
accident and other insurance, car allowance or other health and welfare
plans, programs, policies or practices or understandings) and other taxable
perquisites and fringe benefits to which you or your family may have been
entitled.
(d) An amount in cash equal to the pro rata portion of the greater of
(i) your target benefits under our Long Term Incentive Plan (the "LTIP")
and (ii) your actual benefits under the LTIP;
(e) If, at the time of your Qualified Termination, you would have been
eligible for a benefit under either (i) the Xxxx Food Company Supplementary
Executive Retirement Plan Effective January 1, 1989, as amended and
restated through the date of this Change of Control Agreement ("SERP") or
(ii) a Defined Benefit Plan (as defined in the SERP) were it not for the
requirement of at least five (5) years of service with Xxxx, an amount in
cash will be payable to you equal to the actuarial equivalent of such
retirement benefit. If for any reason, a benefit is payable under the
Defined Benefit Plan, the payments made to you under this clause shall be
reduced by the actuarial equivalent of such benefits payable under the
Defined Benefit Plan.(intentionally left blank
(f) An amount in cash equal to the aggregate amount of the Accrued
Obligations;
(g) An amount in cash equal to the pro rata portion of your target
bonus for the fiscal year in which the date of Termination occurs; and
(h) An amount in cash equal to any reimbursement for outstanding
reimbursable expenses.
"PRO RATA PORTION" in clauses (d) and (g), above, means pro rata with
respect to the portion of the relevant time period that has elapsed prior to the
date of Termination.
If a Qualified Termination occurs pursuant to the last sentence of Section
1(a) of the Agreement, then, notwithstanding anything to the contrary provided
in any plans or agreements of Xxxx pursuant to which you were granted options to
purchase shares of Xxxx'x common stock, any period of time set forth in such
plans or agreements in which you must exercise your options shall not begin to
run until the earlier to occur of (x) the consummation or effectiveness of the
Fundamental Transaction or the Asset Sale and (y) 270 days after the date of
Termination.
Notwithstanding anything to the contrary provided in any plans or
agreements of Xxxx pursuant to which you were granted options to purchase shares
of Xxxx'x common stock, all of your unvested options granted pursuant to such
plans or agreements (whenever granted) shall be deemed to vest immediately prior
to the first time that one or both of the following conditions are satisfied:
(i) a Change of Control occurs; or (ii) the shares of common stock of the
Corporation are not listed on
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either the New York Stock Exchange or the National Market System of the Nasdaq
Stock Market (or any successor to such entities), and neither the Board of
Directors of Xxxx nor any committee thereof nor any other Person shall have any
discretion, right or power whatsoever to block, delay or impose any condition
upon such vesting. For the avoidance of doubt and not by way of limitation of
the foregoing, if a Qualified Termination occurs pursuant to the last sentence
of Section 1(a) of this Agreement, all of your unvested options shall vest
hereunder immediately prior to the effectiveness or consummation of the
Fundamental Transaction or the Asset Sale but not at any earlier time.
We will furnish you for six years following your Qualified Termination with
Directors and Officers Insurance, or other liability insurance as is reasonable
and customary, insuring you against all insurable events arising from or
relating to alleged acts or omissions pertaining in any way to your activities
as an agent, employee, officer or director of Xxxx or in any other capacity on
behalf of or at the request of Xxxx, such insurance to have policy limits
aggregating not less than $40 million and otherwise to be in substantially the
same form and to contain substantially the same terms, conditions and exceptions
as the liability insurance policies provided for Directors and Officers of Xxxx
in force from time to time, provided that such terms, conditions and exceptions
will not be, in the aggregate, materially less favorable to you than those in
effect on the date of this Agreement and provided that such insurance can be
obtained on commercially reasonable terms.
YOUR SEVERANCE PAY AND BENEFITS LISTED ABOVE AND/OR THOSE PROVIDED TO YOU
UNDER OTHER AGREEMENTS, PLANS OR ARRANGEMENTS WITH XXXX, ARE SUBJECT TO
ADJUSTMENT AS PROVIDED IN EXHIBIT B. The adjustments are related to special
taxes that may be imposed on you and/or us if the severance amounts and benefits
you receive constitute so-called "excess parachute payments" under the tax laws.
These tax laws and the IRS rules and regulations that implement the laws are
highly complex, so we will not attempt to summarize them for you.
In the event that you have an employment contract or any other agreement
with Xxxx or participate in any other plan or program that entitles you to
severance payments upon the termination of your employment with Xxxx, the amount
of any such severance payments will be deducted from the payments to be made to
you under this Agreement. All benefits under this Agreement also will be reduced
by the amount paid to you under any United States, foreign or state statute,
law, rule or regulation that requires a formal notice period, pay in lieu of
notice (including but not limited to WARN Act payments), termination, indemnity,
severance payments or similar payments or entitlements related to service, other
than unemployment or social security benefits provided in the United States.
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EXHIBIT B
ADJUSTMENT TO SEVERANCE PAY AND BENEFITS
ADDITIONAL PAYMENTS BY XXXX
1. Gross-Up Payment. Anything in this Agreement to the contrary
notwithstanding, if it is determined that any payment or distribution by Xxxx to
you or for your benefit (whether paid or payable or distributed or distributable
under this Agreement or otherwise (including, without limitation, the
acceleration of vesting of stock options), but determined without regard to any
additional payments required under this Exhibit B) (a "PAYMENT") would be
subject to the excise tax imposed by Section 4999 of the United States Internal
Revenue Code or any interest or penalties are incurred by you with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are collectively the "EXCISE TAX"), then you will be entitled to receive from
Xxxx an additional payment (a "GROSS-UP PAYMENT"). The Gross-Up Payment will
equal an amount such that after payment by you of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, you retain an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
2. Determination of Amount. Subject to the provisions of paragraph 3,
below, all determinations required to be made under this Exhibit B, including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be used in arriving at such determinations, will
be made, at our option, by Xxxx'x independent auditors or a nationally
recognized executive compensation consulting firm (the "ACCOUNTING FIRM"), which
will provide detailed supporting calculations both to Xxxx and you within 15
business days after the receipt of notice from you that there has been a
Payment, or such earlier time as is requested by Xxxx. If the Accounting Firm is
serving as accountant or auditor for the Person effecting the Change of Control,
Xxxx will appoint another nationally recognized accounting firm to make these
required determinations (which accounting firm will then be referred to as the
Accounting Firm). All fees and expenses of the Accounting Firm will be borne
solely by Xxxx. Any Xxxxx-Up Payment, as determined under this Exhibit B, will
be paid by Xxxx to you within five days after our receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by you, it will furnish you with a written opinion that failure to
report the Excise Tax on your applicable federal income tax return would not
result in the imposition of a negligence or other penalty. Any determination by
the Accounting Firm will be binding upon Xxxx and you. As a result of the
uncertainty in the application of Section 4999 of the United States Internal
Revenue Code at the time of the initial determination by the Accounting Firm, it
is possible that Gross-Up Payments which will not have been made by Xxxx should
have been made ("Underpayment"), consistent with the calculations required to be
made under this Exhibit B. In the event that Xxxx exhausts its remedies under
paragraph 3, below, and you thereafter are required to make a payment of any
Excise Tax, the Accounting Firm will determine the amount of the Underpayment
that has occurred and any such Underpayment will be promptly paid by Xxxx to you
or for your benefit.
3. Claim Process. You will notify Xxxx in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by Xxxx
of the Gross-Up Payment. The notification will be given as soon as practicable
but no later than 10 business days after you are informed in writing of such
claim and will apprise Xxxx of the nature of the IRS's claim and the date on
which such claim is requested to be paid. You will not pay such claim prior to
the 31st day after the date on which you give such notice to Xxxx (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If Xxxx notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you will:
- give Xxxx any information reasonably requested by Xxxx relating to
such claim;
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- take such action in connection with contesting such claim as Xxxx will
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by Xxxx;
- cooperate with Xxxx in good faith in order effectively to contest such
claim; and
- permit Xxxx to participate in any proceedings relating to such claim;
provided, however, that Xxxx will bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and will indemnify and hold you harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Xxxx will control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct you to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner, and you
agree to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as Xxxx will determine; provided, however, that if we direct you to pay
such claim and xxx for a refund, Xxxx will advance the amount of such payment to
you, on an interest-free basis and will indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for your taxable year with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, Xxxx'x control
of the contest will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and you will be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
4. Refunds. If, after the receipt by you of an amount advanced by Xxxx
under paragraph 3, above, you become entitled to receive any refund with respect
to such claim, you will (subject to Xxxx'x complying with the requirements of
paragraph 3) promptly pay to Xxxx the amount of such refund together with any
interest paid or credited thereon after taxes applicable thereto. If, after the
receipt by you of an amount advanced by Xxxx under paragraph 3, above, a
determination is made that you will not be entitled to any refund with respect
to such claim and Xxxx does not notify you in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
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EXHIBIT C
FORM OF GENERAL RELEASE AGREEMENT
THIS GENERAL RELEASE AGREEMENT (this "AGREEMENT"), by and between
__________ (the "EXECUTIVE") and Xxxx Food Company, Inc., and its subsidiary and
affiliate corporations (collectively, the "COMPANY"), with reference to the
following facts:
1. Date of Termination. Executive's employment with the Company will be
terminated effective _______________, _____ ("DATE OF TERMINATION").
2. Payment Contingent upon Release. Executive understands that Company's
obligation to make the payments provided for in the Change of Control Agreement
dated as of _______________, _____ (the "CHANGE OF CONTROL AGREEMENT") between
Executive and the Company, is conditioned upon Executive's execution of this
release within 90 days after the date of Termination and non-revocation of this
release in accordance with the terms hereof.
3. Payment Amount. Executive further understands that by signing this
Agreement, Company shall pay Executive a lump sum payment of _______________,
less payroll and other deductions required by law and authorized by the terms of
the Change of Control Agreement.
4. Return of Company Property. Executive shall immediately return to the
Company all property of the Company, including computer and other electronic
equipment, computer passwords, telephones, pagers, etc., in his possession or
control.
5. Satisfaction and Release of All Obligations Owed. Except for those
obligations created by this Agreement, and except as provided below, Executive
understands and agrees that, by signing this Agreement, Executive acknowledges
full and complete satisfaction of and is releasing and discharging and promising
not to xxx the Company, its divisions, subsidiaries, affiliates, past and
present and each of them as well as its and their directors, officers,
stockholders, representatives, assignees, successors, agents and Executives,
past and present, and each of them (individually and collectively, "RELEASEES"),
from and with respect to any and all claims, wages, stock, vacation pay, paid
time off, bonuses, employee benefits, separation pay, or any other compensation,
employment perquisites or benefits, demands, rights, liens, agreements, suits,
obligations, debts, costs, expenses, attorneys' fees, damages, judgments, orders
and liabilities of any kind, known or unknown, suspected or unsuspected, and
whether or not concealed or hidden, arising out of or in any way connected with
Executive's employment with, or the termination of Executive's employment with,
the Company, including but in no way limited to any act or omission committed or
omitted prior to the date of execution of this Agreement. This includes but is
in no way limited to any claim under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), the
Executive Retirement Income Security Act of 1974 (except for vested benefits, if
any), the Americans with Disabilities Act, California Fair Employment and
Housing Act, or any other foreign law, federal, state or local law, regulation,
constitution or ordinance. Nothing in this release shall affect Executive's
ability to pursue COBRA rights, and Company acknowledges the Executive will
pursue his election to convert coverages as permitted under COBRA. Further,
nothing in this Release shall affect Executive's rights under any qualified
retirement plans, supplemental retirement plans, deferred compensation plans or
stock option plans of the Company, and Executives rights under such plans shall
be governed by the terms of such plans.
6. Release of Liability Related to Termination. Except for those
obligations created by this Agreement, and except as provided below, the Company
hereby acknowledges full and complete satisfaction of and releases and
discharges and covenants not to xxx Executive from and with respect to any and
all claims, demands, rights, liens, agreements, suits, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders and liabilities of
any kind, known or unknown, suspected or unsuspected, and whether or not
concealed or hidden, arising out of or in any way connected with
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Executive's employment with, or the termination of Executive's employment with,
the Company, including but in no way limited to any act or omission committed or
omitted prior to the date of execution of this Agreement, provided however, that
this general release of Executive shall not extend to any claims against
Executive which arise out of facts which are finally adjudged by a court of
competent jurisdiction to be a willful breach of fiduciary duty or a crime under
any federal, state, or local statute, law, ordinance or regulation. At this
time, no such claim exists to the Company's knowledge.
7. Covenants. The parties covenant and affirm that neither of them has
caused or permitted to be filed any claim, charge, suit, complaint, action,
cause of action, or proceeding of any kind in any forum against the Releases or
the Executive. The parties further covenant and affirm that they have not made
any assignment and will make no assignment of any claims, demands or causes of
action released herein and will not file, refile, initiate, or cause to be
filed, refilled or initiated any claim, charge, suit, complaint, action or cause
of action based upon, arising out of, or relating to any claim, demand, or cause
of action released herein, nor shall the parties participate, assist or
cooperate in any claim, charge, suit, complaint, action or proceeding regarding
the Releasees or the Executive, whether before a court, administrative agency,
arbitrator or other tribunal, unless required to do so by law.
8. Waiver of Section 1542. Except as provided in this Agreement, it is both
parties' intention in signing this Agreement that it should be effective as a
bar to each and every claim, demand and cause of action stated above. In
furtherance of this intention, each party hereby expressly waives any and all
rights and benefits conferred upon it by the provisions of Section 1542 of the
California Civil Code or any similar law in any other jurisdiction. Section 1542
provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
9. Waiver of ADEA Rights. Executive understands and agrees that, by signing
this Agreement, Executive is waiving any and all rights or claims that Executive
may have arising under the ADEA, which have arisen on or before the date of
execution of this Agreement. Executive further understands and agrees that (i)
in return for this Agreement, Executive will receive compensation beyond that
which Executive was already entitled to receive before entering into this
Agreement, (ii) Executive is hereby advised in writing by this Agreement to
consult with an attorney before signing this Agreement, (iii) Executive has been
provided a full and ample opportunity to study this Agreement, including a
period of at least twenty-one (21) days, within which to consider it, (iv) to
the extent that Executive takes less than twenty-one (21) days within which to
consider this Agreement prior to execution, Executive acknowledges that he has
had sufficient time to consider this Agreement with his counsel and that he
expressly, voluntarily and knowingly waives any additional time; and (v)
Executive was informed that Executive has seven (7) days following the date of
signing of this Agreement in which to revoke this Agreement by delivering a
written, signed revocation to Vice-President--Human Resources, Xxxx Food
Company, Inc., Xxx Xxxx Xxxxx, Xxxxxxxx Xxxxxxx, XX 00000, before the expiration
of seven (7) days.
10. Confidential Information; No Solicitation. Executive acknowledges that
during Executive's employment with the Company, Executive has had access to
confidential and proprietary business information that is the property of the
Company, the disclosure or utilization of which would cause substantive and
irreparable harm, loss of goodwill and injury to the Company. Executive
acknowledges that Executive has returned to the Company all such confidential
and proprietary business information in Executive's possession, custody or
control, as well as all files, memoranda, records, documents, computer records,
copies of the foregoing, and other such information related to the Company in
Executive's possession, custody or control. Executive further agrees not to
disclose or utilize any such confidential or proprietary business information in
the future.
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11. Waiver of Claims for Damages. Each party agrees that by this Agreement
it waives any claim for damages incurred at any time after the date of this
Agreement because of alleged continuing effects of any alleged wrongful or
discriminatory acts or omissions involving any Releasee, or the Executive, as
applicable, which occurred on or before the execution of this Agreement and any
right to xxx for injunctive relief against the alleged acts or omissions
occurring prior to the date of this Agreement.
12. Severability. The parties understand and agree that if any provision of
this Agreement shall, for any reason, be adjudged by any court of competent
jurisdiction to be invalid or unenforceable, such judgment shall not affect,
impair, or invalidate the remainder of this Agreement, but shall be confined in
this operation to the provision of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
13. Arbitration of Disputes.
(a) Any controversy or claim arising out of or relating to this
Agreement, its enforcement, arbitrability or interpretation, or because of
an alleged breach, default, or misrepresentation in connection with any of
its provisions, or arising out of or relating in any way to the Executive's
employment or termination of the same, including, without limiting the
generality of the foregoing, any alleged violation of statute, common law
or public policy, shall be submitted to final and binding arbitration, to
be held in Los Angeles County, California, before a single arbitrator, in
accordance with California Civil Procedure Code Sections 1280 et seq. The
arbitrator shall be selected by mutual agreement of the parties or, if the
parties cannot agree, then by striking from a list of arbitrators supplied
by the American Arbitration Association. The arbitrator shall issue a
written opinion revealing, however briefly, the essential findings and
conclusions upon which the arbitrator's award is based. The Company will
pay the arbitrator's fees and arbitration expenses and any other costs
associated with the arbitration hearing (recognizing that each side bears
its own deposition, witness, expert and attorneys' fees and other expenses
as and to the same extent as if the matter were being heard in court). If,
however, any party prevails on a statutory claim which affords the
prevailing party attorneys' fees and costs, or if there is a written
agreement providing for fees and costs, then the arbitrator may award
reasonable fees to the prevailing party. Any dispute as to the
reasonableness of any fee or cost shall be resolved by the arbitrator.
Nothing in this paragraph shall affect the Executive's or the Company's
ability to seek from a court injunctive or equitable relief.
(b) Except as may be necessary to enter judgment upon the award or to
the extent required by applicable law, all claims, defenses and proceedings
(including, without limiting the generality of the foregoing, the existence
of a controversy and the fact that there is an arbitration proceeding)
shall be treated in a confidential manner by the arbitrator, the parties
and their counsel, each of their agents, and employees and all others
acting on behalf of or in concert with them. Without limiting the
generality of the foregoing, no one shall divulge to any third party or
Person not directly involved in the arbitration the content of the
pleadings, papers, orders, hearings, trials, or awards in the arbitration,
except as may be necessary to enter judgment upon an award as required by
applicable law. Any controversy relating to the arbitration, including,
without limiting the generality of the foregoing, to prevent or compel
arbitration or to confirm, correct, vacate or otherwise enforce an
arbitration award, shall be filed under seal with the court, to the extent
permitted by law.
14. Entire Understanding. The parties understand that this Agreement
represents the entire agreement and understanding between the parties and
supersedes any prior or contemporaneous agreement, understanding or negotiations
respecting such subject. No change to or modification of this Agreement shall be
valid or binding unless it is in writing and signed by Executive and a duly
authorized officer of the Company.
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15. Governing Law. This Agreement shall be governed and construed under the
applicable laws of the State of California.
Executive affirms that Executive has read and understands this Agreement
and hereby agrees to voluntarily sign it. Executive declares under penalty of
perjury that the foregoing is true and correct.
EXECUTED this _____ day of __________, _____, at __________.
------------------------------------- ----------------------------------------
[Name] Vice President, Xxxx Food Co., Inc.
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CHANGE OF CONTROL AGREEMENT
