CHANGE OF CONTROL AGREEMENT
Exhibit
10(v)
THIS
AGREEMENT dated as of this ___ day of _________ between TASTY BAKING COMPANY,
a
Pennsylvania corporation (the “Company”), and __________
(“Executive”).
Background
Executive
serves as ____________________ of the Company and, as such, has made and
is
currently making a significant contribution to the Company’s business. The
Company considers the maintenance of an able and experienced executive group
to
be essential to protecting and enhancing the best interests of the Company
and
its shareholders. The Company recognizes that there is a possibility of a
change
in control of the Company and that the uncertainty and questions which such
a
possibility raise may result in the departure or distraction of senior
executives to the detriment of the Company and its shareholders.
The
Company has determined that appropriate steps should be taken to reinforce
and
encourage the continued dedication of key executives by providing for severance
payments in the event of termination of employment because of a change of
control of the Company. Executive is willing to enter into a change of control
agreement with the Company upon the terms and conditions set forth
below.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained and
of the
mutual benefits herein provided, and intending to be legally bound hereby,
the
Company and Executive hereby agree as follows:
Section
1. Term.
This
Agreement shall commence on the date hereof and shall remain in effect until
terminated in one of the following ways:
(a) Executive’s
death or Executive’s total disability within the meaning of the Company’s Long
Term Disability Plan;
(b) Executive
attains Normal Retirement Date under the Company’s Pension Plan or Executive’s
Early Retirement Date if Executive elects to retire early; or
(c) Executive’s
employment is terminated for cause (as defined in Section 4(c) below) at
any
time or Executive otherwise leaves the Company’s employ on a voluntary basis
other than as provided in Section 4(a) or (b) below.
Section
2. Definition
of “Change of Control”.
A
“Change of Control” of the Company shall be deemed to occur:
(a) upon
any
change of control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A or Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended and the regulations thereunder
(“Exchange Act”);
(b) upon
the
acquisition by any person or group of beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of twenty-five percent (25%) or more
of
the combined voting power of the Company’s outstanding securities then entitled
to vote generally in the election of directors, excluding, however, acquisitions
by the Company or any of its subsidiaries, or any employee benefit plan
sponsored or maintained by the Company, or by a corporation pursuant to a
reorganization, merger, consolidation, division or issuance of securities
if the
conditions described in clauses (f) (i) and (ii) below are satisfied;
(c) if
individuals who constitute the Board of Directors of the Company (“Board”) as of
the date hereof (“Incumbent Board”), cease for any reason to constitute at least
a majority of the Board during any two (2) year period; provided, however,
that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Incumbent Board;
(d) if
the
Company shall meet the delisting criteria of the New York Stock Exchange
(or any
successor stock exchange or automated trading system on which the Company’s
common stock is then traded);
(e) if
the
Board shall approve the sale of all or substantially all of the assets of
the
Company or recommend the adoption of a plan of complete liquidation or
dissolution of the Company; or
(f) upon
approval by the shareholders of the Company of a reorganization, merger,
consolidation, division, or issuance of securities, in each case unless
following such transaction (i) not less than sixty percent (60%) of the
outstanding equity securities of the corporation resulting from or surviving
such transaction and of the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election
of
directors is then beneficially owned by the holders of the Company common
stock
immediately prior to such transaction in substantially the same proportions
as
their ownership immediately prior to such transaction, and (ii) at least
a
majority of the members of the board of directors of the resulting or surviving
corporation were members of the Incumbent Board.
Section
3. At-Will
Employment and Duties.
During
Executive’s employment, Executive shall have such duties, responsibilities and
authority and shall perform such services for the Company as are consistent
with
Executive’s background, training and experience and as may from time to time be
assigned to Executive by the Board. The Company and Executive acknowledge
and
agree that this Agreement does not constitute a contract for future employment,
and that Executive’s employment is and shall continue to be at-will, as defined
by applicable law. If the Executive’s employment terminates for any reason,
Executive shall not be entitled to any payments, compensation, benefits,
damages
or awards under this Agreement other than as expressly provided by this
Agreement, or otherwise as may be established under the Company’s then existing
employee benefit plans or policies applicable to executive officers at the
time
of termination.
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Section
4.
Termination
of Employment upon a Change of Control.
(a) If
within
one (1) year following a Change of Control (i) Executive’s employment is
terminated by the Company other than for cause (as defined in Section 4(c)
hereof), or (ii) Executive terminates his or her employment for “good reason”
(as defined in Section 4(d) hereof), then Executive shall be entitled to
receive
those payments, compensation and benefits set forth in Section 5 as severance
and in lieu of any other damages which Executive may suffer as a direct or
indirect result of the termination of Executive’s employment with the
Company.
(b) In
addition to and notwithstanding the provisions of Section 4(a) above, Executive
shall have the right to terminate his or her employment with the Company
at any
time during the thirteenth calendar month following the date of the Change
of
Control, for any or no reason, by providing not less than thirty (30) days
written notice to the Company and upon such termination Executive shall be
entitled to receive those payments, compensation and benefits set forth in
Section 5 as severance and in lieu of any other damages which Executive may
suffer as a direct or indirect result of the termination of Executive’s
employment with the Company.
(c) Executive’s
employment may be terminated for cause at any time in which case Executive
shall
have no right to any payment under this Agreement. “Cause”
shall mean:
(i) Executive’s
conviction in a court of law of any crime or offense which constitutes a
felony,
which conviction, in the good faith judgment of the Board, makes him or her
unfit for continuing employment, prevents him or her from effectively performing
his or her duties for the Company, or materially and adversely affects the
reputation or business activities of the Company;
(ii) Dishonesty
or willful misconduct which materially and adversely affects the reputation
or
business activities of the Company and which continues after written notice
thereof to Executive (provided that prior to termination for such reason,
the
Company shall give Executive written notice of the acts constituting grounds
for
such termination and in the event such acts are capable of being cured, the
Company shall give Executive a period of 20 days within which to cease and
correct such acts, such that there is no longer grounds for termination for
cause, and if Executive fails to cease and correct such acts the Agreement
shall
be deemed terminated), or misappropriation of funds;
(iii) Substance
abuse, including abuse of alcohol or use of illegal narcotics, or other drugs
or
substances, for which Executive fails to undertake and maintain effective
treatment within 15 days after being requested so to do by the Company;
or
(iv) Executive’s
continuing material failure or refusal to perform the duties associated with
his
or her position with the Company, or to carry out in all material respects
the
lawful directives of the Board (other than such failure resulting from
Executive’s incapacity due to injury, physical or mental illness, disability or
death); provided that the Company shall give Executive written notice of
the
acts and in the event such acts are capable of being cured, the Company shall
give Executive a period of 20 days within which to cease and correct such
acts,
such that there is no longer grounds for termination for cause, and if Executive
fails to cease and correct such acts this Agreement shall be deemed terminated
and Executive shall have no right to receive the benefits/payments provided
herein.
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(d) “Good
reason” shall mean a material change in the authority, duties and
responsibilities of the Executive so as to be inconsistent with his or her
background, training and experience, or the Company’s continued failure to
perform its duties under this Agreement in any material respect, which failure
has not been cured within twenty (20) days after written notice of such failure
has been given by Executive to the Company.
Section
5.
Executive
Benefits Following Change of Control.
In the
event of termination of Executive’s employment upon a Change of Control as
provided in Sections 4(a) or (b) above, Executive shall be entitled to the
payments, compensation and benefits described below:
(a) Severance.
Executive shall be entitled to receive in lieu of all other damages and benefits
to which Executive may otherwise be entitled as a direct or indirect result
of
such termination, (i) two times his/her annual base salary then in effect
payable over 24 months, (ii) for each of the first two fiscal year’s of the
Company ending after the date of termination, the average annual cash bonus
he/she received during the five fiscal years of the Company immediately
preceding the year in which such termination occurs (and if Executive has
been
then employed by the Company for less than five full years, the average shall
be
calculated for the period Executive was so employed) multiplied by the
percentage derived by dividing (x) the aggregate cash bonuses awarded to
other
senior executives for each such year, by (y) the average annual cash bonuses
received by such senior executives during the five fiscal years of the Company
immediately preceding the year of calculation, (iii) group medical and life
insurance benefits for a period of 24 months after the date of termination
equivalent to those provided to other senior executors (provided Executive
satisfies the insurability criteria and complies with the conditions of such
plans) on the same basis as other senior executives employed by the Company
during such period, (iv) any unpaid accrued benefits due to Executive through
the date of such termination, (v) reimbursement for any expenses to which
Executive is entitled through the date of such termination, and (vi) any
indemnification obligations to which Executive may become entitled from the
Company whether by contract or pursuant to the Company’s charter or Bylaws. The
amounts payable under clause (ii) above shall be calculated separately for
each
year after termination, and the amounts due shall be paid when and as bonuses,
if any, for such year are paid to other senior executives of the Company.
Payments due under clauses (i) and (ii) of the first sentence of this
subsection, shall be paid by the Company periodically in accordance with
normal
payroll practices for senior executives. To the extent that the Company deems
it
undesirable to cover Executive under the Company’s group medical and life
insurance plans, then the Company shall provide Executive with the same level
of
coverage under individual policies or pay cash to Executive equal to the
cost to
the Company for such benefits to Executive immediately prior to termination
of
his employment.
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(b) Accelerated
Vesting of Options. In the event of a Change of Control and regardless of
whether Executive’s employment is terminated in connection with such Change of
Control, one hundred percent (100%) of the shares subject to all options
granted
to Executive by the Company and still outstanding (the “Options”) shall
immediately become vested and exercisable in full, subject to any applicable
shareholder approval requirement. Such Options shall continue to be subject
to
the other terms and conditions of the Company’s long term incentive plans and
the applicable option agreements between Executive and the Company.
(c) Aggregate
Cap. Executive and the Company expressly agree that in no event shall the
aggregate amount of change of control benefits payable to Executive hereunder
plus the amount of change of control benefits payable to all other Senior
Executives of the Company exceed three percent (3%) of the total transaction
value for such Change of Control, as such value and percentages are then
determined by a nationally-recognized executive compensation consulting firm
or
investment banking firm at the time of such Change of Control. The Company
shall
have the accounting firm serving as the Company’s independent public accountants
immediately prior to the Change of Control (the “Accountants”) determine
promptly after a Change of Control the aggregate amount of Change of Control
benefits payable by the Company to Executive and all other senior executives
of
the Company, and the amount, if any, by which the cap set forth in the preceding
sentence is exceeded. Such excess shall be allocated among Executive and
all
other senior executives of the Company receiving change of control benefits
in
the same proportion as the total amount of their individual change of control
benefits relates to the aggregate amount of change of control benefits for
all
such persons as a group.
(d) Golden
Parachute Excise Tax Cap. Notwithstanding the foregoing provisions of this
Agreement, if the aggregate present value of the payments and benefits to
be
made or afforded to the Executive under this Section, plus other payments
and
benefits to be made or afforded to Executive in the event of a Change of
Control, would equal or exceed three times the Executive’s “base amount” (as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended,
and any successor provision thereto) as of the date of the Change of Control,
the payments and benefits to be made or afforded to the Executive under this
Agreement shall be reduced to the extent necessary to ensure that such aggregate
present value is one dollar ($1.00) less than three times such base amount.
The
determination of whether the aggregate present value of payments and benefits
to
be made or afforded to the Executive in the event of a Change of Control
would
equal or exceed three times the Executive’s base amount, and the amount of the
reduction necessary to ensure that such aggregate present value is one dollar
($1.00) less than three times such base amount, shall be made by a certified
public accountant or other competent professional selected by the
Company.
(e) No
Duty to
Mitigate. The Executive shall not be required to mitigate the amount of any
payment contemplated by this Agreement, nor shall any such payment be reduced
by
any earnings that the Executive may receive from any other source. However,
the
Executive shall not be entitled to receive the medical coverage and benefits
contemplated by this Agreement in the event that the Executive receives similar
medical coverage and benefits as a result of new employment during the period
that severance payments are being paid to Executive hereunder.
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(f) Release.
The payments and benefits made pursuant to this Section 5 are expressly
conditioned upon Executive’s first signing a valid general release and waiver in
a form reasonably acceptable to the Company, pursuant to which Executive
shall
release and waive all claims that he may have against the Company arising
during
or in any way related to Executive’s employment with the Company except for the
Company’s continuing obligations to Executive hereunder. The release shall be in
favor of the Company, its affiliates, officers, directors, employees,
representatives and agents. Payments by the Company shall commence within
30
days after delivery of such executed release provided Executive has not revoked
the release.
Section
6.
Assignment.
This
Agreement shall not be assignable by the Company except to a majority-owned
subsidiary or parent entity of the Company or to a successor to the Company
and
its business by way of merger, acquisition, purchase of assets or otherwise,
which does not constitute a Change of Control of the Company, and this Agreement
is and shall be binding upon and inure to the benefit of any such parent,
subsidiary or successor. This Agreement shall not be assignable by Executive
but
it shall be binding upon and inure to the benefit of Executive’s heirs,
executors, administrators and legal representatives.
Section
7. Confidential
Information; Non-Solicitation.
(a) Executive
agrees to hold in a fiduciary capacity for the benefit of the Company all
of the
Company’s business secrets and confidential information, knowledge and data
relating to the Company or any of its affiliated companies and their respective
businesses, which shall have been obtained by the Executive during his/her
employment by the Company or any of its affiliated companies, including without
limitation, information relating to such matters as finances, operations,
processes, product recipes, new products in development, sales methods,
equipment, techniques, plans, formulae, products, methods and know-how, customer
requirements and names of suppliers. Executive’s obligations under this Section
7(a) shall not be deemed violated in the event that (i) Executive discloses
any
such information pursuant to order of a court of competent jurisdiction,
provided Executive has notified the Company of such potential legal order
and
provided the Company with the opportunity to challenge or limit the scope
of the
disclosure, or (ii) such information becomes generally available from a source
other than the Company, any of its affiliates, or any of their employees
when
such source is legally entitled, to the best of Executive’s knowledge, to make
such information available, except that notwithstanding anything herein which
may be construed to the contrary, in no event shall Executive be permitted
to
use or disclose any of the Company’s product recipes.
(b) Executive
agrees, as a condition to the performance by the Company of its obligations
hereunder, during the period of his/her employment and for the period specified
below after termination of Executive’s employment as provided in Sections 4(a)
or (b) above, that Executive shall not, within the applicable territory
specified below, without the prior written approval of the Board, directly
or
indirectly, through any other person, firm or entity, whether individually
or in
conjunction with any other person, or as an employee, agent, consultant,
representative, partner or holder of any interest in any other person, firm,
entity or other association:
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(i) For
a
period of two (2) years after termination of employment as provided in Sections
4(a) or (b) above, solicit, entice or induce any Customer (as defined below)
located in any portion of the continental United States, to become a client,
customer, original equipment manufacturer, distributor or reseller of any
other
person, firm or entity with respect to any products or services competing
with
the products and services then sold, licensed or under development by the
Company or to cease doing business with the Company, or approach any such
person, firm or entity for such purpose or authorize or knowingly approve
the
taking of any such actions by any other person; or
(ii) For
a
period of two (2) years after termination of employment as provided in Sections
4(a) or (b) above, solicit, entice or induce, directly or indirectly, any
person
who presently is an employee, route operator, contractor or business associate
of the Company to become employed in the Territory by any other person, firm,
entity or other association or to cease their employment or other business
relationship with the Company, and Executive shall not approach any such
persons
for such purpose; or
(iii) For
a
period of one (1) year after termination of employment as provided in Sections
4(a) or (b) above, render services to, consult for, become employed by, own
or
have a financial or other interest in any person or entity that manufactures
and/or provides products or services competing with the products or services
then sold, licensed or under development by the Company.
For
purposes of Section 7(b)(i), “Customer” shall mean (x) any person or entity
which at the time of determination is, or shall have been within two years
prior
to such time, a client, customer, original equipment manufacturer, distributor
or reseller of the Company, or (y) any person or entity to whom a detailed
written proposal has been made within twelve (12) months immediately preceding
the date of termination of Executive’s employment with the Company. For purposes
of Section 7(b)(ii), “Territory” shall mean the states of Florida, North and
South Carolina, Virginia, West Virginia, Maryland, Ohio, Pennsylvania, Delaware,
New Jersey, New York, and Connecticut and the District of Columbia. For purposes
of Sections 7(b)(i) and (iii), products or services “competing” with those of
the Company shall include, but not be limited to, pre-packaged snack cakes
or
other bakery-type sweet products, pies, cakes, danish, donuts, pretzels,
cookies, granola bars, energy bars, and baked salty snacks, excluding, however,
bakery products intended to be purchased by the consumer as frozen.
(c) Executive
agrees that in the event of breach of any of his/her obligations under this
Section 7, the Company would suffer irreparable harm for which there is no
adequate remedy at law, and that such harm may be impossible to measure in
monetary damages. Accordingly, in addition to any other remedies which the
Company may have at law or in equity, the Company shall have the right to
have
all obligations, undertakings, agreements and other provisions of this Agreement
specifically performed by Executive, and the Company shall be entitled to
an
injunction restraining Executive from violating the provisions hereof and
shall
have the right to obtain preliminary and permanent injunctive relief to secure
specific performance, and to prevent a breach or contemplated breach, of
this
Agreement. In such event, the Company shall be entitled to an accounting
and
repayment of all profits, compensation, remunerations or benefits which
Executive, directly or indirectly, has realized or may realize as a result
of,
growing out of, or in conjunction with, any violation of this Agreement.
Such
remedies shall be in addition to and not in limitation of any relief or other
rights or remedies to which the Company is or may be entitled at law or in
equity or under this Agreement.
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(d) If
any
part of this Section or the application thereof is construed to be invalid
or
unenforceable, then the other parts of this Section or the application thereof
shall not be affected and shall be given full force and effect without regard
to
the invalid or unenforceable provisions. If any provision in this Section
is
held to be unenforceable because of the area covered, the duration, or the
scope
thereof, then the court making such determination shall have the power to
reduce
the area and/or duration and/or scope thereof, and the provision shall then
be
enforceable in its modified form.
(e) Executive
acknowledges that he/she will be able to earn a livelihood without violating
the
provisions of Section 7 of this Agreement. Executive further acknowledges
that
his/her rights have been limited by this Agreement only to the extent reasonably
necessary to protect the legitimate interests of the Company and as
consideration for the Company’s entering into this Agreement.
Section
8. Notices.
All
notices, requests, demands and other communications hereunder must be in
writing
and shall be deemed to have been given if delivered by hand or mailed by
first
class, registered mail, return receipt requested, postage and registry fees
prepaid, and addressed as follows:
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(a)
|
To
Executive:
|
|
(b)
|
To
Company:
|
|
Tasty
Baking Company
|
|
|
Attention:
Secretary
|
|
|
0000
Xxx Xxxxxx
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|
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Xxxxxxxxxxxx,
XX 00000
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Addresses
may be changed by notice in writing signed by the addressee.
8
Section
9. Mediation/Arbitration.
Except
as provided in Section 7 above or any claims by the Company for injunctive
relief, the parties shall attempt to resolve any dispute through mediation
conducted in Philadelphia, Pennsylvania. If the parties do not promptly agree
on
a neutral mediator, then any of the parties may notify J.A.M.S./Endispute,
000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, to initiate selection of a mediator from
the
J.A.M.S/Endispute Panel of Neutrals. The Company shall pay the fees and expenses
of the mediator. If the mediator is unable to facilitate a settlement of
the
dispute within a reasonable period of time, as determined by the mediator,
the
mediator shall issue a written statement to the parties to that effect and
the
aggrieved party(ies) may then seek relief through arbitration, which shall
be
binding, before a single arbitrator pursuant to the Commercial Arbitration
Rules
(“Rules”) of the American Arbitration Association (the “Association”). The place
of arbitration shall be Philadelphia, Pennsylvania. Arbitration may be commenced
at any time (after the mediator issues the written statement provided in
the
fourth sentence of this Section 9) by any party seeking arbitration by written
notice to the other party(ies) by first class mail, postage prepaid. The
arbitrator shall be selected by the joint agreement of the parties, but if
the
parties do not so agree within (30) business days after the date of the notice
referred to above, the selection shall be made pursuant to the Rules from
the
panels of arbitrators maintained by the Association, and such arbitrator
shall
be neutral, impartial, independent of the parties and others having any known
interest in the outcome, shall abide by the ABA and AAA Code of Ethics for
neutral arbitrators and shall have no ex parte communications about the dispute
with either party. The arbitrator shall render a written decision within
60 days
of completion of the arbitration. Any award rendered by the arbitrator shall
be
final, conclusive and binding upon the parties hereto and there shall be
no
right of appeal therefrom. Judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof. The costs and expenses
of arbitration, including legal fees and expenses of the arbitrator, shall
be
paid by the parties as the arbitrator may assess. Each party, however, shall
bear the cost of preparing and presenting its own case including legal fees
and
expenses. The arbitrator shall not be permitted to award punitive or similar
type damages under any circumstances. The procedures set forth in this Section
9
shall constitute the sole and exclusive procedures for the resolution of
any
dispute under this Agreement, except for any dispute related to an alleged
violation of Section 7 hereof or any claims by the Company for injunctive
relief, in which case Company, without prejudice to or compliance with the
procedures set forth in this Section 9, is expressly permitted to institute
legal proceedings to obtain a temporary restraining order, a preliminary
and
permanent injunction or other equitable relief.
Section
10. Miscellaneous.
This
Agreement is the entire agreement and understanding between the parties hereto
and supersedes all prior agreements (including the Letter Agreement, which
shall
have no further force or effect) and understandings, oral or written, relating
to the subject matter hereof, and no change, alteration or modification hereof
may be made except in writing signed by both parties hereto. The headings
in
this Agreement are for convenience of reference only and shall not be considered
as part of this Agreement nor limit or otherwise affect the meaning hereof.
This
Agreement shall in all respects be governed by and construed and enforced
in
accordance with the laws of the Commonwealth of Pennsylvania.
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IN
WITNESS
WHEREOF, the parties hereto have executed and delivered this Agreement
as of the
first above written.
ATTEST:
TASTY BAKING COMPANY
__________________________ By:_____________________________
Secretary
Xxxxxxx X. Xxxxx
President
and CEO
WITNESS:
__________________________ _______________________________
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