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EXHIBIT 10.03
MANAGEMENT CONTINUITY AGREEMENT
AGREEMENT between Ralcorp Holdings, Inc., a Missouri corporation
("Ralcorp"), and (the "Executive"), WITNESSETH:
WHEREAS, the Board of Directors (the "Board") has authorized Ralcorp to
enter into Management Continuity Agreements with certain key executives of
Ralcorp; and
WHEREAS, the Executive is a key executive of Ralcorp 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 Ralcorp (as defined herein), the Board believes it imperative that
Ralcorp be able to rely upon the Executive to continue in his position, and
that Ralcorp be able to receive and rely upon his advice, if it is requested,
as to the best interests of Ralcorp and its shareholders without concern that
he 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, Ralcorp and the Executive agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
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 his 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
Ralcorp Holdings, Inc. Savings Investment Plan and
under any benefit plan complying with Section 125 of
the Code and deferrals pursuant to the Executive
Savings Investment Plan, 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 his
Qualifying Termination or the Change in Control,
whichever is higher (or if the Executive has not been
awarded an annual bonus by Ralcorp prior to the Change
in Control, then his last annual bonus awarded by
Xxxxxxx Purina Company, Ralcorp's former parent
company).
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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
Ralcorp or any of its subsidiaries or any employee benefit
plan of Ralcorp (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 Ralcorp.
d. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
e. "Company" shall mean Ralcorp Holdings, Inc. and its
wholly owned subsidiaries.
f. "Continuing Director" means any member of the Board
of Directors of Ralcorp, as of January 31, 1997 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 his regular occupation because of injury or
sickness.
To determine whether the Executive is Disabled, he 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 4.57% compounded semi-annually
(120% of the applicable Federal rate determined under Section
1274(d) of the Code and the regulations thereunder and
utilized pursuant to the Retirement Plan to determine the
present value of benefits payable under the Retirement Plan).
i. "Involuntary Termination" shall be any termination of
the Executive's employment with the Company (a) to which the
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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, he is required to be based anywhere
other than his 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 executive
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 Ralcorp's 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.
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(v) the liquidation, dissolution, consolidation, or merger
of the Company or transfer of all or a significant portion
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.
j. "Normal Retirement Date" shall be the date on which
the Executive attains age 65.
k. "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.
l. 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 first year
following the Change in Control -- 36 months;
(ii) if the Qualifying Termination is an
Involuntary Termination that occurs at any time during
the second year following the Change in Control -- 24
months;
(iii) if the Qualifying Termination is an Involuntary
Termination that occurs at any time during the third year
following the Change in Control -- 12 months; or
(iv) if the Qualifying Termination is a
Voluntary Termination that occurs at any time during
the three years following the Change in Control -- 12
months,
but in no event shall the Payment Period extend beyond the
Executive's Normal Retirement Date.
m. "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 his Normal
Retirement Date or Termination for Cause. "Qualifying
Termination" shall not include any change in the Executive's
employment status due to Disability.
n. "Retirement Plan" means the Ralcorp Holdings, Inc.
Retirement Plan or any successor qualified plan.
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o. "Stock" means the common stock of Ralcorp or such
other security entitling the holder to vote at the election of
Ralcorp's directors or any other security outstanding upon its
reclassification, including, without limitation, any stock
split-up, stock dividend or other recapitalization of Ralcorp
or any merger or consolidation of Ralcorp with any of its
Affiliates.
p. "Supplemental Plan" means the Ralcorp Holdings, Inc.
Supplemental Retirement Plan, as amended.
q. A "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 his 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
his duties; or
(ii) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise,
in either 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 his 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.
2. Operation of Agreement. This Agreement shall not create any 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
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Agreement is not exclusive with regard to benefits to be provided to the
Executive on his 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 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, he shall be entitled to the following "Severance Benefits":
a. Subject to any offer provided in Section 3g below,
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 his 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 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 he 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. Subject to any offer provided in Section 3g below, payment in a
lump sum in cash, within 60 days after the Executive's Qualifying
Termination, of the difference between the present values as of
the date of the Qualifying Termination of (a) the benefits under
the Retirement Plan and the Supplemental Plan which the Executive
and his beneficiary, if applicable, would have been entitled to
receive if he had remained employed by Ralcorp at a compensation
level equal to his Base Compensation for the entirety of the
applicable Payment Period, and (b) his actual benefit, if any, to
which he and his beneficiary are entitled under the Retirement
Plan and the Supplemental Plan. For purposes of this
subparagraph, present value shall be calculated in accordance with
Section 417(e)(3) of the Code; no reduction factors for early
retirement shall be applied in the calculation of benefits;
d. Subject to any offer provided in Section 3g below, 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
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Agreement, or to recover or recoup from the Executive or
his 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;
e. 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; and
f. The Company shall be entitled to withhold from any
payments made pursuant to this paragraph three any federal,
state or local taxes required to be withheld by law or
regulation.
g. The Company shall off-set from any amounts otherwise
payable to the Executive under a, c and d above, the amount
payable or to be paid for similar matters pursuant to any
Employment Agreement between the Executive and the Company.
The Executive may file with the Secretary of Ralcorp a written designation
of a beneficiary or contingent beneficiaries to receive the payments described
in subparagraphs (a) and (c) above in the event of the Executive's death
following his 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 his 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 his 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 subparagraphs
(a) and (c).
4. Successors to Company; Binding Effect; Assignment. This Agreement
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,
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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 herein before 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 (3) above.
5. Missouri Law to Govern. This Agreement shall be governed by the 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, 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 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
rights the Company may have against him or anyone else.
8. Severability. The invalidity and unenforceability of any 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 effective
the ______ day of ______________________________ , 1994.
RALCORP HOLDINGS, INC.
___________________________ _______________________________
Executive
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